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Occupancy Expense and Information Systems and Communications Expense
 12 Months Ended
Dec. 31, 2024
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 2024, 2023 and 2022 was $824 million, $829 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, 2024 and 2023, we had finance leases for information technology equipment of $67 million and $119 million, respectively, recorded in premises and equipment, with the related liability of $79 million and $130 million, respectively, recorded in long-term debt, in our consolidated statement of condition.
Finance lease right-of-use asset amortization is recorded in information systems and communications expense on a straight-line basis in our consolidated statement of income over the respective lease term. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. Accumulated amortization of the finance lease right-of-use assets was $135 million as of December 31, 2024. Interest expense related to the finance lease obligation reflected in NII was $3 million and $5 million in 2024 and 2023, respectively.
As of December 31, 2024, aggregate net book value of the operating lease right-of-use assets recorded in other assets was $818 million, with the related lease liability 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, 2024, we have additional operating and finance leases, primarily for office space and equipment, that have not yet commenced with approximately $207 million of undiscounted future minimum lease payments. These leases will commence in fiscal year 2025 with lease terms ranging from 3 to 11 years.
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 2024:
Years Ended December 31,
(In millions)20242023
Finance lease:
Amortization of right-of-use assets$48 $48 
Interest on lease liabilities3 5 
Total finance lease expense51 53 
Sublease income — — 
Net finance lease expense51 53 
Operating lease:
Operating lease expense168 163 
Sublease income (17)(23)
Net operating lease expense151 140 
Net lease expense$202 $193 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$3 $5 
Operating cash flows from operating leases179 197 
Financing cash flows from finance leases46 45 
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases$174 $461 
Finance leases— — 
The following table presents future minimum lease payments under non-cancellable leases as of December 31, 2024:
(In millions)Operating LeasesFinance LeasesTotal
2025
$182 $55 $237 
2026152 26 178 
2027134 — 134 
2028118 — 118 
202988 — 88 
Thereafter342 — 342 
Total future minimum lease payments1,016 81 1,097 
Less imputed interest(177)(2)(179)
     Total$839 $79 $918 
The following table presents details related to remaining lease terms and discount rate as of December 31, 2024 and 2023:
December 31, 2024December 31, 2023
Weighted-average remaining lease term (in years):
     Finance leases1.42.5
     Operating leases8.18.5
Weighted-average discount rate:
     Finance leases3 %3 %
     Operating leases4 %4 %
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 2024, 2023 and 2022 was $824 million, $829 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, 2024 and 2023, we had finance leases for information technology equipment of $67 million and $119 million, respectively, recorded in premises and equipment, with the related liability of $79 million and $130 million, respectively, recorded in long-term debt, in our consolidated statement of condition.
Finance lease right-of-use asset amortization is recorded in information systems and communications expense on a straight-line basis in our consolidated statement of income over the respective lease term. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. Accumulated amortization of the finance lease right-of-use assets was $135 million as of December 31, 2024. Interest expense related to the finance lease obligation reflected in NII was $3 million and $5 million in 2024 and 2023, respectively.
As of December 31, 2024, aggregate net book value of the operating lease right-of-use assets recorded in other assets was $818 million, with the related lease liability 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, 2024, we have additional operating and finance leases, primarily for office space and equipment, that have not yet commenced with approximately $207 million of undiscounted future minimum lease payments. These leases will commence in fiscal year 2025 with lease terms ranging from 3 to 11 years.
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 2024:
Years Ended December 31,
(In millions)20242023
Finance lease:
Amortization of right-of-use assets$48 $48 
Interest on lease liabilities3 5 
Total finance lease expense51 53 
Sublease income — — 
Net finance lease expense51 53 
Operating lease:
Operating lease expense168 163 
Sublease income (17)(23)
Net operating lease expense151 140 
Net lease expense$202 $193 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$3 $5 
Operating cash flows from operating leases179 197 
Financing cash flows from finance leases46 45 
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases$174 $461 
Finance leases— — 
The following table presents future minimum lease payments under non-cancellable leases as of December 31, 2024:
(In millions)Operating LeasesFinance LeasesTotal
2025
$182 $55 $237 
2026152 26 178 
2027134 — 134 
2028118 — 118 
202988 — 88 
Thereafter342 — 342 
Total future minimum lease payments1,016 81 1,097 
Less imputed interest(177)(2)(179)
     Total$839 $79 $918 
The following table presents details related to remaining lease terms and discount rate as of December 31, 2024 and 2023:
December 31, 2024December 31, 2023
Weighted-average remaining lease term (in years):
     Finance leases1.42.5
     Operating leases8.18.5
Weighted-average discount rate:
     Finance leases3 %3 %
     Operating leases4 %4 %