24. PARENT COMPANY FINANCIAL INFORMATION

The parent company functions primarily as a coordinating and servicing unit for all subsidiary entities. Provided services include general management, accounting and taxes, loan review, internal auditing, investment advisory, marketing, insurance risk management, general corporate services, and financial and strategic planning. The following financial information relates only to the parent company operations:

BALANCE SHEETS


	AT DECEMBER 31,
	2015		2014
	(IN THOUSANDS)
ASSETS
Cash	$	100	$	100
Short-term investments in money market funds		21,793		5,784
Investment securities available for sale		8,484		11,714
Equity investment in banking subsidiary		100,726		100,473
Equity investment in non-banking subsidiaries		6,007		5,685
Guaranteed junior subordinated deferrable interest debenture issuance costs		193		209
Subordinated debt issuance costs		232		—
Other assets		3,197		4,698
TOTAL ASSETS	$	140,732	$	128,663
LIABILITIES
Guaranteed junior subordinated deferrable interest debentures	$	13,085	$	13,085
Subordinated debt		7,650		—
Other liabilities		1,024		1,171
TOTAL LIABILITIES		21,759		14,256
STOCKHOLDERS’ EQUITY
Total stockholders’ equity		118,973		114,407
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	140,732	$	128,663

STATEMENTS OF OPERATIONS


	YEAR ENDED DECEMBER 31,
	2015		2014			2013
	(IN THOUSANDS)
INCOME
Inter-entity management and other fees	$	2,432	$	2,432		$	2,355
Dividends from banking subsidiary		5,100		1,500			5,500
Dividends from non-banking subsidiaries		975		870			675
Interest, dividend and other income		669		262			243
TOTAL INCOME		9,176		5,064			8,773
EXPENSE
Interest expense		1,125		1,121			1,121
Salaries and employee benefits		2,302		2,576			2,502
Other expense		1,563		1,996			1,608
TOTAL EXPENSE		4,990		5,693			5,231
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES		4,187		(629	)		3,542
Benefit for income taxes		642		1,020			895
Equity in undistributed earnings of subsidiaries		1,168		2,632			756
NET INCOME	$	5,997	$	3,023		$	5,193
COMPREHENSIVE INCOME	$	5,344	$	1,996		$	4,697

STATEMENTS OF CASH FLOWS


	YEAR ENDED DECEMBER 31,
	2015			2014			2013
	(IN THOUSANDS)
OPERATING ACTIVITIES
Net income	$	5,997		$	3,023		$	5,193
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Equity in undistributed earnings of subsidiaries		(1,168	)		(2,632	)		(756	)
Stock compensation expense		29			42			82
Other – net		842			(505	)		(718	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		5,700			(72	)		3,801
INVESTING ACTIVITIES
Purchase of investment securities – available for sale		(1,533	)		(2,027	)		(3,885	)
Proceeds from maturity of investment securities – available for sale		4,669			2,284			2,506
Proceeds from life insurance policies		719			—			—
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		3,855			257			(1,379	)
FINANCING ACTIVITIES
Purchase of treasury stock		—			—			(1,171	)
Subordinated debt issuance, net		7,418			—			—
Preferred stock dividends paid		(210	)		(210	)		(209	)
Common stock dividends paid		(754	)		(752	)		(566	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		6,454			(962	)		(1,946	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		16,009			(777	)		476
CASH AND CASH EQUIVALENTS AT JANUARY 1		5,884			6,661			6,185
CASH AND CASH EQUIVALENTS AT DECEMBER 31	$	21,893		$	5,884		$	6,661

The ability of the subsidiary Bank to upstream cash to the parent company is restricted by regulations. Federal law prevents the parent company from borrowing from its subsidiary Bank unless the loans are secured by specified assets. Further, such secured loans are limited in amount to ten percent of the subsidiary Bank’s capital and surplus. In addition, the Bank is subject to legal limitations on the amount of dividends that can be paid to its shareholder. The dividend limitation generally restricts dividend payments to a bank’s retained net income for the current and preceding two calendar years. Cash may also be upstreamed to the parent company by the subsidiaries as an inter-entity management fee. The subsidiary Bank had a combined $109,300,000 of restricted surplus and retained earnings at December 31, 2015.