Profile: Tower Financial Corp (TOFC.OQ)
13 Mar 2014
Tower Financial Corporation, incorporated on July 8, 1998, is a bank holding company with one bank subsidiary, Tower Bank & Trust (the Bank or Tower Bank) and two unconsolidated subsidiary guarantor trusts, Tower Capital Trust 2, and Tower Capital Trust 3. The Bank has a direct wholly owned trust company subsidiary, Tower Trust Company (the Trust Company). Through September 30, 2011, the Bank also had a direct wholly owned Nevada investment subsidiary, Tower Capital Investments, Inc. that was formed for the purpose of holding long term investments and an indirect wholly owned subsidiary, Tower Funding Corporation. Tower Funding Corporation is a real estate investment trust, (REIT). The REIT purchases mortgage-backed real estate loans from the Bank. The Bank provides a range of commercial and consumer banking services from six locations in the metropolitan area of Fort Wayne, Allen County, Indiana, and one location in Warsaw, Indiana. The Bank offers a range of deposit products, including checking, savings, and money market accounts, certificates of deposit and direct deposit services. Trust investment and management services are offered by the Trust Company.
The Company makes loans to individuals and businesses located within its market area. As December 31, 2011, its loan portfolio consisted of commercial and commercial real estate loans (71.9%), residential mortgage loans (17.7%) and personal loans (10.4%). The Bank’s legal lending limit under applicable federal banking regulations is approximately $11.6 million, based on the legal lending limit of 15% of the Bank’s total risk-based capital. Its lending activities focus primarily on providing small-and medium-sized businesses in its market area with commercial loans. These loans are both secured and unsecured and are made available for general operating purposes, including acquisition of fixed assets such as real estate, equipment and machinery, and lines of credit collateralized by inventory and accounts receivable. Commercial and industrial loans consisted of 46.3% of total loans as of December 31, 2011. Commercial and industrial loans also include revolving notes for working capital that range in maturity from on demand to no longer than one year.
The Company provides fixed rate, long-term residential mortgage loans and floating, short-term construction loans to its customers. During the year ended December 31, 2011, it originated $4.9 million in construction loans and $68.9 million of residential mortgage loans, of which it retained $25.5 million, sold $38.7 million in the secondary market, and brokered $4.7 million. It makes personal loans and lines of credit available to consumers for various purposes, such as the purchase of automobiles, boats and other recreational vehicles, as well as to make home improvements and personal investments. The majority of its personal loans are home equity loans secured by a second lien on real estate. It retains all of such loans in its loan portfolio.
The Bank invest funds that it retains from time to time in various debt instruments, including but not limited to obligations guaranteed by the United States, general obligations of a state or political subdivision thereof, bankers’ acceptance of deposit of United States commercial banks, commercial paper of United States issuers, or trust preferred securities. The Bank has two of these investments, a $20,000 investment in an economic development venture capital limited partnership focusing on businesses located in Northeast Indiana; a $54,505 investment in a limited liability company formed for the purpose of acting as an agent for the sale of title insurance in the state of Indiana, and an equity investment with an initial investment of $1 million in a limited partnership focused on financial holding companies, primarily bank holding companies.
Sources of Funds
The Bank funds its operations and loan growth primarily with local deposits. Secondarily, the Bank uses alternative funding sources as needed, including advances from the Federal Home Loan Bank, out-of-market deposits (including national market CDs and brokered CDs) and other forms of wholesale financing. It generates deposits primarily through offering an array of deposit products to individuals, businesses, associations, financial institutions, and government entities in its primary market areas. Its deposit services include checking, savings, health savings accounts, money market accounts, certificates of deposit, direct deposit services, and telephone and Internet banking. It also offers a courier service for the deposit convenience of its business customers, as well as wholesale lockbox and other business deposit and cash management services. The Company also generates certificates of deposit through national, so-called out-of-market sources. These deposits include brokered deposits. As of December 31, 2011, approximately 83.0% of its deposits were generated in-market, while 17.0% were out-of-market deposits.
The Company’s investment management and trust services provide a wide range of traditional personal trust services to customers in its market area. Its trust services include estate planning and money management, as well as traditional revocable trusts, irrevocable trusts, charitable trusts, estate administration, guardianship administration, individual retirement account (IRA) administration, personal and institutional investment management and custodial services.
Tower Financial Corp
116 East Berry Street
FORT WAYNE IN 46802