Fifth Third's $11 Billion Acquisition of Comerica
Last month, Fifth Third Bancorp, based in Cincinnati, announced it would acquire Dallas-based Comerica in a significant regional bank deal worth $10.9 billion. This all-stock transaction reshapes the regional banking sector as mergers and acquisitions accelerate under the Trump administration's more favorable policies.
Impact of the Merger
The combined entity will become the ninth-largest bank in the United States, managing $288 billion in assets. This acquisition grants Fifth Third the leading retail-deposit franchise in Michigan and strengthens its presence in rapidly expanding Texas markets.
Loan Portfolio and Business Mix
After closing the deal, the merged bank will have over two-thirds of its loan portfolio comprised of commercial real estate and commercial and industrial loans. In addition, it will operate robust fee-based businesses in commercial payments and asset and wealth management.
Background on the Treasury Contract
Previously, Comerica managed the U.S. Department of Treasury's Direct Express program, distributing federal benefits via prepaid cards. This contract supplied Comerica with approximately $3 billion in non-interest-bearing deposits, providing cost-free funding for loans and securities purchases.
The Treasury Department awarded the Direct Express contract to Fifth Third, replacing Comerica.
This shift represents a notable change in funding sources and operations for both banks, benefiting Fifth Third substantially.
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