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 18, 2002
- --------------------------------------------------------------------------------
(Date of earliest event reported)
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 18, 2002 Progress Financial Corporation reported second quarter
net income of $907,000 or diluted earnings of $.13 per share. For further
information see the press release attached as Exhibit 99(a) and incorporated
herein by reference.
On July 18, 2002, 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 18, 2002 By: /s/ Michael B. High
-----------------------------------
Michael B. High
Chief Operating Officer and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
99(a) Press Release on Second Quarter 2002 earnings
distributed on July 18, 2002.
99(b) Analyst package distributed on July 18, 2002.
Exhibit 99(a)
Press Release on Second Quarter 2002 Earnings
FOR IMMEDIATE RELEASE Contacts:
July 18, 2002 Michael B. High, COO/CFO
610-941-4804
mhigh@progressbank.com
Dorothy Jaworski, Director of Investor Relations
484-322-4822
djaworski@progressbank.com
Progress Financial Corporation Announces Increased Earnings
Second Quarter Net Income of $907,000 or $.13 Pper Sshare
Blue Bell, PA, July 18, 2002 - Progress Financial Corporation (the
"Company" - Nasdaq: PFNC), reported second quarter 2002 net income of $907,000,
or diluted earnings per share of $.13 compared to a net loss of $1.4 million, or
a $.24 loss per diluted share for the second quarter of 2001. Net income for the
six months ended June 30, 2002 was $1.7 million, or diluted earnings per share
of $.25 compared to a $944,000 loss, or a $.17 loss per diluted share for the
six months ended June 30, 2001.
Commenting on the second quarter results, W. Kirk Wycoff, President and
CEO, stated, "Our continued deposit growth in a difficult low interest rate
environment combined with lower loan loss provision expense for the quarter
shows that the operating earnings of Progress are positioned for improvement.
Our new retail offices opened in the past two years are all doing well and we
are optimistic about new locations in 2003."
Tax-equivalent net interest income for the quarter ended June 30, 2002
increased $543,000, or 8%,as compared to the first quarter of 2002 and decreased
$518,000, or 6%, as compared to the second quarter of 2001. The net interest
margin for the second quarter of 2002 was 3.62% compared to 3.53% for the first
quarter of 2002 and 3.79% for the second quarter of 2001. Tax-equivalent net
interest income for the six months ended June 30, 2002 decreased $1.7 million,
or 10%, as compared to the same period in 2001. The net interest margin for the
six months ended June 30, 2002 was 3.58% compared to 3.90% for the same period
in 2001.
The provision for loan and lease losses was $1.0 million for the quarter
ended June 30, 2002 compared to $3.6 million for the same period in 2001. The
provision for loan and lease losses was $2.4 million for the six months ended
June 30, 2002 compared to $4.6 million for the same period in 2001. The higher
provision during 2001 reflected the reserve additions to address credit and
economic concerns which have been reduced as a result of the sale of TechBanc
loans to Comerica in January 2002.
Non-interest income for the quarter ended June 30, 2002 was $3.2 million
compared to $3.3 million for the same period in 2001. The quarter ended June 30,
2002 included a gain on sale of securities of $352,000 compared to a loss on
sale of securities of $21,000 for the same quarter in 2001. Fee income for the
quarter decreased $1.1 million primarily due to the decline in private equity
fund management fees from the Company's subsidiary, Progress Capital Management,
Inc., as the Company exited the venture fund management business at December 31,
2001, a reduction in consulting fees from the Company's subsidiary, KMR
Management, Inc. and a decrease in mutual fund, annuity and insurance
commissions from the Company's subsidiary, Progress Financial Resources, Inc.
Service charges on deposits amounted to $978,000 during the second quarter of
2002 compared to $623,000 for the comparable quarter in 2001. This 57% growth is
primarily attributable to new deposit products implemented during the first
quarter of 2002. Equity in unconsolidated entities was $6,000 for the quarter
ended June 30, 2002 compared to a loss in unconsolidated entities of $551,000
during the second quarter primarily relating to a loss on its investment in a
venture capital fund.
Non-interest income for the six months ended June 30, 2002 was $7.8 million
as compared to $6.3 million for the same period in 2001. The six months ended
June 30, 2002 included income of $1.5 million from the sale of client warrants
as compared to losses of $2.0 million from client warrants for the comparable
period in 2001, due to the permanent impairment of equity securities received
from warrants. Gain on sale of securities for the six months ended June 30, 2002
was $352,000 as compared to gain on
sale of securities of $1.2 million for same period in 2001. Fee income for
the six months decreased $1.8 million primarily due to the decline in private
equity fund management fees from the Company's subsidiary, Progress Capital
Management, Inc., as the Company exited the venture fund management business at
December 31, 2001 and a reduction in consulting fees from the Company's
subsidiary, KMR Management, Inc. Service charges on deposits for the six months
increased $624,000 primarily attributable to the new deposit products
implemented during the first quarter of 2002.
Total non-interest expense was $8.3 million for the quarter ended June 30,
2002 compared to $9.8 million for the second quarter of 2001. Total non-interest
expense was $17.3 million for the six months ended June 30, 2002 compared to
$19.3 million for same period in 2001. Salaries and employee benefits decreased
by $1.1 million and $1.7 million for the three and six months ended June 30,
2002 from the comparable periods in 2001, respectively, mainly due to the
Company exiting the fund management business, lower staffing levels at Progress
Leasing Company and lower commission expense for Progress Financial Resources,
Inc. Professional services expenses decreased during the three and six months
ended June 30, 2002 from the comparable periods in 2001 primarily due to a
reduction in the business activities of KMR Management, Inc. in 2002 and legal
expenses related to loans to pre-profit companies during 2001.
Average earning assets for the second quarter of 2002 were $841.9 million
compared to $858.9 million for the second quarter of 2001 and $825.8 million for
the six months ended June 30, 2002 compared to $844.3 million for the same
period in 2001. The decline in earning assets during the three and six months
ended June 30, 2002 from the comparable periods in 2001 was primarily due to
lower commercial business loan volume as a result of the TechBanc sale which was
partially offset with higher levels of investments in mortgage-backed
securities. Tax-equivalent interest income for the second quarter of 2002
decreased $3.4 million, or 20%, over the same period in 2001 while interest
expense
decreased $2.9 million, or 33%, for the same period. Tax-equivalent
interest income for the six months ended June 30, 2002 decreased $7.7 million,
or 22%, over the same period in 2001 while interest expense decreased $6.0
million, or 33%, for the same period.
Loans and leases outstanding totaled $481.5 million at June 30, 2002
compared to $530.5 million at December 31, 2001. This decrease was primarily due
to the sale of TechBanc loans to Comerica totaling $25.6 million during January
2002, which were primarily commercial business loans, as well the ABL loan sale
and payoffs of commercial business loans during the first quarter of 2002. The
Company reported non-performing assets of $13.2 million at June 30, 2002
compared to $10.9 million at December 31, 2001. The increase in non-performing
assets was primarily the result of additional real estate owned of $2.7 million
acquired during the first quarter of 2002 related to one commercial real estate
loan. The Company's non-performing assets to total assets ratio at June 30, 2002
was 1.46% compared to 1.28% at December 31, 2001. The non-performing loans to
assets ratio was .97% at June 30, 2002 compared to 1.10% at December 31, 2001.
The ratio of the allowance for loan and lease losses to total loans and leases
was 1.67% at June 30, 2002 compared to 1.87% at December 31, 2001.
Total deposits increased to $631.6 million at June 30, 2002 from $629.5
million at December 31, 2001 as a result of $48.3 million in deposit growth
during the six months of 2002 which was partially offset by the sale of $46.2
million in deposits to Comerica in January 2002. Total assets increased to
$904.0 million at June 30, 2002 from $851.4 million at December 31, 2001.
At June 30, 2002, Progress Bank's Tier 1 leverage ratios and total
risked-based capital ratios were 8.23% and 15.22%, respectively, which were in
compliance with the capital requirements in the existing directive by the Office
of Thrift Supervision ("OTS") of 8.00% and 14.00%, respectively.
In June 2002, the OTS agreed to extend the dates by which the Bank must
comply with the designated ratio of classified assets to capital required by the
directive. As revised, the Bank's classified assets to capital ratio must not
exceed 25% on September 30, 2002 and must not exceed 20% on March 31, 2003. At
June 30, 2002, the Bank's classified assets to capital ratio was approximately
32%, a decline from 35% at March 31, 2002 and 37% at December 31, 2001. The Bank
is actively working to resolve classified assets, however, no assurance can be
given that additional time may not be needed to achieve the required ratios.
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 twenty full service offices. The Company also offers financial
planning services, life insurance, and investments through Progress Financial
Resources, Inc., headquartered in Philadelphia, Pa. In addition, the Company
receives fees for financial and operational management consulting services for
commercial clients through KMR Management, Inc. located in Willow Grove, Pa. The
Company's common stock is traded on The Nasdaq Stock Market under the Symbol
"PFNC".
FINANCIAL DATA ATTACHED
Progress Financial Corporation
Consolidated Statements of Financial Condition
(Dollars in Thousands)
June 30, December 31,
2002 2001
--------------- --------------
Assets:
Cash and due from other financial institutions:
Non-interest earning $ 17,030 $ 21,250
Interest earning 5,603 11,276
Investments and mortgage-backed securities
Available for sale at fair value (amortized cost: $268,468 and $212,793) 271,018 211,828
Held to maturity at amortized cost (fair value: $89,794 and $38,020) 88,782 38,173
Loans and leases, net (net of reserve: $8,024 and $9,917) 473,435 495,025
Loans held for sale -- 25,587
Premises and equipment 28,567 26,038
Other assets 19,567 22,203
-------- --------
Total assets $904,002 $851,380
======== ========
Liabilities, Capital Securities and Shareholders' Equity
Liabilities:
Deposits $631,622 $629,523
Short-term borrowings 50,698 200
Other liabilities 13,178 10,430
Long-term debt:
Federal Home Loan Bank advances 120,500 117,000
Other debt 1,314 20,368
Subordinated debt 3,000 3,000
-------- --------
Total liabilities 820,312 780,521
-------- --------
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trust holding solely junior subordinated debentures of the 20,274 20,260
Corporation
Commitments and contingencies -- --
Shareholders' equity:
Serial preferred - $.01 par value; 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; 7,043,000 and
5,818,000 shares issued and outstanding, including treasury shares of
64,000 and 84,000 and unallocated shares held by the Employee Stock 7,043 5,818
Ownership Plan of 179,000 and 182,000
Other common shareholders' equity, net 54,730 45,466
Net accumulated other comprehensive income (loss) 1,643 (685)
-------- --------
Total shareholders' equity 63,416 50,599
-------- --------
Total liabilities, capital securities and shareholders' equity $904,002 $851,380
======== ========
Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
----------------------------------------------------
Interest income:
Loans and leases, including fees $ 8,525 $12,208 $17,475 $24,883
Mortgage-backed securities 4,285 3,835 7,655 7,112
Investment securities 628 639 1,234 1,629
Other 36 224 122 580
------- ------- ------- -------
Total interest income 13,474 16,906 26,486 34,204
Interest expense:
Deposits 3,840 6,134 7,861 12,800
Short-term borrowings 308 696 411 1,343
Long-term borrowings 1,860 2,082 3,808 3,948
------- ------- ------- -------
Total interest expense 6,008 8,912 12,080 18,091
Net interest income 7,466 7,994 14,406 16,113
Provision for loan and lease losses 1,000 3,554 2,439 4,601
------- ------- ------- -------
Net interest income after provision for loan and 6,466 4,440 11,967 11,512
lease losses
Non-interest income:
Service charges on deposits 978 623 1,832 1,208
Lease financing fees 63 242 126 519
Mutual fund, annuity and insurance commissions 678 981 1,618 1,781
Loan brokerage and advisory fees 302 365 575 588
Private equity fund management fees 65 615 117 1,229
Gain (loss) on sale of securities 352 (21) 352 1,237
Gain (loss) on sale of loans and lease receivables 215 (4) 347 298
Gain on sale of investments in unconsolidated entities -- -- 11 --
Client warrant income (loss) 35 1 1,461 (1,958)
Equity (loss) in unconsolidated entities 6 (551) 101 (578)
Fees and other 522 1,034 1,220 2,019
------- ------- ------- -------
Total non-interest income 3,216 3,285 7,760 6,343
------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits 3,904 4,983 8,305 9,973
Occupancy 661 633 1,247 1,246
Data processing 230 276 487 491
Furniture, fixtures and equipment 509 572 1,055 1,118
Professional services 641 915 1,219 1,730
Capital securities expense 573 572 1,145 1,133
Other 1,822 1,874 3,810 3,654
------- ------- ------- -------
Total non-interest expense 8,340 9,825 17,268 19,345
------- ------- ------- -------
Income (loss) before income taxes 1,342 (2,100) 2,459 (1,490)
Income tax expense (benefit) 435 (731) 802 (546)
------- ------- ------- -------
Net income (loss) $907 $(1,369) $ 1,657 $ (944)
======= ======= ======= =======
Basic earnings (loss) per common share $.13 $(.24) $.25 $(.17)
==== ====== ==== ======
Diluted earnings (loss) per common share $.13 $(.24) $.25 $(.17)
==== ====== ==== ======
Dividends per common share $.00 $.06 $.00 $.12
==== ===== ==== =====
Basic average common shares outstanding 6,795,122 5,584,582 6,502,277 5,634,483
========= ========= ========= =========
Diluted average common shares outstanding 6,962,428 5,715,918 6,656,226 5,773,018
========= ========= ========= =========
Progress Financial Corporation
Supplemental Data
(Dollars in Thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
--------------------------------------------------------
Profitability Measures:
Return on average assets 0.41% (0.61)% 0.38% (0.21)%
Return on average equity 5.90 (10.57) 5.63 (3.66)
Net interest spread (FTE) (1) 3.16 3.18 3.11 3.22
Net interest margin (FTE) (1) 3.62 3.79 3.58 3.90
Efficiency ratio 71.26 77.79 71.96 71.94
Diluted net income (loss) per common share $ .13 $ (.24) $ .25 $ (.17)
Selected Loan Data:
Non-performing assets $13,233 $ 8,413 $13,233 $8,413
Ratio of non-performing assets to total assets 1.46% .92% 1.46% .92%
Ratio of allowance for loan and lease losses
to total loans and leases receivable 1.67 1.82 1.67 1.82
Ratio of allowance for loan and lease losses
to non-performing loans and leases receivable 91.83 203.21 91.83 203.21
Loan delinquency ratio 1.19 1.37 1.19 1.37
Ratio of loans and leases to deposits 76.23 89.48 76.23 89.48
Selected Equity Data:
Book value per share $9.33 $8.92 $9.33 $8.92
Tangible book value per share 9.07 8.46 9.07 8.46
Dividends per common share .00 .06 .00 .12
Average equity to average assets 6.91% 5.73% 6.78% 5.81%
Tier 1 risk-based capital ratio (Bank) 13.97 10.32 13.97 10.32
Total risk-based capital ratio (Bank) 15.22 11.57 15.22 11.57
Tier 1 leverage ratio (Bank) 8.23 6.83 8.23 6.83
Selected Average Balances:
Loans, gross $482,449 $558,879 $494,205 $552,572
Earning assets 841,859 858,918 825,842 844,313
Total assets 892,158 907,178 875,687 895,431
Deposits 624,579 611,157 619,526 611,064
Equity 61,649 51,963 59,355 51,995
(1) FTE represents a fully tax equivalent basis.
Progress Financial Corporation
Supplemental Balances
(Dollars in Thousands)
Period-End Balances At : June 30, 2002 December 31, 2001 % Change
----------------------------------------------------------------
Loans and Leases, Net:
Commercial business (2) $ 91,675 $146,844 (37.6%)
Commercial real estate (2) 196,688 197,394 (.4)
Construction, net of loans in process 90,126 77,380 16.5
Single family residential real estate 29,215 26,518 10.2
Consumer 46,997 44,821 4.9
Leases receivable 26,758 37,572 (28.8)
----------------------------------------------------------------
Total loans and leases 481,459 530,529 (9.2)
Allowance for loan and lease losses (8,024) (9,917) (19.1)
----------------------------------------------------------------
Loans and leases, net $473,435 $520,612 (9.1%)
================================================================
Deposits:
Non-interest bearing demand deposits $ 83,538 $ 84,783 (1.5)%
NOW and SuperNow 113,141 120,665 (6.2)
Money Market 79,013 45,779 72.6
Passbook and Statement Savings 32,520 30,191 7.7
Time deposits 323,410 348,105 (7.1)
----------------------------------------------------------------
Total deposits $631,622 $629,523 .3%
================================================================
(2) Includes loans held for sale at December 31, 2001: commercial business loans of $23,298 and commercial real estate loans of
$2,289.
###
Exhibit 99(b)
Analyst Package Distributed July 18, 2002
Three months ended Six months ended
-----------------------------------------------------------------------
June 30, June 30,
-----------------------------------------------------------------------
Percent Percent
2002 2001 change 2002 2001 change
---------- --------- ---------- --------- -------- ----------
Per Common Share Data
- ---------------------
Net income:
Basic $ 0.13 $ (0.24) -154.17% $ 0.25 $ (0.17) -247.06%
Diluted $ 0.13 $ (0.24) -154.17% $ 0.25 $ (0.17) -247.06%
Cash dividends declared $ - $ 0.06 -100.00% $ - $ 0.12 -100.00%
Book value $ 9.33 $ 8.92 4.60% $ 9.33 $ 8.92 4.60%
Tangible book value $ 9.07 $ 8.46 7.21% $ 9.07 $ 8.46 7.21%
Average shares outstanding:
Basic 6,795,122 5,584,582 21.68% 6,502,277 5,634,483 15.40%
Diluted 6,962,428 5,715,918 21.81% 6,656,226 5,773,018 15.30%
Financial Ratios
- ----------------
Return on average shareholders' equity 5.90% -10.57% -155.82% 5.63% -3.66% -253.83%
Return on average total assets 0.41% -0.61% -167.21% 0.38% -0.21% -280.95%
Average yield on earning assets 6.48% 7.95% -18.49% 6.53% 8.23% -20.66%
Average rate on interest bearing liabilities 3.32% 4.77% -30.40% 3.42% 5.01% -31.74%
Net interest spread 3.16% 3.18% -0.63% 3.11% 3.22% -3.42%
Net interest margin (FTE) 3.62% 3.79% -4.49% 3.58% 3.90% -8.21%
Efficiency ratio 71.26% 77.79% -8.39% 71.96% 71.94% 0.03%
Risk-based capital - Tier 1 13.97% 10.32% 35.37% 13.97% 10.32% 35.37%
- Total capital 15.22% 11.57% 31.55% 15.22% 11.57% 31.55%
Tier 1 leverage ratio 8.23% 6.83% 20.50% 8.23% 6.83% 20.50%
Average shareholders' equity/average total assets 6.91% 5.73% 20.59% 6.78% 5.81% 16.70%
Asset Quality (dollars in thousands)
- ------------------------------------
Allowance for loan losses $ 8,024 $ 10,309 -22.17% $ 8,024 $10,309 -22.17%
Allowance for loan losses/Loans 1.67% 1.82% -8.24% 1.67% 1.82% -8.24%
Net charge-offs (recoveries) $ 1,751 $ 953 83.74% $ 4,332 $1,699 154.97%
Net charge-offs/Average loans (annualized) 1.46% 0.68% 114.71% 1.77% 0.62% 185.09%
Nonperforming assets $ 13,233 $ 8,413 57.29% $13,233 $ 8,413 57.29%
Nonperforming assets/Total loans plus OREO 2.77% 1.50% 84.67% 2.77% 1.50% 84.67%
Nonperforming assets/Total assets 1.46% 0.92% 58.70% 1.46% 0.92% 58.70%
Allowance for loan losses/Nonperforming loans 91.83% 203.21% -54.81% 91.83% 203.21% -54.81%
Average Balances (in thousands)
- -------------------------------
Loans and leases (gross of reserves) $482,449 $ 558,879 -13.68% $494,205 $ 552,572 -10.56%
Earning assets 841,859 858,918 -1.99% 825,842 844,313 -2.19%
Total assets 892,158 907,178 -1.66% 875,687 895,461 -2.21%
Deposits 624,579 611,157 2.20% 619,526 611,064 1.38%
Interest bearing liabilities 725,705 749,598 -3.19% 713,086 728,119 -2.06%
Shareholders' equity 61,649 51,963 18.64% 59,355 51,995 14.16%
Period End Balances (in thousands)
- ----------------------------------
Loans and leases (gross of reserves) $ 481,459 $ 566,290 -14.98% $ 481,459 $ 566,290 -14.98%
Total assets 904,002 914,370 -1.13% 904,002 914,370 -1.13%
Deposits 631,622 632,871 -0.20% 631,622 632,871 -0.20%
Total liabilities 820,312 844,493 -2.86% 820,312 844,493 -2.86%
Shareholders' equity 63,416 49,631 27.77% 63,416 49,631 27.77%
Three months ended Three months ended Six months ended
June 30, March 31, June 31,
--------------------------- -------------------------- -----------------------
Percent Percent Percent
2002 2001 change 2002 2001 change 2002 2001 change
-------- ------- -------- ------- -------- ---------- ------ ------- --------
TAX EQUIVALENT INCOME STATEMENT
- -------------------------------
($ in thousands, except per share data)
Net interest income(FTE) $ 7,594 $ 8,112 -6% $ 7,051 $ 8,235 -14% $14,645 $16,347 -10%
FTE adjustment (128) (118) -8% (111) (116) 4% (239) (234) -2%
---------------- ---- ---------------- ---- ------------------ ----
Net interest income 7,466 7,994 -7% 6,940 8,119 -15% 14,406 16,113 -11%
Provision for losses on loans 1,000 3,554 -72% 1,439 1,047 37% 2,439 4,601 -47%
Non-Interest Income:
Service charges on deposits 978 623 57% 854 585 46% 1,832 1,208 52%
Lease financing fees 63 242 -74% 63 277 -77% 126 519 -76%
Mutual fund, annuity and insurance commissions 678 981 -31% 940 800 18% 1,618 1,781 -9%
Loan brokerage and advisory fees 302 365 -17% 273 223 22% 575 588 -2%
Private equity fund management fees 65 615 -89% 52 614 -92% 117 1,229 -90%
Gain(loss) on securities 352 (21) 1776% - 1,258 -100% 352 1,237 -72%
Client warrant income (loss) 35 1 3400% 1,426 (1,959) 173% 1,461 (1,958) 175%
Equity (loss) in unconsolidated entities 6 (551) 101% 95 (27) 452% 101 (578) 117%
Fees and other income 737 1,030 -28% 841 1,287 -35% 1,578 2,317 -32%
---------------- ---- ---------------- ---- ------------------ ----
Total non-interest income 3,216 3,285 -2% 4,544 3,058 49% 7,760 6,343 22%
Non-Interest Expenses:
Salaries and employee benefits 3,904 4,983 -22% 4,401 4,990 -12% 8,305 9,973 -17%
Occupancy 661 633 4% 586 613 -4% 1,247 1,246 0%
Data processing 230 276 -17% 257 215 20% 487 491 -1%
Furniture, fixtures and equipment 509 572 -11% 546 546 - 1,055 1,118 -6%
Loan and real estate owned expenses, net 243 151 61% 295 284 4% 538 435 24%
Professional services 641 915 -30% 578 815 -29% 1,219 1,730 -30%
Capital securites expense 573 572 0% 572 561 2% 1,145 1,133 1%
Other 1,579 1,723 -8% 1,693 1,496 13% 3,272 3,219 2%
---------------- ---- ---------------- ---- ------------------ ----
Total non-interest expenses 8,340 9,825 -15% 8,928 9,520 -6% 17,268 19,345 -11%
---------------- ---- ---------------- ---- ------------------ ----
Income before income taxes 1,342 (2,100) 164% 1,117 610 83% 2,459 (1,490) 265%
Provision for income tax expense 435 (731) 160% 367 185 98% 802 (546) 247%
---------------- ---- ---------------- ---- ------------------ ----
Net income $ 907 $ (1,369) 166% $ 750 $ 425 76% $ 1,657 $ (944) 276%
================ ==== ================ ==== ================== ====
QUARTERLY INCOME STATEMENT
(Unaudited)
($ in thousands, except per share) Second First Year-
2002 Quarter Quarter to-date
- ------------------------------------------------------------- ----------- ------------- ----------
FTE interest income $13,602 $13,123 $26,725
Interest expense 6,008 6,072 12,080
----------- ------------- ----------
FTE net interest income 7,594 7,051 14,645
Less: FTE adjustment (128) (111) (239)
----------- ------------- ----------
Net Interest Income 7,466 6,940 14,406
Provision for Losses on Loans 1,000 1,439 2,439
Non-Interest Income:
- --------------------
Service charges on deposits 978 854 1,832
Lease financing fees 63 63 126
Mutual fund, annuity and insurance commissions 678 940 1,618
Loan brokerage and advisory fees 302 273 575
Private equity fund management fees 65 52 117
Gain(loss) on securities 352 - 352
Client warrant income (loss) 35 1,426 1,461
Equity (loss) in unconsolidated entities 6 95 101
Fees and other income 737 841 1,578
----------- ------------- ----------
Total non-interest income 3,216 4,544 7,760
Non-Interest Expenses:
- ----------------------
Salaries and employee benefits 3,904 4,401 8,305
Occupancy 661 586 1,247
Data processing 230 257 487
Furniture, fixtures and equipment 509 546 1,055
Loan and real estate owned expenses, net 243 295 538
Professional services 641 578 1,219
Capital securites expense 573 572 1,145
Other 1,579 1,693 3,272
----------- ------------- ----------
Total non-interest expenses 8,340 8,928 17,268
Income Before Income Taxes 1,342 1,117 2,459
Provision for income tax expense 435 367 802
----------- ------------- ----------
Net Income $ 907 $ 750 $ 1,657
=========== ============= ==========
Other Data:
EPS - Basic $0.13 $0.12 $0.25
EPS - Diluted $0.13 $0.12 $0.25
ROA 0.41% 0.35% 0.38%
ROE 5.90% 5.33% 5.63%
Net interest margin (FTE) 3.62% 3.53% 3.58%
Dividends declared on common stock $0.00 $0.00 $0.00
FTE employees 282 277 282
QUARTERLY INCOME STATEMENT
(Unaudited)
($ in thousands, except per share) Fourth Third Second First Year-
2001 Quarter* Quarter Quarter Quarter to-date*
---- ------------------------------------------------------ ------------
FTE interest income $ 14,565 $ 16,445 $ 17,024 $ 17,414 $ 65,448
Interest expense 7,046 8,235 8,912 9,179 33,372
------------ ------------ -------------------------- ------------
FTE net interest income 7,519 8,210 8,112 8,235 32,076
Less: FTE adjustment (114) (115) (118) (116) (463)
------------ ------------ -------------------------- ------------
Net Interest Income 7,405 8,095 7,994 8,119 31,613
Provision for Losses on Loans 972 1,543 3,554 1,047 7,116
Non-Interest Income:
- --------------------
Service charges on deposits 768 640 623 585 2,616
Lease financing fees 1 231 242 277 751
Mutual fund, annuity and insurance commissions 1,000 313 981 800 3,094
Loan brokerage and advisory fees 573 158 365 223 1,319
Private equity fund management fees 614 614 615 614 2,457
Gain(loss) on securities 509 1,073 (21) 1,258 2,819
Loss on extinguishment of debt* (301) - - - (301)
Client warrant income 9 1 1 (1,959) (1,948)
Equity (loss) in unconsolidated entities 184 (240) (551) (27) (634)
Fees and other income 1,858 1,462 1,030 1,287 5,637
------------ ------------ -------------------------- ------------
Total non-interest income 5,215 4,252 3,285 3,058 15,810
Non-Interest Expenses:
- ----------------------
Salaries and employee benefits 4,961 4,225 4,983 4,990 19,159
Occupancy 648 647 633 613 2,541
Data processing 280 230 276 215 1,001
Furniture, fixtures and equipment 588 528 572 546 2,234
Loan and real estate owned expenses, net 402 557 151 284 1,394
Professional services 989 943 915 815 3,662
Capital securities expense 572 573 572 561 2,278
Other 2,370 1,705 1,723 1,496 7,294
------------ ------------ -------------------------- ------------
Total non-interest expenses 10,810 9,408 9,825 9,520 39,563
Income Before Income Taxes 838 1,396 (2,100) 610 744
Provision for income tax expense (benefit)* 283 463 (731) 185 200
------------ ------------ -------------------------- ------------
Net Income $ 555 $ 933 $ (1,369) $ 425 $ 544
============ ============ ========================== ============
Other Data:
- -----------
EPS - Basic $0.10 $0.17 ($0.24) $0.07 $0.10
EPS - Diluted $0.10 $0.17 ($0.24) $0.07 $0.10
ROA 0.25% 0.41% -0.61% 0.20% 0.06%
ROE 4.12% 7.25% -10.57% 3.31% 1.04%
Net interest margin (FTE) 3.58% 3.78% 3.79% 4.03% 3.79%
Dividends declared on common stock $0.00 $0.00 $0.06 $0.06 $0.12
FTE employees 306 302 318 298 306
*Restated for FAS 145
ASSET QUALITY
(Unaudited)
2002 2001
-------------------------------------- -------------------------------------------------------
($ in thousands) Year- Second First Year- Fourth Third Second First
Allowance for Loan Losses to-date Quarter Quarter to-date Quarter Quarter Quarter Quarter
- ------------------------- ---------------------- --------- --------- --------- --------- --------- --------
Balance at beginning of period $ 9,917 $ 8,775 $ 9,917 $ 7,407 $ 10,560 $ 10,309 $ 7,708 $ 7,407
Provision 2,439 1,000 1,439 7,116 972 1,543 3,554 1,047
Charge-offs 4,538 1,817 2,721 5,299 2,124 1,344 1,049 782
-------- ------- ------- ------- -------- -------- ------- -------
Recoveries (206) (66) (140) (693) (509) (52) (96) (36)
-------- ------- ------- ------- -------- -------- ------- -------
Net loan charge-offs 4,332 1,751 2,581 4,606 1,615 1,292 953 746
-------- ------- ------- ------- -------- -------- ------- -------
Balance at end of period $ 8,024 $ 8,024 $ 8,775 $ 9,917 $ 9,917 $ 10,560 $ 10,309 $ 7,708
======== ======= ======= ======= ======== ======== ======== =======
Allowance as percentage of loans 1.67% 1.67% 1.84% 1.87% 1.87% 1.92% 1.82% 1.39%
Net charge-offs/average loans 0.88% 0.36% 0.51% 0.83% 0.30% 0.23% 0.17% 0.14%
Allowance as percentage of
non-performing loans 91.83% 91.83% 93.93% 106.28% 106.28% 221.15% 203.21% 128.42%
Non-performing assets
Non-accrual loans and leases $ 8,738 $ 8,738 $ 9,342 $ 9,331 $ 9,331 $ 4,775 $ 5,073 $ 6,002
Other real estate owned 4,495 4,495 4,243 1,533 1,533 1,498 3,340 1,356
-------- ------- ------- ------- -------- -------- ------- -------
Total non-performing assets $ 13,233 $ 13,233 $ 13,585 $ 10,864 $ 10,864 $ 6,273 $ 8,413 $ 7,358
======== ======= ======= ======= ======== ======== ======== =======
Non-performing assets to:
Loans and leases plus OREO 2.77% 2.77% 2.87% 2.08% 2.08% 1.16% 1.50% 1.34%
Total assets 1.46% 1.46% 1.55% 1.28% 1.28% 0.72% 0.92% 0.81%
Loans past due 90 days $1,766 $1,766 $3,244 $1,125 $1,125 $2,540 $2,473 $2,971
Total under-performing assets $14,999 $14,999 $16,829 $11,989 $11,989 $8,813 $10,886 $10,329
AVERAGE BALANCE SHEET DATA
(Unaudited)
2002 2001
--------------------------------- ---------------------------------------------------
($ in thousands) Second First Year- Fourth Third Second First Year-
Average balances Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
- ---------------- --------- --------- --------- --------- --------- --------- --------- ---------
Cash and due from banks (Interest-earning) $ 9,022 $ 22,496 $ 15,722 $ 27,686 $ 26,971 $ 21,353 $ 26,385 $ 25,606
Loans,net of unearned discounts:
Commercial business 96,440 123,173 109,732 158,298 182,187 186,230 177,260 175,959
Commercial mortgage 196,331 193,250 194,799 200,495 195,209 185,864 179,400 190,313
Residential real estate 27,929 25,688 26,815 28,123 30,887 32,436 33,870 31,312
Construction loans 86,253 83,831 85,049 76,503 68,694 70,094 64,141 69,889
Consumer 45,416 44,437 44,929 45,008 41,612 38,742 37,401 40,714
Lease financing 30,080 35,712 32,881 38,660 43,962 45,513 54,123 45,518
-------- -------- -------- -------- -------- -------- -------- --------
Total loans 482,449 506,091 494,205 547,087 562,551 558,879 546,195 553,705
Investment securities(available for sale) 6,465 5,967 6,217 5,608 4,719 5,873 23,269 10,798
Investment securities(held to maturity) 40,977 38,224 39,608 37,970 37,675 37,381 38,261 37,821
Mortgage-backed securities 302,946 236,869 270,090 214,914 230,158 235,432 195,436 218,012
-------- -------- -------- -------- -------- -------- -------- --------
Earning assets 841,859 809,647 825,842 833,265 862,074 858,918 829,546 845,942
Cash and due from banks
(non-interest bearing) 14,445 15,563 15,001 16,788 16,663 16,206 16,612 16,568
Other non-earning assets 35,854 33,822 34,844 33,485 30,158 32,054 37,394 33,317
-------- -------- -------- -------- -------- -------- -------- --------
Total assets $892,158 $859,032 $875,687 $883,538 $908,895 $907,178 $883,552 $895,827
======== ======== ======== ======== ======== ======== ======== ========
Deposits:
Demand $ 77,860 $ 73,734 $ 75,808 $ 81,334 $ 77,796 $ 69,629 $ 80,637 $ 77,352
Interest bearing:
NOW and Supernow accounts 116,734 119,129 117,925 118,912 116,900 113,218 104,396 113,406
Money Market Accounts 75,009 61,776 68,429 45,471 40,946 37,282 45,848 42,382
Passbook and Stmt Savings 33,081 30,956 32,024 30,036 29,086 28,614 27,804 28,892
Time deposits 321,895 328,822 325,340 370,709 373,851 362,414 352,287 364,891
-------- -------- -------- -------- -------- -------- -------- --------
Total interest bearing deposits 546,719 540,683 543,718 565,128 560,783 541,528 530,335 549,571
Federal Home Loan Bank borrowings 117,609 120,333 118,963 126,891 127,000 126,999 121,366 125,584
Other borrowings 61,377 39,311 50,405 27,803 62,632 81,071 54,704 56,495
-------- -------- -------- -------- -------- -------- -------- --------
Interest bearing liabilities 725,705 700,327 713,086 719,822 750,415 749,598 706,405 731,650
Non-interest bearing liabilities 6,675 7,674 7,172 8,645 9,352 15,747 24,248 14,440
Capital securities 20,269 20,263 20,266 20,254 20,250 20,241 20,235 20,245
Total shareholders' equity 61,649 57,034 59,355 53,483 51,082 51,963 52,027 52,140
-------- -------- -------- -------- -------- -------- -------- --------
Total Liabilities and Shareholders'Equity $892,158 $859,032 $875,687 $883,538 $908,895 $907,178 $883,552 $895,827
======== ======== ======== ======== ======== ======== ======== ========
AVERAGE BALANCE SHEET DATA - continued
(Unaudited)
2002 2001
----------------------------------- ----------------------------------------------------
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 1.60% 1.55% 1.56% 2.03% 3.28% 4.21% 5.47% 3.69%
Investment securities 6.29% 6.47% 6.38% 6.55% 6.90% 6.84% 7.17% 6.75%
Mortgage-backed securities 5.67% 5.77% 5.72% 5.86% 6.29% 6.53% 6.80% 6.39%
Single family residential loans 7.07% 7.44% 7.24% 7.42% 7.89% 8.36% 9.78% 8.41%
Commercial real estate loans 7.85% 7.48% 7.67% 8.15% 8.39% 8.60% 8.95% 8.51%
Construction loans 6.44% 6.47% 6.45% 7.08% 8.43% 9.20% 10.38% 8.69%
Commercial business loans 5.50% 6.55% 6.09% 6.81% 8.18% 8.61% 9.54% 8.32%
Lease financing 10.21% 10.27% 10.24% 10.66% 10.06% 10.73% 10.33% 10.44%
Consumer loans 6.44% 6.38% 6.41% 6.71% 7.31% 7.67% 7.86% 7.35%
------ ------ ------ ------ ------ ------ ------ ------
Total interest - earning assets 6.48% 6.57% 6.53% 6.93% 7.57% 7.95% 8.51% 7.74%
------ ------ ------ ------ ------ ------ ------ ------
Interest - bearing liabilities
Interest - bearing deposits
NOW and SuperNOW 1.20% 1.40% 1.30% 1.68% 2.27% 2.81% 3.41% 2.51%
Money Market 2.11% 1.91% 2.02% 1.88% 2.48% 2.63% 3.50% 2.62%
Passbook and Statement Savings 0.99% 1.02% 1.01% 1.14% 1.47% 1.60% 1.71% 1.47%
Time deposits 3.76% 4.00% 3.88% 4.36% 4.97% 5.52% 6.07% 5.21%
------ ------ ------ ------ ------ ------ ------ ------
Total interest - bearing deposits 2.82% 3.02% 2.92% 3.43% 4.04% 4.54% 5.10% 4.26%
FHLB borrowings 5.52% 5.43% 5.48% 5.50% 5.59% 5.49% 5.65% 5.60%
Other borrowings 3.39% 4.24% 3.72% 5.37% 4.68% 4.95% 5.93% 5.20%
------ ------ ------ ------ ------ ------ ------ ------
Total interest - bearing liabilities 3.32% 3.52% 3.42% 3.88% 4.35% 4.77% 5.27% 4.56%
------ ------ ------ ------ ------ ------ ------ ------
Interest Rate Spread 3.16% 3.05% 3.11% 3.05% 3.22% 3.18% 3.24% 3.18%
Net Interest Margin 3.62% 3.53% 3.58% 3.58% 3.78% 3.79% 4.03% 3.79%
Avg Int-earning assets to
int-bearing liabilities 116.01% 115.61% 115.81% 115.76% 114.88% 114.58% 117.43% 115.62%
PERIOD END BALANCE SHEET DATA
(Unaudited)
2002 2001
------------------------------ ----------------------------------------------------
Second First Fourth Third Second First
($ in thousands) Quarter Quarter Quarter Quarter Quarter Quarter
------------------------------ ---------------------------------------------------
Assets
Cash and due from bank(interest bearing) $ 5,603 $ 12,130 $ 11,276 $ 15,545 $ 11,342 $ 16,548
Loans and lease(net) 473,435 469,173 520,612 538,741 555,981 548,749
Investment securities:
Held-to-maturity:
Book 43,912 39,570 38,173 37,869 37,570 37,278
Market 44,532 38,660 38,020 38,077 37,330 37,350
Available-for-sale 5,962 5,941 6,682 5,217 5,965 5,826
Mortgage-backed securities:
Held-to-maturity:
Book 44,870 25,304 - - - -
Market 45,262 24,952 - - - -
Available-for-sale 265,056 263,908 205,146 191,714 239,829 241,431
-------- -------- -------- -------- -------- --------
Earning assets 838,838 816,026 781,889 789,086 850,687 849,832
Cash and due from bank(non-interest bearing) 17,030 11,906 21,250 30,126 16,631 14,009
Other non-earning assets 48,134 47,047 48,241 56,587 47,052 41,066
-------- -------- -------- -------- -------- --------
Total assets $904,002 $874,979 $851,380 $875,799 $914,370 $904,907
======== ======== ======== ======== ======== ========
Liabilities and shareholders' equity
Deposits:
Demand $ 83,538 $ 72,567 $ 84,783 $ 79,318 $ 76,588 $ 67,105
Interest bearing 548,084 546,240 544,740 550,417 556,283 528,067
-------- -------- -------- -------- -------- --------
Total deposits 631,622 618,807 629,523 629,735 632,871 595,172
Federal Home Loan Bank borrowings 120,500 117,000 117,000 127,000 127,000 127,000
Other borrowings 55,012 46,087 23,568 34,147 72,549 89,738
-------- -------- -------- -------- -------- --------
Interest bearing liabilities 807,134 781,894 770,091 790,882 832,420 811,910
Other Liabilities 13,178 13,498 10,430 12,157 12,073 20,695
-------- -------- -------- -------- -------- --------
Total liabilities 820,312 795,392 780,521 803,039 844,493 832,605
Capital Securities 20,274 20,267 20,260 20,253 20,246 20,239
Total shareholders' equity 63,325 59,320 50,599 52,507 49,631 52,063
-------- -------- -------- -------- -------- --------
Total Liabilities, cap sec, and equity $904,002 $874,979 $851,380 $875,799 $914,370 $904,907
======== ======== ======== ======== ======== ========
Other selected balances
Intangible assets -- Goodwill 1,757 1,865 1,974 2,478 2,541 2,605
Amount included in shareholders' equity
for net unrealized gains on investments
available-for-sale 1,643 (1,269) (685) 1,848 48 130
Capital Data
(Unaudited)
2002 2001
----------------------------------- -----------------------------------------------------------
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 6,795,122 6,206,177 6,502,277 5,545,478 5,584,133 5,584,582 5,684,940 5,599,358
Average-diluted 6,962,428 6,342,450 6,656,226 5,642,897 5,680,014 5,715,918 5,829,134 5,717,568
Period-end 6,800,380 6,768,458 6,800,380 5,551,535 5,584,361 5,563,378 5,648,895 5,551,535
Book value $9.33 $8.76 $9.33 $9.11 $9.40 $8.92 $9.22 $9.11
Tangible Book Value $9.07 $8.49 $9.07 $8.76 $8.96 $8.46 $8.76 $8.76
Price:
High 10.40 9.65 10.40 7.60 7.94 8.40 9.63 9.63
Low 8.61 7.44 7.44 5.90 5.60 6.88 7.06 5.60
Close 9.74 8.94 9.74 7.50 6.40 7.95 7.38 7.50
Capital ratios
($ in thousands)
Risk-based capital:
Tier 1 capital $73,567 $71,957 $73,567 $66,395 $65,343 $61,449 $61,935 $66,395
% risk adjusted assets 13.97% 13.58% 13.97% 11.60% 11.34% 10.32% 10.61% 11.60%
Total capital $80,167 $78,606 $80,167 $73,582 $72,583 $68,929 $69,236 $73,582
% risk adjusted assets 15.22% 14.84% 15.22% 12.85% 12.59% 11.57% 11.86% 12.85%
Tier 1 leverage ratio 8.23% 8.30% 8.23% 7.90% 7.58% 6.83% 6.95% 7.90%
Average shareholders' equity to
total average assets 6.91% 6.64% 6.78% 6.05% 5.62% 5.73% 5.89% 5.82%