Fifth Third announces $10.9B acquisition of Comerica, forming ninth-largest U.S. bank

In a landmark move for the U.S. banking sector, Fifth Third has announced its plan to acquire Comerica in an all-stock deal valued at $10.9 billion. Once finalized, the merger will create the ninth-largest lender in the United States, with a combined $288 billion in total assets. The deal, regarded as the largest U.S. banking transaction of the year, represents a significant step forward in the ongoing consolidation among regional banks.

A Favorable Regulatory Climate

The transaction comes amid a regulatory environment that has become increasingly conducive to mergers and acquisitions under President Trump’s administration. Comerica CEO Curtis Farmer highlighted the administration's pro-business stance as a factor influencing the deal's timing. "The shifting regulatory environment has gotten more conducive to M&A, and we saw windows starting to open where there might be a chance for us to consider partnering with another institution", Farmer said in an interview with Reuters.

Farmer also assured that both parties feel confident about gaining regulatory approval for the deal. "We would not be moving forward if we did not feel like we had regulatory support", he added.

Strategic Growth for Regional Lenders

With $224 billion in deposits and $174 billion in loans, the combined bank will expand Fifth Third's reach across 17 of the 20 fastest-growing markets in the U.S., including Texas, California, and parts of the Southeast. Fifth Third CEO Tim Spence emphasized the strategic importance of the acquisition. "This combination marks a pivotal moment for Fifth Third as we accelerate our strategy to build density in high-growth markets and deepen our commercial capabilities", he said.

Comerica, traditionally focused on organic growth, saw the merger as a logical step to keep pace with competitors that have grown through acquisitions. Farmer pointed to challenges faced during recent industry disruptions. "What changed in the last two years was living through the situation with the regional bank crisis as a $78 billion bank and not having a large retail presence - that was hard for us during the 2023 bank crisis", he explained.

M&A Gains Momentum in the Banking Sector

The banking sector has seen rising interest in mergers and acquisitions, particularly among regional lenders seeking to diversify revenues and strengthen their financial positions. Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors, noted this trend: "I expect we will see more combinations amongst regional banks because we are in an environment where bank M&A of equals or near equals makes a lot of sense."

The deal is also expected to accelerate Fifth Third’s consumer banking and wealth management services. "This is a crown jewel middle market banking franchise", a Fifth Third executive remarked, expressing optimism about the bank's enhanced commercial capabilities.

Financial Impact and Deal Details

Under the terms of the agreement, Comerica shareholders will receive 1.8663 shares of Fifth Third stock for each Comerica share, valuing the deal at $82.88 per share based on Fifth Third's stock price on October 3. Fifth Third shareholders will own approximately 73% of the combined company once the deal is completed.

The transaction, which is expected to close by the end of the first quarter of 2026, will see Comerica CEO Curtis Farmer assume the role of vice chair at the combined company. Additionally, three members of Comerica’s board will join Fifth Third’s board, while Peter Sefzik, Comerica’s chief banking officer, will lead Fifth Third's wealth and asset management business.

Market Reaction and Broader Implications

Investors responded positively to the announcement, with Comerica shares jumping nearly 14% and Fifth Third shares experiencing a modest decline of about 1.4%. The regional bank index rose over 1% following the news, reflecting optimism about further consolidation in the sector.

Industry analysts see the deal as part of a broader wave of mergers among regional banks, fueled by record-high bank stock prices and a favorable regulatory environment. "Record bank stock prices have also allowed for a greater currency to do deals", said Stephen Biggar, an analyst at Argus Research.

Looking ahead, the combined bank is expected to strengthen its presence in high-growth regions, with plans for more than half of its branches to be located in these areas by 2030. As Fifth Third and Comerica move forward with the merger, the transaction could pave the way for additional consolidation among banks with assets of up to $100 billion, according to investment banking sources.

Goldman Sachs served as the exclusive financial advisor to Fifth Third, while Comerica was advised by JPMorgan Securities and Keefe, Bruyette & Woods, with JPMorgan acting as lead advisor.

With this merger, Fifth Third is set to solidify its position as a major player in the U.S. banking industry, creating new opportunities for growth and expansion in key markets.

Read the source