NOTE 7 – PREMISES AND EQUIPMENT

The composition of premises and equipment was as follows at December 31:


	December 31,
(dollars in thousands)	2017			2016
Land	$	73,046		$	71,769
Buildings		343,833			322,165
Furniture, fixtures, and equipment		94,254			102,631
Leasehold improvements		38,918			28,555

Total		550,051			525,120
Accumulated depreciation		(91,977	)		(95,498	)

Premises and equipment, net	$	458,074		$	429,622

The increase in premises and equipment at December 31, 2017 was primarily due to $33.6 million of assets attributable to the Anchor (MN) acquisition.

Depreciation expense was $22.2 million in 2017, $16.6 million in 2016, and $14.1 million in 2015.

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 two years and six months to twenty-five 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 $15.8 million in 2017, $25.4 million in 2016, and $29.1 million in 2015. The following is a summary of future minimum lease commitments as of December 31, 2017:


(dollars in thousands)
2018	$	18,919
2019		17,463
2020		16,865
2021		15,960
2022		13,759
Thereafter		63,828

Total	$	146,794

Old National purchased 23 properties during 2016 that it had previously leased, 20 of which had deferred gains that were accelerated when the associated leases were terminated. These gains were partially offset by the recognition of deferred rent expense, cease-use liabilities, and other expense, resulting in a net gain of $12.0 million.

Old National purchased 14 properties during 2015 that it had previously leased, all of which had deferred gains that were accelerated when the associated leases were terminated. These gains were partially offset by the recognition of deferred rent expense and other expense, resulting in a net gain of $10.8 million.

Old National had deferred gains remaining associated with prior sale leaseback transactions totaling $8.2 million at December 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 two branch buildings and certain equipment under capital leases. See Note 14 to the consolidated financial statements for detail regarding these leases.