Business Segments

3 Months Ended

Mar. 31, 2015

Segment Reporting

Business Segments

20.Business Segments

The Bancorp reports on four business segments: Commercial Banking, Branch Banking, Consumer Lending and Investment Advisors. 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. This methodology insulates the business segments from interest rate volatility, enabling them to focus on serving customers through loan originations and deposit taking. The FTP system assigns charge rates and credit rates to classes of assets and liabilities, respectively, based on expected duration and the U.S. swap curve. Matching duration allocates interest income and interest expense to each business segment so its resulting net interest income is insulated from interest rate risk. In a rising rate environment, the Bancorp benefits from the widening spread between deposit costs and wholesale funding costs. However, the Bancorp's FTP system credits this benefit to deposit-providing businesses, such as Branch Banking and Investment Advisors, on a duration-adjusted basis. The net impact of the FTP methodology is captured in General Corporate and Other.

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 the estimated durations for the indeterminate-lived deposits. The credit rate provided for demand deposit accounts is reviewed annually based upon the account type, its estimated duration and the corresponding fed funds, U.S. swap curve or swap rate. The credit rates for several deposit products were reset January 1, 2015 to reflect the current market rates and updated market assumptions. These rates were generally lower than those in place during 2014, thus net interest income for deposit providing businesses wasnegatively impacted during 2015.

The business segments are charged provision expense based on the actual net charge-offs experienced by the loans and leases owned by each business segment. Provision expense attributable to loan and lease growth and changes in ALLL factors are 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 cross-sell opportunities and when funding operations, by accessing the capital markets as a collective unit.

The results of operations and financial position for the threemonths ended March 31, 2014 were adjusted to reflect the transfer of certain customers and Bancorp employees from Commercial Banking to Branch Banking, effective January 1, 2015. In addition, the prior year balances were adjusted to reflect a change in internal allocation methodology.

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 1,303 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 mortgage, home equity, automobile and other indirect lending activities. Direct lending activities include the origination, retention and servicing of mortgage and home equity loans or lines of credit, sales and securitizations of those loans, pools of loans or lines of credit, and all associated hedging activities. Indirect lending activities include extending loans to consumers through correspondent lenders and automobile dealers.

Investment Advisors provides a full range of investment alternatives for individuals, companies and not-for-profit organizations. Investment Advisors is made up of four main businesses: FTS, an indirect wholly-owned subsidiary of the Bancorp; ClearArc Capital, Inc., 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. ClearArc Capital, Inc. provides asset management services and previously advised the Bancorp's proprietary family of mutual funds. Fifth Third Private Bank offers holistic strategies to affluent clients in wealth planning, investing, insurance and wealth protection. Fifth Third Institutional Services provides advisory services for institutional clients including states and municipalities.

The following tables present the results of operations and assets by business segment for the three months ended March 31, 2015 and 2014:
						General
		Commercial	Branch	Consumer	Investment	Corporate
March 31, 2015 ($ in millions)		Banking	Banking	Lending	Advisors	and Other	Eliminations	Total
Net interest income	$	392	377	63	29	(14)	-	847
Provision for loan and lease losses		33	42	14	2	(22)	-	69
Net interest income after provision for loan and lease losses		359	335	49	27	8	-	778
Total noninterest income		174(c)	176(b)	129	107	82	(38)(a)	630
Total noninterest expense		357	392	104	115	(7)	(38)	923
Income before income taxes		176	119	74	19	97	-	485
Applicable income tax expense		13	42	26	7	36	-	124
Net income		163	77	48	12	61	-	361
Less: Net income attributable to noncontrolling interests		-	-	-	-	-	-	-
Net income attributable to Bancorp		163	77	48	12	61	-	361
Dividends on preferred stock		-	-	-	-	15	-	15
Net income available to common shareholders	$	163	77	48	12	46	-	346
Total goodwill	$	613	1,655	-	148	-	-	2,416
Total assets	$	57,864	53,290	22,057	10,042	(2,783)	-	140,470

						General
		Commercial	Branch	Consumer	Investment	Corporate
March 31, 2014 ($ in millions)		Banking	Banking	Lending	Advisors	and Other	Eliminations	Total
Net interest income	$	398	391	64	32	8	-	893
Provision for loan and lease losses		98	45	25	-	(99)	-	69
Net interest income after provision for loan and lease losses		300	346	39	32	107	-	824
Total noninterest income		208	174	119	103	(5)	(35)(a)	564
Total noninterest expense		333	390	167	110	(15)	(35)	950
Income (loss) before income taxes		175	130	(9)	25	117	-	438
Applicable income tax expense (benefit)		17	45	(3)	8	52	-	119
Net income (loss)		158	85	(6)	17	65	-	319
Less: Net income attributable to noncontrolling interests		-	-	-	-	1	-	1
Net income (loss) attributable to Bancorp		158	85	(6)	17	64	-	318
Dividends on preferred stock		-	-	-	-	9	-	9
Net income (loss) available to common shareholders	$	158	85	(6)	17	55	-	309
Total goodwill	$	613	1,655	-	148	-	-	2,416
Total assets	$	55,090	49,469	22,436	9,775	(7,116)	-	129,654

• Revenue sharing agreements between Investment Advisors and Branch Banking are eliminated in the Condensed Consolidated Statements of Income.
• Includes an impairment chargeof $4for branches and land. For more information refer to Note7 andNote 19.
• Includes an impairment charge of $30 for operating lease equipment. For more information refer to Note 8 and Note 19.