Note 23 - Parent Corporation Only Financial Statements

The Parent Corporation operates its wholly-owned subsidiary, the Bank. The earnings of this subsidiary are recognized by the Parent Corporation using the equity method of accounting. Accordingly, earnings are recorded as increases in the Parent 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 Parent Corporation are restricted under supervisory regulations (see Note 20 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,
	2018		2017
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	22,071	$	7,506
Investment in subsidiaries		692,516		614,083
Receivable due from subsidiaries		32,250		-
Investments securities available-for-sale		176		779
Equity securities ⁽¹⁾		607		-
Other assets		1,282		322
Total assets	$	748,902	$	622,690
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other liabilities	$	6,419	$	2,554
Subordinated debentures		128,556		54,699
Stockholders’ equity		613,927		565,437
Total liabilities and stockholders’ equity	$	748,902	$	622,690

⁽¹⁾

Beginning January 1, 2018, equity securities were reclassified out of investment securities available-for-sale in conjunction with ASU 2016-01.

Condensed Statements of Income

	For Years Ended December 31,
	2018		2017		2016
	(dollars in thousands)
Income:
Dividend income from subsidiaries	$	16,700	$	13,000	$	12,400
Other income		1,618		13		8
Total Income		18,318		13,013		12,408
Expenses		(7,201)		(3,251)		(3,252)
Income before equity in undistributed earnings of subsidiaries		11,117		9,762		9,156
Equity in undistributed earnings of subsidiaries		49,235		33,458		21,926
Net Income	$	60,352	$	43,220	$	31,082

Condensed Statements of Cash Flows

	For Years Ended December 31
	2018		2017		2016
	(dollars in thousands)
Cash flows from operating activities:
Net income	$	60,352	$	43,220	$	31,082
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiary		(49,235)		(33,458)		(21,926)
Loss on equity securities, net		4		-		-
(Increase) decrease in other assets		(627)		269		2,023
Increase (decrease) in other liabilities		3,843		(151)		544
Net cash provided by operating activities		14,337		9,880		11,723

Cash flows from investing activities:
Purchase of available-for-sale securities		(8)		(7)		-
Capital infusion to subsidiary		(64,500)		-		(38,439)
Net cash used in investing activities		(64,508)		(7)		(38,439)

Cash flows from financing activities:
Proceeds from subordinated debt		73,525		-		-
Cash dividends on common stock		(9,664)		(9,612)		(9,067)
Cash dividends on preferred stock		-		-		(22)
Secondary offering and issuance of common stock		-		(180)		38,439
Redemption of preferred stock		-		-		(11,250)
Proceeds from exercise of stock options		875		417		767
Net cash provided by (used in) financing activities		64,736		(9,375)		18,867

Increase (decrease) in cash and cash equivalents		14,565		498		(7,849)
Cash and cash equivalents at January 1,		7,506		7,008		14,857
Cash and cash equivalents at December 31,	$	22,071	$	7,506	$	7,008