Fifth Third CEO 'not worried' about suit over Comerica deal

• Key insight: Comerica is aiming to close its sale to Fifth Third on the earliest possible date, Feb. 2, according to a source familiar with the matter.
• What's at stake: The nearly $11 billion deal has been challenged in court by activist investor HoldCo Asset Management. The combination of the banks would create a combined $288 billion-asset company.
• Expert quote: "There is nothing that's come up that has caused me even the slightest concern," Fifth Third CEO Tim Spence said Wednesday.

Fifth Third Bancorp CEO Tim Spence expressed confidence Wednesday that his bank's acquisition of Comerica will close on schedule, despite a lawsuit from an activist investor challenging the deal.

The banks, which inked their nearly $11 billion deal in October, expect to receive regulatory approval "around the new year," and to close the transaction in the first quarter, Spence said at an industry conference.

Shareholders of both banks are slated to vote on the deal on Jan. 6. The merger must be greenlit by the Office of the Comptroller of the Currency, the Federal Reserve Board and the Texas Department of Banking.

If everything goes to plan, the earliest the deal could close is Feb. 2, per the merger agreement. A source familiar with the matter told American Banker that Comerica is aiming to close on that date.

Once the deal closes, the bank expects to generate $850 million in savings through the elimination of facilities, systems, vendors and "some headcount reductions concentrated in overhead and noncustomer-facing roles," Spence said.

About 70% to 90% of Comerica employees in non-frontline roles — such as legal, information technology and marketing positions — will lose their jobs, a source who spoke on the condition of anonymity told American Banker. Those layoffs will hit in waves across 2026, with the first round slated for January, the source said.

A public presentation by Fifth Third on Wednesday said that the expense synergies will be realized in 2027, and that 70% to 80% of the $850 million in savings will come from personnel cuts.

Fifth Third has been pausing recruiting for open roles "to ensure we can keep positions available for new colleagues once the combined company is formed," a Fifth Third spokesperson said.

"We are focused on creating a new Fifth Third that creates meaningful opportunities for employees from both organizations, and both companies will experience changes to align staffing with future business needs," the spokesperson said in an email.

Comerica did not provide comment for this article by deadline.

Fifth Third expects to convert Comerica's branches and systems early in the fourth quarter of next year, according to a company presentation Wednesday.

The deal, which is the largest bank transaction announced this year, was hatched 10 weeks after the activist investor HoldCo Asset Management launched a campaign aimed at pressuring Comerica to sell itself. After the Fifth Third-Comerica deal was announced, HoldCo sued the two banks in Delaware court over what it alleges was a flawed negotiation process.

The judge in the case said last month that Comerica will need to provide HoldCo with additional information about how the deal came together, and that there will be another two hearings to discuss the suit. One hearing should happen prior to the shareholder vote, and the next should be held before the deal closes, the judge said at the time.

Spence said Wednesday that he's "not worried at all" about the lawsuit. He said the bank has been in "constant dialogue" with both the Fed and the OCC, and that those talks have been "constructive."

"There is nothing that's come up that has caused me even the slightest concern," Spence said.

He added that based on feedback from Fifth Third and Comerica shareholders, the deal is "in really good shape."

An anonymous group calling itself the Comerica 175 Coalition, in reference to the bank's years of existence, recently sent a public comment to the Federal Reserve of Cleveland, asking the agency to extend the time for public comments, hold a public hearing on the deal and compel the banks to delay their shareholder votes.

The comment letter, which was obtained by American Banker, also asks the Fed to demand that Fifth Third and Comerica address concerns raised in HoldCo's lawsuit about alleged omissions or distortions of facts.

The Fed's confirmation of receipt of the comment letter, also obtained by American Banker, included an acknowledgement that it sent the comment letter to the applicants. Fifth Third confirmed that it received the comment letter. The Fed declined to comment for this article.

On Wednesday, Spence highlighted the benefits that Fifth Third sees from the deal, including $500 million in revenue opportunities over the next three to five years, a beachhead in Texas, and a life sciences and tech loan portfolio.

Comerica has for years been strapped for access to low-cost funding — a problem that will be diminished if the company gets absorbed into the larger Fifth Third.

"Job number-one when you get these deals is, first to do no harm," Spence said Wednesday. "What we're excited about with Comerica is the expense synergies paid for the deal, but the markets, the vertical expertise … and middle-market franchise and the culture they have there are really the foundation for like a decade of organic growth opportunities at Fifth Third."

He added that Fifth Third wants to handle the conversion "sensitively" after using a playbook that's similar to the one it used for its last whole-bank deal, the acquisition of MB Financial in 2019.

Fifth Third wants to frontload expense actions to the extent that it's able to do so, Spence said. The bank has estimated it will incur one-time charges of $950 million.

The deal notably won't dilute tangible book value, avoiding a common hangup for shareholders when banks decide to merge, as the value of their stakes decrease.

Shortly before the merger was announced, Fifth Third won a lucrative federal government contract that had previously been Comerica's. Spence has said the two banks will be able to transition that contract more easily as a merged company.

Fifth Third said Wednesday that the system conversion for the Treasury Department program, called Direct Express. is slated for the first quarter of 2026. New cardholder enrollment will transition in the second quarter, and existing cardholders will transition in the second half of the year, according to Fifth Third.