PREMISES, EQUIPMENT, AND SOFTWARE

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

NOTE 6 - PREMISES, EQUIPMENT AND SOFTWARE

Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization have been computed using the straight-line method over the estimated useful

lives of the assets. Leasehold improvements are amortized over the life of the lease (including renewal options if exercise of those options is reasonably assured) or their estimated useful life, whichever is shorter.

Additions to premises and equipment are recorded at cost. The cost of major additions, improvements and betterments is capitalized. Normal repairs and maintenance and other costs that do not improve the property, extend the useful life or otherwise do not meet capitalization criteria are charged to expense as incurred. Citizens evaluates premises and equipment for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

A summary of the carrying value of premises and equipment is presented below:


		December 31,
(dollars in millions)	Useful Lives (years)	2020	2019
Land and land improvements	10 - 75	$102	$102
Buildings and leasehold improvements	5 - 60	800	848
Furniture, fixtures and equipment	4 - 20	644	535
Construction in progress		50	368
Total premises and equipment, gross		1,596	1,853
Accumulated depreciation		(837)	(1,092)
Total premises and equipment, net		$759	$761

Depreciation charged to noninterest expense totaled $110 million, $116 million, and $117 million for the years ended December 31, 2020, 2019, and 2018, respectively, and is presented in the Consolidated Statements of Operations in both occupancy and equipment expense.

Software

Costs related to computer software developed or obtained for internal use are capitalized if the projects improve functionality and provide long-term future operational benefits. Capitalized costs are amortized using the straight-line method over the asset’s expected useful life, based upon the basic pattern of consumption and economic benefits provided by the asset. Citizens begins to amortize the software when the asset (or identifiable component of the asset) is substantially complete and ready for its intended use. All other costs incurred in connection with an internal-use software project are expensed as incurred. Capitalized software is included in other assets on the Consolidated Balance Sheets.

Citizens had capitalized software assets of $2.2 billion and $2.0 billion and related accumulated amortization of $1.3 billion and $1.1 billion as of December 31, 2020 and 2019, respectively. Amortization expense was $215 million, $194 million, and $189 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The estimated future amortization expense for capitalized software assets is presented below.


Year			(in millions)
2021			$191
2022			155
2023			123
2024			97
2025			57
Thereafter			43
Total (1)			$666

(1) Excluded from this balance is $226 million of in-process software at December 31, 2020.