Q A John Bultema, Fifth Third Banks local president
John Bultema landed in a challenging position during one of the most difficult economic periods in recent history when he was named president of Fifth Third Bank — Western Michigan, in early January 2009.
Bultema, now 38, had previously served for three years as president and CEO of Fifth Third Bank — Central Florida.
A native of Muskegon, Bultema had moved from Grand Rapids to Orlando in early 2006 after having been the Fifth Third executive vice president and head of retail banking in Western Michigan. He has been with the bank since 1995, and had previously served as senior vice president of Business Banking for Fifth Third Bank — Chicago.
Bultema recent answered questions regarding the banking industry.
GRBJ: What have the last two years been like for you?
Bultema: It’s certainly been a tumultuous time for us and for our customers. There has been a lot of wealth that’s been lost. Not only do we have a large commercial and retail business, we also have a large wealth management business. So there has been lots of consulting with our clients, about where they want to go, about how this two-year period impacted their goal and what they want to do.
GRBJ: Are people more gun-shy now with their money?
Bultema: They are more conservative — absolutely. I would say people in general are more debt averse. They are more concerned about how they are going to save for their future and still meet some of the goals they had set for themselves before the crisis. But that really creates an opportunity for us because when times were great, people didn’t want to spend a lot of time talking about planning for the future. Things were kind of going the way they wanted them to. And when you hit a speed bump such as we hit — and speed bump is an understatement — it forces people to re-evaluate. As bankers, that’s what we are really there to do — help our clients meet their goals and their dreams.
GRBJ: There is a perception that banks are not lending. What is the situation?
Bultema: Demand (for loans) is weak, with the economy being down. Companies are just are not real excited right now to take on more debt to finance expansion, buy equipment, etcetera.
Banks were certainly lending less, but what was not talked about was the fact that demand was down significantly. You did have businesses that, unfortunately, were in very difficult situations where their revenues had gone away and they were in some tough spots, (in regard to) access to capital.
The mood is certainly changing. There is more optimism now than there has been. And we’re seeing companies go from having shorter work weeks to going back to five-day work weeks. They’re having people who were on reduced hours, now coming back to work overtime. In some cases they are hiring and they are also beginning to talk about needing to buy new equipment, upgrade equipment, because they had really been trying to hang on to what they had, without investing significant dollars.
We touch a lot of the businesses in West Michigan and it certainly is encouraging to hear of some of the signs that were not even being talked about twelve months ago.
What I have seen is a lot of companies in West Michigan, because they are conservatively run, found a way to get through this crisis and are much stronger as a result. And now that volumes are starting to come back, they’re finding themselves running more efficiently than they were before the downturn.
GRBJ: Is there a “new reality” to banking and lending?
Bultema: The new reality is asset values are still depressed. We know when were going into a deal that the value of the collateral is going to be a challenge, because values are down. When you are evaluating the company itself, you have to face the likely scenario that their sales are lower this year than in previous years. They may have had a couple quarters of losses, or a year — particularly last year. So it’s requiring us to get much more focused on management, and any type of turnaround they are showing. How confident are we that that turnaround is going to continue?
GRBJ: What industries are showing the most strength now?
Bultema: Automotive has come back the quickest because it was at such a low. We’re seeing some nice opportunities in agribusiness, food processing, alternate energy. I would also say education overall has some opportunities, as well.
The health care sector is growing rapidly. We have a group (within Fifth Third) that we identified as having a passion for servicing the health care industry. They go to certain health care trade shows, they get specialized training about the needs of health care. We also have some specialized products just for health care. One that’s really the first in this area is our mPay Gateway, a credit card processing solution. When you go to the doctor now, they don’t really know how much you have to pay up front because of the co-pays, and what your responsible for later, so about 50 percent of those charges are written off by health care. They have a hard time collecting it. This provides up front to the health care provider what that patient is eligible for, so they can collect payment or authorization for payment, at the point of sale. It lowers the overall write off for the providers.
GRBJ: What is “retailing of banking?”
Bultema: Banking is changing from the kind of stodgy you-come-to-us mentality, to more of how can we be more retail, like Meijer? Many stores are now open 24 hours, much more consumer friendly. So we do a lot of surveying of our clients, which is very much a retail concept. We’ve expanded our hours — we’re now open another hour during the week, until 6 pm, and we’ve extended our Saturday hours by two hours. Customers can open checking accounts on line now; they don’t have to go to the bank to do it. You can do your banking on your BlackBerry.
GRBJ: What is your new focus on small business?
Bultema: We’ve got about 36,000 small business customers, about a 33 or 34 percent share of that segment, companies with revenues of $3 million or less. What we have found is many of those clients have financial relationships that are very fragmented. They’re with a bunch of different providers. They are also looking for a banker to be their trusted advisor. We saw a real opportunity to dedicate resources on that segment. So we hired 28 new people to go after that. We’re not seeing a lot of capital expenditures or anything by that segment yet. They’re still being a little cautious, but they are certainly encouraged to have that resource.