v3.26.1
Business Combination
 3 Months Ended
Mar. 31, 2026
Business Combination [Abstract]  
Business Combination Business Combination
On February 1, 2026, Fifth Third Bancorp closed the merger with Comerica Incorporated in an all-stock transaction valued at approximately $12.7 billion. Comerica was headquartered in Dallas, Texas, with 351 full-service banking center locations, primarily located in Michigan, Texas and California. Comerica had two wholly-owned banking subsidiaries, Comerica Bank and Comerica Bank & Trust, National Association, which were both merged into Fifth Third Bank, National Association on February 1, 2026. The merger resulted in a combined company that is one of the largest banks in the U.S., with a strengthened competitive position in the Midwest and significant operations in high-growth U.S. markets, including key regions in the Southeast, Texas and California.

Under the terms of the merger agreement, each outstanding share of Comerica’s common stock was converted into the right to receive 1.8663 shares of Fifth Third Bancorp common stock and each outstanding share of Comerica’s preferred stock was converted into the right to receive one share of a newly created series of preferred stock with comparable terms issued by the Bancorp.

On February 1, 2026, the Bancorp issued approximately 240 million shares of its common stock to holders of Comerica common stock as of the acquisition date, representing a value per common share of $93.73, based on the $50.22 closing price of Fifth Third Bancorp’s common stock on January 30, 2026. Fractional shares were not issued and were instead paid in cash. Upon closing of the transaction, all shares of Comerica common stock were cancelled and retired. Additionally, on February 1, 2026, the Bancorp issued 16,000,000 depository shares, representing 400,000 shares of 6.875% fixed-rate reset non-cumulative perpetual preferred stock, Series M to the holders of Comerica’s 6.875% fixed-rate reset non-cumulative perpetual preferred stock, Series B that were outstanding on January 30, 2026. Each Series M share has a $1,000 liquidation preference and accrues dividends on a non-cumulative quarterly basis, initially beginning on January 1, 2026 with a first dividend payment date of April 1, 2026. Subject to any required regulatory approval, the Bancorp may redeem the Series M preferred shares at its option, in whole or in part, on any dividend payment date on or after October 1, 2030 and may redeem, in whole but not in part, within 90 days following a regulatory capital event. The Series M preferred shares are not convertible into Bancorp common shares or any other securities.

The acquisition of Comerica constituted a business combination and was accounted for under the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. These fair value estimates are considered preliminary as of March 31, 2026. Fair value estimates, including those for loans and leases, intangible assets, deposits, bank premises and equipment, other liabilities, certain tax-related matters and goodwill, are subject to change for up to one year after the acquisition date as additional information becomes available.
The following table reflects total consideration transferred for Comerica’s net assets and the amounts of acquired identifiable assets and liabilities assumed at their preliminary estimated fair values as of the acquisition date:
($ in millions)
Purchase consideration
Fair value of common stock issued$12,056 
Fair value of preferred stock issued412 
Replacement of stock-based awards208 
Fair value of purchase consideration$12,676 
Net Identifiable Assets Acquired, at Fair Value:
Assets:
Cash and due from banks$740 
Other short-term investments11,242 
Available-for-sale debt and other securities7,243 
Held-to-maturity securities3,669 
Trading debt securities170 
Equity securities141 
Loans and leases held for sale1 
Portfolio loans and leases50,536 
Allowance for loan and lease losses(661)
Portfolio loans and leases, net49,875 
Bank premises and equipment526 
Intangible assets1,209 
Other assets5,954 
Total assets acquired$80,770 
Liabilities:
Deposits$65,189 
Accrued taxes, interest and expenses901 
Other liabilities1,494 
Long-term debt5,529 
Total liabilities assumed$73,113 
Net identifiable assets acquired$7,657 
Goodwill$5,019 
In connection with the merger, the Bancorp recognized approximately $5.0 billion of goodwill, which is not expected to be tax-deductible. Refer to Note 8 for additional information on goodwill recognized and Note 9 for additional information on intangible assets acquired in the acquisition of Comerica.

The following is a description of the methods used to determine the estimated fair values of significant assets and liabilities:

Cash and due from banks and other short-term investments
For financial instruments with a short-term or no stated maturity, prevailing market rates and limited credit risk, carrying amounts approximate fair value.

Available-for-sale debt and other securities, held-to-maturity securities, trading debt securities and equity securities
Fair values for securities were based on quoted market prices, where available. If quoted market prices were not available, fair value estimates were based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market. In the absence of observable inputs, fair value was estimated based on pricing models and/or DCF methodologies.

Loans and leases held for sale and portfolio loans and leases, net
Fair values for loans and leases were estimated individually based on a DCF methodology that considered factors including the type of loan and related collateral, fixed or variable interest rate, remaining term, credit quality ratings or scores, amortization status and current discount rates. Loans and leases with similar characteristics were pooled together to determine certain inputs or assumptions when applying various valuation techniques. The discount rates used for loans were based on an evaluation of current market rates for new originations of comparable loans and a market participant’s required rate of return to purchase similar assets, including adjustments for liquidity and credit
quality when necessary. The initial amortized cost basis of acquired portfolio loans and leases also included the initial ACL amount for instruments designated as PCD assets or PSLs, as further discussed in the Acquired Loans and Leases section of this footnote.

Bank premises and equipment
Fair values for bank premises and equipment were generally based on appraisals of the property values.

Intangible assets
Intangible assets primarily consist of the core deposit intangible asset, representing the value of relationships with deposit customers. The fair value was estimated based on a DCF methodology that considered expected customer attrition rates, net maintenance cost of the deposit base, the alternative cost of funds and the interest costs associated with customer deposits. The core deposit intangible is being amortized on an accelerated basis over its estimated useful life.

Deposits
The fair values for time deposits were estimated using a DCF methodology whereby the contractual remaining cash flows were discounted using market rates currently being offered for time deposits of similar maturities. For transactional deposits, carrying amounts approximate fair value.

Long-term debt
The fair values of long-term debt instruments were estimated based on quoted market prices for identical or similar instruments if available, or by using DCF analyses based on current incremental borrowing rates for similar types of instruments.

Other assets and other liabilities
Acquired BOLI policies were initially recognized at their cash surrender value as of the acquisition date, which approximates fair value.

Assets and obligations of acquired pension and other postretirement benefit plans were remeasured as of the acquisition date, including Comerica’s qualified defined benefit plan, which was in an overfunded position. Refer to Note 18 for additional information.

Fair values for ROU assets associated with real estate operating leases were based on current market rental rates for similar properties in the same area, discounted at market-indicated discount rates for similar asset types as of the acquisition date. Estimates of current market rental rates were generally based on third-party market rent studies performed for each significant property.

Fair values for derivative contracts, which are included in either other assets or other liabilities, were valued using DCF or other models that incorporate current market interest rates, credit spreads assigned to the derivative counterparties and other market parameters. Certain derivative contracts were valued based upon models with significant unobservable market parameters.

Merger-Related Charges
Direct merger-related charges associated with the acquisition of Comerica were expensed as incurred by the Bancorp. These merger-related charges primarily related to employee change in control and termination expenses, system conversions and other costs of integrating and conforming the acquired operations with those of the Bancorp. The table below summarizes the merger-related charges recorded in the Condensed Consolidated Statements of Income:
($ in millions)
For the three months ended March 31, 2026
Noninterest Expense
Compensation and benefits$427 
Technology and communications21 
Net occupancy expense25 
Card and processing expense30 
Equipment expense4 
Other noninterest expense128 
Total noninterest expense$635 
Noninterest Income
Other noninterest income (loss)(22)
Total noninterest income$(22)
Total merger-related charges$657 
Unaudited Pro Forma Information
The following table presents unaudited pro forma information as if the merger of Comerica had occurred on January 1, 2025. This unaudited pro forma information combines the historical condensed consolidated results of operations of Fifth Third Bancorp and Comerica after giving effect to certain adjustments, including purchase accounting adjustments, amortization of intangible assets and merger costs, as well as the related income tax effects of those adjustments. The unaudited pro forma results also reflect reclassification adjustments to conform Comerica’s presentation with the Bancorp’s presentation. Direct costs associated with the merger are included in unaudited pro forma earnings as of January 1, 2025.

The unaudited pro forma information does not necessarily reflect the results of operations that would have occurred had Fifth Third Bancorp acquired Comerica on January 1, 2025. Furthermore, cost savings and other business synergies related to the merger are not reflected in the unaudited pro forma amounts for the three months ended March 31, 2026 and 2025.
Unaudited Pro Forma Information
For the three months ended March 31,
($ in millions)20262025
Net interest income$2,133 2,058 
Noninterest income1,007 937 
Net income available to common shareholders762 52 

Acquired Loans and Leases
For information on the accounting for acquired loans and leases, refer to Note 3.

The following table reflects the unpaid principal balance, fair value and initial amortized cost basis of acquired loans and leases as of:
February 1, 2026 ($ in millions)
PCDPSLOtherTotal
Fair value of acquired loans and leases$3,404 46,066 405 49,875 
Adjustments for expected credit losses(a)(b)
180 481 — 661 
Initial amortized cost basis of acquired loans and leases$3,584 46,547 405 50,536 
Unpaid principal balance of acquired loans and leases(a)
3,680 46,621 406 50,707 
Noncredit discount, net$(96)(74)(1)(171)
(a)The unpaid principal balance and adjustment for expected credit losses exclude net charge-offs of $94 which were taken immediately at the time of the Comerica acquisition.
(b)The initial ALLL on other acquired loans and leases was $8 and was recorded as provision for credit losses in the Bancorp’s Condensed Consolidated Statements of Income.