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: SEPTEMBER 30, 1995
COMMISSION FILE NUMBER: 2-89573
EXACT NAME OF REGISTRANT: TOWER BANCORP INC.
STATE OF INCORPORATION: 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:
424,090 SHARES OF COMMON STOCK, PAR VALUE OF TWO DOLLARS AND FIFTY
CENTS ($2.50), OUTSTANDING AS OF SEPTEMBER 30, 1995.
INDEX TO EXHIBITS IS ON PAGE 8
1
TOWER BANCORP INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 3
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED SEPTEMBER 30,1995 AND 1994 4
CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30,1995 AND 1994 5
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 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
09-30-95 12-31-94
ASSETS
CASH AND DUE FROM BANKS 3,511 4,327
INTEREST BEARING BALANCES WITH BANKS 3,145 2,075
FEDERAL FUNDS SOLD 3,730 0
INVESTMENT ACCOUNT SECURITIES:
1 OBLIGATIONS OF STATES AND POLITICAL 8,208 8,231
SUBDIVISIONS (FAIR VALUE $8424,8151)
2 US TREASURY SECURITIES 1,298 1,610
2 US GOVT AGENCIES AND CORPORATIONS 19,918 18,849
2 OTHER SECURITIES AND EQUITY SEC 3,430 3,213
UNREALIZED GAIN (LOSS) 181 (1,004)
LOANS: 94,121 95,309
LESS: UNEARNED INCOME OF LOANS (197) (240)
RESERVE FOR POSSIBLE LOAN LOSSES (1,928) (1,856)
BANK PREMISES, EQUIP, FURNITURE & FIXTURES 1,961 2,059
REAL ESTATE OWNED OTHER THAN BANK PREMISES 238 238
ACCRUED INTEREST RECEIVABLE 905 817
DEFERRED INCOME TAXES 778 1,149
OTHER ASSETS 704 598
------- -------
TOTAL ASSETS 140,003 135,375
======= =======
LIABILITIES AND CAPITAL
DEPOSITS IN DOMESTIC OFFICES:
DEMAND 9,822 7,277
SAVINGS 53,335 54,390
TIME 58,621 52,515
LIABILITIES FOR BORROWED MONEY 903 6,353
FEDERAL FUNDS PURCHASED 0 0
ACCRUED INTEREST PAYABLE 391 269
ACCRUED FEDERAL INCOME TAXES 637 748
OTHER LIABILITIES 511 424
------- -------
TOTAL LIABILITIES 124,220 121,976
------- -------
EQUITY CAPITAL
CAPITAL STOCK:
COMMON STOCK: PAR VALUE $2.50
AUTHORIZED 1,000,000 SHARES:
424,090 SHARES ISSUED - 1995 1,060 965
385,888 SHARES ISSUED - 1994
SURPLUS 5,354 3,749
UNDIVIDED PROFITS 9,190 9,415
NET UNREALIZED (LOSS) ON MARKETABLE SEC 206 (607)
LESS: COST OF TREASURY STOCK (27) (123)
------- -------
TOTAL EQUITY CAPITAL 15,783 13,399
------- -------
TOTAL LIABILITIES AND CAPITAL 140,003 135,375
======= =======
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 09-30-95 09-30-94
- ---------- ------- -------
INTEREST AND FEES ON LOANS 2,227,540 1,953,310
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 112,056 111,832
AVAILABLE FOR SALE 377,669 306,588
INTEREST ON FED FUNDS SOLD 17,016 1,350
INTEREST ON DEPOSITS WITH BANKS 35,957 71,952
------- -------
2,770,238 2,445,032
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 1,186,793 913,971
INTEREST ON FED FUNDS PURCHASED 104 12,995
INTEREST ON BORROWED MONEY 23,492 19,997
------- -------
1,210,389 946,963
------- -------
NET INTEREST INCOME 1,559,849 1,498,069
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 1,559,849 1,498,069
OTHER INCOME:
TRUST DEPARTMENT INCOME 54,779 45,547
SERVICE CHARGES ON DEPOSIT ACCOUNTS 79,877 72,072
OTHER SERVICE CHARGES 20,717 16,461
OTHER OPERATING INCOME 11,227 13,804
INVESTMENT SECURITIES GAINS(LOSSES) 37,820 11,084
------- -------
204,420 158,968
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 472,016 468,234
OCCUPANCY EXPENSE OF BANK PREMISES 64,670 60,638
FURNITURE AND FIXTURE EXPENSE 143,775 143,146
OTHER OPERATING EXPENSES 238,779 274,817
------- -------
919,240 946,835
------- -------
INCOME BEFORE TAXES 845,029 710,202
APPLICABLE INCOME TAXES 246,841 177,660
------- -------
NET INCOME 598,188 532,542
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 1.41
1.38
CASH DIVIDENDS DECLARED PER SHARE 0.33
0.33
NUMBER OF SHARES OUTSTANDING 424,090 385,888
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
4
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED
INTEREST INCOME 09-30-95 09-30-94
- ---------- ------- -------
INTEREST AND FEES ON LOANS 6,562,871 5,612,188
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 338,698 337,558
AVAILABLE FOR SALE 1,131,490 992,712
INTEREST ON FED FUNDS SOLD 17,016 1,998
INTEREST ON DEPOSITS WITH BANKS 99,120 144,231
------- -------
8,149,195 7,088,687
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 3,278,539 2,600,564
INTEREST ON FED FUNDS PURCHASED 487 30,422
INTEREST ON BORROWED MONEY 192,134 44,177
------- -------
3,471,160 2,675,163
------- -------
NET INTEREST INCOME 4,678,035 4,413,524
PROVISION FOR LOAN LOSSES 0 13,000
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 4,678,035 4,400,524
OTHER INCOME:
TRUST DEPARTMENT INCOME 153,232 134,370
SERVICE CHARGES ON DEPOSIT ACCOUNTS 226,538 209,065
OTHER SERVICE CHARGES 53,796 49,800
OTHER OPERATING INCOME 12,529 54,663
INVESTMENT SECURITIES GAINS(LOSSES) 83,039 94,728
------- -------
529,134 542,626
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 1,416,411 1,370,087
OCCUPANCY EXPENSE OF BANK PREMISES 198,028 194,872
FURNITURE AND FIXTURE EXPENSE 460,840 450,129
OTHER OPERATING EXPENSES 866,892 819,262
------- -------
2,942,171 2,834,350
------- -------
INCOME BEFORE TAXES 2,264,998 2,108,800
APPLICABLE INCOME TAXES 637,000 592,660
------- -------
NET INCOME 1,627,998 1,516,140
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 3.84 3.93
CASH DIVIDENDS DECLARED PER SHARE 0.36 0.33
NUMBER OF SHARES OUTSTANDING 424,090 385,888
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
5
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MO NINE MO
ENDED ENDED
(,000 OMITTED) 09-30-95 09-30-94
CASH FLOWS FROM OPERATING ACTIVITIES: ------- -------
NET INCOME 1,542 1,516
ADJMENTS TO RECONCILE NET CASH:
DEPRECIATION AND AMORTIZATION 192 167
PROVISION FOR LOAN LOSSES 0 13
GAIN ON SALE OF INVESTMENT SECURITIES 83 95
LOSS ON DISPOSAL OF EQUIPMENT 0 0
PROVISION FOR DEFERRED TAXES (371) (235)
(INCREASE) IN OTHER ASSETS (106) (116)
(INCREASE) IN INTEREST RECEIVABLE (88) (98)
INCREASE IN INTEREST PAYABLE 122 4
(DECREASE) IN ACCRUED INCOME TAXES (111) 51
(DECREASE) IN OTHER LIABILITIES 87 (106)
OTHER, NET 372 232
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,722 1,523
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
LOANS (NET) 1,145 (6,190)
PURCHASES OF BANK PREMISES, EQUIPMENT,
FURN & FIX 98 (122)
SALES OF OTHER REAL ESTATE 0 99
INT BEARING BALANCES WITH BANKS (NET) (1,070) 470
SECURITIES (NET) (974) (1,490)
------- -------
NET CASH (USED) BY INVESTING ACTIVITIES (801) (7,233)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET DECREASE IN DEMAND AND SAVINGS DEPOSITS 1,490 2,606
CERTIFICATES OF DEPOSIT (NET) 6,106 4,512
NET CHANGE IN FED FUNDS (3,730) 0
DEBT (NET) (5,450) (188)
PROCEEDS FROM SALE OF CAPITAL STOCK 0 0
CASH DIVIDENDS PAID (153) (168)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES (1,737) 6,762
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS (816) 1,052
CASH AND CASH EQUIVALENTS AT BEGINNING OF YR 4,327 3,836
------- -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER 3,511 4,888
======= =======
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 SEPT.30, 1995 AND
SEPTEMBER 30,1994, AND THE RESULTS OF ITS OPERATIONS FOR THE THREE AND NINE
MONTH PERIODS ENDED SEPT.30, 1995 AND 1994, AND THE CHANGES IN CONSOLIDATED
FINANCIAL POSITION FOR THESE PERIODS THEN ENDED.
THE RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED
SEPT.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 6.31% AND
4.12% FOR THE NINE AND THREE MONTH PERIODS ENDED 9-30-95 COMPARED TO THE SAME
PERIODS IN 1994. OTHER INCOME IS DOWN SLIGHTLY DUE TO FEWER GAINS BEING TAKEN
IN THE EQUITY PORTFOLIO. OTHER EXPENSES HAVE INCREASED ONLY 3.80% FOR THE
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1995. NET INCOME IS UP 12.33% AND
7.38% FOR THE THREE AND NINE MONTH PERIODS ENDED 9-30-95.
THE BANK HAS NOT MADE A LOAN LOSS PROVISION IN 1995 AS IT MAINTAINS A RATIO
TO TOTAL LOANS OF 2.05%. ANTICIPATED LOSSES ARE WELL BELOW THE CURRENT
RESERVE BALANCE. THE BANK HAS HAD NET RECOVERIES THUS FAR IN 1995.
THE BANK MAINTAINS A CAPITAL RATIO OF 10.49% AND A RISK BASED RATIO OF
18.04% AS OF 9-30-95.
TOWER'S INVESTMENT PORTFOLIO HAS AN UNREALIZED GAIN OF $181,000. LESS THAN
20% OF THE BANK'S INVESTMENTS ARE IN STRUCTURED NOTES AND CMOS.
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 AN AVERAGE BALANCE OF APPROXIMATELY $1,000,000 IN
MATURITIES FROM THE INVESTMENT PORTFOLIO AS WELL AS NORMAL PRINCIPAL AND
INTEREST PAYMENTS FROM THE LOAN AND MORTGAGE BACKED PORTFOLIOS. INCREASES IN
THE DEPOSIT BASE ALSO PROVIDED LIQUIDITY. THE BANK IS CURRENTLY SELLING ON
AVERAGE OVER $3,000,000 PER DAY IN FED FUNDS.
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
27 FINANCIAL DATA SCHEDULE
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
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,511
<INT-BEARING-DEPOSITS> 3,145
<FED-FUNDS-SOLD> 3,730
<TRADING-ASSETS> 0
<INVESTMENTS-AVAILABLE-FOR-SALE> 24,646
<INVESTMENTS-CARRYING> 8,208
<INVESTMENTS-MARKET> 8,420
<LOANS> 94,121
<ALLOWANCE> 1,928
<TOTAL-ASSETS> 140,003
<DEPOSITS> 121,778
<SHORT-TERM> 903
<LIABILITIES-OTHER> 1,539
<LONG-TERM> 0
<COMMON> 1,060
0
0
<OTHER-SE> 14,723
<TOTAL-LIABILITIES-AND-EQUITY> 140,003
<INTEREST-LOAN> 6,563
<INTEREST-INVEST> 1,470
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<INTEREST-TOTAL> 8,149
<INTEREST-DEPOSIT> 3,279
<INTEREST-EXPENSE> 3,471
<INTEREST-INCOME-NET> 4,678
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 83
<EXPENSE-OTHER> 2,942
<INCOME-PRETAX> 2,265
<INCOME-PRE-EXTRAORDINARY> 1,628
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<CHANGES> 0
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<EPS-DILUTED> 3.84
<YIELD-ACTUAL> 4.29
<LOANS-NON> 167
<LOANS-PAST> 0
<LOANS-TROUBLED> 276
<LOANS-PROBLEM> 3,020
<ALLOWANCE-OPEN> 1,856
<CHARGE-OFFS> 15
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<ALLOWANCE-CLOSE> 1,928
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<ALLOWANCE-FOREIGN> 0
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