Premises and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Premises and Equipment

Premises and Equipment

Premises and equipment are described as follows:

	Estimated Useful Life	2014		2013
	(dollars in thousands)
Land	Indefinite	$	12,098	$	12,431
Buildings and improvements	10-50 years	75,873		81,829
Leasehold improvements	5-40 years	14,229		14,354
Furniture and equipment	3-10 years	59,034		80,131
Software	3-7 years	37,007		46,133
Subtotal		198,241		234,878
Less accumulated depreciation and amortization		133,252		166,938
Total premises and equipment		$	64,989	$	67,940

Depreciation related to premises and equipment included in noninterest expense for the years ended December 31, 2014, 2013 and 2012 amounted to $13.2 million, $10.4 million and $7.9 million, respectively.

As a result of the Company's core processing system conversion, which was completed in the third quarter of 2014, the estimated average useful life on $14.0 million in software included in the table above for 2013 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. These assets were considered obsolete after the system conversion, resulting in accelerated depreciation of $5.6 million and $2.0 million being recognized in 2014 and 2013, respectively.

At December 31, 2013, $0.2 million in software had an estimated useful life of 10 years, with 5 years remaining. During 2014, the use of this software was discontinued and the remaining book value of $0.1 million was fully depreciated. The estimated useful life for all other software is 3 to 7 years.

First Commonwealth leases various premises and assorted equipment under non-cancellable agreements. Total future minimal rental commitments at December 31, 2014, were as follows:

	Premises		Equipment
	(dollars in thousands)
2015	$	3,257	$	56
2016	2,969		—
2017	2,758		—
2018	2,582		—
2019	2,330		—
Thereafter	12,276		—
Total	$	26,172	$	56

Included in the lease commitments above is $321 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 $2.9 million, $4.2 million and $4.3 million in 2014, 2013 and 2012, respectively.