Leases

12 Months Ended

Dec. 31, 2022

Text Block [Abstract]

Leases

  NOTE 7   Leases

The Company, as a lessor, originates retail and commercial leases either directly to the consumer or indirectly through dealer networks. Retail leases consist primarily of automobiles, whilecommercial leases may include high dollar assets such as aircraft or lower cost items such as office equipment.

The components of the net investment in sales-type and direct financing leases, at December 31, were as follows:

(Dollars in Millions)	2022		2021
Lease receivables	$	8,731	$	10,738
Unguaranteed residual values accruing to the lessor’s benefit		1,323		1,610
Total net investment in sales-type and direct financing leases	$	10,054	$	12,348

The Company, as a lessor, recorded $764 million, $888 million and $952 million of revenue on its Consolidated Statement of Income for the years ended December 31, 2022,2021 and 2020, respectively, primarily consisting of interest income on sales-type and direct financing leases.

The contractual future lease payments to be received by the Company, at December 31, 2022, were as follows:

(Dollars in Millions)	Sales-type and direct financing leases			Operating leases
2023	$	3,496		$	134
2024		2,765			103
2025		1,665			69
2026		658			33
2027		284			18
Thereafter		447			26
Total lease payments		9,315		$	383
Amounts representing interest		(584	)
Lease receivables	$	8,731

The Company, as lessee, leases certain assets for use in its operations. Leased assets primarily include retail branches, operations centers and other corporate locations, and, to a lesser extent, office and computer equipment. For each lease with an original term greater than 12 months, the Company records a lease liability and a corresponding right of use (“ROU”) asset. At December 31, 2022, the Company’s ROU assets included in premises and equipment and lease liabilities included in long-term debt and other liabilities, were $1.6 billion and $1.7 billion,

respectively, compared with $1.2 billion of ROU assets and $1.3 billion of lease liabilities at December 31, 2021, respectively.

Total costs incurred by the Company, as a lessee, were $390 million, $364 million and $374 million for the years ended December 31, 2022, 2021 and 2020, respectively, and principally related to contractual lease payments on operating leases. The Company’s leases do not impose significant covenants or other restrictions on the Company.

The following table presents amounts relevant to the Company’s assets leased for use in its operations for the years ended December 31:

(Dollars in Millions)	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	294	$	288	$	305
Operating cash flows from finance leases		4		5		6
Financing cash flows from finance leases		14		12		12
Right of use assets obtained in exchange for new operating lease liabilities		239		164		128
Right of use assets obtained in exchange for new finance lease liabilities		91		75		6

The following table presents the weighted-average remaining lease terms and discount rates of the Company’s assets leased for use in its operations at December 31:

	2022			2021
Weighted-average remaining lease term of operating leases (in years)		6.8			7.0
Weighted-average remaining lease term of finance leases (in years)		8.5			9.5
Weighted-average discount rate of operating leases		3.3	%		2.7	%
Weighted-average discount rate of finance leases		7.9	%		9.3	%

The contractual future lease obligations of the Company at December 31, 2022, were as follows:

(Dollars in Millions)	Operating leases			Finance leases
2023	$	369		$	29
2024		318			51
2025		255			48
2026		198			33
2027		152			10
Thereafter		410			28
Total lease payments		1,702			199
Amounts representing interest		(202	)		(22	)
Lease liabilities	$	1,500		$	177