Premises and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Premises and equipment are described as follows:



	Estimated Useful Life	2013		2012
	(dollars in thousands)
Land	Indefinite	$	12,431	$	12,503
Buildings and improvements	10-50 years	81,829		81,328
Leasehold improvements	5-40 years	14,354		14,617
Furniture and equipment	3-10 years	80,131		79,181
Software	3-10 years	46,133		40,199
Subtotal		234,878		227,828
Less accumulated depreciation and amortization		166,938		158,858
Total premises and equipment		$	67,940	$	68,970

Depreciation related to premises and equipment included in noninterest expense for the years ended December 31, 2013, 2012 and 2011 amounted to $10.4 million, $7.9 million and $8.3 million, respectively.

As a result of the Company's core processing system conversion, which is expected to be completed in the third quarter of 2014, the estimated average useful life on $13.9 million in software included in the table above was reduced from an average life of 6 years to 3 years and the average useful life on $0.7 million of equipment was reduced from an average life of 5 years to 4 years.

First Commonwealth leases various premises and assorted equipment under non-cancellable agreements. Total future minimal rental commitments at December 31, 2013, were as follows:



	Premises		Equipment
	(dollars in thousands)
2014	$	3,327	$	82
2015	3,113		2
2016	2,904		—
2017	2,653		—
2018	2,514		—
Thereafter	14,916		—
Total	$	29,427	$	84

Included in the lease commitments above is $376 thousand in lease payments to be paid under a sale-leaseback arrangement. The sale-leaseback transaction occurred in 2005 and resulted in a gain of $297 thousand on the sale of a branch that is being recognized over the 15 year lease term through 2020.

Increases in utilities and taxes that may be passed on to the lessee under the terms of various lease agreements are not reflected in the above table. However, certain lease agreements provide for increases in rental payments based upon historical increases in the consumer price index or the lessor’s cost of operating the facility, and are included in the minimum lease commitments. Additionally, the table above includes rent expense that is recognized for rent holidays and during construction periods. Total lease expense amounted to $4.2 million, $4.3 million and $4.4 million in 2013, 2012 and 2011, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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