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Tower Financial Corporation Reports Annual Net Income Of $5.7 Million

Stocks in this article: TOFC

These forward-looking statements are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, speak only as of this date, and involve risks and uncertainties related to our banking business or to general business and economic conditions that may affect our business, which may cause actual results to turn out differently. More detailed information about such risks and uncertainties may be found in our most recent Annual Report on Form 10-K, or, if applicable, in subsequently filed Forms 10-Q quarterly reports, under the captions "Forward-Looking Statements" and "Risk Factors," which we file from time to time with the Securities and Exchange Commission. These reports are available on the Commission's website at www.sec.gov , as well as on our website at www.towerbank.net .

Tower Financial Corporation
Consolidated Balance Sheets
At December 31, 2012 and December 31, 2011
     
  (unaudited) December 31 2012 December 31 2011
ASSETS    
Cash and due from banks  $ 11,958,507  $ 60,753,268
Short-term investments and interest-earning deposits  159,866  3,260,509
Federal funds sold  2,727,928  3,258,245
Total cash and cash equivalents  14,846,301  67,272,022
     
Interest bearing deposits  457,000  450,000
Debt Securities available for sale, at fair value  173,480,599  128,619,951
Equity Securities available for sale, at fair value  902,900  -- 
FHLBI and FRB stock  3,807,700  3,807,700
Loans Held for Sale  4,933,299  4,930,368
     
Loans  450,465,610  462,561,174
Allowance for loan losses  (8,288,644)  (9,408,013)
Net loans  442,176,966  453,153,161
     
Premises and equipment, net  8,904,214  9,062,817
Accrued interest receivable  2,564,503  2,675,870
Bank Owned Life Insurance  17,672,783  17,084,858
Other Real Estate Owned  1,908,010  3,129,231
Prepaid FDIC Insurance  925,337  1,551,133
Other assets  11,393,469  8,944,145
     
Total assets  $ 683,973,081  $ 700,681,256
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
LIABILITIES    
Deposits:    
Noninterest-bearing  $ 108,147,229  $ 169,757,998
Interest-bearing  452,860,109  432,278,838
Total deposits  561,007,338  602,036,836
     
Fed Funds Purchased  --   -- 
Short-term borrowings  9,093,652  -- 
Federal Home Loan Bank advances  28,300,000  12,000,000
Junior subordinated debt  17,527,000  17,527,000
Accrued interest payable  107,943  2,148,424
Other liabilities  4,191,237  4,871,924
Total liabilities  620,227,170  638,584,184
     
STOCKHOLDERS' EQUITY    
Preferred stock, no par value, 4,000,000 shares authorized; no shares issued and outstanding  --   -- 
Common stock and paid-in-capital, no par value, 6,000,000 shares authorized; 4,941,994 and 4,918,136 shares issued at December 31, 2012 and December 31, 2011, respectively; and 4,735,144 and 4,853,136 shares outstanding at December 31, 2012 and December 31, 2011, respectively  44,834,605  44,542,795
Treasury stock, at cost, 206,850 and 65,000 shares at December 31, 2012 and December 31, 2011, respectively  (2,619,486)  (884,376)
Retained earnings  17,880,539  15,070,115
Accumulated other comprehensive income (loss), net of tax of $1,880,434 at December 31, 2012 and $1,735,307 at December 31, 2011  3,650,253  3,368,538
Total stockholders' equity  63,745,911  62,097,072
     
Total liabilities and stockholders' equity  $ 683,973,081  $ 700,681,256
 
 
Tower Financial Corporation
Consolidated Statements of Operations
For the three and twelve months ended December 31, 2012 and 2011
(unaudited for 2012)
  For the Three Months Ended December 31 For the Twelve Months ended December 31
  2012 2011 2012 2011
Interest income:        
Loans, including fees  $ 5,299,343  $ 5,990,191  $ 22,063,567  $ 24,828,298
Securities - taxable  371,045  547,198  1,837,958  2,295,838
Securities - tax exempt  561,244  490,300  2,027,131  1,730,535
Other interest income  9,026  13,436  45,559  39,041
Total interest income  6,240,658  7,041,125  25,974,215  28,893,712
Interest expense:        
Deposits  640,929  1,076,737  3,157,522  5,090,715
Fed Funds Purchased  131  26  388  638
FHLB advances  43,602  45,501  160,836  230,713
Trust preferred securities  84,466  211,745  451,265  816,852
Total interest expense  769,128  1,334,009  3,770,011  6,138,918
         
Net interest income  5,471,530  5,707,116  22,204,204  22,754,794
Provision for loan losses  200,000  975,000  2,493,000  4,220,000
         
Net interest income after provision for loan losses  5,271,530  4,732,116  19,711,204  18,534,794
         
Noninterest income:        
Trust and brokerage fees  961,721  1,048,264  3,828,291  3,553,965
Service charges  261,658  278,968  1,090,028  1,092,260
Mortgage banking income  396,346  227,937  1,478,486  1,026,711
Gain/(Loss) on sale of securities  73,289  --   149,098  776,753
Net debit card interchange income  161,631  158,469  725,564  612,143
Bank owned life insurance income  146,353  147,028  587,925  568,070
Impairment on AFS securities  --   --   (688)  (149,045)
Other fees  169,338  198,749  655,210  670,294
Total noninterest income  2,170,336  2,059,415  8,513,914  8,151,151
         
Noninterest expense:        
Salaries and benefits  2,827,700  3,145,882  11,342,508  11,185,034
Occupancy and equipment  707,018  677,006  2,598,996  2,494,913
Marketing  176,386  100,095  483,573  431,833
Data processing  452,775  322,892  1,444,309  1,335,034
Loan and professional costs  478,396  370,687  1,497,000  1,612,321
Office supplies and postage  42,200  58,264  202,565  228,281
Courier service  56,505  58,061  232,179  224,987
Business Development  191,817  138,379  522,964  464,807
Communication Expense  49,666  49,131  217,901  192,520
FDIC Insurance Premiums  143,061  249,209  664,770  1,367,622
OREO Expenses  192,168  419,370  641,190  1,057,503
Other expense  257,489  236,616  1,020,558  1,023,585
Total noninterest expense  5,575,181  5,825,592  20,868,513  21,618,440
         
Income/(loss) before income taxes/(benefit)  1,866,685  965,939  7,356,605  5,067,505
Income taxes expense/(benefit)  137,869  (2,456,540)  1,612,439  (1,552,031)
         
Net income/(loss)  $ 1,728,816  $ 3,422,479  $ 5,744,166  $ 6,619,536
Less: Preferred Stock Dividends  --   --   --   -- 
Net income/(loss) available to common shareholders  $ 1,728,816  $ 3,422,479  $ 5,744,166  $ 6,619,536
         
Basic earnings/(loss) per common share  $ 0.36  $ 0.71  $ 1.18  $ 1.37
Diluted earnings/(loss) per common share  $ 0.36  $ 0.71  $ 1.18  $ 1.36
Average common shares outstanding  4,855,557  4,853,645  4,859,155  4,824,514
Average common shares and dilutive potential common shares outstanding  4,855,557  4,853,645  4,859,155  4,853,015
         
Total Shares outstanding at end of period  4,735,144  4,853,136  4,735,144  4,853,136
Dividends declared per common share  $ 0.555  $ --   $ 0.610  $ -- 
 
 
Tower Financial Corporation
Consolidated Financial Highlights
                     
(unaudited)                    
  Quarterly Year-To-Date
($ in thousands except for share data) 4th Qtr 2012 3rd Qtr 2012 2nd Qtr 2012 1st Qtr 2012 4th Qtr 2011 3rd Qtr 2011 2nd Qtr 2011 1st Qtr 2011 2012 2011
                     
EARNINGS                    
Net interest income  $ 5,472 5,615 5,706 5,412 5,707 5,684 5,721 5,643  22,205  22,755
Provision for loan loss  $ 200 618 925 750 975 900 1,125 1,220  2,493  4,220
NonInterest income  $ 2,170 2,202 2,126 2,016 2,059 2,372 2,072 1,647  8,514  8,150
NonInterest expense  $ 5,575 5,019 5,025 5,249 5,826 5,408 5,292 5,093  20,868  21,619
Net income/(loss)  $ 1,729 1,563 1,365 1,088 3,422 1,325 1,090 783  5,745  6,620
Basic earnings per share  $ 0.36 0.32 0.28 0.22 0.71 0.27 0.23 0.16  1.18  1.37
Diluted earnings per share  $ 0.36 0.32 0.28 0.22 0.71 0.27 0.22 0.16  1.18  1.36
Average shares outstanding 4,855,557 4,874,660 4,853,136 4,853,136 4,853,645 4,852,761 4,835,510 4,754,892  4,859,155 4,824,514
Average diluted shares outstanding 4,855,557 4,874,660 4,853,136 4,853,136 4,853,645 4,852,761 4,853,035 4,852,759  4,859,155 4,853,015
                     
PERFORMANCE RATIOS                    
Return on average assets * 1.01% 0.96% 0.84% 0.65% 2.02% 0.80% 0.66% 0.48% 0.87% 1.00%
Return on average common equity * 10.24% 9.43% 8.53% 6.92% 23.22% 9.24% 7.92% 5.92% 8.80% 11.81%
Net interest margin (fully-tax equivalent) * 3.65% 3.87% 3.98% 3.76% 3.90% 3.80% 3.83% 3.83% 3.81% 3.84%
Efficiency ratio 72.95% 64.21% 64.16% 70.67% 75.02% 67.13% 67.91% 69.85% 67.93% 69.95%
Full-time equivalent employees  155.25  154.50  157.00  158.00  151.00  158.50  157.00  150.75  155.25  150.75
                     
CAPITAL                    
Equity to assets 9.32% 10.34% 9.97% 9.76% 8.86% 8.80% 8.47% 8.19% 9.32% 8.86%
Regulatory leverage ratio 11.18% 12.00% 11.71% 11.13% 10.97% 11.09% 10.82% 10.59% 11.18% 10.97%
Tier 1 capital ratio 14.65% 15.20% 14.87% 14.74% 13.91% 14.02% 13.66% 13.27% 14.65% 13.91%
Total risk-based capital ratio 15.90% 16.46% 16.13% 15.99% 15.16% 15.28% 14.92% 14.53% 15.90% 15.16%
Book value per share  $ 13.46 13.77 13.38 13.06 12.79 11.97 11.54 11.11 13.46  12.79
Cash dividend per share  $ 0.555 0.055 0.000 0.000 0.000 0.000 0.000 0.000 0.610 0.000
                     
ASSET QUALITY                    
Net charge-offs  $ 451 1,111 1,001 1,050 1,632 2,852 1,015 1,802 3,613  7,301
Net charge-offs to average loans * 0.39% 0.95% 0.86% 0.91% 1.38% 2.34% 0.84% 1.49% 0.78% 1.51%
Allowance for loan losses  $ 8,289 8,539 9,032 9,108 9,408 10,065 12,017 11,908 8,289 9,408
Allowance for loan losses to total loans 1.84% 1.86% 1.95% 1.99% 2.03% 2.14% 2.46% 2.43% 1.84% 2.03%
Other real estate owned (OREO)  $ 1,908 2,245 2,562 2,878 3,129 3,827 3,729 4,741 1,908 3,129
Non-accrual Loans  $ 14,968  12,083  13,275  14,375  8,682  9,913  9,663  12,738 14,968 3,129
90+ Day delinquencies  $ 110 913 472 902 2,007 1,028 2,123 2,873 110 8,682
Restructured Loans  $ 4,683  4,242  3,692  1,802  1,805  1,810  1,822  2,120 4,683 1,805
Total Nonperforming Loans 16,723  14,553  14,107  15,277  12,494  12,751  13,608  17,731 16,723 12,494
Impaired Securities (Market Value) 0  317  307  314  331  332  386  402 0 331
Other Impaired Assets (Dougherty) 130  130  --   --   --   --   --   --  130 0
Total Nonperforming Assets 18,761  17,245  16,976  18,469  15,954  16,910  17,723  22,874 18,761 15,954
NPLs to Total loans 3.71% 3.18% 3.04% 3.34% 2.70% 2.71% 2.78% 3.62% 3.71% 2.70%
NPAs (w/o 90+) to Total assets 2.73% 2.51% 2.53% 2.71% 1.99% 2.41% 2.36% 3.01% 2.73% 1.99%
NPAs+90 to Total assets 2.74% 2.66% 2.61% 2.84% 2.28% 2.56% 2.68% 3.44% 2.74% 2.28%
                     
END OF PERIOD BALANCES                    
Total assets  $ 683,973 649,466 651,239 649,343 700,681 659,725 661,015 664,117 683,973  700,681
Total earning assets  $ 636,935 607,484 601,014 601,190 606,888 602,291 621,981 621,273 636,935 606,438
Total loans  $ 450,466 457,865 463,833 457,260 462,561 470,877 488,694 489,250 450,466 462,561
Total deposits  $ 561,007 530,278 551,486 552,191 602,037 565,937 547,896 575,525 561,007 602,037
Stockholders' equity  $ 63,746 67,140 64,934 63,374 62,097 58,071 56,015 54,413 63,746 62,097
                     
AVERAGE BALANCES                    
Total assets  $ 678,885 647,999 650,713 671,686 671,384 656,408 660,860 664,564 662,321 663,304
Total earning assets  $ 628,333 603,004 603,119 605,429 606,775 616,024 620,723 618,266 609,971 615,447
Total loans  $ 454,925 464,046 464,802 462,661 467,932 483,442 486,360 489,999 461,609 481,933
Total deposits  $ 565,105 544,142 550,441 572,134 576,898 559,615 558,198 577,654 557,956 568,091
Stockholders' equity  $ 67,168 65,927 64,180 63,021 58,468 56,914 55,213 53,662 65,074 56,064
                     
* annualized for quarterly data                    
CONTACT: FOR INVESTORS:
         Richard R. Sawyer
         Chief Financial Officer
         260-427-7150
         rick.sawyer@towerbank.net
         
         FOR MEDIA:
         Tina M. Farrington
         Executive Vice President
         260-427-7155
         tina.farrington@towerbank.net

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