- Key Insight: The deal marks the largest bank acquisition announcement of 2025, and Fifth Third's first since 2019.
- What's at Stake: Comerica had been facing calls from an activist investor to sell itself for months, though CEO Curt Farmer said that the external pressure wasn't a factor
- Supporting Data: When completed, the deal will create the ninth-largest bank in the country, with $288 billion of assets.
This story has been updated with additional financial details and commentary from management and analysts.
Fifth Third Bancorp said it has inked a deal to acquire Comerica in a $10.9 billion transaction that will create the ninth-largest bank in the country.
The Cincinnati-based company announced Monday that it plans to buy its Dallas-based peer in an all-stock purchase expected to close in the first quarter of 2026, creating a company with a combined $288 billion of assets.
Fifth Third Chairman and CEO Tim Spence said in an interview on Monday that the Comerica purchase will not only complement his bank's strategic initiatives, but will also become its top priority going forward.
"This is officially the biggest thing we've ever done as a company, by any measure," Spence said. "So it is number one, two and three for us, in terms of the focus."
Fifth Third's stock was relatively flat by Monday afternoon, after some up-and-down movement in the morning. Comerica's stock price, though, was up more than 14%, as investors rewarded the company for selling itself after it had faced external pressure to hatch a deal for months.
Comerica CEO Curt Farmer told American Banker in a Monday interview that the bank had been accelerating its evaluations around a sale over the last six months, adding that the deal proposal with Fifth Third "unfolded fairly quickly."
"We had been thinking about — really coming out of the regional bank crisis in the spring of 2023 — more and more about the need for scale, for the need for a bigger, granular retail deposit base," Farmer said. "It's something our board had been weighing for a while."
The acquisition comes amid a flurry of bank deals, as the regulatory and economic environment has greased the wheels for financial institutions to buy each other after several years of relatively tepid acquisition activity. Dealmaking has especially taken off in the fast-growing areas like the Southeast, Texas, Arizona and California, where the fight for deposits has been heating up for years.
What's in the combination
Spence said on the call with analysts that to reach the bank's optimistic financial projects, analysts, investors had to believe that Fifth Third could cut the expenses it had planned, "unlock the middle market business," and build out its retail network.
Steven Alexopoulos, an analyst at TD Cowen, said in a note that, "in terms of the financial impact, to us this transaction is a home run," adding that it's "one of the strongest we've seen in years."
"The key question for the upcoming call is whether Fifth Third is tying an anchor to its long-term growth rate or whether it can, after many years, be the company to unlock the value of the Comerica franchise," Alexopoulos wrote, noting that "our bias is toward the latter."
The banks said on Monday that the deal is expected to take advantage of Comerica's commercial portfolios, while expanding and using Fifth Third's retail footprint. Both CEOs noted the positive overlap in the companies' portfolios.
"What you get here is a bank that's going to be really beautifully balanced," Spence said in an interview. "We wanted to be more granular in commercial banking, and this combination has a huge impact on that. Comerica wanted to have a higher mix of retail funding, and this combination is going to have a direct and immediate impact on that."
Both banks were hit by the regional banking crisis in the spring of 2023, when several bank failures drove retail deposits to the megabanks. Since then, Fifth Third has put its branch plans in overdrive as it has sought to pick up its consumer presence across the Southeast.
When completed, Fifth Third expects half of its branches to be in the higher-growth Southeast, including Texas and Arizona, announcing Monday it also plans to add at least 150 new branches in Texas over the next four years. Then, it will work on growing its location footprint in California.
Scott Siefers, an analyst at Piper Sandler, wrote in a note that the deal marks a "significant acceleration" of Fifth Third's growth in Texas, calling it "basically a game-changer."
Fifth Third projects that it can cut Comerica's planned noninterest expenses by more than one-third, or about $850 million, with the deal. Fifth Third said the deal won't dilute tangible book value, and projects a 9% earnings per share accretion benefit to 2027. The company also estimates one-time charges of $950 million.
The buyer is paying a 20% premium for Comerica, based on the bank's 10-day volume weighted average price. Pro forma ownership of the company will be 73% Fifth Third and 27% Comerica.
But the deal will also come with $1.7 billion balance sheet restructuring for Comerica's unrealized losses on its securities portfolio, estimated to be accretive to income over 8.5 years.
Spence told American Banker that he thinks the overlap between the companies will come with limited redundancies. Noting certain areas that are especially complementary, Spence said Fifth Third will pick up Comerica's auto dealer floor plan lending business, which he thinks will add to the buyer's existing indirect auto lending business for consumers.
He added that Comerica brings a life sciences and tech loan portfolio to the table, which Spence said his bank has "coveted," and sees as fuel for Fifth Third's embedded payments business.
Fifth Third has had a major focus on its payments platform in recent years, an area where Comerica also operates.
In August, Fifth Third bought a cash management software service called DTS Connex, to expand its commercial payments capabilities in cash logistics, infrastructure and risk management. A few weeks later, the Cincinnati bank said it had won a contract from the Treasury Department's Bureau of Fiscal Service as the next financial agent for the U.S. government's Direct Express prepaid debit card program.
Comerica had been the previous financial agent of the program, which disburses federal benefits to about 3.4 million Americans, until it faced allegations that it shared sensitive consumer data with vendors and failed to reimburse government beneficiaries who claimed their benefits had been stolen due to fraud.
Spence said Monday that, pending regulatory approval, the merger will eliminate conversion risks as Fifth Third integrates Comerica.
External pressure
Comerica saw the deal as an opportunity to bulk up on retail deposits and access lower-cost funding, Farmer said in an interview.
The proposed acquisition comes 10 weeks after activist investor HoldCo Asset Management, which owns about 1.8% of Comerica's common shares, issued a report calling for Comerica to sell itself, arguing that the Dallas-based company made poor financial decisions in recent years and keeps failing to address its lagging stock price performance.
Farmer, in a Monday morning interview with American Banker, declined to comment on any specific activist investors, but said that external pressure "did not factor into our decisioning here."
"We've always been focused on being an independent institution, and have really liked our model, our commercial orientation, or middle market franchise, the markets that we operate in," Farmer said in an interview. "But having said all that, we've always known that you have to earn your independence every day."
Farmer will stay on at Fifth Third as vice chair for an undisclosed period of time to assist with the transition, but he told American Banker he'll remain for as long as it's valuable for the franchise. Spence said that "when the time is right," Farmer will also become part of the bank's board of directors.
The news that Comerica would sell was welcomed by Mike Mayo, an analyst at Wells Fargo Securities who has been openly critical of Comerica in the past. In 2016, he pushed for the bank to explore a sale.
"Better late than never," Mayo told American Banker. He disagreed with Farmer's stance on external pressure, and whether it was a factor in the decision to sell.
"I think it has to play some part," Mayo said. "I have to say, to the person, every Comerica shareholder I spoke with thought [the bank] should sell … because of the lagging efficiency, returns and performance."
HoldCo said in a statement sent to American Banker that it was glad Comerica had decided to sell, "unlike so many regional bank boards for whom shareholder unfriendliness is a lifestyle choice."
"This decision is worthy of recognition and respect," the firm said in a statement.
Still, "the price seems light to us," the asset manager said, adding that it will await information on Comerica's timeline and process for finding a buyer. As is customary of bank M&A deals, those details and more will be disclosed in an upcoming regulatory filing.
Farmer declined to comment on the timeline for conversations around the deal, but said that negotiations hadn't begun as of Sept. 8, when it was announced that Fifth Third would take on the Direct Express relationship.
