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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 September 30, 2003
------------------
Commission file number: 2-89573
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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.
1,732,701 shares of common stock outstanding at September 30, 2003.
Page 1 of 23
TOWER BANCORP, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets - September 30, 2003
and December 31, 2002 4
Condensed consolidated statements of income - three months
ended September 30, 2003 and 2002 5
Condensed consolidated statements of income - nine months
ended September 30, 2003 and 2002 6
Condensed consolidated statements of comprehensive income -
nine months ended September 30, 2003 and 2002 7
Condensed consolidated statements of cash flows - nine
months ended September 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 and 15
Signatures 16
Exhibits 17 - 23
Page 2 of 23
PART I - FINANCIAL INFORMATION
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2003 2002*
(Unaudited (Audited)
ASSETS (000 omitted)
Cash and due from banks $ 7,187 $ 8,943
Interest bearing balances with banks 772 1,644
Investment securities available for sale 56,545 50,838
Restricted bank stock 3,371 3,162
Loans 204,824 187,537
Less: reserve for possible loan losses ( 1,793) ( 1,632)
Bank premises, equipment, furniture
and fixtures 4,025 3,876
Accrued interest receivable 1,040 1,013
Cash surrender value of life insurance 6,572 6,306
Other assets 673 902
----------- ----------
Total assets $ 283,216 $ 262,589
=========== ==========
LIABILITIES AND CAPITAL
Deposits in domestic offices:
Demand $ 17,772 $ 13,297
Savings 114,329 104,186
Time 71,717 70,074
Liabilities for borrowed money 41,440 39,052
Accrued interest payable 213 287
Other liabilities 3,149 2,827
----------- ----------
Total liabilities 248,620 229,723
----------- ----------
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 24,855 22,999
Accumulated other comprehensive income 2,143 2,195
Less: cost of treasury stock ( 1,349) ( 1,266)
----------- ----------
Total equity capital 34,596 32,866
----------- ----------
Total liabilities and capital $ 283,216 $ 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 SEPTEMBER 30, 2003 and 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Interest Income
Interest & fees on loans $ 3,030 $ 3,341
Interest on investment securities available
for sale 559 595
Interest on federal funds sold 1 0
Interest on deposits with banks 14 35
------------ ------------
Total interest & dividend income 3,604 3,971
------------ ------------
Interest Expense
Interest on deposits 636 932
Interest on borrowed money 424 381
------------ ------------
Total interest expense 1,060 1,313
------------ ------------
Net interest income 2,544 2,658
Provision for loan losses 90 90
------------ ------------
Net interest income after provision for loan losses 2,454 2,568
------------ ------------
Other Income
Service charges on deposit accounts 213 152
Other service charges 75 65
Other operating income 20 189
Investment securities gains (losses) 806 314
------------ ------------
Total other income 1,114 720
------------ ------------
Other Expense
Salaries, wages and other benefits 941 875
Occupancy expense of bank premises 310 266
Furniture and fixture expense 130 149
Other operating expenses 581 449
------------ ------------
Total other expenses 1,962 1,739
------------ ------------
Income before taxes 1,606 1,549
Applicable income taxes 438 409
------------ ------------
Net income $ 1,168 $ 1,140
============ ============
Earnings per share:
Basic earnings per share $ 0.67 $ 0.66
Weighted average shares outstanding 1,733,893 1,734,221
Diluted earnings per share $ 0.66 $ 0.65
Weighted average shares outstanding 1,761,644 1,759,368
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
NINE MONTHS ENDED SEPTEMBER 30, 2003 and 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Interest Income
Interest & fees on loans $ 9,246 $ 10,029
Interest on investment securities available for sale 1,635 1,948
Interest on federal funds sold 1 0
Interest on deposits with banks 55 115
------------ ------------
Total interest & dividend income 10,937 12,092
------------ ------------
Interest Expense
Interest on deposits 2,075 2,981
Interest on borrowed money 1,199 1,175
------------ ------------
Total interest expense 3,274 4,156
------------ ------------
Net interest income 7,663 7,936
Provision for loan losses 270 220
------------ ------------
Net interest income after provision for loan losses 7,393 7,716
------------ ------------
Other Income
Service charges on deposit accounts 626 450
Other service charges 225 201
Other operating income 288 371
Investment securities gains (losses) 2,403 1,709
------------ ------------
Total other income 3,542 2,731
------------ ------------
Other Expense
Salaries, wages and other benefits 2,791 2,630
Occupancy expense of bank premises 526 462
Furniture and fixture expense 391 420
Other operating expenses 2,144 1,821
------------ ------------
Total other expenses 5,852 5,333
------------ ------------
Income before taxes 5,083 5,114
Applicable income taxes 1,389 1,382
------------ ------------
Net income $ 3,694 $ 3,732
============ ============
Earnings per share:
Basic earnings per share $ 2.13 $ 2.15
Weighted average shares outstanding 1,733,794 1,738,922
Diluted earnings per share $ 2.10 $ 2.11
Weighted average shares outstanding 1,761,169 1,765,403
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
NINE MONTHS ENDED SEPTEMBER 30, 2003 and 2002
(UNAUDITED)
2003 2002
(000 Omitted)
Net income $ 3,694 $ 3,732
------- -------
Other comprehensive income:
Unrealized holding gains (losses) 2,324 4,074
reclassification adjustment for gains
Realized in net income ( 2,403) ( 1,709)
------- -------
( 79) 2,365
Tax effect 27 ( 804)
------- -------
Other comprehensive income (loss) ( 52) 1,561
------- -------
Comprehensive income $ 3,642 $ 5,293
======= =======
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
Nine Months Ended September 30, 2003 and 2002
(UNAUDITED)
2003 2002
(000 omitted)
Cash flows from operating activities:
Net income $ 3,694 $ 3,732
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 288 347
Provision for loan losses 270 220
(Gain) on sale of investment securities ( 2,403) ( 1,709)
(Increase) in cash surrender value of life
insurance ( 266) ( 1,041)
(Increase) decrease in other assets 256 ( 1,068)
(Increase) decrease in interest receivable ( 27) 103
Increase (decrease) in interest payable ( 74) ( 134)
Increase (decrease) in other liabilities 322 1,318
---------- ----------
Net cash provided by operating activities 2,060 1,768
---------- ----------
Cash flows from investing activities:
Loans (net) ( 17,396) ( 20,723)
Purchases of bank premises, equipment, furniture
and fixtures ( 437) ( 948)
Interest bearing balances with banks 872 876
Purchases of available for sale securities ( 12,403) ( 5,246)
Maturities/sales of available for sale securities 9,020 11,613
(Purchase) sale of restricted bank stock ( 209) 290
---------- ----------
Net cash (used) by investing activities ( 20,553) ( 14,138)
---------- ----------
Cash flows from financing activities:
Net increase in deposits 16,261 10,440
Debt (net) 2,388 3,326
Cash dividends paid ( 1,838) ( 1,147)
Purchase treasury stock ( 397) ( 468)
Proceeds from sale of capital stock 323 92
---------- ----------
Net cash provided by financing activities 16,737 12,243
---------- ----------
Net increase (decrease) in cash and cash
equivalents ( 1,756) ( 127)
Cash and cash equivalents at beginning of year 8,943 8,080
---------- ----------
Cash and cash equivalents at end of period $ 7,187 $ 7,953
========== ===========
The accompanying notes are an integral part of these
condensed financial statements.
Page 8 of 23
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(UNAUDITED)
Review of Interim Financial Statements
The condensed consolidated financial statements as of and for the
three and nine month periods ended September 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 September 30, 2003 and the results of its operations for the
three and nine month periods ended September 30, 2003 and 2002.
The results of operations for the nine month period ended
September 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
Nine Months Ended
September 30
Net income (000) omitted As reported $ 3,694 $ 3,732
Pro forma 3,682 3,721
Basic earnings per share As reported 2.13 2.15
Pro forma 2.12 2.14
Earnings per share As reported 2.10 2.11
assuming dilution Pro forma 2.09 2.11
Page 10 of 23
TOWER BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the first nine months of 2003 was $ 3,694,000 compared to
$ 3,732,000 for the first nine months of 2002. Net income on a per share basis
for 2003 was $ 2.13, down $ .02 from the $ 2.15 realized during the first nine
months of 2002.
Total interest income for the first nine months of 2003 was $ 10,937,000
compared to $ 12,092,000 for the first nine months of 2002. Decreases occurred
primarily due to decreases in the yield on earning assets. Investment yields
dropped 60 basis points and loan yields dropped 100 basis points from average
yields realized in the first nine months of 2002. Average loan balances at
September 30, 2003 increased 6.6% over those at September 30, 2002. Increases
from September 30, 2002 were primarily in mortgage and commercial loans, which
increased 10.5% and 15.6%, respectively, since September 30, 2002. Earnings on
investments for the first nine months decreased 16.1% over totals for the
corresponding period in 2002. Decreases were attributable primarily to the
aforementioned rate decreases and a 11.1% decrease in volume of average
investments from 2002 totals.
Total interest expense was $ 3,274,000 for the first nine months of 2003, a
decrease of $ 882,000 from the $ 4,156,000 reported for the nine months of 2002.
Increases in average total deposits has been 7.6% since September 30, 2002.
Most of this growth has occurred in the interest bearing demand deposit
accounts. Average rates on deposits decreased 82 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 21.2%
from 2002 totals. However, asset yields have decreased faster than
corresponding decreases in cost of funds causing the net interest margin for the
first nine months of 2003 to drop 33 basis points from the first nine months of
2002. The loan to deposit ratio was 100.5% at September 30, 2003 compared to
100% at September 30, 2002. Management intends to continue to competitively
price its deposits to maintain desired net interest spreads.
The Bank made a $ 270,000 provision for loan losses during the first nine
months of 2003. Net charge-offs were $ 109,000 during the first nine months of
2003 compared to $ 201,000 during the nine months 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 $ 3,542,000 for the first nine months of 2003
representing a 30.0% increase over the first nine months of 2002. Increases
were primarily in service charges on deposit accounts and securities gains.
Noninterest expenses were $ 5,852,000 for the first nine months of 2003
compared to $ 5,333,000 for 2002. Increases were primarily in personnel, data
processing, and marketing 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 27.0% for the first nine
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 $ 283,216,000 at September 30, 2003 compared to
$ 262,294,000 at September 30, 2002. This represents a growth rate of
approximately 7.98%. Internal capital generation has been the primary method
utilized to increase capital. Total stockholders' equity was $ 34,596,000 at
September 30, 2003, representing 12.2% of total assets compared to $ 32,288,000
at September 30, 2002, which represented 12.2% 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
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 September 4,
2003.
Current report on Form 8-K filed with the Commission on September 8,
2003.
Current report on Form 8-K filed with the Commission on October 7,
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: October 31, 2003 /s/ Jeff B. Shank
------------------------------
Jeff B. Shank, President, CEO
(Principal Executive Officer)
Date: October 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: October 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: October 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 September 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
October 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 September 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
October 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 September 30, 2003 and the related
consolidated statements of income for the three and nine month periods ended
September 30, 2003 and 2002 and consolidated statements of comprehensive income
for the nine months ended September 30, 2003 and 2002 and consolidated
statements of cash flows for the nine months ended September 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
October 27, 2003
Page 23 of 23