Comerica in the M&A Spotlight: What's Driving Acquisition Interests?

On Comerica Incorporated’s CMA second-quarter 2025 earnings call, two experienced sell-side research analysts — David George and Mike Mayo — questioned the company regarding its historical underperformance and whether Comerica would sell itself. In response to this, CEO Curtis Farmer hinted at the bank’s openness to mergers and acquisitions (M&A).

Adding momentum to the buyout chatter, on July 28, 2025, New York-based HoldCo Asset Management disclosed a stake worth approximately $155 million in Comerica. In a letter to the bank’s board, HoldCo called for the immediate launch of a strategic review, including the solicitation of acquisition offers.

The activist specifically named PNC Financial Services Group PNC, Fifth Third Bancorp FITB, and Huntington Bancshares HBAN as potential suitors, arguing that these regional players may extract significant cost synergies and expand their geographic footprints through a deal.

What Makes Comerica a Prospective Buyout Target

Share Price Underperformance: Comerica’s stock price substantially underperformed the broader industry over the last seven years. CMA shares have declined 4.5% against the industry’s 38.6% growth. 

Price Performance

Also, the CMA stock has lagged the KBW Nasdaq Bank (BKX) Index’s growth of nearly 25% over the same time frame.

Strategic Missteps During the 2023 Regional Banking Crisis: While peers were aggressively defending their deposit bases in 2023, Comerica allowed low-cost deposits to roll off, thereby increasing its dependence on high-cost wholesale funding. Its interest rate hedge strategy involving large swap positions backfired, leading to realized losses and limiting the benefit from higher rates on the floating loan portfolio.

Declining Loan & Deposit Trend: Comerica loans and deposits have been witnessing a declining trend over the last few years. Over the last four years ending 2024, total loans and deposits have seen a CAGR of nearly 1%, with the trend continuing in the first half of 2025. Also, the company’s deposit has not recovered from the 2023 regional bank crisis. Its total deposits declined 9.1% in the second quarter of 2025 from the second quarter of 2023. 

Rising Efficiency Ratio: CMA’s total revenues have declined over the past six years, while expenses have increased. This has led to an increase in the efficiency ratio.

Though Comerica’s revenues increased and expenses declined in the first half of 2025, between 2018 and 2024, total revenues witnessed a negative CAGR of 0.4%, while non-interest expenses saw a positive CAGR of 4.2%. Its efficiency ratio has increased from 54% in 2018 to 71% in 2024. The rise in the efficiency ratio indicates deteriorating profitability.

Revenue & Expense Trend

Here’s What CMA Can Offer to a Prospective Buyer

Geographic Reach in High-Growth Markets: Comerica’s geographic footprint delivers immediate scale in fast-growing Sunbelt and Midwestern markets, eliminating the need for a lengthy branch build-out. 

Business Banking Strength: CMA’s well-established commercial lending franchise, with deep relationships in middle-market segments and specialties like energy, technology, and life sciences, offers opportunities for cross-selling high-margin services such as treasury management and foreign exchange. 

Mid-Tier Size: With a market capitalization of $8.5 billion, Comerica offers meaningful scale without the complexities of a megamerger. Its size makes it a realistic acquisition target for larger regional peers, including PNC Financial and Fifth Third or Huntington, while minimizing execution and regulatory risks.

Final Thoughts in CMA Buyout Chatter

Comerica’s prolonged underperformance, operational missteps, and weakening fundamentals have created a valuation gap that activist investors and potential acquirers will be eager to exploit. With a desirable footprint in growth markets, specialized lending expertise, and a manageable acquisition size, the company offers a rare combination of strategic value and cost synergy potential.

Whether through a premium buyout by a larger regional bank or a disciplined internal turnaround, the coming quarters are likely to be pivotal in determining if Comerica remains an independent player or becomes one of the next headline deals in U.S. regional bank consolidation.

Currently, CMA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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