TOWER FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - TOWER FINANCIAL CORPORATION 8-K 7-28-2011 - TOWER FINANCIAL CORP	form8-k.htm

Exhibit 99.1

FOR FURTHER INFORMATION:

FOR INVESTORS:

FOR MEDIA:

Richard R. Sawyer

Tina M. Farrington

Chief Financial Officer

Executive Vice President

260-427-7150

260-427-7155

rick.sawyer@towerbank.net

tina.farrington@towerbank.net

TOWER FINANCIAL CORPORATION REPORTS RECORD QUARTERLY INCOME OF $1.1 MILLION

FORT WAYNE, INDIANA – JULY 28, 2011 –Tower Financial Corporation (NASDAQ: TOFC) reported record net income of $1.1 million or $0.22 per diluted share for the second quarter of 2011, compared with net income of $514,000, or $0.12 per diluted share, reported for the second quarter 2010. Year to date earnings through the first six months of 2011 were $1.9 million, or $0.39 per diluted share, compared to $1.2 million, or $0.30 per diluted share for the first six months of 2010.

Our second quarter highlights include:

Record net interest income of $5.7 million. Net interest margin remained strong at 3.83 percent, the same as the first quarter of 2011.

Capital ratios continue to increase and remain well above the regulatory standards necessary to be considered “well-capitalized.” As of June 30, 2011, our leverage ratio was 10.8 percent and our Total Risked Based Capital ratio was 14.9 percent, compared to regulatory requirements of 5.0 percent and 10.0 percent, respectively.

Non-performing assets (NPA’s) decreased by $5.1 million. NPA’s were 2.68 percent of total assets at June 30, 2011 compared to 3.44 percent and 4.22 percent at March 31, 2011 and December 31, 2010, respectively.

Recorded $397,000 of pre-tax gains on sales of investment securities through restructuring opportunities within the market allowing us to monetize some gains and reinvest the proceeds with minimal impact to the portfolio yield.

“We are very pleased to have achieved record net income, while making such significant progress in the reduction of non-performing assets. All of the hard work of my fellow team members is gaining significant traction and is resulting in continual earnings improvements and credit metrics. We continue to aggressively build capital in preparation for market expansion opportunities.” stated Mike Cahill, President and Chief Executive Officer.

Capital

The Company’s regulatory capital ratios continue to remain above the “well-capitalized” levels of 6 percent for Tier 1 capital and 10 percent for Total risk-based capital. Tier 1 capital at June 30, 2011, increased to 13.7 percent, compared to 13.1 percent at December 31, 2010 and 11.6 percent at June 30, 2010. Total risk-based capital at June 30, 2011, increased to 14.9 percent, compared to 14.3 percent at December 31, 2010 and 13.1 percent at June 30, 2010. Leverage capital grew to 10.8 percent at June 30, 2011, more than double the regulatory requirement of 5 percent to be considered “well-capitalized”.

The following table shows the current capital position as of June 30, 2011 in both dollars and percentages, compared to the minimum amounts required per regulatory standards for “well-capitalized” institutions.

Minimum Dollar Requirements ($000's omitted)	Regulatory Minimum (Well-Capitalized)		Tower 6/30/11		Excess
Tier 1 Capital / Risk Assets	$	31,407	$	71,486	$	40,079

Total Risk Based Capital / Risk Assets	$	52,345	$	78,097	$	25,752

Tier 1 Capital / Average Assets (Leverage)	$	33,043	$	71,486	$	38,443

Minimum Percentage Requirements	Regulatory Minimum (Well-Capitalized)	Tower 6/30/11
Tier 1 Capital / Risk Assets	6% or more		13.66	%

Total Risk Based Capital / Risk Assets	10% or more		14.92	%

Tier 1 Capital / Quarterly Average Assets	5% or more		10.82	%

Asset Quality

Nonperforming assets plus delinquencies were $17.7 million, or 2.7 percent of total assets as of June 30, 2011. This compares with $ 22.9 million, or 3.4 percent of total assets at March 31, 2011 and $27.8 million, or 4.2 percent of total assets at December 31, 2010. Net charge-offs were $1.0 million for the second quarter 2011, or 0.83 percent of average loan outstandings for the quarter. This compares to net charge-offs of $1.8 million, or 1.49 percent of average loans for the first quarter 2011 and $531,000, or 0.41 percent of average loans for the second quarter of 2010. Loan loss provision through June 30, 2011 was $2.3 million compared to $2.4 million for the first six months of 2010.

The current and historical breakdown of non-performing assets is as follows:

($000's omitted)	6/30/11			3/31/11			12/31/10			9/30/10			6/30/10			3/31/10
Non-Accrual loans
Commercial		5,650			7,338			6,155			6,361			4,055			4,014
Acquisition & Development		1,802			3,305			3,489			1,918			3,497			6,954
Commercial Real Estate		1,566			1,443			2,452			1,396			1,799			1,886
Residential Real Estate		645			652			843			1,093			1,063			1,120
Total Non-accrual loans		9,663			12,738			12,939			10,768			10,414			13,974
Trouble-debt restructered (TDR)		1,822			2,119			7,502			1,761			1,862			1,997
OREO		3,729			4,741			4,284			3,843			6,186			4,443
Deliquencies greater than 90 days		2,123			2,873			2,688			3,175			2,185			3,223
Impaired Securities		386			402			422			437			489			440

Total Non-Performing Assets		17,723			22,873			27,835			19,984			21,136			24,077

Allowance for Loan Losses (ALLL)		12,017			11,908			12,489			12,016			12,718			12,150

ALLL / Non-accrual loans		124.4	%		93.5	%		96.5	%		111.6	%		122.1	%		86.9	%

Classified Assets		41,598			46,027			50,115			51,409			55,688			56,297

The non-performing troubled-debt restructured (“TDR”) category consists of two loans. Both loans are new to the list and each make up approximately 50 percent of the balance. These two notes are separate parts of a larger land development project. Due to the project being primarily collateral dependent with limited activity in the last year, we renewed the matured notes and allowed a period of several months to pay interest only. One loan, totaling $2.1 million came off the non-performing TDR list during the quarter because it continues to keep current and perform according to the modified terms.

Delinquencies greater than 90 days have decreased by $750,000 from the first quarter 2011. This category is comprised of three loan relationships. As discussed in previous press releases, included in this category is an accruing $1.8 million loan that has matured. The Bank has elected not to renew the loan and is seeking collection via legal process. The loan remains in accruing status because it is further supported by the unlimited guaranty of a third party whose guaranty is fully secured by a mortgage on a performing commercial real estate property that is unrelated to the borrower’s enterprise. This loan is expected to remain technically nonperforming during the pendency of our legal collection efforts but ultimate collection from the guarantor is not currently in doubt. We expect this loan to be resolved during the third quarter of 2011. The decrease quarter over quarter primarily pertains to one large relationship totaling $677,000, which was brought current during the second quarter.

Our non-accrual commercial and industrial loan category decreased by $1.7 million during the second quarter. No new relationships were added and six relationships totaling $1.6 million were resolved. As of June 30, 2011, there were eleven relationships within this category, with two relationships comprising 61.0 percent of the total.

Our non-accrual commercial real estate category increased by $123,000 during the second quarter, the result of adding a new relationship in the amount of $582,000 and charging down another relationship by $300,000. The charge-off was done as a result of a purchase agreement secured on the property, with the charge-down bringing the loan amount down to the sales price, less anticipated closing costs. As of June 30, 2011, the category comprised of four relationships.

Our non-accrual acquisition and development category decreased by $1.5 million, or 45 percent during the second quarter. The decrease was primarily the result of a large paydown of one relationship of $1.9 million offset by the addition of a non-accrual relationship of $551,000. As of June 30, 2011, the category was comprised of four relationships.

Our non-accrual residential category had minimal changes during the quarter. This was the net result of two loans being brought to resolution, but were replaced by two additional loans of similar size. In total there are eight relationships that comprise this category.

Classified assets are comprised of substandard and non-accrual loans, along with impaired investments and OREO. Classified assets reached their peak at the end of the second quarter of 2009 at $63.0 million. We have made steady progress to reduce these assets by $21.4 million, or 34.0 percent since that time. As of June 30, 2011, classified assets totaled $41.6 million and comprised 51.6 percent of Tier 1 capital plus the Allowance for Loan Losses (“ALLL”).

The allowance for loan losses decreased $109,000 during the second quarter of 2011 and was 2.46 percent of total loans at June 30, 2011, a decrease from 2.56 percent at December 31, 2010 and from 2.50 percent at June 30, 2010. The allowance for loan losses has decreased by $472,000 from December 31, 2010, as a result of loan provision of $2.3 million, offset by $2.8 million of net charge-offs.

Balance Sheet

Company assets were $661.0 million at June 30, 2011, an increase of $1.1 million, or 0.2 percent from December 31, 2010. While the increase in total assets was minimal, we utilized $12.3 million of excess cash to increase our long-term investments by $10.8 million and purchase $3.0 million in additional bank owned life insurance (“BOLI”).

Total loans at June 30, 2011 were $488.7 million, compared to $489.2 at March 31, 2011 and $486.9 million at December 31, 2010. The year to date increase in loans came primarily from the Commercial Real Estate and Residential Mortgage categories, which grew by $6.7 and $4.2 million respectively. This growth was offset by a reduction in Commercial and Industrial, Home Equity and Consumer loan outstandings of $5.3 million, $1.6 million and $2.1 million respectively. The large decrease in Commercial and Industrial loans relates primarily to disposal of classified and non-performing loans.

Long term investments at June 30, 2011 were $120.9 million, a decrease of $2.7 million from March 31, 2011 and an increase of $10.8 million from December 31, 2010. The decrease quarter over quarter was the result of some security sales to take advantage of some fluctuation in the marketplace in which we were able to see at a gain and reinvest with minimal impact to the long-term portfolio yield. Sales within the investment portfolio generated $397,000 of income during the second quarter. Long-term investment now comprise 18.3 percent of total assets as we continue to expand our investment portfolio to enhance liquidity and yield opportunities in light of fewer lending opportunities in the local economy. This is a continued purposeful change in asset allocation driven by profitability and liquidity targets, current economic conditions, and capital management guidelines.

Total deposits at June 30, 2011 were $547.9 million compared to $575.5 million at March 31, 2011 and $576.4 million at December 31, 2010. The year to date decrease in deposits of $28.5 million, or 4.9 percent is made up of a reduction in core deposits of $18.8 million and in non-core (Jumbo and Brokered certificates of deposits) of $9.7 million. The decrease in core deposits was led by a reduction in Money Market accounts of $10.9 million, non-Jumbo (less than $100,000) certificates of deposit of $6.7 million, and non-interest bearing accounts of $5.7 million. These decreases were offset by an increase in interest bearing checking accounts of $6.5 million, primarily in our Health Savings Account project. The decrease in total deposits was offset by an increase of $26.5 million in short-term low interest rate Federal Home Loan Bank borrowings.

Shareholders' equity was $56.0 million at June 30, 2011, an increase of 2.9 percent from the $54.4 million reported at March 31, 2011 and an increase of 5.4 percent from the $53.1 million reported at December 31, 2010. Affecting the year to date increase in stockholders’ equity was net income of $1.9 million, $23,500 of additional paid in capital from the accounting treatment for stock options, and an increase of $990,000 in unrealized gains, net of tax, on securities available for sale. Current common shares outstanding are 4,852,761.

Operating Statement

Total revenue, consisting of net interest income and noninterest income, was $7.8 million for the second quarter 2011, an increase of $500,000 from the first quarter 2011 and an increase of $422,000 from the second quarter 2011. Second quarter 2011 net interest income was $5.7 million an increase of $78,000, or 1.4 percent from the first quarter 2011 and an increase of $124,000, or 2.2 percent compared to the second quarter 2010. The increase from the first quarter was attributable to an increase in average earning assets of $2.5 million. The second quarter 2011 net interest margin was 3.83 percent and represents a 11 basis point increase from the net interest margin of 3.72 percent posted for the second quarter 2010. The increase in our margin has come primarily from a reduction in cost of funds, which was 1.26 percent for the second quarter, compared to 1.28 percent for the first quarter 2011 and 1.64 percent for the second quarter 2010. Yields on earning assets declined to 4.88 percent from 4.91 percent in the first quarter 2011 and 5.12 percent in the second quarter 2010.

Non-interest income was $2.1 million for the second quarter 2011, which represented 26.6 percent of total revenue. This is an increase of $425,000 from the first quarter 2011 and an increase of $338,000 from the second quarter of 2010. The increase from the first quarter is primarily from gains on sales of securities, which were $397,000 for the quarter, compared with $59,000 in the first quarter 2011 and $42,000 in the second quarter 2010. We recorded only $1,000 of Other Than Temporary Impairment (“OTTI”) charges during the first quarter, compared to $125,000 in the first quarter 2011 and $14,000 in the second quarter 2010. The OTTI charge related to one security with a current book value of $386,000. We experienced a slight decrease of $71,000, or 8.0 percent, in our Trust and Brokerage fee income from the first quarter of 2011 due primarily to one-time annual fees that are collected each January. All other fee categories remained relatively flat quarter over quarter.

Non-interest expenses were $5.3 million, an increase of $200,000 from the first quarter 2011 and a decrease of $350,000 from the second quarter of 2010. The majority of the increase in expenses quarter over quarter related to one-time accruals of $125,000 related to incentive plans. Other expense increases occurred in Legal and Professional, Data Processing, Business Development, and Marketing, which were offset by a decrease in FDIC premiums of $157,000. Beginning in the third quarter of 2011, we expect a further reduction in FDIC premiums of approximately $125,000 per quarter. The estimated savings is based on our current deposit balances and will vary depending on growth or contraction in the portfolio. We expect all other expense categories to remain relatively flat throughout the remainder of 2011.

ABOUT THE COMPANY

Headquartered in Fort Wayne, Indiana, Tower Financial Corporation is a financial services holding company with one subsidiary; Tower Bank & Trust Company, a community bank headquartered in Fort Wayne. Tower Bank provides a wide variety of financial services to businesses and consumers through its six full-service financial centers in Fort Wayne, and one in Warsaw, Indiana. Tower Bank has a wholly-owned subsidiary, Tower Trust Company, which is a state-chartered wealth services firm doing business as Tower Private Advisors. Tower Bank also markets under the HSA Authority brand, which provides Health Savings Accounts to clients in 48 states. Tower Financial Corporation's common stock is listed on the NASDAQ Global Market under the symbol "TOFC." For further information, visit Tower's web site at www.towerbank.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 Litigation 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 banking regulation; changes in governmental and regulatory policy or enforcement; changes in the national and local economy; 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 tax laws; changes in prices; the impact of technological advances; the outcomes of contingencies, trends in customer behavior and their ability to repay loans; changes in local real estate values; and other factors, including various risk factors identified and described in the Corporation’s Annual Report on Form 10-K, quarterly reports of Form 10-Q and in other periodic reports 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 June 30, 2011 and December 31, 2010

	(unaudited) June 30 2011			December 31 2010
ASSETS
Cash and due from banks	$	11,134,424		$	24,717,935
Short-term investments and interest-earning deposits		2,495,818			4,309,006
Federal funds sold		4,726,977			1,648,441
Total cash and cash equivalents		18,357,219			30,675,382

Securities available for sale, at fair value		120,888,531			110,108,656
FHLBI and FRB stock		3,807,700			4,075,100
Loans Held for Sale		1,367,988			2,140,872

Loans		488,694,118			486,914,115
Allowance for loan losses		(12,017,002	)		(12,489,400	)
Net loans		476,677,116			474,424,715

Premises and equipment, net		8,301,973			8,329,718
Accrued interest receivable		2,444,535			2,391,953
Bank Owned Life Insurance		16,791,120			13,516,789
Other Real Estate Owned		3,728,845			4,284,263
Prepaid FDIC Insurance		2,037,350			2,864,527
Other assets		6,612,292			7,116,280

Total assets	$	661,014,669		$	659,928,255

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	87,171,004		$	92,872,957
Interest-bearing		460,724,610			483,483,179
Total deposits		547,895,614			576,356,136

Fed Funds Purchased		-			-
Federal Home Loan Bank advances		34,000,000			7,500,000
Junior subordinated debt		17,527,000			17,527,000
Accrued interest payable		1,794,934			1,415,713
Other liabilities		3,782,519			4,000,654
Total liabilities		605,000,067			606,799,503

STOCKHOLDERS' EQUITY
Preferred stock, no par value, 4,000,000 shares authorized; 0 shares and 7,750 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		-			757,213
Common stock and paid-in-capital, no par value, 6,000,000shares authorized; 4,917,761 and 4,789,023 shares issued at June 30, 2011and December 31, 2010, respectively; and 4,852,761 and 4,724,023shares outstanding at June 30, 2011 and December 31, 2010, respectively		44,520,823			43,740,155
Treasury stock, at cost, 65,000 shares at June 30, 2011 and December 31, 2010		(884,376	)		(884,376	)
Retained earnings		10,323,051			8,450,579
Accumulated other comprehensive income (loss), net of tax of $1,058,690 at June 30, 2011 and $548,730at December 31, 2010		2,055,104			1,065,181
Total stockholders' equity		56,014,602			53,128,752

Total liabilities and stockholders' equity	$	661,014,669		$	659,928,255

Tower Financial Corporation

Consolidated Statements of Operations

For the three months ended June 30, 2011 and 2010

(unaudited)

	For the Three Months Ended						For the Six Months ended
	June 30						June 30
	2011			2010			2011			2010
Interest income:
Loans, including fees	$	6,276,853		$	6,826,902		$	12,565,817		$	13,709,904
Securities - taxable		640,091			662,823			1,219,460			1,301,914
Securities - tax exempt		411,978			255,223			805,140			499,774
Other interest income		6,692			6,122			20,954			12,370
Total interest income		7,335,614			7,751,070			14,611,371			15,523,962
Interest expense:
Deposits		1,350,799			1,727,772			2,711,945			3,487,270
Fed Funds Purchased		196			111			385			111
FHLB advances		62,765			142,854			134,836			312,712
Trust preferred securities		201,214			283,071			400,567			563,297
Total interest expense		1,614,974			2,153,808			3,247,733			4,363,390

Net interest income		5,720,640			5,597,262			11,363,638			11,160,572
Provision for loan losses		1,125,000			1,100,000			2,345,000			2,440,000

Net interest income after provision for loan losses		4,595,640			4,497,262			9,018,638			8,720,572

Noninterest income:
Trust and brokerage fees		818,384			889,681			1,702,384			1,772,647
Service charges		259,774			280,053			550,624			570,439
Loan broker fees		159,995			167,069			268,383			284,569
Gain/(Loss) on sale of securities		396,836			41,708			455,505			42,548
Impairment on AFS securities		(1,288	)		(14,278	)		(126,287	)		(24,868	)
Other fees		438,547			369,916			868,852			686,508
Total noninterest income		2,072,248			1,734,149			3,719,461			3,331,843

Noninterest expense:
Salaries and benefits		2,694,184			2,273,975			5,253,266			4,661,051
Occupancy and equipment		589,434			630,224			1,209,040			1,259,502
Marketing		134,504			144,975			224,288			241,667
Data processing		391,398			116,300			700,703			425,212
Loan and professional costs		420,213			421,030			781,655			859,437
Office supplies and postage		63,565			71,103			112,512			134,292
Courier service		57,105			55,790			110,829			111,124
Business Development		136,008			99,832			226,627			178,840
Communication Expense		46,591			58,502			92,967			94,861
FDIC Insurance Premiums		349,923			490,467			856,771			992,672
OREO Expenses		165,523			945,519			357,443			1,001,316
Other expense		243,823			334,619			458,877			587,528
Total noninterest expense		5,292,271			5,642,336			10,384,978			10,547,502

Income/(loss) before income taxes/(benefit)		1,375,617			589,075			2,353,121			1,504,913
Income taxes expense/(benefit)		285,788			74,985			480,649			269,787

Net income/(loss)	$	1,089,829		$	514,090		$	1,872,472		$	1,235,126
Less: Preferred Stock Dividends		-			-			-			-
Net income/(loss) available to common shareholders	$	1,089,829		$	514,090		$	1,872,472		$	1,235,126

Basic earnings/(loss) per common share	$	0.23		$	0.13		$	0.39		$	0.30
Diluted earnings/(loss) per common share	$	0.22		$	0.12		$	0.39		$	0.30
Average common shares outstanding		4,835,510			4,090,432			4,795,424			4,090,416
Average common shares and dilutive potential common shares outstanding		4,853,035			4,394,419			4,852,898			4,090,416

Total Shares outstanding at end of period		4,852,761			4,090,432			4,852,761			4,090,432
Dividends declared per common share	$	-		$	-		$	-		$	-

Tower Financial Corporation

Consolidated Financial Highlights

(unaudited)

	Quarterly																								Year-To-Date
($ in thousands except for share data)	2nd Qtr 2011			1st Qtr 2011			4th Qtr 2010			3rd Qtr 2010			2nd Qtr 2010			1st Qtr 2010			4th Qtr 2009			3rd Qtr 2009			2011			2010

EARNINGS
Net interest income	$	5,721			5,643			5,521			5,580			5,597			5,563			5,381			5,077			11,364			11,160
Provision for loan loss	$	1,125			1,220			805			1,500			1,100			1,340			1,230			1,995			2,345			2,440
NonInterest income	$	2,072			1,647			1,825			2,657			1,734			1,598			1,490			1,210			3,719			3,332
NonInterest expense	$	5,292			5,093			5,345			5,350			5,642			4,905			6,079			5,468			10,385			10,547
Net income/(loss)	$	1,090			783			884			1,045			514			721			(1,202	)		(721	)		1,873			1,235
Basic earnings per share	$	0.23			0.16			0.19			0.24			0.13			0.18			(0.29	)		(0.18	)		0.39			0.31
Diluted earnings per share	$	0.22			0.16			0.18			0.22			0.12			0.17			(0.29	)		(0.18	)		0.39			0.29
Average shares outstanding		4,835,510			4,754,892			4,720,159			4,427,370			4,090,432			4,090,432			4,090,432			4,090,432			4,795,424			4,090,416
Average diluted shares outstanding		4,853,035			4,852,759			4,852,759			4,669,965			4,394,419			4,394,419			4,090,432			4,090,432			4,852,898			4,090,416

PERFORMANCE RATIOS
Return on average assets *		0.66	%		0.48	%		0.53	%		0.63	%		0.31	%		0.43	%		-0.70	%		-0.42	%		0.57	%		0.37	%
Return on average common equity *		7.92	%		5.92	%		6.56	%		8.17	%		4.26	%		6.17	%		-9.83	%		-6.13	%		6.94	%		5.20	%
Net interest margin (fully-tax equivalent) *		3.83	%		3.83	%		3.72	%		3.69	%		3.72	%		3.66	%		3.47	%		3.24	%		3.83	%		3.70	%
Efficiency ratio		67.91	%		69.85	%		72.76	%		64.95	%		76.96	%		68.50	%		88.47	%		86.97	%		68.85	%		72.78	%
Full-time equivalent employees		157.00			150.75			150.75			149.25			145.75			150.25			146.25			159.25			157.00			145.75

CAPITAL
Equity to assets		8.47	%		8.19	%		8.05	%		8.09	%		7.44	%		7.12	%		6.90	%		7.14	%		8.47	%		7.44	%
Regulatory leverage ratio		10.82	%		10.59	%		10.55	%		10.35	%		9.50	%		9.20	%		9.05	%		9.04	%		10.82	%		9.50	%
Tier 1 capital ratio		13.66	%		13.27	%		13.10	%		12.73	%		11.62	%		11.14	%		10.90	%		11.00	%		13.66	%		11.62	%
Total risk-based capital ratio		14.92	%		14.53	%		14.30	%		13.98	%		13.11	%		12.66	%		12.46	%		12.53	%		14.92	%		13.11	%
Book value per share	$	11.39			11.11			11.09			11.15			11.53			11.30			11.04			11.87			11.39			11.53
Cash dividend per share	$	0.000			0.000			0.000			0.000			0.000			0.000			0.000			0.000			0.000			0.000

ASSET QUALITY
Net charge-offs	$	1,015			1,802			332			2,202			531			789			4,537			2,045			2,817			1,320
Net charge-offs to average loans *		0.84	%		1.49	%		0.27	%		1.74	%		0.41	%		0.61	%		3.38	%		1.49	%		1.16	%		0.51	%
Allowance for loan losses	$	12,017			11,908			12,489			12,016			12,718			12,150			11,598			14,905			12,017			12,718
Allowance for loan losses to total loans		2.46	%		2.43	%		2.56	%		2.43	%		2.50	%		2.32	%		2.20	%		2.78	%		2.46	%		2.50	%
Other real estate owned (OREO)	$	3,729			4,741			4,284			3,843			6,477			4,443			4,634			3,990			3,729			6,477
Non-accrual Loans	$	9,663			12,738			12,939			10,768			10,360			13,974			13,466			20,219			3,729			10,360
90+ Day delinquencies	$	2,123			2,873			2,688			3,175			2,213			3,223			561			1,477			9,663			2,213
Restructured Loans	$	1,822			2,120			7,502			1,761			1,862			1,997			1,915			163			1,822			1,862
Total Nonperforming Loans		13,608			17,731			23,129			15,704			14,435			19,194			15,942			21,859			13,608			14,435
Impaired Securities (Market Value)		386			402			422			437			489			440			479			779			386			489
Total Nonperforming Assets		17,723			22,874			27,835			19,984			21,401			24,077			21,055			26,628			17,723			21,401
NPLs to Total loans		2.78	%		3.62	%		4.75	%		3.17	%		2.83	%		3.67	%		3.02	%		4.08	%		2.78	%		2.83	%
NPAs (w/o 90+) to Total assets		2.36	%		3.01	%		3.81	%		2.55	%		2.91	%		3.09	%		3.01	%		3.70	%		2.36	%		2.91	%
NPAs+90 to Total assets		2.68	%		3.44	%		4.22	%		3.03	%		3.25	%		3.57	%		3.10	%		3.92	%		2.68	%		3.25	%

END OF PERIOD BALANCES
Total assets	$	661,015			664,117			659,928			660,141			658,327			674,152			680,159			679,394			661,015			658,327
Total earning assets	$	621,981			621,273			609,196			613,286			611,996			626,197			629,904			633,742			621,981			611,996
Total loans	$	488,694			489,250			486,914			494,818			509,656			523,437			527,333			536,074			488,694			509,656
Total deposits	$	547,896			575,525			576,356			577,094			564,988			559,291			568,380			592,731			547,896			564,988
Stockholders' equity	$	56,015			54,413			53,129			53,382			48,950			48,002			46,936			48,541			56,015			48,950

AVERAGE BALANCES
Total assets	$	660,860			664,564			657,397			658,898			663,825			677,967			678,445			686,752			662,712			670,896
Total earning assets	$	620,723			618,266			605,306			614,742			617,060			629,582			628,983			636,503			619,495			623,321
Total loans	$	486,360			489,999			485,125			503,334			514,962			526,814			532,627			542,921			488,180			520,888
Total deposits	$	558,198			577,654			574,072			561,966			569,759			564,238			581,018			597,792			567,926			566,999
Stockholders' equity	$	55,213			53,662			53,438			50,744			48,404			47,421			48,507			46,678			54,438			47,913

* annualized for quarterly data

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