Note 20 — Parent Corporation Only Financial Statements

The Parent Corporation operates its wholly-owned subsidiary, Union Center National Bank. The earnings of this subsidiary are recognized by the Corporation using the equity method of accounting. Accordingly, earnings are recorded as increases in the Corporation's investment in the subsidiaries and dividends paid reduce the investment in the subsidiaries. The ability of the Parent Corporation to pay dividends will largely depend upon the dividends paid to it by the Bank. Dividends payable by the Bank to the Corporation are restricted under supervisory regulations (see Note 18 of the Notes to Consolidated Financial Statements).

Condensed financial statements of the Parent Corporation only are as follows:

Condensed Statements of Condition



	At December 31,
	2012		2011
	(Dollars in Thousands)
ASSETS
Cash and cash equivalents	$	629	$	2,042
Investment in subsidiaries		165,351		139,107
Securities available for sale		543		419
Other assets		41		191
Total assets	$	166,564	$	141,759
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$	718	$	688
Subordinated debentures		5,155		5,155
Stockholders' equity		160,691		135,916
Total liabilities and stockholders' equity	$	166,564	$	141,759

Condensed Statements of Income



	For Years Ended December 31,
	2012			2011			2010
	(Dollars in Thousands)
Income:
Dividend income from subsidiaries	$	2,079		$	785		$	500
Other income		15			7			8
Net gains (losses) on available for sale securities		26			—			(97	)
Management fees		409			294			290
Total Income		2,529			1,086			701
Expenses		(731	)		(615	)		(635	)
Income before equity in undistributed earnings of subsidiaries		1,798			471			66
Equity in undistributed earnings of subsidiaries		15,709			13,455			6,938
Net Income	$	17,507		$	13,926		$	7,004

Condensed Statements of Comprehensive Income



	Consolidated Subsidiaries			Parent			Consolidated Total
	(Dollars in Thousands)
For the year ended 2012:
Net income	$	17,507		$	—		$	17,507
Other comprehensive income, net of tax:
Net unrealized gain on investment securities		10,935			41			10,976
Actuarial loss		(467	)		—			(467	)
Total other comprehensive income		10,468			41			10,509
Total comprehensive income	$	27,975		$	41		$	28,016

For the year ended 2011:
Net income	$	13,926		$	—		$	13,926
Other comprehensive income, net of tax:
Net unrealized gain on investment securities		3,301			(7	)		3,294
Actuarial loss		(1,065	)		—			(1,065	)
Total other comprehensive income		2,236			(7	)		2,229
Total comprehensive income	$	16,162		$	(7	)	$	16,155

For the year ended 2010:
Net income	$	7,004		$	—		$	7,004
Other comprehensive income, net of tax:
Net unrealized gain on investment securities		2,989			112			3,101
Total other comprehensive income		2,989			112			3,101
Total comprehensive income	$	9,993		$	112		$	10,105

Condensed Statements of Cash Flows



	For Years Ended December 31
	2012			2011			2010
	(Dollars in Thousands)
Cash flows from operating activities:
Net income	$	17,507		$	13,926		$	7,004
Adjustments to reconcile net income to net cash provided by operating activities:
Net (gains) losses on available for sale securities		(26	)		—			97
Equity in undistributed earnings of subsidiary		(15,709	)		(13,455	)		(6,938	)
Change in deferred tax asset		—			3			224
Decrease (increase) in other assets		563			(298	)		(44	)
(Decrease) increase in other liabilities		(772	)		220			70
Stock based compensation		39			35			51
Net cash provided by operating activities		1,602			431			464
Cash flows from investing activities:
Maturity of available-for-sale securities		—			—			130
Proceeds from sales of available-for-sale securities		375			—			—
Purchase of available-for-sale securities		(410)			—			—
Investments in subsidiaries		—			(1,250	)		(8,000	)
Net cash used in investing activities		(35	)		(1,250	)		(7,870	)
Cash flows from financing activities:
Net decrease in borrowings		—			(310	)		(82	)
Cash dividends on common stock		(2,778	)		(1,955	)		(1,800	)
Cash dividends on preferred stock		(363	)		(417	)		(500	)
Proceeds from issuance of Series B preferred stock		—			11,250			—
Redemption of Series A preferred stock		—			(10,000	)		—
Warrant repurchased		—			(245	)		—
Issuance cost of common stock		(8	)		(5	)		(6	)
Issuance cost of Series B preferred stock		—			(84	)		—
Proceeds from exercise of stock options		141			328			—
Proceeds from restricted stock		—			—			25
Proceeds from issuance of shares from stock offerings		—			—			12,148
Issuance cost of common stock from common stock offering		—			—			(770	)
Tax expense from stock based compensation		28			—			7
Net cash (used in) provided by financing activities		(2,980	)		(1,438	)		9,022
Increase (decrease) in cash and cash equivalents		(1,413	)		(2,257	)		1,616
Cash and cash equivalents at beginning of year		2,042			4,299			2,683
Cash and cash equivalents at the end of year	$	629		$	2,042		$	4,299