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Tower Financial Corporation Reports Annual Net Income Of $5.7 Million

"I will reiterate what I said last year: we believe there is still more opportunity in the coming year for Tower. We are committed to retaining and expanding relationships with our existing clients, and we believe there are many opportunities with new clients to experience the ' Tower' difference."

"We remain committed to the tasks of improving our credit metrics and operational efficiencies to deliver the best experience to our clients, community, and shareholders."

Capital

During the fourth quarter of 2012, the Company issued dividends to its shareholders in the amount of $2.7 million. Additionally, the Company repurchased 141,850 shares of its common stock at a cost of $1.7 million. These reductions of capital along with an increase in total assets of $34.5 million caused a decrease in our regulatory capital ratios.   However, our regulatory capital ratios continue to remain significantly above the "well-capitalized" levels of 6 percent for tier 1 capital and 10 percent for total risk-based capital. Tier 1 capital at December 31, 2012 was 14.7 percent compared to 15.2 percent at September 30, 2012 and 13.9 percent at December 31, 2011. Total risk-based capital at December 31, 2012 was 15.9 percent compared to 16.5 percent at September 30, 2012 and 15.2 percent at December 31, 2011. Our leverage capital was 11.2 percent at December 31, 2012, more than double the regulatory requirement of 5 percent to be considered "well-capitalized". 

The following table provides the current capital position as of December 31, 2012 in both dollars and percentages, compared to the minimum amounts required per regulatory standards for "well-capitalized" institutions. 

       
Minimum Dollar Requirements  ($000's omitted) Regulatory Minimum (Well-Capitalized) Tower 12/31/12 Excess
Tier 1 Capital / Risk Assets $31,000 $75,670 $44,670
       
Total Risk Based Capital / Risk Assets $51,666 $82,151 $30,485
       
Tier 1 Capital / Average Assets (Leverage) $33,847 $75,670 $41,823
       
Minimum Percentage Requirements Regulatory Minimum (Well-Capitalized) Tower 12/31/12  
Tier 1 Capital / Risk Assets 6% or more 14.65%  
       
Total Risk Based Capital / Risk Assets 10% or more 15.90%  
       
Tier 1 Capital / Quarterly Average Assets 5% or more 11.18%  

Asset Quality

Our nonperforming assets were $18.8 million, or 2.7 percent of total assets as of December 31, 2012. This compares with $17.2 million at September 30, 2012 and $16.0 million at December 31, 2011. Our net charge-offs were $451,000 for the fourth quarter of 2012, or 0.4 percent of average outstanding loans for the quarter. This compares to net charge-offs of $1.1 million, or 1.0 percent of average loans for the third quarter of 2012 and $1.6 million, or 1.4 percent of average loans for the fourth quarter of 2011. Net charge-offs for 2012 were $3.6 million, or 0.8 percent of average loans, compared to $7.3 million, or 1.5 percent of average loans during 2011. Our loan loss provision for the fourth quarter of 2012 was $200,000 compared to $618,000 for the third quarter of 2012 and $975,000 for the fourth quarter of 2011.  Loan loss provision for 2012 was $2.5 million compared to $4.2 million for 2011. 

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