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PARENT COMPANY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2021

PARENT COMPANY FINANCIAL INFORMATION

PARENT COMPANY FINANCIAL INFORMATION

25. 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,
		2021			2020

		(IN THOUSANDS)
ASSETS
Cash		$	100		$	100
Short-term investments			5,533			1,998
Cash and cash equivalents			5,633			2,098
Investment securities available for sale			3,692			3,789
Equity investment in banking subsidiary			127,874			111,513
Equity investment in non-banking subsidiaries			6,707			7,327
Other assets			866			1,289
TOTAL ASSETS		$	144,772		$	126,016
LIABILITIES
Guaranteed junior subordinated deferrable interest debentures		$	—		$	12,970
Subordinated debt			26,603			7,534
Other liabilities			1,620			1,113
TOTAL LIABILITIES			28,223			21,617
STOCKHOLDERS’ EQUITY
Total stockholders’ equity			116,549			104,399
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	144,772		$	126,016

STATEMENTS OF OPERATIONS


		YEAR ENDED DECEMBER 31,
		2021			2020			2019

		(IN THOUSANDS)
INCOME
Inter-entity management and other fees		$	2,520		$	2,708		$	2,556
Dividends from banking subsidiary			2,000			2,000			3,800
Dividends from non-banking subsidiaries			1,550			1,944			1,105
Interest, dividend and other income			115			106			186
TOTAL INCOME			6,185			6,758			7,647
EXPENSE
Interest expense			1,798			1,642			1,642
Salaries and employee benefits			2,871			2,667			2,614
Other expense			1,783			1,749			1,707
TOTAL EXPENSE			6,452			6,058			5,963
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES			(267)			700			1,684
Benefit for income taxes			(802)			(681)			(676)
Equity in undistributed earnings of subsidiaries			6,537			3,217			3,668
NET INCOME		$	7,072		$	4,598		$	6,028
COMPREHENSIVE INCOME		$	13,758		$	7,571		$	4,082

STATEMENTS OF CASH FLOWS


		YEAR ENDED DECEMBER 31,
		2021			2020			2019

		(IN THOUSANDS)
OPERATING ACTIVITIES
Net income		$	7,072		$	4,598		$	6,028
Adjustment to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries			(6,537)			(3,217)			(3,668)
Stock compensation expense			43			3			7
Other – net			1,204			(133)			(526)
NET CASH PROVIDED BY OPERATING ACTIVITIES			1,782			1,251			1,841
INVESTING ACTIVITIES
Purchase of investment securities – available for sale			(1,008)			(1,254)			—
Proceeds from maturity and sales of investment securities – available for sale			991			1,246			1,085
Capital contribution to banking subsidiary			(3,500)			—			—
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES			(3,517)			(8)			1,085
FINANCING ACTIVITIES
Redemption of guaranteed junior subordinated deferrable interest debentures			(12,018)			—			—
Subordinated debt issuance, net			26,589			—			—
Redemption of subordinated debt			(7,650)			—			—
Stock options exercised			57			78			99
Purchases of treasury stock			—			(151)			(2,550)
Common stock dividends paid			(1,708)			(1,716)			(1,642)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			5,270			(1,789)			(4,093)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			3,535			(546)			(1,167)
CASH AND CASH EQUIVALENTS AT JANUARY 1			2,098			2,644			3,811
CASH AND CASH EQUIVALENTS AT DECEMBER 31		$	5,633		$	2,098		$	2,644

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 $118,693,000 of restricted surplus and retained earnings at December 31, 2021.