LEASES

9 Months Ended

Sep. 30, 2019

NOTE 6 - LEASES

The Company determines if an arrangement is a lease at inception and records a right-of-use asset and a corresponding lease liability. A right-of-use asset represents the value of the Company’s contractual right to use an underlying leased asset and a lease liability represents the Company’s contractual obligation to make payments on the same underlying leased asset. Operating and finance lease right-of-use assets and liabilities are recognized at commencement date based on the present value of the lease payments over the non-cancelable lease term. As most of the Company’s leases do not specify an implicit rate, the Company uses an incremental borrowing rate based on information available at the lease commencement date to determine the present value of the lease payments. The Company evaluates right-of-use assets for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

In its normal course of business, the Company leases both equipment and real estate, including office and branch space. Lease terms predominantly range from one year to ten years and may include options to extend the lease, terminate the lease, or purchase the underlying asset at the end of the lease. Certain lease agreements include rental payments based on an index or are adjusted periodically for inflation. The Company has lease agreements that contain lease and non-lease components and for certain real estate leases, these components are accounted for as a single lease component.

Leases with an initial term of 12 months or less are not recorded on the Company’s Consolidated Balance Sheets and are recognized in occupancy expense in the Company’s Consolidated Statements of Operations on a straight-line basis over the remaining lease term. The Company may also enter into subleases with third parties for certain leased real estate properties that are no longer occupied.

The components of operating lease cost are presented below:



(in millions)	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost		$42			$123
Short-term lease cost	2			8
Variable lease cost	2			6
Sublease income	(1		)	(3		)
Total		$45			$134

Operating lease cost is recognized on a straight line basis over the lease term and recorded in occupancy expense on the Consolidated Statements of Operations.

Supplemental Consolidated Balance Sheet information related to the Company’s operating lease arrangements is presented below:



(in millions)	September 30, 2019		Affected Line Item in Consolidated Balance Sheets
Operating lease right-of-use assets		$712	Other assets
Operating lease liabilities	733		Other liabilities

Supplemental information related to the Company’s operating lease arrangements is presented below:



(in millions)	Nine Months Ended September 30, 2019
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases		$122
Right-of-use assets in exchange for new operating lease liabilities	91

The weighted average remaining lease term and weighted average discount rate for operating leases is seven years and 3.20%, respectively.

At September 30, 2019, lease liabilities maturing under non-cancelable operating leases are presented below for the years ended December 31:



(in millions)	Operating Leases
2019		$29
2020	162
2021	146
2022	121
2023	96
Thereafter	269
Total lease payments	823
Less: Interest	90
Present value of lease liabilities		$733