Fifth Third Bancorp is purchasing Comerica in the largest bank deal announced this year, an acquisition that shows the importance of retail branches in growing regional deposits.
Bank executives specifically cited the need for more deposits as a factor in the all-stock deal, valued by the banks at $10.9 billion, during a call Monday with analysts. Retail branches are considered one of the best ways for banks to collect deposits and Dallas-based Comerica operates about 355 branches nationwide.
"The location attractiveness of Comerica's existing retail network is literally No. 1 among the regional peer group," said Timothy Spence, chairman, CEO and president of Fifth Third Bank, on a conference call. The combined bank will operate in 17 of the 20 fastest-growing markets in the country, including important regions in the Southeast, Texas and California, the banks said in a statement.
The country's largest banks are opening new retail branches across the nation to beef up deposit-collecting efforts. JPMorgan Chase wants to open 500 new branches by 2027; Bank of America’s goal is to open 150 branches in the same period; and PNC Financial Services Group plans to open as many as 220 branches by 2030.
“Comerica’s … attractive footprint further strengthens Fifth Third’s position in high-growth markets,” Cincinnati-based Fifth Third said in the statement.
Comerica has 144 locations and $36 billion in deposits in Michigan, making it the third-largest bank in the state by deposits, according to the Federal Deposit Insurance Corp. Fifth Third already has a major presence in Michigan, and it said the Comerica deal will vault it to the top spot in Michigan.
More branches
Fifth Third has also been opening new branches, with plans to open about 50 branches this year, primarily in the Southeast. On Monday, Fifth Third announced an extension of that program, saying it will now open 150 new branches in Texas by 2029.
Those new branches will be in addition to Comerica’s existing Texas footprint, where it has 108 branches and $9.4 billion in deposits. By 2029, Fifth Third estimates it will be among the five largest banks in the Dallas-Fort Worth, Houston and Austin, Texas, markets.
"By the end of 2029 ... over half of our branches will be in the higher-growth Southeast Texas and Arizona markets," Spence said on the call.
Fifth Third’s retail expansion has already paid dividends, according to company executives.
“Branches built between 2022 and 2024 are averaging over $25 million in deposit balances within the first 12 months after opening, significantly outpacing our original expectations,” said Bryan Preston, chief financial officer at Fifth Third, during a July 17 conference call.
The Fifth Third-Comerica deal follows PNC's $4.1 billion acquisition announced last month. Pittsburgh-based PNC agreed to acquire FirstBank to expand in Colorado and Arizona. FirstBank has 95 branches in those states.
Expanding loan portfolio
Fifth Third is also expected to enlarge its holdings of commercial real estate loans through the Comerica deal. Comerica held $18.2 billion in commercial mortgages and construction loans as of Dec. 31, according to its annual report.
The deal is projected to close by the end of March 2026, pending regulatory approval. If approved, Fifth Third will hold $288 billion in assets, making it the ninth-largest bank in the U.S., the firms said in a statement.
Comerica was founded in 1849 in Detroit as the Detroit Savings Fund Institute that offered interest-paying savings accounts, a groundbreaking offer at the time, according to the company’s website. More than a century-and-a-half later, the bank made expansions in Texas and California and what became known as Comerica Bank relocated its corporate headquarters to Dallas in 2007.
In December 2023, Comerica opened a technology research hub in the Dallas-Fort Worth suburb of Frisco. Comerica is one of the largest occupants of office space in downtown Dallas with about 220,000 square feet at Comerica Bank Tower. It was not immediately clear what the merger means for Comerica's office space in downtown Dallas.
“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," said Curt Farmer, chairman, president and CEO of Comerica, in the statement.
Farmer is expected to assume the role of vice chair of the combined bank once the deal closes.