Business Segments

9 Months Ended

Sep. 30, 2021

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.

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 1,100 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 wealth management services for individuals, companies and not-for-profit organizations. Wealth and Asset Management is made up of three main businesses: FTS, an indirect wholly-owned subsidiary of the Bancorp; 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 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, non-profits, states and municipalities.

The following tables present the results of operations and assets by business segment for the three months ended:

September 30, 2021 ($ in millions)	Commercial Banking		Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	369	309	145	22	344		—		1,189
(Benefit from) provision for credit losses	(242)		13	(2)	—	189		—		(42)
Net interest income after (benefit from) provision for credit losses	$	611	296	147	22	155		—		1,231
Noninterest income:
Commercial banking revenue	$	150	2	—	—	—		—		152
Service charges on deposits	91		61	—	—	—		—		152
Wealth and asset management revenue	—		53	—	140	—		(46)	(a)	147
Card and processing revenue	17		82	—	1	2		—		102
Mortgage banking net revenue	—		3	82	1	—		—		86
Leasing business revenue	78		—	—	—	—		—		78
Other noninterest income(b)	24		28	2	1	65		—		120
Securities (losses) gains, net	2		—	—	—	(3)		—		(1)
Securities losses, net – non-qualifying hedges on MSRs	—		—	—	—	—		—		—
Total noninterest income	$	362	229	84	143	64		(46)		836
Noninterest expense:
Compensation and benefits	$	138	160	61	48	220		—		627
Technology and communications	5		1	3	—	89		—		98
Net occupancy expense(c)	8		48	2	4	17		—		79
Equipment expense	7		9	—	—	18		—		34
Leasing business expense	33		—	—	—	—		—		33
Marketing expense	1		10	1	1	16		—		29
Card and processing expense	2		18	—	—	(1)		—		19
Other noninterest expense	212		217	91	81	(302)		(46)		253
Total noninterest expense	$	406	463	158	134	57		(46)		1,172
Income before income taxes	$	567	62	73	31	162		—		895
Applicable income tax expense	110		14	15	7	45		—		191
Net income	$	457	48	58	24	117		—		704
Total goodwill	$	1,981	2,302	—	231	—		—		4,514
Total assets	$	70,346	88,732	33,438	11,272	3,943	(d)	—		207,731

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

(b)Includes impairment charges of $3 for branches and land recorded in Branch Banking. For more information, refer to Note 7 and Note 22.

(c)Includes impairment losses and termination charges of $1 for ROU assets related to certain operating leases. For more information, refer to Note 9.

(d)Includes bank premises and equipment of $25 classified as held for sale. For more information, refer to Note 7.

September 30, 2020 ($ in millions)	Commercial Banking		Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	432	355	98	28	257		—		1,170
(Benefit from) provision for credit losses	337		68	2	—	(422)		—		(15)
Net interest income after (benefit from) provision for credit losses	$	95	287	96	28	679		—		1,185
Noninterest income:
Commercial banking revenue	$	125	1	—	—	(1)		—		125
Service charges on deposits	91		53	—	—	—		—		144
Wealth and asset management revenue	1		44	—	126	—		(39)	(a)	132
Card and processing revenue	13		76	—	—	3		—		92
Mortgage banking net revenue	—		2	72	2	—		—		76
Leasing business revenue	77		—	—	—	—		—		77
Other noninterest income(b)	11		16	2	4	(7)		—		26
Securities gains, net	—		—	—	—	51		—		51
Securities losses, net – non-qualifying hedges on MSRs	—		—	(1)	—	—		—		(1)
Total noninterest income	$	318	192	73	132	46		(39)		722
Noninterest expense:
Compensation and benefits	$	127	162	57	54	237		—		637
Technology and communications	3		1	2	—	83		—		89
Net occupancy expense(c)	8		44	2	3	33		—		90
Equipment expense	6		10	—	—	17		—		33
Leasing business expense	35		—	—	—	—		—		35
Marketing expense	2		6	1	—	14		—		23
Card and processing expense	2		28	—	—	(1)		—		29
Other noninterest expense	228		209	75	76	(324)		(39)		225
Total noninterest expense	$	411	460	137	133	59		(39)		1,161
Income before income taxes	$	2	19	32	27	666		—		746
Applicable income tax expense (benefit)	(10)		4	7	6	158		—		165
Net income	$	12	15	25	21	508		—		581
Total goodwill	$	1,961	2,047	—	253	—		—		4,261
Total assets	$	72,025	77,018	27,869	11,520	13,564	(d)	—		201,996

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

(b)Includes impairment charges of $7 and $4 for branches and land recorded in Branch Banking and General Corporate and Other, respectively. For more information, refer to Note 7 and Note 22.

(c)Includes impairment losses and termination charges of $1 for ROU assets related to certain operating leases. For more information, refer to Note 9.

(d)Includes bank premises and equipment of $45 classified as held for sale. For more information, refer to Note 7.

The following tables present the results of operations and assets by business segment for the nine months ended:

September 30, 2021 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	1,110		905	415	64	1,080		—		3,574
(Benefit from) provision for credit losses	(470)			79	7	(1)	55		—		(330)
Net interest income after (benefit from) provision for credit losses	$	1,580		826	408	65	1,025		—		3,904
Noninterest income:
Commercial banking revenue	$	457		7	—	1	—		—		465
Service charges on deposits	273			172	—	—	—		—		445
Wealth and asset management revenue	2			154	—	414	—		(134)	(a)	436
Card and processing revenue	45			244	—	2	7		—		298
Mortgage banking net revenue	—			8	225	2	—		—		235
Leasing business revenue	226		(c)	—	—	—	—		—		226
Other noninterest income(b)	66			73	6	3	63		—		211
Securities gains, net	8			—	—	—	4		—		12
Securities losses, net – non-qualifying hedges on MSRs	—			—	(2)	—	—		—		(2)
Total noninterest income	$	1,077		658	229	422	74		(134)		2,326
Noninterest expense:
Compensation and benefits	$	431		488	189	151	712		—		1,971
Technology and communications	12			4	8	1	260		—		285
Net occupancy expense(d)	25			144	8	11	47		—		235
Equipment expense	19			28	—	—	55		—		102
Leasing business expense	102			—	—	—	—		—		102
Marketing expense	4			24	2	1	41		—		72
Card and processing expense	5			68	—	—	(3)		—		70
Other noninterest expense	627			647	276	236	(948)		(134)		704
Total noninterest expense	$	1,225		1,403	483	400	164		(134)		3,541
Income before income taxes	$	1,432		81	154	87	935		—		2,689
Applicable income tax expense	270			17	33	19	243		—		582
Net income	$	1,162		64	121	68	692		—		2,107
Total goodwill	$	1,981		2,302	—	231	—		—		4,514
Total assets	$	70,346		88,732	33,438	11,272	3,943	(e)	—		207,731

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

(b)Includes impairment charges of $6 and $1 for branches and land recorded in Branch Banking and General Corporate and Other, respectively. For more information, refer to Note 7 and Note 22.

(c)Includes impairment charges of $25 for operating lease equipment. For more information, refer to Note 8 and Note 22.

(d)Includes impairment losses and termination charges of $3 for ROU assets related to certain operating leases. For more information, refer to Note 9.

(e)Includes bank premises and equipment of $25 classified as held for sale. For more information, refer to Note 7.

September 30, 2020 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	1,512		1,372	279	116	321		—		3,600
Provision for credit losses	839			182	25	—	64		—		1,110
Net interest income after provision for credit losses	$	673		1,190	254	116	257		—		2,490
Noninterest income:
Commercial banking revenue	$	386		3	—	1	(3)		—		387
Service charges on deposits	253			160	—	1	—		—		414
Wealth and asset management revenue	2			128	—	371	—		(114)	(a)	387
Card and processing revenue	40			209	—	1	10		—		260
Mortgage banking net revenue	—			6	286	3	—		—		295
Leasing business revenue	207		(c)	—	—	—	—		—		207
Other noninterest income(b)	9			49	8	13	(37)		—		42
Securities gains, net	—			—	—	—	48		—		48
Securities gains, net – non-qualifying hedges on MSRs	—			—	3	—	—		—		3
Total noninterest income	$	897		555	297	390	18		(114)		2,043
Noninterest expense:
Compensation and benefits	$	405		491	162	165	688		—		1,911
Technology and communications	10			2	6	1	253		—		272
Net occupancy expense(d)	23			131	7	9	84		—		254
Equipment expense	20			31	—	—	46		—		97
Leasing business expense	103			—	—	—	—		—		103
Marketing expense	5			23	3	2	41		—		74
Card and processing expense	6			86	—	—	(3)		—		89
Other noninterest expense	722			635	204	223	(988)		(114)		682
Total noninterest expense	$	1,294		1,399	382	400	121		(114)		3,482
Income before income taxes	$	276		346	169	106	154		—		1,051
Applicable income tax expense	27			73	35	22	71		—		228
Net income	$	249		273	134	84	83		—		823
Total goodwill	$	1,961		2,047	—	253	—		—		4,261
Total assets	$	72,025		77,018	27,869	11,520	13,564	(e)	—		201,996

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

(b)Includes impairment charges of $11 and $14 for branches and land recorded in Branch Banking and General Corporate and Other, respectively. For more information, refer to Note 7 and Note 22.

(c)Includes impairment charges of $3 for operating lease equipment. For more information, refer to Note 8 and Note 22.

(d)Includes impairment losses and termination charges of $6 for ROU assets related to certain operating leases. For more information, refer to Note 9.

(e)Includes bank premises and equipment of $45 classified as held for sale. For more information, refer to Note 7.