SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
July 25, 2001
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(Date of earliest event reported)
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Progress Financial Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-14815 25-2413363
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(State of other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identified No.)
4 Sentry Parkway, Suite 200, Blue Bell, Pennsylvania 19422-0764
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(Address of principal executive offices) (Zip Code)
(610)-825-8800
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name,former address and former fiscal year,if changed since last report)
Exhibit Index appears on page 4
Item 5. Other Events
On July 25, 2001 Progress Financial Corporation reported second operating
quarter earnings of $988,000 or $.18 per share and a Second Quarter Net Loss of
$1.4 million or $23. per share. For further information see the press release
attached as Exhibit 99(a) and incorporated herein by reference.
On July 25, 2001, Progress Financial Corporation distributed an
earnings package to analysts. For further information see the attached Exhibit
99(b) and incorporated herein by reference.
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.
PROGRESS FINANCIAL CORPORATION
Dated: July 25, 2001 By: /s/ Michael B. High
-------------------------------------
Michael B. High
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
99(a) Press Release on Second Quarter 2001 earnings
distributed on July 25, 2001
99(b) Analyst package distributed on July 25, 2001
Exhibit 99(a)
99(a)
Press Release on Second Quarter 2001 Earnings
Distributed on July 25, 2001
NEWS RELEASE
Contact: Michael B. High, CFO/Executive Vice President
(610) 941-4804
Dorothy Jaworski, Director of Investor Relations
(484) 322-4822
For immediate release:
Progress Financial Corporation Announces Second Quarter Operating Earnings
of $988,000 or $.18 per share and a Second Quarter
Net Loss of $1.4 million or $.23 per share
Blue Bell, PA, July 25, 2001 - Progress Financial Corporation (the
"Company" -Nasdaq: PFNC) today reported a second quarter 2001 net loss of $1.4
million or a $.23 loss per diluted share. Operating earnings, which excludes
gain (loss) on sales of securities, equity in unconsolidated entities, client
warrant income, additional loan loss provisions, income from discontinued
operations and data processing conversion costs, net of tax, for the second
quarter of 2001 were $988,000, or diluted earnings per share of $.18, compared
to $1.5 million or diluted earnings per share of $.25 in the second quarter of
2000. Operating earnings, net of tax, for the six months ended June 30, 2001
were $2.2 million or diluted earnings per share of $.39 compared to $2.4 million
or diluted earnings per share of $.39 for the six months ended June 30, 2000.
For the three months ended June 30, 2001, a net loss of $1.4 million was
recognized or a $.23 loss per diluted share, compared to net income of $2.6
million, or diluted earnings per share of $.43 for the second quarter of 2000.
Results for the three months ended June 30, 2001 included a $3.6 million
provision for loan and lease losses compared to $1.2 million in the same period
in 2000. The increase was undertaken due to increases in non-performing loans
and leases, loan and lease growth and continued economic concerns as previously
reported. During the second quarter of 2001, loss in unconsolidated entities was
$551,000 primarily relating to NewSpring Ventures capital fund compared to a
$1.0 million loss for the second quarter of 2000 primarily relating to the Ben
Franklin mezzanine debt fund.
For the six months ended June 30, 2001, a net loss of $944,000 was
recognized or a $.16 loss per diluted share, compared to net income of $4.1
million or, diluted earnings per share of $.69. Results for the six months ended
June 30, 2001 included losses of $2.0 million from client warrants, due to the
permanent impairment of equity securities received from warrants, compared to
gains of $3.6 million for the comparable period in 2000, which were primarily
due to market appreciation on these same warrants recorded in accordance with
FASB 133. The provision for loan and leases losses was $4.6 million for the six
months ended June 30, 2001 as compared to $2.2 million for the same period in
2000.
Commenting on the second quarter results, W. Kirk Wycoff, President and
CEO, stated, "We are disappointed with our results for the first half of 2001.
Our strategy to focus on niche lending in various areas, including early stage
technology companies, has contributed to the need for an increased allowance for
loan and lease losses which eliminated our core earnings in this period. Given
the economic downturn, particularly in the technology sector, our asset quality
has remained satisfactory during the first half of 2001 and we will continue to
closely monitor credit quality during the balance of the year." He continued,
"The recent expansion of Progress Bank in Bucks County and our continued
development of our retail franchise put us in an excellent position to compete
with the other regional banks in our market."
Average earning assets for the second quarter of 2001 were $858.9 million
compared to $759.0 million for the same period in 2000. The growth in average
assets relates primarily to purchases of mortgage-backed securities and higher
commercial loan production funded by higher levels of deposits. Tax-equivalent
interest income for the second quarter of 2001 increased $606,000, or 4%, over
the same period in 2000. Tax-equivalent net interest income remained level as
compared to the second quarter of 2000. The net interest margin was 3.79%
compared to 4.25% for the same period in 2000 and
4.03% for the first quarter of 2001. The Company continues its commitment to
managing interest rate risk despite the margin being depressed by an environment
of sharply declining rates as evidenced by a 275 basis point decrease in short
term rates this year.
Tax-equivalent interest income for the six months ended June 30, 2001
increased $2.7 million, or 9%, over the same period in 2000. Tax-equivalent net
interest income increased $645,000 for the six months in 2001, or 4% over the
comparable period in 2000. The net interest margin was 3.90% for the six months
ended June 30, 2001 compared to 4.26% for the same period in 2000.
Loans and leases outstanding totaled $566.3 million at June 30, 2001
compared to $543.1 million at December 31, 2000. This increase was primarily due
to increases in business, commercial real estate and construction loans
partially offset by sales in lease receivables. The Company reported
non-performing assets of $8.4 million at June 30, 2001 compared to $5.8 million
at December 31, 2000. The increase in non-performing assets is primarily the
result of additional non-accrual loans amounting to $1.0 million, primarily
relating to commercial business loans to pre-profit companies and additional
real estate owned of $1.6 million primarily relating to a commercial real estate
loan and a residential real estate development project classified as other real
estate owned and acquired by the Company through deeds in lieu of foreclosure.
The Company's non-performing assets to total assets ratio at June 30, 2001 was
.92% compared to .63% at December 31, 2000 and 1.16% at June 30, 2000. The
non-performing loans to assets ratio was .55% at June 30, 2001 compared to .44%
at December 31, 2000 and .48% at June 30, 2000. The ratio of the allowance for
loan and lease losses to total loans and leases has increased to 1.82% at June
30, 2001 compared to 1.36% at December 31, 2000.
Non-interest income for the quarter ended June 30, 2001 amounted to $3.3
million, compared to $3.9 million for the same period in 2000. Loss in the
unconsolidated entities was $551,000 during the quarter ended June 30, 2001
compared with a loss of $1.0 million in the 2000 quarter. The 2001 loss in
the unconsolidated entities primarily relates to the NewSpring Ventures capital
fund and the 2000 loss primarily relates to the Ben Franklin mezzanine debt
fund. During the second quarter of 2000, the Company had recognized a gain of
$985,000 from client warrants.
Non-interest income for the six months ended June 30, 2001 amounted to
$6.3 million, compared to $8.8 million for the same period in 2000. The Company
recognized a loss of $2.0 million from client warrants during the 2001 period
compared with a gain of $3.6 million during the 2000 period. Loss in
unconsolidated entities was $578,000 during the six months ended June 30, 2001
compared with a loss of $2.0 million in 2000. A gain on sale of securities of
$1.2 million was realized during the six months in 2001 as compared to a loss of
$110,000 for the same period in 2000. The securities gain during 2001 included a
$708,000 gain on the disposition of the Company's investment in NewSeasons
Assisted Living Communities Series B and C stock.
Total non-interest expense was $9.8 million for the quarter ended June 30,
2001 compared to $9.1 million for the quarter ended June 30, 2000. Excluding
non-recurring expense of $119,000 in 2000 related to data processing conversion
costs, non-interest expense increased $802,000. This increase was primarily due
to professional services expenses which increased $391,000 mainly due to the
business activities of KMR Management, Inc. and legal expenses related to loans
to pre-profit companies. Occupancy expense increased $120,000 primarily due to
new banking offices. Capital securities expense increased $173,000 due to the
issuance of $6.0 million of 11.445% capital securities in July 2000.
Total non-interest expense was $19.3 million for the six months ended June
30, 2001 compared to $18.3 million for the same period in 2000. Excluding
non-recurring expense of $243,000 in 2000 related to data processing conversion
costs, non-interest expense increased $1.3 million. This increase was primarily
due to professional services expenses which increased $591,000 mainly due to the
business activities of KMR Management, Inc. Occupancy expense increased $145,000
primarily due to new
banking offices. Capital securities expense increased $335,000 due to the
issuance of $6.0 million of 11.445% capital securities in July 2000.
On July 12, 2001, the Company's Board of Directors approved a resolution to
comply with the terms of a directive issued by the Office of Thrift Supervision
that requires Progress Bank to reduce its lending to pre-profit companies,
increase its capital ratios, increase its valuation allowance and implement
improved credit review and monitoring programs.
Total assets remained at the same level for June 30, 2001 of $914.4 million
compared to $914.2 million at December 31, 2000. Total deposits increased to
$632.9 million at June 30, 2001 from $617.5 million at December 31, 2000,
primarily due to an increase in certificates of deposit of $18.4 million.
Progress Financial Corporation is a unitary thrift holding company
headquartered in Blue Bell, Pennsylvania. The business of the Company consists
primarily of the operation of Progress Bank, which serves businesses and
consumers through eighteen full service offices. The Company also offers a
diversified array of financial services including equipment leasing through
Progress Leasing Company, with offices in Blue Bell, Pennsylvania, and financial
planning services and investments through Progress Financial Resources, Inc.,
headquartered in Philadelphia, Pennsylvania; and asset based lending through
Progress Business Credit. In addition, the Company also conducts commercial
mortgage banking and brokerage services through Progress Realty Advisors, Inc.
with locations in Blue Bell, Pennsylvania, and Woodbridge, New Jersey. The
Company also receives fees for construction and development activities through
Progress Development Corporation; fees for venture capital management services
provided by Progress Capital Management, Inc.; and financial and operational
management consulting services for commercial clients through KMR Management,
Inc. located in Willow Grove, Pennsylvania. The Company's common stock is traded
on The Nasdaq Stock MarketSM under the Symbol "PFNC".
FINANCIAL DATA ATTACHED
Progress Financial Corporation
Consolidated Statements of Financial Condition
(Dollars in Thousands)
June 30, December 31,
2001 2000
--------------- -------------
(Unaudited) (Audited)
Assets:
Cash and due from banks:
Non-interest bearing $ 16,631 $ 25,360
Interest bearing 11,342 59,637
Investments and mortgage-backed securities
Available for sale at fair value (amortized cost: $245,637 and $207,795) 245,794 205,166
Held to maturity at amortized cost (fair value: $37,330 and $40,225) 37,570 41,940
Loans and leases, net (net of reserve: $10,309 and $7,407) 555,981 535,712
Premises and equipment 19,945 18,343
Other assets 27,107 28,091
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Total assets $914,370 $914,249
======== ========
Liabilities and Shareholders' Equity
Liabilities:
Deposits $632,871 $617,543
Short-term borrowings 49,049 79,360
Other liabilities 12,073 31,954
Long-term Debt:
Federal Home Loan Bank advances 127,000 102,000
Other debt 20,500 10,000
Subordinated Debt 3,000 3,000
-------- --------
Total liabilities 844,493 843,857
-------- --------
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trust holding solely junior subordinated debentures of the 20,246 20,232
Corporation
Commitments and contingencies -- --
Shareholders' equity:
Serial preferred - 1,000,000 shares authorized but unissued -- --
Junior participating preferred stock - $.01 par value - 1,010 shares -- --
authorized but unissued
Common stock, $1 par value; 12,000,000 shares authorized; 5,836,000 and
5,814,000 shares issued, including treasury shares of 83,800 and 125,000 5,836 5,814
and unallocated shares held by the Employee Stock Ownership Plan of
188,700 and 0
Other shareholders' equity, net 43,747 46,145
Net accumulated other comprehensive income (loss) 48 (1,799)
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Total shareholders' equity 49,631 50,160
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Total liabilities, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding and shareholders' equity $914,370 $914,249
======== ========
Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
-----------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income:
Loans and leases, including fees $12,208 $12,506 $24,883 $24,451
Mortgage-backed securities 3,835 2,462 7,112 4,526
Investment securities 639 1,016 1,629 1,979
Other 224 347 580 586
------- ------- ------- -------
Total interest income 16,906 16,331 34,204 31,542
Interest expense:
Deposits 6,134 5,632 12,800 10,841
Short-term borrowings 696 1,082 1,343 1,970
Long-term borrowings 2,082 1,686 3,948 3,204
------- ------- ------- -------
Total interest expense 8,912 8,400 18,091 16,015
Net interest income 7,994 7,931 16,113 15,527
Provision for loan and lease losses 3,554 1,175 4,601 2,233
------- ------- ------- -------
Net interest income after provision for loan and 4,440 6,756 11,512 13,294
lease losses
Non-interest income:
Service charges on deposits 623 687 1,208 1,229
Lease financing fees 242 374 519 664
Mutual fund, annuity and insurance commissions 981 960 1,781 1,839
Loan brokerage and advisory fees 365 541 588 1,062
Private equity fund management fees 615 632 1,229 1,006
Gain (loss) from sale of securities (21) 2 1,237 (110)
Client warrant income (loss) 1 985 (1,958) 3,585
Loss in unconsolidated entities (551) (1,042) (578) (1,997)
Fees and other 1,030 785 2,317 1,526
------- ------- ------- -------
Total non-interest income 3,285 3,924 6,343 8,804
------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits 4,983 5,087 9,973 9,871
Occupancy 633 513 1,246 1,108
Data processing 276 231 491 636
Furniture, fixtures and equipment 572 560 1,118 1,028
Professional services 915 524 1,730 1,139
Capital securities expense 572 399 1,133 798
Other 1,874 1,828 3,654 3,756
------- ------- ------- -------
Total non-interest expense 9,825 9,142 19,345 18,336
------- ------- ------- -------
Income (loss) from continuing operations before income taxes (2,100) 1,538 (1,490) 3,762
Income tax expense (benefit) (731) 529 (546) 1,268
------- ------- ------- -------
Income (loss) from continuing operations (1,369) 1,009 (944) 2,494
Gain on sale of discontinued operations, net of tax -- 1,513 -- 1,513
Income from discontinued operations, net of tax -- 61 -- 114
------- ------- ------- -------
Net income (loss) $(1,369) $2,583 $(944) $4,121
======= ======= ======= =======
Basic income (loss) from continuing operations per common share $(.24) $.18 $(.17) $.43
====== ==== ====== ====
Diluted income (loss) from continuing operations per $(.23) $.17 $(.16) $.42
common share ====== ==== ====== ====
Basic net income (loss) per common share $(.24) $.45 $(.17) $.71
====== ==== ====== ====
Diluted net income (loss) per common share $(.23) $.43 $(.16) $.69
====== ==== ====== ====
Dividends per common share $.06 $.05 $.12 $.10
==== ==== ==== ====
Basic average common shares outstanding 5,684,940 5,795,006 5,634,483 5,820,851
========= ========= ========= =========
Diluted average common shares outstanding 5,829,134 5,991,080 5,773,018 6,019,440
========= ========= ========= =========
Progress Financial Corporation
Supplemental Data
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
---------------------------------------------------------
Profitability Measures:
Return on average assets (0.61)% 1.27% (0.21)% 1.04%
Return on average equity (10.57) 22.69 (3.66) 17.60
Net interest spread (FTE) (2) 3.18 3.59 3.22 3.62
Net interest margin (FTE) (2) 3.79 4.25 3.90 4.26
Efficiency ratio 77.79 72.22 72.42 70.57
Diluted net income per common share (1) $ (.23) $ .43 $( .16) $ .69
Selected Loan Data:
Non-performing assets $8,413 $9,719 $8,413 $9,719
Ratio of non-performing assets to total assets .92% 1.16% .92% 1.16%
Ratio of allowance for loan and lease losses
to total loans and leases receivable 1.82 1.20 1.82 1.20
Ratio of allowance for loan and lease losses
to non-performing loan and leases receivable 203.21 162.08 203.21 162.08
Loan delinquency ratio 0.93 1.16 0.93 1.16
Ratio of loans and leases to deposits 89.48 95.01 89.48 95.01
Selected Equity Data:
Book value per share (1) $8.92 $8.07 $8.92 $8.07
Tangible book value per share (1) 8.46 7.12 8.46 7.12
Dividends per common share (1) .06 .05 .12 .10
Average equity to average assets 5.73% 5.58% 5.81% 5.89%
Tier 1 risk-based capital ratio (Bank) 10.32 9.24 10.32 9.24
Total risk-based capital ratio (Bank) 11.57 10.37 11.57 10.37
Tier 1 leverage ratio (Bank) 6.83 6.42 6.83 6.42
Selected Average Balances:
Loans, gross $558,879 $537,400 $552,572 $529,494
Earning assets 858,918 759,004 844,313 740,383
Total assets 907,178 820,157 895,431 799,007
Deposits 611,157 547,850 611,064 536,936
Equity 51,963 45,780 51,995 47,093
(1) Per share amounts have been restated to reflect the 5% stock dividend distributed to shareholders on August 31, 2000.
(2) FTE represents a fully tax equivalent basis.
Progress Financial Corporation
Supplemental Balances
Period-End Balances At : June 30, 2001 December 31, 2000 % Change
------------------------------------------------------------------
Loans and Leases, Net:
Commercial business $190,791 $175,972 8.4%
Commercial real estate 188,631 178,874 5.5
Construction, net of loans in process 69,998 60,172 16.3
Single family residential real estate 32,230 34,676 (7.1)
Consumer 40,404 37,242 8.5
Leases receivable 44,236 56,183 (21.3)
------------------------------------------------------------------
Total loans and leases 566,290 543,119 4.3
Allowance for loan and lease losses (10,309) (7,407) 39.2
------------------------------------------------------------------
Loans and leases, net $555,981 $535,712 3.8%
==================================================================
Deposits:
Non-interest-bearing demand deposits $ 76,588 $ 88,356 (13.3)%
NOW and SuperNow 110,969 104,047 6.7
Money Market 37,803 37,157 1.7
Passbook and Statement Savings 28,435 27,337 4.0
Time deposits 379,076 360,646 5.1
------------------------------------------------------------------
Total Deposits $632,871 $617,543 2.5%
==================================================================
###
Exhibit 99(b)
Analyst Package Distributed July 25, 2001
Three months ended Six months ended
June 30, June 30,
---------------------------------------------------------------------------------
Percent Percent
2001 2000 change 2001 2000 change
---------------------------------------------------------------------------------
Per Common Share Data
- ---------------------
Net income:
Basic ($0.24) $0.45 -153.33% ($0.17) $0.71 -123.94%
Diluted ($0.23) $0.43 -153.49% (0.16) $0.69 -123.19%
Cash dividends declared $0.06 $0.05 20.00% 0.12 0.10 20.00%
Book value $8.92 $8.07 10.53% 8.92 8.07 10.53%
Tangible book value $8.46 $7.12 18.82% 8.46 7.12 18.82%
Average shares outstanding:
Basic 5,584,582 5,795,006 -3.63% 5,634,483 5,820,851 -3.20%
Diluted 5,715,918 5,991,080 -4.59% 5,773,018 6,019,440 -4.09%
Financial Ratios
- ----------------
Return on average shareholders' equity -10.57% 22.69% -146.57% -0.21% 1.04% -120.44%
Return on average total assets -0.61% 1.27% -147.79% -3.66% 17.60% -120.80%
Average yield on earning assets 7.95% 8.70% -8.62% 8.23% 8.61% -4.41%
Average rate on interest bearing liabilities 4.77% 5.11% -6.65% 5.01% 4.99% 0.40%
Net interest spread 3.18% 3.59% -11.42% 3.22% 3.62% -11.05%
Net interest margin (FTE) 3.79% 4.25% -10.82% 3.90% 4.26% -8.45%
Efficiency ratio 77.79% 72.22% 7.71% 72.42% 70.57% 2.62%
Risk-based capital - Tier 1 10.32% 9.24% 11.69% 10.32% 9.24% 11.69%
- Total capital 11.57% 10.37% 11.57% 11.57% 10.37% 11.57%
Tier 1 leverage ratio 6.83% 6.42% 6.39% 6.83% 6.42% 6.39%
Average shareholders'equity/average total assets 5.73% 5.58% 2.62% 5.81% 5.89% -1.41%
Asset Quality (dollars in thousands)
- ------------------------------------
Allowance for loan losses $ 10,309 $ 6,527 57.94% $ 10,309 $ 6,527 57.94%
Allowance for loan losses/Loans 1.82% 1.20% 51.67% 1.82% 1.20% 51.67%
Net charge-offs(recoveries) $ 953 $ 266 258.27% $ 1,699 $ 2,075 -18.12%
Net charge-offs/Average loans (annualized) 0.68% 0.20% 243.56% 0.62% 0.79% -21.32%
Nonperforming assets $ 8,413 $ 9,719 -13.44% $ 8,413 $ 9,719 -13.44%
Nonperforming assets/Total loans plus OREO 1.50% 1.80% -16.67% 1.50% 1.80% -16.67%
Nonperforming assets/Total assets 0.92% 1.16% -20.69% 0.92% 1.16% -20.69%
Allowance for loan losses/Nonperforming loans 203.21% 162.08% 25.38% 203.21% 162.08% 25.38%
Average Balances (in thousands)
- -------------------------------
Loans and leases(gross of reserves) $ 558,879 $537,400 4.00% $552,572 $529,494 4.36%
Earning assets 858,918 759,004 13.16% 844,313 740,383 14.04%
Total assets 907,178 820,157 10.61% 895,431 799,007 12.07%
Deposits 611,157 547,850 11.56% 611,064 536,936 13.81%
Interest bearing liabilities 749,598 660,684 13.46% 728,119 644,814 12.92%
Shareholders' equity 51,963 45,780 13.51% 51,995 47,093 10.41%
Period End Balances (in thousands)
- ----------------------------------
Loans and leases(gross of reserves) $ 566,290 $ 541,881 4.50% $566,290 $ 541,881 4.50%
Total assets 914,370 839,309 8.94% 914,370 839,309 8.94%
Deposits 632,871 570,333 10.97% 632,871 570,333 10.97%
Total liabilities 844,493 778,053 8.54% 844,493 778,053 8.54%
Shareholders' equity 49,631 46,795 6.06% 49,631 46,795 6.06%
Three months ended Three months ended Six months ended
June 30, March 31, June 30,
-------------------------- -------------------------- -----------------------------
Percent Percent Percent
2001 2000 change 2001 2000 change 2001 2000 change
------ ------ -------- ------ ------ --------- ------ ------ ---------
TAX EQUIVALENT INCOME STATEMENT
- -------------------------------
($ in thousands, except per share data)
Net interest income(FTE) $ 8,112 $ 8,018 1% $ 8,235 $ 7,684 7% $16,347 $ 15,702 4%
FTE adjustment (118) (87) 36% (116) (88) 32% (234) (175) 34%
Net interest income 7,994 7,931 1% 8,119 7,596 7% 16,113 15,527 4%
Provision for losses on loans 3,554 1,175 202% 1,047 1,058 -1% 4,601 2,233 106%
Non-Interest Income:
Service charges on deposits 623 687 -9% 585 542 8% 1,208 1,229 -2%
Lease financing fees 242 374 -35% 277 290 -4% 519 664 -22%
Mutual fund, annuity and
insurance commissions 981 960 2% 800 879 -9% 1,781 1,839 -3%
Loan brokerage and advisory fees 365 541 -33% 223 521 -57% 588 1,062 -45%
Private equity fund management fees 615 632 -3% 614 374 64% 1,229 1,006 22%
Gain(loss) from sale of securities (21) 2 -1150% 1,258 (112) -1223% 1,237 (110) -1225%
Client warrant income (loss) 1 985 -100% (1,959) 2,600 -175% (1,958) 3,585 -155%
Equity (loss)in unconsolidated entities (551) (1,042) -47% (27) (955) -97% (578) (1,997) -71%
Fees and other income 1,030 785 31% 1,287 741 74% 2,317 1,526 52%
------ ------- ------ ------- ------- ------ ------- -------- ------
Total non-interest income 3,285 3,924 -16% 3,058 4,880 -37% 6,343 8,804 -28%
Non-Interest Expenses:
Salaries and employee benefits 4,983 5,087 -2% 4,990 4,784 4% 9,973 9,871 1%
Occupancy 633 513 23% 613 595 3% 1,246 1,108 12%
Data processing 276 231 19% 215 405 -47% 491 636 -23%
Furniture, fixtures and equipment 572 560 2% 546 468 17% 1,118 1,028 9%
Loan and real estate owned expenses,net 151 270 -44% 284 231 23% 435 501 -13%
Professional services 915 524 75% 815 615 33% 1,730 1,139 52%
Capital securites expense 572 399 43% 561 399 41% 1,133 798 42%
Other 1,723 1,558 11% 1,496 1,697 -12% 3,219 3,255 -1%
------ ------- ------ ------- ------- ------ ------- -------- ------
Total non-interest expenses 9,825 9,142 7% 9,520 9,194 4% 19,345 18,336 6%
------ ------- ------ ------- ------- ------ ------- -------- ------
Income from continuing operations
before income taxes (2,100) 1,538 -237% 610 2,224 -73% (1,490) 3,762 -140%
Provision for income tax expense (731) 529 -238% 185 739 -75% (546) 1,268 -143%
------ ------- ------ ------- ------- ------ ------- -------- ------
Income from Continuing Operations (1,369) 1,009 -236% 425 1,485 -71% (944) 2,494 -138%
Gain on sale of discontinued
operations, net of tax - 1,513 -100% - - - - 1,513 -100%
Income from discontinued
operations, net of tax - 61 -100% - 53 -100% - 114 -100%
-------- ------- ---- ------- ------- ------ ------- -------- ------
Net income $ (1,369) $ 2,583 -153% $ 425 $ 1,538 -72% $ (944) $ 4,121 -123%
======== ======= ==== ======= ======== ====== ======= ======= ======
QUARTERLY INCOME STATEMENT
(Unaudited)
($ in thousands, except per share) Fourth Third Second First Year-
2000 Quarter Quarter Quarter Quarter to-date
------ --------------- --------------- -------------- ---------------- ------------
FTE interest income $18,449 $17,256 $16,418 $15,299 $67,422
Interest expense 10,069 9,091 8,400 7,615 35,175
--------------- --------------- -------------- ---------------- ------------
FTE net interest income 8,380 8,165 8,018 7,684 32,247
Less: FTE adjustment (133) (86) (87) (88) (394)
--------------- --------------- -------------- ---------------- ------------
Net Interest Income 8,247 8,079 7,931 7,596 31,853
Provision for Losses on Loans 1,666 517 1,175 1,058 4,416
Non-Interest Income:
Service charges on deposits 514 493 687 542 2,236
Lease financing fees 397 372 374 290 1,433
Mutual fund, annuity and insurance commissions 1,710 1,056 960 879 4,605
Loan brokerage and advisory fees 540 591 541 521 2,193
Private equity fund management fees 614 615 632 374 2,235
Gain(loss) from sale of securities 270 373 2 (112) 533
Client warrant income (loss) 41 (103) 985 2,600 3,523
Equity (loss) in unconsolidated entities (802) 8 (1,042) (955) (2,791)
Fees and other income 3,261 788 785 741 5,575
--------------- --------------- -------------- ---------------- ------------
Total non-interest income 6,545 4,193 3,924 4,880 19,542
Non-Interest Expenses:
Salaries and employee benefits 5,406 4,903 5,087 4,784 20,180
Occupancy 618 576 513 595 2,302
Data processing 223 239 231 405 1,098
Furniture, fixtures and equipment 563 556 560 468 2,147
Loan and real estate owned expenses, net 399 328 270 231 1,228
Professional services 827 500 524 615 2,466
Capital securites expense 572 537 399 399 1,907
Other 2,185 1,538 1,558 1,697 6,978
--------------- --------------- -------------- ---------------- ------------
Total non-interest expenses 10,793 9,177 9,142 9,194 38,306
Income from Continuing Operations
Before Income Taxes 2,333 2,578 1,538 2,224 8,673
Provision for income tax expense 907 841 529 739 3,016
--------------- --------------- -------------- ---------------- ------------
Income from Continuing Operations 1,426 1,737 1,009 1,485 5,657
Gain on sale of discontinued
operations, net of tax - 6 1,513 - 1,519
Income from discontinued
operations, net of tax - 9 61 53 123
--------------- --------------- -------------- ---------------- ------------
Net Income $1,426 $1,752 $2,583 $1,538 $7,299
=============== =============== ============== ================ ============
Other Data:
EPS - Basic income from continuing operations $0.25 $0.30 $0.18 $0.25 $0.98
EPS - Diluted income from continuing operations $0.24 $0.29 $0.17 $0.25 $0.95
EPS - Basic $0.25 $0.30 $0.45 $0.26 $1.26
EPS - Diluted $0.24 $0.29 $0.43 $0.26 $1.22
ROA 0.63% 0.83% 1.27% 0.79% 0.88%
ROE 11.41% 14.33% 22.69% 12.81% 15.16%
Net interest margin (FTE) 3.99% 4.18% 4.25% 4.28% 4.17%
Dividends declared on common stock $0.06 $0.05 $0.05 $0.05 $0.21
FTE employees 313 326 319 301 313
FTE employees -- Continued Operations 313 326 319 279 313
QUARTERLY INCOME STATEMENT
(Unaudited)
($ in thousands, except per share) Second First Year-
2001 Quarter Quarter to-date
------ ------------------------------- ---------------
FTE interest income $ 17,024 $ 17,414 $ 34,438
Interest expense 8,912 9,179 18,091
-------------------------------- ---------------
FTE net interest income 8,112 8,235 16,347
Less: FTE adjustment (118) (116) (234)
------------------------------- --------------
Net Interest Income 7,994 8,119 16,113
Provision for Losses on Loans 3,554 1,047 4,601
Non-Interest Income:
Service charges on deposits 623 585 1,208
Lease financing fees 242 277 519
Mutual fund, annuity and insurance commissions 981 800 1,781
Loan brokerage and advisory fees 365 223 588
Private equity fund management fees 615 614 1,229
Gain(loss) from sale of securities (21) 1,258 1,237
Client warrant income 1 (1,959) (1,958)
Equity (loss) in unconsolidated entities (551) (27) (578)
Fees and other income 1,030 1,287 2,317
-------------------------------- --------------
Total non-interest income 3,285 3,058 6,343
Non-Interest Expenses:
Salaries and employee benefits 4,983 4,990 9,973
Occupancy 633 613 1,246
Data processing 276 215 491
Furniture, fixtures and equipment 572 546 1,118
Loan and real estate owned expenses, net 151 284 435
Professional services 915 815 1,730
Capital securites expense 572 561 1,133
Other 1,723 1,496 3,219
------------------------------- --------------
Total non-interest expenses 9,825 9,520 19,345
Income from Continuing Operations Before Income Taxes (2,100) 610 (1,490)
Provision for income tax expense (731) 185 (546)
-------------------------------- --------------
Income from Continuing Operations (1,369) 425 (944)
Gain on sale of discontinued operations, net of tax - - -
Income from discontinued operations, net of tax - - -
-------------- --------------- --------------
Net Income ($1,369) $425 ($944)
================================ ===============
Other Data:
EPS - Basic income from continuing operations ($0.24) $0.07 ($0.17)
EPS - Diluted income from continuing operations ($0.23) $0.07 ($0.16)
EPS - Basic ($0.24) $0.07 ($0.17)
EPS - Diluted ($0.23) $0.07 ($0.16)
ROA -0.61% 0.20% -0.21%
ROE -10.57% 3.31% -3.66%
Net interest margin (FTE) 3.79% 4.03% 3.90%
Dividends declared on common stock $0.06 $0.06 $0.12
FTE employees 318 298 318
FTE employees--Continued Operations 318 298 318
ASSET QUALITY
(Unaudited)
2001 2000
------------------------------- ---------------------------------------------------------
($ in thousands) Year- Second First Year- Fourth Third Second First
to-date Quarter Quarter to-date Quarter Quarter Quarter Quarter
--------- -------- ------- -------- ------- -------- ------- --------
Allowance for Loan Losses
Balance at beginning of period $ 7,407 $ 7,708 $ 7,407 $ 5,927 $ 6,513 $ 6,527 $ 5,618 $ 5,927
Provision 4,601 3,554 1,047 4,416 1,666 517 1,175 1,058
Charge-offs 1,831 1,049 782 3,618 839 704 542 1,533
Recoveries (132) (96) (36) (682) (67) (173) (276) (166)
Net loan charge-offs 1,699 953 746 2,936 772 531 266 1,367
Balance at end of period $ 10,309 $ 10,309 $ 7,708 $ 7,407 $ 7,407 $ 6,513 $ 6,527 $ 5,618
Allowance as percentage of loans 1.82% 1.82% 1.39% 1.36% 1.36% 1.16% 1.20% 1.04%
Net charge-offs/average loans 0.31% 0.17% 0.14% 0.54% 0.14% 0.10% 0.05% 0.26%
Allowance as percentage of
non-performing loans 203.21% 203.21% 128.42% 183.61% 183.61% 149.79% 162.08% 135.73%
Non-performing assets
Non-accrual loans and leases $ 5,073 $ 5,073 $ 6,002 $ 4,034 $ 4,034 $ 4,348 $ 4,027 $ 4,139
Other real estate owned 3,340 3,340 1,356 1,750 1,750 3,536 5,692 -
Total non-performing assets $ 8,413 $ 8,413 $ 7,358 $ 5,784 $ 5,784 $ 7,884 $ 9,719 $ 4,139
Non-performing assets to:
Loans and leases plus OREO 1.50% 1.50% 1.34% 1.08% 1.08% 1.41% 1.80% 0.77%
Total assets 0.92% 0.92% 0.81% 0.63% 0.63% 0.90% 1.16% 0.50%
Loans past due 90 days $2,473 $2,473 $2,971 $4,502 $4,502 $2,015 $3,049 $4,569
Total under-performing assets $10,886 $10,886 $10,329 $10,286 $10,286 $9,899 $12,768 $8,708
AVERAGE BALANCE SHEET DATA
(Unaudited)
2001 2000
------------------------------- --------------------------------------------------
($ in thousands) Second First Year- Fourth Third Second First Year-
Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
------- ------- ------- ------- ------- ------- ------- --------
Average balances
Cash and due from banks (Interest-earning) $21,353 $26,385 $ 23,855 $ 27,595 $18,630 $ 22,015 $16,945 $21,244
Trading securities - - - - - - 1,077 264
Loans,net of unearned discounts:
Commercial business 186,230 177,260 181,770 164,230 149,579 140,605 130,946 146,332
Commercial mortgage 185,864 179,400 182,650 174,199 166,918 172,716 166,847 170,180
Residential real estate 32,436 33,870 33,149 35,568 38,866 41,205 40,686 39,078
Construction loans 70,094 64,141 67,134 58,052 48,936 50,959 59,720 54,435
Consumer 38,742 37,401 38,075 40,371 38,080 36,850 34,853 37,538
Lease financing 45,513 54,123 49,794 93,575 97,348 95,065 88,474 93,615
Loans held for sale - - - - - - - -
------- ------- ------- ------- ------- ------- ------- --------
Total loans 558,879 546,195 552,572 565,995 539,727 537,400 521,526 541,178
Investment securities(available for sale) 5,873 23,269 14,523 26,916 28,467 30,324 31,429 29,283
Investment securities(held to maturity) 37,381 38,261 37,819 40,460 35,205 34,874 34,418 36,246
Mortgage-backed securities 235,432 195,436 215,544 174,236 155,086 134,391 116,534 145,056
------- ------- ------- ------- ------- ------- ------- --------
Earning assets 858,918 829,546 844,313 835,202 777,115 759,004 721,929 773,271
Cash and due from banks(non-interest bearing) 16,206 16,612 16,408 18,125 17,270 15,146 16,426 16,762
Other non-earning assets 32,054 37,394 34,710 41,404 46,102 46,007 40,400 43,272
------- ------- ------- ------- ------- ------- ------- --------
Total assets $907,178 $883,552 $895,431 $894,731 $840,487 $ 820,157 $778,755 $833,305
======== ======== ======== ======== ======== ========= ======== ========
Deposits:
Demand $69,629 $80,637 $ 75,103 $ 74,730 $70,700 $ 75,546 $69,559 $72,626
Interest bearing:
NOW and Supernow accounts 113,218 104,396 108,831 96,067 95,516 93,225 83,141 91,975
Money Market Accounts 37,282 45,848 41,541 39,713 37,133 36,234 35,855 37,223
Passbook and Stmt Savings 28,614 27,804 28,211 27,704 29,148 30,699 31,452 29,752
Time deposits 362,414 352,287 357,378 366,107 335,111 312,146 306,189 329,874
------- ------- ------- ------- ------- ------- ------- --------
Total interest bearing deposits 541,528 530,335 535,961 529,591 496,908 472,304 456,637 488,824
Federal Home Loan Bank borrowings 126,999 121,366 124,198 112,693 100,500 98,658 88,126 100,010
Other borrowings 81,071 54,704 67,960 83,961 83,085 89,722 84,257 85,257
------- ------- ------- ------- ------- ------- ------- --------
Interest bearing liabilities 749,598 706,405 728,119 726,245 680,493 660,684 629,020 674,091
Non-interest bearing liabilities 15,747 24,248 19,976 23,805 18,636 23,689 17,425 20,652
Capital securities 20,241 20,235 20,238 20,228 22,009 14,458 14,453 17,795
Total shareholders' equity 51,963 52,027 51,995 49,723 48,649 45,780 48,298 48,141
------- ------- ------- ------- ------- ------- ------- --------
Total Liabilities and Shareholders' Equity $907,178 $883,552 $895,431 $894,731 $840,487 $ 820,157 $778,755 $833,305
======== ======== ======== ======== ======== ========= ======== ========
AVERAGE BALANCE SHEET DATA - continued
(Unaudited)
2001 2000
-------------------------------- ----------------------------------------------------
Second First Year- Fourth Third Second First Year-
Average yields and rates Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
-------- ------- ------- ------- ------- ------- ------- -------
Interest - earning assets
Interest-earning deposits 4.21% 5.47% 4.90% 6.14% 6.58% 6.34% 5.67% 6.21%
Investment securities 6.84% 7.17% 7.04% 7.08% 6.83% 6.75% 6.37% 6.76%
Mortgage-backed securities 6.53% 6.80% 6.65% 7.14% 7.21% 7.37% 7.12% 7.21%
Single family residential loans 8.36% 9.78% 9.80% 7.81% 7.78% 7.55% 7.50% 7.65%
Commercial real estate loans 8.60% 8.95% 8.77% 8.75% 8.91% 8.87% 8.68% 8.80%
Construction loans 9.20% 10.38% 9.76% 11.41% 11.60% 10.52% 10.23% 10.92%
Commercial business loans 8.61% 9.54% 9.06% 9.91% 9.62% 9.14% 8.90% 9.43%
Lease financing 10.73% 10.33% 10.51% 10.93% 11.08% 11.27% 11.35% 11.16%
Consumer loans 7.67% 7.86% 7.76% 8.30% 8.25% 8.08% 7.81% 8.12%
-------- ------- ------- ------- ------- ------- ------- -------
Total interest - earning assets 7.95% 8.51% 8.23% 8.79% 8.83% 8.70% 8.52% 8.72%
-------- ------- ------- ------- ------- ------- ------- -------
Interest - bearing liabilities
Interest - bearing deposits
NOW and SuperNOW 2.81% 3.41% 3.10% 3.53% 3.54% 3.34% 3.10% 3.39%
Money Market 2.63% 3.50% 3.11% 3.31% 3.16% 3.12% 2.98% 3.15%
Passbook and Statement Savings 1.60% 1.71% 1.65% 1.78% 1.77% 1.76% 1.78% 1.77%
Time deposits 5.52% 6.07% 5.79% 6.19% 5.99% 5.72% 5.47% 5.86%
-------- ------- ------- ------- ------- ------- ------- -------
Total interest - bearing deposits 4.54% 5.10% 4.82% 5.26% 5.06% 4.80% 4.59% 4.94%
FHLB borrowings 5.49% 5.65% 5.56% 6.06% 5.98% 5.85% 5.50% 5.87%
Other borrowings 4.95% 5.93% 5.33% 6.40% 6.05% 5.97% 5.73% 6.03%
-------- ------- ------- ------- ------- ------- ------- -------
Total interest - bearing liabilities 4.77% 5.27% 5.01% 5.52% 5.31% 5.11% 4.87% 5.22%
Interest Rate Spread 3.18% 3.24% 3.22% 3.27% 3.52% 3.59% 3.65% 3.50%
Net Interest Margin 3.79% 4.03% 3.90% 3.99% 4.18% 4.25% 4.28% 4.17%
Avg Int-earning assets to
int-bearing liabilities 114.58% 117.43% 115.96% 115.00% 114.20% 114.88% 114.77% 114.71%
PERIOD END BALANCE SHEET DATA
(Unaudited)
2001 2000
------------------------- ------------------------------------------------------
Second First Fourth Third Second First
($ in thousands) Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- -------
Assets
Cash and due from bank(interest bearing) $ 11,342 $ 16,548 $ 59,637 $ 16,380 $ 18,658 $ 19,668
Loans and lease(net) 555,981 548,749 535,712 555,630 535,354 535,084
Investment securities:
Held-to-maturity:
Book 37,570 37,278 41,940 35,382 35,103 34,578
Market 37,330 37,350 40,225 32,031 33,440 33,151
Available-for-sale 5,965 5,826 21,698 27,558 28,830 32,167
Mortgage-backed securities 239,829 241,431 183,468 175,960 152,779 135,162
------- ------- ------- ------- ------- -------
Earning assets 850,687 849,832 842,455 810,910 770,724 756,659
Cash and due from bank(non-interest bearing) 16,631 14,009 25,360 18,076 16,926 18,687
Other non-earning assets 47,052 41,066 46,434 49,308 51,659 46,101
Net assets of discontinued operations - - - - - 1,164
------- ------- ------- ------- ------- -------
Total assets $914,370 $ 904,907 $ 914,249 $ 878,294 $ 839,309 $ 822,611
======= ======= ======= ======= ======= =======
Liabilities and shareholders' equity
Deposits:
Demand $ 76,588 $ 67,105 $ 88,356 $ 77,558 $ 79,213 $ 80,230
Interest bearing 556,283 528,067 529,187 512,087 491,120 467,410
------- ------- ------- ------- ------- -------
Total deposits 632,871 595,172 617,543 589,645 570,333 547,640
Federal Home Loan Bank borrowings 127,000 127,000 127,000 100,500 100,500 88,000
Other borrowings 72,549 89,738 67,360 91,689 90,630 91,111
------- ------- ------- ------- ------- -------
Interest bearing liabilities 832,420 811,910 811,903 781,834 761,463 726,751
Other Liabilities 12,073 20,695 31,954 27,912 16,590 35,011
------- ------- ------- ------- ------- -------
Total liabilities 844,493 832,605 843,857 809,746 778,053 761,762
Capital Securities 20,246 20,239 20,232 20,225 14,461 14,456
Total shareholders' equity 49,631 52,063 50,160 48,323 46,795 46,393
------- ------- ------- ------- ------- -------
Total Liabilities, cap sec, and equity $914,370 $ 904,907 $ 914,249 $ 878,294 $ 839,309 $ 822,611
======= ======= ======= ======= ======= =======
Other selected balances
Intangible assets -- Goodwill 2,541 2,605 3,042 5,377 5,499 5,832
Amount included in shareholders' equity
for net unrealized gains on investments
available-for-sale 48 130 (1,799) (3,330) (3,749) (2,023)
Capital Data
(Unaudited)
2001 2000
------------------------------- -------------------------------------------------------------
Second First Year- Fourth Third Second First Year-
Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
------- ------- --------- ------- --------- --------- --------- ---------
Per common share
Shares outstanding:
Average-basic 5,584,582 5,684,940 5,634,483 5,731,664 5,801,653 5,795,006 5,846,695 5,793,607
Average-diluted 5,715,918 5,829,134 5,773,018 5,889,374 6,005,429 5,991,080 6,048,070 5,984,594
Period-end 5,563,378 5,648,895 5,563,378 5,688,594 5,773,706 5,798,495 5,813,995 5,688,594
Book value $8.92 $9.22 $8.92 $8.82 $8.37 $8.07 $7.98 $8.82
Tangible Book Value $8.46 $8.76 $8.46 $8.28 $7.44 $7.12 $6.98 $8.28
Price:
High 8 2/5 9 5/8 9 5/8 10 3/4 12 79/128 11 27/32 12 67/256 12 79/128
Low 6 7/8 7 1/16 6 7/8 7 1/8 11 3/16 10 15/128 10 107/256 7 1/8
Close 7 19/20 7 3/8 7 19/20 7 1/8 11 1/4 11 201/256 10 107/256 7 1/8
Capital ratios
($ in thousands)
Risk-based capital:
Tier 1 capital $61,449 $61,935 $61,449 $57,921 $55,182 $53,125 $50,282 $55,182
% risk adjusted assets 10.32% 10.61% 10.32% 9.79% 9.23% 9.24% 9.05% 9.23%
Total capital $68,929 $69,236 $68,929 $65,311 $61,678 $59,633 $55,873 $61,678
% risk adjusted assets 11.57% 11.86% 11.57% 11.04% 10.32% 10.37% 10.06% 10.32%
Tier 1 leverage ratio 6.83% 6.95% 6.83% 6.46% 6.42% 6.42% 6.22% 6.42%
Average shareholders' equity to
total average assets 5.73% 5.89% 5.81% 5.56% 5.79% 5.58% 6.20% 5.78%