Assets Exceed $500 Million Mark
FORT WAYNE, Ind., July 20 /PRNewswire-FirstCall/ -- TOWER FINANCIAL
CORPORATION (Nasdaq: TOFC) today announced second quarter 2005 net income of
$841.6 thousand compared with $454.4 thousand for the second quarter of 2004,
an increase of 85.1 percent. Diluted earnings per share were $0.21, a
90.9 percent increase over the $0.11 reported for the prior-year period.
Earnings improvement reflects strong growth in both net interest income and
non-interest income.
For the first six months of 2005, net income was $1.6 million compared
with $934.9 thousand for the first six months of 2004, an increase of
67.8 percent. Diluted earnings per share increased 69.6 percent over the
prior-year period, from $0.23 to $0.39. The earnings improvement again
reflects strong growth in both net interest income and non-interest income.
Second quarter 2005 highlights include:
- Total assets surpassed $500 million in the second quarter of 2005.
- Total revenue increased 29.2 percent above the prior-year second
quarter.
- The net interest margin on a tax-equivalent basis for the second
quarter of 2005 was 3.75 percent, a 69 basis point improvement year-
over-year.
- Loans outstanding grew 7.2 percent since year-end 2004 (14.5 percent
annualized), driven by strong commercial real estate and commercial
loan growth.
- Trust fees for the second quarter of 2005 grew 30.8 percent over the
second quarter of 2004, and managed assets exceeded $400 million for
the first time.
Donald F. Schenkel, Chairman and Chief Executive Officer, commented,
"Strong earnings growth continued into the second quarter of 2005, as we
surpassed the $500 million mark in total assets. Our year-to-date financial
performance has been our strongest in recent years from the synergistic impact
of a recovering economy, effective balance sheet management and a focused
operating strategy. Our business development efforts are supporting loan
growth at the strong yet prudent mid-teen levels we set as our goal for 2005.
"The success of the infrastructure and organizational changes we initiated
in the wealth management group in 2004 are reflected in the strong growth in
trust accounts and their associated fee income," Mr. Schenkel continued. "The
deeply-rooted relationships we are building through our integrated approach to
trust and private banking are beginning to benefit all of our business lines."
Total revenue, consisting of net interest income and non-interest income,
was $5.3 million for the second quarter of 2005, an increase of 29.2 percent
over the $4.1 million reported in the prior-year period. Net interest income
grew 30.8 percent for the same period to $4.3 million, reflecting a 7.3
percent increase in average earning assets and a 69 basis point improvement in
the net interest margin to 3.75 percent; the linked quarter margin improved 12
basis points from 3.63 percent. Mr. Schenkel noted, "We have continued to
benefit from the impact of rising interest rates on our commercially-oriented
portfolio. We anticipate a fairly steady margin for the remainder of the year
as we balance higher loan yields with increased funding costs."
Non-interest income for the second quarter of 2005 was $1.0 million, up
22.7 percent above the $816.0 thousand reported in the second quarter of 2004.
Tower reported trust fees of $538.4 thousand, up $126.9 thousand or
30.8 percent above the prior-year second quarter, as well as 40.6 percent
growth in other fees and 14.8 percent growth in service charges, partially
offset by a decline in mortgage banking fees. Mr. Schenkel noted that Tower's
trust department surpassed $400 million in managed assets during the quarter.
The trust department currently manages 568 accounts and $407.4 million in
assets compared with 470 accounts and $334.8 million in assets a year ago, an
increase of 20.9 percent and 21.7 percent, respectively.
Non-interest expense for the second quarter of 2005 was $3.5 million, an
11.1 percent increase over the $3.1 million reported for the second quarter of
2004. Salaries, benefits and occupancy expense together rose 19.5 percent,
reflecting corporate growth and the Company's investment in 13 additional FTE
employees, an increase of 10.4 percent. Professional expenses returned to more
normalized levels; the $217.7 thousand reported represents a decline of
$109.6 thousand or 33.5 percent from the year-ago quarter. The efficiency
ratio was 65.22 percent for the second quarter of 2005, an improvement from
75.86 percent reported for the prior-year period.
Mr. Schenkel noted that Tower continues to maintain sound asset quality
without any significant additions to non-performing status this year. "We
already sold the properties that we took in foreclosure last quarter without
any gain or loss on the sale." Non-performing assets at June 30, 2005 were
$3.1 million, or 0.61 percent of total assets, compared with $3.7 million or
0.75 percent for the linked quarter and $1.6 million or 0.35 percent for the
year-ago quarter. Net charge-offs for the second quarter of 2005 were
$334 thousand, or 0.32 percent of average loans on an annualized basis,
compared with $464 thousand (0.46 percent of average loans) for the linked
quarter and $273 thousand (0.29 percent of average loans) for the prior-year
second quarter. Tower's allowance for loan losses was 1.38 percent of loans at
June 30, 2005.
Assets reached $507.5 million at June 30, 2005, a 7.2 percent increase
over the $473.6 million reported twelve months ago. Loans outstanding grew by
$47.6 million, or 12.5 percent, reaching $429.3 million at June 30, 2005.
Commercial loans (CRE plus C&I) account for $336.0 million or 78.3 percent of
Tower's loan portfolio. Since year-end 2004, commercial loans increased
6.8 percent (13.8 percent annualized). Deposits increased $29.5 million, or
7.4 percent, to $429.7 million; non-interest bearing deposits now comprise
15.0 percent of the deposit portfolio.
Shareholders' equity was $45.7 million at June 30, 2005, an increase of
10.8 percent from the $41.3 million reported for the year-ago quarter. The
Company continues its "well-capitalized" status; the total risk-based capital
ratio was 11.84 percent. Period-end shares outstanding totaled 4,007,686. "We
are pleased with our 2005 year-to-date performance and remain optimistic about
the remainder of the year," concluded Mr. Schenkel.
ABOUT THE COMPANY
Tower Financial Corporation is the bank holding company for Tower Bank &
Trust Company, a growing community bank that opened in February 1999. The only
publicly-held bank headquartered in Fort Wayne, Indiana, Tower provides a wide
variety of bank and trust services to businesses and consumers located in
Northeast Indiana through its five full-service banking centers in Fort Wayne
and one business development office in Angola, Indiana. Tower Financial
Corporation's common stock is listed on the Nasdaq National Market under the
symbol "TOFC." For further information, please visit Tower's web site
at http://www.TOFC.net.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements that are based on
management's beliefs, assumptions, current expectations, estimates and
projections about the financial services industry, the economy, and about the
Corporation and the Bank. These forward-looking statements are intended to be
covered by the safe-harbor provisions of the Private Securities Reform Act of
1995.
These statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to predict
with regard to timing, extent, likelihood and degree of occurrence. Actual
results and outcomes may differ materially from what may be expressed or
forecasted in the forward-looking statements. Future factors include changes
in interest rates and interest-rate relationships; demand for products and
services; the degree of competition by traditional and non-traditional
competitors; changes in banking regulation; changes in tax laws; changes in
prices, levies, and assessments; the impact of technological advances;
governmental and regulatory policy changes; the outcomes of contingencies,
trends in customer behavior and their ability to repay loans; changes in the
national and local economy; and other factors, including risk factors,
referred to from time to time in filings made by the Corporation with the
Securities and Exchange Commission and available via EDGAR. These are
representative of the future factors that could cause a difference between an
ultimate actual outcome and a preceding forward-looking statement. The
Corporation undertakes no obligation to update forward-looking statements,
whether as a result of new information, future events or otherwise.
Tower Financial Corporation
Consolidated Financial Highlights
Second Quarter 2005
(unaudited)
Quarterly
2nd Qtr 1st Qtr
($ in thousands except for share
data) 2005 2005
EARNINGS
Net interest income $4,304 4,033
Provision for loan loss $536 581
NonInterest income $1,001 907
NonInterest expense $3,460 3,246
Net income $842 727
Basic earnings per share $0.21 0.18
Diluted earnings per share $0.21 0.18
Average shares outstanding 4,005,824 4,003,156
Average diluted shares outstanding 4,073,011 4,070,758
PERFORMANCE RATIOS
Return on average assets * 0.69% 0.62%
Return on average common equity * 7.48% 6.61%
Net interest margin (fully-tax
equivalent) * 3.75% 3.63%
Efficiency ratio 65.22% 65.71%
CAPITAL
Average equity to average assets 9.26% 9.33%
Tier 1 leverage capital ratio 10.12% 10.03%
Tier 1 risk-based capital ratio 10.69% 10.87%
Total risk-based capital ratio 11.90% 12.09%
Book value per share $11.41 11.11
ASSET QUALITY
Net charge-offs $334 464
Net charge-offs to average loans * 0.32% 0.46%
Allowance for loan losses $5,927 5,725
Allowance for loan losses to total
loans 1.38% 1.38%
Nonperforming loans $2,687 2,564
Other real estate owned $400 1,095
Nonperforming loans to total loans 0.63% 0.62%
Nonperforming assets to total
assets 0.61% 0.75%
END OF PERIOD BALANCES
Total assets $507,519 487,833
Total earning assets $479,241 465,217
Total loans $429,331 414,423
Total deposits $429,678 399,896
Stockholders' equity $45,712 44,476
AVERAGE BALANCES
Total assets $487,429 477,739
Total earning assets $468,357 458,122
Total loans $418,564 404,794
Total deposits $410,019 392,351
Stockholders' equity $45,131 44,593
* annualized for quarterly data
Tower Financial Corporation
Consolidated Financial Highlights
Second Quarter 2005
(unaudited)
Quarterly
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
($ in thousands except for
share data) 2004 2004 2004 2004
EARNINGS
Net interest income 4,082 3,675 3,290 3,269
Provision for loan loss 895 655 310 500
NonInterest income 1,816 853 816 788
NonInterest expense 3,565 2,912 3,115 2,807
Net income 915 629 454 480
Basic earnings per share 0.23 0.16 0.12 0.12
Diluted earnings per share 0.23 0.16 0.11 0.12
Average shares outstanding 4,003,156 3,947,941 3,944,394 3,943,512
Average diluted shares
outstanding 4,064,054 4,025,947 4,017,018 4,044,039
PERFORMANCE RATIOS
Return on average assets * 0.77% 0.53% 0.40% 0.44%
Return on average common
equity * 8.39% 5.93% 4.39% 4.67%
Net interest margin (fully-
tax equivalent) * 3.65% 3.30% 3.06% 3.17%
Efficiency ratio 60.44% 64.31% 75.86% 69.19%
CAPITAL
Average equity to average
assets 9.17% 9.00% 9.16% 9.46%
Tier 1 leverage capital
ratio 9.87% 9.97% 9.99% 10.26%
Tier 1 risk-based capital
ratio 11.08% 11.18% 11.18% 11.31%
Total risk-based capital
ratio 12.29% 12.39% 12.39% 12.52%
Book value per share 10.99 10.81 10.46 10.55
ASSET QUALITY
Net charge-offs 1,088 259 273 391
Net charge-offs to average
loans * 1.08% 0.27% 0.29% 0.42%
Allowance for loan losses 5,608 5,707 5,181 5,368
Allowance for loan losses
to total loans 1.40% 1.44% 1.36% 1.40%
Nonperforming loans 2,257 4,490 1,637 2,117
Other real estate owned 430 400 - -
Nonperforming loans to
total loans 0.56% 1.13% 0.43% 0.55%
Nonperforming assets to
total assets 0.56% 1.02% 0.35% 0.47%
END OF PERIOD BALANCES
Total assets 481,117 477,489 473,616 446,054
Total earning assets 464,081 445,145 454,225 430,466
Total loans 400,510 395,883 381,690 382,941
Total deposits 386,380 401,003 400,212 370,953
Stockholders' equity 44,013 43,275 41,266 41,623
AVERAGE BALANCES
Total assets 471,607 467,142 454,100 437,385
Total earning assets 452,327 449,735 436,621 420,517
Total loans 399,546 387,269 381,613 377,936
Total deposits 396,066 393,480 380,577 361,113
Stockholders' equity 43,245 42,058 41,615 41,370
* annualized for quarterly data
Tower Financial Corporation
Consolidated Financial Highlights
Second Quarter 2005
(unaudited)
Year-To-Date
($ in thousands except for share
data) 2005 2004
EARNINGS
Net interest income 8,337 6,559
Provision for loan loss 1,117 810
NonInterest income 1,908 1,604
NonInterest expense 6,706 5,922
Net income 1,569 935
Basic earnings per share 0.39 0.24
Diluted earnings per share 0.39 0.23
Average shares outstanding 4,004,497 3,943,953
Average diluted shares outstanding 4,071,104 4,031,425
PERFORMANCE RATIOS
Return on average assets * 0.66% 0.42%
Return on average common equity * 7.05% 4.53%
Net interest margin (fully-tax
equivalent) * 3.69% 3.11%
Efficiency ratio 65.46% 72.55%
CAPITAL
Average equity to average assets 9.30% 9.31%
Tier 1 leverage capital ratio 10.12% 9.99%
Tier 1 risk-based capital ratio 10.69% 11.18%
Total risk-based capital ratio 11.90% 12.39%
Book value per share 11.41 10.46
ASSET QUALITY
Net charge-offs 798 664
Net charge-offs to average loans * 0.39% 0.35%
Allowance for loan losses 5,927 5,181
Allowance for loan losses to total
loans 1.38% 1.36%
Nonperforming loans 2,687 1,637
Other real estate owned 400 0
Nonperforming loans to total loans 0.63% 0.43%
Nonperforming assets to total
assets 0.61% 0.35%
END OF PERIOD BALANCES
Total assets 507,519 473,616
Total earning assets 479,241 454,225
Total loans 429,331 381,690
Total deposits 429,678 400,212
Stockholders' equity 45,712 41,266
AVERAGE BALANCES
Total assets 482,584 445,751
Total earning assets 463,239 428,570
Total loans 411,679 379,775
Total deposits 401,185 370,844
Stockholders' equity 44,862 41,502
* annualized for quarterly data
Tower Financial Corporation
Consolidated Statements of Operations
For the three and six months ended June 30, 2005 and 2004
(unaudited)
For the Three Months
Ended For the Six Months Ended
June 30 June 30
2005 2004 2005 2004
Interest income:
Loans, including fees $6,372,476 $4,494,231 $12,133,057 $8,937,882
Securities - taxable 231,258 243,623 478,548 429,984
Securities - tax exempt 134,632 124,807 269,361 214,089
Other interest income 122,003 41,979 203,787 71,907
Total interest income 6,860,369 4,904,640 13,084,753 9,653,862
Interest expense:
Deposits 2,293,840 1,356,259 4,157,443 2,587,479
Short-term borrowings - 485 289 4,131
FHLB advances 181,405 176,830 428,105 340,561
Trust preferred
securities 81,180 81,180 162,360 162,360
Total interest
expense 2,556,425 1,614,754 4,748,197 3,094,531
Net interest income 4,303,944 3,289,886 8,336,556 6,559,331
Provision for loan losses 536,000 310,000 1,117,000 810,000
Net interest income after
provision for loan losses 3,767,944 2,979,886 7,219,556 5,749,331
Noninterest income:
Trust and brokerage fees 538,442 411,501 1,038,583 818,333
Service charges 169,285 147,520 317,437 305,879
Loan broker fees 48,602 82,651 110,795 170,415
Gain on sale of
securities - 376 - 3,286
Other fees 244,513 173,940 440,950 306,509
Total noninterest
income 1,000,842 815,988 1,907,765 1,604,422
Noninterest expense:
Salaries and benefits 2,063,704 1,701,328 3,988,543 3,233,025
Occupancy and equipment 461,541 412,129 897,257 748,794
Marketing 153,211 111,891 309,743 300,541
Data processing 101,602 102,262 223,920 190,780
Loan and professional
costs 217,743 327,355 394,149 568,102
Office supplies and
postage 70,843 67,086 141,043 159,336
Courier service 83,464 78,670 162,696 149,847
Business Development 101,060 78,955 196,741 154,085
Other expense 206,885 235,532 391,755 417,489
Total noninterest
expense 3,460,053 3,115,208 6,705,847 5,921,999
Income before income
taxes 1,308,733 680,666 2,421,474 1,431,754
Income taxes expense 467,160 226,230 853,050 496,880
Net income $841,573 $454,436 $1,568,424 $934,874
Basic earnings per common
share $0.21 $0.12 $0.39 $0.24
Diluted earnings per
common share $0.21 $0.11 $0.39 $0.23
Average common shares
outstanding 4,005,824 3,944,394 4,004,497 3,943,953
Average common shares and
dilutive potential common
shares outstanding 4,073,011 4,017,018 4,071,104 4,031,425
Total Shares outstanding
at end of period 4,007,686 3,944,394 4,007,686 3,944,394
Tower Financial Corporation
Consolidated Balance Sheets
At June 30, 2005, December 31, 2004, and June 30, 2004
(unaudited) (unaudited)
June 30 December 31 June 30
2005 2004 2004
ASSETS
Cash and due from banks $16,103,495 $11,911,033 $14,148,278
Short-term investments and
interest-earning deposits 7,288,779 8,109,456 10,261,047
Federal funds sold 8,070,223 17,204,536 19,742,266
Total cash and cash
equivalents 31,462,497 37,225,025 44,151,591
Securities available for sale,
at fair value 31,130,188 35,024,966 40,169,535
FHLBI and FRB stock 3,421,300 3,232,500 2,361,700
Loans held for sale - - -
Loans 429,330,502 400,510,491 381,689,715
Allowance for loan losses (5,927,453) (5,607,992) (5,180,796)
Net loans 423,403,049 394,902,499 376,508,919
Premises and equipment, net 2,805,166 2,984,596 3,195,711
Accrued interest receivable 2,258,330 1,969,610 1,604,843
Other assets 13,038,142 5,777,805 5,623,444
Total assets $507,518,672 $481,117,001 $473,615,743
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $64,514,586 $57,800,311 $61,381,105
Interest-bearing 365,163,112 328,579,595 338,830,655
Total deposits 429,677,698 386,379,906 400,211,760
Short-term borrowings - 200,000 200,000
Federal Home Loan Bank advances 26,200,000 45,000,000 27,000,000
Junior subordinated debt 3,608,000 3,608,000 3,608,000
Accrued interest payable 665,315 559,213 446,734
Other liabilities 1,655,753 1,356,412 883,268
Total liabilities 461,806,766 437,103,531 432,349,762
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; issued and outstanding -
4,007,686 shares at June 30, 2005,
4,003,156 share at December 31, 2004,
and 3,944,394 shares at
June 30, 2004 38,003,894 37,952,860 37,347,861
Retained earnings 7,608,579 6,040,155 4,495,718
Accumulated other comprehensive
income (loss) , net of tax
of $55,931 at June 30, 2005,
$13,637 at December 31, 2004,
and $(385,065) at June 30, 2004 99,433 20,455 (577,598)
Total stockholders' equity 45,711,906 44,013,470 41,265,981
Total liabilities and
stockholders' equity $507,518,672 $481,117,001 $473,615,743
SOURCE Tower Financial Corporation
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Related links:
http://www.tofc.net
CONTACT:
Michael Cahill, Chief Financial Officer,
+1-260-427-7013, or mike.cahill@towerbank.net , or Trois Hart,
Vice President, Marketing, +1-260-427-7053, or
trois.hart@towerbank.net , both of Tower Financial Corporation
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