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Fifth Third Restructuring Continues; Vends 17 More Branches

In furtherance of its restructuring measures announced in June 2015, Ohio-based Fifth Third Bancorp FITB has shut 17 branches in late October, according to filings with the Ohio Division of Financial Institutions. The bank has agreed to sell nine branches in Chicago, four in Orlando, three in the Naples and one in Daytona Beach, FL.

The sale of branches forms a part of Fifth Third's plan to consolidate or sell around 105 branches and around 31 other properties. Such restructuring is expected to result in $65 million in cost savings annually. The bank incurred around $97 million in non-cash impairment charges that was recognized in second-quarter 2015. Further, the company anticipates recognizing around $6-10 million in other costs, mainly tied with real estate contract terminations. The proposed actions are likely to be completed by mid-2016.

The plans come as part of Fifth Third's review on customers' choice and usage patterns throughout the bank's network and all distribution channels. As of Sep 30, 2015, Fifth Third had 1,295 full-service banking centers and 2,650 ATMs operating in regions including Ohio, Kentucky, Indiana, Michigan, Illinois and Florida.

Previously, in September 2015, Fifth Third announced its exit from the Pittsburgh retail market. The bank has agreed to sell 17 branches, the retail and private banking deposits worth $383 million and consumer loans in Pittsburgh to Pennsylvania- based F.N.B. Corporation FNB . The bank also exited the St. Louis retail market with the agreement to sell 12 branches, the retail and private banking deposits worth $261 million and consumer loans worth $155 million in St. Louis to Springfield based Great Southern Bancorp Inc. GSBC . Both the deals await regulatory review and approval and are anticipated to close in early 2016.

To combat revenue challenges in the current low interest rate environment, banks are striving hard and taking cost cutting initiatives including branch closures to boost bottom-line growth. Notably, people are increasingly getting accustomed to mobile and internet banking, which has already reduced the importance of banking locations. Such modes of communication not only save time for a customer, avoiding physical visit to a branch, but also saves costs for a bank.

Several other banks that have taken similar moves in recent times include JPMorgan Chase & Co. JPM , Bank of America Corporation (BAC) and Citigroup Inc. (C).

Fifth Third currently carries a Zacks Rank #3 (Hold).

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JPMORGAN CHASE (JPM): Free Stock Analysis Report

FIFTH THIRD BK (FITB): Free Stock Analysis Report

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FNB CORP (FNB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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