Note 6 - Property and Equipment

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

6.

Property and Equipment

The major components of property and equipment at

December 31, 2018

and

2017

were as follows:

(Dollars in Thousands)	2018		2017
Land	$	4,309	$	4,309
Buildings and improvements		8,617		8,617
Leasehold improvements		2,154		2,154
Furniture and equipment		2,479		2,314
Software		301		296
Construction in process		456		4
Property and equipment, total		18,316		17,694
Less accumulated depreciation and amortization		5,373		4,757
Property and equipment, net	$	12,943	$	12,937

Depreciation and amortization expense totaled

$678

thousand and

$726

thousand for the years ended

December 31, 2018

and

2017,

respectively.

Leases

The Company currently leases its main office under a non-cancelable lease agreement. The lease has a

ten

-year term and expires on

December 31, 2025.

The agreement provides an option to extend the lease for

one

additional

ten

-year term at expiration. Terms of the new agreement provide for an annual rental increase, beginning

January 1, 2017,

based on a published inflation index,

not

to exceed

three

percent over the rent for the immediately preceding lease year. The Company currently leases a branch location under a non-cancelable lease agreement. The original lease expired on

July 31, 2016.

The lease was renewed for

one

additional term of

ten

years and it provides an option to extend the lease for

two

additional, consecutive

five

-year terms. The newly negotiated lease expires

July 31, 2026.

The Company currently leases space to operate an automated teller machine under a non-cancelable lease agreement. The term of the

eight

year lease commenced on

April 1, 2013

and expires on

April 1, 2021.

The lease provides an option to extend the term for

two

additional

five

-year periods. Terms of the agreement provide for an annual rental increase of

three

percent over the rent for the immediately preceding lease year. HomeTown Residential Mortgage, LLC leases space in Roanoke and Christiansburg for its mortgage operations. Both leases are for a term of

twelve

months and renew under the same terms unless

60

days’ notice is provided by the lessor or the Company. The Roanoke lease expires every

May 31

and the Christiansburg lease expires every

September 30.

The current minimum annual lease payments under non-cancelable leases in effect at

December 31, 2018

were as follows:

(Dollars In Thousands)	2018
2019	$	288
2020		274
2021		265
2022		265
2023		270
Thereafter		606
Total	$	1,968

Rent expense for the years ended

December 31, 2018

and

2017

was

$287

thousand and

$304

thousand, respectively, and is included in occupancy and equipment expense on the Company’s consolidated statements of income.