b'Bank carried a balance of $104,500 and $567,611.Terms of the lease purchase agreement require 14 annual principal payments of $66,666 beginning June 2018, with a final payment of $66,676 due June 2032. These payments are deposited into another savings account, Morgan County Board of Education Sinking Fund and will accumulate until 2032 at which time the $1,000,000 will be repaid to the Bank in full.In lieu of cash interest payments, the Bank may receive a tax credit annually for 15 years approximately equal to 4.16% of the outstanding principal amount.For 2019 and 2018, the Bank opted to use the tax credit.NOTE 7.PREMISES AND EQUIPMENTMajor classifications of premises and equipment at December 31 were as follows: 2019 2018Land and land improvements $ 2,300,422 $ 2,091,298Buildings and building improvements6,065,0425,637,179Bank owned automobiles 122,262 114,537Furniture, fixtures and equipment4,354,7964,294,561$ 12,842,522 $ 12,137,575 Less accumulated depreciation5,903,4656,546,524$ 6,939,057 $ 5,591,051 Depreciation expense amounted to $529,472 and $440,858 in 2019 and 2018, respectively.Computer software, net of accumulated amortization, included in the statement of financial condition caption Other Assets amounted to $238,587 and $221,673 at December 31, 2019 and 2018, respectively.Amortization expense on computer software amounted to $117,730 and $86,883 in 2019 and 2018, respectively. The remaining amortization included in depreciation and amortization on premises, equipment and software in the Consolidated Statements of Cash Flows is the amortization expense related to the Banks right of use asset as a result of the implication of ASU 2016-02, Leases (Topic 842).See Note 19 for further details.NOTE 8.FORECLOSED REAL ESTATE HELD FOR SALEDuring 2019, the Bank foreclosed on four loans secured by residential real estate.During 2019, four foreclosed properties were sold at a net gain of $25,369 which is included in noninterest income on the statement of income.This gain is partially offset by write-downs of $4,590.The carrying value of the five real estate properties held at December 31, 2019 totaled $346,812.The cumulative charge to earnings related to these properties, which consisted of loan charge offs, OREO write-downs and non-capitalized expenses incurred to prepare the properties for resale, totaled $160,678, of which $114,977 were incurred in 2019.At December 31, 2019, there was one loan secured by residential real estate in the process of foreclosure totaling $72,714.During 2019, the Bank foreclosed on two loans secured by land.The carrying value of the properties held at December 31, 2019 totaled $2.3 million.The cumulative charge to earnings related to these properties, which consisted of loan charge offs, OREO write-downs and non-capitalized expenses incurred to prepare the properties for resale, totaled $713,357 all of which was incurred in 2019.During 2018, the Bank foreclosed on four loans secured by residential real estate.During 2018, five foreclosed properties were sold at a net gain of $9,370 which is included in noninterest income on the statement of income.Included in this gain is a write-up on a property in the amount of $12,543.This gain is offset by write-downs in the amount of $44,600.The carrying value of the five real estate properties held at December 31, 2018 totaled $191,070.The cumulative charge to earnings related to these properties, which consisted of loan charge offs, OREO write-downs and non-capitalized expenses incurred to prepare the properties for resale, totaled $109,229, of which $59,493 were incurred in 2018.At December 31, 2018, there was one loan secured by residential real estate in the process of foreclosure totaling $61,600. 28'