Fifth Third to Buy Comerica: A Bold Bet on Scale & Diversification

In one of the most consequential banking moves of 2025, Fifth Third Bancorp (FITB) entered a definitive merger agreement to acquire Comerica Incorporated (CMA) in an all-stock transaction valued at $10.9 billion. The transaction is projected to close at the end of the first quarter of 2026.

Following the announcement yesterday, shares of Comerica jumped nearly 14%, while Fifth Third’s stock slipped 1% after an initial jump.

Tim Spence, chairman, CEO and president of Fifth Third Bank, stated, “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.”

“Comerica’s strong middle market franchise and complementary footprint make this a natural fit. Together, we are creating a stronger, more diversified bank that is well-positioned to deliver value for our shareholders, customers, and communities – starting today, and over the long term,” Spence added.

FITB-CMA Merger Deal to Expand Reach & Scale

This transaction will bring together two banking franchises to create the ninth-largest U.S. bank with nearly $288 billion in assets, $224 billion in deposits and $174 billion in loans.

The impending acquisition serves as a strategic acceleration of Fifth Third’s long-term growth plan, enhancing scale, profitability and geographic reach. By integrating Fifth Third’s retail and digital banking platforms with Comerica’s strong middle-market expertise and attractive regional footprint, the merger enhances FITB’s presence across high-growth markets.

The combined entity will operate in 17 of the 20 fastest-growing markets in the country, including key regions in the Southeast, Texas and California, while reinforcing its leadership in the Midwest.

Beyond scale, the acquisition will give FITB a more diversified business model. Comerica’s strength in commercial banking, specialty verticals and wealth management complements Fifth Third’s broader retail and payments platform. The combined loan book will have a more balanced composition, reducing commercial loan concentration from 44% to 36%. That diversification can prove critical in volatile credit cycles, helping stabilize earnings even if regional economies weaken.

Strategic & Financial Synergies From FITB-CMA Merger Deal

Under the terms of the agreement, Comerica’s shareholders will receive 1.8663 Fifth Third shares for each CMA share, representing $82.88 per share as of FITB’s closing stock price on Oct. 3, 2025, and a 20% premium to Comerica’s 10-day volume-weighted average stock price. Upon closing, Fifth Third shareholders will own nearly 73% of the combined company and Comerica shareholders will own approximately 27%.

FITB projects $850 million in annual pre-tax cost synergies, equal to roughly 35% of Comerica’s non-interest expense base. The company also anticipates an internal rate of return of 22%.

Additionally, Fifth Third expects no tangible book value dilution and immediate cash-on-cash returns to shareholders. Financially, the deal is projected to boost earnings per share by 9% by 2027, while driving the combined efficiency ratio into the low-to-mid-50% range, roughly 200 basis points better than the current performance levels.

Final Thoughts on CMA-FITB Deal

Comerica’s prolonged underperformance, operational missteps, and weakening fundamentals left it vulnerable to consolidation. However, its attractive footprint in high-growth markets, niche commercial expertise, and manageable acquisition size make it a compelling fit. In fact, in July 2025, the company faced pressure from HoldCo Asset Management, an activist investor, calling for immediate strategic review of the business and solicitation of acquisition offers.

Fifth Third’s decision to acquire Comerica represents a strategic opportunity, as well as a calculated risk, a chance to expand scale, strengthen diversification and improve efficiency at a pivotal time for regional banks. If executed with precision, this merger may transform the company into a more resilient, nationally competitive bank capable of thriving in the evolving scenario of the U.S. banking landscape.

In the past year, CMA shares have gained 40.3%, while FITB has risen 5.4%. In comparison, the industry’s growth was 16.2%.

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

Similar Steps by Other Finance Firms

Earlier this month, Rocket Companies, Inc. (RKT) completed the acquisition of Mr. Cooper Group Inc. The combination unites Mr. Cooper’s servicing operations with Rocket’s scale in mortgage origination and its growing real estate and technology platform. Together, the companies will create a comprehensive homeownership ecosystem spanning mortgage origination, servicing, real estate search, title, and closing. As part of the transaction, Mr. Cooper and its servicing operations will transition under the Rocket brand.

The acquisition enhances RKT’s data capabilities, adding nearly 7 million new clients and 150 million annual customer interactions. This expanded dataset will improve automation, personalization and overall operational efficiency.

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

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