So next up with us we have Fifth Third Bancorp. From Fifth Third we have Jamie Leonard, Chief Operating Officer, and joining Jamie we have Brennen Willingham, who's the Treasurer of Fifth Third, so thank you both of you for joining us.
Thank you.
I believe Jamie has some prepared remarks for us, so hand it over to Jamie first.
Thank you, Ibrahim. And good afternoon, thanks for joining us today. It is a pleasure to be out of the Cincinnati snow, to discuss, in Florida, why the Comerica acquisition represents such an important milestone for Fifth Third, how we are executing on the integration, and why we believe this transaction positions us for stronger, more resilient performance in the years ahead. When we evaluated this transaction, we focused on one question: will this combination create a meaningfully better bank? The answer is unequivocally yes, strategically, financially, and operationally. This acquisition strengthens our competitive position, expands our capabilities, and supports superior long-term returns. It creates a more durable, more efficient, and better growth-oriented franchise, not just a larger one. The financial logic is also compelling.
There's no tangible book dilution at close, with expected tangible book value per share accretion each quarter this year, achievable cost synergies, and a long runway for sustainable growth. This is a disciplined acquisition aligned with our longstanding commitment to through-the-cycle value creation. As you know, while it's important that the numbers look good on paper, execution in the real world is ultimately where value is created. Our integration activities build on what worked particularly well in the MB Financial transaction and the lessons we learned from what could have worked better. Today we are fortunate that almost all of our integration team members from our MB conversion are still here to successfully handle the Comerica integration. Ever since we were asked to bid on First Republic in March of 2023, we have been preparing for the potential for a large-scale bank integration.
We've been stressing our systems and automating processes so that we could double the size of the bank without compromising stability. While Comerica does not double our size, it does represent a significantly larger integration effort than MB. We have already made substantial progress on data mapping, technology alignment, and operational readiness. Compared to the MB integration, as well as our initial targets for Comerica, we are meaningfully further ahead, enabling us to accelerate customer conversion to Labor Day rather than mid-October. This earlier conversion will provide a clean view of the company's financial performance in the Q4 of 2026. Performance we expect will already reflect the return and efficiency levels we had originally targeted for full year 2027. While systems create stability, people and culture create value. Retaining the clients and colleagues is central to our integration strategy.
Several senior Comerica leaders are joining Fifth Third in meaningful roles, reinforcing continuity and stability across our markets. Steve Davis, a 33-year Comerica veteran, is the regional president of our expanded Michigan presence. Cynthia Jordan, with 28 years of Comerica experience, is our regional president of Southern California. Brian Enzler is the regional president of our North Texas region with over 19 years at Comerica. In corporate banking, Joe Ursuy brings over 27 years of Comerica experience as the Group Head of Environmental Services. David Whiting will be the Group Head of the Tech and Life Sciences segment, bringing deep experience from his work in a similar role at Comerica. Michael Hoin joins us as the Head of Dealer Services, continuing the strong leadership he demonstrated as Director of that business at Comerica. Our integration approach is anchored in the core principle of customer first.
We are proactively engaging Comerica's top relationships to highlight the expanded benefits they will receive from our broader product suite to our digital capabilities and advisory expertise. Comerica's Treasury clients will receive white glove onboarding, with many converted before September. This deliberate and methodical approach protects relationships and positions us for long-term growth. By bringing our teams together and strengthening client trust, we are laying the groundwork for the rest of the integration to succeed. Cultural alignment and financial discipline are not separate efforts. They reinforce one another. When people are supported and clients feel confident, the organization can move faster, execute with precision, and capture the financial benefits of the merger more effectively. With that foundation in place, let me turn to the financial impact of the transaction. We expect $850 million in annual pre-tax expense synergies are roughly 35% of Comerica's expense base.
These savings will come from consolidating duplicative functions, optimizing facilities and vendors, aligning overlapping systems, and creating a more efficient end-to-end operating model. We are confident that we will achieve our cost savings goals while improving both the scale and density of the company. We originally anticipated recognizing approximately $320 million of these savings in 2026. With the earlier legal day one, we now expect an additional $80 million of savings, with half of that dropping to the bottom line and half reinvested for growth. Achieving these targets strengthens returns, enhances capital generation, and gives us the flexibility to reinvest for the long term. The most exciting part of this merger is the growth potential it unlocks. We see more than $500 million in identifiable revenue synergies over the next five years, grounded in capabilities already proven inside of Fifth Third.
We are bringing Comerica markets a modern consumer strategy built on analytics-driven marketing, segmentation tools, digital onboarding, and an award-winning mobile experience. Comerica will see its first major consumer deposit campaign in more than a decade, with roughly 1 million direct pieces of direct mail being dropped and over 13 million over 2026. Direct mail remains one of the highest performing tools in our customer acquisition toolkit, particularly ahead of digital account opening enablement, which will take place post-conversion. Before we complete the full systems conversion, we intend to introduce our Provide fintech lending platform to small businesses across the legacy Comerica footprint.
Provide delivers a meaningfully better end-to-end customer experience, and since becoming Fifth Third's small business lending engine, it has helped us rise to a top 15 national SBA lender and earn the number two ranking in J.D. Power's 2025 National Small Business Banking Satisfaction Study ahead of every other regional bank. These results give us tremendous confidence in the value Provide will bring to our new markets. In the medium term, we are positioning Fifth Third for high-quality growth in Texas, one of the country's most attractive banking markets. We will open 150 new financial centers across Texas in 2027 through 2029, supplementing Comerica's existing statewide presence and accelerating Fifth Third's ability to scale quickly in Dallas, Houston, and Austin.
We have already secured more than a quarter of those sites in the past few months, reflecting the strength of our de novo capabilities and the power of the data-driven tools we use to select and activate new locations. This is the same playbook that has delivered outperformance for us across the Southeast, and now we're bringing that formula to Texas at scale. With these 150 new branches, we are positioned to achieve top four branch share in Dallas, Houston, and Austin by the end of the decade. As a result, more than half of our retail network will be concentrated across the Southeast, Texas, Arizona, and California. This expansion not only strengthens our distribution advantage in high-growth markets but also supports durable, granular deposit growth that enhances long-term funding stability and earnings power. In commercial, we expect meaningful lift from existing Comerica clients.
We are already reviewing Comerica's commercial relationships name by name to identify opportunities where Fifth Third's broader balance sheet, expanded product capabilities such as ABL leasing and Treasury services, and technology investments can immediately strengthen and grow these relationships. Many Comerica clients have been constrained by technology limitations or balance sheet caps, and that changed last week with Fifth Third. Looking ahead, one of the most exciting opportunities is the combined innovation platform. Comerica's Tech and Life Science vertical is highly respected, and Fifth Third's Newline platform is one of the most differentiated embedded payments offerings in the industry. Together, these strengths position us to build a scaled innovation economy franchise without introducing concentration risk by uniting balance sheet capacity, API-driven payments infrastructure, Treasury capabilities, and deep sector specialization.
This final opportunity captures the essence of what this merger enables: stronger capabilities, deeper client relationships, and a more innovative foundation for growth. With that in mind, let me close by reiterating the core message. The Comerica acquisition strengthens our franchise in meaningful ways. It expands our capabilities, deepens our market presence, enhances our earnings profile, and gives us a long runway for further sustainable growth. We recognize that investors measure not only strategy but also execution. Our approach is designed to ensure success on both fronts. We have a clear integration plan, a disciplined financial framework, and a proven track record of executing transactions successfully. We are confident in the road ahead and confident that this combination positions the new Fifth Third and our shareholders for a stronger, more resilient future. Thank you, and with that, Brennen and I look forward to your questions.
Thank you for that. Thanks for the update. I guess maybe since you brought it up, and then when we think about just the MB Financial and having the experience of integrating that, just maybe Jamie spend a minute about what worked with MB, what did not work, and how that's informing how you'll go about sort of integrating Comerica?
Yeah, I think the thing that worked the best with MB was the fact that we were able to keep the right leaders in the right roles. So you look back at the MB Financial integration with Mitch Feiger as the CEO staying on and then ultimately moving to our board where he is an active board member today, followed by then Mark Hoppe as our President of Chicago, and then today Mark Heckler, who's an MB veteran, also heading up Chicago. I think when you keep the right leaders from the franchise you've acquired, you ultimately do a better job with both RM retention and therefore customer retention. So that was a positive, and I think that was one of the messages here today. As you look at the Comerica positions for the regional presidents, we're really proud and excited about what they will bring to the franchise.
I think there are also lessons that can be learned the hard way. We learned that with one example would be consumer data, where with cell phones and information, how that data, when you lift and shift information, does not yet populate all of your fraud rules and some of your analytics-driven internal controls. That is something we will not make a similar mistake on, where we will populate, hydrate the fraud and internal control analytics such that a Comerica experience wouldn't be viewed as, "Hey, I'm a new customer on day one after conversion," but rather, "Hey, I've been here all along, and this is a normal pattern for me, and therefore, my Zelle limits and fraud controls are therefore in place." So I think we've learned a few things.
I think the team is excited about showing what we can do with this integration, and I'm confident this will go very well.
Got it. Maybe just talk about, like, whenever we have banks go through a merger or a large transaction, I think the question is, will management be spread too thin, etc.? Does it take the focus away from organic growth? You had a distinctive organic growth strategy in the Southeast, I would say, over the last five years. Just talk to us. I mean, you're sort of in command of all of this in your seat. How has your sort of time allocation shifted from the Southeast expansion, branch openings to integrating Comerica?
Yeah, the Southeast story is one that is truly an exceptional organic growth story, and it's one of those stories that is better and better every year. Each vintage of de novo builds that we have done in the Southeast, each one has gotten better, and it has performed so well that the 2024 vintage was actually 200% of its deposit goal. This year, 2025's vintage is over 213% of their deposit goal. The total of all of the branches we've opened since 2018 are +130% over their deposit goal. To your point, it has been a very successful strategy. We know what we're doing, but we're also humble enough to learn from our mistakes. So each vintage, we are tweaking things. We're getting better partners.
We're focused on opening these branches where people live, work, or shop, and, you know, that's really what we're focused on. So the Southeast, now that all 200 sites have been locked in, we've opened 50 last year, we'll open 55 this year. The rest of it, you know, I want to say is sort of on autopilot. Our teams know what they're doing. So it has enabled us to lift out one of our best leaders in the company who's been handling the Southeast retail buildout and now focus him on Southwest because that opportunity is every bit as great and getting the Comerica branches to perform at a level that a Fifth Third branch would be expected to perform.
So we're spending a lot of time now on the Southwest, on site location, and now that we're past legal day one, really working on the people and the sales culture, and then the tools, products, process will all come post Labor Day.
Got it. And just on the branch vintages you mentioned, like, if you go back a few years ago, what is it that you're doing today in terms of these, like, my sense is you have this down to an exact science in how you're opening branches. So what are you doing today that you weren't doing early on, which has improved the productivity of these branches?
So our site selection tools, we continue to refine. We use Placer.ai data as just one input into identifying the movement that people have throughout their day or week. So that has helped inform the model, and, you know, we've talked a lot about, you know, how we break the country down into, you know, an eighth of a mile, sixteenth of a mile, to determine where best to put that. So I think that is fine, but where we've really improved the performance has been in a couple of areas. One is, you know, the out parcels of grocery stores and being with the right partner in those grocery stores has been a very impactful, item for us. And starting and continuing the de novo support from a marketing perspective ahead of opening and for a year or two post-opening has also been, something that has helped.
And then ultimately in this business, you win with people, and we've done a very nice job of building, recruiting, training, and development program that gives the employees the ability to really service customers. And then that growth and that success just feeds on itself.
And maybe one more on the Southeast. I remember when you first moved into the role, you talked about, like, winning helps, like seeing, like, for your employees, like seeing that you're winning the Southeast kind of feeds on itself. When we think about the growth in the Southeast, I think the general perception is super competitive markets. Big banks are opening branches. A lot of small banks want to grow there. How, in that backdrop, do you create sticky client relationships and household acquisitions?
Yeah, I think our approach has proven out over time, and I would summarize it as getting somebody in the door is just the beginning and not bring them in, open account, and leave it alone. Our sales process is highly interactive with the customer. We follow what we call a two-to-two process. You are getting a phone call from a banker two days, two weeks, and two months after the opening of your account to help drive privacy. I think we've removed friction from the account opening process where you can have your direct deposit switch, account open, in just minutes, whereas, you know, we know from Comerica that could be a much longer experience. So with frictionless and then with the right products, over time, the customer then starts to experience the service convenience and location benefits of being a part of the Fifth Third customer base.
That is ultimately what leads to the stickiness is that customer relationship with the bankers in the branch. So it's our job to bring the best of Fifth Third to get the customer into the branch, and then it's the branch's job, and why their reward system is based on managing their book of business and driving privacy. I think that has worked out very well for us.
Got it. I guess maybe shifting to Comerica, my sense and just talking to investors, I think a lot of people expect you had a franchise that was sort of underutilized. I think the bullish view around this transaction would be there's just a lot more that Fifth Third can do with that franchise. You talked about a couple of, like, lending verticals, but just more holistically, is that the right way to think about it where just there should be a significant runway? I don't want to call it low-hanging fruit, but to monetize that franchise.
Yeah, I'll start on the consumer side, and Brennen can chime in on payments and commercial. On the consumer side, Comerica's franchise is a very interesting one because it is a barbelled franchise where Michigan, the average deposits per branch are roughly $80 million per branch, which is a very nice level and very competitive to what Fifth Third does in the state of Michigan. However, the Southwest franchise is operating at just $30 million per branch. So it is a very under-penetrated customer base surrounding the branch, and yet the branches are in great locations, in great markets, with a population growth that when we're finished with our Southeast, Southwest expansion plans, we are going to have the second best population growth rate in our retail footprint of any, other regional bank.
So, you know, that's what we had included in the slide deck, that that population growth is over 4%. So just by waking up, we ought to be able to grow households at a very nice clip. We just need to bring the Fifth Third process, technology, products, and marketing to the Comerica branch. I think the Comerica people are great. We've visited a lot of branches. They're very excited about the opportunity ahead, but we've got to get them from being a $30 million per branch franchise to being a $70 million -$80 million per branch franchise. And that's one of the big deposit opportunities ahead of us.
Yeah, and there's tremendous opportunity in the middle market space, and that's the crown jewel of the franchise. We've talked a whole lot about the value of the Comerica middle market piece, and, you know, they're bringing with it a lot of expertise in Texas and California and certain verticals, that they're bringing to the table. Jamie talked about the tech and life sciences vertical, but, you know, it's really a business that's been a little bit handcuffed by balance sheet availability of the Comerica franchise, particularly post-Silicon Valley crisis in 2023. So coming on to Fifth Third, you know, we have a lot different liquidity position, obviously robust capital position, more diversified balance sheet. So we could unlock a lot of that value in the middle market space, and I think their bankers are very excited to hear that.
We've put a lot of, you know, fact packs in front of the bankers to get familiar with Fifth Third so they could get out and running with their clients. One of the things that's resonated immediately with their clients is the ratings upgrade that they're going to get simply through the acquisition. That changes things from a hold limits perspective on deposit opportunities. You know, right off the bat, we should be able to get a lot of benefit from the middle market franchise and win very quickly there.
Good. Are there any aspects of the way Comerica ran the middle market franchise, which you mentioned was a crown jewel, that you can sort of import into Fifth Third?
I mean, I think it's just the overlap of the expertise. I mean, we were already in some of those markets that they're operating in, but now we're deepening in those markets using their expertise from the middle market channels. And a lot of the things that they're doing today are things that we do. They just do it exceptionally well in the markets that they're represented in. And so I think that's just going to add value back to our middle market franchise. There's another opportunities within, you know, capital market space as well, you know, just the products and services that we have. We've already converted over their swap dealer. And so as, you know, they're bringing deals to market already, they're bringing it over onto the Fifth Third platforms, and that's quick wins right out of the gate for us.
I think from a culture perspective, they're very proud of their Credit College. They have great credit results as a result of everyone going through that program. So that is something we intend to bring to Fifth Third.
That's good.
Got it. Maybe I think just pivoting a little bit to the operating environment and as we think about just the organic growth outlook. Talk to us in terms of your level of confidence in organic growth for the year. Are sort of what you're hearing from clients, what you're hearing from your bankers is all sort of directionally positive, and what could go wrong, I guess?
Yeah, the environment I would say is a very productive environment right now. We came out of the fourth quarter on a commercial perspective with very strong middle market production. We were up 20% year-over-year on loan production, which was a multi-year high for us. So the middle market and that production environment continues to be positive. What has really changed for us thus far out of the gate in 2026 is that the corporate bank had experienced a fair bit of paydowns and decline in line utilization. That has since rebounded so that we're off to a fast start on C&I balances. Tim mentioned that on the earnings call. I think we're up, you know, $1 billion or so through the month of January. So that's a nice start to what is a productive environment. And on the consumer side, the consumer continues to perform well.
Deposit balances have actually shown a little bit of a rebound in that lower FICO banded deposit customer. We don't do, you know, the subprime lending on the asset side, but we do monitor that cohort in the deposit book. And so we've seen a little bit of an uptick there. I think you've heard that essentially throughout the day at this conference about the health of the consumer. So home equity lending, auto lending continues to go well for us. And so we're excited about how the year has gotten off to a very nice start. And, you know, with that said, you know, we affirm our guide for the year. No changes there. Things are tracking nicely.
Good. I think we heard from another bank too in terms of January had started out well on loan, actually from multiple banks all day today. Does that indicate that finally this whole uncertainty over the last 18 months around tariffs, Fed policy, all of that, businesses are kind of now done with it and sort of leaning in, investing?
Yeah, I mean, that's what it sounds like. Just talking to our customers, you know, there was a whole lot of wait and see last year, just a lot of noise and a lot of uncertainty. As you get into this year, it feels like the environment is a little set up for growth. Customers are feeling a little bit better about putting capital to work. I mean, that appears to be the reason why we're off to a fast start and why everyone is a bit more constructive on loan growth this year. You know, as I look at, Jamie mentioned the loan growth that we've had since the start of the year. I mean, it's being driven by our corporate verticals, but we're having good production in the middle market. The pipelines are very robust.
When we look across the corporate banking verticals, it's been pretty broad success. I think almost all of our verticals are up year to date with the exception of maybe a couple that call them flattish. In the middle market segments, the Southeast is doing really well. The Carolinas, Georgia, which also includes our Alabama team. Things are looking pretty positive to start the year, and it appears that customers feel pretty good about putting capital to work right now.
Got it. How would you characterize the deposit pricing environment? I mean, it's always competitive. I'm just wondering, is it getting worse?
I wouldn't say it's worse. I would say this cycle has been interesting. Even though the Fed has reduced rates, it's still been firm. I think I've said it's rational, but it's firm. That continues to be what we see. Everybody's going after the same pool of deposits, but it has stayed rational for the most part. Consumer is going to be competitive. The Midwest and the Southeast, those markets have always been competitive and will continue to be competitive. We continue to see a lot of competition in the middle market space for operational deposits. I mean, that's the crown jewel of commercial banking is operational deposits. You know, we'll continue to see that competition, I think, particularly as people are more constructive on the loan growth sort of story.
Got it. I guess you're a former CFO, a treasurer on the stage, so I would be remiss not to ask about NII and ALCO and interest rate risk management. So just, so you obviously have your NII guidance out there. As we think about the puts and takes, my sense is better balance sheet growth or loan growth would be a positive to that outlook. But just talk to us in terms of are there other factors that could drive a better NII for the year? And then what are the risks? Is it what the Fed does? Is it the yield curve? Like how do you sort of think about the risks, downside risks?
Yeah, don't forget Jamie was also a former treasurer too. So he could answer all of these questions.
But he can't hold down the job apparently.
I would say it was his most important job, but that's just me. But no, I think, you know, Jamie reiterated the guide. I think the obvious driver there is going to be loan growth. I think if you look at our NII guide, it is sort of set within the guide of loan, you know, 5%-7% loan growth guide. If we hit the upper end of that range, it's going to coincide with that upper end of NII. But, you know, there would be some benefit if we see some changes in the yield curve shape, obviously a little bit more slope in the yield curve is a positive for us. You know, we have a lot of optionality with our investment portfolio. We've talked for a couple of years now about our fixed asset repricing benefit.
While that's not as big of a driver as what it was maybe last year because certain portfolios like auto have repriced over now, there's still marginal benefit in the steepness of the yield curve to be had and the deployment of the securities portfolio. So that I think would be another benefit outside of just the loan growth.
It's funny, if you go back a few years when I was in the CFO chair, I think I'd said if we got a Fed funds rate around 350 with a nice slope to the curve, that would be an incredible position for our balance sheet to be positioned. And, you know, looks like that's the type of scenario we're going to see play out here. So, you know, we had record NII last year and obviously going to blow through that this year.
Anything as we think about, so you closed the Comerica merger a few weeks back. As we think about closing of the transaction, like anything from a balance sheet standpoint that we should be sort of thinking about any on the securities book or on the loan book that might be getting restructured or runoff or any of that?
Yeah, we're going to. We talked about on the earnings call doing some restructuring of the investment portfolio. So that's been underway. And so, you know, really just looking for some opportunities with the entry points on the portfolio. Like I said, we've stayed pretty short. We've taken some actions on the Comerica portfolio. A lot of that right now is in cash that we're able to deploy at, you know, when we see the right entry points. And, you know, hopefully we'll see a little bit more steepness in the yield curve that'll help us out there a little bit. But nothing really major on the loan side of the balance sheet to reconstruct. It's mainly just the investment portfolio actions. Yeah.
Got it. Maybe last two on this one, when we think about just organic expense growth investments, just maybe talk to us about where the efficiency opportunities are, like where are the savings coming from? Then outside of branches, like what are the one or two top areas of investment spend?
The expense synergies from the transaction will predominantly be people, just given that's the nature of how bank mergers go. We're tracking very well actually ahead of pace, which is why we'd said we'll reinvest some of that excess in order to pull forward the revenue synergy opportunities such that we'll deliver $400 million or so of expense synergies this year. But we would expect to spend about $40 million. And that $40 million of investment, though the largest portion of that would be on marketing in order to fulfill the direct mail campaign that'll be focused more on raising deposit dollars and a test and learn to see how the Southwest markets react to our approach to direct mail. And then post-conversion, that will then transition into more of the traditional Fifth Third marketing with digital offers, checking, and really be focused on primacy and household growth.
So marketing would be a large portion of the investment. But additionally, we're already hiring mortgage loan originators in order to have those mortgage loan originators reside in a Comerica branch because Comerica doesn't have a branch presence for mortgage. They would be on Fifth Third systems and technology, but would be able to fulfill mortgage lending starting in a month or so. So we're excited about that opportunity. And then there's always hiring additional middle market RMs, treasury management officers, and then continuing to invest in their verticals. And so we're excited about the revenue opportunities. And I think I said in my prepared remarks, probably the most exciting part, you know, it's no fun going through the expense cuts. But now that I think we've got the worst of that behind us, now it's looking forward at the future.
I think the teams are excited about what you take the 12th largest bank and the 22nd largest bank in the country. Now we've got the ninth largest bank. That is a great platform for us to springboard a lot of exciting things.
You're almost a national bank. But I did want to touch upon Newline in the embedded payments business. I think it is a unique business for Fifth Third. Just talk about client acquisition, the sales, so one independently in terms of like winning clients for the payments business and then the cross-sell opportunity that business creates in the Southeast and maybe as you integrate Comerica.
Yeah, I mean, as Jamie mentioned in his prepared remarks, I mean, the crossover between the tech and life sciences vertical and Newline. I think there's a natural synergy there between the underlying customer base in terms of what Newline can do for them from a payments perspective and from a deposit perspective. And, you know, I think we've done a really good job of going out and landing, you know, some very banner clients on the Newline platform that are, you know, very well-known names like Stripe, Trustly, and Nuvei and like the likes of those. And so, you know, these are companies that are growing at a pretty rapid rate. The adoption of embedded payments, instant payment platforms continues to scale. And as they scale and grow, we get to grow with them. And the beauty of Newline is it's capital light, right?
We're not having to necessarily extend the balance sheet. It used to establish a relationship with the customer where you got a deposit and recurring fee revenue. It used to be you needed to lead with the balance sheet and capital. You know, with Newline, we're leading with a product and a service that's fairly unique. And I think that, you know, from a treasurer's perspective, you know, bringing with it a deposit and recurring fee revenue that adds to the P&L and our stability of the bank without extension of credit, it is a huge positive. So I do think that there is, continues to be a massive opportunity with Newline, high growth segment with high growth clients and natural crossover with what Comerica is already doing. So it can be very interesting for us.
We just got to get our arms around like the tech and life science vertical in terms of what it could mean for Newline.
Got it. I guess pivoting to just regulations and capital. On the regulatory front, I think there is expectations. We hosted a panel earlier today just in terms of maybe getting some proposals from the Fed around the Basel Endgame and other priorities. What are you looking for? Like what would be the most impactful as we think about Fifth Third on the regulatory agenda that could move the needle?
I was waiting for my cue to answer the question. He's looking at me. There we go. So on the regulatory front, I think one we'd all like to see an end to the Basel Endgame just finally be out there so we know what rules we're playing by. I t's our expectation that, you know, whether or not you have the inclusion or exclusion of the AOCI in the formal capital rules has kind of been a game changer in terms of how people evaluate capital. And so we're going to continue to evaluate ourselves based on a marked capital basis. And, you know, obviously TCE matters. The threshold moves, I think, are interesting and impactful for the industry as a whole.
You know, if they were to move the Category 3 threshold up and we would still be a Category 4 bank, there would certainly be some incremental benefit for some of the more prescriptive regulations that are out there. But I think that there's still some things that we'll just continue to do. That's just good hygiene for being a bigger bank, whether that's, you know, continued adaptation of our risk platforms to make sure that we have more timely and accurate reporting around, you know, some of the shortened timing requirements that a Category 3 is up under. But also to just building out the infrastructure around our modeling capabilities and the robustness of our framework. So there's a lot to be done there.
I don't know that there's anything that's just like one magic, like this would be like a home run for Fifth Third, but there would be just things on the margin that I think would be impactful.
Yeah, it seems like the environment, you know, the tone is certainly helpful. The fact that we were able to get a transaction approved in 99 days versus 273 days with MB, that is certainly helpful. But for the most part, it's not the regulations that are dictating what we do and how we manage the company. To Brennen's point, you know, with even though LCR was no longer a requirement, we still do a daily LCR calculation. We still do semi-annual capital stress testing. The SCB change, it doesn't matter because it's, you know, the fact they're holding everybody constant. It doesn't matter because that's not how we're managing the capital of our company. So for the most part, it's going to be the ability for us to do the right things and manage the risks facing us. And the regulations just simply are not binding constraints.
Got it. I guess one last question. I think going back to you, Jamie, when we think about the Southeast, so the debate around what's the right scale, can the regional banks compete? One, in your mind, is there a certain asset size or density that really tips that scale? Maybe it's $100 billion, maybe it's $200 billion. And you have a lot of experience competing with national banks, regional banks, small banks across the Southeast. Like is there any reason to believe a bank of your size, ninth largest bank, $300 billion in assets? Is there any competitive disadvantage that you face?
I don't think there's a competitive disadvantage. I think the density that we have been able to achieve in market is absolutely critical to our success. One of the main reasons why the de novo program has been as successful as it has been is we are focused on density where we compete and not scale and breadth in and then forsaking density. That's part of why the Comerica transaction was so helpful to Fifth Third was you had density in Michigan and it's adding and expanding to the perimeter of the company that gives us a growth trajectory for the next 10 years that we can pursue organically. I think the profile of the Southeast is one that, you know, we're in a great position to compete in.
Perhaps the one lesson from Comerica that where regulation, back to your earlier question, where regulation could impact somebody, we're well past this point. But if you're approaching the $100 billion mark, it is an expensive hurdle to jump. We see that as companies have to build out a three lines of defense. It's $125 million-$150 million price tag to build out those risk functions. For us, we've already done it. We're good. We're excited about a 53% efficiency ratio in 2026. It's brand appropriate. So we like that. We're excited about the Southeast.
Thank you both.
Thank you.