Leases

6 Months Ended

Jun. 30, 2021

We determine if a contract is a lease or contains a lease at inception. The right to use leased assets for the lease term are considered right-of-use (“ROU”) assets. Operating lease assets are included in “other assets,” and finance lease assets are included in “premises, equipment and software, net,” and lease liabilities for operating leases are included in “other liabilities,” and finance leases are included in “long-term debt” on our consolidated balance sheet. For a more detailed discussion of our lease policies, see Note 8 of our 2020 Form 10-K.

We have operating and finance leases for branches, corporate offices, and data centers. Our equipment leases are not material. At June 30, 2021, we had 419 branches, of which 273 are owned and 146 are leased. We lease our headquarters in Salt Lake City, Utah, and other office or data centers are either owned or leased.

We may enter into certain lease arrangements with a term of 12 months or less, and we have elected to exclude these from capitalization. The remaining maturities of our lease commitments range from the year 2021 to 2062, and some lease arrangements include options to extend or terminate the leases.

Assets recorded under operating leases were $202 million at June 30, 2021, and $213 million at December 31, 2020, while assets recorded under finance leases were $4 million for the same periods. We utilized a secured incremental borrowing rate based on the remaining term of the lease as of the effective date for the discount rate to determine our lease ROU assets and liabilities.

The following schedule presents lease-related assets and liabilities, their weighted average remaining life, and the weighted average discount rate:


(Dollar amounts in millions)	June 30, 2021			December 31, 2020

Operating assets and liabilities
Operating right-of-use assets, net of amortization	$	202		$	213
Operating lease liabilities	229			240
Weighted average remaining lease term (years)
Operating leases	8.7			8.9
Finance leases	18.8			19.2
Weighted average discount rate
Operating leases	2.8		%	2.9		%
Finance leases	3.1		%	3.1		%

The components of lease expense are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020

Operating lease costs	$	12	$	12	$	24	$	24





Variable lease costs	12		12		25		24

Total lease cost	$	24	$	24	$	49	$	48

Supplemental cash flow information related to leases is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020

Cash paid for amounts in the measurement of lease liabilities:
Operating cash disbursements from operating leases	$	12	$	13	$	25	$	25

ROU assets obtained in exchange for lease liabilities are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020

New operating lease liabilities	$	—	$	3	$	—	$	6

Maturities analysis for operating lease liabilities at June 30, 2021 is as follows (contractual undiscounted lease payments):


(In millions)

2021 1	$	25
2022	47
2023	41
2024	32
2025	23
Thereafter	97
Total	$	265

1 Contractual maturities for the six months remaining in 2021.

We enter into certain lease agreements where we are the lessor of real estate. Real estate leases are made from bank-owned and subleased property to generate cash flow from the property, including from leasing vacant suites in which we occupy portions of the building. Operating lease income was $3 million for both the second quarter of 2021 and 2020, and $7 million and $6 million for the first six months of 2021 and 2020, respectively.

We make equipment leases, considered to be sales-type leases or direct financing leases, totaling $307 million and $320 million at June 30, 2021 and December 31, 2020, respectively. We recorded income of $3 million on these leases for both the second quarter of 2021 and 2020, and $6 million and $7 million for the first six months of 2021 and 2020, respectively.