Fifth Third Bank 2003 Annual Report Download - page 6

Can Fifth Third maintain its culture and sales
focus as it continues to grow?
The one thing we’ve learned over the last
couple of years is that our culture is just a
matter of trusting capitalism inside the company.
We’ve found that when our expectations are clear,
you keep score and publish results, the measure
of success is well defined. People want to win.
The resulting competition improves performance
across the board, top performers are identified and
rewarded, winning strategies are copied and the
areas in need of improvement become clear as well.
What lessons have been learned from
Fifth Third’s recent regulatory challenges?
Fifth Third has always focused on dissecting
the company into small pieces and measuring
results to make sure we knew what parts of our
business were working and what areas needed
improvement. More recently, we have focused on
enhancing our capabilities to produce an enterprise-
wide view of the risks inherent in our businesses.
These efforts include improvements in software,
processes and internal audit oversight, all of which
should serve us extremely well as we continue to
focus on the things we do best.
Where do you see your largest opportunities
for growth and what is Fifth Third’s appetite
and outlook for future banking acquisitions?
Our best opportunities for growth are clearly
in the markets with the largest populations
and lowest market share. At this point, we are
investing significantly in our Chicago, Detroit and
Cleveland affiliates and I feel that we have a great
deal of positive momentum in these markets. It’s
important to note that we only have about seven
percent market share in terms of deposits and even
less in some of our individual business lines in our
five principal states, so we have a tremendous
opportunity in all of our markets. In terms of
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acquisitions, we have always been very cautious in
evaluating potential deals, but I think we’ll continue
to be opportunistic given the consolidation trends in
our industry. We believe there are a few markets
where an acquisition might make sense in order to
establish a platform for growth.
How has the competitive landscape in your
business changed?
Our toughest competitors are different in
every single neighborhood and that’s
something that has never really changed. While I do
believe it’s true that some of our major regional
competitors have realized the importance of a retail
banking franchise, I still believe that success in this
business largely depends on the ability to respond
with individualized and market-specific strategies.
That means having flexible pricing to go after
entrenched large market share competitors and the
less efficient smaller institutions, as well as
maintaining a high touch, customer focused local
operation. In this respect, I feel that our affiliate
banking model provides a very unique competitive
advantage in all of our markets.
What do you see as the primary driver for
delivering value to your shareholders?
The primary driver of shareholder value at Fifth
Third is consistent and strong growth in
earnings per diluted share. The industry will fall in and
out of favor with investors at various points in time, but
ultimately we believe that earnings growth and stock
price performance compound over time. Fifth Third
has a strong track record of delivering earnings growth
and industry-leading returns on equity. At times,
growth can build capital to a level that exceeds our
targets and, in the absence of investment opportunities
that meet our strict return criteria, alternative return
strategies such as share buybacks are also an effective
means of delivering value.
PRESIDENT’S Q&A
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