Tower Financial Corporation Reports Second Quarter Results
- Press Release
- Source: Tower Financial Corporation
- On 5:30 am EDT, Friday July 24, 2009
FORT WAYNE, Ind., July 24, 2009 (GLOBE NEWSWIRE) -- Tower Financial Corporation (Nasdaq:TOFC - News) reported a second quarter 2009 loss of $4.1 million, or $1.00 per diluted share, compared with net income of $343,000, or $0.08 per share, reported for the second quarter 2008. This brings the year to date net loss to $3.7 million, or $0.90 per diluted share, compared to year to date net income of $1.0 million, or $0.26 per share at June 30, 2008.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| TOFC | 4.84 | 0.00 |
The quarterly loss was mainly caused by:
* Loan loss provisions of $6.55 million. * The write-down in value of a foreclosed property of $950,000. * An industry-wide imposed special assessment from the FDIC of $315,000.
Mike Cahill, President and CEO of Tower Financial Corporation commented, "While disappointing, the results posted for the second quarter were well within the scenarios utilized in our own capital stress test analysis. We continue to have confidence that we will remain 'well-capitalized' and continue the execution of our business plan. Additionally, we still maintain our position of being able to passionately serve our existing clients and communities along with adding new clientele who are being displaced by national banks."
As previously announced, the Company conducted its own internal stress test analysis during the first quarter of 2009. Based on the results of these stress tests, the application for participation in the Capital Purchase Program (CPP) was withdrawn, which is part of the federal government's Troubled Assets Relief Program (TARP).
"As our customers are impacted by the economy, so is Tower. A small number of our clients represent over 90% of our quarterly loan loss provision, with a significant portion of this loss being tied to Northeast Indiana land development projects that continue to be adversely affected by the local economy," stated Cahill. "In the past 10 years Tower has invested in the Fort Wayne business community just as the community has invested in Tower. We have worked side-by-side with our clients to grow and will continue that business model through these tough economic times."
Second quarter highlights include:
* The Company's regulatory capital ratios continue to remain above the "well-capitalized" levels, and the second quarter results were well within the stress testing of existing capital performed by the Company earlier this year. * Allowance for Loan Losses increased to 2.53 percent of total loans, compared to 2.06 percent at March 31, 2009, and 1.90 percent at December 31, 2008. This increase was primarily the result of reserve building in the second quarter of 2009, which includes a $6.55 million of loan loss provision, in addition to the $960,000 taken during the first quarter of 2009. * Trust and brokerage assets under management grew to $663.4 million as of June 30, 2009, an increase of $61.7 million or 10.26% during the second quarter. * Core deposits grew to $444.3 million as of June 30, 2009, an increase of $7.9 million for the second quarter and $37.6 million year to date. This represents annualized core deposit growth of 7.3% for the second quarter and 18.6% for the first half of the year. The majority of the growth came from non-interest bearing checking accounts. * Lending continued to experience solid growth in both the Commercial & Industrial (C&I) and Home Equity categories. This growth was offset by an expected decrease in both our Commercial and Residential real estate loan categories.
Capital
The Company's regulatory capital ratios continue to remain above the "well-capitalized" levels of 6 percent for tier 1 capital and 10 percent for risked-based capital. Tier 1 capital at June 30, 2009, was 10.4 percent, compared to 11.7 percent at December 31, 2008. Total risked-based capital at June 30, 2009, was 12.0 percent, compared to 13.0 percent at December 31, 2008. Leverage capital was 8.6 percent at June 30, 2009, well above the regulatory requirement of 5 percent to be considered "well-capitalized". The reduction in capital ratios is the direct result of a large loan loss provision and write down of a foreclosed land development during the quarter, offset by a reduction in total assets.
The following table shows our current Capital position as of June 30, 2009 in both dollars and percentages, compared to the minimum amounts required per regulatory standards for "well-capitalized" institutions.
Minimum Dollar
Requirements Regulatory
--------------- Minimum (Well- Tower
Capitalized) 6/30/09 Excess
------------- ------- ------
Tier 1 Capital / Risk
Assets $35,066 $60,654 $25,588
Total Risk Based
Capital / Risk Assets $58,444 $69,880 $11,437
Tier 1 Capital /
Average Assets (Leverage) $35,414 $60,654 $25,240
Minimum Percentage
Requirements Regulatory
------------------ Minimum (Well- Tower
Capitalized) 6/30/09
------------ -------
Tier 1 Capital / Risk
Assets 6% or more 10.38%
Total Risk Based Capital
/ Risk Assets 10% or more 11.96%
Tier 1 Capital /
Quarterly Average Assets 5% or more 8.56%
==================================================================
Asset Quality
Nonperforming assets plus delinquencies increased $6.1 million from December 31, 2008 to $25.8 million, or 3.78 percent of total assets as of June 30, 2009. This compares with $19.7 million, or 2.81 percent of assets at December 31, 2008 and $24.4 million a year ago, or 3.51 percent of assets at June 30, 2008. Net charge-offs were $3.1 million for the quarter compared with net charge-offs of $117,000 in the first quarter of 2009. The current and historical breakdown of our non-performing assets is as follows:
($000's omitted) 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
---------------- ------- ------- -------- ------- -------
Non-Accrual loans
Commercial 5,907 1,246 1,658 598 2,736
Acquisition &
Development 9,882 9,801 13,221 15,020 15,000
Commercial Real Estate 2,675 437 449 1,341 1,483
Residential Real Estate 552 224 347 107 193
--------------------------------------------
Total Non-accrual loans 19,016 11,708 15,675 17,066 19,412
Trouble-debt
restructured 184 191 198 366 373
OREO 4,060 5,080 2,660 2,432 2,500
Delinquencies greater
than 90 days 2,509 1,304 1,020 982 1,840
--------------------------------------------
Total Non-Performing
Assets 25,769 18,283 19,553 20,846 24,125
============================================
Four relationships comprise the non-accrual loans in the Acquisition and Development category, while loans in the Commercial Real Estate category are made up of two relationships. In the Commercial category, 91 percent of the total non-accrual loans are comprised of three relationships. In total, 94 percent of all non-accrual loans are held within nine lending relationships.
Our allowance for loan losses was 2.53 percent of total loans at June 30, 2009, an increase from 2.06 percent and 1.90 percent at March 31, 2009, and December 31, 2008, respectively. The year to date increase was the net result of a reduction on loan outstandings of $3.5 million, net charge-offs of $4.1 million, and loan loss provision of $7.5 million. This increased provisioning was primarily driven by a deliberate focus by management on reserve building, a recognition of valuation changes in the marketplace related to underperforming assets, and current economic factors in our local markets.
"While we are not pleased with the level of non-performing assets, the main drivers of these numbers are contained to previously identified land development projects and a handful of companies experiencing significant operating difficulties due to the economy versus a portfolio wide deterioration," stated Mr. Cahill. "While the foreclosure and legal process slows our ability to quickly resolve these issues, the smaller number of non-performing assets allows us to be more targeted in moving toward final resolution of these assets once we assume control. The reserve building and charge offs taken this quarter should enhance our abilities in this area during the next 12 months."
Balance Sheet
Company assets were $686.3 million at June 30, 2009, a decrease of $10.3 million, or 1.5 percent from December 31, 2008. The decrease in assets was primarily attributable to decreases in cash and cash equivalents of $15.7 million and loans of $3.5 million, along with an increase in our allowance for loan losses of $3.5 million. These changes were offset by an increase in long term investments of $4.9 million and loans held for sale of $3.4 million.
Cash and cash equivalents decreased primarily due to the net paydown of $15.2 million in borrowings from the Federal Home Loan Bank (FHLB) and the Federal Reserve Bank (FRB) Discount Window in an effort to recognize more limited lending opportunities in the short term, and the goal of improving our net interest margin. FHLB and FRB Discount Window borrowings at June 30, 2009 were $24.0 million, compared to $39.2 million at December 31, 2008.
The decrease in loans came in our Commercial and Residential Real estate categories. Commercial real estate loans decreased by $10.4 million from December 31, 2008, while Residential real estate loans decreased by $9.3 million during that same time frame. Offsetting those decreases was growth of $10.1 million in the Commercial and Industrial (C&I) category and $7.8 million in the Home Equity category. Total loans at June 30, 2009 were $557.5 million, compared to $561.0 million at December 31, 2008. The decrease in commercial real estate was due to continued amortization and payoffs in the portfolio combined with limited new activity. The decrease in the residential portfolio was due to increased refinancing activity during the first half of 2009 combined with the Company's desire to sell these mortgages rather than hold them for both interest rate risk and fee income purposes. The growth in C&I lending and Home Equity is attributable to opportunities in our markets to obtain new clients who are being displaced by larger national lenders.
Long term investments increased by $4.9 million to $82.7 million as we continue to expand our investment portfolio to enhance liquidity and yield opportunities in light of the reduction in our loan portfolio. This is a purposeful change in asset allocation driven by profitability and liquidity targets, current economic conditions, and capital management guidelines.
Total deposits at June 30, 2009 were $594.6 million compared to $586.2 million at December 31, 2008, an increase of $8.4 million, or 2.87 percent annualized. Core deposit growth of $37.6 million, or 18.5 percent annualized, was led by $23.6 million of growth in our non-interest bearing checking accounts, $10.3 million in money-market accounts, and $4.3 million in interest bearing checking accounts. This growth was offset by a $14.1 million decrease in certificates of deposit and a $15.1 million decrease in brokered deposits. Core deposits, which totaled $444.4 million at June 30, 2009, now comprise 74.7 percent of the entire deposits of the Company compared to 69.4 percent at December 31, 2008.
Shareholders' equity was $46.0 million at June 30, 2009, a decrease of 7.4 percent from the $49.6 million reported at December 31, 2008. Affecting the decrease in stockholders' equity was a net loss of $3.7 million, $37,000 of additional paid in capital from the FAS123R accounting treatment for stock options, and an increase of $7,500 in unrealized losses, net of tax, on securities available for sale. Period-end common shares outstanding were 4,090,432.
Operating Statement
Total revenue, consisting of net interest income and noninterest income, was $6.4 million for the second quarter 2009, an increase of $90,000 from the first quarter 2009 and a decrease of $133,000 from the fourth quarter 2008. Second quarter 2009 net interest income was $4.8 million an increase of $281,000, or 6.2 percent from the first quarter 2009 and a decrease of $351,000, or 6.8 percent compared to the fourth quarter 2008. The increase in net interest income was the result of a 20 basis point improvement in our net interest margin. Net interest margin for the second quarter 2009 was 3.05%, compared to 2.85% for the first quarter 2009 and 3.28% in the fourth quarter 2008. Our net interest margin continues to improve from its low point of 2.69 percent in January. Monthly margins for the second quarter were 2.88 percent, 2.97 percent, and 3.22 percent in April, May, and June, respectively.
The first quarter decrease in net interest margin was primarily due to the 75 basis point reduction in interest rates that occurred in late December 2008 combined with our primarily floating rate loan portfolio. Overall, the prime interest rate dropped 4.0 percent during 2008. We believe that the first quarter will be the low point in our net interest margin due to the rolling off and replacement of CD's, the implementation of interest rate floors on loans as they renew, the steady increase in local deposits, and less loan price sensitivity in our markets. These items will more than offset any downward pressure on net interest margin caused by any increases in non-performing assets.
Noninterest income accounted for approximately 24.9 percent of total revenue. For the second quarter, noninterest income was $1.6 million, down from the $1.8 million reported in the first quarter of 2009, and up 15.8 percent from the $1.5 million reported in the fourth quarter 2008. The decrease from the first quarter 2009 relates primarily to a $191,000 gain on sale of investments recorded during the first quarter. Currently, Tower Private Advisors manages $663.4 million in combined trust and brokerage assets, an increase of 10.3 percent from the $601.7 million of combined assets reported for March 31, 2009. Trust and brokerage fees were $806,000, a decrease of 7.1 percent from the first quarter 2009; however, this decrease was due to the receipt of significant annual fees in the first quarter of 2009. Looking forward, our fees are positively impacted by the growth in assets under management. Offsetting this second quarter decrease in trust and brokerage fees were increases in bank fee income. Service charges for the Bank were $283,000, a 9.9 percent increase from the first quarter 2009. Loan broker fees were $195,000, a 41.3 percent increase from the first quarter 2009, due to increased refinancing activity being experienced throughout the country. Other fee income increased from the previous quarter by $24,000, or 7.1 percent, primarily as the result of an increase in processing revenue for debit/ATM card transaction, sweep dividends, and BOLI (Bank-owned life insurance) income.
Second quarter noninterest expense increased $1.5 million, or 29.3 percent from the first quarter 2009. Approximately $1.3 million of the increase was due to an industry-wide imposed special FDIC assessment of $315,000 and the write-down of the value of a foreclosed property of $950,000. The remaining $200,000 increase was made up primarily from $85,000 in additional industry-wide standard FDIC insurance premiums due a rate increase, $40,000 of costs associated with the annual report and meeting, $30,000 of one-time expense related to IT systems testing, and $30,000 related to timing of an annual contribution commitment.
The non-interest expense for the first six months of 2009 versus the same period in 2008 are down by over $1.175 million (excluding the increase in FDIC premiums and $950,000 write down of REO in 2009). This reflects management's continuing diligence in reducing operating costs of the Company. This has been and will continue to receive significant attention and action by management.
ABOUT THE COMPANY
Headquartered in Fort Wayne, Indiana, Tower Financial Corporation is a financial services holding company with two subsidiaries: Tower Bank & Trust Company, a community bank headquartered in Fort Wayne; and Tower Trust Company, a state-chartered wealth services firm doing business as Tower Private Advisors. Tower Bank provides a wide variety of financial services to businesses and consumers through its six full-service financial centers in Fort Wayne, and one in Warsaw, Indiana. Tower Financial Corporation's common stock is listed on the NASDAQ Global Market under the symbol "TOFC." For further information, visit Tower's web site at www.towerbank.net.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about the Corporation and the Bank.
These forward-looking statements are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Actual results and outcomes may differ materially from what may be expressed or forecasted in the forward-looking statements. Future factors include changes in banking regulation; governmental and regulatory policy changes; changes in the national and local economy; changes in interest rates and interest-rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in tax laws; changes in prices; the impact of technological advances; the outcomes of contingencies, trends in customer behavior and their ability to repay loans; changes in local real estate values; and other factors, including various risk factors identified and described in the Corporation's Annual Report on Form 10-K, quarterly reports of Form 10-Q and in other periodic reports we file from time to time with the Securities and Exchange Commission. These reports are available on the Commission's website at www.sec.gov, as well as on our website at www.towerbank.net
Tower Financial Corporation
Consolidated Balance Sheets
At June 30, 2009 and December 31, 2008
(unaudited) (unaudited)
June 30 December 31
2009 2008
-------------------------------------------------------------------
ASSETS
Cash and due from banks $ 11,692,671 $ 19,418,905
Short-term investments and interest-
earning deposits 486,924 9,525,414
Federal funds sold 3,702,334 2,632,054
--------------------------
Total cash and cash equivalents 15,881,929 31,576,373
Securities available for sale, at fair
value 77,959,647 77,792,255
Securities held to maturity, at cost 4,720,914 --
FHLBI and FRB stock 4,032,446 4,032,446
Loans Held for Sale 3,513,721 151,614
Loans 557,529,990 561,011,675
Allowance for loan losses (14,105,074) (10,654,879)
-------------------------
Net loans 543,424,916 550,356,796
Premises and equipment, net 7,592,201 8,010,596
Accrued interest receivable 2,462,880 2,615,260
Bank Owned Life Insurance 12,809,168 12,589,699
Other Real Estate Owned 4,060,026 2,660,310
Other assets 9,849,161 6,798,774
--------------------------
Total assets $686,307,009 $696,584,123
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $105,667,772 $ 82,107,483
Interest-bearing 488,925,976 504,129,631
--------------------------
Total deposits 594,593,748 586,237,114
Short-term Borrowings 2,800,000 --
Federal Home Loan Bank advances 21,200,000 39,200,000
Junior subordinated debt 17,527,000 17,527,000
Accrued interest payable 539,193 658,956
Other liabilities 3,684,819 3,342,913
--------------------------
Total liabilities 640,344,760 646,965,983
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 4,000,000
shares authorized; no shares issued and
outstanding
Common stock and paid-in-capital, no par
value, 6,000,000 shares authorized;
4,155,432 and 4,149,432 shares issued;
and 4,090,432 and 4,084,432 shares
outstanding at June 30, 2009 and
December 31, 2008 39,803,592 39,766,742
Treasury stock, at cost, 65,000 shares
at March 31, 2009 and December 31, 2008 (884,376) (884,376)
Retained earnings 7,210,469 10,895,724
Accumulated other comprehensive income
(loss), net of tax of ($86,255) at June
30, 2009 and ($82,399) at December 31,
2008 (167,436) (159,950)
--------------------------
Total stockholders' equity 45,962,249 49,618,140
--------------------------
Total liabilities and stockholders'
equity $686,307,009 $696,584,123
==========================
Tower Financial Corporation
Consolidated Statements of Operations
For the six and three months ended June 30, 2009 and 2008
(unaudited)
For the Three Months For the Six Months
Ended June 30 Ended June 30
------------------------ ------------------------
2009 2008 2009 2008
------------------ ------------------------ ------------------------
Interest income:
Loans, including
fees $ 7,099,710 $ 8,348,159 $14,147,664 $17,615,558
Securities -
taxable 781,080 648,256 1,414,797 1,262,770
Securities - tax
exempt 243,046 223,312 469,329 437,346
Other interest
income 2,708 89,634 9,553 271,986
------------------------ ------------------------
Total interest
income 8,126,544 9,309,361 16,041,343 19,587,660
Interest expense:
Deposits 2,803,694 3,433,023 5,646,584 8,075,158
Fed Funds
Purchased 1,082 -- 990 --
FHLB advances 216,680 298,637 467,028 572,777
Trust preferred
securities 283,071 283,071 563,297 564,720
------------------------ ------------------------
Total interest
expense 3,304,527 4,014,731 6,677,899 9,212,655
------------------------ ------------------------
Net interest
income 4,822,017 5,294,630 9,363,444 10,375,005
Provision for loan
losses 6,550,000 875,000 7,510,000 1,175,000
------------------------ ------------------------
Net interest
income after
provision for
loan losses (1,727,983) 4,419,630 1,853,444 9,200,005
Noninterest
income:
Trust and
brokerage fees 806,067 938,634 1,673,956 1,833,026
Service charges 283,483 314,144 541,316 635,354
Loan broker fees 195,403 66,812 333,681 127,870
Gain/(Loss) on
sale of
securities 3,861 -- 195,012 59,837
Impairment on AFS
securities (47,656) -- (47,656) --
Other fees 357,790 148,879 691,942 453,156
------------------------ ------------------------
Total
noninterest
income 1,598,948 1,468,469 3,388,251 3,109,243
Noninterest
expense:
Salaries and
benefits 2,644,960 3,051,846 5,367,409 6,138,244
Occupancy and
equipment 692,810 731,588 1,391,402 1,489,903
Marketing 134,215 224,014 278,872 374,216
Data processing 327,443 220,172 621,452 500,930
Loan and
professional
costs 383,196 386,418 695,140 630,068
Office supplies
and postage 73,489 81,947 170,546 195,979
Courier service 58,472 75,070 119,907 164,535
Business
Development 165,765 173,959 266,762 328,832
Communication
Expense 44,321 80,931 88,239 151,723
FDIC Insurance
Premiums 679,308 200,241 958,798 367,755
Other expense 1,253,902 394,239 1,492,625 757,024
------------------------ ------------------------
Total
noninterest
expense 6,457,881 5,620,425 11,451,152 11,099,209
------------------------ ------------------------
Income/(loss)
before income
taxes/(benefit) (6,586,916) 267,674 (6,209,457) 1,210,039
Income taxes
expense/(benefit) (2,491,436) (75,033) (2,524,202) 156,160
------------------------ ------------------------
Net income/(loss) $(4,095,480) $ 342,707 $(3,685,255) $ 1,053,879
======================== ========================
Basic earnings/
(loss) per common
share $ (1.00) $ 0.08 $ (0.90) $ 0.26
Diluted earnings/
(loss) per common
share $ (1.00) $ 0.08 $ (0.90) $ 0.26
Average common
shares
outstanding 4,090,399 4,073,582 4,090,399 4,066,864
Average common
shares and
dilutive
potential common
shares out-
standing 4,090,399 4,075,871 4,090,399 4,080,137
Dividends declared
per common share $ -- $ -- $ -- $ 0.176
Tower Financial Corporation
Consolidated Financial Highlights
Second Quarter 2009
(unaudited)
Quarterly
----------------------
2nd Qtr 1st Qtr
($ in thousands except for share data) 2009 2009
----------------------
EARNINGS
Net interest income $ 4,822 4,541
Provision for loan loss $ 6,550 960
NonInterest income $ 1,599 1,789
NonInterest expense $ 6,458 4,993
Net income/(loss) $ (4,095) 410
Basic earnings per share $ (1.00) 0.10
Diluted earnings per share $ (1.00) 0.10
Average shares outstanding 4,090,399 4,090,365
Average diluted shares outstanding 4,090,399 4,090,365
PERFORMANCE RATIOS
Return on average assets * -2.32% 0.24%
Return on average common equity * -32.65% 3.33%
Net interest margin (fully-tax equivalent) * 3.02% 2.85%
Efficiency ratio 100.58% 78.88%
Full-time equivalent employees 172.75 176.50
CAPITAL
Equity to assets 6.70% 7.03%
Regulatory leverage ratio 8.56% 9.52%
Tier 1 capital ratio 10.38% 11.47%
Total risk-based capital ratio 11.96% 12.77%
Book value per share $ 11.24 12.29
Cash dividend per share $ 0.000 0.000
ASSET QUALITY
Net charge-offs $ 3,092 117
Net charge-offs to average loans * 2.21% 0.08%
Allowance for loan losses $ 14,105 11,498
Allowance for loan losses to total
loans 2.53% 2.06%
Other real estate owned (OREO) $ 4,060 5,080
Non-accrual Loans $ 19,016 11,708
90+ Day delinquencies $ 2,509 1,304
Restructured Loans $ 184 191
Total Nonperforming Loans 21,709 13,203
Total Nonperforming Assets 25,769 18,283
NPLs to Total loans 3.89% 2.37%
NPAs (w/o 90+) to Total assets 3.39% 2.37%
NPAs+90 to Total assets 3.75% 2.55%
END OF PERIOD BALANCES
Total assets $ 686,307 715,634
Total earning assets $ 651,946 681,688
Total loans $ 557,530 558,148
Total deposits $ 594,594 618,705
Stockholders' equity $ 45,962 50,280
AVERAGE BALANCES
Total assets $ 708,282 696,431
Total earning assets $ 657,539 662,712
Total loans $ 561,828 559,607
Total deposits $ 612,649 598,807
Stockholders' equity $ 50,303 49,942
Quarterly
-------------------------------------------
($ in thousands except 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
for share data) 2008 2008 2008 2008
---------- ---------- ---------- ----------
EARNINGS
Net interest income $ 5,172 5,426 5,295 5,080
Provision for loan
loss $ 1,225 1,999 875 300
NonInterest income $ 1,381 1,812 1,469 1,641
NonInterest expense $ 4,846 5,043 5,620 5,479
Net income/(loss) $ 506 330 342 711
Basic earnings per
share $ 0.12 0.08 0.08 0.18
Diluted earnings per
share $ 0.12 0.08 0.08 0.17
Average shares
outstanding 4,075,696 4,084,432 4,078,934 4,062,145
Average diluted
shares outstanding 4,079,438 4,086,757 4,081,245 4,088,684
PERFORMANCE RATIOS
Return on average
assets * 0.29% 0.19% 0.20% 0.41%
Return on average
common equity * 4.15% 2.69% 2.79% 5.91%
Net interest margin
(fully-tax
equivalent) * 3.28% 3.43% 3.36% 3.15%
Efficiency ratio 73.95% 69.67% 83.09% 81.52%
Full-time equivalent
employees 173.75 176.50 181.25 184.25
CAPITAL
Equity to assets 7.12% 6.96% 7.01% 7.15%
Regulatory leverage
ratio 9.69% 9.62% 9.52% 9.33%
Tier 1 capital ratio 11.66% 11.69% 11.55% 11.35%
Total risk-based
capital ratio 12.99% 13.04% 12.92% 12.51%
Book value per share $ 12.15 11.86 11.92 12.18
Cash dividend per
share $ 0.00 0.00 0.00 0.044
ASSET QUALITY
Net charge-offs $ (27) 1,570 936 (527)
Net charge-offs to
average loans * -0.02% 1.13% 0.67% -0.37%
Allowance for loan
losses $ 10,655 9,278 8,974 9,035
Allowance for loan
losses to total
loans 1.90% 1.67% 1.62% 1.61%
Other real estate
owned (OREO) $ 2,660 2,432 2,500 1,527
Non-accrual Loans $ 15,675 17,066 19,412 19,726
90+ Day delinquencies $ 1,020 982 1,840 547
Restructured Loans $ 198 366 624 633
Total Nonperforming
Loans 16,893 18,414 21,876 20,906
Total Nonperforming
Assets 19,553 20,846 24,376 22,433
NPLs to Total loans 3.01% 3.32% 3.95% 3.72%
NPAs (w/o 90+) to
Total assets 2.66% 2.85% 3.24% 3.17%
NPAs+90 to Total
assets 2.81% 2.99% 3.51% 3.25%
END OF PERIOD BALANCES
Total assets $ 696,584 696,061 695,427 691,208
Total earning assets $ 655,145 658,963 648,345 653,906
Total loans $ 561,012 554,760 553,843 562,235
Total deposits $ 586,237 573,221 600,118 587,735
Stockholders' equity $ 49,618 48,449 48,753 49,405
AVERAGE BALANCES
Total assets $ 684,669 682,958 685,547 701,423
Total earning assets $ 642,213 642,852 646,745 663,522
Total loans $ 555,558 551,407 562,165 570,010
Total deposits $ 566,193 580,589 580,563 607,402
Stockholders' equity $ 48,540 48,875 49,252 48,427
Quarterly Year-To-Date
--------------------- ---------------------
($ in thousands except 4th Qtr 3rd Qtr
for share data) 2007 2007 2009 2008
---------- ---------- ---------- ----------
EARNINGS
Net interest income $ 5,223 5,488 9,363 5,080
Provision for loan loss $ 2,825 5,246 7,510 300
NonInterest income $ 1,477 1,409 3,388 1,641
NonInterest expense $ 5,325 4,941 11,451 5,479
Net income/(loss) $ (784) (2,208) (3,685) 711
Basic earnings per
share $ (0.19) (0.54) (0.90) 0.18
Diluted earnings per
share $ (0.19) (0.54) (0.90) 0.17
Average shares
outstanding 4,070,766 4,063,750 4,090,399 4,062,145
Average diluted shares
outstanding 4,070,766 4,063,750 4,090,399 4,088,684
PERFORMANCE RATIOS
Return on average
assets * -0.45% -1.25% -1.07% 0.41%
Return on average common
equity * -6.32% -17.52% -14.88% 5.91%
Net interest margin
(fully-tax equivalent)
* 3.19% 3.31% 2.92% 3.15%
Efficiency ratio 79.48% 71.64% 89.80% 81.52%
Full-time equivalent
employees 190.00 193.00 176.50 184.25
CAPITAL
Equity to assets 6.82% 6.91% 7.03% 7.15%
Regulatory leverage
ratio 9.19% 9.34% 9.52% 9.33%
Tier 1 capital ratio 10.92% 11.03% 11.47% 11.35%
Total risk-based capital
ratio 12.08% 12.15% 12.77% 12.51%
Book value per share $ 11.87 12.01 12.29 12.18
Cash dividend per share $ 0.044 0.044 0.000 0.044
ASSET QUALITY
Net charge-offs $ 1,797 5,241 3,209 (527)
Net charge-offs to
average loans * 1.24% 3.54% 1.16% -0.37%
Allowance for loan
losses $ 8,208 7,180 11,498 9,035
Allowance for loan
losses to total loans 1.43% 1.24% 2.06% 1.61%
Other real estate owned
(OREO) $ 1,452 645 5,080 1,527
Non-accrual Loans $ 17,954 6,471 11,708 19,726
90+ Day delinquencies $ 0 14 1,304 547
Restructured Loans $ 639 645 191 633
Total Nonperforming
Loans 18,593 7,130 13,203 20,906
Total Nonperforming
Assets 20,045 N/A 18,283 22,433
NPLs to Total loans 3.23% N/A 2.37% 3.72%
NPAs (w/o 90+) to Total
assets 2.84% N/A 2.37% 3.17%
NPAs+90 to Total assets 2.84% N/A 2.55% 3.25%
END OF PERIOD BALANCES
Total assets $ 706,493 706,914 715,634 691,208
Total earning assets $ 655,668 669,988 681,688 653,906
Total loans $ 575,744 579,902 558,148 562,235
Total deposits $ 600,689 592,854 618,705 587,735
Stockholders' equity $ 48,208 48,830 50,280 49,405
AVERAGE BALANCES
Total assets $ 698,452 702,538 696,431 701,423
Total earning assets $ 660,812 669,524 662,712 663,522
Total loans $ 574,266 587,531 559,607 570,010
Total deposits $ 595,913 596,140 598,807 607,402
Stockholders' equity $ 49,199 50,014 49,942 48,427
* annualized for quarterly data
Contact:
Tower Financial Corporation
FOR INVESTORS:
Richard R. Sawyer, Chief Financial Officer
260-427-7150
rick.sawyer@towerbank.net
FOR MEDIA:
Tina M. Farrington, Senior Vice President
260-427-7155
tina.farrington@towerbank.net
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