Premises and Equipment

12 Months Ended

Dec. 31, 2024

Premises and Equipment

Premises and Equipment

Note 5. Premises and Equipment

A summary of premises and equipment is as follows:

	Useful	December 31,
	lives	2024		2023
(dollars in thousands)
Land		$	685	$	685
Buildings	30-40 years		6,793		6,823
Equipment and fixtures	5-7 years		8,691		8,671
Construction in progress			66		25
Operating Lease Assets			48		210
			16,283		16,414
Accumulated depreciation			(13,605)		(13,368)
		$	2,678	$	3,046

Depreciation expense totaled $0.3 million for the years ended December 31, 2024 and 2023. Amortization of software totaled $0.1 million for the years ended December 31, 2024 and 2023.

Operating lease Right-of-Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Bank leases its Severna Park and Linthicum branches. Minimum lease obligations under the Severna Park branch are $25,000 through September 2025. Minimum lease obligations under the Linthicum branch are $13,000 through January 2025, 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 $73,000 and $76,000 and rent expense totaled $200,000 and $198,000 for the years ended December 31, 2024 and 2023, 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.

Future minimum payments of the Bank’s operating leases as of December 31, 2024 are as follows:

Year ending December 31,	Amount
	(dollars in thousands)
2025	$	49
2026		9
2027		6
2028		—
2029		—
Thereafter		—
Total	$	64