Premises and Equipment

12 Months Ended

Dec. 31, 2019

Note 5. Premises and Equipment

A summary of premises and equipment is as follows:


	Useful	December 31,
	lives	2019		2018
(dollars in thousands)

Land		$	685	$	685
Buildings	5-50 years		6,555		6,491
Equipment and fixtures	5-30 years		7,596		7,426
Construction in progress			103		—
Operating Lease Assets			745		—
			15,684		14,602
Accumulated depreciation			(11,923)		(11,496)

		$	3,761	$	3,106

Depreciation expense totaled $0.3 and $0.4 million for the years ended December 31, 2019 and 2018. Amortization of software totaled $0.1 million for the years ended December 31, 2019 and 2018.

The Bank leases its Severna Park and Linthicum branches. Minimum lease obligations under the Severna Park branch are $33,000 per year through September 2020. Minimum lease obligations under the Linthicum branch are $140,217 per year through December 2024, adjusted annually on a pre-determined basis. The Bank is also required to pay all maintenance costs under all these leasing arrangements. Income from rent totaled $45,082 and $75,074 and rent expense totaled $165,459 and $164,847 for the years ended December 31, 2019 and 2018, respectively. The Bank uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised.