Fifth Third-Comerica Deposit Growth Set to Mid-Single-Digit Path Over Medium Term

Expected medium-term deposit growth rate for the Fifth Third–Comerica combined entity, and the key drivers

Expected medium-term deposit growth rate

Management described a “mid-single digit kind of growth rate” as the trajectory for the company’s deposit growth over the medium term. ¹

They also framed this as something the bank can sustain “for some time,” while noting it could accelerate faster than mid-single digit depending on how aggressively it deploys marketing dollars to grow balances. ¹

Key drivers behind that medium-term deposit growth

1) Broad-based deposit franchise and the ability to attract and retain customers

Management emphasized the combined company’s diversified franchise and the ability to grow both geographically and by business line. ² They specifically pointed to the consumer franchise as continuing to deliver, with investments from a branch perspective “continu[ing] to pay off.” ²

They linked deposit momentum to the franchise’s customer acquisition/retention engine: the ability to attract new customers (with rate “often part of that”) and then maintain those customers while pricing down over time, supported by “leading product,” “great service,” and “convenient locations.” ²

2) Targeting a portfolio of “deposit opportunities” as new networks mature (Southeast, Southwest, and small business)

The medium-term growth rate is supported by management’s view of a network-driven runway. They referenced “four $10 million deposit opportunities” and described:

• maturing of the Southeast network, ¹
• growth from the Southwest network, ¹
• build-out of the small business product with expected market-share progress, ¹
• innovation banking (tech and life sciences) tailwinds. ¹

Management described the combined set of opportunities as about a $40 billion opportunity over roughly the next better part of five, six, seven years as the network matures. ¹

3) Evidence of near-term momentum already showing up in sequential balances and core deposit growth

They cited recent balance-sheet progress to justify the medium-term trajectory, including:

• June average balances vs. March showing ~1% sequential growth, including recovery in DDA balances tied to normal seasonality (tax season). ¹
• Core deposit scale: Average core deposits were $229B and period-end core deposits were $231B in the quarter. ³
• Deposit-cost discipline: they highlighted that total deposit costs fell 4 bps sequentially to 1.54%, and interest-bearing deposit costs also improved (down 2 bps sequentially). ³

That matters because the bank is effectively describing deposit growth as compatible with maintaining (and improving) funding quality/cost. ³

4) Consumer and relationship-based growth (not purely rate-driven), plus Southwest traction

Management explicitly tied deposit growth to relationship-based customer growth:

• Consumer deposits grew nearly $5B during the quarter and offset intentional reduction of higher-cost non-relationship deposits and commercial seasonality. ³
• They described Southwest consumer deposit growth of $2.5B as a “meaningful driver” and a reflection of early traction in newer markets. ³

On relationship dynamics, they said that on a legacy Fifth Third basis, households grew 3% over the past year and consumer DDA growth was 5%, “reflecting relationship-based, not rate-driven growth.” ³

They also described consumer deposit growth as part of an operating model that can persist: for example, consumer and small business deposits increased 4% sequentially, driven by strong new customer acquisition. ⁴

5) Using marketing/channel expansion and product deployment to “turn on” growth levers post-conversion

A key qualitative driver is that deposit growth can accelerate depending on the speed to deploy marketing dollars. ¹

In addition, management described that after systems conversion, it expects to “turn on” growth engines:

• accelerating checking household acquisition marketing in the Southwest, with an example that unannualized sequential checking household growth in the Southwest was 4% and, by simple annualization math, management referenced 16% annualized growth (while also noting it is “without the checking products that Fifth Third will bring” and without incremental household marketing). ⁵
• turning on product specialists in the relationship manager sales force and being “ahead of the game on mortgage.” ⁵

This supports the claim that the company can run at mid-single digit and potentially exceed it as it expands market-facing capabilities. ¹⁵

6) Deposit composition and cost discipline supporting growth

Management’s medium-term outlook depends not just on deposits getting larger, but also on their composition and cost:

• They remain focused on improving deposit mix toward a long-term goal of retail deposits contributing 60% of core deposits. ³
• They reported average non-interest-bearing balances at 28% of core deposits, up from 25% a year ago, attributing this to Comerica’s commercial DDA franchise and Fifth Third consumer DDA growth. ³

They also maintained funding discipline indicators such as Category 1 LCR of 107% and loan-to-core deposit ratio of 77%. ³

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Bottom line

For the combined Fifth Third–Comerica entity, management’s stated expected medium-term deposit growth rate is “mid-single digit”. ¹ The main drivers behind that outlook are (1) a diversified franchise with consumer and business-line engines, ² (2) network maturation opportunities across Southeast and Southwest plus small business and innovation banking, ¹ (3) early proof points in sequential/core deposit momentum and Southwest traction, ¹³ (4) post-conversion ramp of marketing and product/channel capabilities, ⁵ and (5) deposit mix and funding-cost discipline that makes growth sustainable. ³