Operating Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Operating Leases

OPERATING LEASES

We have operating leases primarily for certain branches, office space, land, and office equipment. Our operating leases expire at various dates through the year 2046 and generally include one or more options to renew. The exercise of lease renewal options is at our sole discretion. As of December 31, 2020, we had operating lease right-of-use assets and operating lease liabilities of $126.7 million and $134.4 million, respectively.

Our operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2020, we have certain operating lease agreements, primarily for administrative office space, that have not yet commenced. At commencement, it is expected that these leases will add approximately $18.2 million in right-of-use assets and other liabilities. These operating leases are currently expected to commence in 2021 with lease terms of 16 years.

The components of lease expense were as follows:

TABLE 10.1

	Twelve Months Ended December 31,
(dollars in millions)	2020		2019
Operating lease cost	$	27	$	27
Short-term lease cost	1		1
Variable lease cost	3		4
Total lease cost	$	31	$	32

Rental expense totaled $33.2 million for 2018.

Other information related to leases is as follows:

TABLE 10.2

	Twelve Months Ended December 31,
(dollars in millions)	2020			2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	26		$	26
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	20			25
Weighted average remaining lease term (years):
Operating leases	9.45			9.61
Weighted average discount rate:
Operating leases	2.6		%	3.0		%

Maturities of operating lease liabilities were as follows:

TABLE 10.3

(in millions)	December 31, 2020
2021	$	25
2022	21
2023	17
2024	15
2025	12
Later years	64
Total lease payments	154
Less: imputed interest	(20)
Present value of lease liabilities	$	134

As a lessor we offer commercial leasing services to customers in need of new or used equipment primarily within our market areas of Pennsylvania, Ohio, Maryland, North Carolina, South Carolina and West Virginia. Additional information relating to commercial leasing is provided in Note 5, “Loans and Leases” in the Notes to Consolidated Financial Statements.