Premises, Equipment and Leases

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment and Lease Commitments [Abstract]

Premises, Equipment and Leases

NOTE 7—PREMISES, EQUIPMENT AND LEASES

Premises and Equipment

The following table presents our premises and equipment as of December 31, 2021 and 2020.

Table 7.1 Components of Premises and Equipment

(Dollars in millions)	December 31, 2021		December 31, 2020
Land	$	336	$	366
Buildings and improvements	3,854		3,742
Furniture and equipment	1,816		1,973
Computer software	2,006		2,144
In progress	732		768
Total premises and equipment, gross	8,744		8,993
Less: Accumulated depreciation and amortization	(4,534)		(4,706)
Total premises and equipment, net	$	4,210	$	4,287

Depreciation and amortization expense was $775 million, $809 million and $741 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Leases

Our primary involvement with leases is in the capacity as a lessee where we lease premises to support our business. A majority of our leases are operating leases of office space, retail bank branches and Cafés. For real estate leases, we have elected to account for the lease and non-lease components together as a single lease component. Our operating leases expire at various dates through 2071, and many of them require variable lease payments by us, of property taxes, insurance premiums, common area maintenance and other costs. Certain of these leases also have extension or termination options, and we assess the likelihood of exercising such options. If it is reasonably certain that we will exercise the options, then we include the impact in the measurement of our right-of-use assets and lease liabilities.

Our right-of-use assets and lease liabilities for operating leases are included in other assets and other liabilities on our consolidated balance sheets. As most of our operating leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. Our operating lease expense is included in occupancy and equipment within non-interest expense in our consolidated statements of income. Total operating lease expense consists of operating lease cost, which is recognized on a straight-line basis over the lease term, and variable lease cost, which is recognized based on actual amounts incurred. We also sublease certain premises, and sublease income is included in other non-interest income in our consolidated statements of income.

The following tables present information about our operating lease portfolio and the related lease costs as of and for the years ended December 31, 2021 and 2020.

Table 7.2 Operating Lease Portfolio

(Dollars in millions)	December 31, 2021			December 31, 2020
Right-of-use assets	$	1,137		$	1,316
Lease liabilities	1,485			1,688
Weighted-average remaining lease term	8 years			8.7 years
Weighted-average discount rate	3.0		%	3.1		%

Table 7.3 Total Operating Lease Expense and Other Information

	Year Ended December 31,
(Dollars in millions)	2021		2020
Operating lease cost	$	305	$	315
Variable lease cost	42		43
Total lease cost	347		358
Sublease income	(23)		(26)
Net lease cost	$	324	$	332
Cash paid for amounts included in the measurement of lease liabilities	$	353	$	325
Right-of-use assets obtained in exchange for lease liabilities	81		180

The following table presents a maturity analysis of our operating leases and a reconciliation of the undiscounted cash flows to our lease liabilities as of December 31, 2021.

Table 7.4 Maturities of Operating Leases and Reconciliation to Lease Liabilities

(Dollars in millions)	December 31, 2021
2022	$	279
2023	256
2024	221
2025	184
2026	166
Thereafter	603
Total undiscounted lease payments	1,709
Less: Imputed interest	(224)
Total lease liabilities	$	1,485

As of December 31, 2021, we had approximately $33 million and $53 million of right-of-use assets and lease liabilities, respectively, for finance leases with a weighted-average remaining lease term of 3.4 years. As of December 31, 2020, we had approximately $69 million and $75 million of right-of-use assets and lease liabilities, respectively, for finance leases with a weighted-average remaining lease term of 4.4 years. These right-of-use assets and lease liabilities are included in premises and equipment, net and other borrowings, respectively, on our consolidated balance sheets. We recognized $22 million and $24 million of total finance lease expense for the years ended December 31, 2021 and 2020, respectively.