FIRST LEESPORT BANCORP INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2001

Commission File Number 0-14555

FIRST LEESPORT BANCORP, INC._____________
(Exact name of Registrant as specified in its Charter)

Pennsylvania 23-2354007
(State or Other Juris- (I.R.S. Employer
diction of Incorporation) Identification No.)

1240 Broadcasting Road
Wyomissing, Pennsylvania 19610
(Address of Principal Executive Offices)

(610) 208-0966
Registrant's Telephone Number:

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $5.00 Par Value
(Title of Class)

The Registrant has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No. ___

Indicate by checkmark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

As of February 19, 2002, the aggregate market value of the
Common Stock (based upon the average sales price on such date)
of the Registrant held by nonaffiliates was approximately
$48.3 million.

Number of Shares of Common Stock Outstanding at February 19,
2002: 3,084,950.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement prepared
in connection with its Annual Meeting of Stockholders to be held
on April 23, 2002 are incorporated in Part III hereof.

INDEX

PAGE

PART I

Item 1. Business........................................ 4

Item 2. Properties......................................13

Item 3. Legal Proceedings...............................15

Item 4. Submission of Matters to a Vote of Security
Holders.........................................15

Item 4A. Executive Officers of the Registrant............15

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters.....................17

Item 6. Selected Financial Data.........................19

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................19

Item 7A. Quantitative and Qualitative Disclosures
About Market Risk...............................45

Item 8. Financial Statements and Supplementary Data.....46

Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure......................................85

PART III

Item 10. Directors and Executive Officers of the
Registrant......................................85

Item 11. Executive Compensation..........................85

Item 12. Security Ownership of Certain Beneficial
Owners and Management...........................86

Item 13. Certain Relationships and Related
Transactions....................................86

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K.........................86

SIGNATURES..................................................90

PART I

FORWARD LOOKING STATEMENTS

Except for historical information, this report may be
deemed to contain "forward looking" statements. First Leesport
Bancorp, Inc. (the "Company") desires to avail itself of the
Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act") and is including this
cautionary statement for the express purpose of availing itself
of the protection afforded by the Reform Act.

Examples of forward looking statements include, but are not
limited to (a) projections of or statements regarding future
earnings, net interest income, other income, earnings or loss
per share, asset mix and quality, growth prospects, capital
structure and other financial terms, (b) statements of plans and
objectives of the Company or its management or Board of
Directors, (c) statements of future economic performance, and
(d) statements of assumptions, such as economic conditions in
the Company's market areas, underlying other statements and
statements about the Company or its businesses. Such forward
looking statements can be identified by the use of forward
looking terminology such as "believes," "expects," "may,"
"intends," "will," "should," "anticipates," or the negative of
any of the foregoing or other variations thereon or comparable
terminology, or by discussion of strategy.

No assurance can be given that the future results covered
by the forward-looking statements will be achieved. Such
statements are subject to risks, uncertainties, and other
factors which could cause actual results to differ materially
from future results expressed or implied by such forward-looking
statements. Important factors that could impact the Company's
operating results include, but are not limited to, (i) the
effects of changing economic conditions in the Company's market
areas and nationally, (ii) credit risks of commercial, real
estate, consumer and other lending activities, (iii) significant
changes in interest rates, (iv) changes in federal and state
banking, insurance, and investment laws and regulations which
could impact the Company's operations, (v) funding costs, and
(vi) other external developments which could materially affect
the Company's business and operations.

Item 1. Business

The Company

First Leesport Bancorp, Inc. (the "Company") is a
Pennsylvania business corporation headquartered at 1240
Broadcasting Road, Wyomissing, Pennsylvania 19610. The Company
was organized as a bank holding company on January 1, 1986. On
January 7, 2002, the Company filed an election with the Board of
Governors of the Federal Reserve System to become a financial
holding company. The election became effective on February 7,
2002. The Company offers a wide array of financial services
through its various subsidiaries. The Company's executive
offices are located at 1240 Broadcasting Road, Wyomissing,
Pennsylvania 19610.

At December 31, 2001, the Company had total assets of $504
million, total shareholders' equity of $45 million, and total
deposits of $332 million.

The Bank

The Company's wholly-owned banking subsidiary is Leesport
Bank ("Leesport Bank" or the "Bank"), a Pennsylvania chartered
commercial bank. During the year ended December 31, 2000, the
charters of The First National Bank of Leesport and Merchants
Bank of Pennsylvania, both wholly-owned banking subsidiaries of
the Company, were merged into a single charter under the name
Leesport Bank. The First National Bank of Leesport was
incorporated under the laws of the United States of America as a
national bank in 1909. Since its inception, Leesport Bank, or
its predecessor, the First National Bank of Leesport, has
operated as a banking institution doing business in Berks
County, Pennsylvania. Merchants Bank of Pennsylvania, a
Pennsylvania chartered commercial bank, was acquired in 1999 as
a result of the merger between the Company and Merchants of
Shenandoah Ban-Corp. Merchants Bank of Pennsylvania, now a
division of the Bank, operates in the counties of Schuylkill and
Luzerne in Pennsylvania.

At December 31, 2001, the Bank had the equivalent of 137
full-time employees.

Leesport Bank provides services to its customers through
twelve full service offices, nine of which operate under
Leesport Bank's name in Leesport, Blandon, Bern Township,
Wyomissing Hills, Breezy Corner, Hamburg, Birdsboro, Schuylkill
Haven, and Reading, all of which are in Berks County,
Pennsylvania, except for the Schuylkill Haven financial center,
which is located in Schuylkill County, Pennsylvania, and three
of which operate under the name Merchants Bank, a division of
Leesport Bank, in Shenandoah, Schuylkill County, in Drums and in
Hazel Township, both located in Luzerne County. The Bank also
operates a limited service facility in Wernersville, Berks
County, Pennsylvania and a drive-up only facility in Hazleton,
Luzerne County, Pennsylvania. All offices, except the
Wernersville office, provide automated teller machine services.
Each office, except the Wernersville, Breezy Corner, and Drums
offices, provides drive-in facilities. (See "Properties.")

The Bank engages in full service commercial and consumer
banking business, including such services as accepting deposits
in the form of time, demand and savings accounts. Such time
deposits include certificates of deposit, individual retirement
accounts, Roth IRA accounts, and club accounts. The Bank's
savings accounts include money market accounts, NOW accounts and
traditional regular savings accounts. In addition to accepting
deposits, the Bank makes both secured and unsecured commercial
and consumer loans, finances commercial transactions, provides
equipment lease and accounts receivable financing, makes
construction and mortgage loans, including home equity loans,
and rents safe deposit facilities. The Bank also provides small
business loans and student loans.

In early 2001, the Bank formed a strategic alliance with
INA Trust Company in order to offer personal trust services to
its customers. The alliance enabled the Bank to enter the trust
business quickly and without incurring significant start-up
expenses. Personal trust services through this alliance are
offered by the wealth management division.

Subsidiary Activities

Leesport Bank has four wholly-owned subsidiaries: Essick &
Barr, Inc., a Berks County based general insurance agency
("Essick & Barr"), which was acquired in 1998; First Leesport
Wealth Management, Inc. ("FLWM"), an investment advisory
business which was acquired in 1999; First Leesport Investment
Group, Inc. ("FLIG"), which was formed in 1999 to purchase the
securities brokerage business of KRJ & Associates; and Horizon
Realty Solutions, LLC ("Horizon"), which was formed originally
during 2000 to provide title insurance and other real estate
related services to its customers through limited partnership
arrangements with third parties involved in the real estate
services industry.

Both FLIG and FLWM are headquartered at 1240 Broadcasting
Road, Wyomissing, Pennsylvania and collectively had 9 employees
at December 31, 2001.

Essick & Barr offers a full line of personal and commercial
property and casualty insurance as well as group insurance for
businesses, employee benefit plans, and life insurance.
Headquartered in Leesport, Pennsylvania with sales offices at
108 South Fifth Street, Reading, Pennsylvania and 1240
Broadcasting Road, Wyomissing, Pennsylvania, Essick & Barr had
32 full-time employees at December 31, 2001.

Horizon provides title insurance and other real estate
related services to the Company's customers through limited
partnership arrangements with unaffiliated third parties
involved in the real estate services industry. At December 31,
2001, Horizon had entered into three such arrangements as
follows: Horizon Search and Settlement Solutions (70% equity
interest); New Millennium Abstract (20% equity interest); and
Spectrum Settlement Agency (4% equity interest). The capital
contributions of Horizon in connection with the formation of
each of the limited partnerships was not material. None of the
limited partnership arrangements involves the use of a special
purposes entity for financial accounting purposes or any off-
balance sheet financing technique, and neither Horizon, the
Company, nor any other affiliate of the Company has any
continuing contractual financial commitment to the limited
partnerships beyond the amount of the initial capital
contribution.

The Company also owns First Leesport Capital Trust I (the
"Trust"), a Delaware statutory business trust formed on March 9,
2000. The Trust issued $5 million of 10-7/8% fixed rate capital
trust pass-through securities to investors.

Competition

The Company faces substantial competition in originating
loans, in attracting deposits, and generating fee-based income.
This competition comes principally from other banks, savings
institutions, credit unions, mortgage banking companies and,
with respect to deposits, institutions offering investment
alternatives, including money market funds. Due to the passage
of landmark banking legislation in November 1999, competition
may increasingly come from insurance companies, large securities
firms and other financial services institutions. As a result of
consolidation in the banking industry, some of the Company's
competitors and their respective affiliates may enjoy advantages
such as greater financial resources, a wider geographic
presence, a wider array of services, or more favorable pricing
alternatives and lower origination and operating costs.

Supervision and Regulation

General

The Company is registered as a bank holding company and is
subject to supervision and regulation by the Board of Governors
of the Federal Reserve System under the Bank Holding Act of
1956, as amended. As a bank holding company, the Company's
activities and those of its bank subsidiary are limited to the
business of banking and activities closely related or incidental
to banking. Bank holding companies are required to file
periodic reports with and are subject to examination by the
Federal Reserve Board. The Federal Reserve Board has issued
regulations under the Bank Holding Company Act that require a
bank holding company to serve as a source of financial and
managerial strength to its subsidiary banks. As a result, the
Federal Reserve Board, pursuant to such regulations, may require
the Company to stand ready to use its resources to provide
adequate capital funds to its bank subsidiary during periods of
financial stress or adversity.

The Bank Holding Company Act prohibits the Company from
acquiring direct or indirect control of more than 5% of the
outstanding shares of any class of voting stock, or
substantially all of the assets of any bank, or from merging or
consolidating with another bank holding company, without prior
approval of the Federal Reserve Board. Additionally, the Bank
Holding Company Act prohibits the Company from engaging in or
from acquiring ownership or control of more than 5% of the
outstanding shares of any class of voting stock of any company
engaged in a non-banking business, unless such business is
determined by the Federal Reserve Board to be so closely related
to banking as to be a proper incident thereto. The types of
businesses that are permissible for bank holding companies to
own have been expanded by recent federal legislation; see
discussion below.

As a Pennsylvania bank holding company for purposes of the
Pennsylvania Banking Code, the Company is also subject to
regulation and examination by the Pennsylvania Department of
Banking.

The Company is under the jurisdiction of the Securities and
Exchange Commission and of state securities commissions for
matters relating to the offering and sale of its securities. In
addition, the Company is subject to the Securities and Exchange
Commission's rules and regulations relating to periodic
reporting, proxy solicitation, and insider trading.

Regulation of Leesport Bank

Leesport Bank is a Pennsylvania chartered bank, and its
deposits are insured (up to applicable limits) by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation (the
"FDIC"). The Bank is subject to regulation and examination by
the Federal Reserve Board, the Pennsylvania Department of
Banking, and by the FDIC. The Community Reinvestment Act
requires Leesport Bank to help meet the credit needs of the
entire community where Leesport Bank operates, including low and
moderate income neighborhoods. Leesport Bank's rating under the
Community Reinvestment Act, assigned by the Federal Reserve
Board pursuant to an examination of Leesport Bank, is important
in determining whether the Bank may receive approval for, or
utilize certain streamlined procedures in, applications to
engage in new activities.

Leesport Bank is also subject to requirements and
restrictions under federal and state law, including requirements
to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that
may be charged thereon, and limitations on the types of
investments that may be made and the types of services that may
be offered. Various consumer laws and regulations also affect
the operations of Leesport Bank. In addition to the impact of
regulation, commercial banks are affected significantly by the
actions of the Federal Reserve Board as it attempts to control
the money supply and credit availability in order to influence
the economy.

Capital Adequacy Guidelines

Bank holding companies are required to comply with the
Federal Reserve Board's risk-based capital guidelines. The
required minimum ratio of total capital to risk-weighted assets
(including certain off-balance sheet activities, such as standby
letters of credit) is 8%. At least half of the total capital is
required to be "Tier 1 capital," consisting principally of
common shareholders' equity, less certain intangible assets.
The remainder ("Tier 2 capital") may consist of certain
preferred stock, a limited amount of subordinated debt, certain
hybrid capital instruments and other debt securities, and a
limited amount of the general loan loss allowance. The risk-
based capital guidelines are required to take adequate account
of interest rate risk, concentration of credit risk, and risks
of nontraditional activities.

In addition to the risk-based capital guidelines, the
Federal Reserve Board requires a bank holding company to
maintain a leverage ratio of a minimum level of Tier 1 capital
(as determined under the risk-based capital guidelines) equal to
3% of average total consolidated assets for those bank holding
companies which have the highest regulatory examination ratings
and are not contemplating or experiencing significant growth or
expansion. All other bank holding companies are required to
maintain a ratio of at least 1% to 2% above the stated minimum.
The Pennsylvania Department of Banking requires state chartered
banks to maintain a 6% leverage capital level and 10% risk based
capital, defined substantially the same as the federal
regulations. The Bank is subject to almost identical capital
requirements adopted by the FDIC.

Prompt Corrective Action Rules

The federal banking agencies have regulations defining the
levels at which an insured institution would be considered "well
capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" and "critically
undercapitalized." The applicable federal bank regulator for a
depository institution could, under certain circumstances,
reclassify a "well-capitalized" institution as "adequately
capitalized" or require an "adequately capitalized" or
"undercapitalized" institution to comply with supervisory
actions as if it were in the next lower category. Such a
reclassification could be made if the regulatory agency
determines that the institution is in an unsafe or unsound
condition (which could include unsatisfactory examination
ratings). The Company and the Bank each satisfy the criteria to
be classified as "well capitalized" within the meaning of
applicable regulations.

Regulatory Restrictions on Dividends

Dividend payments made by Leesport Bank to the Company are
subject to the Pennsylvania Banking Code, the Federal Deposit
Insurance Act, and the regulations of the Federal Reserve Board.
Under the Banking Code, no dividends may be paid except from
"accumulated net earnings" (generally, retained earnings). The
Federal Reserve Board and the FDIC have formal and informal
policies which provide that insured banks and bank holding
companies should generally pay dividends only out of current
operating earnings, with some exceptions. The Prompt Corrective
Action Rules, described above, further limit the ability of
banks to pay dividends if they are not classified as well
capitalized or adequately capitalized.

Under these policies and subject to the restrictions
applicable to the Bank, the Bank had approximately $14.92
million available for payment of dividends to the Company at
December 31, 2001, without prior regulatory approval.

FDIC Insurance Assessments

The FDIC has implemented a risk-related premium schedule
for all insured depository institutions that results in the
assessment of premiums based on capital and supervisory
measures. Under the risk-related premium schedule, the FDIC
assigns, on a semiannual basis, each depository institution to
one of three capital groups (well-capitalized, adequately
capitalized or undercapitalized) and further assigns such
institution to one of three subgroups within a capital group.
The institution's subgroup assignment is based upon the FDIC's
judgment of the institution's strength in light of supervisory
evaluations, including examination reports, statistical analyses
and other information relevant to measuring the risk posed by
the institution. Only institutions with a total capital to
risk-adjusted assets ratio of 10% or greater, a Tier 1 capital
to risk-based assets ratio of 6% or greater, and a Tier 1
leverage ratio of 5% or greater, are assigned to the well-
capitalized group. As of December 31, 2001, the Bank was well
capitalized for purposes of calculating insurance assessments.

The Bank Insurance Fund is presently fully funded at more
than the minimum amount required by law. Accordingly, the 2001
Bank Insurance Fund assessment rates ranged from zero for those
institutions with the least risk, to $0.27 for every $100 of
insured deposits for institutions deemed to have the highest
risk. The Bank is in the category of institutions that
presently pay nothing for deposit insurance. The FDIC adjusts
the rates every six months. The FDIC has indicated from time to
time that all banks may again be required to pay deposit
insurance premiums in the future if the current trend of the
size of the deposit insurance funds relative to all insured
deposits continues.

While the Bank presently pays no premiums for deposit
insurance, it is subject to assessments to pay the interest on
Financing Corporation bonds. The Financing Corporation was
created by Congress to issue bonds to finance the resolution of
failed thrift institutions. Prior to 1997, only thrift
institutions were subject to assessments to raise funds to pay
the Financing Corporation bonds. Beginning in 2000, commercial
banks and thrifts are subject to the same assessment for
Financing Corporation bonds. The FDIC sets the Financing
Corporation assessment rate every quarter. The Financing
Corporation assessment for the Bank (and all other banks) for
the first quarter of 2002 is an annual rate of $.0182 for each
$100 of deposits.

Gramm-Leach-Bliley Act and Other Legislation

The Gramm-Leach-Bliley Act, passed in November 1999,
dramatically changed certain banking laws that have been in
effect since the early part of the 20th century. One of the
most significant changes was that the separation between banking
and the securities businesses mandated by the Glass-Steagall Act
has now been removed, and the provisions of any state law that
prohibits affiliation between banking and insurance entities
have been preempted. Accordingly, the legislation now permits
firms engaged in underwriting and dealing in securities, and
insurance companies, to own banking entities, and permits bank
holding companies (and in some cases, banks) to own securities
firms and insurance companies. The provisions of federal law
that preclude banking entities from engaging in non-financially
related activities, such as manufacturing, have not been
changed. For example, a manufacturing company cannot own a bank
and become a bank holding company, and a bank holding company
cannot own a subsidiary that is not engaged in financial
activities, as defined by the regulators.

The legislation creates a new category of bank holding
company called a "financial holding company." In order to avail
itself of the expanded financial activities permitted under the
law, a bank holding company must notify the Federal Reserve
Board ("Federal Reserve") that it elects to be a financial
holding company. A bank holding company can make this election
if it, and all its bank subsidiaries, are well capitalized, well
managed, and have at least a satisfactory Community Reinvestment
Act rating, each in accordance with the definitions prescribed
by the Federal Reserve and the regulators of the subsidiary
banks. Once a bank holding company makes such an election, and
provided that the Federal Reserve does not object to such
election by such bank holding company, the financial holding
company may engage in financial activities (i.e., securities
underwriting, insurance underwriting, and certain other
activities that are financial in nature as to be determined by
the Federal Reserve) by simply giving a notice to the Federal
Reserve within thirty days after beginning such business or
acquiring a company engaged in such business. This makes the
regulatory approval process to engage in financial activities
much more streamlined than under prior law.

On January 7, 2002, the Company filed an election with the
Board of Governors of the Federal Reserve System to become a
financial holding company. The election became effective in
February 2002.

The Gramm-Leach-Bliley Act also makes a number of additions
and revisions to numerous federal laws that affect the business
of banking. For example, there is now a federal law on privacy
with respect to customer information held by banks. The federal
banking regulators are authorized to adopt rules regarding
privacy for customer information. Banks must establish a
disclosure policy for non-public customer information, disclose
the policy to their customers, and give their customers the
opportunity to object to non-public information being disclosed
to a third party. In addition, any Community Reinvestment Act
(CRA) agreement entered into between a bank and a community
group must be disclosed, with both the bank and the group
receiving any grants from the bank detailing the amount of
funding provided and for what it was used. The new law also
requires a bank's policy on fees for transactions at ATM
machines by non-customers to be conspicuously posted on the ATM.
A number of other provisions affecting other general regulatory
requirements for banking institutions were also adopted.

Pennsylvania banking law was amended in November 2000 to
provide for complete parity of Pennsylvania banks with federally
chartered banks in the area of permissible activities. Under
Pennsylvania law, as revised, the Bank may engage in any
activity authorized for national banks or federal savings banks.

In October 2001, the President signed into law the USA
PATRIOT Act. This Act was passed in direct response to the
terrorist attacks on September 11, 2001 and strengthens the
anti-money laundering provisions of the Bank Secrecy Act. Most
of the new provisions added by the Act apply to accounts at or
held by foreign banks, or accounts of or transactions with
foreign entities. The Bank does not have a significant foreign
business and does not expect this Act to materially affect its
operations. The Act does, however, require the banking
regulators to consider a bank's record of compliance under the
Bank Secrecy Act in acting on any application filed by a bank.
As the Bank is subject to the provisions of the Bank Secrecy Act
(i.e., reporting of cash transactions in excess of $10,000), the
Bank's record of compliance in this area will be an additional
factor in any applications filed by it in the future. To the
Bank's knowledge, its record of compliance in this area is
satisfactory.

The subsidiaries of the Bank, Essick & Barr, FLIG, and
FLWM, are subject to additional regulatory requirements.
Essick & Barr is subject to Pennsylvania insurance laws and the
regulations of the Pennsylvania Department of Insurance. The
securities brokerage activities of FLIG are subject to
regulation by the SEC and the NASD, and FLWM is a registered
investment advisor subject to regulation by the Pennsylvania
Securities Commission.

Item 2. Properties

The only real estate owned by the Company is a single-
family home located adjacent to the Bank's operations center in
Leesport. This property is presently under agreement of sale
with settlement expected in March, 2002. The Company's
principal office is located in the newly-leased administration
building at 1240 Broadcasting Road, Wyomissing, Pennsylvania.

Listed below are the locations of properties owned or
leased by the Bank and its subsidiaries. Owned properties are
not subject to any mortgage, lien or encumbrance.

Property Location Leased or Owned

Corporate Office
1240 Broadcasting Road
Wyomissing, Pennsylvania Leased

Leesport Operations Center
133-144 North Centre Avenue
Leesport, Pennsylvania Owned

North Pointe Financial Center
241 South Centre Avenue
Leesport, Pennsylvania Owned

Northeast Reading Financial Center
1210 Rockland Street
Reading, Pennsylvania Owned

Hamburg Financial Center
801 South Fourth Street
Hamburg, Pennsylvania Owned

Bern Township Financial Center
409 West Leesport Road
Leesport, Pennsylvania Owned

Shenandoah Financial Center
101 North Main Street
Shenandoah, Pennsylvania Owned

Drums Financial Center
Rittenhouse Place
Drums, Pennsylvania Owned

Wernersville Financial Center
1 Reading Drive
Wernersville, Pennsylvania Leased

Breezy Corner Financial Center
3401-3 Pricetown Road
Fleetwood, Pennsylvania Leased

Blandon Financial Center
100 Plaza Drive
Blandon, Pennsylvania Leased

Wyomissing Financial Center
1199 Berkshire Boulevard
Wyomissing, Pennsylvania Leased

Maplewood Financial Center
140 Cando Expressway
Hazleton, Pennsylvania Leased

Schuylkill Haven Financial Center
237 Route 61 South
Schuylkill Haven, Pennsylvania Leased

Birdsboro Financial Center
350 West Main Street
Birdsboro, Pennsylvania Leased

Essick & Barr Sales Office
108 South Fifth Street
Reading, Pennsylvania Owned

Office (1)
560 Van Reed Road, Suite 308
Wyomissing, Pennsylvania Leased

Hazleton Drive-Up
1 West Broad Street, Rear
Hazleton, Pennsylvania Leased

(1) This office was consolidated into the corporate offices,
and the property is being subleased until the lease expires
in November 2002.

Each of these bank offices, except Drums, provides drive-in
facilities and automated teller machines. Leesport Bank leases
the premises of its Wernersville branch, which does not have a
drive-up facility or an automated teller machine.

Essick & Barr owns its sales office at 108 South Fifth
Street, Reading, Pennsylvania and also shares offices in the
Company's newly-leased administration building located at 1240
Broadcasting Road, Wyomissing, Pennsylvania. Essick & Barr is
charged a pro rata amount of the total lease expense.

FLIG and FLWM also share office space in the Company's
administration building in Wyomissing and are accordingly
charged a pro rata amount of the total lease expense.

Item 3. Legal Proceedings

A certain amount of litigation arises in the ordinary
course of the business of the Company, and the Company's
subsidiaries. In the opinion of the management of the Company,
there are no proceedings pending to which the Company, or the
Company's subsidiaries are a party or to which their property is
subject, that, if determined adversely to the Company or its
subsidiaries, would be material in relation to the Company's
shareholders' equity or financial condition, nor are there any
proceedings pending other than ordinary routine litigation
incident to the business of the Company and its subsidiaries.
In addition, no material proceedings are pending or are known to
be threatened or contemplated against the Company or its
subsidiaries by governmental authorities.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders
during the fourth quarter of the Company's fiscal year ended
December 31, 2001.

Item 4A. Executive Officers of the Registrant

Certain information, as of January 31, 2002, including
principal occupation during the past five years, relating to
each executive officer of the Company is as follows:

PART II

Item 5. Market For Common Equity and Related Shareholder
Matters.

As of December 31, 2001, there were 751 record holders of
the Company's common stock. The market price of the Company's
common stock for each quarter in 2001 and 2000 and the dividends
declared on the Company's common stock for each quarter in 2001
and 2000 are set forth below.

Market Price of Common Stock

The Company's common stock began trading on the Nasdaq
National Market under the symbol "FLPB" on October 1, 2001.
Prior to that time, the Company's common stock was listed on the
NASDAQ SmallCap Market. The following table sets forth, for the
fiscal quarters indicated, the high and low bid and asked price
per share of the Company's common stock, as reported on the
Nasdaq National or SmallCap Market (for periods prior to October
1, 2001, the date of listing the Company's common stock on the
Nasdaq National Market), respectively, for the periods
indicated:

Bid Asked
High Low High Low

2001
First quarter.......... $16.50 $13.50 $17.00 $14.38
Second quarter......... 16.00 14.20 16.63 15.00
Third quarter.......... 16.30 13.00 16.85 14.25
Fourth quarter......... 15.75 13.90 16.10 14.00

2000
First quarter......... $18.13 $12.50 $18.25 $12.75
Second quarter........ 17.75 15.06 18.00 15.63
Third quarter......... 16.13 13.50 16.50 13.63
Fourth quarter........ 14.56 12.38 15.00 13.13

Dividend Information

Dividends on the Company's common stock have historically
been payable on the 15th of January, April, July, and October.

Dividends Declared
(Per share)
2001 2000

First Quarter $.15 $.15
Second Quarter .15 .15
Third Quarter .15 .15
Fourth Quarter .15 .15

The Company derives substantially all of its income from
dividends paid to it by the Bank and its subsidiaries.

Item 6. Selected Financial Data

The selected consolidated financial and other data and
management's discussion and analysis set forth below is derived
in part from, and should be read in conjunction with, the
consolidated financial statements and notes thereto contained
elsewhere herein.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

The Company is a financial company. Leesport Bank is a
wholly-owned subsidiary of the Company. Essick & Barr, FLIG and
FLWM, and Horizon Realty Solutions, LLC are wholly-owned non-
bank subsidiaries of Leesport Bank.

The financial statements have been restated to reflect the
impact of the acquisition of Merchants of Shenandoah Ban-Corp on
July 1, 1999, which was accounted for under the pooling of
interests method of accounting. Merchants of Shenandoah Ban-
Corp was a single-bank holding company acting as the parent
company of Merchants Bank of Pennsylvania. Merchants Bank of
Pennsylvania was a $60 million bank with three full-service
offices, one in Shenandoah, Pennsylvania, one in Drums,
Pennsylvania, and one just outside of Hazleton, Pennsylvania.

The costs of acquiring Merchants of Shenandoah Ban-Corp,
including legal and professional expenses, system conversion
costs, and investment banking activities, amounted to $544,000
before income tax considerations. In addition to the
consolidation, the reorganization of the banks resulted in three
retirement packages and their associated costs. These
transactions added $270,000 to the acquisition costs noted
above. The after tax cost of these merger, conversion and
reorganization expenses amounted to $617,000. These costs were
expensed during the third quarter of 1999.

The Company expanded into the securities sales business
with its October 1, 1999 acquisition of two Wyomissing,
Pennsylvania-based brokerage and financial management companies:
Johnson Financial Group, Inc., and KRJ & Associates. As part of
the acquisition, these companies were reorganized into First
Leesport Investment Group, Inc., and First Leesport Wealth
Management, Inc., respectively. This acquisition, combined with
the purchase of Essick & Barr, Inc., of Reading, Pennsylvania,
in December of 1998, provides the Company with a full array of
financial products and services for its customers and
affiliates.

During 2000, Horizon Realty Solutions, LLC was formed as a
subsidiary of Leesport Bank for the purpose of providing title
insurance and other real estate related services to its
customers through limited partnership arrangements with third
parties involved in the real estate services industry.

Critical Accounting Policies

Note 1. to the Company's consolidated financial statements
lists significant accounting policies used in the development
and presentation of its financial statements. This discussion
and analysis, the significant accounting policies, and other
financial statement disclosures identify and address key
variables and other qualitative and quantitative factors that
are necessary for an understanding and evaluation of the Company
and its results of operations.

Results of Operations

Net income for 2001 was $2.8 million or $1.45 per share
compared to $2.1 million or $1.15 per share for 2000 and
$1.4 million or $.76 per share for 1999. These increases are a
result of increasing net interest income and other income each
year, net of increases in other expenses. Detail regarding
changes in each of these areas follows. Net income for 1999 was
affected by one-time merger expenses of $544,000 and employment
costs of $270,000 incurred through the acquisition of Merchants
of Shenandoah Ban-Corp.

Return on average assets was 0.64% for 2001, 0.57% for 2000
and 0.43% for 1999. Return on average shareholders' equity was
8.67% for 2001, 7.88% for 2000 and 5.24% for 1999.

Net Interest Income

Net interest income is a primary source of revenue for the
Company. This income results from the difference between the
interest and fees earned on loans and investments and the
interest paid on deposits to customers and other non-deposit
sources of funds, such as repurchase agreements and borrowings
from the Federal Home Loan Bank. Net interest margin is the
difference between the gross (tax-effected) yield on earning
assets and the cost of interest bearing funds as a percentage of
earning assets. All discussion of net interest margin is on a
fully taxable equivalent basis.

Net interest income for 2001 was $12.6 million, a 13.5%
increase over the $11.1 million in 2000, which was a 5.7%
increase over the $10.5 million in 1999. Average earning assets
increased by $44.1 million or 12.4% from 2000 to 2001. The net
interest margin was 3.28% in 2001 and 3.29% in 2000. Net
interest margin declined during the first quarter of 2001 as a
result of guaranteed-rate promotional programs run to increase
money market deposits and previously run certificate of deposit
promotional programs instituted to provide liquidity. The money
market deposit rates have been at market levels since late in
the second quarter of 2001. The bulk of the certificates of
deposit began maturing in the fourth quarter and will continue
to mature through April of 2002. The Company saw significant
improvement in the net interest margin during the fourth quarter
and expects to see additional improvement during the first
quarter of 2002. The primary growth in earning assets for 2001
was in average taxable securities, while 2000 and 1999 saw
primary growth in average loans outstanding. Average taxable
securities increased by 35.4% in 2001 and 10.0% in 2000.
Average loans outstanding increased by 6.39% in 2001 and 21.7%
in 2000.

Average interest-bearing deposits increased by 15.7% in
2001 and 11.1% in 2000 while average borrowings decreased by
3.7% in 2001. The return on interest earning assets decreased by
35 basis points from 2000 to 2001, and the cost of supporting
liabilities decreased by 36 basis points during the same time
period. These decreases are primarily due to market rate
reductions.

It should be noted that the 3.7% decrease in average
borrowings for 2001, from $65.8 million for 2000 to $63.4
million, is not truly indicative of the events for the year.
During the first three quarters of 2001, the Company was in the
position of selling federal funds. The average balance of
federal funds sold in this time frame was $11.4 million, while
average borrowings were $58.1 million. By the fourth quarter,
however, the Company switched to a federal funds purchased
position to take advantage of the lower interest rate
environment. Average federal funds sold for the fourth quarter
was $1.2 million while average borrowings were $81.6 million.
At year-end 2001, actual balances for federal funds sold and
borrowings were $0 and $115.8 million, respectively.

Other Income

Details of non-interest income follow:

The Company's primary source of other income for 2001 was
commissions and other revenue generated through sales of
insurance products through the Bank's insurance subsidiary,
Essick & Barr, Inc. Revenues from insurance operations totaled
$3.91 million in 2001 compared to $3.85 million in 2000.
Revenues generated from the Bank's investment subsidiaries,
First Leesport Investment Group, Inc., and First Leesport Wealth
Management, Inc., declined from $956,000 in 2000 to $726,000 in
2001 due to the down turn in the stock market throughout 2001.

The Company also relies on several other sources for its
other income, including sales of newly originated mortgage loans
and service charges on deposit accounts. The income recognized
from mortgage banking activities was $1.2 million in 2001,
$220,000 in 2000 and $198,000 in 1999. The addition of new
mortgage originators and increased refinancing activities due to
falling interest rates contributed to this increase. Also
included in income from mortgage banking activities: a gain of
$41,000 during the second quarter of 2001 from the sale of $4.9
million of portfolio residential mortgage loans and a loss of
$203,000 during the third quarter of 2000 from the sale of $6.4
million of residential mortgage loans. Income from customer
service fees was $1.1 million in 2001, $784,000 in 2000 and
$503,000 in 1999. The continuing increases in this category
reflect an expanded customer base, new services, and a new fee
pricing structure in 2001.

In addition, the results of the following non-recurring
transactions are included in total other income: a loss of
$38,000 during the third quarter of 2001 from the sale of a
building used by administrative and executive staff, who were
relocated to a newly-constructed, leased facility; a gain of
$245,000 during the first quarter of 2000 from the sale of a
Bank financial services facility; and a gain of $50,000 during
the third quarter of 2000 from the sale of $6.5 million of
available for sale investment securities.

Other Expenses

Details of non-interest expense follow:

The largest component of non-interest expenses is salaries
and employee benefits, which increased $501,000, or 6.7% in
2001, after increasing $1.6 million or 28.2% in 2000 as compared
to 1999. Salary and benefit costs associated with the insurance
and investment subsidiaries totaled approximately $2.9 million
in 2001, $2.8 million in 2000 and $1.9 million in 1999. These
increases in salary and benefits expenses resulted from annual
merit increases and promotions, additional personnel costs
associated with the continuing growth of the Company, and
increases in employee health insurance costs consistent with
national trends.

Total occupancy expense increased by 37.2% in 2001 to $1.3
million, from $938,000 in 2000 and had increased by 24.4% in
2000 from $754,000 in 1999. Total equipment expense increased
by 12.8% in 2001 to $962,000 from $853,000 in 2000 and had
increased by 6.8% in 2000 from $799,000 in 1999. Total equipment
expense had increased by 24.1% in 1999. The increase in 2001
was primarily the result of costs associated with new check
imaging software and equipment, the relocation of two existing
financial service centers, the addition and renovation of two
leased financial services centers, and the Company's newly-
constructed, leased executive and administrative office
building. The costs of the new facilities were partially offset
by the sale of the former administrative center and the sublease
of the investment group offices.

The expense related to other real estate owned totaled
$141,000 in 2001, $202,000 in 2000, and $210,000 in 1999. The
expense for 2000 included $60,000 of costs associated with
writing down a single property, and 1999 included $55,000 of
costs associated with carrying and writing down a single rental
property acquired during that year.

Marketing and advertising expenses were $791,000 in 2001,
$575,000 in 2000 and $422,000 in 1999. The increase in
marketing expense reflects the Company's continuing efforts to
increase awareness of its various product offerings and the
costs associated with its new branch openings.

Expense incurred by the Company for professional services
totaled $678,000 in 2001 compared to $729,000 in 2000 and
$420,000 in 1999. Expenses for 2000 include approximately
$35,000 in one-time fees paid to external consultants.

Total merger expenses were $544,000 in 1999, and the cost
of reorganizing the Bank's management team resulted in
additional personnel costs amounting to $270,000 in 1999.

Income Taxes

The effective income tax rate for the Company for the year
ended December 31, 2001 was 28.7% compared to 20.9% for the year
ended December 31, 2000. The effective tax rate for 2001 was
higher than the rate for 2000 primarily as the result of a
decrease in the amount of non-taxable interest income during
2001.

Financial Condition

The Company's total assets increased to $503.5 million at
December 31, 2001, representing a growth rate of 27.9% from
$393.8 million at December 31, 2000.

Cash and Investment Securities

Cash and balances due from banks increased to $19.7 million
at December 31, 2001 from $12.1 million at December 31, 2000 as
the Bank made provisions to cover higher than usual year-end
cash letter activity at the Federal Reserve Bank of
Philadelphia. Average cash and due from banks balances for 2001
and 2000 were $9.7 million and $7.1 million, respectively.

Investment securities increased 97.6% to $147.0 million at
December 31, 2001, from $74.4 million at December 31, 2000
primarily due to deposit balances increasing more than loan
balances, increased short and long-term borrowings to take
advantage of the low rate environment, and proceeds from the
shareholder rights offering. Investment securities are used to
supplement loan growth as necessary, to generate interest and
dividend income, to manage interest rate risk, and to provide
liquidity. To accomplish these ends, most of the purchases in
the portfolio during 2001 were of mortgage backed securities
issued by US Government agencies. In addition, the Company
purchased $14 million in US Treasury notes with short-term
maturities to utilize the proceeds of its shareholder rights
offering completed in December 2001. Currently, all of the
Company's securities are carried as available for sale.

At December 31, 2001, the securities balance included a net
unrealized gain on available for sale securities of $392,000
versus a net unrealized loss of $711,000 at December 31, 2000.
The reduction in interest rates during 2001 resulted in the
appreciation in the fair value of the securities.

Loans

Loans increased to $301.9 million at December 31, 2001 from
$282.8 million at December 31, 2000, an increase of
$19.1 million or 6.8%. Management has targeted the loan
portfolio as a key to the Company's continuing growth.
Specifically, the Company has shifted its lending focus to
higher yielding commercial loans made to small to medium sized
businesses in its market area. A significant increase in the
volume of commercial loans during 2001 and 2000 underscores that
focus as the commercial portfolio increased to $166.6 million at
December 31, 2001, from $145.6 million at December 31, 2000, an
increase of $21.0 million or 14.4%.

Loans secured by residential real estate, which include
home equity lending products, increased to $124.0 million from
$120.6 million between December 31, 2000 and December 31, 2001,
an increase of $3.4 million or 2.8%. This increase is primarily
due to the net effect of the sale of $4.9 million of fixed rate,
portfolio residential real estate loans into the secondary
market in the second quarter of 2001, the transfer of $9.2
million of fixed rate, portfolio residential real estate loans
to the held for sale category in December 2001, and increases in
home equity loans as the result of successful product
promotions. The loans held for sale category also includes $3.0
million of mortgage loans originated for sale.

These sales of residential real estate loans in the
secondary market reflect the Company's financial management
strategy of de-emphasizing the retention of such loans for its
portfolio while increasing their sale to generate fees and fund
growth in higher yielding assets.

Premises and Equipment

Premises and equipment increased during 2001 to $9.6 million
from $8.4 million at the end of 2000. This increased growth is
primarily due to continuing investments in bank processing
technology, the relocation of two existing financial service
centers, the leasehold improvements and furniture and equipment
purchases associated with the Company's newly-constructed
administration building, located at 1240 Broadcasting Road,
Wyomissing, Pennsylvania (occupied in June 2001) and renovations
to two newly-opened retail-banking facilities in Schuylkill
Haven, Pennsylvania (July 2001) and Birdsboro, Pennsylvania
(December 2001).

Other Assets

Other assets, which include accrued interest receivable,
decreased to $16.8 million at December 31, 2001 from
$17.6 million at December 31, 2000. Included in this total are
the intangible assets recorded as a result of the Company's
purchase of Essick & Barr, Inc., First Leesport Investment
Group, Inc., and First Leesport Wealth Management, Inc. At
December 31, 2001, these intangibles totaled $4.3 million.
Another significant component of other assets is the cash
surrender value of certain life insurance policies used to fund
deferred compensation plans for selected board members and
senior officers. The value of these policies at December 31,
2001 was $6.3 million.

Deposits and Borrowings

Total deposits increased by $35.2 million or 11.9%, growing
to $331.6 million at December 31, 2001 from $296.4 million at
December 31, 2000.

Non-interest bearing deposits increased to $43.5 million at
December 31, 2001, from $38.2 million at December 31, 2000, an
increase of $5.3 million or 13.9%. Management continues to
promote growth in these types of deposits, which include a free
checking product, as a method to help reduce the overall cost of
the Company's funds. Interest bearing deposits increased by
$30.0 million or 11.6%, growing from $258.1 million at
December 31, 2000 to $288.1 million at December 31, 2001.
Growth in money market and interest checking accounts of 76.5%,
or $41.9 million, more than offset decreases in traditional
savings accounts and certificates of deposit of 5.9% or $11.9
million dollars. The increase in money market deposits was
primarily the result of successful promotional programs run
during this period, the addition of two new financial services
centers in 2001, and consumer uncertainty regarding financial
markets.

Borrowed funds from various sources were used to supplement
deposit growth. During 2001, short-term borrowings, which were
comprised of federal funds purchased from the Federal Home Loan
Bank and other correspondent banks and securities sold under
agreements to repurchase, were $53.6 million at December 31,
2001, and $15.3 million at December 31, 2000. Long-term debt,
which consisted of advances from the Federal Home Loan Bank in
2001, and advances from the Federal Home Loan Bank and
borrowings from other financial institutions in 2000, totaled
$62.2 million and $43.5 million, respectively.

The increase in long-term debt and short-term borrowings
was implemented to take advantage of the low interest rate
environment and provide two-to-five-year funding to offset some
maturities in the certificates of deposit portfolio. These
borrowed funds were primarily reinvested into securities and
loans.

In December 2001, the Company repaid $1.5 million of high
interest rate subordinated debt from other financial
institutions.

Shareholders' Equity

The Company's common stock, surplus and retained earnings
increased by $16.09 million during 2001. This increase is
primarily the result of the Company's shareholder rights
offering which was completed in December 2001. Through the
rights offering, the Company issued an additional 1.2 million
shares of common stock at the offering price of $13 per share.
The offering resulted in net proceeds of $14.3 million.

Total shareholders' equity includes accumulated other
comprehensive income, which includes an adjustment for the fair
value of the Company's securities. This amount attempts to
identify the impact to equity in the unlikely event that the
Company's entire securities portfolio would be liquidated under
current economic conditions. The amounts and types of
securities held by the Company at the end of 2001, combined with
current interest rates, would have resulted in an increase in
equity, net of taxes, of $259,000. This compares with a
decrease to equity of $469,000 at the end of 2000. Retained
earnings, after the payment of dividends, accounted for an
additional increase of $1.5 million.

Interest Rate Sensitivity

Through the years, the banking industry has adapted to an
environment in which interest rates have fluctuated dramatically
and in which depositors have been provided with liquid, rate
sensitive investment options. The industry utilizes a process
known as asset/liability management as a means of managing this
adaptation.

Asset/liability management is intended to provide for
adequate liquidity and interest rate sensitivity by matching
interest rate sensitive assets and liabilities and coordinating
maturities and repricing characteristics on assets and
liabilities.

Interest rate risk management involves managing the extent
to which interest-sensitive assets and interest-sensitive
liabilities are matched. Interest rate sensitivity is the
relationship between market interest rates and earnings
volatility due to the repricing characteristics of assets and
liabilities. The Company's net interest income is affected by
changes in the level of market interest rates. In order to
maintain consistent earnings performance, the Company seeks to
manage, to the extent possible, the repricing characteristics of
its assets and liabilities.

One major objective of the Company when managing the rate
sensitivity of its assets and liabilities is to stabilize net
interest income. The management of and authority to assume
interest rate risk is the responsibility of the Company's
Asset/Liability Committee ("ALCO"), which is comprised of senior
management and Board members. The ALCO meets quarterly to
monitor the ratio of interest sensitive assets to interest
sensitive liabilities. The process to review interest rate risk
management is a regular part of management of the Company. In
addition, there is an annual process to review the interest rate
risk policy with the Board of Directors which includes limits on
the impact to earnings from shifts in interest rates.

To manage the interest rate sensitivity position, an
asset/liability model called "gap analysis" is used to monitor
the difference in the volume of the Company's interest sensitive
assets and liabilities that mature or reprice within given
periods. A positive gap (asset sensitive) indicates that more
assets reprice during a given period compared to liabilities,
while a negative gap (liability sensitive) has the opposite
effect.

At December 31, 2001, the Company maintained a negative
one-year cumulative gap. The Company expanded its short-term
borrowings significantly during the fourth quarter of 2001 to
take advantage of the low rate environment. This is reflected
in the negative gap position shown below. The Company expects
to extend the terms of these short-term borrowings during 2002.

Interest Sensitivity Gap at December 31, 2001

(1) Gross of unrealized gains/losses on available for sale
securities.

(2) Investments and loans are included in the earlier of the
period in which interest rates were next scheduled to
adjust or the period in which they are due.

(3) Demand and savings accounts are generally subject to
immediate withdrawal. However, management considers a
certain amount of such accounts to be core accounts
having significantly longer effective maturities
based on the retention experiences of such deposits in
changing interest rate environments.

Certain shortcomings are inherent in the method of analysis
presented in the above table. Although certain assets and
liabilities may have similar maturities or period of repricing,
they may react in different degrees to changes in market
interest rates. The interest rates on certain types of assets
and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types of assets
and liabilities may lag behind changes in market interest rates.
Certain assets, such as adjustable-rate mortgages, have features
which restrict changes in interest rates on a short-term basis
and over the life of the asset. In the event of a change in
interest rates, prepayment and early withdrawal levels may
deviate significantly from those assumed in calculating the
table. The ability of many borrowers to service their
adjustable-rate debt may decrease in the event of an interest
rate increase.

The Company also measures its sensitivity to interest rate
movements through simulations of the effects of rate changes
upon its net interest income. Interest rate movements of 100,
200 and 300 basis points upward and downward were applied to the
Company's interest earning assets and interest bearing
liabilities as of December 31, 2001. The results of these
simulations on net interest income for 2001 are as follows:

Simulated % Change in 2001
Net Interest Income

Assumed
Changes in
Interest Rates % Change
-300 -3%
-200 -2%
-100 0%
0 0%
+100 0%
+200 0%
+300 0%

Present value of equity as a result of interest rate
changes is presented in the following hypothetical table. This
analysis estimates the projected change in the value of equity
as of December 31, 2001 as a result of hypothetical interest
rate movements.

Simulated % Change in
Economic Value of Shareholders' Equity

Assumed
Changes in
Basis Points % Change
-300 -18%
-200 -9%
-100 -1%
0 0%
+100 -7%
+200 -14%
+300 -21%

Capital

Federal bank regulatory agencies have established certain
capital-related criteria that must be met by banks and bank
holding companies. The measurements which incorporate the
varying degrees of risk contained within the Bank's balance
sheet and exposure to off-balance sheet commitments were
established to provide a framework for comparing different
institutions.

The Company is not aware of any pending recommendations by
regulatory authorities that would have a material impact on the
Company's capital, resources, or liquidity if they were
implemented, nor is the Company under any agreements with any
regulatory authorities.

The adequacy of the Company's capital is reviewed on an
ongoing basis with regard to size, composition and quality of
the Company's resources. An adequate capital base is important
for continued growth and expansion in addition to providing an
added protection against unexpected losses.

An important indicator in the banking industry is the
leverage ratio, defined as the ratio of common shareholders'
equity less intangible assets, to average quarterly assets less
intangible assets. The leverage ratio at December 31, 2001 was
10.03% compared to 7.49% at December 31, 2000. This increase is
primarily the result of the issuance in December 2001 of 1.2
million common shares pursuant to the Company's shareholder
rights offering. For 2001, 2000 and 1999, the ratios were above
minimum regulatory guidelines.

As required by the federal banking regulatory authorities,
guidelines have been adopted to measure capital adequacy. Under
the guidelines, certain minimum ratios are required for core
capital and total capital as a percentage of risk-weighted
assets and other off-balance sheet instruments. For the
Company, Tier I capital consists of common shareholders' equity
less intangible assets plus the mandatory redeemable capital
debentures, and Tier II capital includes the allowable portion
of the allowance for loan losses, currently limited to 1.25% of
risk-weighted assets. By regulatory guidelines, the separate
component of equity for unrealized appreciation or depreciation
on available for sale securities is excluded from Tier I
Capital.

The following table sets forth the Company's capital
ratios.

At December 31,
2001 2000
(Dollars in thousands)
Tier I
Common shareholders' equity
(excluding unrealized gains(losses)
on securities) $ 44,962 $ 28,815
Disallowed intangible assets (4,346) (4,587)
Mandatory Redeemable Capital Debentures 5,000 5,000
Tier II
Allowable portion of allowance for
Loan losses 3,722 3,422
-------- --------

Risk-based capital $ 49,338 $ 32,650

Risk adjusted assets (including off-
balance sheet exposures) $333,809 $273,604

Leverage ratio 10.03% 7.49%
Tier I risk-based capital ratio 13.67% 10.68%
Total risk-based capital ratio 14.78% 11.93%

Regulatory guidelines require that Tier I capital and total
risk-based capital to risk-adjusted assets must be at least 4.0%
and 8.0%, respectively.

Liquidity and Funds Management

Liquidity management ensures that adequate funds will be
available to meet anticipated and unanticipated deposit
withdrawals, debt servicing payments, investment commitments,
commercial and consumer loan demand and ongoing operating
expenses. Funding sources include principal repayments on loans
and investment securities, sales of loans, growth in core
deposits, short and long-term borrowings and repurchase
agreements. Regular loan payments are a dependable source of
funds, while the sale of loans and investment securities,
deposit flows, and loan prepayments are significantly influenced
by general economic conditions and level of interest rates.

At December 31, 2001, the Company maintained $19.7 million
in cash and cash equivalents primarily consisting of cash and
due from banks. In addition, the Company had $147.0 million in
securities available for sale. The combined total of
$166.7 million represented 33.1% of total assets at December 31,
2001. The Company believes that its liquidity is adequate.

The Company considers its primary source of liquidity to be
its core deposit base, which includes noninterest-bearing and
interest-bearing demand deposits, savings, and time deposits
under $100,000. This funding source has grown steadily over the
years and consists of deposits from customers throughout the
branch network. The Company will continue to promote the growth
of deposits through its branch offices. At December 31, 2001,
approximately 61% of the Company's assets were funded by core
deposits acquired within its market area. An additional 9% of
the assets were funded by the Company's equity. These two
components provide a substantial and stable source of funds.

The Company's financial statements do not reflect various
commitments that are made in the normal course of business,
which may involve some liquidity risk. These commitments
consist mainly of unfunded loans and letters of credit made
under the same standards as on-balance sheet instruments.
Unused commitments, at December 31, 2001 totaled $64.6 million.
This consisted of $7.2 million in commercial real estate and
construction loans, $11.1 million in home equity lines of
credit, $2.1 million in standby letters of credit and the
remainder in other unused commitments. Because these
instruments have fixed maturity dates, and because many of them
will expire without being drawn upon, they do not generally
present any significant liquidity risk to the Company. Any
amounts actually drawn upon, management believes, can be funded
in the normal course of operations. The Company has no
investment in or financial relationship with any unconsolidated
entities that are reasonably likely to have a material effect on
liquidity or the availability of capital resources.

The following table represents the Company's aggregate on
and off balance sheet contractual obligations to make future
payments.

Changes in Interest Income and Interest Expense

The following table sets forth certain information
regarding changes in interest income and interest expense of the
Company for the periods indicated. For each category of
interest-earning asset and interest-bearing liability,
information is provided on changes attributable to (1) changes
in volume (changes in volume multiplied by old rate), and (2)
changes in rate (changes in rate multiplied by average volume).

Analysis of Changes in Interest Income(1)(2)(3)

__________

(1) Loan fees have been included in the change in interest
income totals presented. Nonaccrual loans have been
included in average loan balances.

(2) Changes due to both volume and rates have been allocated in
proportion to the relationship of the dollar amount change
in each.

(3) Interest income on loans and investments is presented on a
taxable equivalent basis.

Average Balances, Rates and Net Yield

The following table sets forth the average daily balances
of major categories of interest earning assets and interest
bearing liabilities, the average rate paid thereon, and the net
interest margin for each of the periods indicated.

(1) Rates on loans and investment securities are reported on a
tax-equivalent basis of 34%.

(2) Nonaccrual loans have been included in average loan balances.

Risk Elements

Non-performing loans, consisting of loans on non-accrual
status, loans past due 90 days or more and still accruing
interest, and renegotiated troubled debt decreased to $931,000
at December 31, 2001, down from $2.6 million at December 31,
2000. Generally, loans that are more than 90 days past due are
placed on non-accrual status. As a percentage of total loans,
non-performing loans represented 0.31% at December 31, 2001,
down from .90% at December 31, 2000. The allowance for loan
losses improved to 399.8% of non-performing loans at
December 31, 2001, compared to 139.2% at December 31, 2000.
These decreases reflect the Company's continued emphasis on
improving credit quality. The Company believes that pre-funding
analysis and diligent intervention at the first signs of
delinquency will help to maintain these levels.

The following table is a summary of non-performing loans
and renegotiated loans for the years presented.

Non-performing Loans
(In thousands)
As of December 31,
2001 2000 1999 1998 1997
Nonaccrual loans
Real estate $ 215 $ 682 $ 797 $ 721 $ 959
Consumer 5 0 0 23 45
Commercial 531 419 1,192 232 458
------ ------ ------ ------ ------
Total 751 1,101 1,989 976 1,462

Loans past due
90 days or more
and still accruing
interest
Real estate 0 265 363 454 593
Consumer 8 89 86 110 127
Commercial 56 116 226 825 234
------ ------ ------ ------ ------
Total loans past
due 90 days or
more 64 470 675 1,389 954
Troubled debt
restructurings
Real estate 0 0 0 0 0
Consumer 0 0 0 0 0
Commercial 116 994 1,084 387 0
------ ------ ------ ------ ------
Total troubled
debt
restructurings 116 994 1,084 387 0
------ ------ ------ ------ ------

Total non-performing
loans $ 931 $2,565 $3,748 $2,752 $2,416
====== ====== ====== ====== ======

The Bank generally places a loan on non-accrual after the
loan is more than 90 days past due. At December 31, 2001, there
were $1.54 million of commercial loans for which payments are
current, but where the borrowers were experiencing significant
financial difficulties, that were not classified as non-accrual.

The following summary shows the impact on interest income
of nonaccrual and restructured loans for the year ended
December 31, 2001 (in thousands):

Amount of interest income on loans which would have
been recorded under original terms $ 37
Interest income reported during the period $ 6

Provision and Allowance for Loan Losses

The provision for loan losses for 2001 was $1.0 million
compared to $1.1 million in 2000 and $1.3 million in 1999. The
Company performs a review of the credit quality of its loan
portfolio on a monthly basis to determine the adequacy of the
allowance for possible loan losses. The Company experienced
significant growth in the loan portfolio of 6.8% in 2001 and
12.5% in 2000. The allowance for loan losses at December 31,
2001 was $3.7 million, or 1.23% of outstanding loans, compared
to $3.6 million or 1.25% of outstanding loans at December 31,
2000.

The allowance for loan losses is an amount that management
believes to be adequate to absorb potential losses in the loan
portfolio. Additions to the allowance are charged through the
provision for loan losses. Management regularly assesses the
adequacy of the allowance by performing an ongoing evaluation of
the loan portfolio, including such factors as charge-off
history, the level of delinquent loans, the current financial
condition of specific borrowers, value of any collateral, risk
characteristics in the loan portfolio, and local and national
economic conditions. Significant loans are individually
analyzed, while other smaller balance loans are evaluated by
loan category. Based upon the results of such reviews,
management believes that the allowance for loan losses at
December 31, 2001 was adequate to absorb credit losses inherent
in the portfolio as of that date.

The following table presents a comparative allocation of
the allowance for loan losses for each of the past five year-
ends. Amounts were allocated to specific loan categories based
upon management's classification of loans under the Company's
internal loan grading system and assessment of near-term charge-
offs and losses existing in specific larger balance loans that
are reviewed in detail by the Company's internal loan review
department and pools of other loans that are not individually
analyzed. The allocation is made for analytical purposes and is
not necessarily indicative of the categories in which future
credit losses may occur.

Allocation of Allowance for Loan Losses
(In thousands except percentage data)

The unallocated portion of the allowance is intended to
provide for possible losses that are not otherwise accounted for
and to compensate for the imprecise nature of estimating future
loan losses. Management believes the allowance is adequate to
cover the inherent risks associated with the Company's loan
portfolio. While allocations have been established for
particular loan categories, management considers the entire
allowance to be available to absorb losses in any category.

The following tables set forth an analysis of the Company's
allowance for loan losses for the years presented.

Analysis of the Allowance for Loan Losses
(In thousands except ratios)

Loan Policy and Procedure

The Bank's loan policies and procedures have been approved
by the Board of Directors, based on the recommendation of the
Bank's President, Chief Lending Officer, Loan Review Officer,
and the Risk Management Officer, who collectively establish and
monitor credit policy issues. Application of the loan policy is
the direct responsibility of those who participate either
directly or administratively in the lending function.

The Bank's commercial lending officers originate loan
requests through a variety of sources which include the Bank's
existing customer base, referrals from directors and various
networking sources (accountants, attorneys, and realtors), and
market presence. Over the past three years, the Bank's
commercial lending efforts have been significantly increased
through (1) the hiring of experienced commercial lenders in the
Bank's geographic markets, (2) the Bank's continued
participation in community and civic events, (3) strong
networking efforts, (4) local decision making, and (5)
consolidation and other changes which are occurring with respect
to other local financial institutions.

The Bank's commercial lenders have approval authority up to
designated individual limits, along with joint lending authority
up to $500,000. Loans in excess of $500,000 are presented to
the Bank's credit committee, comprised of the President, Chief
Lending Officer, Credit Manager, Loan Review Officer (non-
voting), and selected regional commercial lenders. The credit
committee can approve loans up to $1,000,000 and recommend loans
to the executive loan committee for approval up to $3,500,000
(which represents approximately 69% of the Bank's legal lending
limit of $5,047,000). The executive loan committee is comprised
of selected Board members. Loans up to the Bank's legal lending
limit are submitted to the Board for approval. The Bank has
established an "in-house" lending limit of 80% of its legal
lending limit, and at this time has no loan relationships in
excess of its in-house limit.

The Bank has successfully implemented individual, joint,
and committee level approval procedures which have monitored and
solidified credit quality as well as provided lenders with a
process that is responsive to customer needs.

The Bank manages credit risk in the loan portfolio through
adherence to consistent standards, guidelines, and limitations
established by the credit policy. The Bank's credit department,
together with the loan officer, analyze the financial statements
of the borrower, collateral values, loan structure, and economic
conditions, to then make a recommendation to the appropriate
approval authority. Commercial loans generally consist of real
estate secured loans, lines of credit, term, and equipment
loans. The Bank's underwriting policies impose strict
collateral requirements and normally will require the guaranty
of the principals. For requests that qualify, the Bank will use
Small Business Administration guarantees to improve the credit
quality and support local small business.

The Bank's loan review officers/department conduct ongoing,
independent reviews of all new loan relationships to ensure
adherence to established policies and procedures, monitor
compliance with applicable laws and regulations, and provide
objective measurement statistics. The Bank's loan review
officers/department submit quarterly reports to the Board on
loan concentrations, large loan relationships, collateral and
documentation exceptions, and relevant loan ratios pertaining to
the Bank's loan loss reserves, delinquency, and other key asset
quality ratios.

Loan Portfolio

The following table sets forth the Company's loan
distribution at the periods presented:

Loan Maturities

The following table shows the maturity of commercial,
financial and agricultural loans outstanding at December 31,
2001:

Maturities of Outstanding Loans
Within After One After
One But Within Five
Year Five Years Years Total
(In thousands)
Commercial, Financial
and Agricultural $35,236 $93,222 $33,769 $162,227

Maturity of Certificates of Deposit of $100,000 or More

The following table sets forth the amounts of the Bank's
certificates of deposit of $100,000 or more by maturity date.

December 31, 2001
(In thousands)

Three Months or Less $ 9,293
Over Three Through Six Months 3,627
Over Six Through Twelve Months 7,199
Over Twelve Months 2,787
-------
TOTAL $22,906

Securities Portfolio Maturities and Yields

The following table sets forth information about the
maturities and weighted average yield on the Company's
securities portfolio. Floating rate, immediately repriceable
items are included in the first column, and yields are not
reported on a tax equivalent basis.

Securities Portfolio

The following table sets forth the carrying value of the
Company's investment securities at its last three fiscal year
ends:

As of December 31,
2001 2000 1999
(In thousands)

U.S. Treasuries $14,046 $ 3,115 $ 6,532
U.S. Government Agencies 95,797 46,747 39,337
State and Political Subdivisions 16,879 12,086 18,681
Other Securities and Equity
Securities 20,235 12,420 7,615
-------- ------- -------
Total $146,957 $74,369 $72,165
======== ======= =======

For purposes of the above table, all securities are
classified as available for sale and are reflected at fair
value.

Average Deposits and Average Rates by Major Classification

The following table sets forth the average balances of the
Bank's deposits and the average rates paid for the years
presented.

Other Borrowed Funds

Short-term borrowings at December 31, 2001 consisted of
overnight borrowings from the FHLB under a repurchase agreement,
overnight borrowings from other correspondent financial
institutions, and repurchase agreements with customers. The
borrowings are collateralized by certain qualifying assets of
the Bank.

In December 2001, the Company repaid two loans to other
financial institutions of $500,000 and $1.0 million to reduce
interest expense. These loans carried interest rates of 8.50%
and 9.00%. The Company was assessed a prepayment penalty on the
$1.0 million loan in the amount of $25,000.

Federal funds purchased by the Bank were $32.5 million and
$600,000 at December 31, 2001, and 2000, respectively. The
federal funds purchased typically mature in one day.

Information concerning the short-term borrowings is
summarized as follows:

Dividends and Shareholders' Equity

The Company declared cash dividends in 2001 of $0.60 per
share, and $.60 per share in 2000.

Year ended December 31,
2001 2000 1999

Return on assets 0.64% 0.57% 0.43%
Return on equity 8.67% 7.88% 5.24%
Dividend payout ratio 41.38% 52.17% 71.05%
Average equity to average assets 7.37% 7.17% 8.24%

Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.

The discussion concerning the effects of interest rate
changes on the Company's estimated net interest income for the
year ending December 31, 2001 set forth under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Interest Rate Sensitivity" in Item 7 hereof, is
incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
First Leesport Bancorp, Inc.
Leesport, Pennsylvania

We have audited the accompanying consolidated balance
sheets of First Leesport Bancorp, Inc., and its wholly-owned
subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended
December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing
standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of First Leesport Bancorp, Inc.
and its wholly-owned subsidiaries as of December 31, 2001 and
2000, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.

Reading, Pennsylvania /s/ Beard Miller Company LLP
January 25, 2002

FIRST LEESPORT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000
(Amounts in thousands, except share data)

December 31,
2001 2000
ASSETS
Cash and due from banks $ 18,885 $ 11,643
Interest-bearing deposits in banks 831 506
-------- --------
Total cash and cash equivalents 19,716 12,149

Mortgage loans held for sale 12,209 2,065
Securities available for sale 146,957 74,368
Loans, net of allowance for loan losses
2001 - $3,723; 2000 - $3,571 298,200 279,227
Premises and equipment, net 9,623 8,400
Goodwill, net of accumulated
amortization 2001 - $780; 2000 - $515 4,309 4,574
Other assets 12,495 13,043
-------- --------
Total assets $503,509 $393,826
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest bearing $ 43,476 $ 38,233
Interest bearing 288,101 258,130
-------- --------

Total deposits 331,577 296,363

Securities sold under agreements to
repurchase 21,074 14,663
Federal funds purchased 32,500 600
Long-term debt 62,200 43,500
Mandatory redeemable capital debentures 5,000 5,000
Other liabilities 5,937 5,354
-------- --------

Total liabilities 458,288 365,480
-------- --------

Shareholders' equity
Common stock, par value $5 per share;
authorized 10,000,000 shares; issued
3,079,338 shares in 2001 - 1,858,919
shares in 2000 15,397 9,295
Surplus 13,510 4,996
Retained earnings 16,055 14,586
Accumulated other comprehensive income (loss) 259 (469)
Treasury stock, at cost; 0 shares in
2001; 4,960 shares in 2000 - (62)
-------- --------

Total shareholders' equity 45,221 28,346
-------- --------

Total liabilities and shareholders'
equity $503,509 $393,826
======== ========

See Notes to Consolidated Financial Statements.

FIRST LEESPORT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands, except share data)

Years Ended December 31,
2001 2000 1999
Interest income:
Interest and fees on loans $ 23,280 $ 22,249 $ 18,346
Interest on securities:
Taxable 5,015 3,941 3,439
Tax-exempt 675 849 874
Dividend income 262 284 169
Interest on federal funds sold 323 97 50
Other interest income 71 51 32
-------- -------- --------
Total interest income 29,626 27,471 22,910
-------- -------- --------

Interest expense:
Interest on deposits 13,159 11,990 10,177
Interest on short-term
borrowings 522 1,757 1,062
Interest on long-term debt 2,821 2,215 1,124
Interest on mandatory redeem-
able capital debentures 551 424 -
-------- -------- --------

Total interest expense 17,053 16,386 12,363
-------- -------- --------

Net interest income 12,573 11,085 10,547

Provision for loan losses 1,012 1,082 1,270
-------- -------- --------

Net interest income after
provision for loan losses 11,561 10,003 9,277
-------- -------- --------

Other income:
Customer service fees 1,058 784 503
Mortgage banking activities,
net 1,249 220 198
Commissions and fees from
insurance sales 3,914 3,852 3,296
Broker and investment advisory
commissions and fees 726 956 187
Other income 838 845 429
Net realized gains on sales of
securities 49 29 52
-------- -------- --------

Total other income 7,834 6,686 4,665
-------- -------- --------

Other expense:
Salaries and employee benefits 8,006 7,505 5,856
Occupancy expense 1,287 938 754
Equipment expense 962 853 799
Marketing and advertising
expense 791 575 422
Professional services 678 729 420
Merger-related costs - - 544
Restructuring costs - - 270
Other expense 3,776 3,400 3,015
-------- -------- --------

Total other expense 15,500 14,000 12,080
-------- -------- --------

Income before income
taxes 3,895 2,689 1,862

Income taxes 1,119 563 461
-------- -------- --------
Net income $ 2,776 $ 2,126 $ 1,401
======== ======== ========

Basic and diluted earnings
per share $ 1.45 $ 1.15 $ .76
======== ======== ========

See Notes to Consolidated Financial Statements.

FIRST LEESPORT BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands, except share data)

See Notes to Consolidated Financial Statements.

FIRST LEESPORT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands)

Years Ended December 31,
2001 2000 1999
Cash Flows From Operating Activities

Net income $ 2,776 $ 2,126 $ 1,401
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 1,012 1,082 1,270
Provision for depreciation 571 801 888
Provision for amortization 311 291 265
Deferred income taxes 109 (327) (463)
Net amortization of securities
premiums and discounts 118 47 27
Net realized loss on sale of
foreclosed real estate 54 98 -
Net gain on sales of securities
available for sale (49) (29) (52)
Proceeds from sale of loans 32,363 8,473 111
Net (gain) loss on loans held for sale (1,138) 308 (296)
Loans held for sale (41,369) (10,846) -
Realized (gain) loss on sale
of premises and equipment 38 (246) -
Earnings on investment in life insurance (374) (311) (106)
(Increase) decrease in accrued
interest receivable and other assets 251 (2,031) (75)
Increase in accrued interest
payable and other liabilities 583 1,115 34
-------- -------- --------
Net Cash Provided by (Used in)
Operating Activities (4,744) 551 3,004
-------- -------- --------

Cash Flows From Investing Activities

Activity in available for
sale securities :
Purchases (118,251) (16,859) (30,277)
Maturities, calls and
principal repayments 17,999 6,680 12,295
Proceeds from sales 29,421 11,030 15,449
Net cash used in acquisitions - (29) (523)
Net decrease in federal funds sold - - 650
Net increase in loans receivable (20,354) (30,594) (58,150)
Net increase in Federal Home Loan
Bank stock (723) (552) (1,373)
Purchase of life insurance policies - (3,317) -
Proceeds from sale of foreclosed
real estate 455 399 -
Purchase of premises and equipment (2,651) (1,772) (1,861)
Proceeds from sale of
premises and equipment 819 416 -
-------- -------- --------

Net Cash Used in Investing Activities (93,285) (34,598) (63,790)
-------- -------- --------

Cash Flows From Financing Activities

Net increase in deposits 35,214 27,019 40,360
Net increase (decrease) in federal
funds purchased and securities
sold under agreements to repurchase 38,311 (12,912) 18,058
Net repayment of other borrowed funds - - (2,550)
Repayment of long-term debt (1,500) (11,000) -
Proceeds from long-term debt 20,200 23,500 15,000
Issuance of mandatory redeem-
able capital debentures - 5,000 -
Deferred financing fees on
redeemable capital debentures - (229) -
Reissuance of treasury stock 69 64 -
Net proceeds from issuance of common
stock 14,609 - -
Cash dividends paid (1,307) (1,111) (982)
-------- -------- --------

Net Cash Provided by Financing
Activities 105,596 30,331 69,886
-------- -------- -------

Increase (decrease) in cash
and cash equivalents 7,567 (3,716) 9,100

Cash and cash equivalents:

January 1 12,149 15,865 6,765
-------- -------- --------

December 31 $ 19,716 $ 12,149 $ 15,865
======== ======== ========
Cash payments for:
Interest $ 16,627 $ 15,973 $ 12,222
======== ======== ========
Federal income taxes $ 1,095 $ 875 $ 756
======== ======== ========

Supplemental Schedule of Noncash
Investing and Financing Activities
Other real estate acquired
in settlement of loans $ 369 $ 525 $ -
======== ======== ========

See Notes to Consolidated Financial Statements.

1. Significant Accounting Policies

Principles of consolidation:

The consolidated financial statements include the accounts
of First Leesport Bancorp, Inc. (the "Company"), a bank holding
company and its wholly-owned subsidiaries, First Leesport
Capital Trust I and Leesport Bank (the "Bank"),including the
Bank's wholly-owned subsidiaries, Essick & Barr, Inc. ("Essick &
Barr"), First Leesport Investment Group ("FLIG"), First Leesport
Wealth Management ("FLWM"), and Horizon Realty Solutions, LLC
("Horizon"). All significant intercompany accounts and
transactions have been eliminated.

Nature of operations:

The Bank provides full banking services. Essick & Barr
provides risk management services and personal and commercial
insurance coverage through several insurance companies. FLIG
and FLWM provide investment advisory and brokerage services.
Horizon provides title insurance and other real estate related
services to the Company's customers through limited partnership
arrangements with unaffiliated third parties involved in the
real estate services industry. First Leesport Capital Trust I
is the trust formed for the purpose of issuing the mandatory
redeemable debentures on behalf of the Company. The Company and
the Bank are subject to the regulations of various federal and
state agencies and undergo periodic examinations by various
regulatory authorities. The area served by the Bank and related
subsidiaries is principally Berks, Luzerne and Schuylkill
counties in Pennsylvania.

Estimates:

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Reclassifications:

For comparative purposes, prior years' consolidated
financial statements have been reclassified to conform with
report classifications of the current year. The
reclassifications had no effect on net income.

Presentation of cash flows:

For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks and interest-bearing
deposits in other banks.

Securities available for sale:

Securities classified as available for sale are those
securities that the Company intends to hold for an indefinite
period of time but not necessarily to maturity. Any decision to
sell a security classified as available for sale would be based
on various factors, including significant movement in interest
rates, changes in maturity mix of the Bank's assets and
liabilities, liquidity needs, regulatory capital considerations
and other similar factors. Securities available for sale are
carried at fair value. Unrealized gains and losses are reported
in other comprehensive income, net of the related deferred tax
effect. Realized gains or losses, determined on the basis of
the cost of the specific securities sold, are included in
earnings. Premiums and discounts are recognized in interest
income using a method which approximates the interest method
over the period to maturity.

Management determines the appropriate classification of
debt securities at the time of purchase and re-evaluates such
designation as of each balance sheet date.

Loans:

Loans that management has the intent and ability to hold
for the foreseeable future, or until maturity or pay-off,
generally are stated at their outstanding unpaid principal
balances, net of any deferred fees or costs on originated loans
or unamortized premiums or discounts on purchased loans.
Interest income is accrued on the unpaid principal balance.
Loan origination fees, net of certain direct origination costs,
are deferred and recognized as an adjustment of the yield
(interest income) of the related loans. These amounts are
generally being amortized over the contractual life of the loan.

The accrual of interest is generally discontinued when the
contractual payment of principal or interest has become 90 days
past due or management has serious doubts about further
collectibility of principal or interest, even though the loan is
currently performing. A loan may remain on accrual status if it
is in the process of collection and is either guaranteed or well
secured. When a loan is placed on nonaccrual status, unpaid
interest credited to income in the current year is reversed and
unpaid interest accrued in prior years is charged against the
allowance for loan losses. Interest received on nonaccrual
loans generally is either applied against principal or reported
as interest income, according to management's judgment as to the
collectibility of principal. Generally, loans are restored to
accrual status when the obligation is brought current, has
performed in accordance with the contractual terms for a
reasonable period of time and the ultimate collectibility of the
total contractual principal and interest is no longer in doubt.

Allowance for loan losses:

The allowance for loan losses is established through
provisions for loan losses charged against income. Loans deemed
to be uncollectible are charged against the allowance for loan
losses, and subsequent recoveries, if any, are credited to the
allowance.

The allowance for loan losses is maintained at a level
considered adequate to provide for losses that can be reasonably
anticipated. Management's periodic evaluation of the adequacy
of the allowance is based on the Bank's past loan loss
experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, composition of the
loan portfolio, current economic conditions, and other relevant
factors. This evaluation is inherently subjective as it
requires material estimates that may be susceptible to
significant change, including the amounts and timing of future
cash flows expected to be received on impaired loans.

A loan is considered impaired when, based on current
information and events, it is probable that the Bank will be
unable to collect the scheduled payments of principal or
interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the
probability of collecting scheduled principal and interest
payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as
impaired. Management determines the significance of payment
delays and payment shortfalls on a case-by-case basis, taking
into consideration all of the circumstances surrounding the loan
and the borrower, including the length of the delay, the reasons
for the delay, the borrower's prior payment record and the
amount of the shortfall in relation to the principal and
interest owed. Impairment is measured on a loan by loan basis
for commercial and construction loans by either the present
value of expected future cash flows discounted at the loan's
effective interest rate, the loan's obtainable market price or
the fair value of the collateral if the loan is collateral
dependent.

Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, the Bank
does not separately identify individual consumer, residential
and home equity loans for impairment disclosures.

Loans held for sale:

Mortgage loans originated and intended for sale in the
secondary market at the time of origination are carried at the
lower of cost or estimated fair value on an aggregate basis.
All sales are made without recourse. At December 31, 2001 and
2000, there were $3.03 million and $2.07 million, respectively,
of residential mortgage loans held for sale. In addition, in
December 2001, the Company transferred $9.17 million in seasoned
residential mortgages from the loan portfolio to the held for
sale category, which are also carried at the lower of cost or
estimated fair value on an aggregate basis.

Foreclosed assets:

Foreclosed assets, which are recorded in other assets,
include properties acquired through foreclosure or in full or
partial satisfaction of the related loan.

Foreclosed assets are initially recorded at fair value, net
of estimated selling costs, at the date of foreclosure,
establishing a new cost basis. After foreclosure, valuations
are periodically performed by management, and the real estate is
carried at the lower of carrying amount or fair value, less
estimated costs to sell. Revenue and expense from operations
and changes in the valuation allowance are included in other
expense.

Premises and equipment:

Premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on straight-line and
accelerated depreciation methods over the estimated useful lives
of the related assets.

Loan servicing:

Capitalized servicing rights are reported in other assets
and are amortized into noninterest income in proportion to, and
over the period of, the estimated future net servicing income of
the underlying financial assets. Servicing rights are evaluated
for impairment based upon the fair value of the rights as
compared to amortized cost. Fair value is determined using
prices for similar assets with similar characteristics, when
available, or based upon discounted cash flows using market-
based assumptions. Impairment is recognized through a valuation
allowance to the extent that fair value is less than the
capitalized amount.

Goodwill:

Goodwill is the excess of the purchase price over the fair
value of net assets of the entity acquired through a business
combination that is recorded using the purchase method of
accounting. Goodwill is being amortized using the straight-line
method over periods ranging from 15 to 20 years and is
periodically reviewed for impairment.

Other assets:

Financing costs related to the Company's issuance of
mandatory redeemable capital debentures are being amortized over
the life of the debentures and are included in other assets.

Income taxes:

Deferred taxes are provided on the liability method whereby
deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and
liabilities in the financial statements and their tax basis.
Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted
through the provision for income taxes for the effects of
changes in tax laws and rates on the date of enactment.

Off-balance sheet financial instruments:

In the ordinary course of business, the Bank has entered
into off-balance sheet financial instruments consisting of
commitments to extend credit and letters of credit. Such
financial instruments are recorded in the consolidated balance
sheets when they become receivable or payable.

Advertising:

Advertising costs are expensed as incurred.

Earnings Per Common Share:

Basic earnings per common share is calculated by dividing
net income by the weighted average number of shares of common
stock outstanding. Diluted earnings per share is calculated by
adjusting the weighted average number of shares of common stock
outstanding to include the effect of stock options, if dilutive,
using the treasury stock method.

The Company's calculation of earnings per share for the
years ended December 31, 2001, 2000, and 1999 is as follows:

Comprehensive income:

Accounting principles generally require that recognized
revenue, expense, gains and losses be included in net income.
Although certain changes in assets and liabilities, such as
unrealized gains and losses on available for sale securities are
reported as a separate component of the equity section of the
balance sheet, such items, along with net income, are components
of comprehensive income.

The components of other comprehensive income and related
tax effects were as follows:

Years Ended December 31,
2001 2000 1999
(In thousands)
Unrealized holding gains (losses)
on available for sale securities $1,152 $2,552 $(4,339)
Less reclassification adjustment
for gains realized in income (49) (29) (52)
------ ------ ------
Net unrealized gains (losses) 1,103 2,523 (4,391)

Tax effect (375) (858) 1,491
------ ------ ------

Net of tax amount $ 728 $1,665 $(2,900)
======= ======== =========
Segment reporting:

The Bank acts as an independent community financial
services provider, and offers traditional banking and related
financial services to individual, business and government
customers. Through its branch and automated teller machine
networks, the Bank offers a full array of commercial and retail
financial services, including the taking of time, savings and
demand deposits; the making of commercial, consumer and mortgage
loans; and the providing of other financial services.
Management does not separately allocate expenses, including the
cost of funding loan demand, between the commercial, retail and
mortgage banking operations of the Bank. As such, discrete
financial information is not available and segment reporting
would not be meaningful. See Note 19 for a discussion of
insurance operations and investment advisory and brokerage
operations.

Recently Issued Accounting Standards:

The Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities," in June 1998 which was amended by Statement
No. 137 and Statement No. 138. The Company was required to
adopt the Statement on January 1, 2001. The adoption of the
Statement has not had a significant impact on the Company.

In September 2000, the Financial Accounting Standards Board
issued Statement No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities." This Statement replaces SFAS No. 125 of the same
name. It revises the standards of securitizations and other
transfers of financial assets and collateral and requires
certain disclosures, but carries over most of the provisions of
SFAS No. 125 without reconsideration. SFAS No. 140 is effective
for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001.
The Statement was effective for recognition and reclassification
of collateral and for disclosures relating to securitization
transactions and collateral for fiscal years ending after
December 15, 2000. The adoption of the Statement has not had a
significant impact on the Company.

In July 2001, the Financial Accounting Standards Board
issued Statement No. 141, "Business Combinations," and Statement
No. 142, "Goodwill and Other Intangible Assets."

Statement No. 141 requires all business combinations to be
accounted for using the purchase method of accounting, as use of
the pooling-of-interests method is prohibited. In addition,
this Statement requires that negative goodwill that exists after
the basis of certain acquired assets is reduced to zero should
be recognized as an extraordinary gain. The provisions of this
Statement apply to all business combinations initiated after
June 30, 2001.

Statement No. 142 prescribes that goodwill associated with
a business combination and intangible assets with an indefinite
useful life should not be amortized but should be tested for
impairment at least annually. The Statement requires intangibles
that are separable from goodwill and that have a determinable
useful life to be amortized over the determinable useful life.
The provisions of this Statement became effective for the
Company on January 1, 2002. Upon adoption of this Statement,
goodwill and other intangible assets arising from acquisitions
completed before July 1, 2001 should be accounted for in
accordance with the provisions of this Statement.

At December 31, 2001, the Company had goodwill of
$4,309,000 (net of accumulated amortization of $780,000) related
to the acquisitions of Essick & Barr, Inc., Johnson Financial
Group, Inc. and KRJ & Associates. Amortization expense for the
years ended December 31, 2001, 2000 and 1999 was $265,000,
$228,000 and $228,000, respectively. Commencing January 1,
2002, the Company no longer amortizes goodwill; however,
subsequent impairment reviews may result in periodic write-downs
of goodwill. The Company is also required to complete a
goodwill impairment test within six months of the adoption of
the Statement. Except for discontinuing the amortization of
goodwill, the Company has not determined the impact of adoption
of SFAS Nos. 141 and 142 on the Company's financial condition or
results of operations.

In June of 2001, the Financial Accounting Standards Board
issued Statement No. 143, "Accounting for Asset Retirement
Obligations," which addresses the financial accounting and
reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement
costs. This Statement requires that the fair value of a
liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs
are capitalized as part of the carrying amount of the long-lived
asset. This Statement will become effective for the Company on
January 1, 2003 and is not expected to have a significant impact
on the Company's financial condition or results of operations.

In August of 2001, the Financial Accounting Standards Board
issued Statement No. 144, "Accounting for the Impairment of or
Disposal of Long-Lived Assets." This Statement supercedes FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," and the
accounting and reporting provisions of APB Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions for the
Disposal of a Segment of a Business." This Statement also
amends ARB No. 51, "Consolidated Financial Statements." The
provisions of this Statement were effective for the Company on
January 1, 2002, but are not expected to have a significant
impact on financial condition or results of operations.

2. Mergers And Acquisitions

The consolidated financial statements give retroactive
effect to the July 1999 pooling of interests merger of the
Company and Merchants of Shenandoah Ban-Corp (Merchants) as more
fully described below. As a result, the consolidated statements
of income, shareholders' equity and cash flows for the year
ended December 31, 1999, are presented as if the combining
companies had been consolidated for that period. The
consolidated statements of shareholders' equity reflect the
accounts of the Company as if the common stock issued in the
merger had been issued and outstanding during all periods
presented.

On July 1, 1999, Merchants' shareholders received 1.5854
shares of the Company's common stock for each outstanding share,
for a total of 484,561 shares. Cash was paid for fractional
share interests. The merger was accounted for as a pooling of
interests by the Company. Merger costs of approximately
$544,000 consisting primarily of professional fees and related
transaction costs were expensed in 1999 in connection with the
merger.

The results of operations of the separate entities for
periods prior to the combination were as follows:

Company Merchants Combined
(In thousands)

For the period from
January 1, 1999 to
June 30, 1999 (unaudited):
Net interest income $3,898 $1,076 $4,974
Net income $ 885 $ 254 $1,139

On January 29, 1999, the Company acquired EBFS, Inc., a
licensed insurance agency and broker, through a payment of cash
of $250,000. Additional consideration of $29,000 was paid in
2000. The acquisition has been accounted for as a purchase, and
results of operations of EBFS since the date of acquisition are
included in the consolidated financial statements.

On September 30, 1999, the Company acquired an investment
advisory firm and a brokerage firm that have been renamed First
Leesport Wealth Management and First Leesport Investment Group.
The Company issued 12,742 shares of its common stock and paid
cash of $250,000 in exchange for stock of one entity and assets
of a second entity. The acquisitions have been accounted for as
purchases and the results of operations of these two entities
since the date of acquisition are included in the consolidated
financial statements.

3. Restrictions on Cash and Due From Banks

The Federal Reserve Bank requires the Bank to maintain
average reserve balances. For the years 2001 and 2000, the
average of these daily reserve balances approximated $1.6
million and $451,000, respectively. During 2001, vault cash
maintained by the Bank was adequate to meet the reserve
requirements. In addition, the Bank is required to maintain a
$100,000 clearing balance.

4. Securities - Available For Sale

The amortized cost of securities and their approximate fair
values at December 31 were as follows:

Equity securities consist of stock in the Federal Home Loan
Bank, Atlantic Central Bankers' Bank and other bank stocks.

The amortized cost and fair value of securities as of
December 31, 2001, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities
because certain securities may be called or prepaid without
penalty.

Amortized Fair
Cost Value
(In thousands)
Due in one year or less $ 13,449 $ 13,445
Due after one year through five years 10,965 11,397
Due after five years through ten years 4,347 4,381
Due after ten years 21,925 21,633
Mortgage-backed securities 90,079 90,139
Equity securities 5,800 5,962
-------- --------
$146,565 $146,957
======== ========

Securities with a carrying amount of $56.3 million and
$39.7 million at December 31, 2001 and 2000, respectively, were
pledged to secure public deposits and for other purposes as
required or permitted by law.

Net gains of $49,000, $29,000 and $52,000 were realized on
sales of securities available for sale in 2001, 2000 and 1999,
respectively.

5. Loans

The components of loans were as follows:

December 31,
2001 2000
(In thousands)
Residential real estate $109,435 $112,855
Commercial 111,772 110,580
Commercial, secured by real estate 54,799 34,997
Consumer, net of unearned income 11,376 16,648
Home equity lines of credit 14,541 7,718
-------- --------
Loans 301,923 282,798

Allowance for loan losses (3,723) (3,571)
-------- --------

Loans, net of allowance for loan losses $298,200 $279,227
======== ========
Changes in the allowance for loan losses were as follows:

Years Ended December 31,
2001 2000 1999
(In thousands)
Balance, beginning $3,571 $2,954 $2,129
Provision for loan losses 1,012 1,082 1,270
Loans charged off (980) (555) (568)
Recoveries 120 90 123
------ ------ ------

Balance, ending $3,723 $3,571 $2,954
====== ====== ======

The recorded investment in impaired loans not requiring an
allowance for loan losses was $1.0 million at December 31, 2001
and $471,000 at December 31, 2000. The recorded investment in
impaired loans requiring an allowance for loan losses was $2.3
million and $1.0 million at December 31, 2001 and 2000,
respectively. At December 31, 2001 and 2000, the related
allowance for loan losses associated with those loans was
$630,000 and $517,000, respectively. For the years ended
December 31, 2001, 2000 and 1999, the average recorded
investment in these impaired loans was $3.24 million, $1.50
million and $1.28 million, respectively; and the interest income
recognized on impaired loans was $257,000 for 2001, $61,000 for
2000 and $0 for 1999.

6. Loan Servicing

Loans serviced for others are not included in the
accompanying consolidated balance sheets. The unpaid principal
balance of these loans as of December 31, 2001 and 2000 was
$31.6 million and $22.6 million, respectively.

The balance of capitalized servicing rights included in
other assets at December 31, 2001 and 2000, was $371,000 and
$228,000, respectively. The fair value of these rights was
$371,000 and $240,000, respectively. The fair value of
servicing rights was determined using discount rates of 10.0
percent. Mortgage servicing rights of $244,000 were sold in
1999.

The following summarizes mortgage servicing rights
capitalized and amortized:

Years Ended December 31,
2001 2000 1999
(In thousands)
Mortgage servicing rights capitalized $187 $ 83 $170
==== ==== ====
Mortgage servicing rights amortized $ 44 $ 22 $ 23
==== ==== ====

7. Premises And Equipment

Components of premises and equipment were as follows:

December 31,
2001 2000
(In thousands)
Land and land improvements $ 1,443 $ 1,858
Buildings 5,895 6,307
Leasehold improvements 2,212 1,213
Furniture and equipment 6,674 5,393
------- -------
16,224 14,771

Less accumulated depreciation 6,601 6,371
------- -------

Premises and equipment, net $ 9,623 $ 8,400
======= =======

Certain facilities and equipment are leased under various
operating leases. Rental expense for these leases was $624,000,
$302,000 and $246,000 for the years ended December 31, 2001,
2000 and 1999, respectively. Future minimum rental commitments
under noncancellable leases as of December 31, 2001 were as
follows (in thousands):

2002 $ 685
2003 660
2004 650
2005 657
2006 643
Thereafter 6,169
------
$9,464
======

8. Deposits

The components of deposits were as follows:

December 31,
2001 2000
(In thousands)
Demand, non-interest bearing $ 43,476 $ 38,233
Demand, interest bearing 96,672 54,783
Savings 41,338 46,317
Time, $100,000 and over 22,906 26,565
Time, other 127,185 130,465
-------- --------
Total deposits $331,577 $296,363
======== ========

At December 31, 2001, the scheduled maturities of time
deposits were as follows (in thousands):

2002 $109,262
2003 31,921
2004 4,582
2005 3,302
2006 734
Thereafter 290
--------
$150,091
========

9. Borrowings

At December 31, 2001, the Bank had purchased federal funds
from the Federal Home Loan Bank and other correspondent
financial institutions totaling $32.5 million. At December 31,
2000, the Bank had purchased federal funds from the Federal Home
Loan Bank in the amount of $600,000. The December 31, 2001
balances outstanding matured January 2, 2002, at interest rates
ranging from 1.58% to 2.31%.

In addition, the Bank enters into agreements with customers
as part of cash management services where the Bank sells
securities to the customer overnight with the agreement to
repurchase them at par. Securities sold under agreements to
repurchase generally mature one day from the transaction date.
The securities underlying the agreements are under the Bank's
control. The outstanding balances and related information of
securities sold under agreements to repurchase are summarized as
follows:

Years Ended December 31,
2001 2000
(Dollars in thousands)

Average balance during the year $13,459 $ 9,673
Average interest rate during the year 3.59% 5.73%
Maximum month-end balance during the
year $22,313 $15,659

Long-term debt consisted of the following:

December 31,
2001 2000
(In thousands)
Notes with the Federal Home Loan Bank(FHLB):

18 Month/6 Month Term Note Due July 2001,
Variable at 6.83% $ 0 $10,000
30 Day Term Note Due January 2002,
Fixed at 1.93% 3,000 0
1 Year Term Note Due August 2002,
Variable at 2.05% 3,000 0
2 Year Term Note Due November 2002,
Fixed at 6.57% 4,000 4,000
1 Year Term Note Due December 2002,
Fixed at 2.41% 2,000 0
18 Month Term Note Due February 2003,
Fixed at 4.13% 3,500 0
2 Year Term Note Due December 2003,
Fixed at 3.39% 1,300 0
2 Year Term Note Due August 2003,
Fixed at 4.33% 3,500 0
3 Year Term Note Due November 2003,
Fixed at 6.59% 4,000 4,000
3 Year Term Note Due January 2004,
Fixed at 5.55% 10,000 0
4 Year Term Note Due November 2004,
Fixed at 6.63% 4,000 4,000
5 Year/2 Year Term Note Due December 2004,
Fixed at 6.14%(1) 5,000 5,000
3 Year Term Note Due December 2004,
Fixed at 4.23% 1,300 0
4 Year Term Note Due December 2005
Fixed at 4.80% 1,300 0
5 Year Term Note Due December 2006,
Fixed at 5.14% 1,300 0
10 Year/5 Year Term Note Due September 2008,
Fixed at 4.92%(1) 5,000 5,000
10 Year/5 Year Term Note Due February 2009,
Fixed at 4.97%(1) 5,000 5,000
10 Year/5 Year Term Note Due December 2009,
Fixed at 6.30%(1) 5,000 5,000
------- -------
$62,200 $42,000
------- -------

Notes with other financial institutions:
5 Year Term Note Due March 2005, Fixed
at 8.50% 0 500
5 Year Term Note Due March 2005, Fixed
at 9.00% 0 1,000
------- -------
$62,200 $43,500
======= =======

(1) These notes contain a convertible option that allows the
FHLB, at quarterly intervals, to change the note to an
adjustable-rate advance at three-month LIBOR (1.88% at
December 31, 2001) plus 14 to 16 basis points. If the note
is converted, the option allows the Bank to put the funds
back to the FHLB at par. The year/year refers to the
maturity of the note (in years) and the term until the
first convertible date.

Contractual maturities of long-term debt at December 31,
2001 were as follows (in thousands):

2002 $12,000
2003 12,300
2004 20,300
2005 1,300
2006 1,300
Thereafter 15,000
-------
$62,200
=======

The Bank has a maximum borrowing capacity with the Federal
Home Loan Bank of approximately $128.6 million, of which $81.2
million was outstanding at December 31, 2001. Advances from the
Federal Home Loan Bank are secured by qualifying assets of the
Bank.

10. Mandatory Redeemable Capital Debentures

First Leesport Capital Trust I, a Delaware statutory
business trust, was formed on March 9, 2000 and is a wholly-
owned subsidiary of the Company. The Trust issued $5 million of
10 7/8% fixed rate capital trust pass-through securities to
investors. First Leesport Capital Trust I purchased $5 million
of fixed rate junior subordinated deferrable interest debentures
from First Leesport Bancorp. The debentures are the sole asset
of the Trust. The terms of the junior subordinated debentures
are the same as the terms of the capital securities. The
obligations under the debentures constitute a full and
unconditional guarantee by First Leesport Bancorp of the
obligations of the Trust under the capital securities. The
capital securities are redeemable by First Leesport Bancorp on
or after March 9, 2010, at stated premiums, or earlier if the
deduction of related interest for federal income taxes is
prohibited, classification as Tier 1 Capital is no longer
allowed, or certain other contingencies arise. The capital
securities must be redeemed upon final maturity of the
subordinated debentures on March 9, 2030.

11. Employee Benefits

In 2000, the Company established an Employee Stock
Ownership Plan (ESOP) to provide its employees with future
retirement plan assistance. The ESOP will invest primarily in
the Company's common stock. Contributions to the Plan are at
the discretion of the Board of Directors. For the years ended
December 31, 2001 and 2000, $167,000 and $167,000, respectively,
was accrued to provide for contribution of shares to the Plan.
During 2001, 4,704 shares were purchased on behalf of the ESOP.
No shares were purchased during 2000.

Leesport Bank terminated its noncontributory defined
benefit pension plan during 2000. This plan had covered all
Leesport Bank employees who met the eligibility requirements.
The Plan assets in excess of the projected benefit obligation
were allocated to the Plan's eligible participants, and a gain
on the termination of $21,000 was recognized. The expense
related to this plan was $88,000 for the year ended December 31,
1999.

Net pension cost for this plan consisted of the following
components:
Year Ended December 31, 1999
(In thousands)
Service cost (benefits earned) $ 134
Interest cost on projected benefit
obligation 115
Expected return on plan assets (150)
Net amortization and deferral (11)
-----
$ 88
=====

Assumptions used by Leesport Bank in the determination of
pension plan information for 1999 consisted of the following:
Discount rate - 6.5%, rate of increase in compensation levels -
4.0%, expected long-term rate of return on plan assets - 8.0%.

The Company has a 401(k) Salary Deferral Plan. This plan
covers all eligible employees who elect to contribute to the
Plan. An employee who has attained 18 years of age and has been
employed for at least 30 calendar days is eligible to
participate in the Plan effective with the next quarterly
enrollment period. Employees become eligible for the Company
contribution to the Salary Deferral Plan at each future
enrollment period upon completion of one year of service.
Effective January 1, 2000, the Company contributes 100% of the
first three percent of eligible employees' annual salary
deferral and 50% of the next four percent of salary deferred.
The Company previously contributed 50% of the employees'
contribution up to a maximum of seven percent of annual salary.
Contributions from the Company vest to the employee over a five
year schedule. The annual expense included in salaries and
employee benefits representing the expense of the Company's
contribution was $217,000, $257,000, and $132,000 for the years
ended December 31, 2001, 2000, and 1999, respectively.

The Company has entered into deferred compensation
agreements with certain directors and a salary continuation plan
for certain key employees. At December 31, 2001 and 2000, the
present value of the future liability for these plans was
$657,000 and $625,000, respectively. To fund the benefits under
these agreements, the Company is the owner and beneficiary of
life insurance policies on the lives of the directors and
employees. These policies had an aggregate cash surrender value
of $6.3 million and $5.9 million at December 31, 2001 and 2000,
respectively. For the years ended December 31, 2001, 2000 and
1999, $98,000, $226,000 and $125,000, respectively, was charged
to expense in connection with these agreements.

In May 2000, the Board of Directors of First Leesport
Bancorp, Inc. adopted a non-compensatory Employee Stock Purchase
Plan (ESPP). Under the ESPP, employees of the Company who elect
to participate are eligible to purchase common stock at prices
up to a 15 percent discount from the market value of the stock.
The ESPP does not allow the discount in the event that the
purchase price would fall below the Company's most recently
reported book value per share. The ESPP allows an employee to
make contributions through payroll deduction to purchase common
shares up to 15 percent of annual compensation. The total
number of shares of common stock that may be issued pursuant to
the ESPP is 250,000. As of December 31, 2001, a total of 3,098
shares have been issued under the ESPP.

12. Stock Option Plans and Shareholders' Equity

The Company has an Employee Stock Incentive Plan that
covers all officers and key employees of the Company and its
subsidiaries and is administered by a committee of the Board of
Directors. The Plan covers 210,000 shares of common stock. The
option price for options issued under the Plan must be at least
equal to 100% of the fair market value of the common stock on
the date of grant and shall not be less than the stock's par
value. Options granted under the Plan are exercisable over a
period not less than six months after the date of grant, but no
later than ten years after the date of grant in accordance with
the vesting period as determined by the Plan committee. Options
expire on the earlier of ten years after the date of grant,
three months from the participant's termination of employment or
one year from the date of the participant's death or disability.

The Company has an Independent Directors Stock Option Plan
that covers 52,500 shares of common stock. The Plan covers all
directors of the Company who are not employees. The option
price for options issued under the Plan will be equal to the
fair market value of the Company's common stock on the date of
grant. Options are exercisable from the date of grant and
expire on the earlier of ten years after the date of grant,
three months from the date the participant ceases to be a
director of the Company or twelve months from the date of the
participant's death or disability.

The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related Interpretations in accounting for its
employee and director stock options. Under APB 25, because the
exercise price of the Company's stock options equals the market
price of the underlying stock on the date of grant, no
compensation expense is recognized.

Pro forma information regarding net income and earnings per
share is required by Financial Accounting Standards Board
Statement 123, "Accounting and Disclosure of Stock-Based
Compensation" (FASB 123), and has been determined as if the
Company had accounted for its stock options under the fair value
method of that statement. The fair value of options granted
during 2001, 2000 and 1999 was estimated at the date of grant
using a Black-Scholes option pricing model with the following
weighted-average assumptions: risk-free interest rates of 4.71%
to 6.63%; volatility factors of the expected market price of the
Company's common stock of 12.77% to 21.82%; expected life of the
options of 7 years and a cash dividend yield of 2.2% to 4.0%.

For purposes of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options'
vesting period. The Company's pro forma information follows:

Years Ended December 31,
2001 2000 1999
(In thousands except per share data)
Net income:
As reported $2,776 $2,126 $1,401
Pro forma $2,622 $1,979 $1,305
Earnings per share:
As reported, basic and
diluted $ 1.45 $ 1.15 $ .76
Pro forma, basic and diluted $ 1.37 $ 1.07 $ .71

Stock option transactions under the Plans were as follows:

Options available for grant at December 31, 2001 were
80,946. Stock options outstanding at December 31, 2001, were
exercisable at prices ranging from $13.75 to $25.95 a share.
The weighted-average remaining contractual life of the above
options is approximately 8 years.

In December 2001, the Company completed its shareholder
rights offering. Through the rights offering, the Company
issued an additional 1.2 million shares of common stock at the
offering price of $13.00 per share. The offering resulted in
net proceeds of $14.3 million, after offering costs of $1.3
million.

13. Income Taxes

The components of income tax expense were as follows:

Years Ended December 31,
2001 2000 1999
(In thousands)
Current $1,010 $ 890 $ 924
Deferred 109 (327) (463)
------ ----- -----
$1,119 $ 563 $ 461
====== ===== =====

Reconciliation of the statutory federal income tax expense
computed at 34% to the income tax expense included in the
consolidated statements of income is as follows:

Years Ended December 31,
2001 2000 1999
(In thousands)
Federal income tax at statutory rate $1,324 $ 914 $ 633
Tax exempt interest (343) (378) (351)
Interest disallowance 50 59 41
Bank owned life insurance (112) (107) (32)
Non-deductible goodwill amortization 83 85 76
Non-deductible merger costs - - 81
Other 117 (10) 13
----- ----- -----
$1,119 $ 563 $ 461
====== ===== =====

The federal income tax provision includes $17,000, $10,000
and $18,000 in 2001, 2000 and 1999, respectively, of federal
income taxes related to gains on the sale of securities.

Net deferred tax assets consisted of the following
components:
December 31,
2001 2000
(In thousands)
Deferred tax assets:
Allowance for loan losses $1,065 $1,021
Deferred compensation 258 214
Net unrealized losses on securities
available for sale 0 242
Other 0 10
------ ------
Total deferred tax assets 1,323 1,487
------ ------

Deferred tax liabilities:
Premises and equipment (185) (86)
Net unrealized gains on securities
available for sale (133) 0
Mortgage servicing rights (126) (77)
Other (45) (6)
______ ______
Total deferred tax liabilities (489) (169)
______ ______
Net deferred tax assets $ 834 $1,318
====== ======

14. Transactions With Executive Officers And Directors

The Bank has had banking transactions in the ordinary
course of business with its executive officers and directors and
their related interests on the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with others. At December 31, 2001 and
2000, these persons were indebted to the Bank for loans totaling
$7.43 million and $5.62 million, respectively. During 2001,
$2.30 million of new loans were made and repayments totaled
$490,000.

15. Regulatory Matters And Capital Adequacy

The Company and the Bank are subject to various regulatory
capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have a direct
material effect on their financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific
capital guidelines that involve quantitative measures of its
assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative
judgments by the regulators about components, risk-weightings
and other factors.

Quantitative measures established by regulation to ensure
capital adequacy require the Company and the Bank to maintain
minimum amounts and ratios of total and tier I capital (as
defined in the regulations) to risk-weighted assets, and of
tier I capital to average assets. Management believes, as of
December 31, 2001, that the Company and the Bank meet all
minimum capital adequacy requirements to which they are subject.

As of December 31, 2001, the most recent notification from
the Bank's primary regulator categorized the Bank as well
capitalized under the regulatory framework for prompt corrective
action. There are no conditions or events since that
notification that management believes have changed its category.

The Company's and the Bank's actual capital amounts and
ratios are presented below:

Federal and state banking regulations place certain
restrictions on dividends paid and loans or advances made by the
Bank to the Company. At December 31, 2001, the Bank had
approximately $14.92 million available for payment of dividends
to the Company. Loans or advances are limited to 10 percent of
the Bank's capital stock and surplus on a secured basis. At
December 31, 2001, the Bank had secured loans outstanding to
the Company totaling $1.01 million.

As of December 31, 2001, the Company had declared a $.15
per share cash dividend for shareholders of record on January 2,
2002, payable January 15, 2002. The Company's Board of
Directors declared a five percent stock dividend in December
1999 to shareholders of record on January 3, 2000, which was
paid on January 17, 2000.

16. Financial Instruments With Off-Balance Sheet Risk

The Bank is party to financial instruments with off-balance
sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments
include commitments to extend credit and letters of credit.
Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized
in the balance sheets.

The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument
for commitments to extend credit and letters of credit is
represented by the contractual amount of those instruments. The
Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet
instruments.

A summary of the contractual amount of the Bank's financial
instrument commitments is as follows:

December 31,
2001 2000
(In thousands)
Commitments to grant loans $12,820 $11,425
Unfunded commitments under lines of credit 49,696 28,830
Outstanding letters of credit 2,070 291

Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Since many of the commitments are
expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. Commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee.
The Bank evaluates each customer's credit worthiness on a case-
by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on
management's credit evaluation. Collateral held varies but may
include personal or commercial real estate, accounts receivable,
inventory and equipment.

Outstanding letters of credit are conditional commitments
issued by the Bank to guarantee the performance of a customer to
a third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending
loan facilities to customers.

17. Concentrations of Credit Risk

The Bank grants commercial, residential and consumer loans
to customers primarily located in Berks, Schuylkill and Luzerne
counties in Pennsylvania. The concentrations of credit by type
of loan are set forth in Note 5. Although the Bank has a
diversified loan portfolio, its debtors' ability to honor these
contracts is influenced by the region's economy.

18. Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair
value of the Company's financial instruments; however, there are
inherent weaknesses in any estimation technique. Therefore, for
substantially all financial instruments, the fair value
estimates herein are not necessarily indicative of the amounts
the Company could have realized in a sales transaction on the
dates indicated. The estimated fair value amounts have been
measured as of their respective year ends and have not been re-
evaluated or updated for purposes of these consolidated
financial statements subsequent to those respective dates. As
such, the estimated fair values of these financial instruments
subsequent to the respective reporting dates may be different
than the amounts reported at each year end.

The following information should not be interpreted as an
estimate of the fair value of the entire Company since a fair
value calculation is only provided for a limited portion of the
Company's assets and liabilities. Due to a wide range of
valuation techniques and the degree of subjectivity used in
making the estimates, comparisons between the Company's
disclosures and those of other companies may not be meaningful.

The following methods and assumptions were used to estimate
the fair values of the Company's financial instruments at
December 31, 2001 and 2000:

Cash and cash equivalents:

The carrying amounts reported in the balance sheet for cash
and short-term instruments approximate those assets' fair
values.

Securities available for sale:

Fair values for securities are based on quoted market
prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of
comparable instruments.

Loans and loans held for sale:

For variable-rate and adjustable-rate loans that reprice
frequently with no significant change in credit risk, fair
values are based on carrying values. For fixed-rate loans, fair
values are estimated using quoted market prices, when available,
or discounted cash flows, at interest rates currently offered
for loans with similar terms to borrowers of similar credit
quality.

Mortgage servicing rights:

The fair value of mortgage servicing rights is based on
observable market prices when available or the present value of
expected future cash flows when not available.

Deposit liabilities:

The fair values disclosed for demand deposits (e.g.,
interest and non-interest checking, savings and certain types of
money market accounts) are considered to be equal to the amount
payable on demand at the reporting date (i.e., their carrying
amounts). Fair values for fixed-rate time deposits are estimated
using a discounted cash flow calculation that applies interest
rates currently being offered on time deposits to a schedule of
aggregated expected monthly maturities on time deposits.

Securities sold under agreements to repurchase and federal funds
purchased:

The carrying amounts of these short-term borrowings
approximate their fair values.

Long-term debt:

The fair value of long-term debt is calculated based on the
discounted value of contractual cash flows, using rates
currently available for borrowings with similar maturities.

Mandatory redeemable capital debentures:

The fair value of these debentures is calculated based on
the discounted value of contractual cash flows, using rates
currently available.

Accrued interest receivable and payable:

The carrying amount of accrued interest receivable and
accrued interest payable approximate its fair value.

Off-balance sheet instruments:

Fair values for the Bank's off-balance sheet instruments
are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing.

The estimated fair values of the Company's financial
instruments were as follows:

19. Segment and Related Information

The Company's insurance operations and brokerage and
investment operations are managed separately from the
traditional banking and related financial services that the
Company also offers. These operations provide commercial
insurance, individual and group benefit plans, personal
insurance coverage, securities brokerage services, and
investment advisory services.

Segment information for 2001, 2000 and 1999 is as follows
(in thousands):

Income (loss) before income taxes, as presented above, does
not reflect referral and management fees of approximately
$816,000 and $216,000 that the insurance operation and the
brokerage and investment operation, respectively, paid to the
Bank during 2001. Referral and management fees of approximately
$614,000 and $179,000 were paid by the insurance operation and
the brokerage and investment operation, respectively, to the
Bank in 2000. Referral and management fees of approximately
$614,000 were paid by the insurance operation to the Bank in
1999.

20. First Leesport Bancorp, Inc. (Parent Company Only)
Financial Information

21. Quarterly Data (Unaudited)

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The information relating to directors and executive
officers of the Registrant is incorporated herein by reference
to the information disclosed under the caption "MATTER NO. 1 -
ELECTION OF DIRECTORS - Directors" included in the Registrant's
Proxy Statement for the Annual meeting of Shareholders to be
held on April 23, 2002.

Item 11. Executive Compensation

The information relating to executive compensation and
directors' compensation is incorporated herein by reference to
the information disclosed under the captions "MATTER NO. 1 -
ELECTION OF DIRECTORS - Director Compensation; Executive
Compensation; Executive Officer Agreements; Deferred
Compensation and Salary Continuation Agreements; and
Compensation Committee Interlocks and Insider Participation"
included in the Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held on April 23, 2002.

Item 12. Security Ownership of Certain Beneficial Owners and
Management

The information relating to security ownership of certain
beneficial owners and management is incorporated herein by
reference to the information disclosed under the caption "MATTER
NO. 1 - ELECTION OF DIRECTORS - Directors - Director and Officer
Stock Ownership" included in the Registrant's Proxy Statement
for the Annual Meeting of Shareholders to be held on April 23,
2002.

Item 13. Certain Relationships and Related Transactions

The information relating to certain relationships and
related transactions is incorporated herein by reference to the
information disclosed under the caption "MATTER NO. 1 - ELECTION
OF DIRECTORS - Transactions with Management and Others" included
in the Registrant's proxy Statement for the Annual Meeting of
Shareholders to be held on April 23, 2002.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K

(a) 1. Financial Statements.

Consolidated financial statements are included under Item 8
of Part II of this Form 10-K.

(b) 2. Financial Statement Schedules.

Financial statement schedules are omitted because the
required information is either not applicable, not required or
is shown in the respective financial statements or in the notes
thereto.

3. Exhibits

Exhibit No. Description

3.1 Articles of Incorporation of First Leesport
Bancorp, Inc. (incorporated by reference to
Exhibit 3.1 of the Registrant's Amended Report on
Form 10-K for the year ended December 31, 2000).

3.2 Bylaws of First Leesport Bancorp, Inc.
(incorporated by reference to Exhibit 3.2 of the
Registrant's Annual Report on Form 10-K for the
Year ended December 31, 2000).

4.1 Form of Rights Agreement, dated as of September
19, 2001, between First Leesport Bancorp, Inc. and
American Stock Transfer & Trust Company as Rights
Agent (incorporated by reference to Exhibit 4.1
of First Leesport Bancorp, Inc.'s Registration
Statement on Form 8-A, dated October 1, 2001).

10.1 Contract between the First National Bank of
Leesport and Bisys (Incorporated herein by
reference to Exhibit 10.1 to Registrant's annual
report on Form 10-KSB for the year ended
December 31, 1998).

10.2 Severance Agreement between the First National
Bank of Leesport and John T. Connelly
(Incorporated herein by reference to Exhibit 10.2
to Registrant's annual report on Form 10-KSB for
the year ended December 31, 1998).*

10.3 Employment Agreement between the First National
Bank of Leesport and Raymond H. Melcher, Jr.
(Incorporated herein by reference to Exhibit 10.4
to Registrant's annual report on Form 10-KSB for
the year ended December 31, 1998).*

10.4 Supplemental Executive Retirement Plan
(Incorporated herein by reference to Exhibit 10.1
to Registrant's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1996).*

10.5 Deferred Compensation Plan for Directors
(Incorporated herein by reference to Exhibit 10.2
to Registrant's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1996).*

10.6 Non-Employee Director Compensation Plan
(Incorporated by reference to Exhibit A to
Registrant's Definitive Proxy Statement on
Form 14A for the year ended December 31, 1999).*

10.7 1998 Employee Stock Incentive Plan (Incorporated
by reference to Exhibit 10.9 to Registrant's
Annual Report on Form 10-KSB for the year ended
December 31, 1998).*

10.8 1998 Independent Directors Stock Option Plan
(Incorporated by reference to Exhibit 10.10
to Registrant's Annual Report on Form 10-KSB for
the year ended December 31, 1998).*

10.9 Employment Agreement, dated September 17, 1998,
among First Leesport Bancorp, Inc., Essick & Barr,
Inc. and Charles J. Hopkins (Incorporated by
reference to Exhibit 10.12 to Registrant's
Annual Report on Form 10-KSB for the year ended
December 31, 1998).*

10.10 Employment Agreement, dated October 1, 1999, among
First Leesport Bancorp, Inc., First Leesport
Investment Group, Inc., First Leesport Wealth
Management, Inc. and Keith W. Johnson.
(Incorporated herein by reference to Exhibit 10.12
of the Registrant's annual report on Form 10-K for
the year ended December 31, 1999.)*

11 No statement setting forth the computation of per
share earnings is included because such
computation is reflected clearly in the financial
statements set forth in response to Item 8 of this
Report.

21 Subsidiaries of First Leesport Bancorp, Inc.

23.1 Consent of Beard Miller Company LLP.

_____________________

* Denotes a management contract or compensatory plan or
arrangement.

(b) Reports on Form 8-K.

The following reports on Form 8-K were filed by
the Company during the quarter ended December 31, 2001:

Form 8-K filed October 3, 2001/Announcement of
adoption of shareholder rights plan.

Form 8-K filed November 16, 2001/Announcement of
commencement of rights offering to shareholders
and execution of stock purchase agreements
with twelve institutional and high net worth
individuals as standby purchasers.

Form 8-K filed December 21, 2001/Announcement of
completion of rights offering and sale of common
stock to standby purchasers.

Signatures

In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

March 19, 2002 FIRST LEESPORT BANCORP, INC.

By:/s/Raymond H. Melcher, Jr.
Raymond H. Melcher, Jr.,
Chairman, President and
Chief Executive Officer

In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

/s/Raymond H. Melcher, Jr. Chairman, March 19, 2002
Raymond H. Melcher, Jr. President and Chief
Executive Officer,
Director

/s/Stephen A. Murray Chief Financial March 19, 2002
Stephen A. Murray Officer

/s/Edward C. Barrett Director March 19, 2002
Edward C. Barrett

/s/James H. Burton Director March 19, 2002
James H. Burton

/s/John T. Connelly Director March 19, 2002
John T. Connelly

/s/Charles J. Hopkins Director March 19, 2002
Charles J. Hopkins

/s/Keith W. Johnson Director March 19, 2002
Keith W. Johnson

/s/William J. Keller Director March 19, 2002
William J. Keller

/s/Andrew J. Kuzneski, Jr. Director March 19, 2002
Andrew J. Kuzneski, Jr.

/s/Roland C. Moyer, Jr. Director March 19, 2002
Roland C. Moyer, Jr.

/s/Harry J. O'Neill III Director March 19, 2002
Harry J. O'Neill III

/s/Karen A. Rightmire Director March 19, 2002
Karen A. Rightmire

/s/Alfred J. Weber Director March 19, 2002
Alfred J. Weber

EXHIBIT INDEX

Exhibit No. Description

21 Subsidiaries of First Leesport Bancorp,
Inc.

23.1 Consent of Beard Miller Company LLP.