Fifth Third touts growth in lending from recently acquired fintech

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Fifth Third Bancorp says early results from its recent acquisition of a healthcare-focused fintech lender are better than expected.

Provide, which provides funding for dental, medical, veterinary and optometric practices, made $ 75 million in new loans last month, Fifth Third said Wednesday. As a result, the Bank of Cincinnati increased its estimate of Provide loan production next year from $ 1 billion to $ 1.2 billion.

“Their monthly volumes in August were above expectations,” fifth third CFO Jamie Leonard told the Barclays Financial Services conference, which was held virtually. “They are way ahead of the annual rate of $ 700 million for this year.”

Fifth Third closed the acquisition of Provide on August 2. The $ 205 billion asset bank said on Wednesday it plans to add sales staff to support the unit’s stronger than expected growth.

Bloomberg

A number of banks have recently embarked on health care financing. Launch of KeyCorp a digital bank for healthcare professionals earlier this year, while Synchrony Financial bought a healthcare focused consumer lender.

Fifth Third first invested in Provide in 2018 and started funding loans through the company’s platform last year. $ 205 billion asset bank completed its acquisition of Provide August 2.

Provide specializes in loans to healthcare professionals looking to establish or expand their practice. Its borrowers are often relatively young and have significant student debt.

One of the main attractions of the deal for Fifth Third is the ability to market its other products, including mortgages and wealth management offerings, to Provide existing borrowers.

Fifth Third said on Wednesday that it plans to add more sales staff, including a veterinary practice leader, to support Provide’s stronger than expected growth.

Fifth Third also said its outlook for the third quarter improved slightly from its last earnings call in July. While commercial line utilization rates were mostly flat from the second quarter, loan production and total liabilities are increasing, especially in the bank’s new south-eastern markets, executives said.

The outlook for commission income has also improved, driven by growth in commissions from the capital markets operations of Fifth Third and its wealth and asset management business, as well as higher mortgage commission income than planned.

Fifth third announcement in May that this would give customers more time to replenish their accounts before they are hit by overload charges. The fifth third president, Tim Spence, on Wednesday said the bank had made a strategic move over the past five years to reduce its reliance on consumer filing fees.

“The thing that I’m most satisfied with strategically is that we’re getting the growth in value-added services,” he said. “We were pretty deliberate in weaning ourselves off of consumer filing fees because we didn’t think they were competitively sustainable.”


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