Business Segments

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Business Segments

Business Segments

The Bancorp reports on four business segments: Commercial Banking, Branch Banking, Consumer Lending and Wealth and Asset Management. Results of the Bancorp’s business segments are presented based on its management structure and management accounting practices. The structure and accounting practices are specific to the Bancorp; therefore, the financial results of the Bancorp’s business segments are not necessarily comparable with similar information for other financial institutions. The Bancorp refines its methodologies from time to time as management’s accounting practices and businesses change.

The Bancorp manages interest rate risk centrally at the corporate level. By employing an FTP methodology, the business segments are insulated from most benchmark interest rate volatility, enabling them to focus on serving customers through the origination of loans and acceptance of deposits. The FTP methodology assigns charge and credit rates to classes of assets and liabilities, respectively, based on the estimated amount and timing of the cash flows for each transaction. Assigning the FTP rate based on matching the duration of cash flows allocates interest income and interest expense to each business segment so its resulting net interest income is insulated from future changes in benchmark interest rates. The Bancorp’s FTP methodology also allocates the contribution to net interest income of the asset-generating and deposit-providing businesses on a duration-adjusted basis to better attribute the driver of the performance. As the asset and liability durations are not perfectly matched, the residual impact of the FTP methodology is captured in General Corporate and Other. The charge and credit rates are determined using the FTP rate curve, which is based on an estimate of Fifth Third’s marginal borrowing cost in the wholesale funding markets. The FTP curve is constructed using the U.S. swap curve, brokered CD pricing and unsecured debt pricing.

The Bancorp adjusts the FTP charge and credit rates as dictated by changes in interest rates for various interest-earning assets and interest-bearing liabilities and by the review of behavioral assumptions, such as prepayment rates on interest-earning assets and the estimated durations for indeterminate-lived deposits. Key assumptions, including the credit rates provided for deposit accounts, are reviewed annually. Credit rates for deposit products and charge rates for loan products may be reset more frequently in response to changes in market conditions. In general, the charge rates on assets have declined since December 31, 2019 as they were affected by the prevailing level of interest rates and by the duration and repricing characteristics of the portfolio. The credit rates for deposit products also declined due to lower interest rates and modified assumptions. Thus, net interest income for asset-generating business segments improved while deposit-providing business segments were negatively impacted during the year ended December 31, 2020.

The Bancorp’s methodology for allocating provision for credit losses expense to the business segments includes charges or benefits associated with changes in criticized commercial loan levels in addition to actual net charge-offs experienced by the loans and leases owned by each business segment. Provision for credit losses expense attributable to loan and lease growth and changes in ALLL factors is captured in General Corporate and Other. The financial results of the business segments include allocations for shared services and headquarters expenses. Additionally, the business segments form synergies by taking advantage of relationship depth opportunities and funding operations by accessing the capital markets as a collective unit.

The following is a description of each of the Bancorp’s business segments and the products and services they provide to their respective client bases.

Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and government and professional customers. In addition to the traditional lending and depository offerings, Commercial Banking products and services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing and syndicated finance.

Branch Banking provides a full range of deposit and loan and lease products to individuals and small businesses through 1,134 full-service banking centers. Branch Banking offers depository and loan products, such as checking and savings accounts, home equity loans and lines of credit, credit cards and loans for automobiles and other personal financing needs, as well as products designed to meet the specific needs of small businesses, including cash management services.

Consumer Lending includes the Bancorp’s residential mortgage, automobile and other indirect lending activities. Residential mortgage activities within Consumer Lending include the origination, retention and servicing of residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Residential mortgages are primarily originated through a dedicated sales force and through third-party correspondent lenders. Automobile and other indirect lending activities include extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine dealers.

Wealth and Asset Management provides a full range of investment alternatives for individuals, companies and not-for-profit organizations. Wealth and Asset Management is made up of four main businesses: FTS, an indirect wholly-owned subsidiary of the Bancorp; Fifth Third Insurance Agency; Fifth Third Private Bank; and Fifth Third Institutional Services. FTS offers full service retail brokerage services to individual clients and broker-dealer services to the institutional marketplace. Fifth Third Insurance Agency assists clients with their financial and risk management needs. Fifth Third Private Bank offers wealth management strategies to high net worth and ultra-high net worth clients through wealth planning, investment management, banking, insurance, trust and estate services. Fifth Third Institutional Services provides advisory services for institutional clients including middle market businesses, nonprofits, states and municipalities.

The following tables present the results of operations and assets by business segment for the years ended December 31:

2020 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	1,903		1,667	381	139	692		—		4,782
Provision for (benefit from) credit losses	1,050			231	34	3	(221)		—		1,097
Net interest income after provision for (benefit       from) credit losses	853			1,436	347	136	913		—		3,685
Noninterest income:
Service charges on deposits	343			215	—	1	—		—		559
Commercial banking revenue	524			5	—	2	(3)		—		528
Wealth and asset management revenue	3			172	—	498	—		(153)	(a)	520
Card and processing revenue	54			283	—	2	13		—		352
Mortgage banking net revenue	—			8	307	5	—		—		320
Leasing business revenue	276		(c)	—	—	—	—		—		276
Other noninterest income(b)	101			68	10	18	14		—		211
Securities gains, net	—			—	—	—	62		—		62
Securities gains, net -non-qualifying hedges on MSRs	—			—	2	—	—		—		2
Total noninterest income	1,301			751	319	526	86		(153)		2,830
Noninterest expense:
Compensation and benefits	557			649	221	218	945		—		2,590
Technology and communications	13			4	8	1	336		—		362
Net occupancy expense(e)	31			176	10	12	121		—		350
Leasing business expense	140			—	—	—	—		—		140
Equipment expense	27			41	—	1	61		—		130
Card and processing expense	7			116	—	1	(3)		—		121
Marketing expense	8			32	3	2	59		—		104
Other noninterest expense	938			851	276	298	(1,289)		(153)		921
Total noninterest expense	1,721			1,869	518	533	230		(153)		4,718
Income before income taxes	433			318	148	129	769		—		1,797
Applicable income tax expense	46			67	31	27	199		—		370
Net income	387			251	117	102	570		—		1,427
Total goodwill	$	1,980		2,047	—	231	—		—		4,258
Total assets	$	70,241		79,982	30,480	12,466	11,511	(d)	—		204,680

(a)Revenue sharing agreements between wealth and asset management and branch banking are eliminated in the Consolidated Statements of Income. 

(b)Includes impairment charges of $30 for branches and land. For more information, refer to Note 8 and Note 29. 

(c)Includes impairment charges of $7 for operating lease equipment. For more information, refer to Note 9 and Note 29. 

(d)Includes bank premises and equipment of $35 classified as held for sale. For more information, refer to Note 8. 

(e)Includes impairment losses and termination charges of $8 for ROU assets related to certain operating leases. For more information, refer to Note 10.

2019 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	2,360		2,371	325	182	(441)		—		4,797
Provision for credit losses	183			224	49	—	15		—		471
Net interest income after provision for credit losses	2,177			2,147	276	182	(456)		—		4,326
Noninterest income:
Service charges on deposits	308			260	—	1	(4)		—		565
Commercial banking revenue	455			4	—	1	—		—		460
Wealth and asset management revenue	3			158	—	469	—		(143)	(a)	487
Card and processing revenue	66			285	—	3	6		—		360
Mortgage banking net revenue	—			6	279	2	—		—		287
Leasing business revenue	270		(c)	—	—	—	—		—		270
Other noninterest income(b)	85			89	14	13	863		—		1,064
Securities gains, net	—			—	—	—	40		—		40
Securities gains, net -non-qualifying hedges on MSRs	—			—	3	—	—		—		3
Total noninterest income	1,187			802	296	489	905		(143)		3,536
Noninterest expense:
Compensation and benefits	466			601	196	217	938		—		2,418
Technology and communications	11			4	8	1	398		—		422
Net occupancy expense(e)	28			173	10	13	108		—		332
Leasing business expense	133			—	—	—	—		—		133
Equipment expense	25			48	—	1	55		—		129
Card and processing expense	8			123	—	1	(2)		—		130
Marketing expense	12			72	4	5	69		—		162
Other noninterest expense	938			839	237	291	(1,228)		(143)		934
Total noninterest expense	1,621			1,860	455	529	338		(143)		4,660
Income before income taxes	1,743			1,089	117	142	111		—		3,202
Applicable income tax expense	319			229	25	30	87		—		690
Net income	1,424			860	92	112	24		—		2,512
Total goodwill	$	1,954		2,046	—	252	—		—		4,252
Total assets	$	74,570		69,413	26,555	10,500	(11,669)	(d)	—		169,369

(a)Revenue sharing agreements between wealth and asset management and branch banking are eliminated in the Consolidated Statements of Income.

(b)Includes impairment charges of $28 for branches and land. For more information, refer to Note 8 and Note 29.

(c)Includes impairment charges of $3 for operating lease equipment. For more information, refer to Note 9 and Note 29.

(d)Includes bank premises and equipment of $27 classified as held for sale. For more information, refer to Note 8.

(e)Includes impairment losses and termination charges of $15 for ROU assets related to certain operating leases. For more information, refer to Note 10. 

2018 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	1,713		2,034	237	182	(26)		—		4,140
Provision for (benefit from) credit losses	(26)			171	42	12	8		—		207
Net interest income after provision for (benefit from) credit losses	1,739			1,863	195	170	(34)		—		3,933
Noninterest income:
Service charges on deposits	273			275	—	1	—		—		549
Commercial banking revenue	402			5	—	2	(1)		—		408
Wealth and asset management revenue	3			150	—	429	—		(138)	(a)	444
Card and processing revenue	58			266	—	5	—		—		329
Mortgage banking net revenue	—			5	206	1	—		—		212
Leasing business revenue	114		(c)	—	—	—	—		—		114
Other noninterest income(b)	67			53	14	18	651		—		803
Securities losses, net	—			—	—	—	(54)		—		(54)
Securities losses, net -non-qualifying hedges on MSRs	—			—	(15)	—	—		—		(15)
Total noninterest income	917			754	205	456	596		(138)		2,790
Noninterest expense:
Compensation and benefits	344			536	192	202	841		—		2,115
Technology and communications	7			5	5	1	267		—		285
Net occupancy expense	26			175	10	12	69		—		292
Leasing business expense	76			—	—	—	—		—		76
Equipment expense	23			50	—	1	49		—		123
Card and processing expense	4			121	—	—	(2)		—		123
Marketing expense	6			67	4	4	66		—		147
Other noninterest expense	777			774	191	284	(1,091)		(138)		797
Total noninterest expense	1,263			1,728	402	504	199		(138)		3,958
Income (loss) before income taxes	1,393			889	(2)	122	363		—		2,765
Applicable income tax expense (benefit)	254			187	(1)	25	107		—		572
Net income (loss)	1,139			702	(1)	97	256		—		2,193
Total goodwill	$	630		1,655	—	193	—		—		2,478
Total assets	$	61,630		61,040	22,044	10,337	(8,982)	(d)	—		146,069

(a)Revenue sharing agreements between wealth and asset management and branch banking are eliminated in the Consolidated Statements of Income.

(b)Includes impairment charges of $45 for branches and land. For more information, refer to Note 8.

(c)Includes impairment charges of $4 for operating lease equipment. For more information, refer to Note 9.

(d)Includes bank premises and equipment of $42 classified as held for sale.