SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: JUNE 30, 1995
COMMISSION FILE NUMBER: 2-89573
EXACT NAME OF REGISTRANT: TOWER BANCORP INC.
STATE OF INROCPORATION: PENNSYLVANIA
I.R.S. EMPLOYER IDENTIFICATION NO. 25-1445946
ADDRESS OF PRINCIPAL OFFICE: CENTER SQUARE, GREENCASTLE
PENNSYLVANIA 17225
TELEPHONE NUMBER: (717) 597-2137
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT: NOT APPLICABLE
INDICATED BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 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
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:
385,205 SHARES OF COMMON STOCK, PAR VALUE OF TWO DOLLARS AND FIFTY
CENTS ($2.50), OUTSTANDING AS OF JUNE 30, 1995.
INDEX TO EXHIBITS IS ON PAGE 8
1
TOWER BANCORP INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995 AND DECEMBER 31, 1994 3
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 1995 AND 1994 4
CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 5
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1995 AND 1994 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION
ITEM 6 - INDEX TO EXHIBITS AND REPORTS ON
FORM 8-K 9
SIGNATURES 10
2
TOWER BANCORP INC. CONSOLIDATED BALANCE SHEET
06-30-95 12-31-94
ASSETS
CASH AND DUE FROM BANKS 3,575 4,327
INTEREST BEARING BALANCES WITH BANKS 2,539 2,075
FEDERAL FUNDS SOLD 0 0
INVESTMENT ACCOUNT SECURITIES:
1 OBLIGATIONS OF STATES AND POLITICAL 8,208 8,231
SUBDIVISIONS (FAIR VALUE $8355, $8151)
2 US TREASURY SECURITIES 1,609 1,610
2 US GOVT AGENCIES AND CORPORATIONS 18,806 18,849
2 OTHER SECURITIES AND EQUITY SEC 3,739 3,213
UNREALIZED GAIN (LOSS) 128 (1,004)
LOANS: 95,243 95,309
LESS: UNEARNED INCOME OF LOANS (197) (240)
RESERVE FOR POSSIBLE LOAN LOSSES (1,925) (1,856)
BANK PREMISES, EQUIP, FURNITURE & FIXTURES 1,970 2,059
REAL ESTATE OWNED OTHER THAN BANK PREMISES 238 238
ACCRUED INTEREST RECEIVABLE 877 817
DEFERRED INCOME TAXES 785 1,149
OTHER ASSETS 515 598
------- -------
TOTAL ASSETS 136,110 135,375
======= =======
LIABILITIES AND CAPITAL
DEPOSITS IN DOMESTIC OFFICES:
DEMAND 7,801 7,277
SAVINGS 52,541 54,390
TIME 56,760 52,515
LIABILITIES FOR BORROWED MONEY 2,414 6,353
FEDERAL FUNDS PURCHASED 0 0
ACCRUED INTEREST PAYABLE 366 269
ACCRUED FEDERAL INCOME TAXES 388 748
OTHER LIABILITIES 690 424
------- -------
TOTAL LIABILITIES 120,960 121,976
------- -------
EQUITY CAPITAL
CAPITAL STOCK:
COMMON STOCK: PAR VALUE $2.50
AUTHORIZED 1,000,000 SHARES:
385,888 SHARES ISSUED - 1995 965 965
351,226 SHARES ISSUED - 1994
SURPLUS 3,750 3,749
UNDIVIDED PROFITS 10,306 9,415
NET UNREALIZED (LOSS) ON MARKETABLE SEC 161 (607)
LESS: COST OF TREASURY STOCK (32) (123)
------- -------
TOTAL EQUITY CAPITAL 15,150 13,399
------- -------
TOTAL LIABILITIES AND CAPITAL 136,110 135,375
======= =======
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS. ABOVE 1=
HELD TO MATURITY, 2=AVAILABLE FOR SALE.
3
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED
INTEREST INCOME 06-30-95 06-30-94
- ---------- ------- -------
INTEREST AND FEES ON LOANS 2,230,768 1,862,512
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 113,744 114,067
AVAILABLE FOR SALE 371,416 354,183
INTEREST ON FED FUNDS SOLD 0 32
INTEREST ON DEPOSITS WITH BANKS 38,589 20,469
------- -------
2,754,517 2,351,263
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 1,114,047 864,358
INTEREST ON FED FUNDS PURCHASED AND
SECURITIES SOLD UNDER REPO AGREEMENTS 278 10,027
INTEREST ON BORROWED MONEY 64,234 12,667
------- -------
1,178,559 887,052
------- -------
NET INTEREST INCOME 1,575,958 1,464,211
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 1,575,958 1,464,211
OTHER INCOME:
TRUST DEPARTMENT INCOME 51,295 34,899
SERVICE CHARGES ON DEPOSIT ACCOUNTS 70,290 71,640
OTHER SERVICE CHARGES 21,005 16,758
OTHER OPERATING INCOME 527 3,072
INVESTMENT SECURITIES GAINS(LOSSES) 180 83,644
------- -------
143,297 210,013
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 475,848 451,528
OCCUPANCY EXPENSE OF BANK PREMISES 65,283 63,498
FURNITURE AND FIXTURE EXPENSE 159,492 152,054
OTHER OPERATING EXPENSES 309,312 278,020
------- -------
1,009,935 945,100
------- -------
INCOME BEFORE TAXES 709,320 729,124
APPLICABLE INCOME TAXES 207,159 246,000
------- -------
NET INCOME 502,161 483,124
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 1.30
1.38
CASH DIVIDENDS DECLARED PER SHARE 0.36
0.33
NUMBER OF SHARES OUTSTANDING 385,205 349,460
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
4
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED
INTEREST INCOME 06-30-95 06-30-94
- ---------- ------- -------
INTEREST AND FEES ON LOANS 4,335,331 3,658,878
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 226,642 225,726
AVAILABLE FOR SALE 753,821 686,124
INTEREST ON FED FUNDS SOLD 0 648
INTEREST ON DEPOSITS WITH BANKS 63,163 72,279
------- -------
5,378,957 4,643,655
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 2,091,746 1,686,593
INTEREST ON FED FUNDS PURCHASED AND
SECURITIES SOLD UNDER REPO AGREEMENTS 383 17,427
INTEREST ON BORROWED MONEY 168,642 24,180
------- -------
2,260,771 1,728,200
------- -------
NET INTEREST INCOME 3,118,186 2,915,455
PROVISION FOR LOAN LOSSES 0 13,000
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 3,118,186 2,902,455
OTHER INCOME:
TRUST DEPARTMENT INCOME 98,453 88,823
SERVICE CHARGES ON DEPOSIT ACCOUNTS 146,661 136,993
OTHER SERVICE CHARGES 33,079 33,339
OTHER OPERATING INCOME 1,302 40,859
INVESTMENT SECURITIES GAINS(LOSSES) 45,219 83,644
------- -------
324,714 383,658
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 944,395 901,853
OCCUPANCY EXPENSE OF BANK PREMISES 133,358 134,234
FURNITURE AND FIXTURE EXPENSE 317,065 306,983
OTHER OPERATING EXPENSES 628,113 544,445
------- -------
2,022,931 1,887,515
------- -------
INCOME BEFORE TAXES 1,419,969 1,398,598
APPLICABLE INCOME TAXES 390,159 415,000
------- -------
NET INCOME 1,029,810 983,598
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 2.67 2.81
CASH DIVIDENDS DECLARED PER SHARE 0.36 0.33
NUMBER OF SHARES OUTSTANDING 385,205 349,460
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
5
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MO SIX MO
ENDED ENDED
(,000 OMITTED) 06-30-95 06-30-94
CASH FLOWS FROM OPERATING ACTIVITIES: ------- -------
NET INCOME 1,030 984
ADJ TO RECONCILE NET INC TO NET CASH
PROV/OPERATING ACT.
DEPRECIATION AND AMORTIZATION 129 111
PROVISION FOR LOAN LOSSES (69) 13
GAIN ON SALE OF INVESTMENT SECURITIES 45 84
LOSS ON DISPOSAL OF EQUIPMENT 0 0
PROVISION FOR DEFERRED TAXES 364 (189)
(INCREASE) IN OTHER ASSETS 83 (66)
(INCREASE) IN INTEREST RECEIVABLE (60) (67)
INCREASE IN INTEREST PAYABLE 97 16
(DECREASE) IN ACCRUED INCOME TAXES (360) 336
(DECREASE) IN OTHER LIABILITIES 266 (473)
OTHER, NET 142 211
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,667 960
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
LOANS (NET) 66 (4,743)
PURCHASES OF BANK PREMISES, EQUIPMENT,
FURN & FIX 89 (101)
SALES OF OTHER REAL ESTATE 0 97
INT BEARING BALANCES WITH BANKS (464) 792
SECURITIES (NET) (459) (1,017)
------- -------
NET CASH (USED) BY INVESTING ACTIVITIES (768) (4,972)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET DECREASE IN DEMAND AND SAVINGS DEPOSITS (1,325) (210)
CERTIFICATES OF DEPOSIT (NET) 4,245 4,823
NET CHANGE IN FED FUNDS 0 208
DEBT (NET) (3,939) (128)
PROCEEDS FROM SALE OF CAPITAL STOCK 0 0
CASH DIVIDENDS PAID (138) (115)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES (1,157) 4,578
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS (258) 566
CASH AND CASH EQUIVALENTS AT BEGINNING OF YR 3,836 3,836
------- -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER 3,578 4,402
======= =======
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
6
TOWER BANCORP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE (1) TO BASIS OF PRESENTATION
IN THE OPINION OF MANAGEMENT, THE ACCOMPANYING UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS CONTAIN ALL ADJUSTMENTS NECESSARY TO PRESENT FAIRLY
TOWER BANCORP INC.'S CONSOLIDATED FINANCIAL POSITION AS OF JUNE 30, 1995 AND
DECEMBER 31, 1994, AND THE RESULTS OF ITS OPERATIONS FOR THE THREE AND SIX
MONTH PERIODS ENDED JUNE 30, 1995 AND 1994, AND THE CHANGES IN CONSOLIDATED
FINANCIAL POSITION FOR THESE PERIODS THEN ENDED.
THE RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE
30, 1995 AND 1994 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS EXPECTED FOR
THE FULL YEAR.
NOTE (2) INCOME TAXES
INCOME TAX EXPENSE IS LESS THAN THE AMOUNT CALCULATED USING THE STATUTORY
TAX RATE PRIMARILY AS A RESULT OF TAX EXEMPT INCOME EARNED FROM STATE AND
MUNICIPAL SECURITIES AND LOANS.
NOTE (3) COMMITMENTS
IN THE NORMAL COURSE OF BUSINESS, THE BANK MAKES VARIOUS COMMITMENTS AND
INCURS CERTAIN CONTINGENT LIABILITIES WHICH ARE NOT REFLECTED IN THE
ACCOMPANYING FINANCIAL STATEMENTS. THESE COMMITMENTS INCLUDE VARIOUS
GUARANTEES AND COMMITMENTS TO EXTEND CREDIT AND THE BANK DOES NOT ANTICIPATE
ANY LOSSES AS A RESULT OF THESE TRANSACTIONS.
7
TOWER BANCORP INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FIRST NATIONAL BANK OF GREENCASTLE IS THE WHOLLY OWNED SUBSIDIARY OF
TOWER BANCORP INC. NET INTEREST INCOME FOR THE BANK INCREASED BY 16% AS
COMPARED TO THE SAME PERIOD IN 1994. NET INCOME IS UP 4.7% TO $1,029,810 FOR
TOWER. THE BANK HAS BEEN EXPERIENCING A DECLINING RATE ENVIRONMENT. OTHER
EXPENSES HAVE RISEN 7.17% FROM THE SAME PERIOD LAST YEAR. THIS INCREASE IS
DUE IN PART TO THE TIMING OF EXPENSES IN THE MARKETING AREA. SALARIES WAGES
AND OTHER EXPENSES INCREASED 4.72% WHILE OTHER INCOME DECREASED 15%. THE
BANK'S EFFICIENCY RATIO STANDS AT 59.62%.
THE BANK HAS NOT MADE A LOAN LOSS PROVISION IN 1995 AS IT MAINTAINS A RATIO
TO TOTAL LOANS OF 2.02%. ANTICIPATED LOSSES ARE WELL BELOW THE CURRENT
RESERVE BALANCE. CLASSIFIED AND NON ACCRUAL LOANS CONTINUE TO DECREASE AS A
PERCENTAGE OF TOTAL LOANS. THE BANK HAD NET RECOVERIES IN 1994.
THE BANK MAINTAINS A CAPITAL RATIO OF 10.14% AND A RISK BASED RATIO OF (TIER
1) 17.86% COMPARED TO 9.05% AND 15.09% FOR THE SAME PERIOD IN 1994.
IN THE SECOND QUARTER OF 1995 THE BANK'S UNREALIZED LOSS ON SECURITIES HAS
DECREASED SIGNIFICANTLY DUE TO CHANGES IN THE BOND MARKET. THE BANK
PURCHASES SECURITIES WITH THE INTENT TO HOLD THEM. STRUCTURED NOTES, CMOS
AND MBS COMPRISE 18% OF THE INVESTMENT PORTFOLIO.
LIQUIDITY AND CAPITAL RESOURCES
- --------------------
LIQUIDITY REPRESENTS THE ABILITY OF THE BANK TO ACCOMODATE DECREASES IN
DEPOSITS AND FUND INCREASES TO THE LOAN PORTFOLIO. THE BANK'S SOURCES OF
LIQUIDITY CAME FROM SHORT-TERM MATURITIES OF US GOVERNMENTS, AGENCIES,
MUNICIPALS AND OTHER SECURITIES. ADDITIONALLY THE BANK RECEIVED CASH FLOWS
FROM IT'S CMO PORTFOLIO. THE BANK HAS UTILIZED ITS FLEXLINE AT THE FHLB TO
HELP FUND SOME SHORT TERM GROWTH.
TOWER ISSUED A 10% STOCK DIVIDEND IN ADDITION TO THE REGULAR CASH DIVIDEND
DURING THE SECOND QUARTER. THE BANK CONTINUES TO MAINTAIN A PROFITABLE NET
INTEREST MARGIN THROUGH PRUDENT ASSET LIABILITY MANAGEMENT. PROFITABILITY
AND GROWTH ARE NEAR EXPECTED LEVELS FOR 1995.
8
PART II - OTHER INFORMATION
ITEM (1) LEGAL PROCEEDINGS.
NOT APPLICABLE.
ITEM (2) CHANGES IN SECURITIES.
NOT APPLICABLE.
ITEM (3) DEFAULTS UPON SENIOR SECURITIES.
NOT APPLICABLE.
ITEM (4) SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NOT APPLICABLE.
ITEM (5) OTHER INFORMATION.
NOT APPLICABLE.
ITEM (6) INDEX TO EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS:
EXHIBIT NUMBER REFERRED TO DESCRIPTION OF
ITEM 601 OF REGULATIONS 8-K EXHIBIT
- ------------------ --------------
2 NONE
4 INSTRUMENT DEFINING RIGHTS
SECURITY HOLDERS
11 NONE
15 NONE
18 NONE
19 NONE
20 NONE
22 SUBSIDIARIES OF REGISTRANT
23 NONE
24 NONE
25 NONE
28 NONE
9
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
TOWER BANCORP INC.
(REGISTRANT)
DATE: ________________ JEFF B SHANK, PRESIDENT, CEO
(PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
DATE: _______________ DONALD F. CHLEBOWSKI JR., TREASURER
(PRINCIPAL ACCOUNTING OFFICER)
PART II ITEM (6)
ITEM 601 - 22 SUBSIDIARIES OF REGISTRANT
*THE FIRST NATIONAL BANK OF GREENCASTLE
*NATIONAL BANK ORGANIZED IN PENNSYLVANIA
*BUSINESS NAME: THE FIRST NATIONAL BANK OF GREENCASTLE
*ANTRIM TOWER, PARTNERSHIP
10
