Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

Lessor Arrangements

The Company has lessor arrangements which consist of sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term. For the year ended December 31, 2021, interest earned on Equipment Finance was $10.8 million and is included in “Interest and fees on loans and leases held for investment” on the Income Statement.

The components of Equipment Finance assets are as follows:

December 31,	2021
Lease receivables	$	122,927
Unguaranteed residual asset values	36,837
Unearned income	(10,989)
Deferred fees	380
Total	$	149,155

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of December 31, 2021 were as follows:

2022	$	43,907
2023	35,803
2024	27,374
2025	16,235
2026	9,084
Thereafter	4,382
Total lease payments	$	136,785
Discount effect	(13,858)
Present value of future minimum lease payments	$	122,927

Lessee Arrangements

The Company has operating leases for its headquarters in San Francisco, California, as well as additional office space in the Salt Lake City, Utah, and Boston, Massachusetts areas. As of December 31, 2021, the lease agreements have remaining lease terms ranging from approximately one year to nine years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. In addition, the Company is the sublessor of a portion of its office space in San Francisco, with remaining lease terms of less than one year. As of December 31, 2021, the Company pledged $0.9 million of cash and $5.5 million in letters of credit as security deposits in connection with its lease agreements.

The Company reviewed operating lease right-of-use (ROU) assets for impairment. For the year ended December 31, 2021, the Company recognized an impairment expense of $1.0 million on operating lease assets, included in “Occupancy expense.” For the year ended December 31, 2020, the Company recognized an impairment expense of $3.6 million on operating lease assets.

Balance sheet information related to leases was as follows:

ROU Assets and Lease Liabilities	Balance Sheet Classification	December 31, 2021		December 31, 2020
Operating lease assets	Other assets	$	77,316	$	74,037
Operating lease liabilities (1)	Other liabilities	$	91,588	$	94,538

(1)    The difference between operating lease assets and operating lease liabilities is the unamortized balance of deferred rent.

Components of net lease costs were as follows:

		Year Ended December 31,
Net Lease Costs	Income Statement Classification	2021		2020		2019
Operating lease costs (1)	Occupancy	$	(18,773)	$	(17,346)	$	(19,502)
Sublease revenue	Other non-interest income	6,149		6,146		4,637
Net lease costs		$	(12,624)	$	(11,200)	$	(14,865)

(1)    Includes variable lease costs of $1.3 million, $1.5 million and $1.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Supplemental cash flow information related to the Company’s operating leases was as follows:

Year Ended December 31,	2021		2020		2019
Non-cash operating activity:
Leased assets obtained in exchange for new and amended operating lease liabilities (1)	$	12,914	$	84	$	15,277

(1)    Represents non-cash activity and, accordingly, is not reflected on the Consolidated Statements of Cash Flows. Amount includes noncash remeasurements of the operating lease ROU asset.

The Company’s future minimum undiscounted lease payments under operating leases and anticipated sublease revenue as of December 31, 2021 were as follows:

	Operating Lease Payments		Sublease Revenue		Net
2022	$	15,947	$	(2,918)	$	13,029
2023	12,465		—		12,465
2024	12,810		—		12,810
2025	13,163		—		13,163
2026	13,375		—		13,375
Thereafter	48,975		—		48,975
Total lease payments	$	116,735	$	(2,918)	$	113,817
Discount effect	25,147
Present value of future minimum lease payments	$	91,588

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:

Lease Term and Discount Rate	December 31, 2021
Weighted-average remaining lease term (in years)	8.43
Weighted-average discount rate	5.42	%

Leases

Leases

Lessor Arrangements

The Company has lessor arrangements which consist of sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term. For the year ended December 31, 2021, interest earned on Equipment Finance was $10.8 million and is included in “Interest and fees on loans and leases held for investment” on the Income Statement.

The components of Equipment Finance assets are as follows:

December 31,	2021
Lease receivables	$	122,927
Unguaranteed residual asset values	36,837
Unearned income	(10,989)
Deferred fees	380
Total	$	149,155

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of December 31, 2021 were as follows:

2022	$	43,907
2023	35,803
2024	27,374
2025	16,235
2026	9,084
Thereafter	4,382
Total lease payments	$	136,785
Discount effect	(13,858)
Present value of future minimum lease payments	$	122,927

Lessee Arrangements

The Company has operating leases for its headquarters in San Francisco, California, as well as additional office space in the Salt Lake City, Utah, and Boston, Massachusetts areas. As of December 31, 2021, the lease agreements have remaining lease terms ranging from approximately one year to nine years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. In addition, the Company is the sublessor of a portion of its office space in San Francisco, with remaining lease terms of less than one year. As of December 31, 2021, the Company pledged $0.9 million of cash and $5.5 million in letters of credit as security deposits in connection with its lease agreements.

The Company reviewed operating lease right-of-use (ROU) assets for impairment. For the year ended December 31, 2021, the Company recognized an impairment expense of $1.0 million on operating lease assets, included in “Occupancy expense.” For the year ended December 31, 2020, the Company recognized an impairment expense of $3.6 million on operating lease assets.

Balance sheet information related to leases was as follows:

ROU Assets and Lease Liabilities	Balance Sheet Classification	December 31, 2021		December 31, 2020
Operating lease assets	Other assets	$	77,316	$	74,037
Operating lease liabilities (1)	Other liabilities	$	91,588	$	94,538

(1)    The difference between operating lease assets and operating lease liabilities is the unamortized balance of deferred rent.

Components of net lease costs were as follows:

		Year Ended December 31,
Net Lease Costs	Income Statement Classification	2021		2020		2019
Operating lease costs (1)	Occupancy	$	(18,773)	$	(17,346)	$	(19,502)
Sublease revenue	Other non-interest income	6,149		6,146		4,637
Net lease costs		$	(12,624)	$	(11,200)	$	(14,865)

(1)    Includes variable lease costs of $1.3 million, $1.5 million and $1.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Supplemental cash flow information related to the Company’s operating leases was as follows:

Year Ended December 31,	2021		2020		2019
Non-cash operating activity:
Leased assets obtained in exchange for new and amended operating lease liabilities (1)	$	12,914	$	84	$	15,277

(1)    Represents non-cash activity and, accordingly, is not reflected on the Consolidated Statements of Cash Flows. Amount includes noncash remeasurements of the operating lease ROU asset.

The Company’s future minimum undiscounted lease payments under operating leases and anticipated sublease revenue as of December 31, 2021 were as follows:

	Operating Lease Payments		Sublease Revenue		Net
2022	$	15,947	$	(2,918)	$	13,029
2023	12,465		—		12,465
2024	12,810		—		12,810
2025	13,163		—		13,163
2026	13,375		—		13,375
Thereafter	48,975		—		48,975
Total lease payments	$	116,735	$	(2,918)	$	113,817
Discount effect	25,147
Present value of future minimum lease payments	$	91,588

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:

Lease Term and Discount Rate	December 31, 2021
Weighted-average remaining lease term (in years)	8.43
Weighted-average discount rate	5.42	%