Fifth Third, Comerica enter $10.9 billion deal to create ninth-largest US bank

• Combined bank to have $288 billion in assets
• Comerica shares surge, Fifth Third falls marginally
• Deal expected to boost retail franchise
• Analysts expect a flurry of regional bank deals

Oct 6 (Reuters) – Fifth Third (FITB.O), opens new tab on Monday agreed to buy regional lender Comerica (CMA.N), opens new tab in an all-stock deal valued at $10.9 billion, creating the ninth-largest U.S. lender with a robust presence in the Midwest.

Regional lenders are looking to diversify revenue streams, strengthen balance sheets and enter faster-growing markets as they recover from an industry-wide crisis in 2023 that shook investor confidence and exposed the risks of bank runs and troubles in commercial real estate.

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Analysts have said consolidation is crucial for smaller lenders to compete with the nation’s largest banks, with several banks looking to take advantage of a potentially lighter regulatory environment under the Trump administration.

Comerica shareholders will receive 1.8663 Fifth Third shares for each Comerica share, valuing the deal at $82.88 per share based on Fifth Third’s closing price on October 3.

“Following the acquisition, Fifth Third will rank among the top five banks in every major Midwest MSA (Metropolitan Statistical Area),” TD Cowen analysts said.

The deal will create a bank with $224 billion in deposits and $174 billion in loans. Shares in Comerica were up 15% in morning trading, while Fifth Third was last down 0.7%.

“Record bank stock prices have also allowed for a greater currency to do deals,” said Stephen Biggar, analyst at Argus Research.

The S&P 500 Banks Index (.SPXBK), opens new tab has surged nearly 21% this year, outpacing the benchmark S&P 500’s (.SPX), opens new tab roughly 14% rise, through previous close.

“Today’s announcement will likely encourage more boardroom discussions about possible tie-ups, both large and small,” Biggar said.

The deal comes months after activist investor HoldCo Asset Management revealed it had built a stake in Comerica and urged the lender to pursue a sale.Three-year share performance of Fifth Third and Comerica

CROWN JEWEL FRANCHISE

Mergers and acquisitions have become crucial for regional lenders looking for a competitive edge in a highly saturated U.S. banking market.

“This is a crown jewel middle market banking franchise,” a Fifth Third executive said on a conference call, adding the bank is optimistic about its ability to further build the retail network.

The deal, which would create a lender with $288 billion in combined assets, expands Fifth Third’s reach to 17 of the 20 fastest-growing U.S. markets, including parts of the Southeast, Texas and California.

By 2030, more than half of its branches are expected to be located in these regions, the bank said.

“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,” Fifth Third CEO Tim Spence said.

Many lenders are looking to build more diversified franchises with steadier revenue from businesses such as wealth management, payments and treasury services, as interest income gets squeezed by shifting Federal Reserve policy.

“This deal will accelerate FITB’s expansion into high growth markets, and we believe FITB’s consumer banking strength has the potential to improve growth in legacy CMA,” Baird analysts said in a note.

Comerica CEO Curt Farmer will assume the role of vice chair in the combined company, while Peter Sefzik, its chief banking officer, will lead Fifth Third’s wealth and asset management business.

The companies expect to have two $1 billion recurring and high return fee businesses – Commercial Payments and Wealth and Asset Management – following the deal.

The deal is expected to close by the end of the first quarter of 2026, after which three board members of Comerica will join Fifth Third’s board.

Fifth Third shareholders will own about 73% of the combined company.

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

Reporting by Manya Saini in Bengaluru; Additional reporting by Arasu Kannagi Basil and Tatiana Bautzer in New York;
Editing by Arun Koyyur

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Manya reports on prominent publicly listed U.S. financial firms, including Wall Street’s biggest banks, card companies, asset managers, and fintechs. She also covers late-stage venture capital funding, initial public offerings on U.S. exchanges, and regulatory developments in the cryptocurrency industry. Her work appears in the finance, markets, business, and future of money sections of the Reuters website.
A passionate reader, she loves books across genres, from classics to contemporary fiction. She holds an undergraduate degree in Political Science from the University of Delhi and a master’s in journalism from the Symbiosis Institute of Media and Communication.