Leases

9 Months Ended

Sep. 30, 2019

The Company has operating leases for corporate offices, branch locations, and server equipment and determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease liability may include payments that depend on a rate or index (such as the Consumer Price Index), measured using the rate or index at the commencement date. Payments that vary because of changes in facts or circumstances occurring after the commencement date are considered variable. These payments are not recognized as part of the lease liability and are expensed in the period incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We have lease agreements with lease and non-lease components. For the majority of our leases (real estate leases), the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component. We have not elected the practical expedient for equipment leases and account for lease and non-lease components separately for those classes of leases.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include periods covered by options to extend when it is reasonably certain that we will exercise those options. The lease terms may also include periods covered by options to terminate when it is reasonably certain that we will not exercise that option.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company does not have any finance leases and had an immaterial amount of sublease income for all periods presented.

The following table details the amounts and locations of lease assets and liabilities on the condensed consolidated balance sheet:



Leases	Balance Sheet Classification	September 30, 2019
Assets
Operating lease assets	Other assets	$	596
Liabilities
Operating lease liabilities	Accrued expenses and other liabilities	$	665

The components of lease expense are as follows:



Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost ⁽¹⁾	$	34	$	100
Variable lease cost ⁽²⁾	8		25

⁽¹⁾Includes short-term leases, which are immaterial.

⁽²⁾Includes payments that are entirely variable and amounts that represent the difference between payments based on an index or rate that would be reflected in the lease liability and what is actually incurred.

The following tables present supplemental lease information as of September 30, 2019:



Lease Term and Discount Rate
Weighted-average remaining lease term (years)	7.18
Weighted-average discount rate	3.47	%



Maturity of Lease Liabilities	Operating Leases ⁽¹⁾
2019	$	26
2020	136
2021	113
2022	92
2023	84
Thereafter	309
Total lease payments	760
Less: Interest	95
Present value of lease liabilities	$	665

⁽¹⁾Operating lease payments exclude $41 million of legally binding minimum lease payments for leases signed but not yet commenced. These leases will commence between 2019 and 2020 with lease terms of five years to 20 years.

In accordance with the disclosure requirements for our adoption of ASU 2016-02, the Company is presenting the operating leases commitment table as of December 31, 2018. The following table is unchanged from the disclosure in Note 14 in the 2018 Form 10-K:



	Operating Leases		Subleases		Net
2019	$	131	$	4	$	127
2020	125		4		121
2021	101		4		97
2022	79		2		77
2023	72		1		71
Thereafter	282		—		282
Total	$	790	$	15	$	775