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Occupancy Expense and Information Systems and Communications Expense
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Occupancy Expense and Information Systems and Communications Expense Occupancy Expense and Information Systems and Communications Expense
Occupancy expense and information systems and communications expense include depreciation of buildings, leasehold improvements, computer hardware and software, equipment, furniture and fixtures, and amortization of lease right-of-use assets. Total depreciation and amortization expense in 2021, 2020 and 2019 was $859 million, $858 million and $842 million, respectively.
We use our incremental borrowing rate to determine the present value of the lease payments for finance and operating leases described below. Additionally, we do not separate nonlease components such as real estate taxes and common area maintenance from base lease payments.
As of December 31, 2021 and 2020, an aggregate net book value of $135 million and $55 million, respectively, for the finance lease related to our One Lincoln Street Boston headquarters was recorded in premises and equipment, with the related liability of $164 million and $103 million, respectively,
recorded in long-term debt, in our consolidated statement of condition.
Finance lease right-of-use asset amortization is recorded in occupancy expense on a straight-line basis in our consolidated statement of income over the respective lease term. As of December 31, 2021, accumulated amortization of the finance lease right-of-use asset was $101 million. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. In 2021 and 2020, interest expense related to the finance lease obligation reflected in NII was $6 million and $9 million, respectively.
As of December 31, 2021, an aggregate net book value of $542 million for the operating lease right-of-use assets is recorded in other assets, with the related lease liability of $689 million recorded in accrued expenses and other liabilities in our consolidated statement of condition.
We have entered into non-cancellable operating leases for premises and equipment. Nearly all of these leases include renewal options, and only those reasonably certain of being exercised are included in the term of the lease. Costs for operating leases are recorded on a straight-line basis which includes both interest expense and right-of-use asset amortization. Operating lease costs for office space are recorded in occupancy expense. Costs related to operating leases for equipment are recorded in information systems and communications expense.
As of December 31, 2021, we have an additional operating lease, primarily for office space, that has not yet commenced with approximately $455 million of undiscounted future minimum lease payments. This lease will commence in fiscal year 2023 with 15 year lease term. These future payments relate to the new Boston headquarters lease executed in the first quarter of 2019, replacing the One Lincoln Street Boston property.
None of our leases contain residual value guarantees.
The following table presents lease costs, sublease rental income, cash flows and new leases arising from lease transactions for 2021:
Years Ended December 31,
(In millions)20212020
Finance lease:
Amortization of right-of-use assets$27 $20 
Interest on lease liabilities6 9 
Total finance lease expense33 29 
Sublease income (11)(11)
Net finance lease expense22 18 
Operating lease:
Operating lease expense147 169 
Sublease income (18)(16)
Net operating lease expense129 153 
Net lease expense$151 $171 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$6 $9 
Operating cash flows from operating leases198 192 
Financing cash flows from finance leases47 33 
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases$69 $38 
Finance leases108 — 
The following table presents future minimum lease payments under non-cancellable leases as of December 31, 2021:
(In millions)Operating LeasesFinance LeasesTotal
2022$158 $71 $229 
2023140 60 200 
2024117 29 146 
202598 10 108 
202674 — 74 
Thereafter162 — 162 
Total future minimum lease payments749 170 919 
Less imputed interest(60)(6)(66)
     Total$689 $164 $853 
The following table presents details related to remaining lease terms and discount rate as of December 31, 2021 and 2020:
December 31, 2021December 31, 2020
Weighted-average remaining lease term (in years):
     Finance leases2.62.7
     Operating leases5.87.1
Weighted-average discount rate:
     Finance leases4 %7 %
     Operating leases3 %3 %
Occupancy Expense and Information Systems and Communications Expense Occupancy Expense and Information Systems and Communications Expense
Occupancy expense and information systems and communications expense include depreciation of buildings, leasehold improvements, computer hardware and software, equipment, furniture and fixtures, and amortization of lease right-of-use assets. Total depreciation and amortization expense in 2021, 2020 and 2019 was $859 million, $858 million and $842 million, respectively.
We use our incremental borrowing rate to determine the present value of the lease payments for finance and operating leases described below. Additionally, we do not separate nonlease components such as real estate taxes and common area maintenance from base lease payments.
As of December 31, 2021 and 2020, an aggregate net book value of $135 million and $55 million, respectively, for the finance lease related to our One Lincoln Street Boston headquarters was recorded in premises and equipment, with the related liability of $164 million and $103 million, respectively,
recorded in long-term debt, in our consolidated statement of condition.
Finance lease right-of-use asset amortization is recorded in occupancy expense on a straight-line basis in our consolidated statement of income over the respective lease term. As of December 31, 2021, accumulated amortization of the finance lease right-of-use asset was $101 million. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. In 2021 and 2020, interest expense related to the finance lease obligation reflected in NII was $6 million and $9 million, respectively.
As of December 31, 2021, an aggregate net book value of $542 million for the operating lease right-of-use assets is recorded in other assets, with the related lease liability of $689 million recorded in accrued expenses and other liabilities in our consolidated statement of condition.
We have entered into non-cancellable operating leases for premises and equipment. Nearly all of these leases include renewal options, and only those reasonably certain of being exercised are included in the term of the lease. Costs for operating leases are recorded on a straight-line basis which includes both interest expense and right-of-use asset amortization. Operating lease costs for office space are recorded in occupancy expense. Costs related to operating leases for equipment are recorded in information systems and communications expense.
As of December 31, 2021, we have an additional operating lease, primarily for office space, that has not yet commenced with approximately $455 million of undiscounted future minimum lease payments. This lease will commence in fiscal year 2023 with 15 year lease term. These future payments relate to the new Boston headquarters lease executed in the first quarter of 2019, replacing the One Lincoln Street Boston property.
None of our leases contain residual value guarantees.
The following table presents lease costs, sublease rental income, cash flows and new leases arising from lease transactions for 2021:
Years Ended December 31,
(In millions)20212020
Finance lease:
Amortization of right-of-use assets$27 $20 
Interest on lease liabilities6 9 
Total finance lease expense33 29 
Sublease income (11)(11)
Net finance lease expense22 18 
Operating lease:
Operating lease expense147 169 
Sublease income (18)(16)
Net operating lease expense129 153 
Net lease expense$151 $171 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$6 $9 
Operating cash flows from operating leases198 192 
Financing cash flows from finance leases47 33 
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases$69 $38 
Finance leases108 — 
The following table presents future minimum lease payments under non-cancellable leases as of December 31, 2021:
(In millions)Operating LeasesFinance LeasesTotal
2022$158 $71 $229 
2023140 60 200 
2024117 29 146 
202598 10 108 
202674 — 74 
Thereafter162 — 162 
Total future minimum lease payments749 170 919 
Less imputed interest(60)(6)(66)
     Total$689 $164 $853 
The following table presents details related to remaining lease terms and discount rate as of December 31, 2021 and 2020:
December 31, 2021December 31, 2020
Weighted-average remaining lease term (in years):
     Finance leases2.62.7
     Operating leases5.87.1
Weighted-average discount rate:
     Finance leases4 %7 %
     Operating leases3 %3 %