Fifth Third Shareholders Give The OK
The acquisition will make Fifth Third a $70 billion entity with roughly a thousand branches in this state, Ohio, Illinois, Indiana, Kentucky, Florida and Arizona.
According to George A. Schaefer, Jr., (see March 12 Business Journal) the acquisition will make the Cincinnati-based firm the fourth largest bank in Michigan with a 9 percent market share.
He said the firm also would be the sixth-largest bank in the Chicago area with deposits approaching $6 billion.
The merger is expected to be completed in the second quarter of the year.
The acquisition vote came immediately before the firm’s annual shareholders’ meeting in which they doubled the number of authorized shares of common stock, without par value, from 650 million to 1.3 billion.
The meeting also voted a dividend of 20 cents per share of its common stock, 25 percent higher than last year’s dividend.
In addressing the meeting, Schaefer made reference to Old Kent’s unbroken 42 years of annual dividends and termed the Grand Rapids bank “one of the true gems of the Midwest.”
He said both in Michigan and the Chicago area, Fifth Third finds itself in positions that present further targets for acquisitions.
He said the positions “reflect significant potential for growth in extremely fragmented markets populated by industries and competitors with which we are quite familiar. In fact, in these markets, only one in every 16 households is a Fifth Third customer.”
Historically, banking is an industry where mergers create staff morale costs that tend to shake loose frustrated depositors and customers. But Schaefer seems to think Fifth Third will be different. He told shareholders he believes the number of Fifth Third’s depositor households will grow.
“We are confident in our ability to integrate such a large transaction while sustaining our historical growth rate,” he said.
“Our management teams have been selected and we are working very hard to ensure a seamless conversion for our newest one million customers.”
Fifth Third claims $46 billion in assets.
The firm also claims to maintain the highest short-term ratings available at A-1+ and Prime-1 and said it recently was recognized by Moody’s with one of the highest senior debt ratings, Aa3, for a U.S. bank holding company.
Standard & Poor’s and Moody’s, respectively, recognized Fifth Third’s affiliates with ratings of AA- and Aa2.
Also addressing the shareholder meeting was David J. Wagner, chairman, president and CEO of Old Kent, who will become a Fifth Third board member.
He noted that Old Kent shareholders had voted in favor of the merger the previous week “and are bullish on joining an organization whose philosophy is clearly centered on building shareholder wealth.
“Fifth Third’s emphasis on decentralized decision-making,” he added, “empowers local Fifth Third banks to find the best way to produce double-digit earnings growth and invest capital in the communities where we operate.”