George A. Schaefer Jr.

Chief executive officer and president, Fifth Third Bancorp

Nationality: American.

Born: May 17, 1945.

Education: West Point Academy, BS, 1963; Xavier University, MBA, 1974.

Family: Son of George A. Schaefer Sr. and Mary (maiden name unknown); children: three.

Career: Fifth Third Bancorp, 1971–1982, various positions; 1982–1984, senior vice president in commercial-lending department; 1989–1991, president and COO; 1991–, CEO and president.

Awards: Bronze Star, U.S. Army; Banker of the Year, American Banker , 1994.

Address: Fifth Third Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263;

■ George A. Schaefer Jr., the chief executive officer at the Cincinnati-based Fifth Third Bancorp, was once described as a "numbers-crunching, penny-pinching workaholic" ( Insitutional Investor , July 2001). Schaefer drifted into the banking business by mere chance, bearing an unrelated military and engineering background. While Fifth Third had already possessed a hard-working, everybody-sells-all-the-time, frugal corporate culture when he took the helm in 1990, Schaefer added his engineer's love of gathering data and measuring everything as well as an aggressive leadership style to the mix; he once compared banking to guerrilla warfare. For many people, under Schaefer's leadership Fifth Third was not an easy place to work; type A people who thrived in meritocracies, on the other hand, were quite at home. Over the span of Schaefer's tenure Fifth Third's assets increased from $8 billion to more than $91 billion. Fifth Third had not even been the largest bank in Cincinnati when he took over, but 15 years later it ranked among the 15 largest bank-holding companies in the United States in terms of assets and among the top 10 in market capitalization.


Schaefer was born in 1946 in the working-class community of West Cincinnati. With five brothers and sisters he developed an extremely competitive personality, which he nurtured by playing high-school football. It was Schaefer's football coach who gave him an application to West Point during his senior year. Schaefer recalled that his coach had said, "Mr. Schaefer, I think you're the only person on this team who can read. Why don't you fill this out and send it in" ( American Banker , March 23, 2001). Because he lacked the money to attend a strictly academic university—rather than because he possessed an overabundant sense of patriotism—Schaefer applied to West Point; he was accepted.

Regardless of his motivation Schaefer came to appreciate the discipline instilled by the academy in its cadets. After graduating in 1967 with a degree in engineering, he attended the U.S. Army's elite Ranger School in Fort Benning, Georgia. Schaefer then spent two years in Germany serving with a nuclear-demolition munitions team. During the height of the Cold War his unit was assigned to destroy roads and bridges using small nuclear bombs in the case of an attack launched by the Soviets—a task that brought perspective years later to the pressures of running a bank.

Schaefer completed his commitment to the Army by going to Vietnam for two years during the war. While supervising a 280-man crew constructing a strategically important highway, he learned how to perform under pressure and gained lessons about leadership that would influence his business career. In a profile in Insitutional Investor , he explained, "If you take good care of your people, whether they're soldiers in Vietnam or bankers selling checking accounts in Chicago, then they'll do a marvelous job for you" (July 2001). The highway construction was dangerous work, with his crew always in jeopardy of being shot at by the enemy as well as mistakenly by fellow Americans. For his service Schaefer was awarded a Bronze Star for valor.


Schaefer had no interest in remaining in the army beyond his West Point commitment; in 1971 he returned home to Cincinnati. He applied for an engineering job at the nearby Zimmer Nuclear Power plant, which was being built by Cincinnati Gas and Electric, but as a result of a delay in the issuing of the plant's license a hiring freeze was imposed. With no other engineering positions available in the area, Schaefer decided to become a management trainee at Fifth Third for a salary of $8,500 a year.

Fifth Third's origins could be traced to the 1858 opening of the Bank of the Ohio Valley in Cincinnati. That institution was purchased in 1871 by Third National Bank, which merged in 1908 with Fifth National Bank, forming the Fifth Third National Bank of Cincinnati. Fifth Third Bancorp was formed as a holding company in 1975. When Schaefer joined Fifth Third it was headed by William S. Rowe, the fourthgeneration Cincinnati banker who over his 42-year tenure infused the bank with a frugal, conservative approach. According to Schaefer, "He wouldn't spend a nickel to see an earthquake" ( American Banker , March 14, 1994). Rowe's successor Clement L. Buenger, who took over in 1979, had a background in the grocery and insurance industries and brought the perspective gained from a sales culture to Fifth Third, with an emphasis on hard work. Both men's strengths would inform Schaefer's approach to business, as the trained engineer turned accidental banker worked his way up through the organization.

Taking the advice of a brother-in-law who worked at the Federal Reserve in Cincinnati, Schaefer at first asked to be assigned to the commercial-loan department. He would later find a better use for his superior mathematical skills in taking over the bank's data-processing operation. In the mid-1970s Fifth Third became involved in the credit-card business, initially relying on Bank One to do the necessary processing work. When Fifth Third decided to do processing in-house, management discovered that the company lacked both the necessary computer power and programming personnel. During the operation's overhaul Schaefer was put in charge of the data-processing unit, Midwest Payments Systems. That business would eventually become a profit center for Fifth Third through the processing of credit-card and ATM transactions for other companies. Schaefer's strong performance in his new role caught the attention of the bank's upper management and directors.


To help advance his career, Schaefer went to night school, earning an MBA from Xavier University. After several years heading Midwest Payments, in 1979 Schaefer returned to the commercial-loan department; three years later he was named the department's senior vice president. In 1982, when he was just 36 years old, Schaefer had his first heart-bypass operation—a routine follow-up operation would be conducted in 1997—but health concerns did little to delay his advancement at Fifth Third. In 1984 Schaefer became the head of commercial lending and executive vice president. The next major step in his career came in 1989 when he was appointed president and chief operating officer. When Buenger retired on January 1, 1991, Schaefer became Fifth Third's new CEO.

Schaefer took over a well-established institution with a strong corporate culture. In the words of American Banker , "His challenge was to fill the big shoes of Clement Buenger, who 10 years ago took over a profitable, penny-pinching, conservative bank and turned it into a very profitable, penny-pinching, conservative bank" (July 19, 1991). At Fifth Third everyone was a salesperson; employees from any number of departments made calls to attract business. Tellers were paid $10 if they convinced a customer to apply for a Fifth Third credit card. Another legacy from Buenger was the bank's early move into supermarket locations, which provided a convenient venue through which to do business with a wider range of customers.

In keeping with Fifth Third's cult of salesmanship, one of Schaefer's first acts as CEO was to lead 20 employees on a door-to-door sales campaign to drum up new business for the bank. The one who knocked on the most doors was awarded a $200 pair of Allan Edmond shoes. Such luxuries, while suitable as sales incentives, were not common at Fifth Third, which was known for its thriftiness. The bank's headquarters made do with 20-year-old carpeting, executives flew coach, business lunches were a rarity, and Midwest Payment relied on two second-hand IBM mainframe computers to conduct business. Schaefer took penny-pinching at the bank to the next level, disposing of the few cars owned by the bank for company use. From that point on even Schaefer drove his own car on local business and was reimbursed for mileage.

Schaefer's obsession with cost controls resulted in strong profits. While banks spent on average about 65 cents for every revenue dollar, Fifth Third spent just 50 cents. For their hard work and incessant selling, Fifth Third employees were rewarded with a generous share of the profits. Schaefer had assumed control of an institution that was conservative on other levels as well: at the senior ranks Fifth Third was an all-male club, and Buenger was known to send female employees home to change if he deemed their attire inappropriate.

Overall, Schaefer inherited a bank that was well run and one of the best performers in the industry. He readily admitted that he had no overarching strategy and that his strength lay in the day-to-day execution of his job. If anything, his vision was to do the same as his predecessor—sell—simply to a greater extent. He proved relentless in riding herd on his employees. One of his first actions was to light a fire under the trust business, which had failed to measure up to his expectations. As an engineer number cruncher, Schaefer eventually took advantage of Fifth Third's management-information system to keep tabs on all of the company's major profit centers, ensuring that all employees were kept abreast of who the "winners" and "losers" were. Schaefer was not known to lose his temper or try to intimidate anyone; he simply let statistics pit executives and their groups against one another. Peer pressure to avoid landing on the bottom of one of Schaefer's well-circulated lists was more than enough motivation for his employees; if they lacked driven, type A personalities, they generally didn't stick around very long.


Schaefer was both ambitious and conservative as he expanded Fifth Third one safe step at a time. In his first two years he completed several small acquisitions, then in 1992 attempted a bolder move, making an unsolicited takeover bid for Star Banc Corporation, Fifth Third's chief competitor in Cincinnati. When the offer was rejected by Star's board, Schaefer backed off; somewhat humbled, he returned to his more cautious approach to expansion. Over the course of 10 years Schaefer oversaw the acquisition of more than 50 small banks, thrifts, and branch purchases—mostly institutions with assets in the $500 million range. But as Fifth Third grew larger, so did its capacity to make sizable deals, and Schaefer did not shy away from the challenge. The bank made a pivotal move in 1999 when it completed the $2.4 billion purchase of the Evansville, Indiana–based CNB Bancshares, which placed Fifth Third on the edge of the coveted Chicago market.

As the 1990s came to a close, Schaefer was managing an enterprise that ranked among America's top 25 banks, boasting more than $38 billion in assets. Its core branch network was located in the three states of Ohio, Kentucky, and Indiana and was supplemented by operations in other states, especially Florida. But with the company's increases in size came complications. To avoid the risk of spreading Fifth Third too thin, Schaefer looked for in-market acquisitions. The dramatic increase in the number of employees threatened to dilute the company's cherished culture; to address that issue, he expanded the bank's educational programs: new training facilities were opened, teams from the benefits department made more visits to employees of acquired operations, and a weekly newsletter was created to keep the much larger workforce informed.

To manage Fifth Third's expanding banking enterprise, Schaefer created what one management consultant described as a "model of supercommunity banking" ( Insitutional Investor , July 2001). In essence he established a management structure that broke acquisitions into smaller pieces, creating confederations of regional affiliates, each with a great deal of local decision-making power. Field officers were charged with serving customers according to their needs, while the home office set performance goals and provided administrative, marketing, and product support. Schaefer tried to put his own people in charge wherever possible.

Employees at new acquisitions were quickly inculcated with Fifth Third's culture, although the assimilation was not always successful. A case in point was Schaefer's attempt to break into the securities industry: In 1998 Fifth Third acquired the Columbus-based Ohio Company, a regional brokerage firm. According to an American Banker article, "a significant number of brokers reportedly left out of dissatisfaction with the buyer's operating style, and some took a lot of client assets with them" (March 23, 2001). This case was an exception, however, over Schaefer's first 10 years at the helm of Fifth Third.


Schaefer displayed a gambling side to his personality in November 2000 when—in the midst of an economic downturn—he agreed to pay $5.5 billion for Old Kent Financial Corporation of Grand Rapids, Michigan. The deal was more than twice the size of the CNB acquisition and was a key addition because it provided Fifth Third with direct entry into the lucrative Chicago market as well as other parts of Illinois and Michigan. The addition of Old Kent brought the value of Fifth Third's assets to $69 billion, and with $44 billion in deposits and one thousand banking locations Fifth Third was now one of the five largest banks in the five-state area of Indiana, Illinois, Kentucky, Michigan, and Ohio.

The acquisition did not come without problems, however. Schaefer announced that a large number of Old Kent's seven thousand employees would be laid off, which made the task of persuading the remaining employees to buy into Fifth Third's culture, which was not geared toward people adverse to meritocracy, a difficult one. As he had done with previous acquisitions, Schaefer reorganized Old Kent, forming three affiliate banks, two of which (including one in the all-important Chicago market) would be headed by trustworthy Fifth Third executives. Schaefer hoped to break up Old Kent's culture, allowing him to more easily convert employees to the Fifth Third way of conducting business.


After Old Kent, Schaefer continued to look for opportunities to spur Fifth Third's growth by way of acquisitions; yet he reverted to a more cautious approach, looking for deals which would merely provide toeholds in new markets. From there the bank could employ a technique that it had used successfully in the past: expanding outward and building market share. New markets that Schaefer considered opportunistic existed in the St. Louis, Pittsburgh, and Milwaukee areas; he was also interested in the cities of Charleston, West Virginia, and Knoxville, Tennessee. In 2002 Fifth Third agreed to acquire the Tennessee-based Franklin Financial Corporation, a bank with $954 million in assets. However, the $240 million deal was held up because of concerns on behalf of the Federal Reserve Bank of Cleveland and the Ohio Department of Commerce's Division of Financial Institutions in light of the bank's September 2002 admission to the Securities and Exchange Commission that it was unable to account for $54 million worth of internal investment funds. The matter hung over Fifth Third for the next 18 months, delaying the Franklin Financial acquisition and tarnishing to a certain extent the reputations of both Schaefer and Fifth Third.

When regulatory concerns were finally resolved, Schaefer was able to continue his quest to spur Fifth Third's growth. He maintained that he planned to retire before he turned 65, a decision he said was unrelated to his previous heart problems; yet as long as he was in charge at Fifth Third, it remained likely that he would continue to expand the bank's operations, by and large opting for the conservative route but occasionally exhibiting a willingness to take chances. He told Forbes , "This business is like playing poker. You have to ante up or get out of the game" (January 8, 2001).

See also entry on Fifth Third Bancorp in International Directory of Company Histories .

sources for further information

Bennett, Robert A., "Happy Warrior," U.S. Banker , January 2002, p. 30.

Engen, John R., "Boss George," Insitutional Investor , July 2001, p. 40.

Layne, Richard, "Cincinnati Bank's CEO Has Tough Act to Follow," American Banker , July 19, 1991, p. 1.

Milligan, Jack, "Second-Act Rewrite for Fifth Third's Chief Exec," American Banker , March 23, 2001, p. 1.

Slater, Robert Bruce, "Banking's Cincinnati Kid," Banker's Monthly , January 1993, p. 14.

Wherry, Rob, "Fifth Third Bancorp: The Supermarket Sell," Forbes , January 8, 2001, p. 104.

Zack, Jeffrey, "Fifth Third First Rule: Stick with the Basics," American Banker , March 14, 1994, p. 1A.

—Ed Dinger

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