Business Segments

6 Months Ended

Jun. 30, 2022

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 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 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 products to individuals and small businesses through 1,080 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, in addition to home improvement and solar energy installation loans originated through a network of contractors and installers.

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:

June 30, 2022 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	516		554	114	53	102		—		1,339
Provision for credit losses	85			20	4	—	70		—		179
Net interest income after provision for credit losses	$	431		534	110	53	32		—		1,160
Noninterest income:
Service charges on deposits	$	92		62	—	—	—		—		154
Wealth and asset management revenue	1			51	—	132	—		(44)	(a)	140
Commercial banking revenue	136			2	—	—	(1)		—		137
Card and processing revenue	18			83	—	1	3		—		105
Leasing business revenue	56		(c)	—	—	—	—		—		56
Mortgage banking net revenue	—			1	30	—	—		—		31
Other noninterest income(b)	42			20	3	(1)	21		—		85
Securities losses, net	—			—	—	—	(32)		—		(32)
Securities losses, net – non-qualifying hedges on MSRs	—			—	—	—	—		—		—
Total noninterest income	$	345		219	33	132	(9)		(44)		676
Noninterest expense:
Compensation and benefits	$	142		158	60	56	168		—		584
Technology and communications	2			1	4	—	91		—		98
Net occupancy expense(d)	9			49	2	3	12		—		75
Equipment expense	7			10	—	—	19		—		36
Leasing business expense	31			—	—	—	—		—		31
Marketing expense	1			12	1	—	14		—		28
Card and processing expense	2			19	—	—	(1)		—		20
Other noninterest expense	224			209	79	78	(306)		(44)		240
Total noninterest expense	$	418		458	146	137	(3)		(44)		1,112
Income (loss) before income taxes	$	358		295	(3)	48	26		—		724
Applicable income tax expense (benefit)	64			62	(1)	10	27		—		162
Net income (loss)	$	294		233	(2)	38	(1)		—		562
Total goodwill	$	1,946		2,302	—	226	452	(e)	—		4,926
Total assets	$	80,424		90,520	32,802	13,062	(10,026)	(c)	—		206,782

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

(b)Includes $1 of impairment charges for bank premises and equipment recorded in Branch Banking. For more information, refer to Note 7 and Note 22.

(c)Includes bank premises and equipment of $24 classified as held for sale. For more information, refer to Note 7.

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

(e)Due to the timing of a business acquisition, the Bancorp is in the process of completing its analysis of the allocation of the goodwill across its business segments, therefore goodwill is presented as part of General Corporate and Other as of June 30, 2022.

June 30, 2021 ($ in millions)	Commercial Banking		Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	376	301	142	21	368		—		1,208
(Benefit from) provision for credit losses	(151)		25	—	—	11		—		(115)
Net interest income after (benefit from) provision for credit losses	$	527	276	142	21	357		—		1,323
Noninterest income:
Service charges on deposits	$	92	57	—	—	—		—		149
Wealth and asset management revenue	1		52	—	138	—		(46)	(a)	145
Commercial banking revenue	156		3	—	1	—		—		160
Card and processing revenue	15		84	—	1	2		—		102
Leasing business revenue	61		—	—	—	—		—		61
Mortgage banking net revenue	—		3	60	1	—		—		64
Other noninterest income(b)	30		25	2	2	(10)		—		49
Securities gains, net	—		—	—	—	10		—		10
Securities gains, net – non-qualifying hedges on MSRs	—		—	1	—	—		—		1
Total noninterest income	$	355	224	63	143	2		(46)		741
Noninterest expense:
Compensation and benefits	$	136	158	61	49	234		—		638
Technology and communications	4		1	3	—	86		—		94
Net occupancy expense(c)	8		49	3	4	13		—		77
Equipment expense	7		9	—	—	18		—		34
Leasing business expense	33		—	—	—	—		—		33
Marketing expense	2		7	1	—	10		—		20
Card and processing expense	2		19	—	—	(1)		—		20
Other noninterest expense	207		207	95	78	(304)		(46)		237
Total noninterest expense	$	399	450	163	131	56		(46)		1,153
Income before income taxes	$	483	50	42	33	303		—		911
Applicable income tax expense	90		10	9	7	86		—		202
Net income	$	393	40	33	26	217		—		709
Total goodwill	$	1,981	2,047	—	231	—		—		4,259
Total assets	$	68,851	87,646	33,215	10,881	4,797	(d)	—		205,390

(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 $2 recorded in Branch Banking for bank premises and equipment. For more information, refer to Note 7 and Note 22.

(c)Includes impairment losses and termination charges of $2 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.

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

June 30, 2022 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	1,006		972	246	88	222		—		2,534
Provision for credit losses	56			39	10	—	119		—		224
Net interest income after provision for credit losses	$	950		933	236	88	103		—		2,310
Noninterest income:
Service charges on deposits	$	188		119	—	—	(1)		—		306
Wealth and asset management revenue	1			102	—	274	—		(88)	(a)	289
Commercial banking revenue	269			4	—	—	(1)		—		272
Card and processing revenue	33			162	—	1	5		—		201
Leasing business revenue	118		(c)	—	—	—	—		—		118
Mortgage banking net revenue	—			3	79	1	—		—		83
Other noninterest income(b)	64			44	6	—	24		—		138
Securities losses, net	—			—	—	—	(47)		—		(47)
Securities losses, net – non-qualifying hedges on MSRs	—			—	(1)	—	—		—		(1)
Total noninterest income	$	673		434	84	276	(20)		(88)		1,359
Noninterest expense:
Compensation and benefits	$	310		334	116	116	419		—		1,295
Technology and communications	7			2	6	—	184		—		199
Net occupancy expense(e)	18			95	5	6	28		—		152
Equipment expense	14			18	—	—	40		—		72
Leasing business expense	63			—	—	—	—		—		63
Marketing expense	2			22	2	1	25		—		52
Card and processing expense	4			36	—	—	(2)		—		38
Other noninterest expense	448			438	160	157	(652)		(88)		463
Total noninterest expense	$	866		945	289	280	42		(88)		2,334
Income before income taxes	$	757		422	31	84	41		—		1,335
Applicable income tax expense	137			89	6	18	29		—		279
Net income	$	620		333	25	66	12		—		1,056
Total goodwill	$	1,946		2,302	—	226	452	(f)	—		4,926
Total assets	$	80,424		90,520	32,802	13,062	(10,026)	(d)	—		206,782

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

(b)Includes $1 of impairment charges for bank premises and equipment recorded in Branch Banking. For more information, refer to Note 7 and Note 22.

(c)Includes impairment charges of $2 for operating lease equipment. For more information, refer to Note 8 and Note 22.

(d)Includes bank premises and equipment of $24 classified as held for sale. For more information, refer to Note 7.

(e)Includes $2 of impairment losses and termination charges for ROU assets related to certain operating leases. For more information, refer to Note 9.

(f)Due to the timing of a business acquisition, the Bancorp is in the process of completing its analysis of the allocation of the goodwill across its business segments, therefore goodwill is presented as part of General Corporate and Other as of June 30, 2022.

June 30, 2021 ($ in millions)	Commercial Banking			Branch Banking	Consumer Lending	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	741		596	269	42	737		—		2,385
(Benefit from) provision for credit losses	(227)			66	8	(1)	(134)		—		(288)
Net interest income after (benefit from) provision for credit losses	$	968		530	261	43	871		—		2,673
Noninterest income:
Service charges on deposits	$	181		111	—	—	—		—		292
Wealth and asset management revenue	1			102	—	274	—		(89)	(a)	288
Commercial banking revenue	307			5	—	1	—		—		313
Card and processing revenue	29			161	—	1	5		—		196
Leasing business revenue	148		(c)	—	—	—	—		—		148
Mortgage banking net revenue	—			5	142	2	—		—		149
Other noninterest income(b)	42			45	4	3	(2)		—		92
Securities gains, net	7			—	—	—	6		—		13
Securities losses, net – non-qualifying hedges on MSRs	—			—	(1)	—	—		—		(1)
Total noninterest income	$	715		429	145	281	9		(89)		1,490
Noninterest expense:
Compensation and benefits	$	292		328	127	103	493		—		1,343
Technology and communications	7			2	5	—	173		—		187
Net occupancy expense(d)	17			96	5	7	31		—		156
Equipment expense	13			19	—	—	36		—		68
Leasing business expense	68			—	—	—	—		—		68
Marketing expense	3			15	1	1	23		—		43
Card and processing expense	3			49	—	—	(2)		—		50
Other noninterest expense	416			430	186	156	(645)		(89)		454
Total noninterest expense	$	819		939	324	267	109		(89)		2,369
Income before income taxes	$	864		20	82	57	771		—		1,794
Applicable income tax expense	160			4	17	12	198		—		391
Net income	$	704		16	65	45	573		—		1,403
Total goodwill	$	1,981		2,047	—	231	—		—		4,259
Total assets	$	68,851		87,646	33,215	10,881	4,797	(e)	—		205,390

(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 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 $2 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.