LEESPORT FINANCIAL CORP - 10-Q Quarterly Report

Back to GetFilings.com

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the
Quarterly Period Ended March 31, 2003,

or

[ ] Transition report pursuant to Section 13 or 15(d)
Of the Exchange Act for the Transition Period
from _________________ to _________________.

No. 0-14555
------------------------
(Commission File Number)

LEESPORT FINANCIAL CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)

PENNSYLVANIA 23-2354007
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1240 Broadcasting Road, Wyomissing, Pennsylvania 19610
- ------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)

(610) 208-0966
----------------------------------------------------
(Registrant's telephone number, including area code)

---------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)

Check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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.

1

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

Number of Shares Outstanding
as of May 9, 2003
COMMON STOCK ($5.00 Par Value) 3,381,696
- ------------------------------ ----------------------------
(Title of Class (Outstanding Shares)

2

Forward-looking Statements

Leesport Financial Corp. (the "Company") may from time to
time make written or oral "forward-looking statements,"
including statements contained in the Company's filings with the
Securities and Exchange Commission (including this Quarterly
Report on Form 10-Q and the exhibits hereto and thereto), in its
reports to shareholders and in other communications by the
Company, which are made in good faith by the Company pursuant to
the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.

These forward-looking statements include statements with
respect to the Company's beliefs, plans, objectives, goals,
expectations, anticipations, estimates and intentions, that are
subject to significant risks and uncertainties, and are subject
to change based on various factors (some of which are beyond the
Company's control). The words "may," "could," "should," would,"
"believe," "anticipate," "estimate," "expect," "intend," "plan"
and similar expressions are intended to identify forward-looking
statements. The following factors, among others, could cause
the Company's financial performance to differ materially from
the plans, objectives, expectations, estimates and intentions
expressed in such forward-looking statements: the strength of
the United States economy in general and the strength of the
local economies in which the Company conducts operations; the
effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Board of
Governors of the Federal Reserve System; inflation, interest
rate, market and monetary fluctuations; the timely development
of and acceptance of new products and services of the Company
and the perceived overall value of these products and services
by users, including the features, pricing and quality compared
to competitors' products and services; the willingness of users
to substitute competitors' products and services for the
Company's products and services; the success of the Company in
gaining regulatory approval of its products and services, when
required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking,
securities and insurance); technological changes; acquisitions;
changes in consumer spending and saving habits; and the success
of the Company at managing the risks involved in the foregoing.

3

The Company cautions that the foregoing list of important
factors is not exclusive. Readers are also cautioned not to
place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date of this
report. The Company does not undertake to update any forward-
looking statement, whether written or oral, that may be made
from time to time by or on behalf of the Company.

4

Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements

LEESPORT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)

5

See Notes to Consolidated Financial Statements.

7

LEESPORT FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)

See Notes to Consolidated Financial Statements.

8

LEESPORT FINANCIAL CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Months ended March 31, 2003 and 2002
Dollar amounts in thousands, except share data)

9

LEESPORT FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollar amounts in thousands)

See Notes to Consolidated Financial Statements.

10

LEESPORT FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)

Three Months Ended
-------------------------------
March 31, 2003 March 31, 2002
-------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,132 $ 1,085
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 295 315
Provision for depreciation and amortization of premises
and equipment 232 207
Amortization of identifiable intangible assets 68 -
Deferred income taxes 118 -
Net amortization securities premiums and discounts 71 63
Amortization of mortgage servicing rights 89 9
Realized gain on sale of securities (110) -
Proceeds from sales of loans 27,825 20,687
Net gains on loans held for sale (600) (316)
Loans held for sale (22,126) (8,308)
Net gain on sale of premises and equipment - (22)
Earnings on investment in life insurance (93) (79)
(Increase) in accrued interest receivable and other
assets (489) (744)
Increase in accrued interest payable and other
liabilities 729 1,225
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,141 14,122
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Available for sale securities:
Purchases (39,832) (26,371)
Principal repayments, maturities and calls 28,192 23,278
Proceeds from sales 7,929 -
Net increase in federal funds sold (3,165) (3,541)
Net increase in loans receivable (6,379) (14,477)
Net increase in Federal Home Loan Bank Stock (204) -
Proceeds from sale of foreclosed real estate 33 -
Purchases of premises and equipment (1,043) (408)
Proceeds from sale of premises and equipment - 46
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (14,469) (21,473)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 18,792 23,623
Net decrease in federal funds purchased (9,186) (32,500)
Net decrease in securities sold under agreements to
repurchase (1,447) (740)
Proceeds from long-term debt - 7,000
Purchase of treasury stock (108) -
Net proceeds from issuance of common stock - 152
Proceeds from the exercise of stock options 38 -

11

Cash dividends paid (518) (464)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,571 (2,929)
-------- --------
Increase (Decrease) in cash and cash equivalents 243 (10,280)

Cash and cash equivalents:
Beginning 16,489 19,716
-------- --------
Ending $ 16,733 $ 9,436
======== ========
Cash payments for:
Interest $ 3,558 $ 4,045
======== ========
Income Taxes $ 305 $ -
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Other real estate acquired in settlement of loans $ - $ 122
======== ========

The accompanying notes are an integral part of these financial
statements.

12

LEESPORT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited consolidated financial statements contained
herein have been prepared in accordance with the
instructions to Form 10-Q of Regulation S-X. All
significant intercompany accounts and transactions have been
eliminated. The accompanying unaudited consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information. Accordingly, they do not include all
of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(including normal recurring adjustments) considered
necessary for a fair presentation of the results for the
interim periods have been included. 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.

The balance sheet at March 31, 2003 has been derived from
the audited financial statements at that date but does not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. The results of operations for the
three-month period ended March 31, 2003 are not necessarily
indicative of the results to be expected for the full year.
For purpose of reporting cash flows, cash and cash
equivalents include cash and due from banks, and interest
bearing deposits in other banks. For further information,
refer to the Consolidated Financial Statements and Footnotes
included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2002.

13

2. Earnings Per Common Share

Basic earnings per share represents income available to
Common shareholders divided by the weighted-average number
of common shares outstanding during the period. Diluted
earnings per share reflects additional common shares that
would have been outstanding if dilutive potential common
shares (stock options) had been issued, as well as any
adjustments to income that would result from the assumed
issuance.

The number of common share outstanding as of March 31, 2003
and all references to the weighted-average number of common
shares outstanding and per share amounts reflect the
5% stock dividend declared by the Board of Directors on
March 19, 2003 with a record date of April 1, 2003 and
distributed to shareholders on April 15, 2003. The 5% stock
dividend resulted in 161,949 shares and cash
paid of $7,000 on 343.2 fractional shares, which is included
in cash dividends declared.

Earnings per common share for the three months ended
March 31, 2003 and 2002 have been computed based upon the
following (dollars in thousands):

Three Months Ended
March 31,
-----------------------
2003 2002
---------- ----------
Net income available to shareholders $1,132,000 $1,085,000
========== ==========
Average number of shares outstanding 3,409,341 3,239,640
Effect of dilutive stock options 31,146 3,964
---------- ----------
Average number of shares outstanding
used to calculate diluted earnings
per share 3,440,487 3,243,604
========== ==========

14

3. Contingent Liabilities

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

4. Recently Issued Accounting Standards

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
became 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 June 2002, the Financial Accounting Standards Board
issued Statement No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", which nullifies EITF
Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and other Costs to Exit an Activity
(including certain costs incurred in a restructuring)."
This statement delays recognition of these costs until
liabilities are incurred and requires fair value
measurement. It does not impact the recognition of
liabilities incurred in connection with a business
combination or the disposal of long-lived assets. The
provisions of this statement are effective for exit or
disposal activities initiated after December 31, 2002 and
are not expected to have a significant impact on the
Company's financial condition or results of operations.

15

In November 2002, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others." This Interpretation expands the disclosures to be
made by a guarantor in its financial statements about its
obligations under certain guarantees and requires the
guarantor to recognize a liability for the fair value of an
obligation assumed under certain specified guarantees. FIN
45 clarifies the requirements of FASB Statement No. 5,
"Accounting for Contingencies." In general, FIN 45 applies
to contracts or indemnification agreements that contingently
require the guarantor to make payments to the guaranteed
party based on changes in an underlying obligation that is
related to an asset, liability or equity security of the
guaranteed party, which would include financial standby
letters of credit. Certain guarantee contracts are excluded
from both the disclosure and recognition requirements of
this Interpretation, including, among others, guarantees
related to commercial letters of credit and loan
commitments. The disclosure requirements of FIN 45 require
disclosure of the nature of the guarantee, the maximum
potential amount of future payments that the guarantor could
be required to make under the guarantee and the current
amount of the liability, if any, for the guarantor's
obligations under the guarantee. The accounting recognition
requirements of FIN 45 are to be applied prospectively to
guarantees issued or modified after December 31, 2002.
Adoption of FIN 45 did not have a significant impact on the
Company's financial condition or results of operations.

Outstanding letters of credit written are conditional
commitments issued by the Company to guarantee the
performance of a customer to a third party. The Company's
exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for standby
letters of credit is represented by the contractual amount
of those instruments. The Company had $4,813,000 of
financial and performance standby letters of credit as of
March 31, 2003. The Bank uses the same credit policies in
making conditional obligations as it does for on-balance
sheet instruments.

16

The majority of these standby letters of credit expire
within the next twelve to 24 months. The credit risk
involved in issuing letters of credit is essentially the
same as that involved in extending other loan commitments.
The Company requires collateral and personal guarantees
supporting these letters of credit as deemed necessary.
Management believes that the proceeds obtained through a
liquidation of such collateral and the enforcement of
personal guarantees would be sufficient to cover the maximum
potential amount of future payments required under the
corresponding guarantees. The current amount of the
liability as of March 31, 2003 for guarantees under standby
letters of credit issued after December 31, 2002 is not
material.

In April 2003, the Financial Accounting Standards Board
issued Statement No. 149, "Amendment of Statement No. 133,
Accounting for Derivative Instruments and Hedging
Activities." This Statement clarifies the definition of a
derivative and incorporates certain decisions made by the
Board as part of the Derivatives Implementation Group
process. This Statement is effective for contracts
entered into or modified, and for hedging relationships
designated after June 30, 2003 and should be applied
prospectively. The provisions of the Statement that relate
to implementation issues addressed by the Derivatives
Implementation Group that have been effective should
continue to be applied in accordance with their respective
effective dates. Adoption of this Statement is not expected
to have a significant impact on the Company's financial
condition or results of operations.

5. Segment Information

The Company's insurance operations and investment operations
are managed separately from the traditional banking and
related financial services that the Company also offers.
The insurance operation provides commercial, individual, and
group benefit plans and personal coverage. The investment
operation provides individual financial, retirement and
estate planning, investment advice and services, corporate
and small business pension and retirement planning services.

17

Banking
and
Financial Insurance Investment
Services Services Services Total
--------- --------- ---------- ------
(Amounts in thousands)

Three months ended March 31, 2003
Revenues from external sources $5,336 $2,148 $159 $7,643
Income (loss) before income taxes 1,348 361 (141) 1,568

Three months ended March 31, 2002
Revenues from external sources 4,709 $1,044 $161 $5,914
Income (loss) before income taxes 1,495 89 (94) 1,490

6. Stock Option Plans

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, which was increased by 200,000 shares to 410,000 (see
Note 7. Subsequent Events). 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 not 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, which was
increased by 50,000 shares to 102,500 (see Note 7.
Subsequent Events). 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's relationship with the
Company ceases or twelve months from the date of the
participant's death or disability.

18

The Company accounts for the above stock option plans under
the recognition and measurement principles of APB opinion
No. 25, "Accounting for Stock Issued to Employees" and
related interpretations. No stock-based employee
compensation cost is reflected in net income, as all options
granted under those plans had an exercise price equal to the
market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net
income and earnings per share if the Company had applied the
fair value recognition provisions of FASB Statement No. 123,
"Accounting for Stock-Based Compensation" to stock-based
compensation for the periods ended:

March 31, March 31,
2003 2002
--------- ---------
(In thousands)
Net income, as reported $1,132 $1,085
Deduct total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects (39) (58)
----- -----
Pro forma net income $1,093 $1,027
====== ======

Basic earnings per share:
As reported $ .33 $ .33
Pro forma $ .32 $ .32

Diluted earnings per share:
As reported $ .33 $ .33
Pro forma $ .32 $ .32

7. Subsequent Events

On April 22, 2003, the Company entered into an agreement
with Legacy Bank, Harrisburg, PA, to sell its three most
northern offices - Shenandoah, located in northern
Schuylkill County, and Drums and Hazleton, located in

19

Luzerne County. The sale is expected to be completed in
August 2003. Included in the sale will be the facilities,
staff, equipment and loan and deposit accounts held at the
three branches.

The Company amended its Articles of Incorporation to
increase the number of authorized shares of common stock
from 10,000,000 shares to 20,000,000 shares, which was
approved by the shareholders at the annual shareholders'
meeting on April 22, 2003.

The Company amended its Employee Stock Incentive Plan to
increase the number of shares available for issuance under
the Plan by 200,000 shares from 210,000 shares to 410,000
shares, which was approved by the shareholders at the annual
shareholders' meeting on April 22, 2003.

The Company amended its Independent Directors Stock Option
Plan to increase the number of shares available for issuance
under the Plan by 50,000 shares from 52,500 shares to
102,500 shares, which was approved by the shareholders at
the annual shareholders' meeting on April 22, 2003.

20

Item 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations

OVERVIEW

Net income for the Company for the quarter ended March 31,
2003 was $1.13 million, an increase of 4.3%, as compared to
$1.09 million for the same period in 2002. Basic and diluted
earnings per share were $.33 for the first quarter of 2003
compared to $.33 for the first quarter of 2002.

The following are the key ratios for the Company as of
March 31:

Three Months Ended
March 31,
------------------
2003 2002
------ ------
Return on average assets .82% .90%
Return on average shareholders' equity 8.56% 9.50%
Dividend payout ratio 43.66% 42.86%
Average shareholders' equity
to average assets 9.32% 9.45%

Net Interest Income

Net interest income is a primary source of revenue for the
Company. Net interest 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
short and long-term borrowed funds. 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, using a 34% tax rate.

21

Net interest income for the three months ended March 31,
2003 was $3.94 million, an increase of $175,000, or 4.6%,
compared to the $3.77 million reported for the first quarter of
2002. The net interest margin declined to 3.26% for the first
quarter of 2003 from 3.49% for the first quarter of 2002.

The following summarizes net interest margin information:

Three Months Ended March 31,
---------------------------
2003 2002
-------------------------- --------------------------
Interest Interest
Average Income/ % Average Income/ %
Balance Expense Rate Balance Expense Rate
------- -------- ----- ------- -------- -----
(In thousands, except percentages)

Interest Earning Assets:

Loans (1)(2)
Commercial $216,285 $3,604 6.61 $181,505 $3,213 7.18
Mortgage 47,720 845 7.08 71,334 1,381 7.74
Consumer 73,709 1,196 6.44 58,277 971 6.76
Other 722 - - 1,419 - -
Investments (2) 151,644 1,582 4.14 137,876 1,913 5.63
Federal funds sold 2,607 8 1.22 1,157 4 1.40
Other short-term investment 1,158 5 1.71 1,503 4 1.08
-------- ------ ------ -------- ------ -----
Total interest earning assets $493,845 $7,239 5.82 $453,071 $7,486 6.70

Liabilities:
Transaction accounts $168,161 $ 469 1.11 $144,870 $ 574 1.61
Certificates of deposit 157,314 1,574 3.97 149,659 1,916 5.19
Securities sold under
agreement to repurchase 21,068 75 1.41 15,932 71 1.81
Short-term borrowings 2,505 10 1.58 6,981 42 2.44
Long-term borrowings 71,858 840 4.64 68,097 847 5.04
Mandatory redeemable
capital securities 15,000 219 5.79 5,000 138 11.19
-------- ------ ----- -------- ------ -----
Total interest bearing
liabilities 435,906 3,187 2.90 390,539 3,588 3.73

Noninterest bearing
Deposits 60,173 47,554
-------- --------
Total cost of funds $496,079 3,187 2.55 $438,093 3,588 3.32
======== ------ ======== ------
Net interest margin
(fully taxable equivalent) $4,052 3.26 $3,898 3.49
====== ======

22

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

(2) Interest income on loans and investments is presented on a
taxable equivalent basis using an effective tax rate of
34%.

Average interest-earning assets for the three months ended
March 31, 2003 were $493.8 million, a $40.7 million, or 9.0%
increase over average earning assets of $453.1 million for the
first quarter of 2002. The yield on average interest earning
assets decreased by 0.88%, to 5.82% for the first quarter of
2003 compared to the same period of 2002.

Average interest-bearing liabilities for the three months
ended March 31, 2003 were $435.9 million, a $45.4 million, or
11.6%, increase over average interest-bearing liabilities of
$390.5 million for the first quarter of 2002. In addition, non-
interest-bearing deposits increased to $60.2 million, from $47.6
million for the same time period. The total cost of funds
decreased by 0.77%, to 2.55% for the first quarter of 2003
compared to the same period of 2002.

The lower yield on average earning assets for the first
quarter of 2003, as compared to the first quarter of 2002, is
primarily the result of loan and investment portfolio principal
paydowns and associated premium amortization. These cashflows
were then reinvested into lower yielding assets at current
market rates thereby reducing the yield.

The lower cost of supporting liabilities is the combined
result of reducing deposit product interest rates throughout
2002, the $12.6 million increase in non-interest-bearing
deposits mentioned above and lower yields on long-term
borrowings.

Provision for Loan Losses

The provision for loan losses for the quarter ended
March 31, 2003 was $295,000 compared to $315,000 for the first
quarter of 2002. The provision reflects the amount deemed
appropriate by management to provide an adequate reserve to meet

23

the present risk characteristics of the loan portfolio. The
$20,000 decrease in the provision between the first quarter of
2002 and the first quarter of 2003 is the result of charge-offs
of loans that the Company had previously reserved for. The
Company continues to maintain strong asset quality ratios in
light of the continued growth in the Company's loan portfolio,
to $341.0 million at March 31, 2003 from $315.2 million at
March 31, 2002 and management's assessment of the credit quality
factors existing at this time. The ratio of the allowance for
loan losses to loans outstanding at March 31, 2003 and March 31,
2002 was 1.16% and 1.23%, respectively. Please see further
discussion under the caption "Allowance for Loan Losses."

Other Income

Total other income for the three months ended March 31,
2003 totaled $3.70 million, an increase of $1.55 million, or
72%, over other income of $2.15 million for the same period in
2002.

The Company's primary source of other income is commissions
and other revenue generated through sales of insurance products
through the Company's insurance subsidiary, Essick & Barr, LLC.
Revenues from insurance operations totaled $2.1 million for the
first quarter of 2003 compared to $1.0 million for the same
period in 2002, an increase of 105.7%. This increase is the
result of increased revenues from our existing Essick & Barr
agency and the acquisition of The Boothby Group agency as of
October 1, 2002.

Included in other income for 2003 is a $110,000 gain on the
sale of equity securities, and a $21,000 gain on the sale of
portfolio SBA loans. Included in other income for the first
quarter of 2002 was a $109,000 gain on the sale of approximately
$9.2 million in portfolio mortgage loans, and a $22,000 gain on
the sale of a single-family home owned by the Company located
adjacent to the Bank's operations center in Leesport.

Customer service fees increased 30.9% for the first quarter
of 2003 as compared to the same period in 2002, from $272,000 to
$356,000. This increase is primarily due to an expanded
customer base, new services, and a new fee-pricing schedule.

24

Income from mortgage banking activities increased by
$346,000 or 126.3% for the first quarter of 2003 as compared to
the same period in 2002, from $274,000 to $620,000. This
increase is primarily due to continuing customer demand for
mortgage loans as a result of lower interest rates, an expanded
number of mortgage originators and the Bank's continuing ability
to sell the mortgages in the secondary market.

Revenues generated by the Company's investment subsidiaries
declined to $159,000, or 1.2%, for the first quarter of 2003,
from $161,000 for the first quarter of 2002. With the help of
the acquisition of certain assets of the First Affiliated
Investment Group effective September 1, 2002 and strong customer
retention efforts, we were able to minimize the effects of
continued difficulties in generating investment revenues in
light of market conditions and continued negative investor
sentiment.

Other Expense

Other expense for the quarter ended March 31, 2003 was $5.8
million compared to $4.1 million for the quarter ended March 31,
2002, a 40.7% increase.

Salary and benefits expense for the first quarter of 2003
increased by 48.1% to $3.3 million from $2.2 million for the
first quarter of 2002. This increase is the result of an
increase in the number of full time equivalent employees, to 232
at March 31, 2003 from 190 at March 31, 2002, primarily due to
the acquisitions, the increased commissions paid for the
mortgage banking activities, overall merit increases applied to
base salaries during the past twelve months, and increases in
employee health insurance costs consistent with national trends.

Occupancy and equipment expense for the first quarter of
2003 was $784,000, a $146,000 or 22.9% increase over the
$638,000 for the first three months of 2002. This increase is
primarily attributable to the addition and related construction
costs of two financial service centers in 2003 and expenses
related to the acquisition of the Boothby Group in the second
half of 2002.

25

Advertising and marketing expenses increased 55.1%, to
$307,000 for the first quarter of 2003 from $198,000 for the
same period in 2002. This resulted from an increase in direct
mailings to our customers, the marketing of our new company
brand to include The Boothby Group and an increase in company
sponsorships and donations.

The amortization of identifiable intangible assets for the
first quarter of 2003 increased to $68,000 from $ 0 for the same
period of 2002 and resulted from the acquisitions of The Boothby
Group and certain assets of the First Affiliated Investment
Group in the second half of 2002.

Professional service expenses increased 33.9% to $237,000
for the first quarter of 2003 from $177,000 for the same period
of 2002 and resulted from increases in directors and legal fees.

Other operating expenses increased 24.7% to $1.1 million
for the first quarter of 2003 from $861,000 for the same period
in 2002. Increases in computer & processing services, business
insurance, travel expense, state taxes and miscellaneous
expenses accounted for most of the increase.

Income Taxes

The effective income tax rate for the Company for the first
quarter of 2003 was 27.80% compared to 27.18% for the first
quarter of 2002. The effective tax rates for the first quarter
of 2003 was higher than the rates for the comparable period in
2002 primarily as a result of the decline in tax-advantaged
interest income as a percentage of net income before taxes from
16.50% to 13.4%.

Financial Condition

The total assets of the Company at March 31, 2003 were $571
million, an increase of approximately $9 million, or 1.6%, since
December 31, 2002.

26

Securities Available for Sale

Investment securities available for sale increased 2.2% to
$161.0 million at March 31, 2003 from $157.6 million at December
31, 2002. 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.

Loans

Total loans increased to $341.0 million at March 31, 2003
from $335.2 million at December 31, 2002, an increase of $5.9
million or 1.7%.

The components of loans were as follows:

March 31, December 31,
2003 2002
(In thousands)
Residential real estate $106,520 $106,153
Commercial 96,852 91,030
Commercial, secured by real estate 94,680 98,360
Consumer, net of unearned income 12,200 13,081
Home equity lines of credit 30,789 26,560
-------- --------
Loans 341,041 335,184

Allowance for loan losses (3,955) (4,182)
-------- --------
Loans, net of allowance for loan
losses $337,086 $331,002
======== ========

Commercial loans increased to $191.5 million at March 31,
2003 from $189.4 million at December 31, 2002, an increase of
$2.1 million or 1.1%. This increase underscores the Company's
focus on making higher yielding commercial loans to small and
medium sized businesses in its market area.

In addition, consumer loans, including home equity lending
products, increased to $43 million at March 31, 2003 from $39.7
million at December 31, 2002, an increase of $3.3 million, or
8.3%. This increase is primarily the result of marketing
efforts relating to our home equity products.

27

Loans secured by residential real estate (not including
home equity lending products but including commercial loans
secured by residential real estate) increased $.3 million, or
..4%, between December 31, 2002 and March 31, 2003, from $106.2
million to $106.5 million. The Company has experienced an
increase in prepayments of its higher yielding loans, which have
been replaced with lower yielding loans. This prepayment
activity has negatively impacted the Company's net interest
margin.

Allowance for Loan Losses

The allowance for loan losses at March 31, 2003 was $4.0
million compared to $4.2 million at December 31, 2002. Additions
to the allowance are made from time to time based upon
management's assessment of credit quality factors existing at
that time. 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 loan losses. The allowance at
March 31, 2003 was 1.16% of outstanding loans compared to 1.23%
of outstanding loans at December 31, 2002.

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. Loans deemed to be uncollectible are
charged against the allowance for loan losses, and subsequent
recoveries, if any, are credited to the allowance. 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, the value
of any underlying collateral, risk characteristics in the loan
portfolio, local and national economic conditions, and other
relevant factors. Significant loans are individually analyzed,
while other smaller balance loans are evaluated by loan
category. This evaluation is inherently subjective as it
requires material estimates that may be susceptible to change.
Based upon the results of such reviews, management believes that
the allowance for loan losses at March 31, 2003 was adequate to
absorb credit losses inherent in the portfolio at that date.

The following table shows the activity in the Company's
allowance for loan losses:

28

Three Months Ended
March 31, 2003 March 31, 2002
(Amounts in thousands)

Balance of allowance for loan losses,
beginning of period 4,182 3,723
Loans charged-off:
Commercial, financial and agricultural 570 99
Real estate - mortgage - 39
Consumer 33 49
Total loans charged-off 603 187
Recoveries of loans previously charged-off:
Commercial, financial and agricultural (29) (31)
Real estate - mortgage (41) (3)
Consumer (11) (6)
Total recoveries (81) (40)
Net loans charged-off 522 147
Provision for loan losses 295 315
Balance, end of period $ 3,955 $ 3,891
======== ========
Net charge-offs to average loans .15% .05%
Allowance for loan losses to loans outstanding 1.16% 1.23%
Loans outstanding at end of period
(net of unearned income) $341,041 $315,210
Average balance of loans outstanding
during the period 338,436 312,535

The following table summarizes the Company's non-performing
assets:

March 31, December 31,
2003 2002
--------- ------------
(Amounts in thousands)

Non-accrual loans
Real estate - mortgage $ 285 $ 258
Consumer 0 0
Commercial, financial and agricultural 1,107 971
------ -------
Total 1,392 1,229

Loans past due 90 days or more and still accruing interest
Real estate - mortgage 0 0
Consumer 0 11
Commercial, financial and agricultural 91 53
------ ------
Total 91 64

Troubled debt restructurings 110 112
------ ------
Total non-performing loans 1,593 1,405

29

Other real estate owned 88 121
------ ------
Total non-performing assets $1,681 $1,526
====== ======

Non-performing loans to total loans 0.47% 0.42%
Non-performing assets to total loans plus OREO 0.49% 0.46%

Premises and Equipment

Components of premises and equipment were as follows:

March 31, December 31,
2003 2002
--------- ------------
(In thousands)
Land and land improvements $ 1,445 $ 1,445
Buildings 6,473 6,099
Leasehold improvements 1,913 1,907
Furniture and equipment 4,652 4,072
-------- -------
14,483 13,523

Less accumulated depreciation 2,374 2,225
------- -------
Premises and equipment, net $12,109 $11,298
======= =======

Premises and equipment, net of accumulated depreciation and
amortization, increased $.8 million, or 7.2%, between
December 31, 2002 and March 31, 2003 to $12.1 million from $11.3
million.

Major additions to this category in 2003 include the
additional construction in process costs of approximately
$370,000 for the Sinking Spring and Exeter financial centers,
which are scheduled to open in May 2003; additional cost of
$525,000 relating to the Company's new computer system.

Deposits

Total deposits at March 31, 2003 were $398.6 million
compared to $379.8 million at December 31, 2002, an increase of
$18.8 million, or 5%.

30

The components of deposits were as follows:

March 31, December 31,
2003 2002
--------- ------------
(In thousands)
Demand, non-interest bearing $ 62,854 $ 60,015
Demand, interest bearing 117,570 118,392
Savings 52,266 50,367
Time, $100,000 and over 25,970 23,837
Time, other 139,964 127,221
-------- --------
Total deposits $398,624 $379,832
======== ========

Factors contributing to this increase include successful
promotional programs run during this period, and the opening of
a new branch in May 2002.

Borrowings

Total debt decreased by $10.6 million or 8.8% to $110.7
million at March 31, 2003 from $121.3 million at December 31,
2002. Federal funds purchased declined 100.0% to $0 at March
31, 2003 from $9.2 million at December 31, 2002. The average
balance of federal funds purchased for the first quarter of 2003
was $2.5 million. The repayment of these funds was primarily
accomplished throughout the quarter using proceeds from
investment securities paydowns and increases in deposit account
balances.

Long-term debt, composed of borrowings with the Federal
Home Loan Bank, and mandatory redeemable capital debentures
remained the same from December 31, 2002 to March 31, 2003.

Off Balance Sheet Commitments

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 sheet.

31

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 Company's
financial instrument commitments is as follows:

March 31, December 31,
2003 2002
--------- ------------
(In thousands)

Commitments to grant loans $ 10,149 $11,114
Unfunded commitments under lines of
credit 108,645 98,289
Financial & performance standby
letters of credit 4,813 4,923

Investment in Leesport Mortgage LLC

In May 2002, the Company's subsidiary, Leesport Bank,
jointly formed Leesport Mortgage LLC with a real estate company.
Leesport Mortgage LLC was formed to provide mortgage brokerage
services, including, without limitation, any activity in which a
mortgage broker may engage. It is operated as a permissible
"affiliated business arrangement" within the meaning of the Real
Estate Settlement Procedures Act of 1974. Leesport Bank's
initial investment was $15,000.

Capital

Total shareholders' equity increased $337,000, to $53.2
million at March 31, 2003 from $52.9 million at December 31,
2002. The increase is the net result of net income for the
period of $1.132 million less dividends declared of $526,000,
proceeds of $193,000 from the issuance of shares of common stock
under the Company's employee and director stock plans and
directors compensation, net reduction in unrealized gain on
securities available for sale, net of tax, of $354,000, and the
purchase of treasury stock of $108,000.

32

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

As required by 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 1 capital consists of common shareholders' equity
plus mandatory redeemable capital securities less intangible
assets, and Tier II capital includes Tier I capital plus 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 and Tier II capital.

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

March 31, December 31,
2003 2002
--------- ------------
(Dollars in thousands)

Tier I
Common shareholders' equity
(excluding unrealized gains(losses)
on securities) $ 51,450 $ 50,759
Disallowed intangible assets (11,450) (11,525)
Mandatory redeemable capital debentures 15,000 15,000
Tier II
Allowable portion of allowance for
Loan losses 3,955 4,182
Unrealized gains on available for
sale equity securities 49 95
-------- --------
Risk-based capital $ 59,004 $ 58,511

Risk adjusted assets (including off-
balance sheet exposures) $413,015 $400,781
======== ========

33

Leverage ratio 10.05% 9.94%
Tier I risk-based capital ratio 13.32% 13.53%
Total risk-based capital ratio 14.29% 14.60%

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.

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 Tier I capital less
intangible assets, to average quarterly assets less intangible
assets. The leverage ratio at March 31, 2003 was 10.05%
compared to 9.94% at December 31, 2002. The increase in this
ratio resulted primarily from the increases in average deposits
which in turn increased average total assets while Tier I
capital increased as the result of net income. The mandatory
redeemable securities are included for regulatory purposes as
Tier I capital with certain limiting restrictions. At March 31,
2003, the entire amount of these securities was allowable to be
included as Tier I capital for the Company. For both periods,
the capital ratios were above minimum regulatory guidelines.

On March 23, 2000 and September 26, 2002, the Company
established First Leesport Capital Trust I and Leesport Capital
Trust II, respectively, in which the Company owns all of the
common equity. First Leesport Capital I issued $5 million of
mandatory redeemable capital securities carrying an interest
rate of 10.875%, and Leesport Capital Trust II issued $10
million of mandatory redeemable capital securities carrying a
floating interest rate of 3 month LIBOR plus 3.45%. These
debentures are the sole assets of the Trusts. These securities
must be redeemed in March 2030 and September 2032, respectively,
but may be redeemed earlier in the event that the interest
expense becomes non-deductible for federal income tax purposes
or if the treatment of these securities is no longer qualified
as Tier I capital for the Company. In October 2002, the Company
entered into an interest rate swap agreement that effectively
converts the fixed-rate capital securities to a floating

34

interest rate of six month LIBOR plus 5.25%.

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 following table sets forth the Company's capital
amounts and ratios:

Minimum Minimum Amount
Amount To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
--------------- --------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------- ------ ------- ------ ------- ------
(Amounts In Thousands)

As of March 31, 2003:
Total capital (to risk-weighted assets):
Leesport Financial Corp. $59,004 14.29% $33,041 8.00% $41,302 10.00%
Leesport Bank 53,152 13.15 32,362 8.00 40,452 10.00
Tier I capital (to risk-weighted assets):
Leesport Financial Corp. 55,000 13.32 16,521 4.00 24,781 6.00
Leesport Bank 49,177 12.16 16,181 4.00 24,271 6.00
Tier I capital (to average assets):
Leesport Financial Corp. 55,000 10.05 21,892 4.00 27,365 5.00
Leesport Bank 49,177 9.12 21,568 4.00 26,961 5.00

As of December 31, 2002:
Total capital (to risk-weighted assets):
Leesport Financial Corp. $58,511 14.60% $32,062 8.00% $40,078 10.00%
Leesport Bank 52,089 13.33 31,270 8.00 39,088 10.00
Tier I capital (to risk-weighted assets):
Leesport Financial Corp. 54,234 13.53 16,031 4.00 24,047 6.00
Leesport Bank 47,886 12.25 15,635 4.00 23,453 6.00
Tier I capital (to average assets):
Leesport Financial Corp. 54,234 9.94 21,819 4.00 27,274 5.00
Leesport Bank 47,886 8.82 21,721 4.00 27,151 5.00

Liquidity and Interest Rate Sensitivity

The banking industry has been required to adapt to an
environment in which interest rates may be volatile and in which
deposit deregulation has provided customers with the opportunity
to invest in liquid, interest rate-sensitive deposits. The
banking industry has adapted to this environment by using a
process known as asset/liability management.

35

Adequate liquidity means the ability to obtain sufficient
cash to meet all current and projected needs promptly and at a
reasonable cost. These needs include deposit withdrawal,
liability runoff, and increased loan demand. The principal
sources of liquidity are deposit generation, overnight federal
funds transactions with other financial institutions, investment
securities portfolio maturities and cash flows, and maturing
loans and loan payments. The Bank can also package and sell
residential mortgage loans into the secondary market. Other
sources of liquidity are term borrowings from the Federal Home
Loan Bank, and the discount window of the Federal Reserve Bank.
In view of all factors involved, the Bank's management believes
that liquidity is being maintained at an adequate level.

At March 31, 2003, the Company had a total of $110.7
million, or 19.4%, of total assets in borrowed funds. These
borrowings included $23.5 million of repurchase agreements with
customers, $72.2 million of term borrowings with the Federal
Home Loan Bank, and $15.0 million in mandatory redeemable
capital securities. The FHLB borrowings have final maturities
ranging from August 2003 through December 2009 at interest rates
ranging from 2.58% to 6.63%. At March 31, 2003, the Company had
a maximum borrowing capacity with the Federal Home Loan Bank of
approximately $196 million.

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 on assets and liabilities. With the exception of the
majority of residential mortgage loans, loans generally are
written having terms that provide for a readjustment of the
interest rate at specified times during the term of the loan. In
addition, interest rates offered for all types of deposit
instruments are reviewed weekly and are established on a basis
consistent with funding needs and maintaining a desirable spread
between cost and return. The Bank does not use reverse
repurchase agreements in its asset/liability management
practices at this time.

During October 2002, the Company entered into its first interest
rate swap agreement with a notional amount of $5 million. This
derivative financial instrument effectively converted fixed

36

interest rate obligations of outstanding mandatory redeemable
capital debentures to variable interest rate obligations,
decreasing the asset sensitivity of its balance sheet by more
closely matching the Company's variable rate assets with
variable rate liabilities. The Company considers the credit risk
inherent in the contracts to be negligible.

Item 3 - Quantitative and Qualitative Disclosures About Market
Risk

There have been no material changes in the Company's
assessment of its sensitivity to market risk since its
presentation in the Annual Report on Form 10-K for the year
ended December 31, 2002 filed with the SEC.

Item 4. Controls and Procedures

Within ninety days prior to filling this report, the
Company, under the supervision and with the participation of the
Company's management, including the Chief Executive Officer and
the Chief Financial Officer, evaluated the effectiveness of the
design and operation of the Company's disclosure controls and
procedures. Based on that evaluation, the Company's Chief
Executive Officer and Chief financial Officer conclude that the
Company's disclosure controls and procedures are effective.
There were no significant changes to the Company's internal
controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.

Securities and Exchange Commission Rule 13a-14 defines
"disclosure controls and procedures" as controls and other
procedures of an issuer that are designed to ensure that
information required to be disclosed by the issuer in the
reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported
within the time specified in the Commission's rules and forms.
Disclosure controls and procedures include, without limitation,
control and procedures designed to ensure that such information
is accumulated and communicated to the issuer's management,
including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions
regarding required disclosure.

37

PART II - OTHER INFORMATION

Item 1. Legal Proceedings - None

Item 2. Changes in Securities - None

Item 3. Defaults Upon Senior Securities - None

Item 4. Submission of Matters to Vote of Security Holders -
None

Item 5. Other Information - None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No. Title

3.1 Articles of Incorporation of the Company.
(Incorporated by reference to Exhibit 3.1 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.)

3.2 Bylaws of the Company. (Incorporated by
reference to Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the year
ended December 31, 2000.)

99.1 Certification of Chief Executive Officer
under Section 906 of the Sarbanes-Oxley Act
of 2002.

99.2 Certification of Chief Financial Officer
under Section 906 of the Sarbanes-Oxley Act
of 2002.

(b)Reports on Form 8-K - The Company filed a Current
Report on Form 8-K, dated January 7, 2003, to report the
authorization by the Board of Directors of a stock repurchase
program for up to 5% of the Company's outstanding shares of
common stock.

38

SIGNATURES

In accordance with the requirements of the Exchange Act,
the Registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

LEESPORT FINANCIAL CORP.
(Registrant)

Dated: May 14, 2003 By /s/Raymond H. Melcher, Jr.
-------------------------------
Raymond H. Melcher, Jr.
Chairman, President and Chief
Executive Officer

Dated: May 14, 2003 By /s/ Stephen A. Murray
-------------------------------
Stephen A. Murray
Senior Vice President and
Chief Financial Officer

39

CERTIFICATIONS

I, Raymond H. Melcher, Jr., Chairman, President, and Chief
Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of
Leesport Financial Corp;

2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for and registrant and we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;

40

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weakness in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 14, 2003

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

41

I, Stephen A. Murray, Senior Vice President and Chief Financial
Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of
Leesport Financial Corp;

2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;

3. Based on my knowledge, the financial statements, and
other financial information included in this quarterly
report, fairly present in all material respects the
financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for and registrant and we have:

a) designed such disclosures and procedures to ensure that
material information relating to the registrant,
including its consolidated subsidiaries, is made known
to us by others within those entities, particularly
during the period in which this quarterly report is
being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the

42

registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 14, 2003

By /s/Stephen A. Murray
-------------------------------
Stephen A. Murray
Senior Vice President and
Chief Financial Officer

43