Leases

9 Months Ended

Sep. 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 September 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.

ROU assets from operating leases were $196 million at September 30, 2021, and $213 million at December 31, 2020. ROU assets from finance leases were $4 million for the same periods. We utilized a secured incremental borrowing rate based on the term of the lease 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)	September 30, 2021			December 31, 2020
Operating assets and liabilities
Operating right-of-use assets, net of amortization	$	196		$	213
Operating lease liabilities	223			240
Weighted average remaining lease term (years)
Operating leases	8.6			8.9
Finance leases	18.5			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 September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020

Operating lease costs	$	12	$	12	$	35	$	37





Variable lease costs	12		12		37		36

Total lease cost	$	24	$	24	$	72	$	73

Supplemental cash flow information related to leases is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020


Operating cash disbursements from operating leases	$	13	$	13	$	38	$	38

New operating lease liabilities are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2021		2020		2021		2020

New operating lease liabilities	$	1	$	—	$	1	$	6

Contractual undiscounted lease payments for operating lease liabilities, due by year, include:


(In millions)
2021 1	$	12
2022	48
2023	42
2024	33
2025	24
Thereafter	99
Total	$	258

1 Contractual maturities for the three 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 third quarter of 2021 and 2020, and $10 million and $9 million for the first nine months of 2021 and 2020, respectively.

We originate equipment leases, considered to be sales-type leases or direct financing leases, totaling $293 million and $320 million at September 30, 2021 and December 31, 2020, respectively. We recorded income of $3 million on these leases for both the third quarter of 2021 and 2020, and $9 million and $10 million for the first nine months of 2021 and 2020, respectively.