Tim Spence, who has been leading Fifth Third Bancorp’s overall business strategy since 2015, expects to stick to the game plan once he becomes the Cincinnati company’s chief executive.
Under Spence, who is scheduled to succeed current CEO Greg Carmichael on July 5, Fifth Third will continue to invest in market expansion, digital capabilities and
“We have to sustain the discipline and focus that has made us as successful as we have been,” Spence said in an interview following the bank’s announcement of the leadership transition.
Under the succession plan, Carmichael will retire as CEO and become executive chairman of the board of directors. He will provide advice to Spence.
The plan has been in the works for years, according to Carmichael, who also spoke to American Banker on Tuesday. Carmichael, who turned 60 in January, said he always planned to retire when he was still in good health and had the energy to pursue other potential business opportunities.
“Most importantly, the bank is ready for this transition,” Carmichael said. “We have a good leader in Tim … and it’s a well-thought-out transition from when I hired him more than six years ago.”
There is no time frame for how long Carmichael will serve as executive chairman or keep his seat as a director at Fifth Third, he said. He currently serves on the board of directors at Encompass Health, a health care services provider in Birmingham, Alabama, and on Tuesday said that he is open both to potential board seats and to business investment opportunities.
Speculation about Spence’s future at Fifth Third mounted in the fall of 2020 when he was
Spence, 43, joined the company in 2015 as chief strategy officer and went on to lead consumer banking, payments and strategies. In that role, he was in charge of Fifth Third’s retail banking, mortgage, auto and specialty lending and payments business lines, in addition to strategic growth areas such as digital, marketing and fintech partnerships, the company said.
Spence was named
As president, he has been in charge of all business lines and regional banking, and has also continued to oversee strategy. The company has been closing branches in legacy markets to pay for both digital upgrades and its expansion into markets such as Georgia and North Carolina.
Fifth Third currently has more than 90 “nextgen” branches, including 55 de novo branches that are mainly located in the Southeast, a company spokesperson said in an email. The bank opened 30 such branches last year, and this year it plans to open 20 to 25 branches, depending on supply-chain issues and labor availability, the spokesperson said.
Some analysts expressed surprise Tuesday about the company’s announcement — not because Spence will take over as chief executive, but because Carmichael will retire in just three months. Given Carmichael’s age, Piper Sandler analyst Scott Siefers thought the CEO might stick around longer.
However, Spence “is very highly regarded” among investors, Siefers said.
“He tells the Fifth Third story very well,” along with Carmichael and Chief Financial Officer Jamie Leonard, Siefers said. “They have all navigated the last several years very well.”
But Spence is taking the reins at a challenging time for the banking industry, Siefers said. The Federal Reserve is expected to aggressively raise interest rates, posing a threat to net interest margins and loan growth while increasing the risk of recession. Meanwhile, labor and technological costs are rising, too.
Spence will also face pressure to maintain Fifth Third’s stock performance, said Peter Winter, an analyst at Wedbush Securities. In the last year, the company’s stock price has gone from trading at a discount to trading at a premium, as its profitability metrics have improved, Winter said.
“I think the biggest thing that has helped them has been their focus on organic growth and bolt-on acquisitions to enhance their product offerings and touchpoints with customers,” Winter said. “So it’s about continuing to be able to take market share and expand in the Southeast and continue to deliver new and different products and offerings to customers.”
When asked what he considers his biggest challenge in becoming CEO, Spence pointed to the example set by Carmichael.
“That one’s easy. I have huge shoes to fill,” Spence said. “I’m honored to follow in his footsteps.”
