Too big mid to fail… 

The Cincinnati lender just agreed to buy Comerica in an all-stock deal worth $10.9 billion… which, if you’re keeping score, makes it the ninth-largest U.S. bank with $288 billion in assets. Translation: another regional player just swallowed a slightly smaller regional player to prove it’s “built for scale” in a world where only the top five banks actually matter.

(Source: Giphy) 

The deal is expected to close in Q1 2026, assuming regulators rubber-stamp it… which they probably will, especially since the Trump administration’s deregulation parade has turned the banking sector into a swingers convention. Naturally, CEO Tim Spence called it a “pivotal moment” as he’s betting size equals relevance. Case in point: Spence says the merger will give the bank more exposure to high-growth markets like Texas and California and plans to build 150 new branches in the region. Additionally, Comerica’s middle-market commercial book fills in the gaps Fifth Third’s been chasing since 2020.

(Source: CNBC) 

Now… that’s the surface level narrative. Underneath, both banks are carrying rot from the last cycle… the same kind of late-stage lending that tends to blow up when rates don’t move the way the models assumed. Fifth Third has a book full of subprime auto loans that went sideways during the 2023 crunch. Comerica’s commercial exposure hasn’t recovered from the same period.

Fast forward to 2025, and (as noted in our recent article over the weekend), subprime delinquencies are at decade highs. CRE loans are rotting like summer fruit. Private credit is one rate cut away from turning into collateral soup. And Fifth Third just decided now’s the perfect time to spend billions in stock on a peer that barely survived the last panic. Call it consolidation. Call it strategic alignment. Call it what it is: two regionals duct-taping themselves together in hopes of becoming too medium-sized to fail.

(Source: Giphy) 

And yet, the market is horned up on growth stories as Comerica’s stock popped 17% on the news, while KRE (the regional banking ETF) even jumped 1% in premarket trading. With that said, you can be optimistic all you want… I mean, the news definitely had news initially. But in all honesty, the big banks already won. Whereas now, the mid-tiers are buying each other just to die slower. Fifth Third may get its “national footprint,” but it’s building that footprint on the same cracked concrete that took down Silicon Valley Bank.

Of course, the merger might buy them time. But time is expensive. And the balance sheets don’t lie forever. Meaning, keep your eyes on this story and as always, place your bets accordingly. Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.