NOTE 17: PARENT COMPANY

Merchants Bancshares, Inc.’s (the “Parent Company”) investments in its subsidiaries are recorded using the equity method of accounting. Summarized financial information relative to the Parent Company only balance sheets at December 31, 2016 and 2015, and statements of income and cash flows for each of the years in the three year period ended December 31, 2016, are shown in the following tables. The statement of changes in stockholders' equity for the Parent Company are not reported because they are identical to the consolidated financial statements.


Balance Sheets as of December 31,
(In thousands)	2016		2015
Assets:
Investment in subsidiaries*	$	173,909	$	167,164
Cash*		2,424		1,554
Other assets		1,911		1,009
Total assets	$	178,244	$	169,727
Liabilities and stockholders’ equity:
Other liabilities	$	1,122	$	1,054
Long term debt		20,619		20,619
Stockholders’ equity		156,503		148,054
Total liabilities and stockholders’ equity	$	178,244	$	169,727


Statements of Income for the Years Ended December 31,
(In thousands)	2016		2015		2014
Dividends from Merchants Bank*	$	7,695	$	7,096	$	7,085
Equity in undistributed earnings of subsidiaries*		9,602		7,242		5,857
Other expense, net		(3,976)		(2,646)		(1,276)
Benefit from income taxes		1,562		926		459
Net income	$	14,883	$	12,618	$	12,125


Statement of Cash Flows for the Years Ended December 31,
(In thousands)	2016		2015		2014
Cash flow from operating activities:
Net income	$	14,883	$	12,618	$	12,125
Adjustments to reconcile net income to net cash provided by operating activities:
Net change in other assets		(902)		(686)		138
Net change in other liabilities		68		444		(67)
Equity in undistributed earnings of subsidiaries*		(9,602)		(7,242)		(5,857)
Net cash provided by operating activities		4,447		5,134		6,339
Cash flows from financing activities:
Tax benefit from exercises of stock options		—		115		14
Cash dividends paid		(7,695)		(7,096)		(7,167)
Other, net		4,118		1,204		214
Net cash used in financing activities		(3,577)		(5,777)		(6,939)
Increase (decrease) in cash and cash equivalents		870		(643)		(600)
Cash and cash equivalents at beginning of year		1,554		2,197		2,797
Cash and cash equivalents at end of year	$	2,424	$	1,554	$	2,197

*Account balances are partially or fully eliminated in consolidation