| LEASES |
6. LEASES
Lessor Arrangements
The Company’s lessor arrangements consist of sales-type and direct financing leases for equipment, including vehicles and machinery, with terms ranging from 11 months to 122 months. At March 31, 2025 and December 31, 2024, the carrying value of residual assets covered by residual value guarantees and residual value insurance was $109.9 million and $102.6 million, respectively.
Total net investment in sales-type and direct financing leases are included in “Loans held for investment, net of deferred fees and costs” on the Company’s Consolidated Balance Sheets and consist of the following as of the periods ended (dollars in thousands):
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March 31, 2025 |
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December 31, 2024 |
Sales-type and direct financing leases: |
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Lease receivables, net of unearned income and deferred selling profit |
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$ |
544,799 |
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$ |
529,657 |
Unguaranteed residual values, net of unearned income and deferred selling profit |
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36,861 |
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34,546 |
Total net investment in sales-type and direct financing leases |
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$ |
581,660 |
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$ |
564,203 |
Lessee Arrangements
The Company’s lessee arrangements consist of operating and finance leases; however, the majority of the leases have been classified as non-cancellable operating leases and are primarily for real estate leases with remaining lease terms of up to 15 years.
The tables below provide information about the Company’s lessee lease portfolio and other supplemental lease information for the following periods ended (dollars in thousands):
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March 31, 2025 |
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December 31, 2024 |
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Operating |
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Finance |
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Operating |
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Finance |
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ROU assets |
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$ |
73,015 |
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$ |
3,521 |
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$ |
74,782 |
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$ |
3,751 |
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Lease liabilities |
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77,705 |
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5,439 |
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79,642 |
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5,769 |
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Lease Term and Discount Rate of Operating leases: |
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Weighted-average remaining lease term (years) |
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10.87 |
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3.83 |
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10.96 |
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4.08 |
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Weighted-average discount rate (1) |
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6.28 |
% |
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1.17 |
% |
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6.24 |
% |
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1.17 |
% |
| (1) |
A lease implicit rate or an incremental borrowing rate is used based on information available at commencement date of lease or at remeasurement date. |
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Three months ended March 31, |
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2025 |
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2024 |
Cash paid for amounts included in measurement of lease liabilities: |
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Operating Cash Flows from Finance Leases |
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$ |
16 |
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$ |
20 |
Operating Cash Flows from Operating Leases |
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3,751 |
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3,403 |
Financing Cash Flows from Finance Leases |
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330 |
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317 |
ROU assets obtained in exchange for lease obligations: |
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Operating leases |
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$ |
688 |
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$ |
1,007 |
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Three months ended March 31, |
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2025 |
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2024 |
Net Operating Lease Cost |
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$ |
3,488 |
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$ |
3,102 |
Finance Lease Cost: |
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Amortization of right-of-use assets |
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230 |
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230 |
Interest on lease liabilities |
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16 |
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20 |
Total Lease Cost |
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$ |
3,734 |
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$ |
3,352 |
The maturities of lessor and lessee arrangements outstanding as of March 31, 2025 are presented in the table below for the years ending (dollars in thousands):
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March 31, 2025 |
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Lessor |
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Lessee |
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Sales-type and Direct Financing |
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Operating |
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Finance |
For the remaining nine months of 2025 |
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$ |
137,652 |
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$ |
10,935 |
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$ |
1,046 |
2026 |
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127,419 |
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12,484 |
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1,427 |
2027 |
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127,894 |
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11,016 |
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1,462 |
2028 |
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92,940 |
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9,945 |
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1,499 |
2029 |
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67,024 |
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8,179 |
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|
127 |
Thereafter |
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83,217 |
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59,882 |
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— |
Total undiscounted cash flows |
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636,146 |
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112,441 |
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5,561 |
Less: Adjustments (1) |
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91,347 |
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34,736 |
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122 |
Total (2) |
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$ |
544,799 |
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$ |
77,705 |
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$ |
5,439 |
(1) Lessor – unearned income and unearned guaranteed residual value; Lessee – imputed interest.
(2) Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.
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