Fifth Third's $11 Billion Acquisition of Comerica
Last month, Fifth Third Bancorp, headquartered in Cincinnati, announced it would acquire Comerica in a significant regional banking deal valued at $10.9 billion. This all-stock transaction shakes up the regional banking sector as the Trump administration facilitates increased bank mergers and acquisitions (M&A).
Impact on the Banking Landscape
The merger will create the ninth-largest bank in the United States, managing $288 billion in assets. It grants Fifth Third the top retail deposit franchise in Michigan and supports its ongoing expansion in rapidly growing markets like Texas.
Loan Portfolio and Business Strengths
Post-acquisition, the combined bank’s loan portfolio will comprise over two-thirds commercial real estate and commercial and industrial loans. Additionally, it will maintain robust fee-based businesses in commercial payments and asset and wealth management.
Loss of Treasury Contract by Comerica
Last year, Comerica lost a Treasury Department contract for managing the Direct Express program, which distributes federal benefits using prepaid cards. This contract provided Comerica with about $3 billion in non-interest-bearing deposits, giving the bank essentially free funding for lending or securities purchases.
The Treasury Department awarded this contract to Fifth Third after Comerica lost it.
Author's Summary: Fifth Third's acquisition of Comerica transforms it into a top-ten U.S. bank, strengthening its retail deposits and commercial loan portfolio while capitalizing on strategic business segments.