Back to GetFilings.com
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2003
-------------
Commission file number: 2-89573
-------
TOWER BANCORP INC.
------------------
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 25-1445946
- ------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Center Square
Greencastle, Pennsylvania 17225
- ------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (717) 597-2137
-------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
1,735,913 shares of common stock
Page 1 of 23
TOWER BANCORP, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets - June 30, 2003
and December 31, 2002 4
Condensed consolidated statements of income - three months
ended June 30, 2003 and 2002 5
Condensed consolidated statements of income - six months
ended June 30, 2003 and 2002 6
Condensed consolidated statements of comprehensive income -
six months ended June 30, 2003 and 2002 7
Condensed consolidated statements of cash flows - six
months ended June 30, 2003 and 2002 8
Notes to condensed consolidated financial statements 9 and 10
Management's discussion and analysis of financial
condition and results of operations 11 and 12
PART II - OTHER INFORMATION 13
Item 6 - Index to Exhibits and Reports on Form 8-K 14 - 15
Signatures 16
Exhibits 17 - 23
Page 2 of 23
PART I - FINANCIAL INFORMATION
Page 3 of 23
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2003 2002*
(Unaudited (Audited)
ASSETS (000 omitted)
Cash and due from banks $ 8,461 $ 8,943
Interest bearing balances with banks 966 1,644
Investment securities available for sale 57,104 50,838
Restricted bank stock 3,348 3,162
Loans 194,563 187,537
Less: reserve for possible loan losses ( 1,707) ( 1,632)
Bank premises, equipment, furniture
and fixtures 4,098 3,876
Accrued interest receivable 1,009 1,013
Cash surrender value of life insurance 6,484 6,306
Other assets 253 902
----------- ----------
Total assets $ 274,579 $ 262,589
=========== ==========
LIABILITIES AND CAPITAL
Deposits in domestic offices:
Demand $ 18,883 $ 13,297
Savings 109,797 104,186
Time 70,190 70,074
Liabilities for borrowed money 37,728 39,052
Accrued interest payable 235 287
Other liabilities 3,189 2,827
----------- ----------
Total liabilities 240,022 229,723
----------- ----------
EQUITY CAPITAL
Capital stock, common, authorized 5,000,000
shares; 1,780,100 shares issued 2,225 2,225
Additional paid-in capital 6,722 6,713
Retained earnings 24,034 22,999
Accumulated other comprehensive income 2,806 2,195
Less: cost of treasury stock ( 1,230) ( 1,266)
Total equity capital 34,557 32,866
----------- ----------
Total liabilities and capital $ 274,579 $ 262,589
=========== ============
===
* Condensed from audited financial statements
The accompanying notes are an integral part of these
condensed financial statements.
Page 4 of 23
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Interest Income
Interest & fees on loans $ 3,094 $ 3,340
Interest on investment
securities available for sale 551 631
Interest on deposits with banks 18 37
----------- -----------
Total interest & dividend income 3,663 4,008
Interest Expense ----------- -----------
Interest on deposits 705 995
Interest on borrowed money 398 404
----------- -----------
Total interest expense 1,103 1,399
----------- -----------
Net interest income 2,560 2,609
Provision for loan losses 90 70
----------- -----------
Net interest income after
provision for loan losses 2,470 2,539
----------- -----------
Other Income
Investment service income 5 12
Service charges on deposit accounts 206 149
Other service charges 82 69
Other operating income 91 83
Investment securities gains (losses) 679 486
----------- -----------
Total other income 1,063 799
----------- -----------
Other Expense
Salaries, wages and other benefits 913 873
Occupancy expense of bank premises 103 96
Furniture and fixture expense 131 142
Other operating expenses 847 663
----------- -----------
Total other expenses 1,994 1,774
----------- -----------
Income before taxes 1,539 1,564
Applicable income taxes 419 420
----------- -----------
Net income $ 1,120 $ 1,144
=========== ===========
Earnings per share:
Basic Earnings per share $ 0.65 $ 0.66
Weighted average shares outstanding 1,734,996 1,737,078
Diluted Earnings per share $ 0.64 $ 0.65
Weighted Average Shares Outstanding 1,762,832 1,761,836
The accompanying notes are an integral part of these
condensed financial statements.
Page 5 of 23
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Interest Income
Interest & fees on loans $ 6,216 $ 6,688
Interest on investment
securities available for sale 1,076 1,353
Interest on deposits with banks 41 80
----------- -----------
Total interest & dividend income 7,333 8,121
----------- -----------
Interest Expense
Interest on deposits 1,439 2,049
Interest on borrowed money 775 794
----------- -----------
Total interest expense 2,214 2,843
----------- -----------
Net interest income 5,119 5,278
Provision for loan losses 180 130
----------- -----------
Net interest income after
provision for loan losses 4,939 5,148
----------- -----------
Other Income
Investment service income 66 15
Service charges on deposit accounts 413 298
Other service charges 150 136
Other operating income 202 167
Investment securities gains (losses) 1,597 1,395
----------- -----------
Total other income 2,428 2,011
----------- -----------
Other Expense
Salaries, wages and other benefits 1,850 1,755
Occupancy expense of bank premises 216 196
Furniture and fixture expense 261 271
Other operating expenses 1,563 1,372
----------- -----------
Total other expenses 3,890 3,594
----------- -----------
Income before taxes 3,477 3,565
Applicable income taxes 951 973
----------- -----------
Net income $ 2,526 $ 2,592
=========== ===========
Earnings per share:
Basic Earnings per share $ 1.46 $ 1.49
Weighted average shares outstanding 1,733,743 1,741,311
Diluted Earnings per share $ 1.43 $ 1.47
Weighted Average Shares Outstanding 1,760,927 1,768,450
The accompanying notes are an integral part of these
condensed financial statements.
Page 6 of 23
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2003 and 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Net income $ 2,526 $ 2,592
--------- ---------
Other comprehensive income:
Unrealized holding gains (losses) 2,522 2,769
Reclassification adjustment for gains
realized in net income ( 1,597) ( 1,395)
--------- ---------
925 1,374
Tax effect ( 314) ( 467)
--------- ---------
Other comprehensive income (loss) 611 907
--------- ---------
Comprehensive income $ 3,137 $ 3,499
========= =========
The accompanying notes are an integral part of these
condensed financial statements.
Page 7 of 23
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2003 and 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Cash flows from operating activities:
Net income $ 2,526 $ 2,592
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 192 228
Provision for loan losses 180 130
(Gain) on sale of investment securities ( 1,597) ( 1,395)
(Increase) in cash surrender value of
life insurance ( 178) ( 97)
(Increase)Decrease in other assets 649 ( 616)
(Increase)Decrease in interest receivable 4 17
Increase (decrease) in interest payable ( 52) ( 132)
Increase (decrease) in other liabilities 48 1,122
---------- ----------
Net cash provided by operating activities 1,772 1,849
---------- ----------
Cash flows from investing activities:
Loans (net) ( 7,131) ( 16,829)
Purchases of bank premises, equipment,
furniture, and fixtures ( 414) ( 794)
Interest bearing balances with banks 678 490
Purchases of available for sale securities ( 10,047) ( 3,791)
Maturities/sales of available for sale
securities 6,303 7,047
Purchase of restricted bank stock ( 186) ( 448)
---------- ----------
Net cash (used) by investing activities ( 10,797) ( 14,325)
---------- ----------
Cash flows from financing activities:
Net increase in deposits 11,313 4,501
Debt (net) ( 1,324) 7,277
Cash dividends paid ( 1,491) ( 835)
Purchase of Treasury Stock ( 264) ( 371)
Proceeds from sale of capital stock 309 89
---------- ----------
Net cash provided by financing activities 8,543 10,661
---------- ----------
Net increase (decrease) in cash and cash
equivalents ( 482) ( 1,815)
Cash and cash equivalents at beginning of year 8,943 8,080
----------- -----------
Cash and cash equivalents at end of period $ 8,461 $ 6,265
=========== ===========
The accompanying notes are an integral part of these
condensed financial statements.
Page 8 of 23
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
Review of Interim Financial Statements
The condensed consolidated financial statements as of and for the
three and six month periods ended June 30, 2003 and 2002 have been
reviewed by independent certified public accountants. Their report on
their review is attached as Exhibit 99 to this 10-Q filing.
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly Tower Bancorp, Inc.'s consolidated financial position
as of June 30, 2003 and the results of its operations for the three
and six month periods ended June 30, 2003 and 2002.
The results of operations for the six month period ended
June 30, 2003 and 2002 are not necessarily indicative of the results
to be expected for the full year.
Note 2. Income Taxes
Income tax expense is less than the amount calculated using the
statutory tax rate primarily as a result of tax exempt income earned
from state and municipal securities and loans.
Note 3. Commitments
In the normal course of business, the bank makes various commitments
and incurs certain contingent liabilities which are not reflected in
the accompanying financial statements. These commitments include
various guarantees and commitments to extend credit and the bank does
not anticipate any losses as a result of these transactions.
Note 4. Stock Option Plans
The Corporation applies APB Option 25 and related interpretations in
accounting for its stock option plans. Accordingly, only compensation
cost for the intrinsic value of options has been recognized. Had
compensation cost for the Corporation's stock option plans been
determined based on the fair value at the grant dates for awards under
the plans consistent with the method
Page 9 of 23
Note 4. Stock Option Plans (Continued)
prescribed by FASB Statement No. 123, the Corporation's net income and
earnings per share would have been adjusted to the pro forma amounts
indicated below:
2003 2002
Six Months Ended
June 30
Net income (000) omitted As reported $ 2,526 $ 2,592
Pro forma 2,514 2,581
Basic earnings per share As reported 1.46 1.49
Pro forma 1.45 1.48
Earnings per share As reported 1.43 1.47
assuming dilution Pro forma 1.43 1.46
Page 10 of 23
TOWER BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the first six months of 2003 was $ 2,526,000 compared to
$ 2,592,000 for the first six months of 2002. Net income on a per share basis
for 2003 was $ 1.46, down $ .03 from the $ 1.49 realized during the first six
months of 2002.
Total interest income for the first six months of 2003 was $ 7,333,000
compared to $ 8,121,000 for the first six months of 2002. Decreases occurred
primarily due to decreases in the yield on earning assets. Investment yields
dropped 61 basis points and loan yields dropped 92 basis points from average
yields realized in the first six months of 2002. Average loan balances at June
30, 2003 increased 6.1% over those at June 30, 2002. Increases from June 30,
2002 were primarily in mortgage and commercial loans, which increased 8.5% and
15.6%, respectively, since June 30, 2002. Earnings on investments for the first
six months decreased 20.5% over totals for the corresponding period in 2002.
Decreases were attributable primarily to the aforementioned rate decreases and a
24.1% decrease in volume of average investments from 2002 totals.
Total interest expense was $ 2,214,000 for the first six months of 2003, a
decrease of $ 629,000 from the $ 2,843,000 reported for the six months of 2002.
Increases in average total deposits has been 6.2% since June 30, 2002. Most of
this growth has occurred in the interest bearing demand deposit accounts.
Average rates on deposits decreased 84 basis points from prior year amounts.
This coupled with the fact that deposit growth has been concentrated in
transaction accounts has caused the bank's cost of funds to decrease 23.0% from
2002 totals. However, asset yields have decreased faster than corresponding
decreases in cost of funds causing the net interest margin for the first six
months of 2003 to drop 24 basis points from the first six months of 2002. The
loan to deposit ratio was over 97.8% at June 30, 2003 compared to 100% at June
30, 2002. Management intends to continue to competitively price its deposits to
maintain desired net interest spreads.
The Bank made a $ 180,000 provision for loan losses during the first six
months of 2003. Net charge-offs were $ 105,000 during the first six months of
2003 compared to $ 140,000 during the first half of 2002, which are well below
peer group averages. Management has significantly expanded its detailed review
of the loan portfolio, which is performed quarterly, in an effort to identify
and more readily act on loans with deteriorating trends. Anticipated losses are
well below the current allowance amount and management is not aware of any
problem loans that are indicative of trends, events, or uncertainties that would
significantly impact future operations, liquidity, or capital.
Page 11 of 23
Management also recognizes the need to maintain an adequate allowance to
meet the constant risks associated with a growing loan portfolio and an
expanding customer base and intends to continue to maintain the allowance at
appropriate levels based on ongoing evaluations of the loan portfolio.
Non-interest income was $ 2,428,000 for the first half of 2003 representing
a 20.7% increase over the first six months of 2002. Increases were primarily in
service charges on deposit accounts, investment service income, and securities
gains.
Noninterest expenses were $ 3,890,000 for the first six months of 2003
compared to $ 3,594,000 for 2002. Increases were primarily in personnel costs
as the bank continues to increase its staff, related benefit increases, and
continued investment in technology and related equipment.
The bank's effective income tax rate was 27.3% and 27.3% for the first six
months of 2003 and 2002, respectively. The statutory marginal tax bracket
remains at 34%. The primary differences between the statutory and effective
rates are due to nontaxable income from municipal investments and tax-free
loans.
Total assets were $ 274,579,000 at June 30, 2003 compared to $ 260,724,000
at June 30, 2002. This represents a growth rate of approximately 5.3%.
Internal capital generation has been the primary method utilized to increase
capital. Total stockholders' equity was $ 34,557,000 at June 30, 2003,
representing 12.6% of total assets compared to $ 30,900,000 at June 30, 2002,
which represented 11.9% of total assets. Risk-based capital ratios continue to
exceed regulatory minimums.
CONTROLS AND PROCEDURES
We maintain a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and other
disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. We evaluated the effectiveness of the design
and operation of our disclosure controls and procedures under the supervision
and with the participation of management, including our Chief Executive Officer
and Chief Financial Officer, within 90 days prior to the filing date of this
report. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective in timely alerting them to material information required to be
included in our periodic Securities and Exchange Commission filings. No
significant changes were made to our internal controls or other factors that
could significantly affect these controls subsequent to the date of their
evaluation.
Page 12 of 23
PART II - OTHER INFORMATION
Page 13 of 23
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Not applicable
Item 2 - Changes in Securities
Not applicable
Item 3 - Defaults Upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable
Item 5 - Other Information
Not applicable
Item 6 - Index to Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number Referred to Description
Item 601 of Regulation S-K of Exhibit
31.1 Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350
32.2 Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350
99 Report of Independent Accountant's on
Interim Financial Statements
Page 14 of 23
(b) Reports on Form 8-K:
Current report on Form 8-K filed with the Commission on
June 19, 2003.
Current report on Form 8-K filed with the Commission on
July 3, 2003.
Page 15 of 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOWER BANCORP, INC.
(REGISTRANT)
Date: July 31, 2003 /s/ Jeff B. Shank
-----------------------------
Jeff B. Shank, President, CEO
(Principal Executive Officer)
Date: July 31, 2003 /s/Franklin T. Klink, III
-----------------------------
Franklin T. Klink, III
Treasurer
(Principal Accounting Officer)
Page 16 of 23
Exhibit 31.1
CERTIFICATION
I, Jeffrey B. Shank, President/CEO, certify, that:
1. I have reviewed this quarterly report on Form 10-Q of Tower Bancorp,
Inc.
2. Based on my knowledge, the 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 officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and we have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 and presented in this quarterly report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this quarterly report based on such evaluation; and
(c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Page 17 of 23
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: July 31, 2003 By: /s/Jeff B. Shank
------------- -------------------------
Jeff B. Shank,
President/CEO
(Principal Executive
Officer)
Page 18 of 23
Exhibit 31.2
CERTIFICATION
I, Franklin T. Klink, III, Treasurer, certify, that:
1. I have reviewed this quarterly report on Form 10-Q of Tower Bancorp,
Inc.
2. Based on my knowledge, the 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 officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and we have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 and presented in this quarterly report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this quarterly report based on such evaluation; and
(c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Page 19 of 23
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: July 31, 2003 By: /s/Franklin T. Klink, III
------------- -------------------------
Franklin T. Klink, III
Treasurer
(Principal Financial
Officer)
Page 20 of 23
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tower Bancorp, Inc. (the
"Company") on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Jeff B.
Shank, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Jeff B. Shank
-----------------------------
Chief Executive Officer
July 31, 2003
Page 21 of 23
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tower Bancorp, Inc. (the
"Company") on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Franklin T. Klink, III, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Franklin T. Klink, III
---------------------------
Chief Financial Officer
July 31, 2003
Page 22 of 23
EXHIBIT 99
INDEPENDENT ACCOUNTANT'S REPORT
Board of Directors
Tower Bancorp, Inc.
Greencastle, Pennsylvania
We have reviewed the accompanying consolidated balance sheet of Tower
Bancorp, Inc. and Subsidiary as of June 30, 2003 and the related consolidated
statements of income for the three and six month periods ended June 30, 2003 and
2002 and consolidated statements of comprehensive income for the six months
ended June 30, 2003 and 2002 and consolidated statements of cash flows for the
six months ended June 30, 2003 and 2002. These financial statements are the
responsibility of the corporation's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
/s/ Smith Elliott Kearns & Company, LLC
---------------------------------------
SMITH ELLIOTT KEARNS & COMPANY, LLC
Chambersburg, Pennsylvania
July 31, 2003
Page 23 of 23