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Lease Obligations - Lessee

12 Months Ended

Dec. 31, 2022

Lease Obligations - Lessee

The Bancorp leases certain banking centers, ATM sites, land for owned buildings and equipment. The Bancorp’s lease agreements typically do not contain any residual value guarantees or any material restrictive covenants.

The following table provides a summary of lease assets and lease liabilities as of December 31:


($ in millions)	Consolidated Balance Sheets Caption	2022		2021
Assets
Operating lease right-of-use assets	Other assets	$	508	427
Finance lease right-of-use assets	Bank premises and equipment	150		145
Total right-of-use assets(a)		$	658	572
Liabilities
Operating lease liabilities	Accrued taxes, interest and expenses	$	599	520
Finance lease liabilities	Long-term debt	156		149
Total lease liabilities		$	755	669

(a)Operating and finance lease right-of-use assets are recorded net of accumulated amortization of $255 and $66, respectively, as of December 31, 2022, and $198 and $47, respectively, as of December 31, 2021.

The following table presents the components of lease costs for the years ended December 31:


($ in millions)	Consolidated Statements of Income Caption	2022		2021	2020
Lease costs:
Amortization of ROU assets	Net occupancy and equipment expense	$	19	18	11
Interest on lease liabilities	Interest on long-term debt	5		4	3
Total finance lease costs		$	24	22	14
Operating lease cost	Net occupancy expense	$	84	80	110
Short-term lease cost	Net occupancy expense	1		2	1
Variable lease cost	Net occupancy expense	28		31	29
Sublease income	Net occupancy expense	(3)		(3)	(3)
Total operating lease costs		$	110	110	137
Total lease costs		$	134	132	151

The Bancorp performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values may not be recoverable. In addition to the lease costs disclosed in the table above, the Bancorp recognized $2 million, $3 million and $8 million of impairment losses and termination charges for the ROU assets related to certain operating leases for the years ended

December 31, 2022, 2021 and 2020, respectively. The recognized losses were recorded in net occupancy expense in the Consolidated Statements of Income.

The following table presents undiscounted cash flows for both operating leases and finance leases for 2023 through 2027 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease liabilities:


As of December 31, 2022 ($ in millions)	Operating Leases		Finance Leases	Total
2023	$	90	21	111
2024	85		21	106
2025	78		14	92
2026	68		9	77
2027	61		8	69
Thereafter	350		128	478
Total undiscounted cash flows	$	732	201	933
Less: Difference between undiscounted cash flows and discounted cash flows	133		45	178
Present value of lease liabilities	$	599	156	755

The following table presents the weighted-average remaining lease term and weighted-average discount rate as of December 31:


	2022		2021
Weighted-average remaining lease term (years):
Operating leases	10.80		8.92
Finance leases	15.31		14.70
Weighted-average discount rate:
Operating leases	3.35	%	2.88
Finance leases	2.94		2.74

The following table presents information related to lease transactions for the years ended December 31:


($ in millions)	2022		2021	2020
Cash paid for amounts included in the measurement of lease liabilities:(a)
Operating cash flows from operating leases	$	90	88	91
Operating cash flows from finance leases	5		4	3
Financing cash flows from finance leases	23		16	11

Gains on sale-leaseback transactions	4		2	3

(a)The cash flows related to the short-term and variable lease payments are not included in the amounts in the table as they were not included in the measurement of lease liabilities.

Lease Obligations, Lessee