FIFTH THIRD IN THE GUTTER

[Ed.: This article has been edited to reflect new information we have received since its original publication.]

The Wall Street Journal reported yesterday that Cincinnati-based Fifth Third Bancorp ranks nearly at the bottom of sixty-eight publicly traded U.S. banks in terms of return to shareholders.  It appears that Fifth Third's high flying days of pumping up its stock as a cheap currency to buy competitors are over.

That was how four years ago Fifth Third became the largest bank in the Grand Rapids market.  In April 2001 it gobbled up Old Kent Financial Corporation in a cozy deal that destroyed 1,300 local jobs while rewarding insiders by brushing a number of dubious transactions under the rug.  But the party came to an end.  Your intrepid executive director reported some of these insider shenanigans to the feds in March 2002.  Six months later the Federal Reserve stopped the Fifth Third steamroller, opened an investigation of the bank's acquisition of Old Kent, and then ordered it to re-balance its books to account for $82 million in unreported losses.

These losses were the result of inflated values placed upon Old Kent assets that Fifth Third acquired.  Immediately after the conclusion of the Federal Reserve's investigation in March 2003, Old Kent's former head honcho -- who had proposed, promoted, and executed the sale of Old Kent to Fifth Third and was richly rewarded upon the consummation of that deal -- disappeared from public life.

David Wagner, who rose to the top of the food-chain at Old Kent as its CEO and chairman and delivered Old Kent to Fifth Third, was rewarded with a lucrative sinecure at Fifth Third, where -- believe it or not -- he began his banking career.  In the wake of the Federal Reserve's investigation he surrendered his posh post and later his seat on the Federal Reserve Board of Cleveland.  He then retired to Florida.  (What is it with all these dethroned Grand Rapids grandees making their way to Florida?)

As Fifth Third now tries to clean up the mess, the class-action hyenas -- ahem, I mean, lawyers -- have inundated the bank with several shareholder suits filed in the U.S. District Court in Cincinnati.  One wonders when former Old Kent shareholders will pursue similar action alleging that Old Kent was sold on the cheap to Fifth Third.  There also remains the nagging problem for Fifth Third that it has a major investment in The Boardwalk project, to which a huge environmental liability could attach totaling in the billions of dollars in response costs and penalties.

Whatever the future holds for Fifth Third, stock analysts remain less than impressed.  It returned a loss to shareholders (based upon share price, distributions, and dividends) of -17.9% last year when banks as a group returned a +16.8% on average.  The one-time shark is now a dog.

Comments

[Thomas]

Fifth Third Bank should be closed and the CEO imprisoned. They have an awful reputation for customer disservice and bad accounting practices. They underpay and overwork the staff so many errors occur. There customers service is a joke, When(not if) the screw something up they will cover it up and stonewall requests for information. Just a quick google search like "fifth third worst" or "I hate Fifth third" will show you the realities of this awful bank. Many places in Cincinnati(where they are based) will not accept Fifth third checks or debit cards. They fee fee fee customers and use deceptive accounting to deliberately steal from your account.

[The Executive Director]

Thanks for the information, Thomas.

Fifth Third's strategy has been to capture two markets, the mass consumer market and the big business market. The former works for you only if you need next to nothing from your bank that cannot be processed electronically. The latter works for you only if you have millions in cash to deposit (and then you can get special attention).

This, of course, has alienated many customers who fall into neither category. But Fifth Third doesn't care, because those customers, it figures, cost the bank too much to have. At the end of the day, I'm dubious of the wisdom of Fifth Third's strategy. Looks like others are similarly dubious as demonstrated by its continued fall in its stock price.

Regards, Bill

[Barbara]

Not only is Fifth Third engaged cheating share holders, it is cheating the trusts it administers. Oh! Don't forget Northern Trust. Boy! These two put new meaning in the word corruption. Don't think these two are only cheating the little guy. They want everybody's money.

[american citizen]

I am having issues with a Fifth Third Trust. I am hoping to find the poster Barbara. can you direct me to her as soon as possible. clrhobart@hotmail.com.

[Marcey]

Beware of Fifth Third Bank as it now is preying on home owners. The bank is illegally foreclosing on homes with equity. They go as far as make up "Loan Modification". The bank services loans out without informing the customer. The servicer applies "escrow account to loan" on nonescrow accounts as to foreclose on the property. I have nothing but BAD to say about this pathetic bank. Today at GVSU the big honcho was demanding the bailout happen NOW!!! Sink you sob bank!!! You stole my home and because you have the so called media on your side, nothing is getting reported. I will personally make sure people know about your corrupt bank.

[Marcey]

Funny both the channels in GR knew about what happened with me. The bank is under investigation by the FBI, Federal Reserve, & Kent & Ottawa County police department. Wake up West Michigan--Demand there are tougher rules for any bank to proceed to auction with your home. 5/3 Bank's legal team is the one who determined if my home was in foreclosure. NICE!!! Can you imagine Trott and Trott being honest about anything!!! Hours before my home was auctioned off I received a letter from their senior vice president promising a full investigation to what the bank was making up or "stating". That's right, only hours later my home was auctioned off. This bank could care a less about anyone except themselves. I cannot stand to even look at their building. I prey every criminal charge that is possible is handed to them. Matter a fact, I can see their greed is so, bad they could end up killing someone. That is how bad this bank is acting. How low will this bank go? I find it really scary for them to be still open after all these years.

[Jana Diehl]

Hey, I added my name to the 5-6 digit list of those who were " Screwed, Glued, and Tattoed!", back in 2006. Has anyonde been paid yet? The fifthThird in question is/was located in Dayton, Ohio. Does anybody out there have an answer for me?

Sincerely, Jana Diehl

[Jen]

Let me first disclose that I am bitter... I was laid me off 2 days after returning from maternity leave, even though I met or exceeded all my goals, including my fee income. No wonder this bank is in the toilet. They layoff people who make them money and then give their mid management who do nothing raises and keep them on.
Most of the decisions I saw were based on who knew who and if you could get a higher up to be behind the deal it would get approved. They are suffering serious loses now due to those decisions, just check out their exposure $ levels to certain clients.

Terrible upper management, terrible customer service and ridiculous fees.

Don't bank here, don't work here and please don't let some other bank come in and buy this piece of crap bank.

[Cindy Maynard]

Well it's July 2009 and 5/3 bank is still up to their old ways of messing with their customers to gain a buck. No matter what my husband and I tryed to work things out to save our home in these hard economic times 5/3 kept charging us more on our morgage payments draining our escrow and leavinging us down and out. They used Pres. Obamas plan as a deturent to hold us off til they sheriffed sale our home from under us. 5/3 bank has not changed their ways and are a very dangerous bank to trust with your hard earned money. Beware of this company because you could wind up like my husband and I...in our 50's and broke, no where to go and no hope to look forward to.
Feel free to call me...we need encourment 734-308-6543
from Cindy and Eugene
Wyandotte, MI 48192

[robbie]

Planning a boycott march in Columbus in May. Columbus OH that is. I am marching in front of the Columbus Ohio fifth and third bank (main one downtown) to protest its operations and treatment of customers.
They are one horrible bank. If all of you have an account and want to quit there, I suggest you do it. They are rotten to the core.