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, 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 SEPTEMBER 30, 1996.
INDEX TO EXHIBITS IS ON PAGE 8
1
TOWER BANCORP INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 3
CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 4
CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 5
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 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
09-30-96 12-31-95
ASSETS
CASH AND DUE FROM BANKS 5,201 3,622
INTEREST BEARING BALANCES WITH BANKS 3,345 2,354
FEDERAL FUNDS SOLD 0 0
INVESTMENT ACCOUNT SECURITIES:
1 OBLIGATIONS OF STATE AND POLITICAL 8,521 8,011
SUBDIVISIONS (FAIR VALUE $8424,8155)
2 US TREASURY SECURITIES 898 1,097
2 US GOVT AGENCIES AND CORPORATIONS 21,696 20,921
2 OTHER SECURITIES AND EQUITY SEC 6,476 4,785
UNREALIZED GAIN (LOSS) (146) 120
LOANS: 99,426 96,119
LESS: UNEARNED INCOME OF LOANS (212) (201)
RESERVE FOR POSSIBLE LOAN LOSSES (1,947) (1,945)
BANK PREMISES, EQUIP, FURNITURE & FIXTURES 2,100 1,830
REAL ESTATE OWNED OTHER THAN BANK PREMISES 238 238
ACCRUED INTEREST RECEIVABLE 927 891
DEFERRED INCOME TAXES 853 612
OTHER ASSETS 791 728
------- -------
TOTAL ASSETS 148,167 139,182
======= =======
LIABILITIES AND CAPITAL
DEPOSITS IN DOMESTIC OFFICES:
DEMAND 10,481 8,201
SAVINGS 55,515 51,312
TIME 61,540 60,247
LIABILITIES FOR BORROWED MONEY 1,701 1,222
FEDERAL FUNDS PURCHASED 112 486
ACCRUED INTEREST PAYABLE 412 389
ACCRUED FEDERAL INCOME TAXES 698 0
OTHER LIABILITIES 360 1,177
------- -------
TOTAL LIABILITIES 130,819 123,034
------- -------
EQUITY CAPITAL
CAPITAL STOCK:
COMMON STOCK: PAR VALUE $2.50
AUTHORIZED 5,000,000 SHARES:
424,090 SHARES ISSUED - 1995
848,180 SHARES ISSUED - 1996 2,120 1,060
SURPLUS 4,295 5,354
UNDIVIDED PROFITS 11,132 9,508
NET UNREALIZED (LOSS) ON MARKETABLE SEC (35) 254
LESS: COST OF TREASURY STOCK (164) (28)
------- -------
TOTAL EQUITY CAPITAL 17,348 16,148
------- -------
TOTAL LIABILITIES AND CAPITAL 148,167 139,182
======= =======
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
NINE MONTHS ENDED
INTEREST INCOME 09-30-96 09-30-95
- ---------- ------- -------
INTEREST AND FEES ON LOANS 6,606,693 6,562,871
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 328,998 338,698
AVAILABLE FOR SALE 1,184,610 1,131,490
INTEREST ON FED FUNDS SOLD 12,987 17,016
INTEREST ON DEPOSITS WITH BANKS 186,001 99,120
------- -------
8,319,289 8,149,195
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 3,534,631 3,278,539
INTEREST ON FED FUNDS PURCHASED 34,230 487
INTEREST ON BORROWED MONEY 49,499 192,134
------- -------
3,618,360 3,471,160
------- -------
NET INTEREST INCOME 4,700,929 4,678,035
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 4,700,929 4,678,035
OTHER INCOME:
TRUST DEPARTMENT INCOME 218,630 153,232
SERVICE CHARGES ON DEPOSIT ACCOUNTS 226,382 226,538
OTHER SERVICE CHARGES 66,291 53,796
OTHER OPERATING INCOME 13,600 12,529
INVESTMENT SECURITIES GAINS(LOSSES) 223,176 83,039
------- -------
748,079 529,134
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 1,492,403 1,416,411
OCCUPANCY EXPENSE OF BANK PREMISES 205,785 198,028
FURNITURE AND FIXTURE EXPENSE 239,523 460,840
OTHER OPERATING EXPENSES 1,019,924 866,892
------- -------
2,957,635 2,942,171
------- -------
INCOME BEFORE TAXES 2,491,373 2,264,998
APPLICABLE INCOME TAXES 700,563 637,000
------- -------
NET INCOME 1,790,810 1,627,998
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 2.13 3.84
CASH DIVIDENDS DECLARED PER SHARE .20 .36
NUMBER OF SHARES OUTSTANDING 842,374 424,090
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
4
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED
INTEREST INCOME 09-30-96 09-30-95
- ---------- ------- -------
INTEREST AND FEES ON LOANS 2,199,333 2,227,540
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 111,630 112,056
AVAILABLE FOR SALE 398,413 377,669
INTEREST ON FED FUNDS SOLD 8,575 17,016
INTEREST ON DEPOSITS WITH BANKS 61,890 35,957
------- -------
2,779,841 2,770,238
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 1,183,012 1,186,793
INTEREST ON FED FUNDS PURCHASED 9,279 104
INTEREST ON BORROWED MONEY 23,316 23,492
------- -------
1,215,607 1,210,389
------- -------
NET INTEREST INCOME 1,564,234 1,559,849
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 1,564,234 1,559,849
OTHER INCOME:
TRUST DEPARTMENT INCOME 86,446 54,779
SERVICE CHARGES ON DEPOSIT ACCOUNTS 76,505 79,877
OTHER SERVICE CHARGES 25,323 20,717
OTHER OPERATING INCOME (3,390) 11,227
INVESTMENT SECURITIES GAINS(LOSSES) 108,146 37,820
------- -------
293,030 204,420
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 503,444 472,016
OCCUPANCY EXPENSE OF BANK PREMISES 67,912 64,670
FURNITURE AND FIXTURE EXPENSE 80,146 143,775
OTHER OPERATING EXPENSES 342,153 238,779
------- -------
993,655 919,240
------- -------
INCOME BEFORE TAXES 863,609 845,029
APPLICABLE INCOME TAXES 251,563 246,841
------- -------
NET INCOME 612,046 598,188
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE .73 1.41
CASH DIVIDENDS DECLARED PER SHARE 0.20 0.33
NUMBER OF SHARES OUTSTANDING 842,374 424,090
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
5
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(,000 OMITTED) NINE MONTH NINE MONTH
ENDED ENDED
09-30-96 09-30-95
CASH FLOWS FROM OPERATING ACTIVITIES: ------- -------
NET INCOME 1,568 1,542
ADJ TO RECONCILE NET CASH
DEPRECIATION AND AMORTIZATION 134 192
PROVISION FOR LOAN LOSSES 2 0
GAIN ON SALE OF INVESTMENT SECURITIES 223 83
LOSS ON DISPOSAL OF EQUIPMENT 0 0
PROVISION FOR DEFERRED TAXES (241) (371)
(INCREASE) IN OTHER ASSETS (63) (106)
(INCREASE) IN INTEREST RECEIVABLE (36) (88)
INCREASE IN INTEREST PAYABLE 23 122
(DECREASE) IN ACCRUED INCOME TAXES 698 (111)
(DECREASE) IN OTHER LIABILITIES (817) 87
OTHER, NET (280) 372
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,211 1,722
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
LOANS (NET) (3,307) 1,145
PURCHASES OF BANK PREMISES, EQUIPMENT,
FURN & FIX (270) 98
SALES OF OTHER REAL ESTATE 0 0
INT BEARING W/BANKS (NET) (991) (1,070)
SECURITIES (NET) (2,777) (974)
------- -------
NET CASH (USED) BY INVESTING ACTIVITIES (7,345) (801)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET DECREASE IN DEMAND AND SAVINGS DEPOSITS 6,483 1,490
CD'S (NET) 1,293 6,106
NET CHANGE IN FED FUNDS (374) (3,730)
DEBT (NET) 479 (5,450)
PROCEEDS FROM SALE OF CAPITAL STOCK 0 0
CASH DIVIDENDS PAID (168) (153)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,713 (1,737)
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,579 (816)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YR 3,622 4,327
------- -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER 5,201 3,511
======= =======
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.30,1996 AND
SEPTEMBER 30,1995, AND THE RESULTS OF ITS OPERATIONS FOR THE THREE AND NINE
MONTH PERIODS ENDED SEPT.30,1996 AND 1995, 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, 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 .49% AND .28%
FOR THE NINE AND THREE MONTH PERIODS ENDED 9-30-96 COMPARED TO THE SAME
PERIODS IN 1995. OTHER INCOME HAS INCREASED 41% DUE TO LARGELY TO HAVING
TAKEN GAINS IN THE EQUITY PORTFOLIO. IN ADDITION INCOME FROM THE SALE OF
MUTUAL FUNDS WAS ALLOCATED TO TRUST INCOME. NET INCOME IS UP 10% OVER THE
SAME PERIOD IN 1995.
THE BANK HAS NOT MADE A LOAN LOSS PROVISION IN 1996 AS IT MAINTAINS A RATIO
OF TOTAL LOANS OF 2.00%. ANTICIPATED LOSSES FALL WELL BELOW THE CURRENT
RESERVE BALANCE. THE BANK HAS HAD NET RECOVERIES THUS FAR IN 1996.
THE BANK MAINTAINS A CAPITAL RATIO OF 10.27% AND A RISK BASED CAPITAL RATIO
OF 17.80% AS OF 9-30-96.
THE DEMAND FOR TOWER STOCK REMAINS STRONG. IT APPEARS THAT THE HOLDING CO.
WILL MEET PROJECTED EARNINGS AND GROWTH FOR 1996.
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 MATURITIES IN 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.
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
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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