Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

LEASES

We lease retail branches, datacenters, office space, land and equipment under operating and finance leases. Our leases have remaining lease terms of one year to sixty-two years, some of which may include options to renew the leases for up to ninety-nine years, and some of which may include options to terminate the leases prior to the end date. Certain leases also include options to purchase the leased asset. The exercise of lease renewal, termination and purchase options is at our sole discretion.

At adoption of ASU 2016-02 on January 1, 2019, we elected to account for the lease and nonlease components of existing real estate leases and leases of advertising assets, such as signage, as a single lease component. Effective January 1, 2019, lease and nonlease components of new lease agreements are accounted for separately. Lease components include fixed payments including rent, real estate taxes and insurance costs and nonlease components include common-area maintenance costs. Generally, we have elected to use the Overnight Indexed Swap rate corresponding to the term of the lease at the lease measurement date as our incremental borrowing rate to measure the ROU asset and lease liability. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain of our lease agreements include rental payments based on a percentage of revenue and others include rental payments if certain bank deposit levels are met. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Subleases to third parties were not material at September 30, 2019.

Operating lease assets and liabilities totaled $2.0 billion and $2.2 billion at September 30, 2019, respectively. Finance lease assets and liabilities at September 30, 2019 were not material.

Future undiscounted cash flows on our operating leases are as follows:

Table 75: Maturity of Operating Lease Liabilities

In millions	September 30, 2019
Remainder of 2019	$	85
2020	352
2021	331
2022	297
2023	264
After 2023	1,098
Total operating lease payments	$	2,427
Less: Interest	263
Present value of operating lease liabilities	$	2,164

At December 31, 2018, operating lease commitments under lessee arrangements were $374 million, $346 million, $308 million, $258 million, $228 million for 2019 through 2023, respectively, and $941 million in the aggregate for all years thereafter.

Operating lease term and discount rates at September 30, 2019 were as follows:

Table 76: Operating Lease Term and Discount Rates

	September 30, 2019
Weighted-average remaining lease term (years)	9
Weighted-average discount rate	2.46	%

Leases

LEASES

We lease retail branches, datacenters, office space, land and equipment under operating and finance leases. Our leases have remaining lease terms of one year to sixty-two years, some of which may include options to renew the leases for up to ninety-nine years, and some of which may include options to terminate the leases prior to the end date. Certain leases also include options to purchase the leased asset. The exercise of lease renewal, termination and purchase options is at our sole discretion.

At adoption of ASU 2016-02 on January 1, 2019, we elected to account for the lease and nonlease components of existing real estate leases and leases of advertising assets, such as signage, as a single lease component. Effective January 1, 2019, lease and nonlease components of new lease agreements are accounted for separately. Lease components include fixed payments including rent, real estate taxes and insurance costs and nonlease components include common-area maintenance costs. Generally, we have elected to use the Overnight Indexed Swap rate corresponding to the term of the lease at the lease measurement date as our incremental borrowing rate to measure the ROU asset and lease liability. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain of our lease agreements include rental payments based on a percentage of revenue and others include rental payments if certain bank deposit levels are met. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Subleases to third parties were not material at September 30, 2019.

Operating lease assets and liabilities totaled $2.0 billion and $2.2 billion at September 30, 2019, respectively. Finance lease assets and liabilities at September 30, 2019 were not material.

Table 75: Maturity of Operating Lease Liabilities

In millions	September 30, 2019
Remainder of 2019	$	85
2020	352
2021	331
2022	297
2023	264
After 2023	1,098
Total operating lease payments	$	2,427
Less: Interest	263
Present value of operating lease liabilities	$	2,164

At December 31, 2018, operating lease commitments under lessee arrangements were $374 million, $346 million, $308 million, $258 million, $228 million for 2019 through 2023, respectively, and $941 million in the aggregate for all years thereafter.

Operating lease term and discount rates at September 30, 2019 were as follows:

Table 76: Operating Lease Term and Discount Rates

	September 30, 2019
Weighted-average remaining lease term (years)	9
Weighted-average discount rate	2.46	%