2Q 2011 Diluted GAAP Net Income Per Share
of $0.29 2Q 2011 Diluted Operating Income Per
Share of $0.33 Net Interest Margin Remains Strong
at 4.23% Board of Directors Declares Cash Dividend
Payable August 31, 2011 HIGHLIGHTS FROM THE SECOND
QUARTER OF 2011
- GAAP Net Income and Operating Income Growth:
GAAP net income for the second quarter of 2011 equaled $3.5 million
or $0.29 per diluted share in comparison to $218 thousand or $0.02
per diluted share for the first quarter of 2011. Operating
(Non-GAAP) income totaled $4.1 million or $0.33 per diluted share
for the second quarter of 2011 in comparison to $1.1 million or
$0.10 per diluted share for the first quarter of 2011.
- Net Interest Margin Growth: The net
interest margin totaled 4.23% for the second quarter of 2011
compared to 4.21% for the first quarter of 2011 and 3.73% for the
second quarter of 2010.
- Decrease in Non-Interest
Expense: Non-interest expense decreased $4.8 million
or 17.5% to $22.8 million for the second quarter of 2011 compared
to $27.6 million for the first quarter of 2011.
- Continued Capital Strength: The ratios at
June 30, 2011 of Total Capital to Risk-weighted Assets and Tier 1
Capital to Risk-weighted Assets continue to demonstrate the
Company's capital strength, equaling 13.53% and 12.17%,
respectively. The ratio of tangible common equity to tangible
assets (non-GAAP) equaled 9.27% at June 30, 2011.
|
|
Note Reconciliations of GAAP to
Non-GAAP measures can be found in the tables located at the end of
this release. |
Tower Bancorp, Inc. (Nasdaq:TOBC) (the "Company"), the parent
company of Graystone Tower Bank (the "Bank"), reported net income
available to shareholders of $3.5 million or $0.29 per diluted
share for the second quarter of 2011, an increase of $2.3 million
or $0.12 per diluted share over the same period in 2010 and an
increase of $3.3 million or $0.27 per diluted share when compared
to the first quarter of 2011. Net income for the second
quarter of 2011 was negatively impacted by a net loss of
approximately $1.2 million incurred by the Residential Mortgage
Banking segment, which completed the wind down of the mortgage
banking operations acquired as part of the First Chester County
Corporation merger ("First Chester Merger"), and after-tax merger
expenses related to the pending merger with Susquehanna Bancshares,
Inc. ("Susquehanna") of approximately $350 thousand. Included
in results of the Residential Mortgage Banking segment are
after-tax restructuring charges of $269 thousand incurred in
relation to the wind down of the mortgage banking operations
acquired as part of the First Chester Merger.
Operating (non-GAAP) income, that is net income recognized in
accordance with Generally Accepted Accounting Principles ("GAAP")
adjusted for merger-related expenses, restructuring charges,
and nonrecurring transactions, totaled $4.1 million or $0.33 per
diluted share for the quarter ended June 30, 2011, an increase of
$2.2 million or $0.06 per diluted share when compared to the
quarter ended June 30, 2010. Operating (non-GAAP) income for
the second quarter of 2011 increased $3.0 million or $0.23 per
diluted share when compared to the first quarter of 2011.
Board of Directors Declares $0.14 per Share Dividend,
Payable on August 31, 2011
Andrew Samuel, Chairman and CEO, also reported that the Board of
Directors declared a quarterly cash dividend of $0.14 per share,
payable on August 31, 2011 to shareholders of record at the close
of business on August 15, 2011, commenting, "After careful
consideration, the Board of Directors determined that this dividend
was in the best interests of the Company and our shareholders given
the existing economic, market and industry climate."
Review of Balance Sheet, Credit Quality and Capital
Position
Total assets at June 30, 2011 totaled $2.5 billion, representing
a decrease of $89.4 million or 3.4% from March 31, 2011. Total
gross loans held for investment remained relatively stable,
decreasing $8.7 million or 0.42% from March 31, 2011 to June 30,
2011. The Company has experienced lower levels of loan originations
than anticipated given the continued uncertain economic conditions
and increased competition for high quality loans in the Company's
markets. Loans held for sale, representing agency-conforming
residential mortgages originated for sale, decreased $24.9 million
from March 31, 2011 to $15.7 million at June 30, 2011. This
decrease is the direct result of the wind-down efforts related to
the residential mortgage banking operations acquired through the
First Chester Merger coupled with an overall decrease in
residential mortgage loan demand due to the soft housing
market.
The investment portfolio increased $1.2 million or 0.56% from
March 31, 2011 to $209.2 million at June 30, 2011, which represents
approximately 8.28% of the total assets. The investment
portfolio has grown $106.5 million or 103.7% from December 31, 2010
to June 30, 2011. Following the First Chester Merger in the fourth
quarter of 2010, the Company liquidated a majority of the
investment holdings acquired from First Chester which were not
consistent with the credit quality criteria and investment
strategies of the Company. The increase during the first six months
of 2011 is the direct result of completing the investment portfolio
restructuring following the First Chester Merger. Consistent with
the Company's historic investment strategy, the investment
portfolio consists mostly of agency CMO's, Agency mortgage backed
securities, agency securities, and highly rated general obligation
municipal bonds. The investment portfolio contains unrealized
net gains of $3.3 million as of June 30, 2011.
Total deposits decreased $80.7 million or 3.6% during the second
quarter of 2011 to $2.1 billion. This decrease is mainly
attributable to the strategic run-off of money market deposits and
time deposits of $74.2 million and $21.2 million, respectively.
These decreases were partially offset by $13.2 million in growth of
interest checking accounts, which is the result of the Company's
strategy on generating low cost deposit accounts. The decreases in
money market and time deposits were the result of management's
focus on lowering the cost of deposits through decreases in money
market interest rates and allowing higher cost time deposits to
mature without renewal. As of June 30, 2011, total
non-reciprocal brokered deposits represented 6.6% of total
deposits. The Company's deposit mix continued to be weighted
heavily in lower cost demand, savings and money market accounts,
which comprised 61.7% and 62.1% of total deposits at June 30, 2011
and March 31, 2011, respectively. The average cost of deposits
increased by 8 basis points from 0.80% for the quarter ended March
31, 2011 to 0.88% for the quarter ended June 30, 2011. At June
30, 2011, the Company had a weighted average cost of deposits of
1.01% exclusive of amortization from purchase accounting
adjustments compared to 1.03% at March 31, 2011.
The provision for loan losses was $1.5 million during the second
quarter of 2011 compared to $1.7 million for the first quarter of
2011 and $1.9 million for the second quarter of 2010. The
allowance for loan losses at June 30, 2011 of $11.9 million is a
decrease of $3.2 million from the balance at March 31,
2011. The change in the allowance for loan losses includes an
increase due to the current quarter provision for loan losses of
$1.5 million and a decrease of $4.7 million related to loan
charge-offs. The largest portion of the loan charge-offs is
attributed to a $4.3 million charge related to the estimated
uncollectible portion of a $5.0 million commercial credit, of which
$2.5 million was reserved as of March 31, 2011. As previously
disclosed regarding this credit, the borrower had agreed to
refinance the credit with additional collateral and cash flows from
a newly formed entity, which agreement was contained within a plan
of reorganization filed with the bankruptcy court in May 2011.
However, the lead bank in this agreement withdrew from the
financing arrangement in July 2011. Although the Company is
continuing to negotiate with the borrower and other lenders to
arrange for replacement secured financing, based upon its
evaluation of the status of the bankruptcy proceedings and
negotiations, the Company believed that it was appropriate to
charge off $4.3 million related to this credit during the second
quarter. The annualized rate of net charge-offs to average loans
for the second quarter of 2011 and for the six months ended June
30, 2011 were 0.93%, and 0.51%, respectively.
During the second quarter of 2011, non-performing assets
decreased $1.7 million in comparison to the first quarter of
2011. The main cause of this change is the $4.7 million
charge-off of non-performing loans during the quarter partially
offset by a $2.4 million increase in loans greater than ninety days
past due and continuing to accrue interest. Acquired loans deemed
to be impaired at the time of purchase in accordance with
Accounting Standard Codification 310-30-30, previously known as
Statement of Position (SOP) 03-3, "Accounting for Certain Loans
Acquired in a Transfer," have been recorded at their fair value
based on anticipated future cash flows at the time of acquisition
and are considered to be performing loans as the Company expects to
fully collect the new carrying value (i.e. fair value) of the
loans. For these loans acquired through the First Chester Merger,
the Company recorded a reduction of $29.9 million to their carrying
value to record them at fair value at the time of acquisition. As
such, these loans have been excluded from non-performing assets for
all periods discussed. Excluding non-accrual loans, total
delinquencies equaled $22.5 million at June 30, 2011, a decrease of
$4.0 million and $9.8 million when compared to March 31, 2011 and
December 31, 2010, respectively.
The ratio of non-performing assets to total assets at June 30,
2011 was 1.64% in comparison to 1.65% at March 31, 2011.
Although the second quarter allowance for loan loss to non
performing loans of 31.38% is lower than the industry average,
nearly half of the loan portfolio has been marked to market through
purchase accounting within the past two years in connection with
the First National Bank of Greencastle and First National Bank of
Chester County acquisitions. When including general credit
fair value adjustments recorded on the loan portfolio and the
allowance for loan loss, the adjusted (non-GAAP) allowance for loan
losses to non-performing loans is 78.51% at June 30,
2011.
GAAP requires that expected credit losses associated with loans
obtained in an acquisition be reflected at fair value as of each
respective acquisition date and prohibits the carryover of the
acquired entity's allowance for loan losses. Accordingly, the
Company's management believes that presentation of the adjusted
(non-GAAP) allowance for loan losses, consisting of the allowance
for loan losses plus the credit fair value adjustment on loans
purchased in merger transactions, is useful for investors to
understand the complete allowance that is recorded as a
representation of future expected losses over the Company's loan
portfolio. The details of this calculation and reconciliation
of GAAP and non-GAAP measures are provided in the Selected
Financial Data tables found later in this release.
Income Statement Review
Net income for the second quarter of 2011 equaled $3.5 million
or $0.29 per diluted share, which is an increase of $2.3 million or
$0.12 per diluted share as compared to the second quarter of
2010. When compared to the second quarter of 2010, operating
(non-GAAP) income, representing net income adjusted for merger
expenses, restructuring charges and nonrecurring transactions,
increased $2.2 million or $0.06 per diluted share for the second
quarter 2011 to $4.1 million or $0.33 per diluted
share. Operating (non-GAAP) income excludes $350 thousand in
after-tax merger expenses and $269 thousand in after-tax
restructuring charges for the second quarter of 2011.
When compared to the first quarter of 2011, net income increased
$3.3 million or $0.27 per diluted share to $3.5 million or $0.29
per diluted share for the second quarter of 2011. Operating
(non-GAAP) income, representing net income adjusted for merger
expenses, restructuring charges and nonrecurring transactions,
increased $3.0 million or $0.23 per diluted share for the second
quarter 2011 to $4.1 million or $0.33 per diluted share when
compared to the first quarter of 2011.
Net interest income for the second quarter of 2011 increased
$11.4 million or 88.6% from $12.9 million for the second quarter of
2010 to $24.3 million for the second quarter of 2011. When
compared to the second quarter of 2010, the net interest margin
increased 50 basis points from 3.73% to 4.23%. Average investments
increased $33.6 million and average loans increased $888.9 million,
when compared to the second quarter of 2010, while the average rate
received on interest earning assets decreased by 5 basis
points. The average balance of interest-bearing liabilities
for the second quarter of 2011 increased by $720.3 million but the
effect on interest expense was partially offset by the reduction in
the average rate paid by 55 basis points compared to the second
quarter of 2010. Exclusive of the amortization of purchase
accounting fair value adjustments, the second quarter 2011 yield on
interest earning assets would have been 5.07%, the cost of interest
bearing liabilities would have been 1.40%, and net interest margin
would have been 3.86%. Net interest income decreased $70 thousand
in the second quarter of 2011 when compared to the first quarter of
2011. The net interest margin for the second quarter of 2011
increased 2 basis points over first quarter of 2011.
Noninterest income was $4.9 million for the second quarter of
2011, which represents an increase of $2.5 million or 102.8% over
the second quarter of 2010. These increases are mostly the
result of additional revenue streams acquired through the First
Chester Merger, which provided significant increases to gains on
service charges on deposit accounts, sale of mortgage loans and
fiduciary fees and brokerage commissions. Noninterest income
decreased $454 thousand from $5.3 million to $4.9 million from the
first quarter of 2011 to the second quarter of 2011. The
decrease is mostly the result of the continued wind down and
restructuring of the mortgage operations acquired from the First
Chester Merger, which contributed $340 thousand more in gain on
sale of mortgage loans in the first quarter of 2011 compared to the
second quarter of 2011.
When comparing the second quarter of 2011 to the first quarter
of 2011, non-interest expenses decreased $4.8 million or 17.5%, as
the Company realized cost savings related to mortgage banking
segment restructuring and further incremental savings resulting
from the First Chester Merger. Noninterest expense increased
$11.0 million or 94.4% to $22.7 million for the second quarter of
2011 from $11.7 million for the second quarter of 2010. The Company
experienced increases in all categories of non-interest expense,
which are directly related to the First Chester Merger and expenses
related to operating a significantly larger organization in 2011 as
compared to 2010.
Income tax expense for the second quarter of 2011 was $1.5
million, which resulted in an effective tax rate of 29.9%, which is
a one basis point decrease from the same period of 2010.
Residential Mortgage Segment
As previously disclosed, the Company had initiated a plan during
the fourth quarter of 2010 to wind down and restructure the
mortgage operations acquired in the First Chester Merger, which
generated residential mortgage loans for the purpose of selling
those loans to the secondary market. The Company
completed the wind down and restructuring during the
second quarter of 2011. For the second quarter of 2011, the
Residential Mortgage Segment incurred a net loss of $1.2 million
representing a $2.0 million decrease in the loss incurred when
compared to the net loss of $3.2 million for the first quarter of
2011. As a result of the wind down and restructuring
activities, the Segment incurred noninterest expense for the second
quarter of 2011 of $3.1 million, a $3.4 million decrease as
compared to the first quarter of 2011. The performance of this
operating segment is subject to volatility in earnings due to
fluctuations in the demand for residential mortgage loans. While
the Company anticipates the financial performance of the
Residential Mortgage Segment to improve, such improvements are
limited by the current economic difficulties and could be further
limited by legislative and regulatory developments affecting the
mortgage industry.
Merger with Susquehanna Bancshares, Inc.
On June 20, 2011, the Company announced the signing of a
definitive agreement with Susquehanna Bancshares, Inc.
("Susquehanna") pursuant to which the Company will be acquired in a
stock and cash transaction valued at approximately $343.0 million
at the time of announcement. Under the terms of the merger
agreement, the Company's shareholders will have the option of
receiving either 3.4696 shares of Susquehanna common stock or
$28.00 in cash for each share of Tower common stock, with $88.0
million of the total consideration being paid in cash. The
final transaction value will be determined at the closing of the
acquisition based on the stock price of Susquehanna at that time.
The merger is subject to shareholder and regulatory approvals and
other customary closing conditions.
Andrew Samuel, Chairman and CEO of the Company stated, "We are
excited about the upcoming merger with Susquehanna, which we
anticipate closing in the first quarter of 2012. We believe
that the combined organization will provide strength, size, and
stability that will benefit all of our constituencies."
Supplemental Information – Explanation of Non-GAAP
Financial Measures
This press release contains financial information determined by
methods other than in accordance with GAAP. These measures include
tangible assets, tangible common equity, operating income and
performance and capital ratios derived from the foregoing. Tangible
assets and tangible common equity are derived by reducing the
balance of assets and equity, respectively, by the amount of GAAP
reported goodwill and other intangible assets. Operating income is
calculated by adjusting net income available to common shareholders
for merger-related expenses and other nonrecurring transactions
that occurred during the period presented, since such expenses are
considered by management to be "non-operating" in nature. The
Company calculates the return on average tangible equity by
excluding the balance of intangible assets and their related
amortization expense from the calculation of return on average
equity. The Company believes the presentation of these non-GAAP
financial measures provide useful supplemental information that is
essential to an investor's proper understanding of the operating
results of the Company's core businesses. The Company's management
uses these non-GAAP financial measures in their analysis of the
Company's performance. These non-GAAP disclosures should not
be viewed as a substitute for financial measures determined in
accordance with GAAP, nor are they necessarily comparable to
non-GAAP performance measures that may be presented by other
companies. Reconciliations of GAAP to non-GAAP measures are
included as tables at the end of this release.
About Tower Bancorp, Inc.
Tower Bancorp, Inc. is the parent company of Graystone Tower
Bank, a full-service community bank operating 47 branch offices in
central and southeastern Pennsylvania and Maryland through three
divisions, Graystone Bank, Tower Bank, and 1N Bank. With total
assets of approximately $2.5 billion, Tower Bancorp's unparalleled
competitive advantage is its employees and a strong corporate
culture paired with a clear vision that provides customers with
uncompromising service and individualized solutions to every
financial need. Tower Bancorp's common stock is listed on the
NASDAQ Global Select Market under the symbol "TOBC." More
information about Tower Bancorp and its divisions can be found on
the internet at www.yourtowerbank.com, www.graystonebank.com,
1nbank.com and www.towerbancorp.com.
The Tower Bancorp, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7686
Safe Harbor for Forward-Looking Statements
This document contains "forward-looking" statements as defined
in the Private Securities Litigation Reform Act of 1995, which are
based on the Company's current expectations, estimates and
projections about future events. This includes statements regarding
the future performance of Susquehanna, the timing of the merger
transaction, the business plans and integration efforts once the
transaction is complete, and the impact of the transaction and
the anticipated closing of Susquehanna's acquisition of Abington
Bancorp, Inc., including specifically the impact of the Tower
transaction, on Susquehanna's earnings, market share and capital
position. These statements are not historical facts or guarantees
of future performance, events or results. Such statements involve
potential risks and uncertainties, such as whether the merger will
be approved by the shareholders of Susquehanna and the Company or
by regulatory authorities, whether each of the other conditions to
closing set forth in the merger agreement will be met,
Susquehanna's ability to integrate the Company as planned and the
general effects of financial, economic, regulatory and political
conditions affecting the banking and financial services industries.
Accordingly, actual results may differ materially. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. For additional factors that may affect
future results, please see filings made by Susquehanna and the
Company with the Securities and Exchange Commission ("SEC"),
including their Annual Reports on Form 10-K for the year ended
December 31, 2010, and Quarterly Reports on Form 10-Q for the
quarter ended March 31, 2011.
Additional Information about the Merger and Where to
Find It
In connection with the proposed merger of the Company and
Susquehanna (the "Merger"), Susquehanna will file a registration
statement on Form S-4 with the SEC. The registration statement will
include the joint proxy statement for Susquehanna and the Company,
which will also constitute a prospectus of Susquehanna. This joint
proxy statement/prospectus will be mailed to the shareholders of
Susquehanna and the Company. Investors and security holders of
Susquehanna and the Company are urged to read the joint proxy
statement/prospectus and the other relevant materials when they
become available because they will contain important information
about the Company, Susquehanna and the Merger. The joint proxy
statement/prospectus and other relevant materials (when they become
available), and any other documents filed by Susquehanna or the
Company with the SEC, may be obtained free of charge at the SEC's
Web site at http://www.sec.gov. In addition, investors and security
holders may obtain free copies of the documents filed with the SEC
by the Company by contacting Brent Smith, Tower Bancorp, Inc., 112
Market Street, Harrisburg, PA 17101, telephone: 717-724-4666 or
from Tower's web site at http://www.towerbancorp.com. Investors and
security holders may obtain free copies of the documents filed with
the SEC by Susquehanna by contacting Abram G. Koser, Susquehanna
Bancshares, Inc., 26 North Cedar Street, Lititz, PA 17543,
telephone: 717-626-4721 or from Susquehanna's web site at
http://www.susquehanna.net.
Susquehanna, the Company and their respective directors,
executive officers and certain other members of management and
employees may be deemed "participants" in the solicitation of
proxies from shareholders of Susquehanna and the Company in favor
of the Merger. Information regarding the persons who may, under the
rules of the SEC, be considered participants in the solicitation of
the shareholders of Susquehanna and the Company in connection with
the proposed Merger will be set forth in the joint proxy
statement/prospectus when it is filed with the SEC. You can find
information about the executive officers and directors of
Susquehanna in its Annual Report on Form 10-K for the year ended
December 31, 2010 and in its joint proxy statement/prospectus
filed with the SEC on March 18, 2011. You can find information
about the Company's executive officers and directors in its Annual
Report on Form 10-K for the year ended December 31, 2010 and
in its definitive proxy statement filed with the SEC on
April 8, 2011.
Investors and security holders are urged to read the joint proxy
statement/prospectus and the other relevant materials when they
become available before making any voting or investment decision
with respect to the Merger.
Selected Financial Highlights
The financial information contained on the following pages
provides more detail on the Company's performance for the
quarter-ended and six months ended June 30, 2011 as compared to the
quarter-ended March 31, 2011, and the quarter-ended and six months
ended June 30, 2010. Additionally, the following pages provide
detail on the Company's financial condition as of June 30, 2011 as
compared to December 31, 2010. Persons seeking additional
information should refer to the Company's periodic reports as filed
with the Securities and Exchange Commission (SEC).
|
Tower Bancorp, Inc. and
Subsidiary |
Consolidated Balance
Sheets |
June 30, 2011, March
31, 2011, December 31, 2010 and June 30, 2010 |
(Amounts in thousands,
except share data) |
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
Assets |
(unaudited) |
(unaudited) |
|
(unaudited) |
Cash and due from banks |
$ 77,734 |
$ 111,326 |
$ 219,741 |
$ 57,124 |
Federal funds sold |
17,738 |
37,038 |
28,738 |
14,303 |
Cash and cash equivalents |
95,472 |
148,364 |
248,479 |
71,427 |
Securities available for sale |
209,209 |
208,054 |
102,695 |
190,895 |
Restricted investments |
13,283 |
13,971 |
14,696 |
6,254 |
Loans held for sale |
15,664 |
40,565 |
147,281 |
14,725 |
Loans, net of allowance for loan losses
of $11,869, $15,116, $14,053 and $11,619 |
2,027,998 |
2,033,456 |
2,058,191 |
1,204,716 |
Premises and equipment, net |
54,235 |
55,753 |
56,388 |
29,163 |
Accrued interest receivable |
7,150 |
7,346 |
7,856 |
5,320 |
Deferred tax asset, net |
15,401 |
20,283 |
19,526 |
1,128 |
Bank owned life insurance |
40,466 |
40,074 |
39,670 |
37,340 |
Goodwill |
17,996 |
18,041 |
16,750 |
11,935 |
Other intangible assets, net |
6,697 |
7,060 |
7,493 |
3,031 |
Other real estate owned |
3,520 |
3,477 |
4,647 |
799 |
Other assets |
19,565 |
19,570 |
23,617 |
11,346 |
Total assets |
$ 2,526,656 |
$ 2,616,014 |
$ 2,747,289 |
$ 1,588,079 |
|
|
|
|
|
Liabilities and equity |
|
|
|
|
Liabilities |
|
|
|
|
Deposits: |
|
|
|
|
Non-interest bearing |
$ 304,541 |
$ 301,042 |
$ 301,210 |
$ 120,206 |
Interest bearing |
1,842,659 |
1,926,887 |
1,998,688 |
1,202,136 |
Total deposits |
2,147,200 |
2,227,929 |
2,299,898 |
1,322,342 |
Securities sold under agreements to
repurchase |
7,161 |
9,728 |
6,605 |
5,055 |
Short-term borrowings |
43 |
5,041 |
55,039 |
10,285 |
Long-term debt |
87,856 |
87,816 |
87,800 |
72,476 |
Accrued interest payable |
1,713 |
1,761 |
1,950 |
1,083 |
Other liabilities |
25,633 |
28,952 |
38,111 |
11,475 |
Total liabilities |
2,269,606 |
2,361,227 |
2,489,403 |
1,422,716 |
Equity |
|
|
|
|
Common stock, no par value; 50,000,000
shares authorized; 12,110,545 issued and 12,007,187 outstanding at
June 30, 2011, 12,090,859 issued and 11,987,501 outstanding at
March 31, 2011, 12,074,757 issued and 11,971,399 outstanding at
December 31, 2010 and 7,243,585 issued and 7,140,227 outstanding at
June 30, 2010. |
-- |
-- |
-- |
-- |
Additional paid-in capital |
272,454 |
271,751 |
271,350 |
172,925 |
Accumulated deficit |
(13,852) |
(14,003) |
(10,868) |
(4,934) |
Accumulated other comprehensive
income |
2,155 |
291 |
251 |
1,445 |
Less: cost of treasury stock, 103,358 at
June 30, 2011, March 31, 2011, December 31, 2010, and June 30,
2010 |
(4,093) |
(4,093) |
(4,093) |
(4,093) |
Total stockholders'
equity |
256,664 |
253,946 |
256,640 |
165,343 |
Noncontrolling interests |
386 |
841 |
1,246 |
20 |
Total equity |
257,050 |
254,787 |
257,886 |
165,363 |
Total liabilities and
equity |
$ 2,526,656 |
$ 2,616,014 |
$ 2,747,289 |
$ 1,588,079 |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Consolidated Statements
of Operations |
Three Months Ended June
30, 2011, March 31, 2011 and June 30, 2010 and Six Months Ended
June 30, 2011 and 2010 |
(Amounts in thousands,
except share data) |
|
|
|
|
|
|
|
For the Three
Months Ended |
For the Six
Months Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
Interest income |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
Loans, including fees |
$ 28,979 |
$ 29,199 |
$ 17,274 |
$ 58,178 |
$ 33,780 |
Securities |
1,389 |
973 |
1,167 |
2,362 |
2,203 |
Federal funds sold and other |
41 |
97 |
41 |
138 |
74 |
Total interest
income |
30,409 |
30,269 |
18,482 |
60,678 |
36,057 |
Interest expense |
|
|
|
|
|
Deposits |
4,800 |
4,516 |
4,544 |
9,316 |
9,153 |
Short-term borrowings |
65 |
189 |
212 |
254 |
305 |
Long-term debt |
1,210 |
1,160 |
823 |
2,370 |
1,647 |
Total interest
expense |
6,075 |
5,865 |
5,579 |
11,940 |
11,105 |
Net interest income |
24,334 |
24,404 |
12,903 |
48,738 |
24,952 |
Provision for loan
losses |
1,500 |
1,650 |
1,900 |
3,150 |
3,350 |
Net interest income after
provision for loan losses |
22,834 |
22,754 |
11,003 |
45,588 |
21,602 |
Noninterest income |
|
|
|
|
|
Service charges on deposit accounts |
1,128 |
1,109 |
805 |
2,237 |
1,545 |
Fiduciary fees and brokerage
commissions |
1,066 |
897 |
101 |
1,963 |
138 |
Other service charges, commissions and
fees |
950 |
904 |
581 |
1,854 |
1,070 |
Gain on sale of mortgage loans originated
for sale |
1,128 |
1,468 |
321 |
2,596 |
594 |
Impairment losses on securities available
for sale |
(63) |
-- |
(68) |
(63) |
(68) |
Income from bank owned life
insurance |
387 |
409 |
442 |
796 |
734 |
Other income |
262 |
525 |
214 |
787 |
358 |
Total noninterest
income |
4,858 |
5,312 |
2,396 |
10,170 |
4,371 |
Noninterest expenses |
|
|
|
|
|
Salaries and employee benefits |
11,297 |
13,110 |
5,315 |
24,407 |
10,385 |
Occupancy and equipment |
3,952 |
4,370 |
1,735 |
8,322 |
3,431 |
Amortization of intangible assets |
344 |
406 |
159 |
750 |
336 |
FDIC insurance premiums |
764 |
894 |
538 |
1,658 |
936 |
Advertising and promotion |
697 |
565 |
374 |
1,262 |
509 |
Data processing |
1,096 |
1,155 |
643 |
2,251 |
1,154 |
Communication |
364 |
715 |
295 |
1,079 |
493 |
Professional service fees |
961 |
1,201 |
371 |
2,162 |
812 |
Impairment on fixed assets |
-- |
-- |
920 |
-- |
920 |
Other operating expenses |
2,332 |
3,757 |
1,284 |
6,089 |
2,352 |
Restructuring charges |
414 |
1,160 |
-- |
1,574 |
-- |
Merger related expenses |
538 |
247 |
76 |
785 |
187 |
Total noninterest
expenses |
22,759 |
27,580 |
11,710 |
50,339 |
21,515 |
Income before income
taxes |
4,933 |
486 |
1,689 |
5,419 |
4,458 |
Income tax expense |
1,476 |
146 |
508 |
1,622 |
1,372 |
Income |
3,457 |
340 |
1,181 |
3,797 |
3,086 |
Less: income from noncontrolling
interest |
(53) |
122 |
4 |
69 |
4 |
Net income |
$ 3,510 |
$ 218 |
$ 1,177 |
$ 3,728 |
$ 3,082 |
|
|
|
|
|
|
Per share data |
|
|
|
|
|
Net income per shares |
|
|
|
|
|
Basic |
$ 0.29 |
$ 0.02 |
$ 0.17 |
$ 0.31 |
$ 0.43 |
Diluted |
$ 0.29 |
$ 0.02 |
$ 0.17 |
$ 0.31 |
$ 0.43 |
Dividends declared |
$ 0.28 |
$ 0.28 |
$ 0.28 |
$ 0.56 |
$ 0.56 |
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
Basic |
11,996,283 |
11,975,795 |
7,133,681 |
11,986,039 |
7,129,491 |
Diluted |
11,999,772 |
11,980,802 |
7,137,256 |
11,990,287 |
7,133,819 |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Yields on Average
Interest-Earning Assets and Interest-Bearing
Liabilities |
Three months ended June
30, 2011 and 2010 |
(Amounts in thousands,
except for rate data) |
|
|
|
|
|
|
|
|
For the Three
Months Ended June 30, |
|
2011 |
2010 |
|
Average |
|
Average |
Average |
|
Average |
|
Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
|
|
Interest-earning assets: |
|
|
|
|
|
|
Federal funds sold and other (3) |
$ 14,444 |
$ 11 |
0.31% |
$ 18,738 |
$ 41 |
0.88% |
Investment securities (1) |
223,984 |
1,480 |
2.65% |
190,417 |
1,219 |
2.57% |
Loans |
2,072,405 |
28,979 |
5.61% |
1,183,489 |
17,274 |
5.85% |
Total interest-earning assets |
2,310,833 |
30,470 |
5.29% |
1,392,644 |
18,534 |
5.34% |
Other assets |
257,706 |
|
|
159,519 |
|
|
Total assets |
$ 2,568,539 |
|
|
$ 1,552,163 |
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Interest-bearing non-maturity deposits |
$ 1,030,828 |
1,460 |
0.57% |
$ 753,088 |
2,212 |
1.18% |
Time deposits |
852,261 |
3,340 |
1.57% |
418,126 |
2,332 |
2.24% |
Borrowings |
96,519 |
1,275 |
5.30% |
88,103 |
1,035 |
4.71% |
Total interest-bearing liabilities |
1,979,608 |
6,075 |
1.23% |
1,259,317 |
5,579 |
1.78% |
Demand deposits |
307,705 |
|
|
114,608 |
|
|
Other liabilities |
25,640 |
|
|
12,979 |
|
|
Equity |
255,586 |
|
|
165,259 |
|
|
Total liabilities and equity |
$ 2,568,539 |
|
|
$ 1,552,163 |
|
|
Net interest spread |
|
|
4.06% |
|
|
3.56% |
Net interest income and interest rate margin
FTE |
|
24,395 |
4.23% |
|
12,955 |
3.73% |
Tax equivalent adjustment |
|
(91) |
|
|
(52) |
|
Net interest income |
|
24,304 |
|
|
12,903 |
|
Ratio of average interest-earning assets to
average interest-bearing liabilities |
116.7% |
|
|
110.6% |
|
|
|
|
|
|
|
|
|
(1) The average yields for
investment securities available for sale are reported on a fully
taxable-equivalent basis at a rate of 35% for 2011 and 34% for
2010. |
(2) Average loan balances include
non-accrual loans. |
(3) Amounts exclude cash balances
held at the Federal Reserve and any interest earned thereon. |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Yields on Average
Interest-Earning Assets and Interest-Bearing
Liabilities |
For the Six Months
Ended June 30, 2011 and 2010 |
(Amounts in thousands,
except for rate data) |
|
|
|
|
|
|
|
|
For the Six
Months Ended June 30, |
|
2011 |
2010 |
|
Average |
|
Average |
Average |
|
Average |
|
Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
|
|
Interest-earning assets: |
|
|
|
|
|
|
Federal funds sold and other (3) |
$ 20,691 |
$ 30 |
0.29% |
$ 21,641 |
$ 74 |
0.69% |
Investment securities (1) |
194,137 |
2,533 |
2.63% |
183,806 |
2,287 |
2.51% |
Loans |
2,114,581 |
58,178 |
5.55% |
1,167,322 |
33,780 |
5.84% |
Total interest-earning assets |
2,329,409 |
60,741 |
5.26% |
1,372,769 |
36,141 |
5.31% |
Other assets |
302,413 |
|
|
156,799 |
|
|
Total assets |
$ 2,631,822 |
|
|
$ 1,529,568 |
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Interest-bearing non-maturity deposits |
$ 1,061,841 |
2,939 |
0.56% |
$ 725,658 |
4,332 |
1.20% |
Time deposits |
853,872 |
6,377 |
1.51% |
426,857 |
4,821 |
2.28% |
Borrowings |
103,491 |
2,624 |
5.11% |
85,603 |
1,952 |
4.60% |
Total interest-bearing liabilities |
2,019,204 |
11,940 |
1.19% |
1,238,118 |
11,105 |
1.81% |
Demand deposits |
318,960 |
|
|
113,297 |
|
|
Other liabilities |
38,392 |
|
|
13,492 |
|
|
Equity |
255,266 |
|
|
164,661 |
|
|
Total liabilities and equity |
$ 2,631,822 |
|
|
$ 1,529,568 |
|
|
Net interest spread |
|
|
4.07% |
|
|
3.50% |
Net interest income and interest rate margin
FTE |
|
48,801 |
4.22% |
|
$ 25,036 |
3.68% |
Tax equivalent adjustment |
|
(171) |
|
|
(84) |
|
Net interest income |
|
$ 48,630 |
|
|
$ 24,952 |
|
Ratio of average interest-earning assets to
average interest-bearing liabilities |
115.4% |
|
|
110.9% |
|
|
|
|
|
|
|
|
|
(1) The average yields for
investment securities available for sale are reported on a fully
taxable-equivalent basis at a rate of 35% for 2011 and 34% for
2010. |
(2) Average loan balances include
non-accrual loans. |
(3) Amounts exclude cash balances
held at the Federal Reserve and any interest earned thereon. |
|
Tower Bancorp, Inc. and
Subsidiary |
Selected Financial
Information |
(Dollars in thousands,
except share data and ratios) |
(Unaudited) |
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
|
2011 |
2011 |
2010 |
2010 |
Selected Balance Sheet
Data: |
|
|
|
|
|
Loans held for investment |
|
$ 2,039,867 |
$ 2,048,572 |
$ 2,072,244 |
$ 1,216,335 |
Loans held for sale |
|
15,664 |
40,565 |
147,281 |
14,725 |
|
|
|
|
|
|
Allowance for loans losses |
|
$ 11,869 |
$ 15,116 |
$ 14,053 |
$ 11,619 |
Credit quality adjustment on loans purchased
(1) |
|
17,828 |
19,404 |
21,693 |
1,676 |
Adjusted (Non-GAAP) allowance for loan losses
(9) |
|
$ 29,697 |
$ 34,520 |
$ 35,746 |
$ 13,295 |
|
|
|
|
|
|
Total assets |
|
$ 2,526,656 |
$ 2,616,014 |
$ 2,747,289 |
$ 1,588,079 |
Total deposits |
|
2,147,200 |
2,227,929 |
2,299,898 |
1,322,342 |
Total borrowings and securities sold under
agreements to repurchase |
|
95,060 |
102,585 |
149,444 |
87,816 |
Total stockholders' equity |
|
256,664 |
253,946 |
256,640 |
165,343 |
Goodwill and other intangible assets |
|
24,693 |
25,101 |
24,243 |
14,966 |
Tangible equity - Non-GAAP (9) |
|
231,971 |
228,845 |
232,397 |
150,377 |
Tangible assets - Non-GAAP (9) |
|
2,501,963 |
2,590,913 |
2,723,046 |
1,573,113 |
|
|
|
|
|
|
Shares outstanding at period end |
|
12,007,187 |
11,987,501 |
11,971,399 |
7,140,227 |
|
|
|
|
|
|
|
For the Three
Months Ended |
For the Six
Months Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
Selected Income Statement
Data: |
|
|
|
|
|
Interest income |
$ 30,409 |
$ 30,269 |
$ 18,482 |
$ 60,678 |
$ 36,057 |
Interest expense |
6,075 |
5,865 |
5,579 |
11,940 |
11,105 |
Net interest income |
24,334 |
24,404 |
12,903 |
48,738 |
24,952 |
Provision for loan losses |
1,500 |
1,650 |
1,900 |
3,150 |
3,350 |
Noninterest income |
4,858 |
5,312 |
2,396 |
10,170 |
4,371 |
Noninterest expense |
22,759 |
27,580 |
11,710 |
50,339 |
21,515 |
Net income before income taxes |
4,933 |
486 |
1,689 |
5,419 |
4,458 |
Income tax expense |
1,476 |
146 |
508 |
1,622 |
1,372 |
Less: Income from non-controlling
interest |
(53) |
122 |
4 |
69 |
4 |
Net income |
$ 3,510 |
$ 218 |
$ 1,177 |
$ 3,728 |
$ 3,082 |
|
|
|
|
|
|
Operating Income - Non-GAAP (9) |
$ 4,129 |
$ 1,133 |
$ 1,897 |
$ 5,261 |
$ 3,913 |
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
Weighted average shares outstanding -
basic |
11,996,283 |
11,975,795 |
7,133,681 |
11,986,039 |
7,129,491 |
Weighted average shares outstanding -
diluted |
11,999,772 |
11,980,802 |
7,137,256 |
11,990,287 |
7,133,819 |
Book value per share |
$ 21.38 |
$ 21.18 |
$ 23.16 |
$ 21.38 |
$ 23.16 |
Tangible book value per share - Non-GAAP
(9) |
$ 19.32 |
$ 19.09 |
$ 21.06 |
$ 19.32 |
$ 21.06 |
Basic earnings per share |
$ 0.29 |
$ 0.02 |
$ 0.17 |
$ 0.31 |
$ 0.43 |
Diluted earnings per share |
$ 0.29 |
$ 0.02 |
$ 0.17 |
$ 0.31 |
$ 0.43 |
|
|
|
|
|
|
Diluted operating income per share - Non-GAAP
(9) |
$ 0.33 |
$ 0.10 |
$ 0.27 |
$ 0.44 |
$ 0.55 |
|
|
|
|
|
|
|
For the Three
Months Ended |
For the Six
Months Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
Performance Ratios: |
|
|
|
|
|
Return on average assets |
0.55% |
0.03% |
0.30% |
0.29% |
0.41% |
Return on average equity |
5.51% |
0.35% |
2.86% |
2.95% |
3.77% |
Return on average tangible equity (Non-GAAP)
(9) |
6.70% |
1.10% |
3.57% |
3.92% |
4.61% |
Net interest margin |
4.23% |
4.21% |
3.73% |
4.22% |
3.68% |
Efficiency ratio (2) |
77.96% |
92.81% |
76.54% |
85.45% |
73.37% |
Non-interest income to average assets |
0.76% |
0.80% |
0.62% |
0.78% |
0.58% |
Non-interest expenses to average assets |
3.55% |
4.15% |
3.03% |
3.86% |
2.84% |
|
|
|
|
|
|
Operating Performance Ratios
(Non-GAAP) (9): |
|
|
|
|
|
Return on average assets |
0.64% |
0.17% |
0.49% |
0.40% |
0.52% |
Return on average equity |
6.48% |
1.80% |
4.60% |
4.16% |
4.79% |
Return on average tangible equity
(Non-GAAP) |
7.77% |
2.71% |
5.49% |
5.26% |
3.57% |
Net interest margin |
4.23% |
4.21% |
3.73% |
4.22% |
3.68% |
Efficiency ratio (2) |
75.84% |
89.73% |
71.83% |
82.85% |
70.54% |
Noninterest income to average assets |
0.76% |
0.80% |
0.62% |
0.78% |
0.58% |
Noninterest expenses to average assets |
3.41% |
3.94% |
2.77% |
3.68% |
2.69% |
|
|
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
|
2011 |
2011 |
2010 |
2010 |
Asset Quality Ratios: |
|
. |
|
|
|
Allowance for loan losses to total loans
(6) |
|
0.59% |
0.75% |
0.64% |
0.95% |
Adjusted (Non-GAAP) allowance for loan losses
to total loans (6) (8) |
|
1.49% |
1.69% |
1.66% |
1.09% |
Non-accrual loans to total loans (6) (7) |
|
1.68% |
1.86% |
0.82% |
0.82% |
Net charge-offs to average loans (3) |
|
0.92% |
0.11% |
0.71% |
0.40% |
Non-performing assets to total assets
(4) |
|
1.64% |
1.65% |
0.87% |
0.83% |
Non-performing loans to total loans (5)
(6) |
|
1.89% |
1.95% |
0.89% |
1.01% |
Allowance for loan losses to non-performing
loans (5) |
|
31.38% |
38.17% |
73.40% |
93.51% |
Adjusted (Non-GAAP) allowance for loan losses
to non-performing loans (5) (8) |
|
78.51% |
86.61% |
186.69% |
106.99% |
|
|
|
|
|
|
Capital Ratios: |
|
|
|
|
|
Total capital (to risk-weighted assets) |
|
13.53% |
13.38% |
13.24% |
14.49% |
Tier 1 capital (to risk-weighted assets) |
|
12.17% |
11.91% |
11.83% |
12.00% |
Tier 1 capital (to average assets) |
|
9.65% |
9.14% |
13.45% |
9.69% |
Tangible equity to tangible assets - Non-GAAP
(9) |
|
9.27% |
8.83% |
8.53% |
9.56% |
|
|
|
(1) The credit fair value
adjustment relates to the risk of credit loss related to the
non-impaired portfolio of purchased loans acquired through the
merger between Tower Bancorp. Inc. and Graystone Financial Corp and
loans acquired through the acquisition of First Chester County
Corporation. It does not include the credit fair value adjustment
of purchased impaired loans accounted for under ASC 310-30
(Statement of Position (SOP) 03-3). |
(2) Efficiency ratio is
calculated as total noninterest expense divided by the total of net
interest income and noninterest income. |
(3) Calculated as the annualized
net loans charged off during the quarter ended divided by the
average loans outstanding for the same quarter. |
(4) Non-performing assets equals
the sum of non-accrual loans, loans past due 90 days or greater
that are still accruing, and other real estate
owned. Purchased impaired loans accounted for under ASC 310-30
are excluded from non-performing assets. |
(5) Non-performing loans equals
the sum of non-accrual loans and loans past due 90 days or greater
that are still accruing. Purchased impaired loans accounted for
under ASC 310-30 are excluded from non-performing loans. |
(6) Total loans excludes
purchased impaired loans accounted for under ASC 310-30 acquired as
part of mergers and acquisitions. The total balance of these
loans, net of fair value mark, is $58.0 million as of June 31,
2011, $61.8 million as of March 31, 2011, $61.6 million as of
December 31, 2010, and $6.3 million as of June 31, 2010. |
(7) Non-accrual loans equals the
sum of loans that have been placed on non-accrual status. Purchased
impaired loans accounted for under ASC 310-30 are excluded
from non-accrual loans. |
(8) Adjusted (Non-GAAP) allowance
for loan losses includes the allowance for loan loss and the credit
fair value adjustment to the risk of credit loss related to the
non-impaired portfolio of purchased loans acquired through mergers
and acquisitions. |
(9) This measure is considered to
be a Non-GAAP measure. See the reconciliation of GAAP to
Non-GAAP measures in the tables at the end of this release. |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Loan and Deposit
Detail |
(Dollars in
thousands) |
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
2011 |
2011 |
2010* |
2010 |
Loan detail: |
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
Commercial: |
|
|
|
|
Industrial |
$ 1,048,996 |
$ 1,056,712 |
$ 1,073,666 |
$ 629,520 |
Real estate |
304,025 |
302,392 |
305,423 |
169,185 |
Construction |
195,741 |
193,707 |
183,729 |
138,211 |
Consumer: |
|
|
|
|
Home equity |
167,306 |
158,633 |
163,905 |
61,014 |
Other |
63,421 |
69,479 |
65,305 |
34,009 |
Residential mortgage |
260,099 |
267,500 |
280,154 |
184,474 |
Total
loans |
2,039,588 |
2,048,423 |
2,072,182 |
1,216,413 |
Deferred costs (fees) |
280 |
149 |
62 |
(78) |
Allowance for loan losses |
(11,869) |
(15,116) |
(14,053) |
(11,619) |
Net loans |
$ 2,027,999 |
$ 2,033,456 |
$ 2,058,191 |
$ 1,204,716 |
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
Deposit detail: |
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
Noninterest bearing transaction accounts |
$ 304,541 |
$ 301,042 |
$ 301,210 |
$ 120,206 |
Interest checking accounts |
332,621 |
319,363 |
305,701 |
119,059 |
Money market accounts |
526,025 |
600,244 |
651,760 |
591,256 |
Savings accounts |
161,481 |
163,595 |
160,305 |
78,904 |
Time deposits |
822,532 |
843,685 |
880,922 |
412,917 |
Total
deposits |
$ 2,147,200 |
$ 2,227,929 |
$ 2,299,898 |
$ 1,322,342 |
|
|
|
|
|
* Amounts have been reclassified
in order to be comparable to the amounts disclosed as of June 30,
2011 and March 31, 2011 |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Non-Performing Assets
Detail |
(Dollars in
thousands) |
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
Non-accrual loans |
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
Commercial: |
|
|
|
|
Industrial |
$ 24,172 |
$ 20,675 |
$ 6,320 |
$ 2,554 |
Real estate |
2,191 |
2,169 |
2,426 |
487 |
Construction |
2,524 |
9,816 |
6,011 |
5,370 |
Consumer: |
|
|
|
|
Home equity |
218 |
272 |
115 |
-- |
Other |
370 |
384 |
66 |
123 |
Residential mortgage |
4,050 |
4,357 |
2,784 |
1,504 |
Total non-accrual
loans |
33,525 |
37,673 |
17,722 |
10,038 |
Accruing loans greater than 90 days
past due |
|
|
|
|
Commercial: |
|
|
|
|
Industrial |
2,781 |
-- |
-- |
-- |
Real estate |
-- |
-- |
5 |
-- |
Construction |
-- |
-- |
-- |
-- |
Consumer: |
|
|
|
|
Home equity |
89 |
403 |
351 |
432 |
Other |
183 |
458 |
251 |
37 |
Residential mortgage |
1,250 |
1,072 |
818 |
1,919 |
Total accruing loans
greater than 90 days past due |
4,303 |
1,933 |
1,425 |
2,388 |
Non-performing
loans |
37,828 |
39,606 |
19,147 |
12,426 |
|
|
|
|
|
Other real estate owned |
3,520 |
3,477 |
4,647 |
799 |
Non-performing
assets |
$ 41,348 |
$ 43,083 |
$ 23,794 |
$ 13,225 |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
|
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
Accruing loans 30 to 89 days past due |
$ 18,219 |
$ 24,563 |
$ 30,865 |
$ 14,109 |
Accruing loans greater than 90 days past
due |
4,303 |
1,933 |
1,425 |
2,388 |
Non-accrual loans |
33,525 |
37,673 |
17,722 |
10,038 |
Total delinquencies |
$ 56,047 |
$ 64,169 |
$ 50,012 |
$ 26,535 |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Allowance for Loan
Losses Quarterly Rollforward |
(Dollars in
thousands) |
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
2011 |
2011 |
2010 |
2010 |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
Balance, beginning of quarter |
$ 15,116 |
$ 14,053 |
$ 12,717 |
$ 10,892 |
Provision for loan losses |
1,500 |
1,650 |
4,100 |
1,900 |
Charge-offs |
|
|
|
|
Commercial: |
|
|
|
|
Industrial |
(409) |
(446) |
(1,460) |
(608) |
Real estate |
-- |
(8) |
(574) |
(245) |
Construction |
(4,250) |
-- |
(431) |
-- |
Consumer: |
|
|
|
|
Home equity |
-- |
-- |
(55) |
(200) |
Other |
(38) |
(98) |
-- |
(147) |
Residential mortgage |
(81) |
(177) |
(255) |
-- |
Total charge-offs |
(4,778) |
(729) |
(2,775) |
(1,200) |
|
|
|
|
|
Recoveries |
|
|
|
|
Commercial: |
|
|
|
|
Industrial |
14 |
20 |
7 |
26 |
Real estate |
-- |
120 |
-- |
-- |
Construction |
-- |
-- |
-- |
1 |
Consumer: |
|
|
|
|
Home equity |
8 |
-- |
-- |
-- |
Other |
9 |
2 |
3 |
-- |
Residential mortgage |
-- |
-- |
1 |
-- |
Total recoveries |
31 |
142 |
11 |
27 |
Net charge-offs |
(4,747) |
(587) |
(2,764) |
(1,173) |
Balance, end of quarter |
$ 11,869 |
$ 15,116 |
$ 14,053 |
$ 11,619 |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Condensed Statement of
Operations by Segment |
(Dollars in
thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended June, 30, 2011 |
|
Banking Segment |
Residential Mortgage
Segment |
Elimination |
Total |
Interest income |
$ 30,328 |
$ 202 |
$ (121) |
$ 30,409 |
Interest expense |
6,075 |
121 |
(121) |
6,075 |
Net interest
income |
24,253 |
81 |
-- |
24,334 |
Provision for loan losses |
1,500 |
-- |
-- |
1,500 |
Noninterest income |
3,719 |
1,139 |
-- |
4,858 |
Noninterest expense |
19,017 |
2,790 |
-- |
21,807 |
Merger related expenses and restructuring
charges |
597 |
355 |
-- |
952 |
Net income (loss)
before income taxes |
6,858 |
(1,925) |
-- |
4,933 |
Income tax expense (benefit) |
2,150 |
(674) |
|
1,476 |
Net income (loss)
including noncontrolling interest |
4,708 |
(1,251) |
-- |
3,457 |
Less: Income from non-controlling
interest |
-- |
(53) |
-- |
(53) |
Net income
(loss) |
$ 4,708 |
$ (1,198) |
$ -- |
$ 3,510 |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June, 30, 2011 |
|
Banking Segment |
Residential Mortgage
Segment |
Elimination |
Total |
Interest income |
$ 60,311 |
$ 902 |
$ (535) |
$ 60,678 |
Interest expense |
11,940 |
535 |
(535) |
11,940 |
Net interest
income |
48,371 |
367 |
-- |
48,738 |
Provision for loan losses |
3,150 |
-- |
-- |
3,150 |
Noninterest income |
7,559 |
2,611 |
-- |
10,170 |
Noninterest expense |
38,982 |
8,999 |
-- |
47,981 |
Merger related expenses and restructuring
charges |
1,670 |
688 |
-- |
2,358 |
Net income (loss)
before income taxes |
12,128 |
(6,709) |
-- |
5,419 |
Income tax expense (benefit) |
3,986 |
(2,364) |
-- |
1,622 |
Net income (loss)
including noncontrolling interest |
8,142 |
(4,345) |
-- |
3,797 |
Less: Income from non-controlling
interest |
4 |
65 |
-- |
69 |
Net income
(loss) |
$ 8,138 |
$ (4,410) |
$ -- |
$ 3,728 |
|
|
Tower Bancorp, Inc. and
Subsidiary |
Reconciliation of GAAP
to Non-GAAP Measures |
(Dollars in thousands,
except share data and ratios) |
(Unaudited) |
|
|
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
|
2011 |
2011 |
2010 |
2010 |
Reconciliation of Non-GAAP Balance
Sheet Data: |
|
|
|
|
|
Total assets - GAAP |
|
$ 2,526,656 |
$ 2,616,014 |
$ 2,747,289 |
$ 1,588,079 |
Less: Goodwill and other intangible
assets |
|
24,693 |
25,101 |
24,243 |
14,966 |
Total tangible assets - Non-GAAP |
|
$ 2,501,963 |
$ 2,590,913 |
$ 2,723,046 |
$ 1,573,113 |
|
|
|
|
|
|
Total Stockholders' equity - GAAP |
|
$ 256,664 |
$ 253,946 |
$ 256,640 |
$ 165,343 |
Less: Goodwill and other intangible
assets |
|
24,693 |
25,101 |
24,243 |
14,966 |
Tangible equity - Non-GAAP |
|
$ 231,971 |
$ 228,845 |
$ 232,397 |
$ 150,377 |
|
|
|
|
|
|
|
For the Three
Months Ended |
For the Six
Months Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
Reconciliation of
Non-GAAP Income Statement Data: |
|
|
|
|
Net income - GAAP |
$ 3,510 |
$ 218 |
$ 1,177 |
$ 3,728 |
$ 3,082 |
Plus: Merger related expenses |
538 |
247 |
76 |
785 |
187 |
Plus: Restructuring charges |
414 |
1,160 |
-- |
1,574 |
-- |
Plus: Impairment of fixed assets |
-- |
-- |
920 |
-- |
920 |
Less: Tax effect of adjustments |
(333) |
(492) |
(276) |
(826) |
(276) |
Operating income - Non-GAAP |
$ 4,129 |
$ 1,133 |
$ 1,897 |
$ 5,261 |
$ 3,913 |
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
Book value per share - GAAP |
$ 21.38 |
$ 21.18 |
$ 23.16 |
$ 21.38 |
$ 23.16 |
Per share effect of intangible assets |
(2.06) |
(2.09) |
(2.10) |
(2.06) |
(2.10) |
Tangible book value per share - Non-GAAP |
$ 19.32 |
$ 19.09 |
$ 21.06 |
$ 19.32 |
$ 21.06 |
|
|
|
|
|
|
Diluted earnings per share - GAAP |
$ 0.29 |
$ 0.02 |
$ 0.17 |
$ 0.31 |
$ 0.43 |
Plus: Per share impact of merger related
expenses |
0.04 |
0.02 |
0.01 |
0.07 |
0.03 |
Plus: Per share impact of restructuring
charges |
0.03 |
0.10 |
-- |
0.13 |
-- |
Plus: Per share impact of impairment on
fixed assets |
-- |
-- |
0.13 |
-- |
0.13 |
Less: Per share impact of tax effect of
adjustments |
(0.03) |
(0.04) |
(0.04) |
(0.07) |
(0.04) |
Diluted operating income per share -
Non-GAAP |
$ 0.33 |
$ 0.10 |
$ 0.27 |
$ 0.44 |
$ 0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
Tower Bancorp, Inc. and
Subsidiary |
Reconciliation of GAAP
to Non-GAAP Measures |
(Dollars in thousands,
except share data and ratios) |
(Unaudited) |
|
|
|
|
|
|
|
For the Three
Months Ended |
For the Six
Months Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
Performance Ratios: |
|
|
|
|
|
Return on average assets - GAAP |
0.55% |
0.03% |
0.30% |
0.29% |
0.41% |
Effect of Non-GAAP adjustments to net (loss)
income |
0.09% |
0.14% |
0.19% |
0.11% |
0.11% |
Operating return on average assets -
Non-GAAP |
0.64% |
0.17% |
0.49% |
0.40% |
0.52% |
|
|
|
|
|
|
Return on average equity - GAAP |
5.51% |
0.35% |
2.86% |
2.95% |
3.77% |
Effect of Non-GAAP adjustments to net (loss)
income |
0.97% |
1.45% |
1.74% |
1.21% |
1.02% |
Operating return on average equity -
Non-GAAP |
6.48% |
1.80% |
4.60% |
4.16% |
4.79% |
|
|
|
|
|
|
Return on average equity - GAAP |
5.51% |
0.35% |
2.86% |
2.95% |
3.77% |
Effect of goodwill and other intangible
assets |
1.19% |
0.75% |
0.71% |
0.97% |
0.84% |
Return on average tangible equity - Non
-GAAP |
6.70% |
1.10% |
3.57% |
3.92% |
4.61% |
|
|
|
|
|
|
Return on average tangible equity - Non
-GAAP |
6.70% |
1.10% |
3.57% |
3.92% |
4.61% |
Effect of Non-GAAP adjustments to net (loss)
income |
1.07% |
1.61% |
1.92% |
1.34% |
-1.04% |
Operating return on average tangible equity -
Non-GAAP |
7.77% |
2.71% |
5.49% |
5.26% |
3.57% |
|
|
|
|
|
|
Efficiency ratio - GAAP |
77.96% |
92.81% |
76.54% |
85.45% |
73.37% |
Effect of Non-GAAP adjustments to net (loss)
income |
-2.12% |
-3.08% |
-4.71% |
-2.60% |
-2.83% |
Operating efficiency ratio - Non-GAAP |
75.84% |
89.73% |
71.83% |
82.85% |
70.54% |
|
|
|
|
|
|
Non-interest expenses to average assets -
GAAP |
3.55% |
4.15% |
3.03% |
3.86% |
2.84% |
Effect of Non-GAAP adjustments to net (loss)
income |
-0.14% |
-0.21% |
-0.26% |
-0.18% |
-0.15% |
Operating non-interest expenses to average
assets - Non-GAAP |
3.41% |
3.94% |
2.77% |
3.68% |
2.69% |
|
|
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
|
2011 |
2011 |
2010 |
2010 |
Asset Quality Ratios |
|
|
|
|
|
Allowance for loan loss to total loans -
GAAP |
|
0.59% |
0.75% |
0.64% |
0.95% |
Effect of Non-GAAP adjustment |
|
0.90% |
0.94% |
1.02% |
0.14% |
Adjusted (non-GAAP) allowance for
loan loss to total loans |
1.49% |
1.69% |
1.66% |
1.09% |
|
|
|
|
|
|
Allowance for loan loss to non
performing loans - GAAP |
31.38% |
38.17% |
73.40% |
93.51% |
Effect of Non-GAAP adjustment |
|
47.13% |
48.44% |
113.29% |
13.48% |
Adjusted (non-GAAP) allowance for
loan loss to non-performing loans |
78.51% |
86.61% |
186.69% |
106.99% |
|
|
|
|
|
|
|
|
June 30, |
March 31, |
December 31, |
June 30, |
|
|
2011 |
2011 |
2010 |
2010 |
Capital Ratios: |
|
|
|
|
|
Total equity to total assets - GAAP |
|
10.16% |
9.71% |
9.34% |
10.41% |
Effect of intangible assets |
|
-0.89% |
-0.88% |
-0.81% |
-0.85% |
Tangible common equity to
tangible assets -Non-GAAP |
9.27% |
8.83% |
8.53% |
9.56% |
|
|
|
|
|
|
CONTACT: Media Contact:
Andrew Samuel
717.724.2800
Investor Relations Contact:
Brent Smith
717.724.4666
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