LEASES

9 Months Ended

Sep. 30, 2021

We have operating leases primarily for certain branches, office space, land and office equipment. We have finance leases for certain branches. Our operating leases expire at various dates through the year 2046 and generally include one or more options to renew. Our finance leases expire at various dates through the year 2051 and generally include one or more options to renew. The exercise of lease renewal options is at our sole discretion. As of September 30, 2021, we had operating lease right-of-use assets and operating lease liabilities of $122.6 million and $130.8 million, respectively. We have finance leases of $9.6 million.

Our operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of September 30, 2021, 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 $69.2 million and $109.8 million in right-of-use assets and other liabilities, respectively. These operating leases are currently expected to commence in 2021 - 2023 with lease terms up to 16 years. These operating leases include the lease, with a related party, of the future new FNB headquarters building in Pittsburgh, Pennsylvania. The related party operating the lease is accounted for in a manner consistent with all other leases on the basis of the legally enforceable terms and conditions of the lease and represents a VIE for which we are not the primary beneficiary.

The components of lease expense were as follows:

TABLE 7.1


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)	2021		2020		2021		2020
Operating lease cost	$	7	$	7	$	21	$	20
Short-term lease cost	—		1		—		1
Variable lease cost	1		1		3		3


Total lease cost	$	8	$	9	$	24	$	24

Other information related to leases is as follows:

TABLE 7.2


	Nine Months Ended September 30,
(dollars in millions)	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7		$	19
Operating cash flows from finance leases	$	—		$	—
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	7		$	5
Finance leases	$	—		$	—
Weighted average remaining lease term (years):
Operating leases	9.05			9.51
Finance leases	24.13			0
Weighted average discount rate:
Operating leases	2.5		%	2.8		%
Finance leases	1.9		%	—		%

Maturities of lease liabilities were as follows:

TABLE 7.3


(in millions)	Operating Leases		Finance Leases		Total Leases
September 30, 2021
2021	$	7	$	—	$	7
2022	23		—		23
2023	19		—		19
2024	17		—		17
2025	13		—		13
Later years	67		12		79
Total lease payments	146		12		158
Less: imputed interest	(15)		(2)		(17)
Present value of lease liabilities	$	131	$	10	$	141

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 4, “Loans and Leases” in the Notes to Consolidated Financial Statements.

LEASES