Premises and Equipment

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Premises and Equipment

NOTE 10 – PREMISES AND EQUIPMENT

The composition of premises and equipment at March 31, 2017 and December 31, 2016 was as follows:

	March 31,			December 31,
(dollars in thousands)	2017			2016
Land	$	69,484		$	71,769
Buildings		317,582			322,165
Furniture, fixtures, and equipment		100,489			102,631
Leasehold improvements		27,894			28,555
Total		515,449			525,120
Accumulated depreciation		(94,583	)		(95,498	)
Premises and equipment, net	$	420,866		$	429,622

Depreciation expense was $5.2 million for the three months ended March 31, 2017, compared to $3.5 million for the three months ended March 31, 2016.

Operating Leases

Old National rents certain premises and equipment under operating leases, which expire at various dates. Many of these leases require the payment of property taxes, insurance premiums, maintenance, and other costs. In some cases, rentals are subject to increase in relation to a cost-of-living index. The leases have original terms ranging from less than one year to twenty-four years, and Old National has the right, at its option, to extend the terms of certain leases for four additional successive terms of five years. Old National does not have any material sub-lease agreements. Rent expense was $3.9 million for the three months ended March 31, 2017, compared to $6.3 million for the three months ended March 31, 2016.

Old National had deferred gains remaining associated with prior sale leaseback transactions totaling $9.7 million at March 31, 2017 and $10.3 million at December 31, 2016. The gains will be recognized over the remaining term of the leases. The leases had original terms ranging from five to twenty-four years.

Capital Leases

Old National leases a branch building and certain equipment under capital leases. See Note 16 to the consolidated financial statements for detail regarding these leases.