Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

LEASES

PNC enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 Accounting Policies and for additional details on our equipment lease financing receivables see Note 4 Loans and Related Allowance for Credit Losses.

Lessor Arrangements

PNC’s lessor arrangements primarily consist of direct financing, sales-type and operating leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term.

The following table provides details on our income from lessor arrangements:

Table 66: Lessor Income

Year ended December 31
In millions	2021		2020		2019
Sales-type and direct financing leases (a)	$	243	$	269	$	295
Operating leases (b)	75		95		117
Lease income	$	318	$	364	$	412

(a)Included in Loan interest income on the Consolidated Income Statement.

(b)Included in Corporate services on the Consolidated Income Statement.

The following table provides the components of our equipment lease financing assets:

Table 67: Sales-Type and Direct Financing Leases

In millions	December 31 2021		December 31 2020
Lease receivables (a)	$	5,829	$	6,246
Unguaranteed residual asset values	977		957
Unearned income	(677)		(789)
Equipment lease financing	$	6,129	$	6,414

(a)In certain cases, PNC obtains third-party residual value insurance to reduce its residual risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $0.4 billion for both 2021 and 2020.

Operating lease assets were $0.9 billion and accumulated depreciation was $0.2 billion at December 31, 2021 compared to operating lease assets of $1.0 billion and accumulated depreciation of $0.2 billion at December 31, 2020. We had no lease transactions with related parties or deferred selling profits at December 31, 2021 and 2020.

The future minimum lessor receivable arrangements at December 31, 2021 were as follows:

Table 68: Future Minimum Lessor Receivable Arrangements

In millions	Operating Leases		Sales-type and Direct Financing Leases
2022	$	81	$	1,480
2023	44		1,154
2024	30		1,038
2025	23		649
2026	18		394
2027 and thereafter	27		1,114
Total future minimum lease receivable arrangements	$	223	$	5,829

Lessee Arrangements

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 46 years, some of which may include options to renew the leases for up to 99 years, and some of which may include options to terminate the leases prior to the end date of the lease term. Certain leases also include options to purchase the leased asset. The exercise of lease renewal, termination and purchase options is at our sole discretion.

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 December 31, 2021 and 2020.

Table 69 and 70 provide details on our operating leases:

Table 69: Operating Lease Costs and Cash Flows

Year ended December 31
In millions	2021		2020		2019
Operating lease cost (a)	$	386	$	358	$	360
Operating cash flows	$	400	$	360	$	353

(a)Included in Occupancy, Equipment and Marketing expense on the Consolidated Income Statement.

Table 70: Operating Lease Assets and Liabilities

In millions	December 31 2021		December 31 2020
Operating lease assets (a)	$	1,919	$	1,876
Operating lease liabilities (b)	$	2,220	$	2,097

(a)Included in Other assets on the Consolidated Balance Sheet.

(b)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

Finance lease assets and liabilities, income and cash flows at December 31, 2021 and 2020 were not material.

Operating lease term and discount rates of our lessee arrangements at December 31, 2021 and 2020 were as follows:

Table 71: Operating Lease Term and Discount Rates of Lessee Arrangements

	December 31 2021		December 31 2020
Weighted-average remaining lease term (years)	8		8
Weighted-average discount rate	1.99	%	2.21	%

The future lease payments based on maturity for our lessee liability arrangements at December 31, 2021 are as follows:

Table 72: Future Lease Payments for Operating Lease Liability Arrangements

In millions	December 31, 2021
2022	$	416
2023	389
2024	330
2025	285
2026	231
2027 and thereafter	761
Total future lease payments	$	2,412
Less: Interest	192
Present value of operating lease liability arrangements	$	2,220

Leases

LEASES

PNC enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 Accounting Policies and for additional details on our equipment lease financing receivables see Note 4 Loans and Related Allowance for Credit Losses.

Lessor Arrangements

PNC’s lessor arrangements primarily consist of direct financing, sales-type and operating leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term.

The following table provides details on our income from lessor arrangements:

Table 66: Lessor Income

Year ended December 31
In millions	2021		2020		2019
Sales-type and direct financing leases (a)	$	243	$	269	$	295
Operating leases (b)	75		95		117
Lease income	$	318	$	364	$	412

(a)Included in Loan interest income on the Consolidated Income Statement.

(b)Included in Corporate services on the Consolidated Income Statement.

The following table provides the components of our equipment lease financing assets:

Table 67: Sales-Type and Direct Financing Leases

In millions	December 31 2021		December 31 2020
Lease receivables (a)	$	5,829	$	6,246
Unguaranteed residual asset values	977		957
Unearned income	(677)		(789)
Equipment lease financing	$	6,129	$	6,414

(a)In certain cases, PNC obtains third-party residual value insurance to reduce its residual risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $0.4 billion for both 2021 and 2020.

Operating lease assets were $0.9 billion and accumulated depreciation was $0.2 billion at December 31, 2021 compared to operating lease assets of $1.0 billion and accumulated depreciation of $0.2 billion at December 31, 2020. We had no lease transactions with related parties or deferred selling profits at December 31, 2021 and 2020.

The future minimum lessor receivable arrangements at December 31, 2021 were as follows:

Table 68: Future Minimum Lessor Receivable Arrangements

In millions	Operating Leases		Sales-type and Direct Financing Leases
2022	$	81	$	1,480
2023	44		1,154
2024	30		1,038
2025	23		649
2026	18		394
2027 and thereafter	27		1,114
Total future minimum lease receivable arrangements	$	223	$	5,829

Lessee Arrangements

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 46 years, some of which may include options to renew the leases for up to 99 years, and some of which may include options to terminate the leases prior to the end date of the lease term. Certain leases also include options to purchase the leased asset. The exercise of lease renewal, termination and purchase options is at our sole discretion.

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 December 31, 2021 and 2020.

Table 69 and 70 provide details on our operating leases:

Table 69: Operating Lease Costs and Cash Flows

Year ended December 31
In millions	2021		2020		2019
Operating lease cost (a)	$	386	$	358	$	360
Operating cash flows	$	400	$	360	$	353

(a)Included in Occupancy, Equipment and Marketing expense on the Consolidated Income Statement.

Table 70: Operating Lease Assets and Liabilities

In millions	December 31 2021		December 31 2020
Operating lease assets (a)	$	1,919	$	1,876
Operating lease liabilities (b)	$	2,220	$	2,097

(a)Included in Other assets on the Consolidated Balance Sheet.

(b)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

Finance lease assets and liabilities, income and cash flows at December 31, 2021 and 2020 were not material.

Operating lease term and discount rates of our lessee arrangements at December 31, 2021 and 2020 were as follows:

Table 71: Operating Lease Term and Discount Rates of Lessee Arrangements

	December 31 2021		December 31 2020
Weighted-average remaining lease term (years)	8		8
Weighted-average discount rate	1.99	%	2.21	%

The future lease payments based on maturity for our lessee liability arrangements at December 31, 2021 are as follows:

Table 72: Future Lease Payments for Operating Lease Liability Arrangements

In millions	December 31, 2021
2022	$	416
2023	389
2024	330
2025	285
2026	231
2027 and thereafter	761
Total future lease payments	$	2,412
Less: Interest	192
Present value of operating lease liability arrangements	$	2,220