Premises and Equipment

12 Months Ended

Dec. 31, 2013

Note 4 - Premises and Equipment

Premises and equipment are summarized by major classification as follows:

	December 31,						Estimated
	2013			2012			Useful Lives
	(dollars in thousands)
Land	$	1,537		$	1,537			-
Building		29,162			29,162		39 Years
Leasehold improvements		1,657			1,230		15-27.5 Years
Furniture, fixtures and equipment		3,221			3,291		3-10 Years
Construction in process		54			94
Total at cost		35,631			35,314
Accumulated depreciation		(9,793	)		(8,866	)
	$	25,838		$	26,448

Depreciation expense was $1,054,000 and $1,081,000 for the years ended December 31, 2013 and 2012, 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)
2014	$	121
2015		91
2016		21
2017		18

Total rent expense was $99,000 and $97,000 for the years ended December 31, 2013 and 2012, respectively.

The minimum future annual rental income on leases is as follows:

Years Ended December 31, (in thousands)
2014	$	891
2015		908
2016		926
2017		674
2018		455
2019		217

H.S. West, LLC, a subsidiary of the Bank, leases space to three unrelated companies and to a law firm of which the President of Bancorp and the Bank is a partner. Total gross rental income included in occupancy expense on the Consolidated Statement of Condition was $648,000 and $588,000 for the years end December 31, 2013 and 2012, 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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