The Company purchases new equipment for the purpose of leasing such equipment to customers within its verticals. Equipment purchased to fulfill commitments to commercial renewable energy projects is rented out under operating leases while leases of equipment outside of the renewable energy vertical are generally direct financing leases. Accordingly, leased assets under operating leases are included in premises and equipment while leased assets under direct financing leases are included in loans and leases held for investment in the accompanying Unaudited Condensed Consolidated Balance Sheets.

Interest income on direct financing leases is recognized when earned. Unearned interest is recognized over the lease term on a basis which results in a constant rate of return on the unrecovered lease investment. The term of each lease is generally 3 to 7 years which is consistent with the useful life of the equipment with no residual value. The gross lease payments receivable and the net investment included in accounts receivable for such leases are as follows:

	March 31, 2022			December 31, 2021
Gross direct finance lease payments receivable	$	6,291		$	7,333
Less – unearned interest		(797	)		(998	)
Net investment in direct financing leases	$	5,494		$	6,335

As of March 31, 2022	Amount
2022	$	1,318
2023		2,182
2024		1,570
2025		1,104
2026		117
Total	$	6,291

Interest income of $115 thousand and $186 thousand was recognized in the three months ended March 31, 2022 and 2021, respectively.

The term of each operating lease is generally 10 to 15 years. The Company retains ownership of the equipment and associated tax benefits such as investment tax credits and accelerated depreciation. At the end of the lease term, the lessee has the option to renew the lease for two additional terms or purchase the equipment at the then-current fair market value.

Rental revenue from operating leases is recognized on a straight-line basis over the term of the lease. Rental equipment is recorded at cost and depreciated to an estimated residual value on a straight-line basis over the estimated useful life. The useful lives generally range from 20 to 25 years and residual values generally range from 20% to 50%, however, they are subject to periodic evaluation. Changes in useful lives or residual values will impact depreciation expense and any gain or loss from the sale of used equipment. The estimated useful lives and residual values of the Company's leasing equipment are based on industry disposal experience and the Company's expectations for future sale prices.

If the Company decides to sell or otherwise dispose of rental equipment, it is carried at the lower of cost or fair value less costs to sell or dispose. Repair and maintenance costs that do not extend the lives of the rental equipment are charged to equipment expense at the time the costs are incurred.

As of March 31, 2022 and December 31, 2021, the Company had a net investment of $121.5 million and $123.9 million, respectively, in assets included in premises and equipment that are subject to operating leases. Of the net investment, the gross balance of the assets was $163.4 million as of March 31, 2022 and December 31, 2021, respectively, and accumulated depreciation was $41.9 million and $39.5 million as of March 31, 2022 and December 31, 2021, respectively. Depreciation expense recognized on these assets for the three months ended March 31, 2022 and 2021 was $2.4 million.

Lease income of $2.4 million was recognized in the three months ended March 31, 2022 and 2021.

A maturity analysis of future minimum lease payments to be received under non-cancelable operating leases is as follows:

As of March 31, 2022	Amount
2022	$	7,100
2023		9,075
2024		8,808
2025		8,935
2026		8,923
Thereafter		22,252
Total	$	65,093