Lease Arrangements

12 Months Ended

Dec. 31, 2019

NOTE 19—LEASE ARRANGEMENTS

The Company enters into non-cancelable operating leases for its corporate offices, retail branches and other facilities. These leases have remaining terms ranging from less than one to 12 years, and the weighted-average remaining lease term for these leases is 8.2 years. Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 10 years. Only those renewal terms that the Company is reasonably certain of exercising are included in the calculation of the lease liability. Leases that have not yet commenced at December 31, 2019 will have an immaterial impact on the Company's ROU assets and lease liabilities. Certain lease agreements include rental payments based on power usage or that adjust periodically for inflation or costs incurred by the lessor. None of the Company's current lease agreements contain material residual value guarantees or material restrictive covenants.

The following table presents balance sheet information related to the Company's classification of ROU assets and operating lease liabilities (dollars in millions):

In December 2019, the Company exited its New York headquarters and consolidated related operations at its Jersey City, New Jersey location. The Company remeasured the ROU asset and lease liability, reducing them both by $9 million respectively, to reflect the shortened lease term and recognized an impairment charge of $6 million in restructuring and acquisition-related activities. Refer to Note 2—Acquisitions and Restructuring for further detail.

The Company utilizes incremental borrowing rates to determine the present value of lease payments for each lease. As the Company's leases do not provide an implicit rate, the incremental borrowing rate estimates are based on the terms of each lease as well as the interest rate environment at the later of the adoption date of January 1, 2019, lease commencement date or lease remeasurement date. The incremental borrowing rate has also been adjusted to reflect a secured rate. A weighted-average discount rate of 4.3% was used to calculate the lease liability balances for the Company's operating leases.

Leases with an initial term of twelve months or less are not recorded on the balance sheet; lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.

Cash paid for amounts included in the measurement of operating lease liabilities was $29 million for the year ended December 31, 2019. The following table presents the significant components of lease expense (dollars in millions):


(1)	Includes short-term lease costs which are not material.


(2)	Net of sublease income which is not material.

The following table presents the maturities of lease liabilities (dollars in millions):



	Operating Leases
Years ending December 31,
2020	$	39
2021	37
2022	35
2023	34
2024	29
Thereafter	107
Total lease payments	281
Imputed interest	(46		)
Present value of lease liabilities	$	235

The Company executed a sale-leaseback transaction on its Alpharetta, Georgia office in 2014. The transaction was initially accounted for as a financing as it did not qualify for sale accounting. The Company evaluated this transaction as part of the adoption of the new lease guidance in 2019 and concluded that it did not qualify for sale accounting and should continue to be accounted for as a financing. The office building is included in the property and equipment, net line item and the related financing obligation is included in the other liabilities line item in the Company's consolidated balance sheet. Future minimum lease payments and sublease proceeds to be received under the lease are $24 million and $9 million, respectively.

Classification

December 31, 2019

Operating lease assets, net

Other assets

Operating lease liabilities

Other liabilities