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Fifth Third and First Charter, Revisited

Adam R.'s picture

Posted February 18, 2009

A little less than one year has passed since the Federal Reserve approved Fifth Third's acquisition of First Charter.

It is safe to say that things haven't gone as expected.  Back in April 2008, Fifth Third agreed to pay $1.1 billion for the North Carolina bank.  It was a price that some said was a bit high, but nonetheless, it was an opportunity to get into some enviable markets in North Carolina - Charlotte, Asheville, and Raleigh-Durham.

Now, Fifth Third is trading at $1.47.  Its market capitalization is only $849 million.  That is less than the acquisition price of First Charter.  The bank still has assets of $126 billion, but they are being severely discounted in value.  It is pretty hard to say that an acquisition has been accretive under these circumstances.

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