Fifth Third Set to Expand Multifamily Lending With Fannie Mae DUS Deal

Fifth Third Bancorp FITB has entered into a definitive agreement to acquire Mechanics Bancorp's subsidiary, Mechanics Bank’s Fannie Mae Delegated Underwriting and Servicing (“DUS") business line. The deal brings over Mechanics’ specialized DUS team and an approximately $1.8 billion unpaid principal balance servicing portfolio. The move is aimed at widening FITB's reach in multifamily housing finance across the United States.

The DUS platform serves as Mechanics Bank’s specialized multifamily division that originates and services loans under Fannie Mae’s program. Under this model, approved lenders can independently underwrite, close, and service multifamily loans while benefiting from direct access to an extensive suite of Fannie Mae-backed products.

The transaction is expected to close in the first quarter of 2026. The closing remains subject to customary conditions and required third-party approvals, including Fannie Mae’s approval of Fifth Third as an authorized DUS lender.

FITB’s Strategic Rationale Behind the DUS Acquisition

The acquisition is expected to enhance the company’s leadership in commercial real estate finance by expanding its multifamily lending capabilities, which represent the largest segment of its commercial real estate portfolio.

Upon closing the deal, Fifth Third will gain direct access to Fannie Mae’s multifamily lending platform and a well-established servicing operation. This is anticipated to strengthen the bank’s ability to provide competitive, permanent financing solutions that support liquidity and stability in the multifamily housing market.

FITB’s Zacks Rank & Price Performance

Over the past six months, shares of FITB have gained 15.4% compared with the industry’s growth of 19.4%.

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

Acquisition Announced by Other Financial Firms

A few days ago, Virtus Investment Partners, Inc. VRTS, entered a definitive agreement to acquire a majority interest in Keystone National Group (Keystone), an investment manager specializing in asset-centric private credit and a pioneer in providing such strategies to the wealth channel.

Under the deal, Virtus will acquire a majority interest in Keystone for consideration of $200 million at closing and up to an additional $170 million of deferred consideration, including earnout payments subject to the achievement of future revenue targets. VRTS plans to fund the transaction using existing balance sheet resources.

Last month, Fulton Financial Corp. FULT agreed to acquire Blue Foundry Bancorp in an all-stock transaction valued at roughly $243 million. Per the agreement, Fulton will pay 0.6500 shares for each share of Blue Foundry. The merger agreement has been approved by the board of directors of both entities.

The deal speeds up FULT’s expansion in the lucrative northern New Jersey market. It is projected to lift its first full-year earnings by more than 5%, boost tangible book value per share right away, and leave regulatory capital ratios unchanged at closing.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research