PREMISES AND EQUIPMENT

12 Months Ended

Sep. 30, 2022

PREMISES AND EQUIPMENT

PREMISES AND EQUIPMENT

(5)         PREMISES AND EQUIPMENT

Premises and equipment consisted of the following at September 30, 2022 and 2021:

(In thousands)	2022		2021
Land and land improvements	$	5,328	$	4,561
Office buildings		23,942		23,826
Leasehold improvements		66		66
Furniture, fixtures and equipment		9,187		9,206
Construction in progress		749		400
		39,272		38,059
Less: accumulated depreciation		(12,172)		(10,390)
Totals	$	27,100	$	27,669

Depreciation expense recognized for premises and equipment for the years ended September 30, 2022, 2021 and 2020 is as follows:

(In thousands)	2022		2021		2020
Depreciation expense	$	2,125	$	2,023	$	1,576

In September 2016, the Bank sold property in conjunction with the sale of a real estate development. The Bank’s property sold in the transaction consisted of a retail branch operated by the Bank and other retail space leased to a third-party tenant. In accordance with the purchase and sale agreement, the Bank executed a lease agreement with the buyer to lease back the portion of the property consisting of the retail branch. The lease has an initial term of 10 years and may be extended for up to six consecutive five-year periods. The Bank is accounting for the leaseback as an operating lease. The total gain realized on the sale of the property was $471,000, with $307,000 attributable to the retail branch property operated by the Bank and $164,000 attributable to the other retail space. The gain on the other retail space was recognized in noninterest income in the consolidated statement of income in 2016. The gain attributable to the retail branch property was deferred and had a remaining balance of $218,000 at September 30, 2019. On October 1, 2019, the Company adopted FASB ASC 842 and all subsequent updates that modified FASB ASC 842, which resulted in the recognition of the remaining deferred gain through a cumulative-effect adjustment to retained earnings. See Note 16 for additional information regarding the Company’s leases.