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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: MARCH 25, 1998
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TOWNE BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Ohio 34-1704637
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(STATE OR OTHER (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION
INCORPORATION OR NUMBER)
ORGANIZATION)
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610 East South Boundary
Perrysburg, Ohio 43551
(419) 874-2090
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
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Not Applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
Towne Bancorp, Inc. (the "Company") is filing this report to disclose that
its wholly-owned subsidiary, Towne Bank (the "Bank"), is subject to a Cease and
Desist Order, that the Company incurred a greater than expected loss for the
year ended December 31, 1997 and the resignation of two officers of the Bank.
CEASE AND DESIST ORDER
On January 30, 1998, the Bank executed a Cease and Desist Order Issued Upon
Consent Pursuant to the Federal Deposit Insurance Act, as Amended and Section
1121.32 of the Ohio Revised Code (the "Order"), which was issued by the Ohio
Division of Financial Institutions (the "Division") and the Federal Reserve Bank
of Cleveland (the "Federal Reserve Bank"). The Order was effective February 4,
1998. In summary, the Order required that the Bank: (a) within 30 days employ a
chief lending officer; (b) within 10 days retain an independent bank management
consultant, who will submit a written report to the Bank's board of directors
within thirty days of the date the consultant is retained; (c) within 30 days
of the receipt of the consultant's report submit a written management plan to
the Division and the Federal Reserve Bank; (d) within 30 days submit a written
plan for attaining and maintaining an adequate capital position; (e) obtain
written approval from the Division and the Federal Reserve Bank prior to
declaring or paying any dividends; (f) adhere to certain loan approval policies;
(g) within 30 days achieve and maintain an adequate valuation reserve for loan
losses; (h) within 60 days submit a written record for determining and
maintaining loan loss reserves; (i) within 60 days submit written loan review
procedures; (j) within 60 days provide the Division and Federal Reserve Bank
with certain information regarding loans in excess of $25,000; (k) within 60
days submit a written plan for improving earnings for 1998 and 1999; (l) within
30 days submit a written funds management plan; and (m) within 60 days initiate
a compliance program designed to ensure compliance with the Order, and
thereafter, within thirty days of the end of each quarter submit a report of
actions taken to comply with the Order. The Order will remain in effect until
stayed, modified or terminated by the Division and the Federal Reserve Bank.
The Order followed a Memorandum of Understanding among the Bank, the
Division and the Federal Reserve Bank, dated as of November 14, 1997, which
addressed many of the same matters included in the Order. While there can be
no assurance that the Bank will be able to satisfy all of the requirements of
the Order within the specified time periods, the Bank has satisfied some of the
requirements of the Order and continues to work on the remaining requirements.
DECEMBER 31, 1997 LOSS
The Company reported a net loss of $919,048 for the nine months ended
September 30, 1997 and expects to report a net loss of $1,838,908 for the year
ended December 31, 1997. A significant
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portion of this loss can be attributed to an increase of $631,883 in loan
loss reserves from $90,000 for the nine months ended September 30, 1997 to
$721,883 for the year ended December 31, 1997.
RESIGNATION OF BANK OFFICERS
On March 16, 1998, the Bank announced the resignations of Jerome C.
Bechstein, President and Lois A. Brigham, Sr. Vice President and Secretary.
Both will continue to serve on the Bank's Board of Directors and will continue
to serve as officers and directors of the Company. A copy of the the news
release announcing their resignations is attached as an exhibit to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 99 - New release of Towne Bancorp, Inc., dated March 19,
1998.
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 hereunto duly authorized.
TOWNE BANCORP, INC.
Date: March 25, 1998 By: /s/Jerome C. Bechstein
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Jerome C. Bechstein, President
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
<S> <C>
99 New release of Towne Bancorp, Inc., dated March
19, 1998.
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EXHIBIT 99
PRESS RELEASE
The mission and purpose of establishing the Towne Bank, a locally owned
community bank, has been achieved with $22 million in assets. Offices in
Perrysburg and Sylvania serve small and middle market businesses, agricultural,
professional, retail and individual customers. Looking to the future and the
year 2000, Jerome Bechstein and Lois Brigham have resigned their positions as
officers of the Bank, but will continue active participation as Board Members.
Chairman John Weinert, as one of the originators of the Bank, stated that
without the effort and time spent by Jerome Bechstein and Lois Brigham, the
capitalization of the Bank could not have been possible. The capital was raised
by personal contact which resulted in a shareholder base of over 700 people.
Chairman Weinert announced that Nelson Hagerty will be the interim Chief
Executive Officers. Mr. Hagerty has 40 years of experience and has produced
very positive results in similar situations.
