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,
	2013		2012
	(Dollars in Thousands)
ASSETS
Cash and cash equivalents	$	285	$	629
Investment in subsidiaries		173,658		165,351
Securities available for sale		442		543
Other assets		271		41
Total assets	$	174,656	$	166,564
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other liabilities	$	917	$	718
Subordinated debentures		5,155		5,155
Stockholders’ equity		168,584		160,691
Total liabilities and stockholders’ equity	$	174,656	$	166,564

Condensed Statements of Income

	For Years Ended December 31,
	2013		2012		2011
	(Dollars in Thousands)
Income:
Dividend income from subsidiaries	$	4,393	$	2,079	$	785
Other income		6		15		7
Net gains on available for sale securities		22		26		—
Management fees		353		409		294
Total Income		4,774		2,529		1,086
Expenses		(765)		(731)		(615)
Income before equity in undistributed earnings of subsidiaries		4,009		1,798		471
Equity in undistributed earnings of subsidiaries		15,916		15,709		13,455
Net Income	$	19,925	$	17,507	$	13,926

Condensed Statements of Comprehensive Income

	Consolidated Subsidiaries		Parent		Consolidated Total
	(Dollars in Thousands)
For the year ended 2013:
Net income	$	19,925	$	—	$	19,925
Other comprehensive (loss) income, net of tax:
Net unrealized loss on investment securities		(8,073)		79		(7,994)
Actuarial gain		387		—		387
Total other comprehensive (loss) income		(7,686)		79		(7,607)
Total comprehensive income	$	12,239	$	79	$	12,318

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 (loss) on investment securities		3,301		(7)		3,294
Actuarial loss		(1,065)		—		(1,065)
Total other comprehensive income (loss)		2,236		(7)		2,229
Total comprehensive income	$	16,162	$	(7)	$	16,155

Condensed Statements of Cash Flows

	For Years Ended December 31
	2013		2012		2011
	(Dollars in Thousands)
Cash flows from operating activities:
Net income	$	19,925	$	17,507	$	13,926
Adjustments to reconcile net income to net cash provided by operating activities:
Net gains on available for sale securities		(22)		(26)		—
Equity in undistributed earnings of subsidiary		(15,916)		(15,709)		(13,455)
Change in deferred tax asset		—		—		3
(Increase) decrease in other assets		(167)		563		(298)
(Decrease) increase in other liabilities		(276)		(772)		220
Stock based compensation		59		39		35
Net cash provided by operating activities		3,603		1,602		431
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		181		375		—
Purchase of available-for-sale securities		—		(410)		—
Investments in subsidiaries		—		—		(1,250)
Net cash provided by (used in) investing activities		181		(35)		(1,250)
Cash flows from financing activities:
Net decrease in borrowings		—		—		(310)
Cash dividends on common stock		(4,254)		(2,778)		(1,955)
Cash dividends on preferred stock		(141)		(363)		(417)
Proceeds from issuance of Series B preferred stock		—		—		11,250
Redemption of Series A preferred stock		—		—		(10,000)
Warrant repurchased		—		—		(245)
Issuance of restricted stock award		243		—		—
Issuance cost of common stock		(13)		(8)		(5)
Issuance cost of Series B preferred stock		—		—		(84)
Proceeds from exercise of stock options		21		141		328
Tax expense from stock based compensation		16		28		—
Net cash used in financing activities		(4,128)		(2,980)		(1,438)
Decrease in cash and cash equivalents		(344)		(1,413)		(2,257)
Cash and cash equivalents at beginning of year		629		2,042		4,299
Cash and cash equivalents at the end of year	$	285	$	629	$	2,042