PREMISES AND EQUIPMENT

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT

4. PREMISES AND EQUIPMENT

The following table presents premises and equipment as of December 31,

(In thousands)	2017		2016
Land and land improvements	$	6,235	$	6,160
Buildings		12,589		11,982
Furniture and equipment		19,553		17,572
Leasehold improvements		11,819		11,138
Projects in progress		329		1,415
Capital lease asset		11,237		11,237
		61,762		59,504
Less:  accumulated depreciation		32,286		29,133
Total	$	29,476	$	30,371

The Company has included leases in premises and equipment as follows:

(In thousands)	2017		2016
Land and buildings	$	11,237	$	11,237
Less:  accumulated depreciation		4,663		3,915
Total	$	6,574	$	7,322

Projects in progress represents costs associated with renovations to the Company’s headquarters in addition to smaller renovation or equipment installation projects at other locations.

The Company recorded depreciation expense of $3.3 million, $3.1 million and $3.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The Company leases its corporate headquarters building under a capital lease and in 2014, leased additional space in the building. The lease arrangement requires monthly payments through 2025. Related depreciation expense of $607 thousand is included in each of the 2017, 2016 and 2015 results.

The Company also leases its Gladstone branch after completing a sale-leaseback transaction involving the property in 2011. The lease arrangement requires monthly payments through 2031. The gain on the sale of $764 thousand was deferred and will be accreted to income over the life of the lease. Related depreciation expense and accumulated depreciation of $141 thousand is included in each of the 2017, 2016 and 2015 results.

The following is a schedule by year of future minimum lease payments under capitalized leases, together with the present value of net minimum lease payments as of December 31, 2017:

(In thousands)
2018	$	1,127
2019		1,146
2020		1,195
2021		1,233
2022		1,391
Thereafter		5,196
Total minimum lease payments		11,288
Less: amount representing interest		2,216
Present value of net minimum lease payments	$	9,072

In the fourth quarter of 2015, the Company closed two retail branch offices.  As a result of the closures, the Company recorded additional expense of $2.5 million, which includes accelerated depreciation of $723 thousand. The acceleration of depreciation expense is included with premises and equipment expense and lease related expenses are included with other operating expense on the Consolidated Statements of Income.