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Fifth Third Regroups
By Jean Gruss
Editor/Lee-Collier
Thomas Quinn Jr. has only been president of Fifth Third Bank's South Florida region for two weeks, but he's already visited most of the 44 branches he'll oversee from Sarasota to Naples and West Palm Beach.
He's moving fast to shore up the operation that has struggled with executive departures and declining deposit market share since it acquired Naples-based First National Bankshares of Florida nearly a year ago. Quinn, 46, succeeds Kevin Hale, a First National veteran who recently retired.
Fifth Third didn't reach into its own ranks to replace Hale. Quinn was most recently president and region manager for Citibank's Canadian and upstate New York retail operations. Prior to joining Citibank, Quinn ran his own real estate company in upstate New York.
Quinn says he was ready for a new challenge after 13 years with Citibank, though he admits he didn't seek to make a move at first. His initial contact with Fifth Third happened when he took a call from an executive-search firm as he was waiting in the hospital for the delivery of his fifth child more than a year ago.
Although he won't reveal his strategy for South Florida, citing competitive reasons, he hinted at a few things to come. These include hiring more staff, building new branches and giving more decision-making authority to branch managers.
Quinn declines to break down Fifth Third's financial performance data in Florida or cite any targets. But in a presentation to Boston analysts on Nov. 4, Fifth Third said average loan growth in Florida grew more than 25% in the year-to-date ended Sept. 30, and revenues were up 14% over 2004. Overall, Fifth Third revenues dropped 4% and earnings were down 10% in the nine-month period ended Sept. 30, 2005, versus the same nine months in 2004.
Quinn acknowledges the bank has lost clients in the post-acquisition turmoil. "I wish every one of them will call me so I can make it right," he says.
Fifth Third has lost deposit market share in every county that Quinn will oversee, according to the latest figures from the Florida Bankers Association. In Lee County, for example, Fifth Third's deposit market share has dropped two percentage points to just under 8% in the year ended June 30. One of its vice presidents in Lee County, Heidi Colgate-Tamblyn, recently left in November to become president of SunTrust Bank of Lee County.
In response, Fifth Third recently split its Florida operations into three geographic areas, or what it calls "affiliates." Quinn is president of the South Florida affiliate that extends from Sarasota south to Collier County and east to Broward and Palm Beach counties. Meanwhile, Brian Keenan is now president of Fifth Third in Hillsborough and Pinellas, and Gary Howlett leads the Central Florida counties of Orange, Seminole and Volusia. Of the three affiliates, Quinn oversees the largest, with $6.6 billion in assets, 5% of Fifth Third's total assets. The Tampa affiliate reported $1.3 billion in assets, and the Orlando affiliate $1.2 billion.
Prior to the split, Hale oversaw Fifth Third's statewide operations. Now, with the state divided into three regions, Quinn says the bank can make faster business decisions locally. With less territory to cover, each Florida affiliate president can focus on the unique needs of each market.
Faster growth in Florida
Quinn knows he has a challenge. Like many peers in the Midwest, Fifth Third is better known for its competitive prices than its customer service, says Richard X. Bove, a Pinellas-based analyst with Punk Ziegel.
For many years, Cincinnati-based Fifth Third stuck near its roots in the Midwest and didn't expand outside the region. It kept costs low and its preferred method of executive compensation was stock options, says Bove.
With low operating costs, Fifth Third was able to provide better-than-normal returns on deposit products, such as certificates of deposit, and offered more competitive terms on business loans and mortgages. Then, a few years ago, the bank entered the club of larger banks with assets over $90 billion, and competitors started matching Fifth Third's prices. Meanwhile, Fifth Third's stock price leveled off, making stock options less attractive to executives.
"It wasn't able to offer the best price, and it wasn't able to be the low-cost producer because it had to pay its people," Bove says. "So the company tried to come to Florida to get into growth."
The problem is Florida banks tend to compete more on service than price. Over time, larger banks that have entered Florida through acquisitions have learned to compete by providing superior customer service rather than super-aggressive pricing.
"It's not recognized how good Bank of America and Wachovia really are," Bove notes.
Bove says Fifth Third is now putting money into customer service so it can compete more effectively here. "Over time they'll regain what they lost," Bove predicts. "They will be successful in building market share."
Quinn disputes any assessment that Fifth Third competes more on price than service. "You couldn't have 40% market share in Cincinnati without great service," he says. But he notes that the bank is taking steps to improve customer service by adding staff and branches.
Replenish the staff
One of the first tasks facing Quinn is to replenish the thinning ranks. Many employees who were formerly with First National in its Naples and Fort Myers headquarters region joined local competitors such as Orion Bank and TIB Bank as well as larger rivals such as Bank of America and Wachovia.
Quinn puts a positive spin on the recent employee defections, saying the fact they landed at other banks speaks well of Fifth Third's qualified staff. But he plans to hire 45 people immediately and add at least five new branches next year.
As part of that effort, Fifth Third is opening a large branch in downtown Sarasota in January in Plaza at Five Points, one of the city's new mixed-use towers. Quinn says the bank plans to add at least five new branches in 2006, though he won't say exactly where. "We'll expand when it makes good business sense," he says.
Fifth Third also is building a mortgage-loan processing center in Fort Myers that will open in 2006. The new facility means area customers applying for mortgages will be helped by someone locally rather than from Cincinnati.
In the meantime, Quinn says, he hasn't forgotten the lessons he learned owning his own real estate company for seven years. That experience, he says, makes him sensitive to business owners' needs. Says Quinn: "The true value of every customer has never been lost on me."
How Fifth Third was named a Fractional Bank
Why does Fifth Third Bank have two numbers in its name?
If you guessed that Fifth National Bank combined with Third National Bank, you know your banking trivia.
In 1908, Ohio-based banks Third National and Fifth National merged, creating Fifth Third National Bank of Cincinnati. The bank eventually shortened its name to Fifth Third Bank.
In today's trend of shortened corporate names, the bank has gone all numbers: 5/3. Google Fifth Third Bank and you'll be directed to www.53.com.
Bonus Fifth Third trivia: What was Fifth National Bank's original name?
Answer: Queen City National Bank of Cincinnati.
POST-MERGER EFFECTS
In the aftermath of Fifth Third Bancorp's acquisition of Naples-based First National Bankshares, Fifth Third lost deposit market share in every county it has branches. Dollar figures are in the thousands. The data are through June 30.
Deposits Deposits 2004 Market 2005 Market
June 2004 June 2005 Share % Share %
Broward $17,652 $9,921 0.06 0.03
Collier 1,824,521 2,096,906 21.76 21.43
Hillsborough 227,916 198,309 1.48 1.19
Lee 834,288 780,890 10.06 7.95
Manatee 58,784 51,829 1.37 1.09
Orange 453,065 453,296 2.95 2.60
Palm Beach 122,895 100,238 0.40 0.30
Pinellas 557,795 550,746 3.34 3.10
Sarasota 298,340 280,340 3.00 2.58
Seminole 202,339 118,718 4.29 2.26
Volusia 171,978 113,753 2.48 1.52
Source: Florida Bankers Association
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