Business Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Business Segments

Business Segments

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.

During the third quarter of 2022, the Bancorp reorganized its management reporting structure and now reports on three business segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset Management. This reorganization primarily involved merging the Bancorp’s previously reported Branch Banking and Consumer Lending segments and the transfer of certain portions of the newly combined segment to the Commercial Banking segment. These portions primarily included the loans, deposits and other services provided to relationship manager assigned lower middle-market business customers, along with the income and expenses associated with those customers. Prior period results have been adjusted to conform to the new segment presentation.

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’s FTP methodology was not adjusted during the years ended December 31, 2022, 2021 and 2020.

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.

Consumer and Small Business Banking provides a full range of deposit and loan products to individuals and small businesses through a network of full-service banking centers and relationships with indirect and correspondent loan originators in addition to providing products designed to meet the specific needs of small businesses, including cash management services. Consumer and Small Business Banking includes the Bancorp’s residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Indirect lending activities include extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine dealers. Other consumer lending activities include 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 years ended December 31:

2022 ($ in millions)	Commercial Banking			Consumer and Small Business Banking	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	2,542		3,131	262	(326)		—		5,609
Provision for credit losses	33			139	—	391		—		563
Net interest income after provision for credit      losses	2,509			2,992	262	(717)		—		5,046
Noninterest income:
Service charges on deposits	372			216	1	—		—		589
Wealth and asset management revenue	3			204	540	—		(177)	(a)	570
Commercial banking revenue	563			3	1	(2)		—		565
Card and processing revenue	87			308	2	12		—		409
Leasing business revenue	237		(c)	—	—	—		—		237
Mortgage banking net revenue	—			214	1	—		—		215
Other noninterest income(b)	111			110	—	44		—		265
Securities losses, net	(33)			—	—	(49)		—		(82)
Securities losses, net -non-qualifying      hedges on MSRs	—			(2)	—	—		—		(2)
Total noninterest income	1,340			1,053	545	5		(177)		2,766
Noninterest expense:
Compensation and benefits	639			828	218	869		—		2,554
Technology and communications	11			22	1	382		—		416
Net occupancy expense(d)	40			196	13	58		—		307
Equipment expense	27			38	—	80		—		145
Leasing business expense	131			—	—	—		—		131
Marketing expense	5			58	1	54		—		118
Card and processing expense	11			72	1	(4)		—		80
Other noninterest expense	959			1,175	322	(1,311)		(177)		968
Total noninterest expense	1,823			2,389	556	128		(177)		4,719
Income (loss) before income taxes	2,026			1,656	251	(840)		—		3,093
Applicable income tax expense (benefit)	377			347	53	(130)		—		647
Net income (loss)	1,649			1,309	198	(710)		—		2,446
Total goodwill	$	2,324		2,365	226	—		—		4,915
Total assets	$	83,535		83,697	14,253	25,967	(e)	—		207,452

(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Consolidated Statements of Income. 

(b)Includes impairment charges of $6 recorded in Consumer and Small Business Banking and $3 recorded in General Corporate and Other for bank premises and equipment. For more information, refer to Note 7 and Note 28. 

(c)Includes impairment charges of $2 for operating lease equipment. For more information, refer to Note 8 and Note 28. 

(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 $24 classified as held for sale. For more information, refer to Note 7. 

2021 ($ in millions)	Commercial Banking			Consumer and Small Business Banking	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	1,596		1,685	88	1,401		—		4,770
(Benefit from) provision for credit losses	(597)			120	(1)	101		—		(377)
Net interest income after (benefit from) provision      for credit losses	2,193			1,565	89	1,300		—		5,147
Noninterest income:
Service charges on deposits	385			214	1	—		—		600
Wealth and asset management revenue	2			206	558	—		(180)	(a)	586
Commercial banking revenue	633			2	2	—		—		637
Card and processing revenue	78			312	2	10		—		402
Leasing business revenue	300		(c)	—	—	—		—		300
Mortgage banking net revenue	—			267	3	—		—		270
Other noninterest income(b)	91			108	4	129		—		332
Securities (losses) gains, net	8			—	—	(15)		—		(7)
Securities losses, net -non-qualifying hedges on MSRs	—			(2)	—	—		—		(2)
Total noninterest income	1,497			1,107	570	124		(180)		3,118
Noninterest expense:
Compensation and benefits	644			833	205	944		—		2,626
Technology and communications	17			16	1	354		—		388
Net occupancy expense(d)	37			197	15	63		—		312
Equipment expense	26			38	—	74		—		138
Leasing business expense	137			—	—	—		—		137
Marketing expense	7			41	2	57		—		107
Card and processing expense	7			85	1	(4)		—		89
Other noninterest expense	898			1,185	316	(1,268)		(180)		951
Total noninterest expense	1,773			2,395	540	220		(180)		4,748
Income before income taxes	1,917			277	119	1,204		—		3,517
Applicable income tax expense	363			57	25	302		—		747
Net income	1,554			220	94	902		—		2,770
Total goodwill	$	1,980		2,303	231	—		—		4,514
Total assets	$	75,387		85,455	13,836	36,438	(e)	—		211,116

(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Consolidated Statements of Income.

(b)Includes impairment charges of $6 recorded in Consumer and Small Business Banking and $1 recorded in General Corporate and Other for bank premises and equipment. For more information, refer to Note 7 and Note 28.

(c)Includes impairment charges of $25 for operating lease equipment. For more information, refer to Note 8 and Note 28.

(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 $24 classified as held for sale. For more information, refer to Note 7.

2020 ($ in millions)	Commercial Banking			Consumer and Small Business Banking	Wealth and Asset Management	General Corporate and Other		Eliminations		Total
Net interest income	$	2,009		1,942	139	692		—		4,782
Provision for (benefit from) credit losses	1,086			229	3	(221)		—		1,097
Net interest income after provision for (benefit      from) credit losses	923			1,713	136	913		—		3,685
Noninterest income:
Service charges on deposits	358			200	1	—		—		559
Wealth and asset management revenue	3			172	498	—		(153)	(a)	520
Commercial banking revenue	527			2	2	(3)		—		528
Card and processing revenue	68			269	2	13		—		352
Leasing business revenue	276		(c)	—	—	—		—		276
Mortgage banking net revenue	—			315	5	—		—		320
Other noninterest income(b)	101			78	18	14		—		211
Securities gains, net	—			—	—	62		—		62
Securities gains, net -non-qualifying hedges on MSRs	—			2	—	—		—		2
Total noninterest income	1,333			1,038	526	86		(153)		2,830
Noninterest expense:
Compensation and benefits	606			821	218	945		—		2,590
Technology and communications	13			12	1	336		—		362
Net occupancy expense(d)	32			185	12	121		—		350
Equipment expense	27			41	1	61		—		130
Leasing business expense	140			—	—	—		—		140
Marketing expense	9			34	2	59		—		104
Card and processing expense	7			116	1	(3)		—		121
Other noninterest expense	975			1,090	298	(1,289)		(153)		921
Total noninterest expense	1,809			2,299	533	230		(153)		4,718
Income before income taxes	447			452	129	769		—		1,797
Applicable income tax expense	49			95	27	199		—		370
Net income	398			357	102	570		—		1,427
Total goodwill	$	1,980		2,047	231	—		—		4,258
Total assets	$	71,801		77,169	12,466	43,244	(e)	—		204,680

(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Consolidated Statements of Income.

(b)Includes impairment charges of $15 recorded in Consumer and Small Business Banking and $15 recorded in General Corporate and Other for bank premises and equipment. For more information, refer to Note 7.

(c)Includes impairment charges of $7 for operating lease equipment. For more information, refer to Note 8.

(d)Includes impairment losses and termination charges of $8 for ROU assets related to certain operating leases. For more information, refer to Note 9.

(e)Includes bank premises and equipment of $35 classified as held for sale. For more information, refer to Note 7.