PREMISES AND EQUIPMENT

12 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT

(7) PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:

(In thousands)	2016		2015
Land and land improvements	$	4,411	$	5,218
Office buildings		9,316		10,431
Leasehold improvements		61		-
Furniture, fixtures and equipment		4,681		4,293
		18,469		19,942
Less accumulated depreciation		6,795		6,104
Totals	$	11,674	$	13,838

Depreciation expense of $919,000 and $912,000 was recognized for premises and equipment for the years ended September 30, 2016 and 2015, respectively.

As discussed further in Note 5, the Bank sold property in conjunction with the sale of a real estate development owned by FFCC in September 2016. The Bank’s property sold in the transaction consisted of a retail branch operated by the Bank and other retail space leased to a third-party tenant. In accordance with the purchase and sale agreement, the Bank executed a lease agreement with the buyer to lease back the portion of the property consisting of the retail branch. The lease has an initial term of 10 years and may be extended for up to six consecutive five-year periods. The Bank is accounting for the leaseback as an operating lease. The total gain realized on the sale of the property was $471,000, with $307,000 attributable to the retail branch property operated by the Bank and $164,000 attributable to the other retail space. The gain on the other retail space has been recognized in noninterest income in the accompanying consolidated statements of income. The gain attributable to the retail branch property has been deferred and will be recognized in income in proportion to the rent charged over the term of the lease. At September 30, 2016, the remaining deferred gain of $307,000 is included in other liabilities in the accompanying consolidated balance sheets. See Note 20 for additional information regarding the Company’s operating leases.