The Company leases its rental equipment on either short-term operating leases through master lease agreements, long-term non-cancelable operating leases, or finance leases. The following table summarizes the components of lease revenue (in thousands):


	Three Months Ended March 31,
	2021		2020
Leasing revenue - operating leases	$	63,867	$	54,629
Interest income on finance leases		13,245		11,590
Other revenue		2,536		2,217
Interest income on financing receivable		1,152		677
Total leasing revenue	$	80,800	$	69,113

The following table represents the components of the Company’s net investment in finance leases (in thousands):

(1)At the inception of the lease, the Company records the total minimum lease payments, executory costs, if any, and unguaranteed residual value as gross finance lease receivables. The gross finance lease receivables are reduced as customer payments are received. There was $109.3 million and $98.2 million of unguaranteed residual value at March 31, 2021 and December 31, 2020, respectively, included in gross finance lease receivables. There were no executory costs included in gross finance lease receivables as of March 31, 2021 and December 31, 2020.

(2)The difference between the gross finance lease receivables and the cost of the equipment or carrying amount at the lease inception is recorded as unearned income. Unearned income, together with initial direct costs, are amortized to income over the lease term so as to produce a constant periodic rate of return. There were no unamortized initial direct costs as of March 31, 2021 and December 31, 2020.

(3)One major customer represented 74% and 75% of the Company’s finance lease portfolio as of March 31, 2021 and December 31, 2020, respectively. No other customer represented more than 10% of the Company’s finance lease portfolio in each of those periods.

Contractual maturities of the Company's gross finance lease receivables subsequent to March 31, 2021 for the years ending March 31 are as follows (in thousands):

Financing receivable

The Company has purchased containers and leased back the containers to the seller-lessees through finance leaseback arrangements. As control of the equipment was retained by the customers, the Company concluded that sale-leaseback accounting was not applicable and treated the arrangements as financing transactions. The Company recorded a financing receivable in the amount paid for the containers. Payments made by the seller-lessee are recorded as a reduction to the financing receivable and as interest income, calculated using the effective interest method.

The following table summarizes the components of the Company’s financing receivable (in thousands):


	March 31,		December 31,
	2021		2020
Gross financing receivable	$	74,447	$	71,761
Unearned income		(13,260)		(13,320)
		61,187		58,441
Allowance for credit losses		(4)		(3)
Total financing receivable	$	61,183	$	58,438

Credit quality information

In order to estimate the allowance for losses contained in net investment in finance leases and financing receivable, the Company reviews the credit worthiness of its customers on an ongoing basis. The review includes monitoring credit quality indicators, historical credit loss activity, current market and economic conditions, and reasonable and supportable forecasts.

The Company uses the following definitions for risk ratings:

Tier 1— These customers are typically large international shipping lines that have been in business for many years and have world-class operating capabilities and significant financial resources. In most cases, the Company has had a long commercial relationship with these customers and currently maintains regular communication with them at several levels of management, which provides the Company with insight into the customer's current operating and financial performance. In the Company's view, these customers have the greatest ability to withstand cyclical down turns and would likely have greater access to needed capital than lower-rated customers. The Company views the risk of default for Tier 1 customers to range from minimal to moderate.

Tier 2— These customers are typically either smaller shipping lines or freight forwarders with less operating scale or with a high degree of financial leverage, and accordingly the Company views these customers as subject to higher volatility in financial performance over the business cycle. The Company generally expects these customers to have less access to capital markets or other sources of financing during cyclical down turns. The Company views the risk of default for Tier 2 customers as moderate.

Tier 3— Customers in this category exhibit volatility in payments on a regular basis.

As of March 31, 2021 and December 31, 2020, based on the most recent analysis performed, the risk category of the Company’s net investment in finance leases and financing receivable, based on year of origination is as follows (in thousands):


March 31, 2021	2021		2020		2019		2018		2017		Prior		Total
Net investment in finance leases
Tier 1	$	55,876	$	125,988	$	46,760	$	220,813	$	156,780	$	6,171	$	612,388
Tier 2		1,432		7,990		24,012		11,622		4,120		3,806		52,982
Tier 3		-		-		-		-		-		-		-
Total net investment in finance leases	$	57,308	$	133,978	$	70,772	$	232,435	$	160,900	$	9,977	$	665,370

Financing receivable
Tier 1	$	-	$	26,439	$	29,159	$	-	$	-	$	-	$	55,598
Tier 2		5,028		-		561		-		-		-		5,589
Tier 3		-		-		-		-		-		-		-
Total financing receivable	$	5,028	$	26,439	$	29,720	$	-	$	-	$	-	$	61,187

‎


December 31, 2020	2020		2019		2018		2017		2016		Prior		Total
Net investment in finance leases
Tier 1	$	127,215	$	49,986	$	228,802	$	160,197	$	5,945	$	875	$	573,020
Tier 2		8,425		25,726		12,576		4,272		1,136		4,456		56,591
Tier 3		-		-		-		-		-		-		-
Total net investment in finance leases	$	135,640	$	75,712	$	241,378	$	164,469	$	7,081	$	5,331	$	629,611

Financing receivable
Tier 1	$	27,762	$	30,083	$	-	$	-	$	-	$	-	$	57,845
Tier 2		-		596		-		-		-		-		596
Tier 3		-		-		-		-		-		-		-
Total financing receivable	$	27,762	$	30,679	$	-	$	-	$	-	$	-	$	58,441