Tower Financial Corp. (TOFC, Financial) filed Quarterly Report for the period ended 2009-03-31.
Tower Financial Corporation was incorporated to acquire all of the issued and outstanding stock of Tower Bank & Trust Company and to engage in the business of a bank holding company. The bank offers a broad array of deposit products including checking business checking savings and money market accounts certificates of deposit and direct deposit services. Tower Financial Corp. has a market cap of $21.5 million; its shares were traded at around $5.295 with a P/E ratio of 13.9 and P/S ratio of 0.4.
Total assets increased by $19.0 million from December 31, 2008 to March 31, 2009. The increase in total assets was primarily due to an increase in federal funds sold of $36.6 million, which was funded by an increase of $32.5 million in total deposits and a decrease in long-term investments of $6.0 million. Net loans decreased slightly by $3.7 million from December 31, 2008 to $546.7 million primarily due to a transfer to other real estate owned of $2.7 million.
Cash and Investments. Cash and cash equivalents, which include federal funds sold, were $56.9 million at March 31, 2009, an increase of $25.4 million, or 80.3%. Securities available for sale were $71.8 million at the end of the first quarter of 2009, a decrease of $6.0 million from December 31, 2008. The decrease in the investment portfolio was the result of the sale of $5.5 million of mortgage backed securities at a gain of $191,151. We expect to replace the long-term investment portfolio during the second quarter of 2009.
For the first three months of 2009 we were in a net charge-off position of $117,355 compared to a net recovery position of $527,208 for the first three months of 2008. The Company continues to build its reserves to combat the decline in the economy over the last year. Nonperforming loans decreased significantly by $3.8 million during the first three months of 2009 due to continuous monitoring of problem relationships, demanding payments, creating exit strategies, and the foreclosure of a $2.7 million relationship. The specific allowance allocations increased by $824,000 to $3.9 million in the first quarter of 2009. The amount of the allowance allocated for loan pools increased slightly by 1.0% during the first three months of 2009.
Deposits. Total deposits were $618.7 million at March 31, 2009 compared to total deposits at December 31, 2008 of $586.2 million. The increase of $32.5 million, or 5.5%, during the first three months of 2009 was reflective of the $24.7 million increase in money market accounts and the $12.0 increase in the Health Savings Accounts. The increase in Health Savings Account was primarily due to a one-time employer contribution received in the first quarter. Noninterest-bearing demand deposit balances declined by $7.0 million, primarily due to the expiration of promotional rates offered on certificate of deposits and money market accounts. Certificate of deposit accounts grew by $4.6 million from December 31, 2008 to March 31, 2009. The significant growth in our in-market deposits will allow us to let out-of-market funding mature during the second quarter of 2009 without needing replaced. Brokered certificate of deposits were $84.5 million at March 31, 2009 and December 31, 2008.
Results of operations for the three-month period ended March 31, 2009 reflected net income of $410,225, or $0.10 per diluted share. This was a $300,947, or 42.3%, decrease from 2008 s first quarter net income of $711,172, or $0.17 per diluted share. The operating results for the three-month period ended March 31, 2009 were favorable as we were faced with a steep decrease in the net interest margin, we recorded an additional $660,000 to provision expense compared to the same period in 2008, and FDIC insurance premiums increased by $111,976 compared to the amount recorded as of March 31, 2008. Our non-interest income grew by $148,529 primarily due to a net gain on sale of available for securities. As interest rates began dropping dramatically in 2008 causing a compression of our net interest margin, we continually looked for ways to decrease our non-interest expenses, which we have been successful in accomplishing over the last year. Non-interest expenses decreased by $485,513, or 8.9%, from March 31, 2008 to March 31, 2009 primarily due to decreases in most operating expense categories, including employment, occupancy and equipment, business development, and courier expenses.
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Tower Financial Corporation was incorporated to acquire all of the issued and outstanding stock of Tower Bank & Trust Company and to engage in the business of a bank holding company. The bank offers a broad array of deposit products including checking business checking savings and money market accounts certificates of deposit and direct deposit services. Tower Financial Corp. has a market cap of $21.5 million; its shares were traded at around $5.295 with a P/E ratio of 13.9 and P/S ratio of 0.4.
Highlight of Business Operations:
Net Income for the first quarter 2009 was $410,225, a 42.3% decrease from first quarter 2008. The $300,947 decrease in net income was due to increases in loan loss provision expense and FDIC insurance premiums with balances at March 31, 2009 of $960,000 and $279,490, respectively. Provision expenses increased by $660,000 from the $300,000 recorded in the first three months of 2008 due to the continual decline in environmental conditions and to place specific reserves on two commercial loan relationships. FDIC insurance premiums have increased by $111,976 compared to the $167,514 recorded in the first quarter of 2008 due to the increase of the FDIC insurance premium assessments, which have impacted all banks, and due to an increase in deposits of $31.0 million from March 31, 2008.Total assets increased by $19.0 million from December 31, 2008 to March 31, 2009. The increase in total assets was primarily due to an increase in federal funds sold of $36.6 million, which was funded by an increase of $32.5 million in total deposits and a decrease in long-term investments of $6.0 million. Net loans decreased slightly by $3.7 million from December 31, 2008 to $546.7 million primarily due to a transfer to other real estate owned of $2.7 million.
Cash and Investments. Cash and cash equivalents, which include federal funds sold, were $56.9 million at March 31, 2009, an increase of $25.4 million, or 80.3%. Securities available for sale were $71.8 million at the end of the first quarter of 2009, a decrease of $6.0 million from December 31, 2008. The decrease in the investment portfolio was the result of the sale of $5.5 million of mortgage backed securities at a gain of $191,151. We expect to replace the long-term investment portfolio during the second quarter of 2009.
For the first three months of 2009 we were in a net charge-off position of $117,355 compared to a net recovery position of $527,208 for the first three months of 2008. The Company continues to build its reserves to combat the decline in the economy over the last year. Nonperforming loans decreased significantly by $3.8 million during the first three months of 2009 due to continuous monitoring of problem relationships, demanding payments, creating exit strategies, and the foreclosure of a $2.7 million relationship. The specific allowance allocations increased by $824,000 to $3.9 million in the first quarter of 2009. The amount of the allowance allocated for loan pools increased slightly by 1.0% during the first three months of 2009.
Deposits. Total deposits were $618.7 million at March 31, 2009 compared to total deposits at December 31, 2008 of $586.2 million. The increase of $32.5 million, or 5.5%, during the first three months of 2009 was reflective of the $24.7 million increase in money market accounts and the $12.0 increase in the Health Savings Accounts. The increase in Health Savings Account was primarily due to a one-time employer contribution received in the first quarter. Noninterest-bearing demand deposit balances declined by $7.0 million, primarily due to the expiration of promotional rates offered on certificate of deposits and money market accounts. Certificate of deposit accounts grew by $4.6 million from December 31, 2008 to March 31, 2009. The significant growth in our in-market deposits will allow us to let out-of-market funding mature during the second quarter of 2009 without needing replaced. Brokered certificate of deposits were $84.5 million at March 31, 2009 and December 31, 2008.
Results of operations for the three-month period ended March 31, 2009 reflected net income of $410,225, or $0.10 per diluted share. This was a $300,947, or 42.3%, decrease from 2008 s first quarter net income of $711,172, or $0.17 per diluted share. The operating results for the three-month period ended March 31, 2009 were favorable as we were faced with a steep decrease in the net interest margin, we recorded an additional $660,000 to provision expense compared to the same period in 2008, and FDIC insurance premiums increased by $111,976 compared to the amount recorded as of March 31, 2008. Our non-interest income grew by $148,529 primarily due to a net gain on sale of available for securities. As interest rates began dropping dramatically in 2008 causing a compression of our net interest margin, we continually looked for ways to decrease our non-interest expenses, which we have been successful in accomplishing over the last year. Non-interest expenses decreased by $485,513, or 8.9%, from March 31, 2008 to March 31, 2009 primarily due to decreases in most operating expense categories, including employment, occupancy and equipment, business development, and courier expenses.
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