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, 1997
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:
845,129 SHARES OF COMMON STOCK, PAR VALUE OF TWO DOLLARS AND FIFTY
CENTS ($2.50), OUTSTANDING AS OF JUNE 30, 1997.
INDEX TO EXHIBITS IS ON PAGE 8
1
TOWER BANCORP INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997 AND DECEMBER 31, 1996 3
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 1997 AND 1996 4
CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1997 AND 1996 5
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996 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
(000'S OMITED) 06-30-97 12-31-96
ASSETS
CASH AND DUE FROM BANKS 4,740 3,034
INTEREST BEARING BALANCES WITH BANKS 3,218 4,071
FEDERAL FUNDS SOLD 713 0
INVESTMENT ACCOUNT SECURITIES:
1 OBLIGATIONS OF STATE AND POLITICAL 9,489 9,170
SUBDIVISIONS (FAIR VALUE $9713)
2 US TREASURY SECURITIES 699 698
2 US GOVT AGENCIES AND CORPORATIONS 22,231 21,893
2 OTHER SECURITIES AND EQUITY SEC 8,966 6,359
UNREALIZED GAIN (LOSS) 424 (25)
LOANS: 102,610 100,830
LESS: UNEARNED INCOME OF LOANS (209) (211)
RESERVE FOR POSSIBLE LOAN LOSSES (1,933) (1,947)
BANK PREMISES, EQUIP, FURNITURE & FIXTURES 1,990 1,628
REAL ESTATE OWNED OTHER THAN BANK PREMISES 121 238
ACCRUED INTEREST RECEIVABLE 967 948
DEFERRED INCOME TAXES 809 629
OTHER ASSETS 1,069 1,358
------- -------
TOTAL ASSETS 155,904 148,673
======= =======
LIABILITIES AND CAPITAL
DEPOSITS IN DOMESTIC OFFICES:
DEMAND 9,599 7,959
SAVINGS 62,556 54,490
TIME 62,182 64,155
LIABILITIES FOR BORROWED MONEY 919 1,866
FEDERAL FUNDS PURCHASED 0 865
ACCRUED INTEREST PAYABLE 400 409
ACCRUED FEDERAL INCOME TAXES 450 0
OTHER LIABILITIES 799 1,225
------- -------
TOTAL LIABILITIES 136,905 130,969
------- -------
EQUITY CAPITAL
CAPITAL STOCK:
COMMON STOCK: PAR VALUE $2.50
AUTHORIZED 5,000,000 SHARES:
845,129 SHARES ISSUED - 1997
848,180 SHARES ISSUED - 1996 2,120 2,120
SURPLUS 5,358 5,357
UNDIVIDED PROFITS 11,347 10,236
NET UNREALIZED (LOSS) GAIN ON MARKETABLE SEC 280 236
LESS: COST OF TREASURY STOCK (106) (245)
------- -------
TOTAL EQUITY CAPITAL 18,999 17,704
------- -------
TOTAL LIABILITIES AND CAPITAL 155,904 148,673
======= =======
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 06-30-97 06-30-96
- ---------- ------- -------
INTEREST AND FEES ON LOANS 2,267,776 2,243,869
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 117,407 108,723
AVAILABLE FOR SALE 491,846 374,741
INTEREST ON FED FUNDS SOLD 30,647 344
INTEREST ON DEPOSITS WITH BANKS 35,456 80,956
------- -------
2,943,132 2,808,633
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 1,238,857 1,163,104
INTEREST ON FED FUNDS PURCHASED AND
SECURITIES SOLD UNDER REPO AGREEMENTS 7,351 19,564
INTEREST ON BORROWED MONEY 7,368 18,288
------- -------
1,253,576 1,200,956
------- -------
NET INTEREST INCOME 1,689,556 1,607,677
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 1,689,556 1,607,677
OTHER INCOME:
TRUST DEPARTMENT INCOME 83,990 53,514
SERVICE CHARGES ON DEPOSIT ACCOUNTS 80,632 78,850
OTHER SERVICE CHARGES 21,616 19,481
OTHER OPERATING INCOME 1,500 11,209
INVESTMENT SECURITIES GAINS(LOSSES) 48,304 74,658
------- -------
236,042 237,712
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 546,276 504,647
OCCUPANCY EXPENSE OF BANK PREMISES 69,541 68,830
FURNITURE AND FIXTURE EXPENSE 88,176 79,404
OTHER OPERATING EXPENSES 389,662 346,640
------- -------
1,093,655 999,521
------- -------
INCOME BEFORE TAXES 831,943 845,868
APPLICABLE INCOME TAXES 242,000 231,700
------- -------
NET INCOME 589,943 614,168
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 0.70 0.73
NUMBER OF SHARES OUTSTANDING 845,129 842,374
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 06-30-97 06-30-96
INTEREST AND FEES ON LOANS 4,549,971 4,407,360
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 235,767 217,368
AVAILABLE FOR SALE 946,268 786,197
INTEREST ON FED FUNDS SOLD 34,328 4,412
INTEREST ON DEPOSITS WITH BANKS 94,576 124,111
-------- --------
5,860,910 5,539,448
INTEREST EXPENSE
INTEREST ON DEPOSITS 2,462,320 2,351,619
INTEREST ON FED FUNDS PURCHASED 21,067 24,951
AND SECURITIES SOLD UNDER REPO AGREEMENTS
INTEREST ON BORROWED MONEY 26,027 26,183
-------- --------
2,509,414 2,402,753
-------- --------
NET INTEREST INCOME 3,351,496 3,136,695
PROVISION FOR LOAN LOSSED 0 0
-------- --------
NET INTEREST INCOME AFTER PROV FOR LL 3,351,496 3,136,695
OTHER INCOME:
TRUST DEPARTMENT INCOME 167,036 132,184
SERVICE CHARGES ON DEPOSIT ACCOUNTS 157,972 149,877
OTHER SERVICE CHARGES 45,049 40,968
OTHER OPERATING INCOME 13,787 16,990
INVESTMENT SECURITIES GAINS (LOSSES) 285,971 115,030
-------- --------
669,815 455,049
-------- --------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 1,081,251 988,959
OCCUPANCY EXPENSE OF BANK PREMISES 139,281 137,873
FURNITURE AND FIXTURE EXPENSE 169,731 159,377
OTHER OPERATING EXPENSES 790,947 677,771
-------- --------
2,181,210 1,963,980
-------- --------
INCOME BEFORE TAXES 1,840,101 1,627,764
APPLICABLE INCOME TAXES 535,000 449,000
-------- --------
NET INCOME 1,305,101 1,178,764
======== ========
COMMON SHARE DATE:
NET INCOME PER SHARE 1.54 1.40
CASH DIVIDENDS DECLARED PER SHARE .23 .20
NUMBER OF SHARES OUTSTANDING 845,129 842,374
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
5
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(,000 OMITTED) SIX MONTH SIX MONTH
ENDED ENDED
06-30-97 06-30-96
CASH FLOWS FROM OPERATING ACTIVITIES: ------- -------
NET INCOME 1,305 1,179
ADJ TO RECONCILE NET CASH
DEPRECIATION AND AMORTIZATION 130 134
PROVISION FOR LOAN LOSSES 0 (1)
GAIN ON SALE OF INVESTMENT SECURITIES 286 115
LOSS ON DISPOSAL OF EQUIPMENT 0 0
PROVISION FOR DEFERRED TAXES 180 (301)
(INCREASE) IN OTHER ASSETS (289) (72)
(INCREASE) IN INTEREST RECEIVABLE (19)) (55)
(DECREASE) IN INTEREST PAYABLE (9) (12)
INCREASE IN ACCRUED INCOME TAXES 450 449
(DECREASE) IN OTHER LIABILITIES (426) (669)
OTHER, NET (23) (186)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,585 581
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
LOANS (NET) (1,796) (4,667)
PURCHASES OF BANK PREMISES, EQUIPMENT,
FURN & FIX (492) (314)
SALES OF OTHER REAL ESTATE 117 0
INT BEARING BALANCES WITH BANKS 853 (1,171)
INVESTMENT SECURITIES (NET) (3,714) 1,001
------- -------
NET CASH (USED) BY INVESTING ACTIVITIES (5,032) (5,151)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET INCREASE IN DEMAND AND SAVINGS DEPOSITS 9,706 5,708
CERTIFICATES OF DEPOSIT (NET) (1,973) (2,254)
NET CHANGE IN FED FUNDS (1,578) (486)
DEBT (NET) (947) 2,362
PROCEEDS FROM SALE OF TREASURY STOCK 139 0
CASH DIVIDENDS PAID (194) (788)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,153 4,542
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,706 (28)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YR 3,034 3,622
------- -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER 4,740 3,594
======= =======
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, 1997 AND
DECEMBER 31, 1996, AND THE RESULTS OF ITS OPERATIONS FOR THE THREE AND SIX
MONTH PERIODS ENDED JUNE 30,1997 AND 1996, 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, 1997 AND 1996 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 6.84% FOR THE
SIX MONTH PERIOD ENDED JUNE 30, 1997 COMPARED TO THE SAME PERIODS IN 1996.
THE BANK HAS CONTINUED TO EXPERIENCE LOAN GROWTH WHILE MINIMIZING IT'S
DEPENDENCE ON BORROWED FUNDS.
OTHER INCOME INCREASED BY 47.2% AS THE RESULT OF SECURITY GAINS TAKEN IN
TOWER'S CORPORATE STOCK PORTFOLIO. NET INCOME INCREASED BY $127,000 OR
10.72% AS A RESULT. ADDITIONALLY TRUST INCOME IS UP 26.36%. OTHER EXPENSES
INCREASED BY 11.06% AS COMPARED TO THE SIX MONTH PERIOD IN 1996.
THE BANK HAS NOT MADE A LOAN LOSS PROVISION IN 1997 AS IT MAINTAINS A RATIO
OF TOTAL LOANS OF 1.88%. 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 1996. FOR THE SIX
MONTHS ENDED JUNE 30, 1997, THERE WERE NET CHARGE OFFS OF $14,000.
MANAGEMENT HAS DETERMINED THE BANK'S INTEREST RATE RISK TO BE MODERATE AND IN
LINE WITH ITS PEERS. INTEREST RATE RISK IS CONTINUALLY MONITORED AND
REASSESSED.
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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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,740
<INT-BEARING-DEPOSITS> 3,218
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<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 32,320
<INVESTMENTS-CARRYING> 9,489
<INVESTMENTS-MARKET> 9,713
<LOANS> 102,610
<ALLOWANCE> 1,933
<TOTAL-ASSETS> 155,904
<DEPOSITS> 134,337
<SHORT-TERM> 919
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0
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