Magazine article American Banker

Fifth Third's Efforts to Boost Business Lending Paying Off

Magazine article American Banker

Fifth Third's Efforts to Boost Business Lending Paying Off

Article excerpt

Fifth Third Bancorp of Cincinnati continued to outpace competitors in commercial lending during the second quarter as it threw more resources into the business.

The $88.3 billion-asset company continued to hire lending officers to compete better in its major markets. In Chicago, where it hired 80 during the quarter, profits increased about 34% from a year earlier, said George A. Schaefer Jr., Fifth Third's president and chief executive officer, in a conference call with investors Tuesday.

It reported a second-quarter profit of $437 million, up 8%. Earnings per share of 75 cents beat the Thomson First Call analyst consensus by a penny.

"The highlights for the quarter were, No. 1, loan growth," Mr. Schaefer said during the call. Over all the commercial loan book was up almost 16%, to $27.6 billion. The company made $960 million more loans last quarter than during the first three months of the year, which works out at an annual growth rate of 15%.

Fifth Third's corporate loan business differed from that of Buffalo's M&T Corp., which on Monday reported that its growth was powered by existing customers drawing on their credit lines, rather than new loans.

Fifth Third's growth, conversely, has largely been driven by new commercial customers, which not only took out loans but brought in demand deposits last quarter, Mr. Schaefer said in a telephone interview. The city provides "tremendous opportunities," he said. However, Fifth Third's commercial customers made little use of their existing lines of credit.

Jason Goldberg, an analyst with Lehman Brothers, said Fifth Third posted some of the "the strongest loan-growth numbers I have seen" for the quarter, while margins remained "fairly resilient."

Both Mr. Schaefer and Neal Arnold, Fifth Third's chief financial officer, were cautious about predicting stronger economic growth on the basis of the quarterly results. …

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