Fifth Third to buy solar energy lender POS lender

Fifth Third Bancorp in Cincinnati is making a move in point-of-sale lending with an agreement to buy Dividend Finance in San Francisco. 

The $211 billion-asset Fifth Third said in a press release Wednesday that it expects to acquire the home-improvement fintech in the second quarter. The price was not disclosed. 

Dividend Finance, founded in 2013 and majority owned by LL Funds, focuses on sustainable energy solutions. About 80% of its originations are tied to solar projects; the rest is associated with home improvement projects. 

The point-of-sale lender, which operates in 44 states, had $1 billion of originations last year. Fifth Third said it expects $1.7 billion of originations this year, including $1 billion in the second half of 2022. 

Fifth Third said the loans should have an average 8% yield. 

Fifth Third said it expects to incur $75 million to $80 million of expenses, including $50 million of operating costs, this year tied to Dividend Finance. The company will likely bring in $55 million to $60 million of revenue in 2022 from the acquisition. 

The deal comes months after Fifth Third bought Provide, a fintech that lends to health care professionals.

The deal will also help Fifth Third achieve its targeted $8 billion sustainable finance goal. 

Several banks have been buying point-of-sale and home improvement lenders. Truist has an agreement to buy POS lender Service Finance for $2 billion, and Goldman Sachs is buying GreenSky. Regions Financial recently acquired EnerBank USA, a home improvement lender.