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, 1996
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:
842,374 SHARES OF COMMON STOCK, PAR VALUE OF TWO DOLLARS AND FIFTY
CENTS ($2.50), OUTSTANDING AS OF JUNE 30, 1996.
INDEX TO EXHIBITS IS ON PAGE 8
1
TOWER BANCORP INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996 AND DECEMBER 31, 1995 3
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 1996 AND 1995 4
CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 5
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 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
EXHIBITS 11-12
2
TOWER BANCORP INC. CONSOLIDATED BALANCE SHEET
06-30-96 12-31-95
ASSETS
CASH AND DUE FROM BANKS 3,594 3,622
INTEREST BEARING BALANCES WITH BANKS 3,525 2,354
FEDERAL FUNDS SOLD 0 0
INVESTMENT ACCOUNT SECURITIES:
1 OBLIGATIONS OF STATE AND POLITICAL 8,318 8,011
SUBDIVISIONS (FAIR VALUE $8424,8155)
2 US TREASURY SECURITIES 898 1,097
2 US GOVT AGENCIES AND CORPORATIONS 20,449 20,921
2 OTHER SECURITIES AND EQUITY SEC 4,607 4,785
UNREALIZED GAIN (LOSS) (339) 120
LOANS: 100,801 96,119
LESS: UNEARNED INCOME OF LOANS (216) (201)
RESERVE FOR POSSIBLE LOAN LOSSES (1,944) (1,945)
BANK PREMISES, EQUIP, FURNITURE & FIXTURES 2,144 1,830
REAL ESTATE OWNED OTHER THAN BANK PREMISES 238 238
ACCRUED INTEREST RECEIVABLE 946 891
DEFERRED INCOME TAXES 913 612
OTHER ASSETS 800 728
------- -------
TOTAL ASSETS 144,734 139,182
======= =======
LIABILITIES AND CAPITAL
DEPOSITS IN DOMESTIC OFFICES:
DEMAND 7,688 8,201
SAVINGS 57,533 51,312
TIME 57,993 60,247
LIABILITIES FOR BORROWED MONEY 3,584 1,222
FEDERAL FUNDS PURCHASED 0 486
ACCRUED INTEREST PAYABLE 377 389
ACCRUED FEDERAL INCOME TAXES 449 0
OTHER LIABILITIES 508 1,177
------- -------
TOTAL LIABILITIES 128,132 123,034
------- -------
EQUITY CAPITAL
CAPITAL STOCK:
COMMON STOCK: PAR VALUE $2.50
AUTHORIZED 5,000,000 SHARES:
385,888 SHARES ISSUED - 1995
848,180 SHARES ISSUED - 1996 2,120 1,060
SURPLUS 4,294 5,354
UNDIVIDED PROFITS 10,519 9,508
NET UNREALIZED (LOSS) ON MARKETABLE SEC (168) 254
LESS: COST OF TREASURY STOCK (163) (28)
------- -------
TOTAL EQUITY CAPITAL 16,602 16,148
------- -------
TOTAL LIABILITIES AND CAPITAL 144,734 139,182
======= =======
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 06-30-96 06-30-95
- ---------- ------- -------
INTEREST AND FEES ON LOANS 2,243,869 2,230,768
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 108,723 113,744
AVAILABLE FOR SALE 374,741 371,416
INTEREST ON FED FUNDS SOLD 344 0
INTEREST ON DEPOSITS WITH BANKS 80,956 38,589
------- -------
2,808,633 2,754,517
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 1,163,104 1,114,047
INTEREST ON FED FUNDS PURCHASED
AND SECURITIES SOLD UNDER REPO AGREEMENTS 19,564 278
INTEREST ON BORROWED MONEY 18,288 64,234
------- -------
1,200,956 1,178,559
------- -------
NET INTEREST INCOME 1,607,677 1,575,958
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 1,607,677 1,575,958
OTHER INCOME:
TRUST DEPARTMENT INCOME 53,514 51,295
SERVICE CHARGES ON DEPOSIT ACCOUNTS 78,850 70,290
OTHER SERVICE CHARGES 19,481 21,005
OTHER OPERATING INCOME 11,209 527
INVESTMENT SECURITIES GAINS(LOSSES) 74,658 180
------- -------
237,712 143,297
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 504,647 475,848
OCCUPANCY EXPENSE OF BANK PREMISES 68,830 65,283
FURNITURE AND FIXTURE EXPENSE 79,404 159,492
OTHER OPERATING EXPENSES 346,640 309,312
------- -------
999,521 1,009,935
------- -------
INCOME BEFORE TAXES 845,868 709,320
APPLICABLE INCOME TAXES 231,700 207,159
------- -------
NET INCOME 614,168 502,161
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 0.73
1.30
NUMBER OF SHARES OUTSTANDING 842,374 385,205
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 06-30-96 06-30-95
- ---------- ------- -------
INTEREST AND FEES ON LOANS 4,407,360 4,335,331
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 217,368 226,642
AVAILABLE FOR SALE 786,197 753,821
INTEREST ON FED FUNDS SOLD 4,412 0
INTEREST ON DEPOSITS WITH BANKS 124,111 63,163
------- -------
5,539,448 5,378,957
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 2,351,619 2,091,746
INTEREST ON FED FUNDS PURCHASED 24,951 383
AND SECURITIES SOLD UNDER REPO AGREEMENTS
INTEREST ON BORROWED MONEY 26,183 168,642
------- -------
2,402,753 2,260,771
------- -------
NET INTEREST INCOME 3,136,695 3,118,186
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 3,136,695 3,118,186
OTHER INCOME:
TRUST DEPARTMENT INCOME 132,184 98,453
SERVICE CHARGES ON DEPOSIT ACCOUNTS 149,877 146,661
OTHER SERVICE CHARGES 40,968 33,079
OTHER OPERATING INCOME 16,990 1,302
INVESTMENT SECURITIES GAINS(LOSSES) 115,030 45,219
------- -------
455,049 324,714
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 988,959 944,395
OCCUPANCY EXPENSE OF BANK PREMISES 137,873 133,358
FURNITURE AND FIXTURE EXPENSE 159,377 317,065
OTHER OPERATING EXPENSES 677,771 628,113
------- -------
1,963,980 2,022,931
------- -------
INCOME BEFORE TAXES 1,627,764 1,419,969
APPLICABLE INCOME TAXES 449,000 390,159
------- -------
NET INCOME 1,178,764 1,029,810
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 1.40 2.67
CASH DIVIDENDS DECLARED PER SHARE 0.20 0.36
NUMBER OF SHARES OUTSTANDING 842,374 385,205
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
5
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTH SIX MONTH
ENDED ENDED
(,000 OMITTED) 06-30-96 06-30-95
CASH FLOWS FROM OPERATING ACTIVITIES: ------- -------
NET INCOME 1,179 1,030
ADJ TO RECONCILE NET INC TO NET CASH
DEPRECIATION AND AMORTIZATION 134 129
PROVISION FOR LOAN LOSSES (1) (69)
GAIN ON SALE OF INVESTMENT SECURITIES 115 45
LOSS ON DISPOSAL OF EQUIPMENT 0 0
PROVISION FOR DEFERRED TAXES (301) 364
(INCREASE) IN OTHER ASSETS (72) 83
(INCREASE) IN INTEREST RECEIVABLE (55) (60)
INCREASE IN INTEREST PAYABLE (12) 97
(DECREASE) IN ACCRUED INCOME TAXES 449 (360)
(DECREASE) IN OTHER LIABILITIES (669) 266
OTHER, NET (186) 142
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 581 1,667
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
LOANS (NET) (4,667) 66
PURCHASES OF BANK PREMISES, EQUIPMENT,
FURN & FIX (314) 89
SALES OF OTHER REAL ESTATE 0 0
INT BEARING BALANCES WITH BANKS (1,171) (464)
INVESTMENT SECURITIES (NET) 1,001 (459)
------- -------
NET CASH (USED) BY INVESTING ACTIVITIES (5,151) (768)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET INCREASE IN DEMAND AND SAVINGS DEPOSITS 5,708 (1,325)
CERTIFICATES OF DEPOSIT (NET) (2,254) 4,245
NET CHANGE IN FED FUNDS (486) 0
DEBT (NET) 2,362 (3,939)
PROCEEDS FROM SALE OF CAPITAL STOCK 0 0
CASH DIVIDENDS PAID (788) (138)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,542 (1,157)
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS (28) (258)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YR 3,622 3,836
------- -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER 3,594 3,578
======= =======
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 30,1996 AND
DECEMBER 31,1995, AND THE RESULTS OF ITS OPERATIONS FOR THE THREE AND SIX
MONTH PERIODS ENDED JUNE 30,1996 AND 1995, 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, 1996 AND 1995 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE
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 2.01% AND .59%
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996, COMPARED TO THE SAME
PERIODS IN 1995. THE BANK HAS CONTINUED TO EXPERIENCE LOAN GROWTH WHILE
MINIMIZING IT'S DEPENDENCE ON BORROWED FUNDS.
OTHER OPERATING INCOME INCREASED SIGNIFICANTLY DUE TO THE COMMISSIONS
RECEIVED ON THE SALE OF MUTUAL FUNDS. ADDITIONALLY TRUST INCOME IS UP
34.26%. OTHER EXPENSES DECREASED BY 2.91% AS COMPARED TO THE SIX MONTH
PERIOD IN 1995. FURNITURE AND FIXTURE EXPENSE WAS DECREASED DUE TO A
RECLASSIFICATION OF COMPUTER EXPENSES. THE OFFSET WAS TO OTHER OPERATING
EXPENSES.
THE BANK CONTINUES TO MAINTAIN NEARLY A 2% RESERVE RATIO. NET CHARGE OFFS
YEAR TO DATE TOTAL $1000. NO SIGNIFICANT LOAN LOSSES ARE ANTICIPATED. THE
BANK'S LEVERAGE AND TOTAL RISK BASED CAPITAL RATIOS STAND AT 10.3% AND 17.15%
RESPECTIVELY.
TOWER SPLIT ITS STOCK DURING THE SECOND QUARTER (2:1). THE DEMAND FOR TOWER
STOCK REMAINS STRONG. THE FIRST NATIONAL BANK CONTINUES TO PERFORM ABOVE PEER
AVERAGES. PROJECTED EARNINGS WILL SURPASS THOSE OF 1995, A RECORD YEAR.
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 LIQUIDITY HAS
BEEN FUNDED BY CASH FLOWS AND MATURITIES FROM LOANS AND INVESTMENTS.
ADDITIONAL LIQUIDITY WAS PROVIDED BY BORROWINGS FROM THE FHLB AND FED FUND
LINES OF CREDIT.
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
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<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,594
<INT-BEARING-DEPOSITS> 3,525
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,954
<INVESTMENTS-CARRYING> 8,318
<INVESTMENTS-MARKET> 8,424
<LOANS> 100,801
<ALLOWANCE> 1,944
<TOTAL-ASSETS> 144,734
<DEPOSITS> 123,214
<SHORT-TERM> 3,584
<LIABILITIES-OTHER> 1,344
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0
0
<OTHER-SE> 14,482
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<INTEREST-TOTAL> 5,538
<INTEREST-DEPOSIT> 2,352
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