Note 18 – Condensed Financial Statements of Parent Company


Balance Sheets

	(In Thousands)
	2015		2014
Assets
Cash	$	787	$	302
Related party receivables:
Dividends & Accounts receivable from subsidiaries		1,730		2,227
Accrued interest receivable Municipals		63		58
Securities - Municipals		16,388		14,998
Investment in subsidiaries		102,178		98,088

Total Assets	$	121,146	$	115,673


Liabilities
Accrued expenses	$	42	$	215
Dividends payable		1,007		965

Total Liabilities		1,049		1,180

Stockholders’ Equity		120,097		114,493

Total Liabilities and Stockholders’ Equity	$	121,146	$	115,673

Statements of Income and Comprehensive Income



	(In Thousands)
	2015			2014			2013
Income
Dividends from subsidiaries	$	6,220		$	5,725		$	3,830
Interest		—			—			566
Interest Municipals		219			215			30
Gain on sales of available-for-sale securities		124			—			—

Total Income		6,563			5,940			4,426
Operating Expenses		677			577			304


Income Before Income Taxes and Equity in
Undistributed Earnings of Subsidiaries		5,886			5,363			4,122
Income Taxes (Benefit)		(188	)		(196	)		89

		6,074			5,559			4,033
Equity in undistributed earnings of Subsidiaries		4,266			4,087			4,974

Net Income	$	10,340		$	9,646		$	9,007

Other Comprehensive Income (Loss):
Unrealized gains (losses) on securities	$	(232	)	$	438		$	(6,087	)

Comprehensive Income	$	10,108		$	10,084		$	2,920


Statements of Cash Flows
	(In Thousands)
	2015			2014			2013
Cash Flows from Operating Activities
Net income	$	10,340		$	9,646		$	9,007

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Equity in undistributed net income (Distributions in excess earnings) of subsidiaries		(4,266	)		(4,087	)		(4,974	)
Accretion & Amortization of Securities		152			146			21
Gain on Sale of Available for Sale Securities		(124	)		—			—
Changes in Assets and Liabilities:
Dividends receivable		475			(1,025	)		(10	)
Other Assets and Liabilities		156			(12	)		52

Net Cash Provided by Operating Activities		6,733			4,668			4,096
Cash Flows from Investing Activities
Investing in Subsidiaries		—			(250	)		—
Activitiy in available for sale securities:
Maturities, prepayments and calls		1,000			—			—
Sales		6,282			—			—
Purchases		(8,784	)		—			(14,992	)
Repayment of Subsidiary Subordinated Debt		—			—			15,000

Net Cash Provided by (used in) Investing Activities		(1,502	)		(250	)		8
Cash Flows from Financing Activities
Payment of dividends		(3,943	)		(3,862	)		(3,719	)
Purchase of Treasury Stock		(803	)		(576	)		(1,236	)

Net Cash Used in Financing Activities		(4,746	)		(4,438	)		(4,955	)

Net Change in Cash and
Cash Equivalents		485			(20	)		(851	)
Cash and Cash Equivalents
Beginning of year		302			322			1,173

Cash and Cash Equivalents
End of year	$	787		$	302		$	322

The intercompany subordinated debt between the Company and the Bank matured during the fourth quarter of 2013. The Company invested the proceeds into tax exempt municipal securities, thereby replacing a revenue stream independent of dividends from the Bank with which to operate. The Company also benefits from a more favorable tax treatment for these holdings.

During the fourth quarter of 2014, the Company established a new subsidiary, Farmers & Merchants Risk Management, Inc. which is a Captive insurance company.