Fifth Third's first full quarter with Comerica lifted total revenue 46% to $3.27B and net income to common 29% to $763M, but diluted EPS fell 6% to $0.83 on 36% more shares and $193M of merger costs.
Revenue
$3.3B
+45.8% YoY
Net income
$763M
+29.1% YoY
Diluted EPS
$0.83
-5.7% YoY
Overview
Q2 2026 was Fifth Third's first full quarter as a combined company with Comerica, which it bought on February 1, 2026. The deal makes the year-over-year numbers look very different: total revenue (net interest income plus fee income, U.S. GAAP basis) rose 45.8% to $3.27 billion, and net income available to common shareholders rose 29% to $763 million. But diluted earnings per share fell 6% to $0.83, because about 240 million new shares were issued to pay for Comerica. The company also booked $193 million of Comerica merger costs in the quarter.
The underlying picture is better than the reported EPS suggests. Net interest margin widened, loan losses fell to their lowest rate since Q2 2023, and fee businesses grew. By the company's own adjusted measure, which strips out merger charges and other items, EPS was $1.02. Against that, capital is thinner than a year ago and share buybacks have been paused since the deal.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue (GAAP NII + noninterest income)
$3,274M
$2,245M
+45.8%
Net interest income (GAAP)
$2,215M
$1,495M
+48.2%
Noninterest (fee) income
$1,059M
$750M
+41.2%
Net income available to common
$763M
$591M
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Source: Fifth Third Form 10-Q for the quarter ended June 30, 2026 (Table 1 and the Non-GAAP tables). On the fully-taxable-equivalent (FTE) basis the filing uses for "total revenue", the figure is $3,279 million, up 46%. FTE adds back a small tax adjustment ($5 million this quarter) so that tax-exempt interest can be compared with taxable interest.
First half 2026 (six months): GAAP net interest income was $4,149M (vs. $2,932M) and noninterest income was $1,954M (vs. $1,444M). Net income available to common fell to $891M from $1,069M, and diluted EPS fell 35% to $1.02 from $1.58. Nearly all of the first-half damage came in Q1: $634M of the half's $827M merger expense landed in that quarter, and Q1 EPS was $0.15.
The Comerica deal: where it stands
Closed February 1, 2026. It was an all-stock deal worth about $12.7 billion. Each Comerica share became 1.8663 Fifth Third shares, so about 240 million new Fifth Third shares were issued. Comerica's preferred stock was swapped for a new Fifth Third Series M preferred ($400 million, 6.875%).
What came over (preliminary fair values): $50.5 billion of loans, mostly commercial and industrial ($28.5B) and commercial real estate ($15.1B); $65.2 billion of deposits; $5.5 billion of long-term debt; and 351 branches, mainly in Michigan, Texas and California. Fifth Third recorded about $5.0 billion of goodwill, meaning it paid about $5.0 billion more than the fair value of the net assets it acquired. It also recorded $1.2 billion of intangible assets, mostly the value of Comerica's deposit relationships. Total assets passed $300 billion ($300.2B at June 30, vs. $214.4B at year-end 2025).
Merger costs: $193 million in Q2 and $827 million year-to-date, per the 10-Q's Table 11. Most of it ($537M year-to-date) was compensation, meaning staff retention and severance. The earnings release puts total year-to-date pre-tax merger-related impacts at $933 million and says year-to-date charges are about 65% of the expected full-year total.
Share count: average diluted shares rose 36% year over year to 916 million, and 906.6 million shares were outstanding at quarter-end (667.7 million a year earlier). This is why net income grew 29% while EPS fell. Profit rose, but it is now split across many more shares.
Integration: the July 17 earnings release said the systems conversion was scheduled for Labor Day weekend. A September 15 investor presentation (8-K Exhibit 99.1) says conversion is complete, with 293 branches converted. It also says the company is "on track to achieve $850 million pre-tax run-rate expense synergies" (cost savings from combining the two banks) in Q4 2026.
Regulatory step-up: assets now exceed $250 billion on a trailing-four-quarter average. That moves Fifth Third into the stricter "Category III" regulatory tier starting in Q3 2026, which brings a liquidity coverage ratio requirement and annual Fed stress tests.
Net interest income and margin
Net interest income is the bank's core earnings line: interest collected on loans and securities minus interest paid on deposits and debt. It rose 48% to $2.22 billion (FTE). The net interest margin (NIM) is that spread expressed as a percentage of the assets earning interest. It rose to 3.36% from 3.12% a year ago and 3.30% in Q1.
The 10-Q attributes the gain to three things. First, Comerica's $73.0 billion of interest-earning assets. Second, lower funding costs as short-term rates fell. Third, older fixed-rate loans and securities repricing to higher yields, helped by a securities repositioning in Q2. Loan yields themselves fell, however. The rate paid on interest-bearing liabilities dropped 34 basis points year over year to 2.44% (a basis point is 0.01 percentage point), while the yield on earning assets slipped only 7 bps, to 5.11%.
One part of the margin is an accounting effect rather than lending spread. Q2 net interest income included $64 million of amortization and accretion of purchase-accounting premiums and discounts. When Comerica's loans and deposits were marked to fair value at closing, the discounts created in that step are now recognized as income over time. By our arithmetic, $64 million annualized against $265 billion of average earning assets is roughly 10 bps of the 3.36% NIM. The 10-Q says the Comerica-driven NIM benefit came "primarily" from this accretion plus a better deposit mix. The accretion declines as the acquired loans pay down.
Fee income
Noninterest income rose 41% to $1,059 million. Most lines grew by more than Comerica's size alone would explain:
Fee line
Q2 2026
Q2 2025
YoY
Wealth & asset management
$256M
$166M
+54%
Commercial payments
$254M
$152M
+67%
Consumer banking
$161M
$147M
+10%
Capital markets
$154M
$90M
+71%
Commercial banking
$125M
$79M
+58%
Mortgage banking (net)
$39M
$56M
-30%
Commercial payments grew on treasury-management fees, merchant processing volume and the Direct Express government prepaid-card program. Capital markets grew on loan syndications, customer derivatives and M&A advisory fees. Assets under care in wealth rose to $902 billion from $657 billion, and $180 billion of that came from Comerica. Mortgage banking was the one weak line. Excluding securities gains and other items, the release puts fee income at $1.040 billion, up 13% from Q1.
Loans and deposits
Loans: period-end total loans and leases were $179.4 billion, up 45% from year-end 2025, with $50.5 billion of that acquired. Excluding Comerica, commercial loans grew $4.9 billion (+7%) in six months, led by commercial and industrial loans (+$4.5B, +9%) as originations outpaced payoffs and borrowers drew more on credit lines.
Deposits: period-end deposits were $234.1 billion (vs. $171.8B at year-end). Excluding the $65.2 billion that came from Comerica, core deposits fell $1.7 billion (-1%). Management says it deliberately let higher-cost, non-relationship commercial deposits run off, and interest checking dropped $4.3 billion. Money-market balances rose $3.7 billion on promotional rates. The release says a Comerica Southwest marketing campaign brought in $2.5 billion of consumer deposits, and interest-bearing deposit costs fell 2 bps from Q1 to 2.13%. About 40% of domestic deposits ($94.1B) are estimated to be uninsured.
Costs and efficiency
Noninterest expense rose 67% to $2,109 million. That total includes $193 million of Comerica merger costs and $10 million tied to a separate acquisition (a DUS multifamily-lending business). The efficiency ratio measures how many cents of expense the bank spends to earn a dollar of revenue, so lower is better. It worsened to 64.3% from 56.2%, though it improved sharply from 84.5% in Q1. On the release's adjusted basis, which excludes merger charges and certain other items, it was 57.1%. Headcount rose to 25,197 full-time equivalents from 18,690.
Credit quality
Credit held up well. Net charge-offs, meaning loans written off as uncollectible net of recoveries, were $135 million, or 0.30% of average loans annualized, down from 0.45% a year ago. Commercial charge-offs fell to 21 bps from 38 bps. The provision for credit losses (money set aside for future loan losses) fell to $129 million from $173 million. The 10-Q attributes this to a better economic forecast and improving credit characteristics. Nonperforming portfolio assets (loans that have stopped paying, plus foreclosed property) rose in dollars to $1,075 million from $797 million at year-end as Comerica's book was added. As a share of loans they were 0.60%, down from 0.72% a year ago. The total allowance for credit losses was 1.76% of loans, down from 2.09% a year ago, even though the dollar allowance grew with the acquired book.
Capital and returns
The CET1 ratio measures a bank's highest-quality capital against its risk-weighted assets and is the main gauge of its loss-absorbing cushion. It was 9.93%, up 4 bps from Q1 but down from 10.81% at year-end 2025 and 10.58% a year ago. The release attributes the year-to-date drop to the capital effects of the acquisition and the $933 million of merger impacts. There were no share buybacks in the first half of 2026. The quarterly dividend rose to $0.40 from $0.37.
Return on average tangible common equity (ROTCE) measures profit relative to shareholders' equity after excluding goodwill and intangibles. It was 15.6%, down from 17.6%, weighed down by merger costs and by $48 million of after-tax intangible amortization (vs. $5M a year ago). The release's adjusted ROTCE was 19.0%, vs. 18.0% a year ago. Tangible book value per share was $23.15, vs. $20.98 a year ago (release figures).
Takeaway: The deal is increasing Fifth Third's earnings, but each share's portion is still smaller. Net income was up 29% while share count rose 36%, so reported EPS fell 6%. The gap should narrow as merger charges end and the $850 million of targeted cost savings take effect in Q4. About 10 bps of the 3.36% margin is purchase-accounting accretion that will fade. Legacy core deposits shrank in the first half, so deposit growth is the number to watch next.
Guidance and outlook
Management's Q3 2026 outlook was given on the July 17 earnings call and reiterated unchanged in the September 15, 2026 conference presentation (8-K Exhibit 99.1). It is set against Q2 baselines:
Average loans and leases (including held for sale): up about 1%
Net interest income: up 2–2.5% from $2.22 billion, assuming a 4.00% fed funds rate at September 30 and including purchase-accounting accretion
Fee income, excluding securities gains/losses: up 1–3% from $1.04 billion
Noninterest expense: down 1–2% from $1.86 billion, excluding acquisition charges and including about $60 million of deposit-intangible amortization
Net charge-off ratio: 30–35 bps; effective tax rate: 22.5%
If that plays out, Q3 would bring modest revenue growth and lower costs, and it would be the first quarter since closing without large conversion-related spending. In our view, the key test for H2 is whether the combined bank can hold the margin as accretion declines, while rebuilding CET1 toward pre-deal levels before buybacks resume. The shift to Category III, with its new liquidity requirement, also argues for holding more capital and liquidity in the near term.