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: MARCH 31, 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:
848,180 SHARES OF COMMON STOCK, PAR VALUE OF TWO DOLLARS AND FIFTY
CENTS ($2.50), OUTSTANDING AS OF MARCH 31, 1997.
INDEX TO EXHIBITS IS ON PAGE 8
1
TOWER BANCORP INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997 AND DECEMBER 31, 1996 3
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 4
CONSOLIDATED STATEMENT OF CHANGES IN CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
PART II - OTHER INFORMATION
ITEM 6 - INDEX TO EXHIBITS AND REPORTS ON
FORM 8-K 8
SIGNATURES 9
EXHIBITS 10-11
2
TOWER BANCORP INC. CONSOLIDATED BALANCE SHEET
03-31-97 12-31-96
ASSETS
CASH AND DUE FROM BANKS 4,490 3,034
INTEREST BEARING BALANCES WITH BANKS 4,153 4,071
FEDERAL FUNDS SOLD 1,160 0
INVESTMENT ACCOUNT SECURITIES:
1 OBLIGATIONS OF STATE AND POLITICAL 9,157 9,170
SUBDIVISIONS (FAIR VALUE $9263,$8272)
2 US TREASURY SECURITIES 698 698
2 US GOVT AGENCIES AND CORPORATIONS 21,374 21,893
2 OTHER SECURITIES AND EQUITY SEC 6,786 6,359
UNREALIZED GAIN (LOSS) 145 (25)
LOANS: 102,434 100,830
LESS: UNEARNED INCOME OF LOANS (207) (211)
RESERVE FOR POSSIBLE LOAN LOSSES (1,944) (1,947)
BANK PREMISES, EQUIP, FURNITURE & FIXTURES 2,008 1,628
REAL ESTATE OWNED OTHER THAN BANK PREMISES 121 238
ACCRUED INTEREST RECEIVABLE 953 948
DEFERRED INCOME TAXES 851 629
OTHER ASSETS 900 1,358
------- -------
TOTAL ASSETS 153,079 148,673
======= =======
LIABILITIES AND CAPITAL
DEPOSITS IN DOMESTIC OFFICES:
DEMAND 9,007 7,959
SAVINGS 60,903 54,490
TIME 62,139 64,155
LIABILITIES FOR BORROWED MONEY 862 1,866
FEDERAL FUNDS PURCHASED 0 865
ACCRUED INTEREST PAYABLE 401 409
ACCRUED FEDERAL INCOME TAXES 156 0
OTHER LIABILITIES 1,329 1,225
------- -------
TOTAL LIABILITIES 134,797 130,969
------- -------
EQUITY CAPITAL
CAPITAL STOCK:
COMMON STOCK: PAR VALUE $2.50
AUTHORIZED 5,000,000 SHARES:
848,180 SHARES ISSUED - 1997 2,120 2,120
422,590 SHARES ISSUED - 1996
SURPLUS 5,357 5,357
UNDIVIDED PROFITS 10,951 10,236
NET UNREALIZED (LOSS) ON MARKETABLE SEC 96 236
LESS: COST OF TREASURY STOCK (242) (245)
------- -------
TOTAL EQUITY CAPITAL 18,282 17,704
------- -------
TOTAL LIABILITIES AND CAPITAL 153,079 148,673
======= =======
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 03-31-97 03-31-96
- ---------- ------- -------
INTEREST AND FEES ON LOANS 2,282,195 2,163,491
INTEREST ON INVESTMENT SECURITIES:
HELD TO MATURITY 118,360 108,645
AVAILABLE FOR SALE 454,422 411,456
INTEREST ON FED FUNDS SOLD 3,681 4,068
INTEREST ON DEPOSITS WITH BANKS 59,120 43,155
------- -------
2,917,778 2,730,815
INTEREST EXPENSE
- ----------
INTEREST ON DEPOSITS 1,223,463 1,188,515
INTEREST ON FED FUNDS PURCHASED AND
SECURITIES SOLD UNDER REPO AGREEMENTS 13,716 5,387
INTEREST ON BORROWED MONEY 18,659 7,895
------- -------
1,255,838 1,201,797
------- -------
NET INTEREST INCOME 1,661,940 1,529,018
PROVISION FOR LOAN LOSSES 0 0
------- -------
NET INTEREST INCOME AFTER PROV FOR LL 1,661,940 1,529,018
OTHER INCOME:
TRUST DEPARTMENT INCOME 83,046 78,670
SERVICE CHARGES ON DEPOSIT ACCOUNTS 77,340 71,027
OTHER SERVICE CHARGES 23,433 21,487
OTHER OPERATING INCOME 12,287 5,781
INVESTMENT SECURITIES GAINS(LOSSES) 237,667 40,372
------- -------
433,773 217,337
------- -------
OTHER EXPENSES:
SALARIES, WAGES AND OTHER BENEFITS 534,975 484,312
OCCUPANCY EXPENSE OF BANK PREMISES 69,740 69,043
FURNITURE AND FIXTURE EXPENSE 81,555 79,973
OTHER OPERATING EXPENSES 401,285 331,131
------- -------
1,087,555 964,459
------- -------
INCOME BEFORE TAXES 1,008,158 781,896
APPLICABLE INCOME TAXES 293,000 217,300
------- -------
NET INCOME 715,158 564,596
======== =======
COMMON SHARE DATA:
NET INCOME PER SHARE 0.85 1.34
NUMBER OF SHARES OUTSTANDING 840,298 422,590
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
4
TOWER BANCORP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(,000 OMITTED) PERIOD PERIOD
ENDED ENDED
03-31-97 03-31-96
CASH FLOWS FROM OPERATING ACTIVITIES: ------- -------
NET INCOME 715 565
ADJ TO RECONCILE NET CASH
DEPRECIATION AND AMORTIZATION 66 65
PROVISION FOR LOAN LOSSES 0 0
GAIN ON SALE OF INVESTMENT SECURITIES 238 40
LOSS ON DISPOSAL OF EQUIPMENT 0 0
PROVISION FOR DEFERRED TAXES (222) (177)
(INCREASE) IN OTHER ASSETS 458 (90)
(INCREASE) IN INTEREST RECEIVABLE (5) 2
INCREASE IN INTEREST PAYABLE (8) 2
(DECREASE) IN ACCRUED INCOME TAXES 156 217
(DECREASE) IN OTHER LIABILITIES 104 (229)
OTHER, NET (455) (378)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,047 17
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
LOANS (NET) (1,597) (1,472)
PURCHASES OF BANK PREMISES, EQUIPMENT,
FURN & FIX (380) (25)
SALES OF OTHER REAL ESTATE 117 0
INT BEARING W/BANKS (NET) (82) (12)
SECURITIES (NET) (65) (282)
------- -------
NET CASH (USED) BY INVESTING ACTIVITIES (2,007) (1,791)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET DECREASE IN DEMAND AND SAVINGS DEPOSITS 7,461 2,088
CERTIFICATES OF DEPOSIT (NET) (2,016) (1,300)
NET CHANGE IN FED FUNDS (2,025) 0
DEBT (NET) (1,004) 483
PROCEEDS FROM SALE OF CAPITAL STOCK 0 0
CASH DIVIDENDS PAID 0 0
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,416 1,271
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,456 (503)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YR 3,034 3,747
------- -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER 4,490 3,244
======= =======
THE NOTES TO FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS
5
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 MARCH 31, 1997 AND
DECEMBER 31, 1996, AND THE RESULTS OF ITS OPERATIONS FOR THE THREE MONTH
PERIODS ENDED MARCH 31, 1997 AND 1996, AND THE CHANGES IN CONSOLIDATED
FINANCIAL POSITION FOR THESE PERIODS THEN ENDED.
THE RESULTS OF OPERATIONS FOR THESE PERIODS 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.
6
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. THE BANK'S INTEREST RATE SPREAD HAS DECREASED
APPROXIMATELY 15 BASIS POINTS COMPARED TO THE SAME PERIOD IN 1996. OTHER
INCOME INCREASED BY NEARLY 100% AS THE RESULT OF SECURITY GAINS TAKEN IN
TOWER'S CORPORATE STOCK PORTFOLIO. NET INCOME INCREASED BY $150,000 OR
26.67% AS A RESULT. CONTINUAL PRESSURE TO RAISE DEPOSIT RATES EXISTS IN THE
BANK'S MARKET. THE BANK HAS ALSO BOOSTED OTHER INCOME BY GENERATING
COMMISSIONS FROM THE SALE OF MUTUAL FUNDS.
THE BANK HAS NOT MADE A LOAN LOSS PROVISION IN 1997 AS IT MAINTAINS A RATIO
OF TOTAL LOANS OF 1.90%. 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.
THE BANK MAINTAINS A CAPITAL RATIO OF 9.85% AND A RISK BASED CAPITAL RATIO OF
(TIER1) 15.75.
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 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 HELP
FUND SOME SHORT TERM GROWTH.
7
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
8
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
9
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<ARTICLE> 9
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,490
<INT-BEARING-DEPOSITS> 4,153
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<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,003
<INVESTMENTS-CARRYING> 9,157
<INVESTMENTS-MARKET> 9,263
<LOANS> 102,434
<ALLOWANCE> 1,944
<TOTAL-ASSETS> 153,079
<DEPOSITS> 132,049
<SHORT-TERM> 862
<LIABILITIES-OTHER> 1,329
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<COMMON> 2,120
0
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<OTHER-SE> 16,162
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<INTEREST-DEPOSIT> 1,223
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