Premises and equipment

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Premises and equipment

6. Premises and equipment

The detail of premises and equipment was as follows:

	December 31,
(Dollars in millions)	2023		2022
Land	$	148	$	149
Buildings		685		654
Leasehold improvements		413		387
Furniture and equipment		1,097		1,004
		2,343		2,194
Less: accumulated depreciation and amortization		1,220		1,156
Right-of-use assets — operating leases		616		616
Premises and equipment, net	$	1,739	$	1,654

The right-of-use assets and lease liabilities relate to banking offices and other space occupied by the Company and use of certain equipment under noncancelable operating lease agreements. As of December 31, 2023 and 2022, the Company recognized $717 million and $709 million respectively, of operating lease liabilities as a component of “accrued interest and other liabilities” in the Consolidated Balance Sheet. In calculating the present value of lease payments, the Company utilized its incremental secured borrowing rate based on lease term.

The Company’s noncancelable operating lease agreements expire at various dates over the next 18 years. Real estate leases generally consist of fixed monthly rental payments with certain leases containing escalation clauses. Any variable lease payments or payments for nonlease components are recognized in the Consolidated Statement of Income as a component of “equipment and net occupancy” expense based on actual costs incurred. Some leases contain lessee options to extend the term. Those options are included in the lease term when it is determined that it is reasonably certain the option will be exercised.

The Company has noncancelable operating lease agreements for certain equipment related to ATMs, servers, printers and mail machines that are used in the normal course of operations. The ATM leases are either based on the rights to a specific square footage or a license agreement whereby the Company has the right to operate an ATM in a landlord's location. The lease terms generally contain both fixed payments and variable payments that are transaction-based. Given the transaction-based nature of the variable payments, such payments are excluded from the measurement of the right-of-use asset and lease liability and are recognized in the Consolidated Statement of Income as a component of “equipment and net occupancy” expense when incurred.

The following table presents information about the Company’s lease costs for operating leases recorded in the Consolidated Balance Sheet, cash paid toward lease liabilities, and the weighted-average remaining term and discount rates of the operating leases.

	Year Ended December 31,
(Dollars in millions)	2023			2022			2021
Lease cost
Operating lease cost	$	154		$	139		$	102
Short-term lease cost		—			8			—
Variable lease cost		4			4			4
Total lease cost	$	158		$	151		$	106
Other information
Right-of-use assets:
Obtained in exchange for       new operating lease liabilities	$	134		$	138		$	58
Acquired in business combination		—			226			—
Cash paid toward lease liabilities		158			143			107
Weighted-average remaining lease term	7 years			7 years			6 years
Weighted-average discount rate		3.37	%		2.97	%		2.51	%

Minimum lease payments under noncancelable operating leases are summarized in the following table.

(Dollars in millions)
Year ending December 31:
2024	$	162
2025		145
2026		122
2027		101
2028		75
Later years		208
Total lease payments		813
Less: imputed interest		96
Total	$	717

All other operating leasing activities were not material to the Company’s consolidated results of operations. Minimum lease payments required under finance leases are not material.