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

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8-K - FORM 8-K - TOWER FINANCIAL CORP	tofc_8k-102512.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 THIRD QUARTER NET INCOME OF $1.6 MILLION

FORT WAYNE, INDIANA – OCTOBER 25, 2012 –Tower Financial Corporation (NASDAQ: TOFC) reported net income of $1.6 million or $0.32 per diluted share for the third quarter of 2012, compared with net income of $1.3 million, or $0.27 per diluted share, reported for the third quarter of 2011. Year to date earnings through the first nine months of 2012 were $4.0 million, or $0.83 per diluted share, compared to $3.2 million, or $0.66 per diluted share for the first nine months of 2011.

Our third quarter highlights include:

Our $4.0 million net income through the first nine months already exceeds the $3.6 million reported for the full calendar year of 2006, which was our second highest annual net income year in our history.

Sixth consecutive quarter with earnings in excess of $1.0 million, and “Core” quarterly earnings of $2.9 million. We define core earnings as income before taxes, loan loss provision, and unusual items not related to day to day operations (primarily securities sales and other real estate owned (“OREO”) expenses)

Trust assets under management grew to $675.2 million, an increase of $80.6 million from December 31, 2011.

Our Board of Directors approved a cash dividend of $0.055 per share, payable on November 15, 2012 to shareholders of record on November 1, 2012.

Our leverage capital ratio (Tier 1 Capital divided by average quarterly assets) is now at 12 percent, which is more than double the regulatory requirement of 5% to be considered “well-capitalized”.

“I have shared in the past how pleased we are with the improvement in our results, but we believe we can do better. Our team continues to prove this time and time again, which is demonstrated by this quarter’s results.” stated Mike Cahill, President and CEO. “While we have made and continue to make headway on asset quality, we believe we have significant upside to be gained on that front. We believe that we have terrific opportunities with our Health Savings Accounts (HSA) and that we have only begun to scratch the surface in this area. Our Trust Company has established itself as the local ‘go to’ shop, but even here, we have tremendous upside and we are trying to improve. Our commercial lending team, retail team, residential mortgage team, and private banking teams are all poised to significantly improve Tower’s presence and impact. While we may be going through a tough economic and banking environment, at Tower we are excited about the future.”

Capital

The Company’s regulatory capital ratios continue to remain significantly above the “well-capitalized” levels of 6 percent for tier 1 capital and 10 percent for total risk-based capital. Tier 1 capital at September 30, 2012 was 15.2 percent compared to 14.9 percent at June 30, 2012 and 13.9 percent at December 31, 2011. Total risk-based capital at September 30, 2012 was 16.5 percent compared to 16.2 percent at June 30, 2012 and 15.2 percent at December 31, 2011. Our leverage capital grew to 12.0 percent at September 30, 2012, more than double the regulatory requirement of 5 percent to be considered “well-capitalized”.

The following table shows the current capital position as of September 30, 2012 in both dollars and percentages, compared to the minimum amounts required per regulatory standards for “well-capitalized” institutions.

Minimum Dollar Requirements	Regulatory	Tower
($000's omitted)	Minimum (Well-Capitalized)	9/30/12	Excess
Tier 1 Capital / Risk Assets	$30,541	$77,395	$46,854

Total Risk Based Capital / Risk Assets	$50,902	$83,785	$32,883

Tier 1 Capital / Average Assets (Leverage)	$32,256	$77,395	$45,139

Minimum Percentage Requirements	Regulatory	Tower
	Minimum (Well-Capitalized)	9/30/12
Tier 1 Capital / Risk Assets	6% or more	15.20%

Total Risk Based Capital / Risk Assets	10% or more	16.46%

Tier 1 Capital / Quarterly Average Assets	5% or more	12.00%

Asset Quality

Our nonperforming assets were $17.2 million, or 2.7 percent of total assets as of September 30, 2012. This compares with $17.0 million at June 30, 2012 and $16.0 million at December 31, 2011. Our net charge-offs were $1.1 million for the third quarter of 2012, or 1.0 percent of average outstanding loans for the quarter. This compares to net charge-offs of $1.0 million, or 0.9 percent of average loans for the second quarter of 2012 and $2.9 million, or 2.3 percent of average loans for the third quarter of 2011. Net charge-offs during the third quarter related primarily to one loan relationship, which was fully reserved as of June 30, 2012. Our loan loss provision for the third quarter of 2012 was $618,000 compared to $925,000 for the second quarter of 2012 and $900,000 for the third quarter of 2011.

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

($000's omitted)	9/30/12			6/30/12			3/31/12			12/31/11			9/30/11
Non-Accrual loans
Commercial	$	7,112		$	6,988		$	7,213		$	5,020		$	5,978
Acquisition & Development		2,175			3,176			3,268			2,134			2,464
Commercial Real Estate		764			948			1,515			977			1,078
Residential Real Estate		2,032			2,163			1,630			551			393
Home Equity		-			-			748			-			-
Total Non-accrual loans		12,083			13,275			14,374			8,682			9,913
Trouble-debt restructered (TDR) *		1,557			360			-			1,805			1,810
OREO & Other impaired assets		2,375			2,562			2,878			3,129			3,827
Deliquencies greater than 90 days		913			472			902			2,007			1,028
Impaired Securities		317			307			314			331			332

Total Non-Performing Assets	$	17,245		$	16,976		$	18,468		$	15,954		$	16,910

Allowance for Loan Losses (ALLL)	$	8,539		$	9,032		$	9,108		$	9,408		$	10,065

ALLL / Non-accrual loans		70.7	%		68.0	%		63.4	%		108.4	%		101.5	%

Classified Assets	$	37,145		$	30,368		$	28,759		$	28,108		$	35,475

* Non-performing TDR's

The two loan relationships that were classified as a TDR in the fourth quarter of 2011 were all taken to non-accrual status during the first quarter and are included in the non-accrual loan balances shown above. One new TDR was added during the third quarter of 2012 in the amount of $1.2 million and will be included in nonperforming assets until a consistent payment history can be documented, which is typically six months. There are currently two relationships included in this category at September 30, 2012 in the amount of $1.6 million.

Our delinquencies greater than 90 days have decreased by $1.1 million from the fourth quarter of 2011, but have increased $441,000 from the second quarter 2012. The increase in the third quarter was primarily due to a commercial loan that had matured and wasn’t renewed until after September 30, 2012 causing it to be administratively delinquent at quarter end. The renewal of this loan in October resolved the delinquent status.

Our non-accrual commercial loan category increased by $124,000 during the third quarter of 2012. The primary reason for the increase was the addition of two relationships totaling $271,000. Offsetting the increase was one small charge-off of $11,000 and payments of $136,000. At September 30, 2012, there were twelve relationships within this category, and four of those relationships comprised 65.4 percent of the total.

Our non-accrual acquisition and development category decreased by $1.0 million during the third quarter of 2012. The decrease was due to a charge-off of the specific reserve on one relationship in the amount of $926,000. The remaining decrease was the result of receiving payments on the five relationships that made up this category of loans, of which one loan made up 45.0 percent of the total.

Our non-accrual commercial real estate category decreased by $184,000 during the third quarter due to a charge-off in the amount of $119,000 and the transition of one loan into OREO in the amount of $60,000. This category was comprised of three relationships as of September 30, 2012.

Our non-accrual residential category decreased by $131,000 during the third quarter of 2012 due to two loans that have or will be moving to OREO. One of these loans was charged-down to fair value by $43,000 and foreclosure will likely occur in the fourth quarter of 2012. The other loan moved into OREO during the third quarter causing a decrease by the balance of the loan in the amount of $79,000. This category is comprised of six relationships with two relationships making up 76.4 percent of the total.

Our non-accrual home equity category decreased by $748,000 from March 31, 2012 and had no loans in it at June 30, 2012 or at September 30, 2012. Of the two loans that made up this category in the first quarter, one was charged-off in the amount of $338,000 and the other was resolved and returned to accruing status.

OREO and other impaired assets decreased by $187,000 during the third quarter as a result of commercial real estate property sales in the amount of $399,000 offset by the addition of four residential real estate properties totaling $82,000. Also offsetting the decrease in this category was the addition of $130,000, which represents the fair value of the Company's participation in an aircraft lease that has expired. During the third quarter, the value of the asset decreased and was written down from $261,000 to $130,000.

Our classified assets, defined as substandard, non-accrual loans, impaired investments, and OREO, increased by $6.8 million during the third quarter and totaled $37.1 million at September 30, 2012. Our classified assets were 44.0 percent of tier 1 capital plus ALLL (classified assets ratio) as of September 30, 2012. Our classified assets ratio at June 30, 2012 was 36.5 percent and was 44.3 percent at September 30, 2011. The increase relates primarily to previously identified loans that were downgraded from special mention to substandard during the quarter, including one relationship totaling $5.2 million. Our total “watch list” loans was $41.5 million at September 30, 2012, a decrease of $4.0 million from the second quarter and a $12.4 million decrease from December 31, 2011. Watch list loans now comprise 9.1 percent of the total loan portfolio. The watch list comprises all non “pass” rated credits, including substandard and classified.

“While our classified assets did increase during the third quarter, we are encouraged by the decline in our total watch list loans”, stated Rick Sawyer, Chief Financial Officer of Tower Financial Corporation. “We believe this is a good indication that we have stabilized the asset quality in our current portfolio, allowing us to focus on working through legacy credits that have been and still are rated special mention and classified”.

The allowance for loan losses was $8.5 million at September 30, 2012, a decrease of $493,000 from the $9.0 million reported at June 30, 2012. The quarterly decrease was the net result of loan loss provision of $618,000, offset by $1.1 million of net charge-offs. The year to date loan loss provision was $2.3 million, offset by $3.2 million in net charge-offs. The allowance for loan losses was 1.87 percent of total loans at September 30, 2012, a decrease from 2.03 percent at December 31, 2011 and from 2.34 percent at September 30, 2011.

Balance Sheet

Company assets were $649.5 million at September 30, 2012, a decrease of $51.2, or 7.3 percent from December 31, 2011. The significant decrease stems from two large December short-term deposits that increased our assets by approximately $48 million as of the end of the year. As described in our fourth quarter earnings release and annual report on form 10-K, these deposits were short-term in nature and, as expected, left the Bank by the end of January 2012. Taking these short-term deposit reductions into account, our assets decreased by approximately $3.2 million during the first nine months of 2012.

Our total loans at September 30, 2012 were $457.9 million, compared to $462.6 million at December 31, 2011. The decrease of $4.7 million, or 1.0 percent, came primarily from commercial loans and home equity loans, which decreased by $9.0 million and $2.3 million respectively. These decreases were offset by increases of $4.3 million in commercial real estate loans and $3.4 million in residential mortgage loans.

Our securities available for sale at September 30, 2012 were $135.0 million, an increase of $6.4 million from December 31, 2011. Securities available for sale now comprise 20.8 percent of total assets. We have been strategically increasing the size of our investment portfolio to help combat future margin compression and a reduction in our loan portfolio as we continue to clean up our asset quality. We are focusing on preserving our current level of net interest income as prudently as possible. The increase in the portfolio will most likely result in the further compression of our net interest margin and an increase in our overall assets.

Our total deposits at September 30, 2012 were $530.3 million compared to $602.0 million at December 31, 2011. As described above, we received two large, short-term, deposits of approximately $48 million in December 2011 that increased our deposit totals. Therefore, our adjusted deposits at December 31, 2011 were approximately $554.0 million. Excluding these short-term deposits, our deposit portfolio decreased by approximately $24 million during the first nine months of 2012. The decrease is primarily due to a reduction in brokered CD’s of $30.1 million, offset by an increase of $6.3 million in in-market deposits. In-market deposit growth was led by our HSA product which grew $13.6 million during the first nine months of 2012. Offsetting this growth was a decline in both jumbo and non-jumbo CD’s. Our core deposits at September 30, 2012 were $439.5 million and comprised 82.9 percent of total deposits.

Our borrowings were $45.0 million at September 30, 2012 and were comprised of $17.5 million in trust preferred debt and $27.5 million in borrowings from the Federal Home Loan Bank of Indianapolis (“FHLBI”).

Shareholders' equity was $67.1 million at September 30, 2012, an increase of 8.1 percent from the $62.1 million reported at December 31, 2011. Affecting the year to date increase in stockholders’ equity was net income of $4.0 million, $277,300 of additional paid in capital from the accounting treatment for restricted stock vesting and issuance of shares related to the long-term incentive plan, and an increase of $1.0 million in unrealized gains, net of tax, on securities available for sale. Currently, we have 4,876,994 common shares outstanding. Tangible book value at September 30, 2012 was $13.77 per common share.

Operating Statement

Our total revenue, consisting of net interest income and noninterest income, was $7.8 million for the third quarter of 2012, roughly the same as reported for the second quarter 2012. Net interest income for the third quarter of 2012 was $5.6 million, a decrease of $91,000 from the second quarter of 2012. The quarter over quarter decrease in our net interest income was primarily the result of an 11 basis point decline in our net interest margin. This reduction in our margin came from yield reductions on earning assets. Our yield on loans dropped to 4.74 percent during the third quarter from the 4.84 percent reported for the second quarter, while the yield on our investment portfolio dropped to 3.61 percent from 3.92 percent quarter over quarter. This was offset slightly by our continued reduction in our cost of funds, which decreased to 0.73 percent for the third quarter 2012 from the 0.78 percent reported for the second quarter. We expect this trend to continue due to the extended low rate environment and limited reinvestment and loan opportunities. As mentioned in our balance sheet section, we will continue to prudently increase the investment portfolio as we focus on maintaining our current level of net interest income.

Non-interest income was $2.2 million for the third quarter of 2012, which represented 28.2 percent of total revenue. This is an increase of $77,000 from the second quarter of 2012. The increase relates primarily to an increase of $76,000 in trust and brokerage fee income. Trust and brokerage assets under management were $675.2 million at September 30, 2012, an increase of $37.4 million or 5.9 percent, from the $637.8 million reported as June 30, 2012. Mortgage production continues at a high pace with $29.3 million in closings with $20.0 million of that production being originated for sale for the third quarter, which generated $477,000 of fee income compared to the $375,000 reported for the second quarter 2012. Other fee categories remained relatively flat quarter over quarter.

Non-interest expenses of $5.0 million remained flat quarter over quarter. There were no significant fluctuations in the individual expense categories from the second quarter 2012. We expect this trend to continue for the remainder of the year

ABOUT THE COMPANY

Headquartered in Fort Wayne, Indiana, Tower Financial Corporation is a financial services holding company with one subsidiary; Tower Bank & Trust Company (Tower Bank), 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 50 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, by their nature, are predictive and are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about our company.

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

Tower Financial Corporation

Consolidated Balance Sheets

At September 30, 2012 and December 31, 2011

	(unaudited)
	September 30			December 31
	2012			2011
ASSETS
Cash and due from banks	$	10,333,854		$	60,753,268
Short-term investments and interest-earning deposits		514,469			3,260,509
Federal funds sold		2,787,294			3,258,245
Total cash and cash equivalents		13,635,617			67,272,022

Interest bearing deposits		457,000			450,000
Securities available for sale, at fair value		135,044,138			128,619,951
FHLBI and FRB stock		3,807,700			3,807,700
Loans Held for Sale		7,008,138			4,930,368

Loans		457,864,803			462,561,174
Allowance for loan losses		(8,539,180	)		(9,408,013	)
Net loans		449,325,623			453,153,161

Premises and equipment, net		8,903,340			9,062,817
Accrued interest receivable		2,363,387			2,675,870
Bank Owned Life Insurance		17,526,430			17,084,858
Other Real Estate Owned		2,245,003			3,129,231
Prepaid FDIC Insurance		1,058,911			1,551,133
Other assets		8,090,441			8,944,145

Total assets	$	649,465,728		$	700,681,256

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	110,088,104		$	169,757,998
Interest-bearing		420,189,726			432,278,838
Total deposits		530,277,830			602,036,836

Fed Funds Purchased		-			-
Short-term borrowings		3,962,905			-
Federal Home Loan Bank advances		23,500,000			12,000,000
Junior subordinated debt		17,527,000			17,527,000
Accrued interest payable		118,010			2,148,424
Other liabilities		6,939,975			4,871,924
Total liabilities		582,325,720			638,584,184

STOCKHOLDERS' EQUITY
Preferred stock, no par value, 4,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock and paid-in-capital, no par value, 6,000,000 shares authorized; 4,941,994 and 4,918,136 shares issued at September 30, 2012 and December 31, 2011, respectively; and 4,876,994 and 4,853,136 shares outstanding at September 30, 2012 and December 31, 2011, respectivley		44,820,086			44,542,795
Treasury stock, at cost, 65,000 shares at September 30, 2012 and December 31, 2011		(884,376	)		(884,376	)
Retained earnings		18,817,231			15,070,115
Accumulated other comprehensive income (loss), net of tax of $2,260,004 at September 30, 2012 and $1,735,307 at December 31, 2011		4,387,067			3,368,538
Total stockholders' equity		67,140,008			62,097,072

Total liabilities and stockholders' equity	$	649,465,728		$	700,681,256

Tower Financial Corporation

Consolidated Statements of Operations

For the three and nine months ended September 30, 2012 and 2011

(unaudited)

	For the Three Months Ended September 30						For the Nine Months ended September 30
	2012			2011			2012			2011
Interest income:
Loans, including fees	$	5,525,196		$	6,272,290		$	16,764,224		$	18,838,107
Securities - taxable		441,668			536,123			1,466,913			1,748,639
Securities - tax exempt		486,401			428,152			1,465,887			1,240,236
Other interest income		6,696			4,651			36,533			25,605
Total interest income		6,459,961			7,241,216			19,733,557			21,852,587
Interest expense:
Deposits		714,875			1,302,033			2,516,593			4,013,978
Fed Funds Purchased		159			227			257			612
FHLB advances		40,469			50,376			117,234			185,212
Trust preferred securities		89,854			204,540			366,799			605,107
Total interest expense		845,357			1,557,176			3,000,883			4,804,909

Net interest income		5,614,604			5,684,040			16,732,674			17,047,678
Provision for loan losses		618,000			900,000			2,293,000			3,245,000

Net interest income after provision for loan losses		4,996,604			4,784,040			14,439,674			13,802,678

Noninterest income:
Trust and brokerage fees		998,715			803,317			2,866,570			2,505,701
Service charges		257,509			262,668			828,370			813,292
Mortgage banking income		477,319			530,391			1,082,140			798,774
Gain/(Loss) on sale of securities		9,110			331,248			75,809			776,753
Net debit card interchange income		162,432			153,735			563,933			453,674
Bank owned life insurance income		150,082			146,711			441,572			421,042
Impairment on AFS securities		(688	)		(22,758	)		(688	)		(149,045	)
Other fees		147,792			166,963			485,872			471,545
Total noninterest income		2,202,271			2,372,275			6,343,578			6,091,736

Noninterest expense:
Salaries and benefits		2,867,136			2,785,886			8,514,808			8,039,152
Occupancy and equipment		640,569			608,867			1,891,978			1,817,907
Marketing		111,882			107,450			307,187			331,738
Data processing		301,914			311,439			991,534			1,012,142
Loan and professional costs		342,182			459,979			1,018,604			1,241,634
Office supplies and postage		51,360			57,505			160,365			170,017
Courier service		58,341			56,097			175,674			166,926
Business Development		90,535			99,801			331,147			326,428
Communication Expense		62,489			50,422			168,235			143,389
FDIC Insurance Premiums		138,754			261,642			521,709			1,118,413
OREO Expenses		15,123			280,690			449,022			638,133
Other expense		338,926			328,092			763,069			786,969
Total noninterest expense		5,019,211			5,407,870			15,293,332			15,792,848

Income/(loss) before income taxes/(benefit)		2,179,664			1,748,445			5,489,920			4,101,566
Income taxes expense/(benefit)		617,028			423,860			1,474,570			904,509

Net income/(loss)	$	1,562,636		$	1,324,585		$	4,015,350		$	3,197,057
Less: Preferred Stock Dividends		-			-			-			-
Net income/(loss) available to common shareholders	$	1,562,636		$	1,324,585		$	4,015,350		$	3,197,057

Basic earnings/(loss) per common share	$	0.32		$	0.27		$	0.83		$	0.66
Diluted earnings/(loss) per common share	$	0.32		$	0.27		$	0.83		$	0.66
Average common shares outstanding		4,874,660			4,852,761			4,860,363			4,814,746
Average common shares and dilutive potential common shares outstanding		4,874,660			4,852,761			4,860,363			4,852,852

Total Shares outstanding at end of period		4,876,994			4,852,761			4,876,994			4,852,761
Dividends declared per common share	$	0.055		$	-		$	0.055		$	-

Tower Financial Corporation

Consolidated Financial Highlights

(unaudited)

	Quarterly																					Year-To-Date
($ in thousands except for share data)	3rd Qtr 2012			2nd Qtr 2012			1st Qtr 2012			4th Qtr 2011			3rd Qtr 2011			2nd Qtr 2011			1st Qtr 2011			2012			2011


EARNINGS
Net interest income	$	5,615			5,706			5,412			5,707			5,684			5,721			5,643			16,733			17,048
Provision for loan loss	$	618			925			750			975			900			1,125			1,220			2,293			3,245
NonInterest income	$	2,202			2,126			2,016			2,059			2,372			2,072			1,647			6,344			6,091
NonInterest expense	$	5,019			5,025			5,249			5,826			5,408			5,292			5,093			15,293			15,793
Net income/(loss)	$	1,563			1,365			1,088			3,422			1,325			1,090			783			4,016			3,198
Basic earnings per share	$	0.32			0.28			0.22			0.71			0.27			0.23			0.16			0.83			0.66
Diluted earnings per share	$	0.32			0.28			0.22			0.71			0.27			0.22			0.16			0.83			0.66
Average shares outstanding		4,874,660			4,853,136			4,853,136			4,853,645			4,852,761			4,835,510			4,754,892			4,860,363			4,814,746
Average diluted shares outstanding		4,874,660			4,853,136			4,853,136			4,853,645			4,852,761			4,853,035			4,852,759			4,860,363			4,852,852

PERFORMANCE RATIOS
Return on average assets *		0.96	%		0.84	%		0.65	%		2.02	%		0.80	%		0.66	%		0.48	%		0.81	%		0.65	%
Return on average common equity *		9.43	%		8.53	%		6.92	%		23.22	%		9.24	%		7.92	%		5.92	%		8.31	%		7.74	%
Net interest margin (fully-tax equivalent) *		3.87	%		3.98	%		3.76	%		3.90	%		3.80	%		3.83	%		3.83	%		3.87	%		3.82	%
Efficiency ratio		64.21	%		64.16	%		70.67	%		75.02	%		67.13	%		67.91	%		69.85	%		66.27	%		68.25	%
Full-time equivalent employees		154.50			157.00			158.00			151.00			158.50			157.00			150.75			154.50			158.50

CAPITAL
Equity to assets		10.34	%		9.97	%		9.76	%		8.86	%		8.80	%		8.47	%		8.19	%		10.34	%		8.80	%
Regulatory leverage ratio		12.00	%		11.71	%		11.13	%		10.97	%		11.09	%		10.82	%		10.59	%		12.00	%		11.09	%
Tier 1 capital ratio		15.20	%		14.87	%		14.74	%		13.91	%		14.02	%		13.66	%		13.27	%		15.20	%		14.02	%
Total risk-based capital ratio		16.46	%		16.13	%		15.99	%		15.16	%		15.28	%		14.92	%		14.53	%		16.46	%		15.28	%
Book value per share	$	13.77			13.38			13.06			12.79			11.97			11.54			11.11			13.77			11.97
Cash dividend per share	$	0.055			0.000			0.000			0.000			0.000			0.000			0.000			0.055			0.000

ASSET QUALITY
Net charge-offs	$	1,111			1,001			1,050			1,632			2,852			1,015			1,802			3,162			5,669
Net charge-offs to average loans *		0.95	%		0.86	%		0.91	%		1.38	%		2.34	%		0.84	%		1.49	%		0.91	%		1.56	%
Allowance for loan losses	$	8,539			9,032			9,108			9,408			10,065			12,017			11,908			8,539			10,065
Allowance for loan losses to total loans		1.86	%		1.95	%		1.99	%		2.03	%		2.14	%		2.46	%		2.43	%		1.86	%		2.14	%
Other real estate owned (OREO)	$	2,245			2,562			2,878			3,129			3,827			3,729			4,741			2,245			3,827
Non-accrual Loans	$	12,083			13,275			14,375			8,682			9,913			9,663			12,738			2,245			3,827
90+ Day delinquencies	$	913			472			902			2,007			1,028			2,123			2,873			12,083			9,913
Restructured Loans	$	4,242			3,692			1,802			1,805			1,810			1,822			2,120			4,242			1,810
Total Nonperforming Loans		14,553			14,107			15,277			12,494			12,751			13,608			17,731			14,553			12,751
Impaired Securities (Market Value)		317			307			314			331			332			386			402			317			332
Other Impaired Assets (Dougherty)		130			-			-			-			-			-			-			130			0
Total Nonperforming Assets		17,245			16,976			18,469			15,954			16,910			17,723			22,874			17,245			16,910
NPLs to Total loans		3.18	%		3.04	%		3.34	%		2.70	%		2.71	%		2.78	%		3.62	%		3.18	%		2.71	%
NPAs (w/o 90+) to Total assets		2.51	%		2.53	%		2.71	%		1.99	%		2.41	%		2.36	%		3.01	%		2.51	%		2.41	%
NPAs+90 to Total assets		2.66	%		2.61	%		2.84	%		2.28	%		2.56	%		2.68	%		3.44	%		2.66	%		2.56	%

END OF PERIOD BALANCES
Total assets	$	649,466			651,239			649,343			700,681			659,725			661,015			664,117			649,466			659,725
Total earning assets	$	607,484			601,014			601,190			606,888			602,291			621,981			621,273			607,484			602,291
Total loans	$	457,865			463,833			457,260			462,561			470,877			488,694			489,250			457,865			470,877
Total deposits	$	530,278			551,486			552,191			602,037			565,937			547,896			575,525			530,278			565,937
Stockholders' equity	$	67,140			64,934			63,374			62,097			58,071			56,015			54,413			67,140			58,071

AVERAGE BALANCES
Total assets	$	647,999			650,713			671,686			671,384			656,408			660,860			664,564			656,799			660,611
Total earning assets	$	603,004			603,119			605,429			606,775			616,024			620,723			618,266			603,851			618,338
Total loans	$	464,046			464,802			462,661			467,932			483,442			486,360			489,999			463,836			486,600
Total deposits	$	544,142			550,441			572,134			576,898			559,615			558,198			577,654			555,572			565,156
Stockholders' equity	$	65,927			64,180			63,021			58,468			56,914			55,213			53,662			64,376			55,263

* annualized for quarterly data

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