Fifth Third Bancorp is so frugal it didn't replace the carpet in its 26-year-old headquarters building until a couple of years ago.

So it may seem uncharacteristic that the Cincinnati company is pondering development of a $54 million, 26-story office tower across from its downtown offices. Yet that's what the $19 billion-asset bank company is doing.

"We still are a frugal company, our expense ratios show that," said William J. Moran, vice president of corporate facilities. "What we're doing here is assuring that we'll have space to grow. We're controlling our destiny, and controlling costs."

In September, Fifth Third paid $5 million for the air rights above a proposed mall in downtown Cincinnati. Construction on the mall began last month, but a possible Fifth Third tower built on top of it would be at least four to five years down the road, said Mr. Moran.

While companies address their space needs in different ways, Fifth Third has not been a company known for engaging in expansive office projects.

The company's headquarters isn't the marble mausoleum one would expect from some banks, and it didn't even own the building until 1990.

The old carpet, held together in places by duct tape, was a badge of honor for this cost-conscious company - considered one of the nation's most-efficient banks.

"They're certainly not into spending money aimlessly," said analyst Fred Cummings of McDonald & Company Securities Inc. in Cleveland. "I'm sure Fifth Third would not be the lead developer. It would be atypical of them to do that."

Mr. Moran said that Fifth Third's purchase for air rights is actually helping fund the foundation for the mall and the tower, a project that has been on the city's drawing board for 14 years. While Fifth Third has the first right to develop the office building, Mr. Moran said it could always sell the option later.

However, it's likely that Fifth Third would be at least a partner in the tower, which would shoot up 23 floors above a 3-story retail complex.

Unlike many bank companies, which have transferred operations from city centers to suburban locations, Fifth Third has kept all its 2,500 data processing, operations, and core banking employees downtown.

Since January, the company has created 250 new jobs. Its Fifth Third Center is 100% occupied, with bank employees occupying three-fourths of the building.

Moreover, the bank has already convinced the city to provide some incentives. Cincinnati officials have agreed to build a 700-space parking garage and an enclosed skywalk that would connect the Fifth Third headquarters to the new building across the street.

Mr. Moran said the company's plans to help enhance downtown development are influenced in part by a sense of civic duty. The Ohio city has seen an exodus of retail establishments over the past several years.

"This is a very big deal for Cincinnati," Mr. Moran said.

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