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Leases | 9 Months Ended
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Sep. 30, 2019
Leases [Abstract] |
Leases | Leases On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) and subsequent related ASUs using the alternative transition method with a cumulative-effect adjustment to retained earnings without revising comparable prior periods’ financial information. As both a lessee and lessor, the Company elected the package of practical expedients available for leases that commenced before the adoption date. As such, the Company need not reassess: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) the initial direct costs for any expired or existing leases, such as costs that would qualify for capitalization. The Company also elected the hindsight practical expedient to determine the lease term and to assess impairment on the Company’s right-of-use assets, and the practical expedient to not separate lease and non-lease components, consistently across all leases. Lessee Arrangements The Company determines if an arrangement is a lease or contains a lease at inception. As of September 30, 2019, the Company was obligated under a number of non-cancellable leases, predominantly operating leases for certain retail banking branches and office spaces in the U.S. and Greater China. These operating leases expire in the years ranging from 2019 to 2030, exclusive of renewal and termination options. Some of these leases include options to extend the leases for up to 15 years, while certain leases include lessee termination options. The Company's measurement of the operating lease liability and right-of-use asset does not include payments associated with the options to extend or terminate the lease since it is not reasonably certain that the Company will exercise the options. A portion of the operating leases includes variable lease payments, primarily based on the usage of the asset or the consumer price index as specified in the lease agreements. The Company does not remeasure lease liabilities as a result of changes to variable lease payments. The Company also has equipment and air rights finance leases which expire in the years ranging from 2021 to 2047. The right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company’s incremental borrowing rate based on the information available at the later of the adoption date or the lease commencement date is used to determine the present value of future payments. This approximates a collateralized borrowing rate over a similar term for an amount equal to the lease payments in a similar economic environment. The following table presents the lease related assets and liabilities recorded on the Consolidated Balance Sheet as of September 30, 2019:
($ in thousands) |  | Classification on the Consolidated Balance Sheet |  | September 30, 2019
Assets: |  |  |  |
Operating lease assets |  | Operating lease right-of use assets |  | $ | 103,894 |
Finance lease assets |  | Premises and equipment |  | 7,932 |
Total lease assets |  |  |  | $ | 111,826 |
Liabilities: |  |  |  |
Operating lease liabilities |  | Operating lease liabilities |  | $ | 112,142 |
Finance lease liabilities |  | Long-term debt and finance lease liabilities |  | 5,356 |
Total lease liabilities |  |  |  | $ | 117,498 |
The following table presents the components of lease expense for operating and finance leases during the three and nine months ended September 30, 2019:
($ in thousands) |  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Operating lease cost |  | $ | 8,596 |  |  | $ | 26,346 |
Finance lease cost: |  |  |  |
Amortization of right-of-use assets |  | 251 |  |  | 733 |
Interest on lease liabilities |  | 38 |  |  | 125 |
Variable lease cost |  | 31 |  |  | 93 |
Sublease income |  | — |  |  | (81 | )
Net lease cost |  | $ | 8,916 |  |  | $ | 27,216 |
The following table presents the supplemental cash flow information related to leases during the three and nine months ended September 30, 2019:
($ in thousands) |  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 8,798 |  |  | $ | 26,779 |
Operating cash flows from finance leases |  | $ | 38 |  |  | $ | 125 |
Financing cash flows from finance leases |  | $ | 222 |  |  | $ | 658 |
Right-of-use assets obtained in exchange for new lease liabilities: |  |  |  |
Operating leases |  | $ | 2,794 |  |  | $ | 17,961 |
Financing leases |  | $ | 39 |  |  | $ | 265 |
The following table presents the weighted-average remaining lease terms and discount rates related to leases as of September 30, 2019:
|  | September 30, 2019
Weighted-average remaining lease term (in years): |  |
Operating leases |  | 4.8 |
Finance leases |  | 16.1 |
Weighted-average discount rate: |  |
Operating leases |  | 3.23 | %
Finance leases |  | 2.75 | %
The following table presents a maturity analysis of the Company’s operating and finance lease liabilities as of September 30, 2019:
($ in thousands) |  | Operating Leases |  | Finance Leases
Remainder of 2019 |  | $ | 8,713 |  |  | $ | 260 |
2020 |  | 32,177 |  |  | 1,037 |
2021 |  | 27,962 |  |  | 1,031 |
2022 |  | 18,278 |  |  | 691 |
2023 |  | 11,254 |  |  | 404 |
Thereafter |  | 22,559 |  |  | 3,465 |
Total minimum lease payments |  | $ | 120,943 |  |  | $ | 6,888 |
Less: imputed interest |  | (8,801 | ) |  | (1,532 | )
Present value of lease liabilities |  | $ | 112,142 |  |  | $ | 5,356 |
Lessor Arrangements The Company finances equipment under direct financing and sales-type leases to its commercial customers. As of September 30, 2019, the total net investment in direct financing and sales-type leases was $147.2 million with expiration in the years ranging from 2020 to 2027, exclusive of renewal options. Some of the leases include options to extend the leases, while others include early buyout options. As the Company is not reasonably certain at lease commencement that the purchase options will be exercised by the lessees, the lease terms exclude the purchase option. The unguaranteed residual value is recorded at the present value of the amount the Company expects to derive from the underlying asset following the end of the lease term, which is not guaranteed by the lessee or any third party, discounted using the rate implicit in the lease. In certain cases, the Company obtains residual value insurance from third parties and/or guarantees from the lessee to manage the risk associated with the residual value of the leased assets. The carrying amount of guaranteed residual value, which was included in Loans held-for-investment on the Consolidated Balance Sheet, was $31.4 million as of September 30, 2019. The following table presents the components of the net investment in direct financing and sales-type leases as of September 30, 2019:
($ in thousands) |  | September 30, 2019
Lease receivables |  | $ | 132,431 |
Unguaranteed residual assets |  | 14,767 |
Net investment in direct financing and sales-type leases |  | $ | 147,198 |
The lease income for direct financing and sales-type leases was $1.5 million and $4.5 million for three and nine months ended September 30, 2019, respectively. The following table presents future minimum lease payments that are expected to be received under the direct financing and sales-type leases as of September 30, 2019:
($ in thousands) |  | Direct Financing and Sales-Type Leases
Remainder of 2019 |  | $ | 6,884 |
2020 |  | 27,566 |
2021 |  | 25,584 |
2022 |  | 18,190 |
2023 |  | 11,995 |
Thereafter |  | 20,342 |
Total minimum lease payments |  | $ | 110,561 |
Less: imputed interest |  | (10,842 | )
Present value of lease receivables |  | $ | 99,719 |

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