A Cincinnati bank with five local branches has big expansion plans for the Triangle, including trying to put its name on a high-rise building in downtown Raleigh.
Fifth Third Bank plans to open 20 to 25 branches in this market during the next three years, said Bob James, the bank's North Carolina CEO. The bank has several locations planned already, and it expects to begin opening branches next year.
"We've got to be there, mixing it up with the big guys," James said. "We're just scratching the surface in Raleigh."
As Fifth Third shifts focus from its Midwest roots to faster-growing markets in the Southeast such as the Triangle, it will face tough competition from strong rivals such as Wachovia, First Citizens, SunTrust and many others.
Fifth Third will need to increase marketing, find good locations and convince competitors' customers to switch banks, analysts say.
"They're going into the backyard of some of the banking giants," said Bert Ely, an Alexandria, Va.-based bank consultant. "The real question is, who are they going to take the business from?"
There are some factors that could work in smaller banks' favor, including the financial turmoil of the past two years, and changes spurred by pending regulatory reform, said Tony Plath, a finance professor at UNC Charlotte. Those changes could roil customers of the bigger banks.
Fifth Third is "trying to take advantage of dislocation in the market, which will shake loose a lot of money," Plath said. Still, the Triangle "is a tough market for anybody to crack."
Another potential disruption that could be to Fifth Third's advantage: Wachovia branches in North Carolina are scheduled to change to the Wells Fargo name next year.
Wachovia is the Triangle's biggest bank by deposits, and the shift could upset customers if not handled carefully, Plath added.
Fifth Third entered the Triangle when it bought Charlotte-based First Charter in 2008. The company recently moved its North Carolina headquarters into a new uptown Charlotte building and is planning to add branches in that region.
Fifth Third is Ohio's largest bank and is trying to expand in markets with healthier household income and population growth, compared with Midwest states that have been hit harder during the recession.
The bank, which is scheduled to report quarterly earnings Thursday, has had three straight quarters of losses. The company took $3.4 billion from the U.S. Treasury's Troubled Asset Relief Program and hasn't yet repaid the money.
Visibility in Raleigh
As it expands in this market, Fifth Third wants to get a naming-rights deal for a building in downtown Raleigh. The company plans to take about 50,000 square feet, James said.
"It's about name recognition," he said. "We want to be top of mind when people think about financial services."
It also would help Fifth Third keep up with bigger rivals whose logos already sit atop the Raleigh skyline, including BB&T and RBC.
Finding 50,000 square feet of space in downtown Raleigh is nearly impossible at the moment, said Gregg Sand reuter, a Cary developer. Sandreuter is behind a two-tower project downtown called the Edison that has been delayed by the credit crunch.
Logo logistics
Fifth Third's space needs aren't large enough to get a project like Edison or Charter Square, another stalled downtown Raleigh development, off the ground. But Sandreuter said a tenant that size could anchor a smaller building where it was the majority tenant.
Securing a naming-rights deal is key to cracking the Triangle market, especially to woo midsize and Fortune 2000 business customers, Plath said.
"If you want to be a business bank, you can't have a campus out in the woods," he added. "You have to have a major, visible presence in the urban area. You've got to have a big building with a big sign."
Search for branch sites
Officials are actively seeking new spots for Triangle branches, James said. According to Wake County property records, Fifth Third recently bought a former Bank of America branch on Creedmoor Road in North Raleigh, and land along High House Road in Cary near SearStone, a planned upscale retirement community.
As it prepares to open more local branches, Fifth Third has already begun hiring new business bankers, mortgage lenders and others, James said. The company will increase advertising as it can spread marketing costs across more locations. A billboard recently went up on Interstate 40 near downtown Raleigh.
While many consumers in this market remain reluctant to borrow money for new houses or cars, "businesses seem to be coming back to the table," James said. "We're making more loans than last year, when businesses were pulling in their oars. We're seeing Raleigh come back a bit stronger, and a little sooner."
Staff writer David Bracken contributed to this report.
