Leases

3 Months Ended

Mar. 31, 2025

Note 7 – Leases

Lessor Arrangements

Trustmark leases certain types of machinery and equipment to its customers through sales-type and direct financing leases as part of its equipment financing portfolio. These leases generally have remaining lease terms of one to eight years, some of which include renewal options and/or options for the lessee to purchase the leased property near or at the end of the lease term. Trustmark recognized interest income from its sales-type and direct financing leases of $3.6 million and $2.4 million for the three months ended March 31, 2025 and 2024, respectively. Trustmark does not have any significant operating leases in which it is the lessor.

The table below summarizes the components of Trustmark's net investment in its sales-type and direct financing leases for the periods presented ($ in thousands):


	March 31, 2025			December 31, 2024
Leases receivable	$	278,406		$	282,771
Unearned income		(43,200	)		(45,585	)
Initial direct costs		2,206			2,252
Unguaranteed lease residual		8,189			7,084
Total net investment	$	245,601		$	246,522

The table below details the minimum future lease payments for Trustmark's leases receivable at March 31, 2025 ($ in thousands):


	March 31, 2025
2025 (excluding the three months ended March 31, 2025)	$	39,585
2026		51,083
2027		63,634
2028		53,230
2029		38,716
Thereafter		32,158
Lease receivable	$	278,406

Lessee Arrangements

For Trustmark's lessee arrangements, the leases of FBBI are included in discontinued operations and as a result, have been excluded from the amounts below. Prior period amounts have been reclassified. The following table details the components of net lease cost for the periods presented ($ in thousands):


	Three Months Ended March 31,
	2025			2024
Finance leases:
Amortization of right-of-use assets	$	113		$	113
Interest on lease liabilities		34			38
Operating lease cost		1,341			1,180
Short-term lease cost		165			58
Variable lease cost		219			199
Sublease income		(59	)		(3	)
Net lease cost	$	1,813		$	1,585

The following table details the cash payments included in the measurement of lease liabilities during the periods presented ($ in thousands):


	Three Months Ended March 31,
	2025		2024
Finance leases:
Operating cash flows included in operating activities	$	34	$	38
Financing cash flows included in payments under finance lease obligations		112		99
Operating leases:
Operating cash flows (fixed payments) included in other operating activities, net		1,315		1,099
Operating cash flows (liability reduction) included in other operating activities, net		976		771

The following table details balance sheet information, as well as weighted-average lease terms and discount rates, related to leases at March 31, 2025 and December 31, 2024 ($ in thousands):


	March 31, 2025			December 31, 2024
Finance lease right-of-use assets, net of accumulated depreciation	$	3,186		$	3,299
Finance lease liabilities		3,798			3,910
Operating lease right-of-use assets		33,861			34,668
Operating lease liabilities		37,917			38,698

Weighted-average lease term:
Finance leases	7.10 years			7.35 years
Operating leases	9.15 years			9.31 years

Weighted-average discount rate:
Finance leases		3.61	%		3.61	%
Operating leases		3.73	%		3.72	%

At March 31, 2025, future minimum rental commitments under finance and operating leases were as follows ($ in thousands):


	Finance Leases			Operating Leases
2025 (excluding the three months ended March 31, 2025)	$	438		$	3,973
2026		589			5,160
2027		594			5,193
2028		599			4,824
2029		632			4,655
Thereafter		1,454			21,533
Total minimum lease payments		4,306			45,338
Less imputed interest		(508	)		(7,421	)
Lease liabilities	$	3,798		$	37,917