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PARENT COMPANY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2023

PARENT COMPANY FINANCIAL INFORMATION

PARENT COMPANY FINANCIAL INFORMATION

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 audit, 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,
		2023			2022

		(IN THOUSANDS)
ASSETS
Cash		$	100		$	100
Short-term investments			3,553			3,178
Cash and cash equivalents			3,653			3,278
Investment securities available for sale			4,532			6,334
Equity investment in banking subsidiary			115,322			117,432
Equity investment in non-banking subsidiaries			6,084			6,533
Other assets			1,163			1,008
TOTAL ASSETS		$	130,754		$	134,585
LIABILITIES
Subordinated debt		$	26,685		$	26,644
Other liabilities			1,792			1,763
TOTAL LIABILITIES			28,477			28,407
SHAREHOLDERS’ EQUITY
Total shareholders’ equity			102,277			106,178
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	130,754		$	134,585

STATEMENTS OF OPERATIONS


		YEAR ENDED DECEMBER 31,
		2023			2022			2021

		(IN THOUSANDS)
INCOME
Inter-entity management and other fees		$	2,702		$	2,566		$	2,520
Dividends from banking subsidiary			3,000			4,000			2,000
Dividends from non-banking subsidiary			1,650			1,055			1,550
Interest, dividend and other income			221			146			115
TOTAL INCOME			7,573			7,767			6,185
EXPENSE
Interest expense			1,054			1,054			1,798
Salaries and employee benefits			2,816			2,811			2,871
Other expense			4,362			1,948			1,783
TOTAL EXPENSE			8,232			5,813			6,452
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES			(659)			1,954			(267)
Benefit for income taxes			(1,115)			(652)			(802)
Equity in undistributed earnings of subsidiaries			(3,802)			4,842			6,537
NET INCOME (LOSS)		$	(3,346)		$	7,448		$	7,072
COMPREHENSIVE INCOME (LOSS)		$	(802)		$	(8,560)		$	13,758

STATEMENTS OF CASH FLOWS


		YEAR ENDED DECEMBER 31,
		2023			2022			2021

		(IN THOUSANDS)
OPERATING ACTIVITIES
Net income (loss)		$	(3,346)		$	7,448		$	7,072
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries			3,802			(4,842)			(6,537)
Stock compensation expense			45			50			43
Other – net			(53)			189			1,204
NET CASH PROVIDED BY OPERATING ACTIVITIES			448			2,845			1,782
INVESTING ACTIVITIES
Purchase of investment securities – available for sale			—			(3,994)			(1,008)
Proceeds from maturity and sales of investment securities – available for sale			1,891			655			991
Capital contribution to banking subsidiary			—			—			(3,500)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES			1,891			(3,339)			(3,517)
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			94			106			57
Purchases of treasury stock			—			—			—
Common stock dividends paid			(2,058)			(1,967)			(1,708)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			(1,964)			(1,861)			5,270
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			375			(2,355)			3,535
CASH AND CASH EQUIVALENTS AT JANUARY 1			3,278			5,633			2,098
CASH AND CASH EQUIVALENTS AT DECEMBER 31		$	3,653		$	3,278		$	5,633

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. The subsidiary Bank had a combined $124,585,000 of restricted surplus and retained earnings at December 31, 2023. Cash may also be upstreamed to the parent company by the subsidiaries as an inter-entity management fee.