Premises and Equipment

12 Months Ended

Dec. 31, 2012

Note 5 - Premises and Equipment

Premises and equipment are summarized by major classification as follows:

	December 31,						Estimated
	2012			2011			Useful Lives
	(dollars in thousands)
Land	$	1,537		$	1,537			-
Building		29,162			29,028		39 Years
Leasehold improvements		1,230			1,206		15-27.5 Years
Furniture, fixtures and equipment		3,291			3,232		3-10 Years
Construction in process		94			-
Total at cost		35,314			35,003
Accumulated depreciation		(8,866	)		(7,785	)
	$	26,448		$	27,218

Depreciation expense was $1,081,000, $1,248,000, and $1,238,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Bancorp has four retail branch locations in Anne Arundel County, Maryland, of which it owns three and leases the fourth from a third party. The initial lease term expired July 2010 and the first option to renew for an additional five year term was exercised. There is an option remaining to renew the lease for one more additional five year term. In addition, the Bank leases office space in Annapolis, Maryland from a third party. The lease expires January 2016, with the option to renew the lease for one additional five year term.

The minimum future annual rental payments on leases are as follows:

Years Ended December 31, (in thousands)
2013	$	97
2014		98
2015		73
2016		3
Thereafter		-

Total rent expense was $97,000, $96,000, and $95,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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