$10.9 Billion Shake-Up: Fifth Third’s Bold Comerica Takeover Sparks Regional Bank Rally and Ignites Financial Sector Comeback

Fifth Third Bancorp (FITB) made one of the biggest banking headlines of 2025 Monday, unveiling a $10.9 billion all-stock deal to acquire Dallas-based Comerica (CMA) and form the ninth-largest U.S. bank with $288 billion in assets. The transaction , which is expected to close by the end of the first quarter of 2026 pending regulatory and shareholder approval, marks the largest U.S. bank merger in nearly three years and comes amid a wave of regional bank consolidation driven by the need for scale and capital efficiency. Comerica shareholders will receive 1.8663 shares of Fifth Third stock for each Comerica share, representing a 20% premium to the bank’s 10-day volume-weighted average price and valuing the stock at $82.88 per share based on Fifth Third’s October 3 closing price. Following completion, Fifth Third shareholders will own about 73% of the combined company and Comerica shareholders 27%.

The merger is entirely stock-financed, meaning no new debt issuance, and there are no announced breakup fees attached. Executives said the structure reflects a “disciplined and strategic” approach intended to preserve capital and accretion. “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,” CEO Tim Spence said. “Comerica’s strong middle market franchise and complementary footprint make this a natural fit.” Comerica CEO Curt Farmer echoed that tone, saying, “Joining with Fifth Third – with its strengths in retail, payments and digital – allows us to build on our leading commercial franchise and further serve our customers with enhanced capabilities across more markets.”

Under the new structure, Farmer will become Vice Chair of the combined bank, while Comerica’s chief banking officer Peter Sefzik will lead the Wealth & Asset Management division. Three Comerica directors will join Fifth Third’s board, ensuring continuity and representation. Spence told CNBC that the deal will “create one of the strongest commercial banks in the U.S.,” adding that Fifth Third plans to build 150 new branches in Texas as it moves into the top five by market share in Dallas, Houston, and Austin. The combination will also bring Fifth Third a larger presence in California and solidify its Midwest leadership. By 2030, the company expects more than half of its branches to be in the Southeast, Texas, Arizona, and California—regions viewed as key growth corridors for population and business migration.

Analysts largely welcomed the news as a logical pairing of complementary franchises. CFRA’s Alexander Yokum, CFA, said, “We view the acquisition as providing significant scale benefits and strengthening Fifth Third's commercial banking operations, though CMA’s geographic footprint slows FITB’s shift into attractive Southeast markets.” He added that Comerica’s integration will be challenging, citing “stagnant loan growth with Q2 2025 balances remaining at 2019 levels, elevated deposit costs, and geographic concentration in Michigan (59% of deposits) and California (24%). FITB will face integration challenges as it works to turnaround CMA’s underperformance, in our view.” Nonetheless, CFRA expects the transaction to be immediately accretive to earnings per share, efficiency, and return metrics once closed.

The market reaction was sharply positive for Comerica, whose shares surged 15–17% in early trading Monday, while Fifth Third’s stock slipped initially but recovered to trade modestly higher later in the day. The deal adds to growing optimism across the financial sector, which has been buoyed by several supportive developments. Jefferies (JEF) recently posted strong quarterly results, signaling healthy capital markets activity ahead of earnings season for the investment banks. Meanwhile, Morgan Stanley (MS) received a favorable regulatory ruling on its capital positions and caps, reinforcing confidence in balance-sheet flexibility. The Fifth Third-Comerica merger now provides an additional tailwind to the group, bolstering sentiment toward regionals and diversified financials alike.

Regulatory observers view approval as likely, given the current administration’s relatively permissive stance on bank mergers and the combined entity’s modest systemic footprint compared to megabanks such as JPMorgan Chase and Bank of America. Fifth Third executives expressed confidence that the deal will move smoothly through regulators. “In an environment where merger approvals are coming faster, it builds our confidence,” Spence said, emphasizing that regulators “believed we had the capacity to run a much larger bank.” The all-stock nature of the transaction also lessens capital risk, aligning with post-crisis prudential standards.

For Comerica, the merger offers a much-needed path forward after years of investor frustration and activist pressure. Holdco Asset Management, which owns about 1.8% of Comerica, had urged the bank to pursue a sale earlier this year, citing underperformance and the need for greater scale. Farmer acknowledged those struggles, telling analysts, “Admittedly, we were hit a bit harder than some during the regional bank crisis, and it took us a bit to recover from that.” The deal gives Comerica shareholders a sizable premium and a stake in a stronger, more diversified platform with enhanced revenue opportunities from wealth management, payments, and fee-based businesses.

With two $1-billion recurring and high-return fee units—Commercial Payments and Wealth & Asset Management—the combined bank aims to deliver diversified, durable earnings while reinvesting in digital expansion. Fifth Third estimates that the merger will generate top-quartile efficiency and returns on tangible common equity among regional peers. Industry analysts see the transaction as potentially reigniting investor appetite for financials heading into the upcoming earnings cycle. Between strong early indicators from Jefferies, improving regulatory tone for large banks, and a marquee regional merger, the sector is gaining momentum. If credit quality remains stable and margins hold firm, this deal could mark the start of a renewed rally in U.S. financials.