Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
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 table below presents the net investment in sales-type and direct financing leases at December 31, 2022 and 2021.
Net Investment (1)
December 31
(Dollars in millions) 2022 2021
Lease receivables $ 15,123  $ 16,806 
Unguaranteed residuals 2,143  2,078 
   Total net investment in sales-type and direct
      financing leases		 $ 17,266  $ 18,884 
(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 $6.5 billion and $7.1 billion at December 31, 2022 and 2021.
The table below presents lease income for 2022, 2021 and 2020.
Lease Income
(Dollars in millions) 2022 2021 2020
Sales-type and direct financing leases $ 589  $ 613  $ 707 
Operating leases 941  930  931 
   Total lease income $ 1,530  $ 1,543  $ 1,638 
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, 2022 and 2021.
Supplemental Information for Lessee Arrangements
December 31
(Dollars in millions) 2022 2021
Right-of-use asset $ 9,755  $ 10,233 
Lease liabilities 10,359  10,858 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.25  % 2.91  %
Weighted-average lease term (in years) 8.6 9.0
Right-of-use assets obtained in
  exchange for new operating
  lease liabilities (1)
$ 824  $ 1,713 
2022 2021 2020
Operating cash flows from
  operating leases (2)
$ 1,986  $ 1,964  $ 2,039 
Lease Cost and Supplemental
  Information:
Operating lease cost $ 2,008  $ 2,025  $ 2,149 
Variable lease cost (3)
464  462  474 
   Total lease cost (4)
$ 2,472  $ 2,487  $ 2,623 
(1)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(2)Represents cash paid for amounts included in the measurements of lease liabilities.
(3)Primarily consists of payments for common area maintenance and property taxes.
(4)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2022 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, 2022
2023 $ 819  $ 4,932  $ 1,998 
2024 682  4,399  1,850 
2025 509  2,539  1,567 
2026 368  1,993  1,354 
2027 289  990  1,131 
Thereafter 664  1,635  4,189 
Total undiscounted
cash flows
 $ 3,331  16,488  12,089 
Less: Net present
value adjustment
 1,365  1,730 
Total (3)
$ 15,123  $ 10,359 
(1)Excludes $278 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2023.
(2)Includes $10.2 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 table below presents the net investment in sales-type and direct financing leases at December 31, 2022 and 2021.
Net Investment (1)
December 31
(Dollars in millions) 2022 2021
Lease receivables $ 15,123  $ 16,806 
Unguaranteed residuals 2,143  2,078 
   Total net investment in sales-type and direct
      financing leases		 $ 17,266  $ 18,884 
(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 $6.5 billion and $7.1 billion at December 31, 2022 and 2021.
The table below presents lease income for 2022, 2021 and 2020.
Lease Income
(Dollars in millions) 2022 2021 2020
Sales-type and direct financing leases $ 589  $ 613  $ 707 
Operating leases 941  930  931 
   Total lease income $ 1,530  $ 1,543  $ 1,638 
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, 2022 and 2021.
Supplemental Information for Lessee Arrangements
December 31
(Dollars in millions) 2022 2021
Right-of-use asset $ 9,755  $ 10,233 
Lease liabilities 10,359  10,858 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.25  % 2.91  %
Weighted-average lease term (in years) 8.6 9.0
Right-of-use assets obtained in
  exchange for new operating
  lease liabilities (1)
$ 824  $ 1,713 
2022 2021 2020
Operating cash flows from
  operating leases (2)
$ 1,986  $ 1,964  $ 2,039 
Lease Cost and Supplemental
  Information:
Operating lease cost $ 2,008  $ 2,025  $ 2,149 
Variable lease cost (3)
464  462  474 
   Total lease cost (4)
$ 2,472  $ 2,487  $ 2,623 
(1)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(2)Represents cash paid for amounts included in the measurements of lease liabilities.
(3)Primarily consists of payments for common area maintenance and property taxes.
(4)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2022 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, 2022
2023 $ 819  $ 4,932  $ 1,998 
2024 682  4,399  1,850 
2025 509  2,539  1,567 
2026 368  1,993  1,354 
2027 289  990  1,131 
Thereafter 664  1,635  4,189 
Total undiscounted
cash flows
 $ 3,331  16,488  12,089 
Less: Net present
value adjustment
 1,365  1,730 
Total (3)
$ 15,123  $ 10,359 
(1)Excludes $278 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2023.
(2)Includes $10.2 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 table below presents the net investment in sales-type and direct financing leases at December 31, 2022 and 2021.
Net Investment (1)
December 31
(Dollars in millions) 2022 2021
Lease receivables $ 15,123  $ 16,806 
Unguaranteed residuals 2,143  2,078 
   Total net investment in sales-type and direct
      financing leases		 $ 17,266  $ 18,884 
(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 $6.5 billion and $7.1 billion at December 31, 2022 and 2021.
The table below presents lease income for 2022, 2021 and 2020.
Lease Income
(Dollars in millions) 2022 2021 2020
Sales-type and direct financing leases $ 589  $ 613  $ 707 
Operating leases 941  930  931 
   Total lease income $ 1,530  $ 1,543  $ 1,638 
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, 2022 and 2021.
Supplemental Information for Lessee Arrangements
December 31
(Dollars in millions) 2022 2021
Right-of-use asset $ 9,755  $ 10,233 
Lease liabilities 10,359  10,858 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.25  % 2.91  %
Weighted-average lease term (in years) 8.6 9.0
Right-of-use assets obtained in
  exchange for new operating
  lease liabilities (1)
$ 824  $ 1,713 
2022 2021 2020
Operating cash flows from
  operating leases (2)
$ 1,986  $ 1,964  $ 2,039 
Lease Cost and Supplemental
  Information:
Operating lease cost $ 2,008  $ 2,025  $ 2,149 
Variable lease cost (3)
464  462  474 
   Total lease cost (4)
$ 2,472  $ 2,487  $ 2,623 
(1)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(2)Represents cash paid for amounts included in the measurements of lease liabilities.
(3)Primarily consists of payments for common area maintenance and property taxes.
(4)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2022 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, 2022
2023 $ 819  $ 4,932  $ 1,998 
2024 682  4,399  1,850 
2025 509  2,539  1,567 
2026 368  1,993  1,354 
2027 289  990  1,131 
Thereafter 664  1,635  4,189 
Total undiscounted
cash flows
 $ 3,331  16,488  12,089 
Less: Net present
value adjustment
 1,365  1,730 
Total (3)
$ 15,123  $ 10,359 
(1)Excludes $278 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2023.
(2)Includes $10.2 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 table below presents the net investment in sales-type and direct financing leases at December 31, 2022 and 2021.
Net Investment (1)
December 31
(Dollars in millions) 2022 2021
Lease receivables $ 15,123  $ 16,806 
Unguaranteed residuals 2,143  2,078 
   Total net investment in sales-type and direct
      financing leases		 $ 17,266  $ 18,884 
(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 $6.5 billion and $7.1 billion at December 31, 2022 and 2021.
The table below presents lease income for 2022, 2021 and 2020.
Lease Income
(Dollars in millions) 2022 2021 2020
Sales-type and direct financing leases $ 589  $ 613  $ 707 
Operating leases 941  930  931 
   Total lease income $ 1,530  $ 1,543  $ 1,638 
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, 2022 and 2021.
Supplemental Information for Lessee Arrangements
December 31
(Dollars in millions) 2022 2021
Right-of-use asset $ 9,755  $ 10,233 
Lease liabilities 10,359  10,858 
Weighted-average discount rate used to calculate present value of future minimum lease payments 3.25  % 2.91  %
Weighted-average lease term (in years) 8.6 9.0
Right-of-use assets obtained in
  exchange for new operating
  lease liabilities (1)
$ 824  $ 1,713 
2022 2021 2020
Operating cash flows from
  operating leases (2)
$ 1,986  $ 1,964  $ 2,039 
Lease Cost and Supplemental
  Information:
Operating lease cost $ 2,008  $ 2,025  $ 2,149 
Variable lease cost (3)
464  462  474 
   Total lease cost (4)
$ 2,472  $ 2,487  $ 2,623 
(1)Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows.
(2)Represents cash paid for amounts included in the measurements of lease liabilities.
(3)Primarily consists of payments for common area maintenance and property taxes.
(4)Amounts are recorded in occupancy and equipment expense in the Consolidated Statement of Income.
Maturity Analysis
The maturities of lessor and lessee arrangements outstanding at December 31, 2022 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, 2022
2023 $ 819  $ 4,932  $ 1,998 
2024 682  4,399  1,850 
2025 509  2,539  1,567 
2026 368  1,993  1,354 
2027 289  990  1,131 
Thereafter 664  1,635  4,189 
Total undiscounted
cash flows
 $ 3,331  16,488  12,089 
Less: Net present
value adjustment
 1,365  1,730 
Total (3)
$ 15,123  $ 10,359 
(1)Excludes $278 million in commitments under lessee arrangements that have not yet commenced with lease terms that will begin in 2023.
(2)Includes $10.2 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.