Bank Premises and Equipment

12 Months Ended

Dec. 31, 2017

7. BANK PREMISES AND EQUIPMENT

The following table provides a summary of bank premises and equipment as of December 31:

($ in millions)	Estimated Useful Life		2017	2016
Land and improvements^(a)		$	644	663
Buildings^(a)	2 - 30 yrs.		1,679	1,672
Equipment	2 - 20 yrs.		1,876	1,761
Leasehold improvements	1 - 30 yrs.		399	398
Construction in progress^(a)			93	99
Bank premises and equipment held for sale:
Land and improvements			17	29
Buildings			9	9
Equipment			1	1
Accumulated depreciation and amortization			(2,715)	(2,567)
Total bank premises and equipment		$	2,003	2,065

(a) At December 31, 2017 and 2016, land and improvements, buildings and construction in progress included $91 and $92, respectively, associated with parcels of undeveloped land intended for future branch expansion.

Depreciation and amortization expense related to bank premises and equipment was $234 million, $242 million and $256 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The Bancorp monitors changing customer preferences associated with the channels it uses for banking transactions to evaluate the efficiency, competitiveness and quality of the customer service experience in its consumer distribution network. As part of this ongoing assessment, the Bancorp may determine that it is no longer fully committed to maintaining full-service branches at certain of its existing banking center locations. Similarly, the Bancorp may also determine that it is no longer fully committed to building banking centers on certain parcels of land which had previously been held for future branch expansion.

The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their carrying values may not be recoverable. Impairment losses associated with such assessments and lower of cost or market adjustments were $7 million, $32 million and $109 million for the years ended December 31, 2017, 2016 and 2015, respectively. The recognized impairment losses were recorded in other noninterest income in the Consolidated Statements of Income.

Gross occupancy expense for cancelable and noncancelable leases, which is included in net occupancy expense in the Consolidated Statements of Income, was $101 million, $100 million and $110 million for the years ended December 31, 2017, 2016 and 2015, respectively, which was reduced by rental income from leased premises of $13 million, $16 million and $18 million during the years ended December 31, 2017, 2016 and 2015, respectively. The Bancorp’s subsidiaries have entered into a number of noncancelable operating and capital lease agreements with respect to bank premises and equipment.

The following table provides the annual future minimum payments under noncancelable operating leases and capital leases for the years ending December 31:

($ in millions)		Noncancelable Operating Leases	Capital Leases
2018	$	87	6
2019		83	6
2020		71	5
2021		57	4
2022		51	4
Thereafter		219	1
Total minimum lease payments	$	568	26
Less: Amounts representing interest		-	4
Present value of net minimum lease payments		-	22