Fifth Third's $11 Billion Acquisition of Comerica
Last month, Fifth Third Bancorp, based in Cincinnati, announced a $10.9 billion all-stock acquisition of Comerica, a Dallas-based regional bank. This move significantly alters the regional banking landscape and continues the recent surge in bank mergers and acquisitions under the Trump administration, which has eased regulations and opened doors for such deals.
Details and Impact of the Deal
The merger will create the ninth-largest bank in the United States, with $288 billion in assets. It positions Fifth Third as the leader in retail deposits in Michigan and supports its expansion into rapidly growing markets like Texas.
Loan Portfolio and Business Focus
- Post-acquisition, more than two-thirds of the combined bank’s loan portfolio will consist of commercial real estate and commercial and industrial loans.
- The bank will also maintain strong fee-based businesses, including commercial payments and asset and wealth management.
Changes in Government Contract
Previously, Comerica managed the U.S. Department of Treasury’s Direct Express program, distributing federal benefits via prepaid cards. This contract generated about $3 billion in non-interest-bearing deposits, a valuable and low-cost funding source for the bank’s loan and securities activities. However, this contract was lost to Fifth Third, which was awarded the program by the Treasury Department.
"Once the acquisition closes, the pro forma bank will have over two-thirds of its loan book in commercial real estate and commercial and industrial loans."
"The Treasury Department then awarded the contract to Fifth Third."
The transition strengthens Fifth Third’s funding base and broadens its market presence.
Author’s Summary
This acquisition transforms Fifth Third into one of the largest U.S. regional banks, expanding its presence in key markets and enhancing its commercial lending and fee-based services.