Lease Obligations - Lessee

12 Months Ended

Dec. 31, 2019

Lessee Disclosure [Abstract]

Lease Obligations - Lessee

10. 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.

Refer to Note 1 for additional information.

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

($ in millions)	Consolidated Balance Sheets Caption	December 31, 2019
Assets
Operating lease right-of-use assets	Other assets	$	473
Finance lease right-of-use assets	Bank premises and equipment		34
Total right-of-use assets(a)		$	507
Liabilities
Operating lease liabilities	Accrued taxes, interest and expenses	$	555
Finance lease liabilities	Long-term debt		35
Total lease liabilities		$	590

(a) Operating and finance lease right-of-use assets are recorded net of accumulated amortization of $75 and $27 as of December 31, 2019, respectively.

The following table presents the components of lease costs:

($ in millions)	Consolidated Statements of Income Caption		For the year ended December 31, 2019
Lease costs:
Amortization of right-of-use assets	Net occupancy and equipment expense	$	6
Interest on lease liabilities	Interest on long-term debt		1
Total finance lease costs		$	7
Operating lease cost	Net occupancy expense	$	96
Short-term lease cost	Net occupancy expense		1
Variable lease cost	Net occupancy expense		30
Sublease income	Net occupancy expense		(3)
Total operating lease costs		$	124
Total lease costs		$	131

Gross occupancy expense for cancelable and noncancelable leases, which was included in net occupancy expense in the Consolidated Statements of Income, was $101 million for both the years ended December 31, 2018 and 2017.

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 $15 million of impairment losses and termination charges for the ROU assets related to certain operating leases for the year ended December 31, 2019. 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 2020 through 2024 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease liabilities as follows:

As of December 31, 2019 ($ in millions)	Operating Leases		Finance Leases		Total
2020	$	90		6		96
2021		81		5		86
2022		76		5		81
2023		67		2		69
2024		58		2		60
Thereafter		280		26		306
Total undiscounted cash flows	$	652		46		698
Less: Difference between undiscounted cash flows and discounted cash flows		97		11		108
Present value of lease liabilities	$	555		35		590

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

	December 31, 2019
Weighted-average remaining lease term (years):
Operating leases	9.48
Finance leases	14.17
Weighted-average discount rate:
Operating leases	3.19%
Finance leases	4.30

The following table presents information related to lease transactions for the year ended:

($ in millions)	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:(a)
Operating cash flows from operating leases	$	97
Operating cash flows from finance leases		1
Financing cash flows from finance leases		5
Gains on sale and leaseback transactions		5

(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.