UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997.
Commission file number 0000887203
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
TOWNE BANCORP, INC.
(Name of small business issuer in its charter)
Ohio 34-1704637
(State of Incorporation) (I.R.S. Employer Identification No.)
610 East South Boundary, Perrysburg, Ohio 43551
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (419) 874-2090
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Without Par Value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
X The aggregate market value of the voting stock held by non-affiliates was
$5,287,498 as of January 31, 1997.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date - 370,761 shares of common
stock, without par value (as of March 31, 1997).
DOCUMENTS INCORPORATED BY REFERENCE
Transitional Small Business Disclosure Format (Check One). Yes X No
<PAGE>
INDEX
Page
PART I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet 3
Consolidated Statement of Operations 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis 6
PART II Other Information
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
PART I
ITEM 1. Consolidated Balance Sheet
TOWNE BANCORP, INC.
Consolidated Balance Sheet
March 31, 1997 & December 31, 1996
(unaudited)
ASSETS 3/31/97 12/31/96
CASH AND CASH EQUIVALENTS
Cash and due from banks $ 523,000 $ 383,547
Federal funds sold 4,647,000 5,429,000
Total cash and cash equivalents 5,170,000 5,812,547
INVESTMENT SECURITIES
Available-for-sale, at market value 1,387,000 1.396.103
Held-to-maturity, at amortized cost 1,994,000 1,993,167
Total investment securities 3,381,000 3,389,270
LOANS RECEIVABLE, net of allowance for
loan losses of $50,000 and $20,000
respectfully 4,732,000 1,102,913
PREMISES AND EQUIPMENT, net 2,465,333 2,499,349
OTHER ASSETS 244,761 190,012
TOTAL ASSETS $15,993,094 $12,994,091
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits: $ 9,923,360 $ 6,505,572
Capital lease obligations 2,500,000 2,500,000
Accrued interest, taxes and other
liabilities 146,954 284,975
Total liabilities 12,570,314 9,290,547
STOCKHOLDERS' EQUITY
Common stock, without par value, Authorized
800,000 shares; issued and outstanding
370,761 shares at stated value 370,761 370,761
Surplus 4,111,772 4,111,772
Accumulated deficit (1,052,101) (781,224)
Net unrealized holding gain/(loss) on investment
securities available-for-sale (7,652) 2,235
Total stockholders' equity 3,422,780 3,703,544
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,993,094 $12,994,091
<PAGE>
ITEM 1. Consolidated Statement of Operations
TOWNE BANCORP, INC
Consolidated Statement of Operations
For the period ended March 31, 1997 and December 31, 1996
(unaudited)
Three months Twelve months
3/31/97 12/31/96
INTEREST INCOME
Interest and fees on loans $ 82,008 $ 13,614
Interest and dividends on investment securities 50,804 19,982
Interest on deposits in other banks, escrow acct. 0 110,570
Interest on federal funds sold 70,538 52,789
Total interest income 203,350 196,955
INTEREST EXPENSE
Deposits 117,585 42,714
Total interest expense 117,585 42,714
Net interest income 85,765 154,241
PROVISION FOR LOAN LOSSES 30,000 20,000
Net interest income after provision
for loan losses 55,765 134,241
NON-INTEREST INCOME
Service charges 1,768 1,535
Other operating income 3,554 519
Total non-interest income 5,322 2,054
NON-INTEREST EXPENSE
Employee expense 113,729 350,886
Net occupancy expense 133,851 228,170
Other operating expense 84,383 462,200
Total non-interest expense 331,963 1,041,256
Income (loss) before federal income taxes (270,876) (904,961)
PROVISION(CREDIT) FOR FEDERAL
INCOME TAXES - (31,600)
NET INCOME (LOSS) $ (270,876) $ (873,361)
NET INCOME (LOSS) PER SHARE $ (.73) $ (2.38)
<PAGE>
ITEM 1. Notes to Consolidated Financial Statements
TOWNE BANCORP, INC
Notes to Consolidated Financial Statements
March 31, 1997
(unaudited)
(1) Consolidated Financial Statements
The consolidated balance sheet as of March 31, 1997, the consolidated
statements of operations for the three-month period ended March 31, 1997
have been prepared by the Corporation without audit. In the opinion of
management, all adjustments(which include only normal recurring
adjustments) necessary to present fairly the Corporation's financial
position as of March 31, 1997 and its results of operations for the periods
ended March 31, 1997 have been made.
Certain informations and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. The results of operations for
the period ended March 31, 1997 are not necessarily indicative of the
operating results for the full year.
(2) Potential Contingent Liability
Towne Bancorp, Inc. (the "Company") has a potential contingent liability
related to the sale of common stock in its initial public offering, as a result
of possible defects in its registration with the Securities and Exchange
Commission and various state securities authorities. The maximum potential
contingent liability would be the full purchase price of all 378,614 shares
sold by the Company, or $4,753,471, plus interest. The Company has discussed
this matter, and its potential adverse impact on the Company's capital
structure, with a representative of its banking regulators. The Company has
retained special securities law counsel to advise it with respect to the matter
and is exploring alternatives to remove or reduce, to the extent practical,
any contingent liability, including any possible defenses and the possibility
of undertaking a rescission offer to existing shareholders. The Company
believes it can undertake a successful rescission offer to eliminate or
materially reduce this potential contingent liability. However, no assurance
can be made in that regard.
<PAGE>
ITEM 2. Management's Discussion and Analysis
General
Total assets at March 31, 1997 totaled $15,993,094 compared to $12,994,091 at
1996 year end. Total deposits increased to $9,923,360 from $6,505,572 at year
end, and total loans increased $4,732,000 from $1,102,913 at year end.
Stockholders equity at March 31, 1997 decreased from $3,703,544 to $3,422,780.
The investment securities stayed stable for the first quarter of 1997 at
$3,381,000.
Net loss for the quarter ended March 31, 1997 was $(270,876). The interest
income is growing due to the increase in loan activity. Also, the interest
expense increased due to the growth in the deposits. The provision for loan
loss increased to $50,000 at the end of the quarter, which is warranted due to
the growing loan portfolio. The net interest income was $55,765 for the first
quarter. The non-interest income increased due to the growth of both the loan
portfolio and the deposits. The non-interest expenses are starting to stabilize
after the start-up costs, advertising, and other one time expenditures occured
in 1996. The Federal Funds Sold decreased to $4,647,000 from $5,429,000 at year
end. This was due to the increased loan volume.
Towne Bank has now been open for five and half months and is a very successful.
The bank is growing and the reception of all the communities is tremendous. The
board of directors, management and staff of Towne Bank have provided the best
bank in town for our customers and for our shareholders.
<PAGE>
PART II
ITEM 1. Legal Proceedings
The Company, certain officers and a former board member of the Company have been
named as defendants in a civil action in United States District Court for the
Northern District of Ohio, Western Division. The Complaint alleges a breach of
duty as a result of the failure to hire an individual, who was one of the
original organizers of the Company, as an employee. The plaintiff seeks lost
wages and punitive damages. The Company denies the charges and asserts that
the plaintiff voluntarily left the project of establishing a community owned
bank.
ITEM 2. Change in Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of shareholders, through the solicitation of
proxies or otherwise, during the quarter ended March 31, 1997.
The Company's annual meeting took place on April 23, 1997. The following issues
were voted on at the meeting:
1. Set Number of Directors at Three (3).
Total 227,019(61% of shares)
For 214,481
Against 12,538
2. Election of Directors.
Lois A. Brigham
Total 227,019(61% of shares)
For 224,842
Against 2,177
3. Approval to ratify the appointment
of Clifton Gunderson LTD. as auditors
for the company for the years ended
December 31, 1995 and 1996.
Total 227,019(61% of shares)
For 222,808
Against 4,211
4. Approval to ratify the appointment
of Barkan & Robon as legal counsel
for the company for the years ended
December 31, 1995 and 1996.
Total 227,019(61% of shares)
For 221,414
Against 5,605
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(A) Exhibits - None.
(B) Reports on Form 8-K
The Company filed a report on Form 8-K, dated May 6, 1997, pursuant to Item 5.
Other Events.
<PAGE>
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