Fifth Third paying nearly $11 billion for Comerica as wave of bank mergers builds

By Steve Gelsi

Fifth Third says the combined company will operate in some of the fastest-growing areas of the country, such as Texas

Fifth Third Bancorp plans to increase its presence in Texas and other fast-growing areas by buying Comerica.

Fifth Third Bancorp on Monday announced plans to buy Comerica Inc. for $10.9 billion in stock, in what would be the biggest regional-bank merger in years, as financial institutions look to bulk up to grow their businesses.

The prospect for more bank tie-ups has been a driver of stock-price gains in the sector in recent weeks, amid a lighter regulatory touch by the Trump administration on dealmaking and following past underperformance by the sector due partly to uncertainty about interest-rate cuts.

Fifth Third's (FITB) deal to buy Texas-based Comerica (CMA) - which comes less than a month after PNC Financial Services Group Inc.'s (PNC) deal to acquire Colorado-based FirstBank for $4.1 billion - is evidence that a wave of bank mergers is growing.

Read: Regional-bank stocks are hot, and this PNC purchase suggests the rally can continue

Fifth Third Chief Executive Tim Spence said Comerica stands out as a "crown jewel middle-market banking franchise" that has sparked merger talk for years, but whose business has been "constrained" due to a need for more funding for growth.

The deal also comes as financial firms face pressure to scale up in order to diversify their businesses and compete with the largest U.S. banks, such as JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) Cryptocurrencies and financial-technology companies offering banking services present additional challenges.

Comerica's stock was rallying by 14.4% to $80.70 in midday trading. If the gains hold, it will be the stock's highest closing price since 2022.

Fifth Third's stock fell 1% to $43.94.

Fifth Third said it would pay 1.8663 shares of its stock for each share of Comerica in a deal that values Comerica's stock at $82.88 a share, a 17.5% premium to the stock's closing price on Friday.

The deal comes after activist shareholder HoldCo Asset Management in July took a 1.8% ownership stake in Comerica, in a move that boosted interest in its stock.

Vik Ghei, co-founder of HoldCo Asset Management, said the firm will study the deal to determine whether Comerica's sales process was "real and fulsome" while also praising the transaction.

"We would be remiss not to acknowledge how encouraging it is to see a board listen to shareholders the way that Comerica listened to us," Ghei said in an email to MarketWatch.

Saying the deal amounts to a "financial home run" for Fifth Third, TD Cowen analyst Steven Alexopoulos reiterated his buy rating at a $53-a-share price target.

"This is one of the most financially attractive bank transactions that we've seen in decades," Alexopoulos said. "While this sets up Fifth Third as a financial performance leader, the other key question is what the Comerica acquisition will do to Fifth Third's long-term growth potential."

'This is one of the most financially attractive bank transactions that we've seen in decades.' TD Cowen banking analyst Steven Alexopoulos

Meanwhile, Truist analyst Brian Foran reiterated a buy rating and share-price target of $52 for Fifth Third, and said the deal raises questions over whether the two banks will achieve targeted cost savings as well as "management capacity to integrate the deal."

The deal by Fifth Third currently ranks as the largest purchase of a U.S. bank since BMO Financial Group's (BMO) $16.3 billion acquisition of Bank of the West, which was announced in December 2021 and closed in February 2023.

Cincinnati-based Fifth Third said the deal will add Dallas-based Comerica's "strong middle-market banking franchise and attractive footprint" to its roster, with the combined businesses operating in 17 of the 20 "fastest-growing markets in the country." Those areas include Texas, California and the Southeast.

Along with this geographical footprint, Fifth Third will also have "two $1 billion recurring and high-return fee businesses" in the form of its commercial-payments and wealth- and asset-management units.

Fifth Third shareholders will own about 73% of the combined company, while Comerica shareholders have a 27% stake.

With Comerica's roughly $77.7 billion in assets combined with Fifth Third's $209.3 billion, Fifth Third will move to No. 11 on the list of the largest U.S. banks, up from No. 20, based on the latest Federal Reserve quarterly rankings. That would put it ahead of BMO's $253.7 billion in assets and behind the $356.4 billion held by TD Bank (TD).

Comerica CEO Curt Farmer said the bank had been in talks with Fifth Third over the summer after it first began considering strategic options about a year ago.

"In terms of technology, in terms of marketing, in terms of product development, in terms of regulatory expense, it is becoming increasingly challenging for us and we've seen that in our higher efficiency ratio to manage in that environment," Farmer said.

The merger presents both companies with an opportunity to "really create a one plus one equals three scenario" with a bank-branch buildup in Texas and other areas, he added.

Ahead of the deal, Fifth Third's stock had risen 5% in 2025, while Comerica's stock had risen 14.1%.

The KBW Nasdaq Bank Index BKX was up 18.3% in 2025, while the Financial Select Sector SPDR exchange-traded fund XLF was up 11.2%. The S&P 500 SPX has risen 14.2%.

Steve Goldstein contributed.

-Steve Gelsi

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10-06-25 1314ET