Detailed narrative
Comerica integration progressing ahead of schedule
The Comerica acquisition (largest in Fifth Third history; ASR renders it 'Chimeric' and 'Comerica') closed Feb 1 thanks to timely regulatory approvals, with no tangible book value dilution. Organizational design and leadership decisions are complete, all systems convert over Labor Day weekend (first full conversion later this month), and employee attrition is running slightly below historical levels.
Management reaffirmed $360M net cost savings in 2026 and an $850M annualized run rate by Q4, with the expense benefit building over the first three quarters and stepping up materially in Q4 after conversion and branch consolidations.
Early revenue synergies emerging across commercial and consumer
In the first 60 days, the capital markets team completed fuels and metals commodity hedges and executed an accelerated share repurchase for Comerica clients, booked the first Comerica-to-Fifth Third asset-based lending win, and helped build the largest-ever pipeline in Comerica's National Dealer Services business.
Commercial Payments presented managed-services solutions to over 100 Comerica clients, with 65 (two-thirds) interested in moving forward. On the consumer side, a February Texas deposit campaign generated response rates and opening balances consistent with legacy markets, with nearly half of new savings customers also opening checking; more than half of planned mortgage loan officers and auto dealer reps have been hired.
NII, NIM and balance-sheet repositioning
NII was $1.94B, above March expectations, and NIM expanded 17bps to 3.30%, driven by Comerica impacts: 7bps from securities portfolio marks/repositioning, a portion from cash flow hedge termination, and 2bps from loan purchase-accounting accretion. End-of-period loans were $178B (+2% seq vs pro forma combined year-end) and average loans $158B reflecting the Feb 1 close.
The balance sheet is currently asset-sensitive; management intends to move toward a neutral rate-risk position over time⏳, citing roughly $30B-$40B of notional exposure it could move out the curve, and expects ~1-1.5bps/quarter of fixed-rate repricing pickup toward a ~3.40% NIM exit.
Deposit franchise and funding cost discipline
End-of-period core deposits were $231B with average core deposits ~$207B (ASR states '$207 million'). Noninterest-bearing balances rose to 28% of core deposits from 25% a year ago, aided by Comerica's commercial DDA franchise and organic consumer DDA growth. Total deposit cost was 158bps and interest-bearing deposit cost 215bps, down 27bps YoY.
Average wholesale funding fell 3% YoY even with Comerica, lowering the cost of interest-bearing liabilities by 36bps. LCR was 109% (full Category 1 compliance) and the loan-to-core-deposit ratio 76%.
Credit quality at multi-year lows with deliberate risk avoidance
Net charge-offs were 37bps (2-year low): commercial 26bps (also a 2-year low), consumer 58bps (down 5bps YoY). The NPA ratio improved to 57bps from 65bps. ACL fell to 1.79% of loans (Comerica-driven) with coverage of NPAs rising to 316%. NBFI exposure is only 7% of loans (largest categories: capital-call subscription lines, corporate credit to processors/insurers/brokers, and secured residential-mortgage-related lending).
Private credit + BDC exposure is <1% of loans (~$1B combined), software-related <1%, and funded data-center exposure under $100M — all deliberate avoidance given opaque leverage and history of tech overbuild.
Capital, proposed rule and AOCI improvement
CET1 ended at 10%; under the proposed capital rule the estimated fully phased-in pro forma CET1 is 9.6%, with the RWA benefit worth nearly 100bps (mostly credit-risk RWA reduction rewarding the granular, well-secured, relationship-based book). TCE ratio (incl. AOCI and Comerica) rose to 7.3%.
Over the last 12 months, unrealized losses in regulatory capital under the proposed rule fell 16% — a 25bps improvement to pro forma capital ratios despite an 11bp rise in the 10-year Treasury — reflecting concentration in AFS securities that return principal on a known schedule (~55% of AFS fixed-rate holdings).
Fee engines: wealth and commercial payments scale to ~$1B each
Wealth fees were $233M with AUM of $119B (legacy AUM up $10B/15% YoY); Fifth Third Securities retail brokerage revenue rose 15% YoY. Commercial payment fees were $218M, with Newline fees up 30% YoY and related deposits of $5.5B (up $2.7B).
Direct Express contributed $14M in fees and ~$3.7B in average March deposits. Capital markets fees were $134M, up 11% sequentially, on hedging activity in commodities and FX plus strong bond underwriting and two months of Comerica activity. Both wealth and commercial payments now generate fees at run rates consistent with $1B each in annualized noninterest income.
Southeast and Southwest household-growth playbook
Legacy Fifth Third delivered 3% household growth and 4% DDA balance growth, with Southeast households up 8% (led by Georgia and the Carolinas) and 10 new branches opened in the region. Management is exporting the model to Texas/Southwest: a 700,000-household February test performed in line with legacy markets, and a subsequent 6-million-household mailing on April 10-11 is producing ~3x normal response rates, expected to generate ~$1B of deposits across Texas, Arizona and California (already in the guide).
Letters of intent are in place or in progress for 81 of a targeted 150 de novo Texas branches; first Fifth Third-branded branches open in Dallas and Fresno this month.