Premises and Equipment

12 Months Ended

Dec. 31, 2016

Premises and Equipment [Abstract]

Premises and Equipment

Note 4 - Premises and Equipment

Premises and equipment are summarized by major classification as follows:

	December 31,						Estimated Useful Lives
	2016			2015
	(dollars in thousands)
Land	$	1,537		$	1,537		-
Building		29,464			29,464		39 Years
Leasehold improvements		2,202			1,676		15-27.5 Years
Furniture, fixtures and equipment		2,718			2,385		3-10 Years
Construction in process		81			37
Total at cost		36,002			35,099
Accumulated depreciation		(11,972	)		(10,809	)
	$	24,030		$	24,290

Depreciation expense was $1,164,000 and $1,137,000 for the years ended December 31, 2016 and 2015, respectively.

The Company has five retail branch locations in Anne Arundel County, Maryland, of which it owns three and leases two from third parties.  The current terms of the leases expire in July 2020 and February 2026.  There is no option to renew the lease for any additional terms on the first lease and an option to renew every three to five years on the second lease for twenty-five years.  In addition, the Bank leases office space in Annapolis, Maryland from a third party.  The lease expired January 2017, and was renewed  for an additional five year term.

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

Years Ended December 31, (in thousands)
2017	$	242
2018		225
2019		225
2020		185
2021		135
Thereafter		533

Total rent expense was $175,000 and $131,000 for the years ended December 31, 2016 and 2015, respectively.

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

Years Ended December 31, (in thousands)
2017	$	994
2018		945
2019		945
2020		716
2021		515
Thereafter		488

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 the Company and the Bank is a partner.  Total gross rental income included in occupancy expense on the Consolidated Statements of Operations was $1,004,000 and $970,000 for the years ended December 31, 2016 and 2015, respectively.