<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 000-25287
TOWER FINANCIAL CORPORATION
- -----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
INDIANA 35-2051170
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 East Berry Street, Fort Wayne, Indiana 46802
- ----------------------------------------------------------------------
(Address of principal executive offices)
(219) 427-7000
--------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Number of shares of the issuer's common stock, without par value, outstanding
as of July 31, 1999: 2,530,000.
Transitional Small Business Disclosure Format Yes [ ] No [X]
<PAGE> 2
PART I. FINANCIAL INFORMATION
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------- ------------
<S> <C> <C>
ASSETS
Cash $ 572,158 $ 5,704
Interest bearing deposits in bank 13,215,729 208,216
Federal funds sold 6,104,212
------------ ------------
Total cash and cash equivalents 19,892,099 213,920
Securities available for sale, at fair value 5,537,023
Loans 30,500,873
Allowance for loan losses (455,000)
------------ ------------
Net loans 30,045,873
Premises and equipment, net 574,516 57,696
Other assets 118,418 124,960
------------ ------------
Total assets $ 56,167,929 $ 396,576
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities:
Noninterest bearing $ 8,412,145 $
Interest bearing 25,774,300
------------ ------------
Total deposits 34,186,445
Accrued expenses and other liabilities 145,983 110,000
Related party notes payable 760,000
------------ ------------
Total liabilities 34,332,428 870,000
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, no par value, 4,000,000 shares authorized;
no shares issued and outstanding
Common stock, no par value, 6,000,000 shares authorized;
2,530,000 shares issued and outstanding at June 30, 1999, and
1 share issued and outstanding at December 31, 1998 2,530,000 10
Additional paid-in capital 20,939,770
Accumulated deficit (1,634,269) (473,434)
------------ -----------
Total stockholders' equity (deficit) 21,835,501 (473,424)
Total liabilities and stockholders' equity (deficit) $ 56,167,929 $ 396,576
============ ===========
</TABLE>
The following notes are an integral part of the
financial statements.
1
<PAGE> 3
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1999 June 30,1999
(unaudited) (unaudited)
----------- ------------
<S> <C> <C>
Interest income:
Loans, including fees $ 347,749 $ 387,832
Securities 65,843 102,549
Interest bearing deposits 158,223 263,551
Federal funds sold 94,583 146,133
----------- -----------
Total interest income 666,398 900,065
Interest expense on deposits 218,393 252,102
----------- -----------
NET INTEREST INCOME 448,005 647,963
Provision for loan losses 365,000 455,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 83,005 192,963
NONINTEREST INCOME
Service charges 1,903 1,975
Loan fees 75,955 81,567
Other income 5,807 6,293
----------- -----------
Total noninterest income 83,665 89,835
NONINTEREST EXPENSE
Salaries and benefits 379,143 805,467
Occupancy and equipment 84,037 143,632
Marketing 49,583 71,078
Office supplies 38,303 78,844
Legal and professional 84,683 202,914
Other expense 72,646 141,698
----------- -----------
Total noninterest expense 708,395 1,443,633
LOSS BEFORE INCOME TAXES (541,725) (1,160,835)
Provision for income taxes
----------- -----------
NET LOSS $ (541,725) $(1,160,835)
=========== ===========
BASIC AND DILUTED LOSS PER SHARE $ (0.21) $ (0.54)
Weighted average shares outstanding 2,530,000 2,155,028
</TABLE>
The following notes are an integral part of the financial statements
2
<PAGE> 4
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1999 June 30, 1999
(unaudited) (unaudited)
--------------- ------------
<S> <C> <C>
NET LOSS, AS REPORTED $ (541,725) $ (1,160,835)
Unrealized depreciation on securities, net of taxes
-------------- ------------
COMPREHENSIVE LOSS $ (541,725) $ (1,160,835)
============== ============
</TABLE>
The following notes are an integral part of the
financial statements.
3
<PAGE> 5
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Additional
Preferred Common Paid In Accumulated
Stock Stock Capital Deficit Total
----------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1999 $ $ 10 $ $ (473,434) $ (473,424)
Issuance of common
stock, net of underwriters'
fee and offering costs 2,530,000 20,939,770 23,469,770
Retirement of common stock (10) (10)
Net loss (1,160,835) (1,160,835)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1999 $ $ 2,530,000 $ 20,939,770 $ (1,634,269) $ 21,835,501
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the
financial statements.
4
<PAGE> 6
TOWER FINANCIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1999
(unaudited)
------------
<S> <C>
Cash flows from operating activities:
Net loss $ (1,160,835)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 43,354
Provision for loan losses 455,000
Decrease in accrued interest receivable and other assets 6,542
Increase in accrued interest payable and other liabilities 35,983
------------
Net cash used in operating activities (619,956)
Cash flows from investing activities:
Net increase in loans (30,500,873)
Purchase of securities available for sale (5,537,023)
Purchase of equipment and leasehold expenditures (560,174)
------------
Net cash used in investing activities (36,598,070)
Cash flows from financing activities:
Net increase in deposits 34,186,445
Gross proceeds from issuance of common stock 25,300,000
Payment of underwriters' fee and offering costs (1,830,230)
Retirement of common stock (10)
Repayment of related party notes payable (760,000)
------------
Net cash provided from financing activities 56,896,205
Net increase in cash and cash equivalents
19,678,179
Cash and cash equivalents, beginning of period 213,920
------------
Cash and cash equivalents, end of period $ 19,892,099
============
</TABLE>
The following notes are an integral part of the
financial statements.
5
<PAGE> 7
TOWER FINANCIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. ORGANIZATION: Tower Financial Corporation ("Tower Financial") was
incorporated on July 8, 1998. Tower Financial's wholly-owned
subsidiary, Tower Bank & Trust Company ("Tower Bank") opened on
February 19, 1999 after receiving federal and state bank regulatory
approvals to commence its banking operations. Until February 19, 1999,
Tower Financial was in the development stage and its activities were
limited to the organization of Tower Bank as well as the completion of
its initial public stock offering.
b. BASIS OF PRESENTATION: The accompanying unaudited consolidated
condensed financial statements were prepared in accordance with
generally accepted accounting principles for interim periods and with
instructions for Form 10-QSB and, therefore, do not include all
disclosures required by generally accepted accounting principles for
complete presentation of Tower Financial's financial statements. In the
opinion of management, the consolidated condensed financial statements
contain all adjustments necessary to present fairly its consolidated
financial position at June 30, 1999 and December 31, 1998, consolidated
statements of operations for the three-month and six-month periods
ended June 30, 1999, and consolidated statements of stockholders'
equity and cash flows for the six months ended June 30, 1999. Operating
results for the three-month and six-month periods ended June 30, 1999
are not necessarily indicative of the results that may be expected for
future interim periods or the full year ended December 31, 1999. These
consolidated condensed financial statements should be read in
conjunction with the audited financial statements for the period from
July 8, 1998 (date of inception) through December 31, 1998 and related
notes included in Tower Financial's Annual Report on Form 10-KSB for
the period ended December 31, 1998.
c. PRINCIPALS OF CONSOLIDATION: The accompanying consolidated condensed
financial statements include the accounts of Tower Financial and Tower
Bank. All significant intercompany accounts and transactions have been
eliminated in consolidation.
d. COMPARATIVE DATA: Comparable statements of income, stockholders' equity
and cash flows for the three months and/or six months ended June 30,
1998 have not been presented since Tower Financial had not been
incorporated and did not have operations during those periods.
2. INITIAL PUBLIC OFFERING
On January 29, 1999, Tower Financial completed an initial public offering
of its common stock during which 2,200,000 shares were sold at $10.00 per
share. On February 12, 1999, Tower Financial completed the sale of 330,000
common shares included in the underwriters' overallotment option at $10.00
per share. Total proceeds from the offering were $25,300,000 less
underwriters' fees and offering expenses of $1,830,230 for net proceeds of
$23,469,770. Tower Financial used approximately $15,000,000 of the net
proceeds from the stock offering to provide the initial capitalization of
Tower Bank in February 1999.
6
<PAGE> 8
3. NOTES PAYABLE TO RELATED PARTIES:
Noninterest bearing notes payable in the amount of $760,000 were
outstanding to current and former members of the Board of Directors of
Tower Financial at December 31, 1998. The notes were paid during the first
quarter of 1999 from the proceeds received from the public offering.
4. EARNINGS PER SHARE:
Earnings per share is computed based on the weighted average number of
shares outstanding during the second quarter of 1999 of 2,530,000 and
during the first six months of 1999 of 2,155,028.
All stock options granted through June 30, 1999 had an anti-dilutive effect
on earnings per share.
5. INCOME TAXES:
At June 30, 1999, Tower Financial had net operating loss carryforwards of
approximately $1,634,269. No deferred tax asset is recorded as a valuation
allowance reduces the gross deferred tax asset of approximately $653,708 to
zero.
6. STOCK OPTION PLAN:
On December 14, 1998, and subsequently amended on January 21, 1999, the
stockholder and Board of Directors adopted the 1998 Stock Option and
Incentive Plan (the "Plan") for officers, employees and non-employee
directors. The maximum number of shares, which may be issued under the
Plan, may not exceed 310,000 and will include both incentive stock options
and non-qualified options. The exercise price for incentive stock options
will not be less than the fair market value of the shares at the time of
grant, except as granted to a 10% shareholder where the option price will
not be less than 110% of fair market value. The exercise price for
non-qualified stock options will not be less than the fair market value at
the time of grant. The duration of each option may not exceed ten years
from the date of grant.
At June 30, 1999, options for 289,430 shares have been granted to certain
officers, employees, and directors. The options were granted at the market
price on the dates of grant in a range from $9.875 to $10.1875 per share.
During April, 1999, options for 1,010 shares were terminated in accordance
with the Plan due to an employee termination. Under the plan, these shares
may be subject to new option grants.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OF OPERATIONS
OVERVIEW
Tower Financial was formed in July 1998 to be the bank holding company for Tower
Bank. Tower Financial was in a development stage until Tower Bank commenced
operations on February 19, 1999. Tower Bank is an Indiana chartered bank with
depository accounts insured by the Federal Deposit
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<PAGE> 9
Insurance Corporation. Tower Bank is also a member of the Federal Reserve
System. Tower Bank provides a full range of commercial and consumer banking
services primarily in Allen County, Indiana, including Fort Wayne and its
suburbs and also operates a loan production office in Huntington County,
Indiana.
Since its organization, Tower Financial's principal activities have related to
the organization of Tower Bank and the conducting of Tower Financial's initial
public offering ("IPO"). Tower Financial funded its start-up and organizational
costs through loans from directors in an aggregate amount of $760,000, which
loans were repaid upon completion of the IPO. Total proceeds to Tower Financial
from the IPO were $22,709,770 (net of offering expenses, underwriters' discounts
and repayment of director loans), of which $15,000,000 was used to capitalize
Tower Bank.
The following discussion presents management's discussion and analysis of the
consolidated financial condition and results of operations of Tower Financial as
of June 30, 1999 and December 31, 1998 and for the three and six months ended
June 30, 1999. This discussion should be read in conjunction with Tower
Financial's unaudited consolidated condensed financial statements and the
related notes appearing elsewhere in this report. Since the principal banking
operations commenced on February 19, 1999, a comparison of the June 30, 1999
results (when Tower Bank was operating) to those of June 30, 1998 (prior to
formation of Tower Financial) is not meaningful.
FINANCIAL CONDITION
Total assets of Tower Financial were $56,167,929 at June 30, 1999 compared to
its development stage assets at December 31, 1998 of $396,576. The significant
increase in assets was primarily attributable to the inflow of funds from the
IPO and the deposit growth from the commencement of bank operations. As Tower
Bank is in its initial year of operations, Tower Financial anticipates that
assets will continue to increase significantly.
Cash and cash equivalents, which include Federal funds sold, were $19,892,099
at June 30, 1999, a $19,678,179 increase from $213,920 at December 31, 1998.
Securities available for sale were $5,537,023 at the end of the second quarter
of 1999. There were no securities owned by Tower Financial at December 31, 1998.
The significant increase was again the result of the inflow of funds from the
IPO and the investment of customer deposits after commencement of Tower Bank's
operations.
Total loans were $30,500,873 at June 30, 1999 consisting of $25,031,709 in
commercial and commercial real estate loans, $3,900,247 in residential real
estate loans and $1,568,917 in consumer loans. There were no loans recorded at
the end of 1998. The loan growth occurred as a result of the commencement of
bank operations and was attributable mainly to the commercial and small business
sector.
The allowance for loan losses at June 30, 1999 was $455,000. This represented
1.5% of total loans outstanding. Management considers the allowance for loan
losses to be adequate; however, there can be no assurance that charge-offs in
future periods will not exceed the allowance for loan losses. Additional
provisions for the allowance are expected during 1999 as a result of anticipated
increases in the total loan portfolio. Tower Financial has not experienced any
loan losses as of June 30, 1999.
Net premises and equipment increased by $516,820 during the first six months of
1999 from $57,696 at December 31, 1998 to $574,516 at June 30, 1999. The
increase resulted from the purchase of computer and communications equipment and
software, as well as expenditures for leasehold improvements to Tower
Financial's main office space to begin bank operations and to Tower Bank's loan
production office.
8
<PAGE> 10
Other assets decreased by $6,542 during the first six months of 1999 as deferred
offering costs recorded at December 31, 1998 of $124,960 were netted against the
proceeds from the IPO and this decrease was offset by $118,418 of accrued
interest income and other assets.
Tower Bank began taking deposits when it commenced operations in February, 1999.
Total deposits were $34,186,445 at June 30, 1999. There were no deposits
recorded at December 31, 1998. Noninterest bearing balances were $8,412,145
while interest-bearing balances were $25,774,300 at June 30, 1999.
Accrued expenses and other liabilities increased by $35,983 from $110,000 at
December 31, 1998. This increase was mainly attributable to accrued interest
expense. Additionally, Tower Financial repaid the $760,000 of related party
notes that were recorded at December 31, 1998 concurrently with the closing of
the IPO.
At the completion of its IPO, Tower Financial issued 2,530,000 shares of common
stock and redeemed the one share of common stock outstanding at December 31,
1998. The net proceeds from the sale of common stock in the IPO were $23,469,770
after deducting offering expenses and underwriters' discounts; $20,939,770 of
the net proceeds were recorded as additional paid-in-capital. The accumulated
deficit increased during the first six months of 1999 from $473,424 at December
31, 1998 to $1,634,269 at June 30, 1999. See "Results of Operations."
RESULTS OF OPERATIONS
Results of operations for the three-month and six-month periods ended June 30,
1999 reflect a mix of start-up costs and operating results. Tower Financial
reported a net loss for the second quarter of 1999 in the amount of $541,725 and
$1,160,835 for the first six months of 1999. Net loss for the first quarter
ended March 31, 1999 was $619,110.
At June 30, 1999, Tower Financial had an accumulated deficit of $1,634,269. The
accumulated deficit and net loss are mainly reflective of organizational and
start-up costs incurred during the development stage of Tower Financial from
July 1998 to February 1999 including salaries paid to employees and expenses
incurred in applying for and obtaining regulatory approvals. In addition,
general bank operations in 1999 have generated a loss as Tower Bank continues to
build its loan portfolio to achieve a profitable level and as the allowance for
loan loss is developed. Management believes that Tower Financial will generate a
net loss for the year ended December 31, 1999 as a result of these
circumstances. Management believes that the expenditures made in 1998 and 1999
will create the infrastructure to achieve future growth and profitability.
Loss per share for the three-month and six-month periods ended June 30, 1999 was
$.21 and $.54, respectively. Loss per share for the first quarter of 1999 was
$.35.
Interest income for the three-month and six-month periods ended June 30, 1999
was $666,398 and $900,065 while interest expense for those periods was $218,393
and $252,102, respectively, resulting in net interest income of $448,005 for the
second quarter, compared to $199,958 for the first quarter of 1999. The increase
of net interest income over the first quarter was reflective of general growth
of the loan portfolio during the second quarter. The net interest margin for the
second quarter was 4.08% and was 4.23% for year-to-date 1999.
A loan loss provision was recorded in the amount of $365,000 for the second
quarter to increase the allowance to 1.5% of loans outstanding. The loan loss
provision for the first six months of 1999 totaled
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<PAGE> 11
$455,000. As Tower Financial has had no loan loss experience, the provision was
established based upon peer industry data of comparable commercial banks.
Noninterest income was $83,665 during the second quarter and $89,835 for the six
months ended June 30, 1999. The significant increase in fee income from the
first quarter of 1999 resulted from the establishment of a mortgage origination
unit that began operations in late March.
Noninterest expense was $708,395 for the quarter ended June 30, 1999 while
noninterest expense for the year-to-date was $1,443,633. Noninterest expense for
the first quarter of 1999 was $735,238. The main components of noninterest
expense during the second quarter were salaries and benefits of $379,143 and
legal and professional expenses in the amount of $84,683. These costs were
mainly the result of human resource needs to operate Tower Bank as well as
normal professional fees for accountants/attorneys and professional costs to
originate loans. Expenses that increased from the first quarter of 1999 include
marketing and courier costs. Tower Bank had its grand opening in May, 1999 and
began to advertise in the second quarter. Courier costs increased as Tower Bank
realized a full quarter of operations.
LIQUIDITY AND CAPITAL RESOURCES
In its IPO, Tower Financial raised equity capital with aggregate proceeds, net
of underwriters' discount and offering expenses, of $23,469,770. Tower Financial
contributed $15,000,000 of the net proceeds from the offering to Tower Bank.
Based upon pre-opening growth projections and deposit levels achieved during the
first four and one-half months of operations, management believes that Tower
Financial is likely to have adequate funds to meet its capital requirements and
the capital requirements of Tower Bank for at least twelve months.
YEAR 2000 COMPLIANCE
The Year 2000 Problem. The "Year 2000" problem arose because many existing
computer programs use only the last two digits to refer to the year. Therefore,
these computer programs do not properly recognize a year that begins with "20"
instead of the familiar "19." If not corrected, many computer applications and
other technology-based systems could fail or create erroneous results.
Tower Financial's State of Readiness. Tower Financial has an ongoing process of
assessing the impact of the arrival of the year 2000 on its computerized
information systems and other electronic equipment. Tower Financial's main data
processing vendor has represented to Tower Financial that it is Year 2000 ready
and will continue to update Tower Financial on various testing routines of its
systems as the year progresses. In addition, Tower Financial has completed an
internal evaluation and testing of equipment and vendor supply products to
assess its Year 2000 readiness in the areas of processing services and reports,
electronic banking services, correspondent services and communication systems.
Other systems which Tower Financial has completed assessments on include
security systems, HVAC systems, and local utility services. Tower Financial has
appointed one of its senior officers to oversee the Year 2000 process and to
inform its board of directors on a regular basis of the progress being made.
Tower Financial has developed a contingency plan to address Year 2000 problems
that may occur after December 31, 1999, which has been presented to the federal
regulators and has received approval from the board of directors.
Tower Bank requires general assurances from commercial borrowers as to their
Year 2000 readiness as part of the loan application and review process.
Additionally, Tower Bank is using the following steps to minimize Year 2000
risks: (1) internal communication to keep employees knowledgeable and updated on
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Year 2000 readiness; (2) written communication to all loan applicants to notify
them of Tower Bank's Year 2000 readiness efforts; (3) questionnaires to be
completed by all significant commercial borrowers to apprise them of possible
Year 2000 issues applicable to them; and (4) continued dialogue with loan
clients during 1999 to review Year 2000 readiness.
Because it started bank operations with new equipment, Tower Financial does not
expect to incur large operating expenses to modify its systems to be Year 2000
ready. Costs to Tower Financial related to Year 2000 readiness have been minimal
to date and are estimated to be less than $25,000 for the remainder of the year.
These costs may include testing of equipment and software programs, equipment
upgrades and customer education. It is difficult to predict such costs, and
additional funds may be needed. The failure of Tower Financial, its vendors or
its customers to successfully address Year 2000 issues could interfere with
Tower Financial's ability to operate business and could have an adverse effect
on its financial condition and results of operation.
FORWARD-LOOKING STATEMENTS
The statements contained in this Quarterly Report filed on Form 10-QSB that are
not historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. Forward-looking statements are made
based upon management's current expectations and beliefs concerning future
developments and their potential effects upon Tower Financial or Tower Bank.
There can be no assurance that future developments affecting Tower Financial or
Tower Bank will be those anticipated by management. Actual results may differ
materially from those included in the forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the following:
- - Tower Financial's status as a start-up company with no significant operating
history;
- - Tower Financial's expectation of significant losses for at least the first
two years of operations;
- - the effect of extensive banking regulation on Tower Bank's ability to grow
and compete;
- - the effect of changes in federal economic and monetary policies on Tower
Bank's ability to attract deposits, make loans and achieve satisfactory
interest spreads;
- - the competitive disadvantage resulting from Tower Financial's status as a
highly- regulated, start-up company;
- - Tower Financial's dependence on key management personnel; o the increased
risk of losses due to loan defaults caused by Tower Bank's commercial loan
concentration;
- - Tower Financial's dependence on a favorable local economy in Tower Bank's
primary service area;
- - Tower Bank's dependence on net interest spread for profitability; and
- - Tower Bank's ability to implement developments in technology to be
competitive.
Readers are also directed to other risks and uncertainties discussed in other
documents filed by Tower Financial with the Securities and Exchange Commission.
Tower Financial undertakes no obligation to update or revise any forward-looking
information, whether as a result of new information, future developments or
otherwise.
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<PAGE> 13
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Tower Bank may be involved from time to time in various routine legal
proceedings incidental to its business. Neither Tower Financial nor Tower Bank
is engaged in any legal proceeding that is expected to have a material adverse
effect on the results of operation or financial position of Tower Financial or
Tower Bank.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the second quarter ended June 30, 1999, an additional $4,000 of expenses
were invoiced and paid in connection with the issuance and distribution of Tower
Financial's common stock in the IPO. Accordingly, the aggregate amount of
offering expenses incurred by Tower Financial in connection with the IPO through
June 30, 1999 was $248,980 and the total expenses incurred for the offering,
including the underwriters' discount, was $1,830,230 through June 30, 1999. As a
result, net offering proceeds to Tower Financial of the IPO, after deducting the
underwriters' discount and offering expenses, was $23,469,770.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter ended
June 30, 1999.
Item 3. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(27)Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended June
30, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TOWER FINANCIAL CORPORATION
Dated: August 10, 1999 /s/ Donald F. Schenkel
--------------------------------------------
Donald F. Schenkel, Chairman of the Board,
President and Chief Executive Officer
Dated: August 10, 1999 /s/ Kevin J. Himmelhaver
--------------------------------------------
Kevin J. Himmelhaver, Chief Financial
Officer
12
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF TOWER FINANCIAL CORPORATION FOR
THE SIX MONTHS ENDED JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFRENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 572,158
<INT-BEARING-DEPOSITS> 13,215,729
<FED-FUNDS-SOLD> 6,104,212
<TRADING-ASSETS> 692,934
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 5,537,023
<LOANS> 30,500,873
<ALLOWANCE> (455,000)
<TOTAL-ASSETS> 56,167,929
<DEPOSITS> 34,186,445
<SHORT-TERM> 0
<LIABILITIES-OTHER> 145,983
<LONG-TERM> 0
0
0
<COMMON> 2,530,000
<OTHER-SE> 19,305,501
<TOTAL-LIABILITIES-AND-EQUITY> 56,167,929
<INTEREST-LOAN> 387,832
<INTEREST-INVEST> 102,549
<INTEREST-OTHER> 409,684
<INTEREST-TOTAL> 900,065
<INTEREST-DEPOSIT> 252,102
<INTEREST-EXPENSE> 252,102
<INTEREST-INCOME-NET> 647,963
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,443,633
<INCOME-PRETAX> (1,160,835)
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</TABLE>
