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 March 31, 2005
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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
Yes No X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
1,725,987 shares of common stock outstanding at March 31, 2005
Page 1 of 23
TOWER BANCORP, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed consolidated balance sheets - March 31, 2005
and December 31, 2004 4
Condensed consolidated statements of income - three months
Ended March 31, 2005 and 2004 5
Condensed consolidated statements of comprehensive income -
three months ended March 31, 2005 and 2004 6
Condensed consolidated statements of cash flows - three
months ended March 31, 2005 and 2004 7
Notes to condensed consolidated financial statements 8 and 9
Item 2 - Management's discussion and analysis of financial
condition and results of operations 10 and 11
Item 3 - Quantitative and qualitative disclosures about
market risk 12
Item 4 - Controls and procedures 12
PART II - OTHER INFORMATION 13
Item 1 - Legal proceedings 14
Item 2 - Changes in securities, use of proceeds and issuer
purchases of equity securities 14
Item 3 - Defaults upon senior securities 14
Item 4 - Submission of matters to a vote of security holders 14
Item 5 - Other information 14
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
TOWER BANCORP, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2005 2004
(Unaudited) (Audited)*
(000 Omitted)
ASSETS
Cash and due from banks $ 10,332 $ 10,045
Federal funds sold 3,470 $ 0
Interest bearing balances with banks 196 196
Investment securities available for sale 63,595 62,871
Restricted bank stock 2,256 2,858
Loans 228,219 229,469
Less: reserve for possible loan losses ( 1,993) ( 1,902)
Bank premises, equipment, furniture and 4,022 4,030
fixtures
Accrued interest receivable 995 904
Cash surrender value of life insurance 7,163 7,070
Other assets 1,545 1,349
------------ -----------
Total assets $ 319,800 $ 316,890
============ ===========
LIABILITIES AND CAPITAL
Deposits in domestic offices:
Demand $ 25,033 $ 23,944
Savings 124,614 122,625
Time 83,106 83,721
Federal funds purchased 0 225
Liabilities for borrowed money 35,516 34,707
Accrued interest payable 278 265
Other liabilities 6,377 7,332
------------ -----------
Total liabilities 274,924 272,819
------------ -----------
EQUITY CAPITAL
Capital stock, common, authorized 5,000,000
shares; 1,780,100 shares issued 2,225 2,225
Additional paid-in capital 6,787 6,782
Retained earnings 28,712 28,177
Accumulated other comprehensive income 8,973 8,801
Less: cost of treasury stock; 2005 - 54,113 ( 1,821) ( 1,914)
shares; 2004 - 58,109 shares
------------ -----------
Total equity capital 44,876 44,071
------------ -----------
Total liabilities and capital $ 319,800 $ 316,890
============ ===========
* 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 MARCH 31, 2005 AND 2004
(UNAUDITED)
2005 2004
(000 Omitted)
Interest Income
Interest & fees on loans $ 3,208 $ 2,895
Interest on investment securities available for sale 503 538
Interest on deposits with banks 14 12
------------ ------------
Total interest & dividend income 3,725 3,445
------------ ------------
Interest Expense
Interest on deposits 656 544
Interest on federal funds purchased
and other borrowed money 417 438
------------ ------------
Total interest expense 1,073 982
------------ ------------
Net interest income 2,652 2,463
Provision for loan losses 90 90
------------ ------------
Net interest income after provision for loan losses 2,562 2,373
------------ ------------
Other Income
Investment service income 62 24
Service charges on deposit accounts 232 218
Other service charges and fees 133 103
Other operating income 14 119
Investment securities gains (losses) 198 567
------------ ------------
Total other income 639 1,031
------------ ------------
Other Expense
Salaries, wages and other benefits 1,107 1,078
Occupancy expense of bank premises 131 122
Furniture and fixture expense 329 142
Other operating expenses 409 676
------------ ------------
Total other expenses 1,976 2,018
------------ ------------
Income before taxes 1,225 1,386
Applicable income taxes 308 365
------------ ------------
Net income $ 917 $ 1,021
============ ============
Earnings per share:
Basic earnings per share $ 0.53 $ 0.59
Weighted average shares outstanding $ 1,725,644 $ 1,735,151
Diluted earnings per share $ 0.52 $ 0.58
Weighted average shares outstanding $ 1,757,100 $ 1,763,854
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 COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
2005 2004
(000 Omitted)
Net income $ 917 $ 1,021
---------- ----------
Other comprehensive income:
Unrealized holding gains (losses) 459 1,884
Reclassification adjustment for ( 198) ( 567)
gains realized in net income
---------- ----------
261 1,317
Tax effect 89 ( 441)
---------- ----------
Other comprehensive income 172 876
---------- ----------
Comprehensive income $ 1,089 $ 1,897
=========== ===========
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 CASH FLOWS
Three Months Ended March 31, 2005 and 2004
(UNAUDITED)
2005 2004
(000 Omitted)
Cash flows from operating activities:
Net income $ 917 $ 1,021
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 99 96
Provision for loan losses 90 90
(Gain) on sale of investment securities ( 198) ( 567)
(Increase) in cash surrender value of life ( 93) ( 184)
insurance
(Increase) decrease in other assets ( 196) 303
(Increase) decrease in interest receivable ( 91) ( 12)
(Decrease) increase in interest payable 13 3
Increase in other liabilities ( 184) ( 254)
---------- ----------
Net cash provided by operating activities 357 496
---------- ----------
Cash flows from investing activities:
Loans (net) 1,251 ( 352)
Purchases of bank premises, equipment, ( 91) ( 492)
furniture and fixtures
Purchases of available for sale securities ( 1,201) ( 1,564)
Maturities/sales of available for sale 1,849 3,642
securities
(Purchase) redemption of restricted bank stock ( 311) 239
---------- ----------
Net cash provided(used) by investing activities 1,497 1,473
---------- ----------
Cash flows from financing activities:
Net increase (decrease) in deposits 2,463 3,885
Cash dividends paid ( 1,242) ( 347)
Purchase of treasury stock ( 146) ( 221)
Debt (net) 584 ( 8,288)
Proceeds from sale of capital stock 244 192
---------- ----------
Net cash provided (used) by financing activities ( 1,903) ( 4,779)
---------- ----------
Net increase (decrease) in cash and cash 3,757 ( 2,810)
equivalents
Cash and cash equivalents at beginning of year 10,045 8,929
---------- ----------
Cash and cash equivalents at end of quarter $ 13,802 $ 6,119
========== ==========
Cash and cash equivalents consists of:
Cash and due from banks $ 10,332 $ 6,119
Federal funds sold 3,470 0
---------- ----------
Total cash and cash equivalents $ 13,802 $ 6,119
========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
Page 7 of 23
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
Review of Interim Financial Statements
The condensed consolidated financial statements as of and for the
three months ended March 31, 2005 and 2004 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 March 31, 2005 and the results of its operations for the three
month period ended March 31, 2005 and 2004.
The results of operations for the three month period ended
March 31, 2005 and 2004 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 Opinion 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 8 of 23
Note 4. Stock Option Plans (Continued)
prescribed by FASB Statement No. 123R, the Corporation's net income
and earnings per share would have been adjusted to the pro forma
amounts indicated below:
2005 2004
Three Months Ended
March 31
Net income (000) omitted As reported $ 917 $ 1,021
Pro forma 883 999
Basic earnings per share As reported .53 .59
Pro forma .51 .58
Earnings per share assuming As reported .52 .58
dilution
Pro forma .50 .57
Page 9 of 23
TOWER BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the first quarter of 2005 was $ 917,000 compared to
$ 1,021,000 for the first quarter of 2004. Net income on a per share basis for
2005 was $ .53, down $ .06 from the $ .59 realized during the first three months
of 2004.
Total interest income for the first three months of 2005 was $ 3,725,000
compared to $ 3,445,000 for the first three months of 2004. Increases occurred
primarily due to increases in the yield on earning assets. Investment yields
increased 17 basis points and loan yields increased 28 basis points from average
yields realized in the first quarter of 2004. The higher loan yield is due
primarily to mortgage repricing, with yields on mortgages increasing 36 basis
points over the past twelve months. Average loan balances at March 31, 2005
increased 6.1% over those at March 31, 2004. Loan balances decreased $1,250,000
from balances at December 31, 2004. Increases from March 31, 2004 were
primarily in average mortgage and commercial loans, which increased 7.3% and
13.2%, respectively since March 31, 2004. Earnings on investments for the first
quarter were down with totals for the corresponding period in 2004 due to lower
average balances.
Total interest expense was $ 1,073,000 for the first quarter of 2005, an
increase of $ 91,000 from the $ 982,000 reported for the first quarter of 2004.
Average total deposits increased 8.8% since March 31, 2004. Most of this growth
has occurred in the time deposit accounts. Average rates on deposits have
increased 12 basis points from prior year rates. This coupled with the fact
that the deposit growth has been concentrated in time deposit accounts has
caused the bank's cost of funds to increase 9.1% from 2004 totals. However,
asset yields have increased faster than corresponding increases in cost of funds
causing the net interest margin for the first quarter of 2005 to increase 16
basis points from the first quarter of 2004. The loan to deposit ratio was
99.6% at March 31, 2005 compared to 101.7% at March 31, 2004. Management
intends to continue to competitively price its deposits to maintain desired net
interest spreads.
The bank made a $ 90,000 provision for loan losses during the first
quarter of 2005. Net recoveries were $ 1,000 during the first quarter of 2005
compared to $ 47,000 during the first quarter of 2004, 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 10 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.
Noninterest income was $ 639,000 for the first quarter of 2005
representing a 38.0% decrease from the first quarter of 2004. This decrease was
primarily the result of lower securities gains. The bank sold all holdings of
FHLMC preferred stock, recognizing a $32,000 loss.
Noninterest expenses were $ 1,976,000 for the first quarter of 2005
compared to $ 2,018,000 for 2004. Decreases were in supplies, legal and
postage.
The bank's effective income tax rate was 25.2% and 26.4% for the first
three months of 2005 and 2004, 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 $ 319,800,000 at March 31, 2005 compared to
$ 298,046,000 at March 31, 2004. This represents a growth rate of approximately
7.3%. Internal capital generation has been the primary method utilized to
increase capital. Total stockholders' equity was $ 44,876,000 at March 31,
2005, representing 14.0% of total assets compared to $ 41,953,000 at March 31,
2004, which represented 14.1% of total assets. Risk-based capital ratios
continue to exceed regulatory minimums.
Page 11 of 23
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the quantitative and qualitative
disclosures made in Tower Bancorp's annual report on Form 10-K for the year
ended December 31, 2004.
ITEM 4 - CONTROLS AND PROCEDURES
CONTROLS AND PROCEDURES
The Corporation's Chief Executive Officer and Chief Financial Officer
have evaluated the effectiveness of the Corporation's disclosure controls and
procedures (as such term is defined in the Rules 13a-14(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") as of March 31, 2005.
Based on such evaluation, such officers have concluded that, as of March 31,
2005, the Corporation's disclosure controls and procedures are effective in
alerting them on a timely basis to material information relating to the
Corporation (including its consolidated subsidiary) required to be included in
the Corporation's periodic filings under the Exchange Act.
CHANGES IN INTERNAL CONTROLS
There have not been any significant changes in the Corporation's internal
control over financial reporting or in other factors that could significantly
affect such control during the first quarter of 2005.
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
ISSUER PURCHASES OF EQUITY SECURITIES
Period (a) (b) (c) (d)
Total Number Average Total number Maximum
of shares price of shares number
purchased paid per purchased as shares
share part of that may yet
publicly be purchased
announced under the
plan plan
January 2005
1/11/2005 300 $ 44.50 300 14,477
1/14/2005 375 44.50 375 14,102
1/19/2005 202 44.75 202 13,900
1/24/2005 600 45.00 600 13,300
1/24/2005 1,215 45.00 1,215 12,085
February 2005
March 2005
3/14/2005 500 49.95 500 11,585
Total 3,192 45.65 3,192 11,585
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.
Page 14 of 23
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
(b) Reports on Form 8-K:
Current report on Form 8-K filed with the Commission on March 10, 2005.
Current report on Form 8-K filed with the Commission on April 8, 2005.
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)
/s/ Jeff B. Shank
-----------------------------
Jeff B. Shank, President, CEO
(Principal Executive Officer)
Date: May 13, 2005
/s/Franklin T. Klink, III
-----------------------------
Franklin T. Klink, III,
Treasurer
(Principal Financial Officer)
Date: May 13, 2005
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: May 13, 2005 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: May 13, 2005 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 March 31, 2005 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
May 13, 2005
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 March 31, 2005 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
May 13, 2005
Page 22 of 23
EXHIBIT 99
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Tower Bancorp, Inc.
Greencastle, Pennsylvania
We have reviewed the accompanying condensed consolidated balance sheet of
Tower Bancorp, Inc. and Subsidiary as of March 31, 2005 and the related
condensed consolidated statements of income, statements of comprehensive income,
and statements of cash flows for the three months ended March 31, 2005 and
2004. These financial statements are the responsibility of the corporation's
management.
We conducted our review in accordance with the standards of the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the condensed
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 interim financial statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America.
We have previously audited, in accordance with auditing standards of the
Public Company Accounting Oversight Board (United States), the balance sheet of
Tower Bancorp, Inc. and Subsidiary as of December 31, 2004, and the related
statements of income, changes in stockholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated January 18,
2005, we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 2004, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
/s/ Smith Elliott Kearns & Company, LLC
SMITH ELLIOTT KEARNS & COMPANY, LLC
Chambersburg, Pennsylvania
May 13, 2005
Page 23 of 23