CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

Our investment in our wholly-owned subsidiaries is presented on the equity method of accounting. Information relative to our balance sheets at December 31, 2014 and 2013, and the related statements of income and cash flows for the years ended December 31, 2014, 2013 and 2012, are presented as follows:



Balance Sheets
	December 31,
Dollars in thousands	2014		2013
Assets
Cash	$	13,115	$	5,278
Investment in subsidiaries, eliminated in consolidation	159,839		151,289
Securities available for sale	102		181
Premises and equipment	65		82
Other assets	1,641		1,707
Total assets	$	174,762	$	158,537
Liabilities and Shareholders' Equity
Long-term borrowings	$	4,513	$	8,916
Subordinated debentures	16,800		16,800
Subordinated debentures owed to unconsolidated subsidiary trusts	19,589		19,589
Other liabilities	2,216		2,160
Total liabilities	43,118		47,465
Preferred stock and related surplus, authorized 250,000 shares:
Series 2009, 8% Non-cumulative convertible preferred stock,
par value $1.00; issued 2014 - 3,610 shares; 2013 - 3,710 shares	3,419		3,519
Series 2011, 8% Non-cumulative convertible preferred stock,
par value $1.00; issued 2014 - 11,914 shares; 2013 - 11,938 shares	5,764		5,776
Common stock and related surplus, $2.50 par value, authorized
20,000,000 shares; issued 2014 - 8,301,746 shares; 2013 - 7,451,022 shares	32,670		24,664
Retained earnings	87,719		77,134
Accumulated other comprehensive income	2,072		(21		)
Total shareholders' equity	131,644		111,072
Total liabilities and shareholders' equity	$	174,762	$	158,537



Statements of Income
	For the Year Ended December 31,
Dollars in thousands	2014			2013			2012
Income
Dividends from subsidiaries	$	6,500		$	2,500		$	500
Other dividends and interest income	22			26			41
Realized securities gains (losses)	41			—			(18		)
Management and service fees from subsidiaries	1,189			1,087			1,044
Total income	7,752			3,613			1,567
Expense
Interest expense	1,845			1,948			1,821
Operating expenses	1,746			1,717			1,661
Total expenses	3,591			3,665			3,482
Income (loss) before income taxes and equity in
undistributed income of subsidiaries	4,161			(52		)	(1,915		)
Income tax (benefit)	(739		)	(894		)	(833		)
Income (loss) before equity in undistributed income of subsidiaries	4,900			842			(1,082		)
Equity in (distributed) undistributed income of subsidiaries	6,456			7,226			6,795
Net income	11,356			8,068			5,713
Dividends on preferred shares	771			775			777
Net income applicable to common shares	$	10,585		$	7,293		$	4,936



Statements of Cash Flows
	For the Year Ended December 31,
Dollars in thousands	2014			2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	11,356		$	8,068		$	5,713
Adjustments to reconcile net earnings to net cash provided by operating activities:
Equity in (undistributed) distributed net income of subsidiaries	(6,456		)	(7,226		)	(6,795		)
Deferred tax (benefit)	46			(107		)	(61		)
Depreciation	23			2			12
Other-than-temporary impairment of securities	—			—			—
Realized securities (gains) losses	(41		)	—			18
Tax benefit of exercise of stock options	—			16			—
Stock compensation expense	1			2			2
(Increase) decrease in cash surrender value of bank owned life insurance	1			(5		)	(1		)
(Increase) decrease in other assets	19			(1		)	(11		)
Increase (decrease) in other liabilities	57			(738		)	599
Net cash provided by (used in) operating activities	5,006			11			(524		)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds sales of available for sale securities	112			—			648
Principal payments received on available for sale securities	8			440			662
Purchase of available for sale securities	—			(199		)	(1,672		)
Purchases of premises and equipment	(6		)	(84		)	—
Net cash provided by (used in) investing activities	114			157			(362		)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid on preferred stock	(774		)	(776		)	(731		)
Exercise of stock options	71			96			—
Net proceeds from long-term borrowings	—			3,454			—
Repayment of long-term borrowings	(4,402		)	(3,159		)	(1,354		)
Net proceeds from issuance of common stock	7,822			—			—
Net cash provided by (used in) financing activities	2,717			(385		)	(2,085		)
Increase (decrease) in cash	7,837			(217		)	(2,971		)
Cash:
Beginning	5,278			5,495			8,466
Ending	$	13,115		$	5,278		$	5,495
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest	$	1,909		$	1,942		$	1,824