Annual report pursuant to Section 13 and 15(d)

Leases

v3.20.4
Leases
 12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases Leases
The Corporation enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 – Summary of Significant Accounting Principles and on lease financing receivables, see Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses.
Lessor Arrangements
The Corporation’s lessor arrangements primarily consist of operating, sales-type and direct financing 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 presents the net investment in sales-type and direct financing leases at December 31, 2020 and 2019.
Net Investment (1)
December 31
(Dollars in millions) 2020 2019
Lease receivables $ 17,627  $ 19,312 
Unguaranteed residuals 2,303  2,550 
   Total net investment in sales-type and direct
financing leases		 $ 19,930  $ 21,862 
(1) In certain cases, the Corporation obtains third-party residual value insurance to reduce its residual asset risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $6.9 billion and $5.8 billion at December 31, 2020 and 2019.
The following table presents lease income at December 31, 2020 and 2019.
Lease Income
December 31
(Dollars in millions) 2020 2019
Sales-type and direct financing leases $ 707  $ 797 
Operating leases 931  891 
   Total lease income $ 1,638  $ 1,688 
Lessee Arrangements
The Corporation's lessee arrangements predominantly consist of operating leases for premises and equipment; the Corporation's financing leases are not significant.
Lease terms may contain renewal and extension options and early termination features. Generally, these options do not impact the lease term because the Corporation is not reasonably certain that it will exercise the options.
The following table provides information on the right-of-use assets, lease liabilities and weighted-average discount rates and lease terms at December 31, 2020 and 2019.
Lessee Arrangements
December 31
(Dollars in millions) 2020 2019
Right-of-use asset $ 10,000  $ 9,735 
Lease liabilities 10,474  10,093 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.38  % 3.68  %
Weighted-average lease term (in years) 8.4 8.2
Lease Cost and Supplemental Information:
Operating lease cost $ 2,149  $ 2,085 
Variable lease cost (1)
474  498 
   Total lease cost (2)
$ 2,623  $ 2,583 
Right-of-use assets obtained in exchange for
new operating lease liabilities (3)
$ 851  $ 931 
Operating cash flows from operating
    leases (4)
2,039  2,009 
(1)Primarily consists of payments for common area maintenance and property taxes.
(2)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
(3)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(4)Represents cash paid for amounts included in the measurements of lease liabilities.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2020 are presented in the table below based on undiscounted cash flows.
Maturities of Lessor and Lessee Arrangements
Lessor
Lessee (1)
Operating
Leases
Sales-type and
Direct Financing
Leases (2)
Operating
Leases
(Dollars in millions) December 31, 2020
2021 $ 843  $ 5,424  $ 1,927 
2022 748  4,934  1,715 
2023 630  3,637  1,454 
2024 479  2,089  1,308 
2025 339  1,143  1,087 
Thereafter 886  1,668  4,609 
Total undiscounted
cash flows
 $ 3,925  18,895  12,100 
Less: Net present
value adjustment
 1,268  1,626 
Total (3)
$ 17,627  $ 10,474 
(1)Excludes $885 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2021.
(2)Includes $12.7 billion in commercial lease financing receivables and $4.9 billion in direct/indirect consumer lease financing receivables.
(3)Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.
Leases Leases
The Corporation enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 – Summary of Significant Accounting Principles and on lease financing receivables, see Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses.
Lessor Arrangements
The Corporation’s lessor arrangements primarily consist of operating, sales-type and direct financing 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 presents the net investment in sales-type and direct financing leases at December 31, 2020 and 2019.
Net Investment (1)
December 31
(Dollars in millions) 2020 2019
Lease receivables $ 17,627  $ 19,312 
Unguaranteed residuals 2,303  2,550 
   Total net investment in sales-type and direct
financing leases		 $ 19,930  $ 21,862 
(1) In certain cases, the Corporation obtains third-party residual value insurance to reduce its residual asset risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $6.9 billion and $5.8 billion at December 31, 2020 and 2019.
The following table presents lease income at December 31, 2020 and 2019.
Lease Income
December 31
(Dollars in millions) 2020 2019
Sales-type and direct financing leases $ 707  $ 797 
Operating leases 931  891 
   Total lease income $ 1,638  $ 1,688 
Lessee Arrangements
The Corporation's lessee arrangements predominantly consist of operating leases for premises and equipment; the Corporation's financing leases are not significant.
Lease terms may contain renewal and extension options and early termination features. Generally, these options do not impact the lease term because the Corporation is not reasonably certain that it will exercise the options.
The following table provides information on the right-of-use assets, lease liabilities and weighted-average discount rates and lease terms at December 31, 2020 and 2019.
Lessee Arrangements
December 31
(Dollars in millions) 2020 2019
Right-of-use asset $ 10,000  $ 9,735 
Lease liabilities 10,474  10,093 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.38  % 3.68  %
Weighted-average lease term (in years) 8.4 8.2
Lease Cost and Supplemental Information:
Operating lease cost $ 2,149  $ 2,085 
Variable lease cost (1)
474  498 
   Total lease cost (2)
$ 2,623  $ 2,583 
Right-of-use assets obtained in exchange for
new operating lease liabilities (3)
$ 851  $ 931 
Operating cash flows from operating
    leases (4)
2,039  2,009 
(1)Primarily consists of payments for common area maintenance and property taxes.
(2)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
(3)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(4)Represents cash paid for amounts included in the measurements of lease liabilities.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2020 are presented in the table below based on undiscounted cash flows.
Maturities of Lessor and Lessee Arrangements
Lessor
Lessee (1)
Operating
Leases
Sales-type and
Direct Financing
Leases (2)
Operating
Leases
(Dollars in millions) December 31, 2020
2021 $ 843  $ 5,424  $ 1,927 
2022 748  4,934  1,715 
2023 630  3,637  1,454 
2024 479  2,089  1,308 
2025 339  1,143  1,087 
Thereafter 886  1,668  4,609 
Total undiscounted
cash flows
 $ 3,925  18,895  12,100 
Less: Net present
value adjustment
 1,268  1,626 
Total (3)
$ 17,627  $ 10,474 
(1)Excludes $885 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2021.
(2)Includes $12.7 billion in commercial lease financing receivables and $4.9 billion in direct/indirect consumer lease financing receivables.
(3)Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.
Leases Leases
The Corporation enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 – Summary of Significant Accounting Principles and on lease financing receivables, see Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses.
Lessor Arrangements
The Corporation’s lessor arrangements primarily consist of operating, sales-type and direct financing 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 presents the net investment in sales-type and direct financing leases at December 31, 2020 and 2019.
Net Investment (1)
December 31
(Dollars in millions) 2020 2019
Lease receivables $ 17,627  $ 19,312 
Unguaranteed residuals 2,303  2,550 
   Total net investment in sales-type and direct
financing leases		 $ 19,930  $ 21,862 
(1) In certain cases, the Corporation obtains third-party residual value insurance to reduce its residual asset risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $6.9 billion and $5.8 billion at December 31, 2020 and 2019.
The following table presents lease income at December 31, 2020 and 2019.
Lease Income
December 31
(Dollars in millions) 2020 2019
Sales-type and direct financing leases $ 707  $ 797 
Operating leases 931  891 
   Total lease income $ 1,638  $ 1,688 
Lessee Arrangements
The Corporation's lessee arrangements predominantly consist of operating leases for premises and equipment; the Corporation's financing leases are not significant.
Lease terms may contain renewal and extension options and early termination features. Generally, these options do not impact the lease term because the Corporation is not reasonably certain that it will exercise the options.
The following table provides information on the right-of-use assets, lease liabilities and weighted-average discount rates and lease terms at December 31, 2020 and 2019.
Lessee Arrangements
December 31
(Dollars in millions) 2020 2019
Right-of-use asset $ 10,000  $ 9,735 
Lease liabilities 10,474  10,093 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.38  % 3.68  %
Weighted-average lease term (in years) 8.4 8.2
Lease Cost and Supplemental Information:
Operating lease cost $ 2,149  $ 2,085 
Variable lease cost (1)
474  498 
   Total lease cost (2)
$ 2,623  $ 2,583 
Right-of-use assets obtained in exchange for
new operating lease liabilities (3)
$ 851  $ 931 
Operating cash flows from operating
    leases (4)
2,039  2,009 
(1)Primarily consists of payments for common area maintenance and property taxes.
(2)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
(3)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(4)Represents cash paid for amounts included in the measurements of lease liabilities.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2020 are presented in the table below based on undiscounted cash flows.
Maturities of Lessor and Lessee Arrangements
Lessor
Lessee (1)
Operating
Leases
Sales-type and
Direct Financing
Leases (2)
Operating
Leases
(Dollars in millions) December 31, 2020
2021 $ 843  $ 5,424  $ 1,927 
2022 748  4,934  1,715 
2023 630  3,637  1,454 
2024 479  2,089  1,308 
2025 339  1,143  1,087 
Thereafter 886  1,668  4,609 
Total undiscounted
cash flows
 $ 3,925  18,895  12,100 
Less: Net present
value adjustment
 1,268  1,626 
Total (3)
$ 17,627  $ 10,474 
(1)Excludes $885 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2021.
(2)Includes $12.7 billion in commercial lease financing receivables and $4.9 billion in direct/indirect consumer lease financing receivables.
(3)Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.
Leases Leases
The Corporation enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 – Summary of Significant Accounting Principles and on lease financing receivables, see Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses.
Lessor Arrangements
The Corporation’s lessor arrangements primarily consist of operating, sales-type and direct financing 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 presents the net investment in sales-type and direct financing leases at December 31, 2020 and 2019.
Net Investment (1)
December 31
(Dollars in millions) 2020 2019
Lease receivables $ 17,627  $ 19,312 
Unguaranteed residuals 2,303  2,550 
   Total net investment in sales-type and direct
financing leases		 $ 19,930  $ 21,862 
(1) In certain cases, the Corporation obtains third-party residual value insurance to reduce its residual asset risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $6.9 billion and $5.8 billion at December 31, 2020 and 2019.
The following table presents lease income at December 31, 2020 and 2019.
Lease Income
December 31
(Dollars in millions) 2020 2019
Sales-type and direct financing leases $ 707  $ 797 
Operating leases 931  891 
   Total lease income $ 1,638  $ 1,688 
Lessee Arrangements
The Corporation's lessee arrangements predominantly consist of operating leases for premises and equipment; the Corporation's financing leases are not significant.
Lease terms may contain renewal and extension options and early termination features. Generally, these options do not impact the lease term because the Corporation is not reasonably certain that it will exercise the options.
The following table provides information on the right-of-use assets, lease liabilities and weighted-average discount rates and lease terms at December 31, 2020 and 2019.
Lessee Arrangements
December 31
(Dollars in millions) 2020 2019
Right-of-use asset $ 10,000  $ 9,735 
Lease liabilities 10,474  10,093 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.38  % 3.68  %
Weighted-average lease term (in years) 8.4 8.2
Lease Cost and Supplemental Information:
Operating lease cost $ 2,149  $ 2,085 
Variable lease cost (1)
474  498 
   Total lease cost (2)
$ 2,623  $ 2,583 
Right-of-use assets obtained in exchange for
new operating lease liabilities (3)
$ 851  $ 931 
Operating cash flows from operating
    leases (4)
2,039  2,009 
(1)Primarily consists of payments for common area maintenance and property taxes.
(2)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
(3)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(4)Represents cash paid for amounts included in the measurements of lease liabilities.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2020 are presented in the table below based on undiscounted cash flows.
Maturities of Lessor and Lessee Arrangements
Lessor
Lessee (1)
Operating
Leases
Sales-type and
Direct Financing
Leases (2)
Operating
Leases
(Dollars in millions) December 31, 2020
2021 $ 843  $ 5,424  $ 1,927 
2022 748  4,934  1,715 
2023 630  3,637  1,454 
2024 479  2,089  1,308 
2025 339  1,143  1,087 
Thereafter 886  1,668  4,609 
Total undiscounted
cash flows
 $ 3,925  18,895  12,100 
Less: Net present
value adjustment
 1,268  1,626 
Total (3)
$ 17,627  $ 10,474 
(1)Excludes $885 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2021.
(2)Includes $12.7 billion in commercial lease financing receivables and $4.9 billion in direct/indirect consumer lease financing receivables.
(3)Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.