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
October 22, 2002
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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 October 22, 2002 Progress Financial Corporation reported third quarter
net income of $1.3 million, or diluted earnings of $.19 per share. For further
information see the press release attached as Exhibit 99(a) and incorporated
herein by reference.
On October 22, 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: October 22, 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 Third Quarter 2002 earnings
distributed on October 22, 2002.
99(b) Analyst package distributed on October 22, 2002.
Exhibit 99(a)
Press Release on Third Quarter 2002 Earnings
FOR IMMEDIATE RELEASE Contacts:
October 22, 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
Third Quarter Net Income of $1.3 Million or $.19 per share
Blue Bell, PA, October 22, 2002 - Progress Financial Corporation (the
"Company" - Nasdaq: PFNC), reported third quarter 2002 net income of $1.3
million, or diluted earnings per share of $.19, compared to net income of
$933,000, or diluted earnings per share of $.17, for the third quarter of 2001.
Net income for the nine months ended September 30, 2002 was $3.0 million, or
diluted earnings per share of $.44, compared to an $11,000 loss, or no diluted
earnings per share, for the nine months ended September 30, 2001. The Company
also reported that its classified assets to capital ratio declined significantly
from approximately 32% at June 30, 2002 to 18% at September 30, 2002, which is
below the fully phased-in requirement of 20% in March 2003 contained in the
directive with the Office of Thrift Supervision ("OTS").
Commenting on the third quarter results, W. Kirk Wycoff, President and CEO,
stated, "We are very satisfied to report increased earnings and a significant
decline in classified assets in this challenging climate. While our net interest
rate spread declined due to declining interest rates and additional loan
repayments, we are experiencing an increase in loan requests by qualified
borrowers. We will continue to identify new locations for expanding our
franchise in 2003 while keeping in mind that the current environment requires
continued vigilance on costs."
Tax-equivalent net interest income for the quarter ended September 30, 2002
decreased $81,000, or 1%, compared to the second quarter of 2002 and decreased
$697,000, or 8%, compared to the third quarter of 2001. The net interest margin
for the third quarter of 2002 was 3.50% compared to 3.62% for the second quarter
of 2002 and 3.78% for the third quarter of 2001. Tax-equivalent net interest
income for the nine months ended September 30, 2002 decreased $2.4 million, or
10%, compared to the same period in 2001. The net interest margin for the nine
months ended September 30, 2002 was 3.55% compared to 3.86% for the same period
in 2001.
The provision for loan and lease losses was $500,000 for the quarter ended
September 30, 2002, compared to $1.5 million for the same period in 2001. The
provision for loan and lease losses was $2.9 million for the nine months ended
September 30, 2002, compared to $6.1 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 and the reduction in classified
assets.
Non-interest income for the quarter ended September 30, 2002 was $4.4
million compared to $4.3 million for the same period in 2001. The quarter ended
September 30, 2002 included a net gain on sale of real estate of $1.6 million
resulting from a gain on sale of land of $2.5 million partially offset by a loss
on sale of two commercial real estate owned properties of $937,000. Income of
$466,000 was recognized during the third quarter of 2002 from the sale and
liquidating distribution of client warrants. Gain on sale of securities was
$84,000 compared to $1.1 million for the same quarter in 2001. Fee income for
the quarter decreased $776,000 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 lease financing fees. Service charges on
deposits
amounted to $916,000 during the third quarter of 2002 compared to $640,000 for
the comparable quarter in 2001. This 43% growth is primarily attributable to new
deposit products implemented during the first quarter of 2002.
Non-interest income for the nine months ended September 30, 2002 was $12.1
million compared to $10.6 million for the same period in 2001. The nine months
ended September 30, 2002 included income of $1.9 million primarily 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. A net gain on sale of real estate of $1.6
million was recognized resulting from the sale of land and commercial real
estate owned. Gain on sale of securities for the nine months ended September 30,
2002 was $436,000 compared to $2.3 million for the same period in 2001. Fee
income for the nine months decreased $2.6 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
nine months increased $900,000 which was primarily attributable to new deposit
products implemented during the first quarter of 2002.
Total non-interest expense was $8.8 million for the quarter ended September
30, 2002 compared to $9.4 million for the third quarter of 2001. Total
non-interest expense was $26.1 million for the nine months ended September 30,
2002 compared to $28.8 million for same period in 2001. Salaries and employee
benefits decreased by $319,000 and $2.0 million for the three and nine months
ended September 30, 2002 from the comparable periods in 2001, respectively,
mainly due to the Company exiting the fund management and TechBanc businesses
and lower staffing levels at Progress Leasing Company which were partially
offset by additional expense to support the Company's expanded
community based banking strategy. Professional services expenses decreased
during the three and nine months ended September 30, 2002 from the comparable
periods in 2001 primarily due to a reduction in the business activities of KMR
Management, Inc. in 2002, Progress Capital Management, Inc. exiting the fund
management business and legal expenses related to loans to pre-profit companies
during 2001. The Company performed its annual evaluation of goodwill related to
the acquisition of KMR Management, Inc., which resulted in an impairment loss of
$546,000 reflected in other non-interest expense during the third quarter of
2002.
Average earning assets for the third quarter of 2002 were $852.3 million
compared to $862.1 million for the third quarter of 2001 and $834.8 million for
the nine months ended September 30, 2002 compared to $850.3 million for the same
period in 2001. The decline in earning assets during the three and nine months
ended September 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 by higher levels of investments in mortgage-backed
securities. Tax-equivalent interest income for the third quarter of 2002
decreased $2.8 million, or 17%, over the same period in 2001 while interest
expense decreased $2.1 million, or 26%, for the same period. Tax-equivalent
interest income for the nine months ended September 30, 2002 decreased $10.5
million, or 21%, over the same period in 2001 while interest expense decreased
$8.1 million, or 31%, for the same period.
Loans and leases outstanding totaled $458.3 million at September 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, the Asset-Based Loan sale
and payoffs of commercial business loans during the first quarter of 2002, and
runoff of lease financing receivables. The Company reported non-performing
assets of $8.4 million at September 30, 2002 compared to $10.9 million at
December 31, 2001 and $13.2 million at
June 30, 2002. The decrease in non-performing assets was primarily the result
of principal payments, charge-offs and a net decrease in real estate owned of
$661,000 from acquisitions and sales related to commercial real estate loans.
The Company's non-performing assets to total assets ratio at September 30, 2002
was .91% compared to 1.28% at December 31, 2001. The non-performing loans to
assets ratio was .81% at September 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 1.55% at September 30, 2002 compared to 1.87% at December 31, 2001.
Total deposits increased to $663.0 million at September 30, 2002 from
$629.5 million at December 31, 2001 as a result of $79.7 million in deposit
growth during the nine months of 2002 partially offset by the sale of $46.2
million in deposits to Comerica in January 2002. Total assets increased to
$927.7 million at September 30, 2002 from $851.4 million at December 31, 2001.
At September 30, 2002, Progress Bank's Tier 1 leverage and total risk-based
capital ratios were 8.31% and 16.01%, respectively, which were in compliance
with the capital requirements in the existing directive with the 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
September 30, 2002, the Bank's classified assets to capital ratio was
approximately 18%, a decline from 32% at June 30, 2002 and 37% at December 31,
2001. The Bank reduced classified assets during the third quarter of 2002
primarily through the sales of two commercial real estate owned properties,
principal payments and charge-offs.
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)
September 30, December 31,
2002 2001
---------------- --------------
Assets:
Cash and due from other financial institutions:
Non-interest earning $ 20,434 $ 21,250
Interest earning 3,506 11,276
Investments and mortgage-backed securities
Available for sale at fair value (amortized cost: $298,747 and $212,793) 304,307 211,828
Held to maturity at amortized cost (fair value: $91,523 and $38,020) 89,218 38,173
Loans and leases, net (net of reserve: $7,100 and $9,917) 451,237 495,025
Loans held for sale -- 25,587
Premises and equipment 26,789 26,038
Other assets 32,204 22,203
-------- --------
Total assets $927,695 $851,380
======== ========
Liabilities, Capital Securities and Shareholders' Equity:
Liabilities:
Deposits $662,982 $629,523
Short-term borrowings 36,777 200
Other liabilities 17,815 10,430
Long-term debt:
Federal Home Loan Bank advances 120,500 117,000
Other debt 1,285 20,368
Subordinated debt 3,000 3,000
-------- --------
Total liabilities 842,359 780,521
-------- -------
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trust holding solely junior subordinated debentures of the 18,824 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; 7,056,000 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 7,056 5,818
Ownership Plan of 176,000 and 182,000
Other common shareholders' equity, net 55,822 45,466
Net accumulated other comprehensive income (loss) 3,634 (685)
-------- --------
Total shareholders' equity 66,512 50,599
-------- --------
Total liabilities, capital securities and shareholders' equity $927,695 $851,380
======== ========
Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------------------------------------------------------
Interest income:
Loans and leases, including fees $ 8,250 $11,821 $25,725 $36,704
Mortgage-backed securities 4,490 3,647 12,145 10,759
Investment securities 674 639 1,908 2,268
Other 59 223 181 803
------- ------- ------- -------
Total interest income 13,473 16,330 39,959 50,534
Interest expense:
Deposits 4,011 5,715 11,872 18,515
Short-term borrowings 322 386 733 1,729
Long-term borrowings 1,772 2,134 5,580 6,082
------- ------- ------- -------
Total interest expense 6,105 8,235 18,185 26,326
Net interest income 7,368 8,095 21,774 24,208
Provision for loan and lease losses 500 1,543 2,939 6,144
------- ------- ------- -------
Net interest income after provision for loan and 6,868 6,552 18,835 18,064
lease losses
Non-interest income:
Service charges on deposits 916 640 2,748 1,848
Lease financing fees 50 231 176 750
Mutual fund, annuity and insurance commissions 478 313 2,096 2,094
Loan brokerage and advisory fees 78 158 653 746
Private equity fund management fees 65 614 182 1,843
Gain on sale of securities 84 1,073 436 2,310
Gain on sale of loans and lease receivables 148 437 495 735
Gain on sale of investments in unconsolidated entities -- -- 11 --
Gain on sale of real estate 1,570 -- 1,570 --
Client warrant income (loss) 466 1 1,927 (1,957)
Equity (loss) in unconsolidated entities 1 (240) 102 (818)
Fees and other 495 1,025 1,715 3,044
------- ------- ------- -------
Total non-interest income 4,351 4,252 12,111 10,595
------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits 3,906 4,225 12,211 14,198
Occupancy 720 647 1,967 1,893
Data processing 215 230 702 721
Furniture, fixtures and equipment 511 528 1,566 1,646
Professional services 597 943 1,816 2,673
Capital securities expense 548 573 1,693 1,706
Other 2,341 2,262 6,151 5,916
------- ------- ------- -------
Total non-interest expense 8,838 9,408 26,106 28,753
------- ------- ------- -------
Income (loss) before income taxes 2,381 1,396 4,840 (94)
Income tax expense (benefit) 1,066 463 1,868 (83)
------- ------- ------- -------
Net income (loss) $ 1,315 $933 $2,972 $ (11)
======= ======= ======= =======
Basic earnings per common share $.20 $.17 $.45 $.00
==== ==== ==== ====
Diluted earnings per common share $.19 $.17 $.44 $.00
==== ==== ==== ====
Dividends per common share $.05 $.00 $.05 $.12
==== ==== ==== ====
Basic average common shares outstanding 6,815,956 5,584,133 6,607,985 5,617,516
========= ========= ========= =========
Diluted average common shares outstanding 6,967,686 5,680,014 6,761,675 5,741,879
========= ========= ========= =========
Progress Financial Corporation
Supplemental Data
(Dollars in Thousands, except per share data)
At or For The At or For The
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------------------------------------------------------
Profitability Measures:
Return on average assets 0.57% 0.41% 0.45% 0.00%
Return on average equity 8.05 7.25 6.49 (0.03)
Net interest spread (FTE) (1) 3.07 3.22 3.09 3.22
Net interest margin (FTE) (1) 3.50 3.78 3.55 3.86
Efficiency ratio 74.48 68.85 72.59 70.92
Diluted net income (loss) per common share $ .19 $ .17 $ .44 $ .00
Selected Loan Data:
Non-performing assets $8,415 $6,273 $ 8,415 $6,273
Ratio of non-performing assets to total assets .91% .72% .91% .72%
Ratio of allowance for loan and lease losses
to total loans and leases receivable 1.55 1.92 1.55 1.92
Ratio of allowance for loan and lease losses
to non-performing loans and leases receivable 94.14 221.15 94.14 221.15
Loan delinquency ratio 1.51 1.66 1.51 1.66
Ratio of loans and leases to deposits 69.13 87.23 69.13 87.23
Selected Equity Data:
Book value per share $9.76 $9.40 $9.76 $9.40
Tangible book value per share 9.59 8.96 9.59 8.96
Dividends per common share .05 .00 .05 .12
Average equity to average assets 7.14% 5.62% 6.90% 5.74%
Tier 1 risk-based capital ratio (Bank) 14.76 11.34 14.76 11.34
Total risk-based capital ratio (Bank) 16.01 12.59 16.01 12.59
Tier 1 leverage ratio (Bank) 8.31 7.58 8.31 7.58
Selected Average Balances:
Loans, gross $467,122 $562,551 $485,078 $555,936
Earning assets 852,281 862,074 834,751 850,299
Total assets 908,125 908,895 886,617 899,969
Deposits 658,804 638,579 632,762 620,337
Equity 64,808 51,082 61,192 51,688
(1) FTE represents a fully tax equivalent basis.
Progress Financial Corporation
Supplemental Balances
(Dollars in Thousands)
Period-End Balances At : September 30, 2002 December 31, 2001 % Change
------------------------------------------------------------------
Loans and Leases, Net:
Commercial business $ 83,135 $146,844 (2) (43.4%)
Commercial real estate 195,995 197,394 (2) (.7)
Construction, net of loans in process 81,800 77,380 5.7
Single family residential real estate 27,680 26,518 4.4
Consumer 47,975 44,821 7.0
Leases receivable 21,752 37,572 (42.1)
------------------------------------------------------------------
Total loans and leases 458,337 530,529 (13.6)
Allowance for loan and lease losses (7,100) (9,917) (28.4)
------------------------------------------------------------------
Loans and leases, net $451,237 $520,612 (13.3%)
==================================================================
Deposits:
Non-interest bearing demand deposits $ 74,261 $ 84,783 (12.4)%
NOW and SuperNow 100,453 120,665 (16.8)
Money Market 93,728 45,779 104.7
Passbook and Statement Savings 31,998 30,191 6.0
Time deposits 362,542 348,105 4.1
------------------------------------------------------------------
Total deposits $662,982 $629,523 5.3%
==================================================================
(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 October 22, 2002
Three months ended Nine months ended
September 30, September 30,
--------------------------------- -------------------------------
Percent Percent
2002 2001 change 2002 2001 change
--------------------------------- -------------------------------
Per Common Share Data
- ---------------------
Net income:
Basic $ 0.20 $ 0.17 17.65% $ 0.45 0.00 -
Diluted 0.19 0.17 11.76% 0.44 0.00 -
Cash dividends declared 0.05 0.00 - 0.05 0.12 -58.33%
Book value 9.76 9.40 3.83% 9.76 9.40 3.83%
Tangible book value 9.59 8.96 7.03% 9.59 8.96 7.03%
Average shares outstanding:
Basic 6,815,956 5,584,133 22.06% 6,607,985 5,617,516 17.63%
Diluted 6,967,686 5,680,014 22.67% 6,761,675 5,741,879 17.76%
Financial Ratios
- ----------------
Return on average shareholders' equity 8.05% 7.25% 11.03% 6.49% -0.03% -
Return on average total assets 0.57% 0.41% 39.02% 0.45% 0.00% -
Average yield on earning assets 6.34% 7.57% -16.25% 6.46% 8.00% -19.25%
Average rate on interest bearing liabilities 3.27% 4.35% -24.83% 3.37% 4.78% -29.50%
Net interest spread 3.07% 3.22% -4.66% 3.09% 3.22% -4.04%
Net interest margin (FTE) 3.50% 3.78% -7.41% 3.55% 3.86% -8.03%
Efficiency ratio 74.48% 68.85% 8.18% 72.59% 70.92% 2.35%
Risk-based capital - Tier 1 14.76% 11.34% 30.16% 14.76% 11.34% 30.16%
- Total capital 16.01% 12.59% 27.16% 16.01% 12.59% 27.16%
Tier 1 leverage ratio 8.31% 7.58% 9.63% 8.31% 7.58% 9.63%
Average shareholders' equity/average total assets 7.14% 5.62% 27.05% 6.90% 5.74% 20.21%
Asset Quality (dollars in thousands)
- ------------------------------------
Allowance for loan losses $ 7,100 $ 10,560 -32.77% $ 7,100 $ 10,560 -32.77%
Allowance for loan losses/Loans 1.55% 1.92% -19.27% 1.55% 1.92% -19.27%
Net charge-offs (recoveries) $ 1,424 $ 1,292 10.22% $ 5,756 $ 2,991 92.44%
Net charge-offs/Average loans (annualized) 1.21% 0.91% 32.97% 1.59% 0.72% 120.56%
Nonperforming assets $ 8,414 $ 6,273 34.13% $ 8,414 $ 6,273 34.13%
Nonperforming assets/Total loans plus OREO 1.86% 1.16% 60.34% 1.86% 1.16% 60.34%
Nonperforming assets/Total assets 0.91% 0.72% 26.39% 0.91% 0.72% 26.39%
Allowance for loan losses/Nonperforming loans 94.14% 221.15% -57.43% 94.14% 221.15% -57.43%
Average Balances (in thousands)
- -------------------------------
Loans and leases (gross of reserves) $467,122 $ 562,551 -16.96% $ 485,078 $ 555,936 -12.75%
Earning assets 852,281 862,074 -1.14% 834,751 850,299 -1.83%
Total assets 908,125 908,895 -0.08% 886,617 899,969 -1.48%
Deposits 658,804 638,579 3.17% 632,762 620,337 2.00%
Interest bearing liabilities 740,687 750,415 -1.30% 722,388 735,634 -1.80%
Shareholders' equity 64,808 51,082 26.87% 61,192 51,688 18.39%
Period End Balances (in thousands)
- ----------------------------------
Loans and leases (gross of reserves) $ 458,337 $ 549,301 -16.56% $ 458,337 $ 549,301 -16.56%
Total assets 927,695 875,799 5.93% 927,695 875,799 5.93%
Deposits 662,982 629,735 5.28% 662,982 629,735 5.28%
Total liabilities 842,359 803,039 4.90% 842,359 803,039 4.90%
Shareholders' equity 66,512 52,507 26.67% 66,512 52,507 26.67%
Three months ended Three months ended Three months ended Nine months ended
September 30, June 30, March 31, September 30,
---------------------- --------------------- --------------------- ------------------
Percent Percent Percent Percent
2002 2001 change 2002 2001 change 2002 2001 change 2002 2001 change
------ ------ -------- --------------------- --------------------- ---------------------
TAX EQUIVALENT INCOME STATEMENT
- -------------------------------
($ in thousands, except per share data)
Net interest income(FTE) $7,513 8,210 -8% $7,594 $8,112 -6% $7,051 $8,235 -14% $22,158 $24,557 -10%
FTE adjustment (145) (115) -26% (128) (118) -8% (111) (116) 4% (384) (349) -10%
------ ----- --- ------- ------- --- ------- ------- --- -------- ------- ----
Net interest income 7,368 8,095 -9% 7,466 7,994 -7% 6,940 8,119 -15% 21,774 24,208 -10%
Provision for losses on loans 500 1,543 -68% 1,000 3,554 -72% 1,439 1,047 37% 2,939 6,144 -52%
Non-Interest Income:
Service charges on deposits 916 640 43% 978 623 57% 854 585 46% 2,748 1,848 49%
Lease financing fees 50 231 -78% 63 242 -74% 63 277 -77% 176 750 -77%
Mutual fund, annuity and
insurance commissions 478 313 53% 678 981 -31% 940 800 18% 2,096 2,094 0%
Loan brokerage and advisory fees 78 158 -51% 302 365 -17% 273 223 22% 653 746 -12%
Private equity fund management fees 65 614 -89% 65 615 -89% 52 614 -92% 182 1,843 -90%
Gain(loss) on securities 84 1,073 -92% 352 (21) 1776% - 1,258 -100% 436 2,310 -81%
Gain on sale of real estate 1,570 - - - - - - - - 1,570 - -
Client warrant income (loss) 466 1 46500% 35 1 3400% 1,426 (1,959) 173% 1,927 (1,957) 198%
Equity (loss) in unconsolidated
entities 1 (240) 100% 6 (551) 101% 95 (27) 452% 102 (818) 112%
Fees and other income 643 1,462 -56% 737 1,030 -28% 841 1,287 -35% 2,221 3,779 -41%
------ ----- --- ------- ------- --- ------- ------- --- -------- ------- ----
Total non-interest income 4,351 4,252 2% 3,216 3,285 -2% 4,544 3,058 49% 12,111 10,595 14%
Non-Interest Expenses:
Salaries and employee benefits 3,906 4,225 -8% 3,904 4,983 -22% 4,401 4,990 -12% 12,211 14,198 -14%
Occupancy 720 647 11% 661 633 4% 586 613 -4% 1,967 1,893 4%
Data processing 215 230 -7% 230 276 -17% 257 215 20% 702 721 -3%
Furniture, fixtures and equipment 511 528 -3% 509 572 -11% 546 546 - 1,566 1,646 -5%
Loan and real estate
owned expenses, net 226 557 -59% 243 151 61% 295 284 4% 764 992 -23%
Professional services 597 943 -37% 641 915 -30% 578 815 -29% 1,816 2,673 -32%
Capital securites expense 548 573 -4% 573 572 0% 572 561 2% 1,693 1,706 -1%
Other 2,115 1,705 24% 1,579 1,723 -8% 1,693 1,496 13% 5,387 4,924 9%
------ ----- --- ------- ------- --- ------- ------- --- -------- ------- ----
Total non-interest expenses 8,838 9,408 -6% 8,340 9,825 -15% 8,928 9,520 -6% 26,106 28,753 -9%
------ ----- --- ------- ------- --- ------- ------- --- -------- ------- ----
Income before income taxes 2,381 1,396 71% 1,342 (2,100) 164% 1,117 610 83% 4,840 (94) 5249%
Provision for income tax expense 1,066 463 130% 435 (731) 160% 367 185 98% 1,868 (83) 2351%
------ ----- --- ------- ------- --- ------- ------- --- -------- ------- ----
Net income $1,315 $ 933 41% $ 907 $(1,369) 166% $ 750 $ 425 76% $ 2,972 $ (11)27118%
====== ===== === ======= ======= === ======= ======= === ======== ======= ======
QUARTERLY INCOME STATEMENT
(Unaudited)
($ in thousands, except per share) Third Second First Year-
2002 Quarter Quarter Quarter to-date
- ------------------------------------------------------------- ------------ ----------- ------------- -----------
FTE interest income $13,618 $13,602 $13,123 $40,343
Interest expense 6,105 6,008 6,072 18,185
------------ ----------- ------------- -----------
FTE net interest income 7,513 7,594 7,051 22,158
Less: FTE adjustment (145) (128) (111) (384)
------------ ----------- ------------- -----------
Net Interest Income 7,368 7,466 6,940 21,774
Provision for Losses on Loans 500 1,000 1,439 2,939
Non-Interest Income:
- --------------------
Service charges on deposits 916 978 854 2,748
Lease financing fees 50 63 63 176
Mutual fund, annuity and insurance commissions 478 678 940 2,096
Loan brokerage and advisory fees 78 302 273 653
Private equity fund management fees 65 65 52 182
Gain(loss) on securities 84 352 - 436
Gain on sale of real estate 1,570 - - 1,570
Client warrant income (loss) 466 35 1,426 1,927
Equity (loss) in unconsolidated entities 1 6 95 102
Fees and other income 643 737 841 2,221
------------ ----------- ------------- -----------
Total non-interest income 4,351 3,216 4,544 12,111
Non-Interest Expenses:
- ----------------------
Salaries and employee benefits 3,906 3,904 4,401 12,211
Occupancy 720 661 586 1,967
Data processing 215 230 257 702
Furniture, fixtures and equipment 511 509 546 1,566
Loan and real estate owned expenses, net 226 243 295 764
Professional services 597 641 578 1,816
Capital securites expense 548 573 572 1,693
Other 2,115 1,579 1,693 5,387
------------ ----------- ------------- -----------
Total non-interest expenses 8,838 8,340 8,928 26,106
Income Before Income Taxes 2,381 1,342 1,117 4,840
Provision for income tax expense 1,066 435 367 1,868
------------ ----------- ------------- -----------
Net Income $ 1,315 $ 907 $ 750 $ 2,972
============ =========== ============= ===========
Other Data:
EPS - Basic $0.20 $0.13 $0.12 $0.45
EPS - Diluted $0.19 $0.13 $0.12 $0.44
ROA 0.57% 0.41% 0.35% 0.45%
ROE 8.05% 5.90% 5.33% 6.49%
Net interest margin (FTE) 3.50% 3.62% 3.53% 3.55%
Dividends declared on common stock $0.05 $0.00 $0.00 $0.05
FTE employees 271 282 277 271
QUARTERLY INCOME STATEMENT
(Unaudited)
($ 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 (loss) 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- Third Second First Year- Fourth Third Second First
Allowance for Loan Losses to-date Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter
- ------------------------- ----------------------------------------------------------------------------------------------------
Balance at beginning of period $ 9,917 $ 8,024 $ 8,775 $ 9,917 $ 7,407 $10,560 $10,309 $ 7,708 $ 7,407
Provision 2,939 500 1,000 1,439 7,116 972 1,543 3,554 1,047
Charge-offs 6,365 1,827 1,817 2,721 5,299 2,124 1,344 1,049 782
------- ------- ------- ------- ------- ------- ------- ------- -------
Recoveries (609) (403) (66) (140) (693) (509) (52) (96) (36)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net loan charge-offs 5,756 1,424 1,751 2,581 4,606 1,615 1,292 953 746
------- ------- ------- ------- ------- ------- ------- ------- -------
Balance at end of period $ 7,100 $ 7,100 $ 8,024 $ 8,775 $ 9,917 $ 9,917 $10,560 $10,309 $ 7,708
======= ======= ======= ======= ======= ======= ======= ======= =======
Allowance as percentage of loans 1.55% 1.55% 1.67% 1.84% 1.87% 1.87% 1.92% 1.82% 1.39%
Net charge-offs/average loans 1.19% 0.30% 0.36% 0.51% 0.83% 0.30% 0.23% 0.17% 0.14%
Allowance as percentage of
non-performing loans 94.14% 94.14% 91.83% 93.93% 106.28% 106.28% 221.15% 203.21% 128.42%
Non-performing assets
- ---------------------
Non-accrual loans and leases $ 7,542 $ 7,542 $ 8,738 $ 9,342 $ 9,331 $ 9,331 $ 4,775 $ 5,073 $ 6,002
Other real estate owned 872 872 4,495 4,243 1,533 1,533 1,498 3,340 1,356
------- ------- ------- ------- ------- ------- ------- ------- -------
Total non-performing assets $ 8,414 $ 8,414 $13,233 $13,585 $10,864 $10,864 $ 6,273 $ 8,413 $ 7,358
======= ======= ======= ======= ======= ======= ======= ======= =======
Non-performing assets to:
Loans and leases plus OREO 1.86% 1.86% 2.77% 2.87% 2.08% 2.08% 1.16% 1.50% 1.34%
Total assets 0.91% 0.91% 1.46% 1.55% 1.28% 1.28% 0.72% 0.92% 0.81%
Loans past due 90 days $ 2,735 $ 2,735 $ 1,766 $ 3,244 $1,125 $ 1,125 $2,540 $ 2,473 $ 2,971
Total under-performing assets $11,149 $11,149 $14,999 $16,829 $11,989 $11,989 $8,813 $10,886 $10,329
AVERAGE BALANCE SHEET DATA
(Unaudited)
2002 2001
-------------------------------------- ----------------------------------------------------
($ in thousands) Third Second First Year- Fourth Third Second First Year-
Average balances Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
- ---------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Cash and due from banks
(Interest-earning) $ 14,743 $ 9,022 $ 22,496 $ 15,392 $ 27,686 $ 26,971 $ 21,353 $ 26,385 $ 25,606
Loans,net of unearned discounts:
Commercial business 87,127 96,440 123,173 102,115 158,298 182,187 186,230 177,260 175,959
Commercial mortgage 193,867 196,331 193,250 194,485 200,495 195,209 185,864 179,400 190,313
Residential real estate 28,764 27,929 25,688 27,472 28,123 30,887 32,436 33,870 31,312
Construction loans 84,863 86,253 83,831 84,986 76,503 68,694 70,094 64,141 69,889
Consumer 47,547 45,416 44,437 45,811 45,008 41,612 38,742 37,401 40,714
Lease financing 24,954 30,080 35,712 30,209 38,660 43,962 45,513 54,123 45,518
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total loans 467,122 482,449 506,091 485,078 547,087 562,551 558,879 546,195 553,705
Investment securities
(available for sale) 6,110 6,465 5,967 6,181 5,608 4,719 5,873 23,269 10,798
Investment securities
(held to maturity) 40,600 40,977 38,224 39,942 37,970 37,675 37,381 38,261 37,821
Mortgage-backed securities 323,706 302,946 236,869 288,158 214,914 230,158 235,432 195,436 218,012
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earning assets 852,281 841,859 809,647 834,751 833,265 862,074 858,918 829,546 845,942
Cash and due from banks
(non-interest bearing) 15,408 14,445 15,563 15,138 16,788 16,663 16,206 16,612 16,568
Other non-earning assets 40,436 35,854 33,822 36,728 33,485 30,158 32,054 37,394 33,317
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total assets $908,125 $892,158 $859,032 $886,617 $883,538 $908,895 $907,178 $883,552 $895,827
======== ======== ======== ======== ======== ======== ======== ======== ========
Deposits:
Demand $ 74,920 $ 77,860 $ 73,734 $ 75,508 $ 81,334 $ 77,796 $ 69,629 $ 80,637 $ 77,352
Interest bearing:
NOW and Supernow accounts 105,115 116,734 119,129 113,608 118,912 116,900 113,218 104,396 113,406
Money Market Accounts 89,022 75,009 61,776 75,369 45,471 40,946 37,282 45,848 42,382
Passbook and Stmt Savings 31,963 33,081 30,956 32,004 30,036 29,086 28,614 27,804 28,892
Time deposits 357,784 321,895 328,822 336,273 370,709 373,851 362,414 352,287 364,891
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total interest bearing deposits 583,884 546,719 540,683 557,254 565,128 560,783 541,528 530,335 549,571
Federal Home Loan Bank borrowings 120,500 117,609 120,333 119,482 126,891 127,000 126,999 121,366 125,584
Other borrowings 36,303 61,377 39,311 45,652 27,803 62,632 81,071 54,704 56,495
-------- -------- -------- -------- -------- -------- -------- -------- --------
Interest bearing liabilities 740,687 725,705 700,327 722,388 719,822 750,415 749,598 706,405 731,650
Non-interest bearing liabilities 8,316 6,675 7,674 7,557 8,645 9,352 15,747 24,248 14,440
Capital securities 19,394 20,269 20,263 19,972 20,254 20,250 20,241 20,235 20,245
Total shareholders' equity 64,808 61,649 57,034 61,192 53,483 51,082 51,963 52,027 52,140
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Liabilities and
Shareholders' Equity $908,125 $892,158 $859,032 $886,617 $883,538 $908,895 $907,178 $883,552 $895,827
======== ======== ======== ======== ======== ======== ======== ======== ========
AVERAGE BALANCE SHEET DATA - continued
- --------------------------------------
(Unaudited)
2002 2001
-------------------------------------- ----------------------------------------------------
Third Second First Year- Fourth Third Second First Year-
Average yields and rates Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
- ------------------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Interest - earning assets
Interest-earning deposits 1.59% 1.60% 1.55% 1.57% 2.03% 3.28% 4.21% 5.47% 3.69%
Investment securities 6.86% 6.29% 6.47% 6.54% 6.55% 6.90% 6.84% 7.17% 6.75%
Mortgage-backed securities 5.50% 5.67% 5.77% 5.64% 5.86% 6.29% 6.53% 6.80% 6.39%
Single family residential loans 6.94% 7.07% 7.44% 7.13% 7.42% 7.89% 8.36% 9.78% 8.41%
Commercial real estate loans 7.72% 7.85% 7.48% 7.68% 8.15% 8.39% 8.60% 8.95% 8.51%
Construction loans 6.40% 6.44% 6.47% 6.43% 7.08% 8.43% 9.20% 10.38% 8.69%
Commercial business loans 5.76% 5.50% 6.55% 5.99% 6.81% 8.18% 8.61% 9.54% 8.32%
Lease financing 9.98% 10.21% 10.27% 10.17% 10.66% 10.06% 10.73% 10.33% 10.44%
Consumer loans 6.07% 6.44% 6.38% 6.29% 6.71% 7.31% 7.67% 7.86% 7.35%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total interest - earning assets 6.34% 6.48% 6.57% 6.46% 6.93% 7.57% 7.95% 8.51% 7.74%
----- ----- ----- ----- ----- ----- ----- ----- -----
Interest - bearing liabilities
Interest - bearing deposits
NOW and SuperNOW 1.11% 1.20% 1.40% 1.24% 1.68% 2.27% 2.81% 3.41% 2.51%
Money Market 2.26% 2.11% 1.91% 2.11% 1.88% 2.48% 2.63% 3.50% 2.62%
Passbook and Statement Savings 0.98% 0.99% 1.02% 1.00% 1.14% 1.47% 1.60% 1.71% 1.47%
Time deposits 3.47% 3.76% 4.00% 3.73% 4.36% 4.97% 5.52% 6.07% 5.21%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total interest - bearing deposits 2.73% 2.82% 3.02% 2.85% 3.43% 4.04% 4.54% 5.10% 4.26%
FHLB borrowings 5.47% 5.52% 5.43% 5.48% 5.50% 5.59% 5.49% 5.65% 5.60%
Other borrowings 4.41% 3.39% 4.24% 3.90% 5.37% 4.68% 4.95% 5.93% 5.20%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total interest - bearing liabilities 3.27% 3.32% 3.52% 3.37% 3.88% 4.35% 4.77% 5.27% 4.56%
----- ----- ----- ----- ----- ----- ----- ----- -----
Interest Rate Spread 3.07% 3.16% 3.05% 3.09% 3.05% 3.22% 3.18% 3.24% 3.18%
Net Interest Margin 3.50% 3.62% 3.53% 3.55% 3.58% 3.78% 3.79% 4.03% 3.79%
Avg Int-earning assets
to int-bearing liabilities 115.07% 116.01% 115.61% 115.55% 115.76% 114.88% 114.58% 117.43% 115.62%
PERIOD END BALANCE SHEET DATA
(Unaudited)
2002 2001
------------------------------------------ ----------------------------------------------
Third Second First Fourth Third Second First
($ in thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter
- ---------------- ------------------------------------------ ----------------------------------------------
Assets
Cash and due from bank(interest bearing) $ 3,506 $ 5,603 $ 12,130 $ 11,276 $ 15,545 $ 11,342 $ 16,548
Loans and lease(net) 451,237 473,435 469,173 520,612 538,741 555,981 548,749
Investment securities:
Held-to-maturity:
Book 29,778 43,912 39,570 38,173 37,869 37,570 37,278
Market 30,787 44,532 38,660 38,020 38,077 37,330 37,350
Available-for-sale 5,419 5,962 5,941 6,682 5,217 5,965 5,826
Mortgage-backed securities:
Held-to-maturity:
Book 59,440 44,870 25,304 - - - -
Market 60,736 45,262 24,952 - - - -
Available-for-sale 298,888 265,056 263,908 205,146 191,714 239,829 241,431
-------- -------- -------- -------- -------- -------- --------
Earning assets 848,268 838,838 816,026 781,889 789,086 850,687 849,832
Cash and due from bank(non-interest bearing) 20,434 17,030 11,906 21,250 30,126 16,631 14,009
Other non-earning assets 58,993 48,134 47,047 48,241 56,587 47,052 41,066
-------- -------- -------- -------- -------- -------- --------
Total assets $927,695 $904,002 $874,979 $851,380 $875,799 $914,370 $904,907
======== ======== ======== ======== ======== ======== ========
Liabilities and shareholders' equity
- ------------------------------------
Deposits:
Demand $ 74,261 $ 83,538 $ 72,567 $ 84,783 $ 79,318 $ 76,588 $ 67,105
Interest bearing 588,721 548,084 546,240 544,740 550,417 556,283 528,067
-------- -------- -------- -------- -------- -------- --------
Total deposits 662,982 631,622 618,807 629,523 629,735 632,871 595,172
Federal Home Loan Bank borrowings 120,500 120,500 117,000 117,000 127,000 127,000 127,000
Other borrowings 41,062 55,012 46,087 23,568 34,147 72,549 89,738
-------- -------- -------- -------- -------- -------- --------
Interest bearing liabilities 824,544 807,134 781,894 770,091 790,882 832,420 811,910
Other Liabilities 17,815 13,178 13,498 10,430 12,157 12,073 20,695
-------- -------- -------- -------- -------- -------- --------
Total liabilities 842,359 820,312 795,392 780,521 803,039 844,493 32,605
Capital Securities 18,824 20,274 20,267 20,260 20,253 20,246 20,239
Total shareholders' equity 66,512 63,416 59,320 50,599 52,507 49,631 52,063
-------- -------- -------- -------- -------- -------- --------
Total Liabilities, cap sec, and equity $927,695 $904,002 $874,979 $851,380 $875,799 $914,370 $904,907
======== ======== ======== ======== ======== ======== ========
Other selected balances
- -----------------------
Intangible assets -- Goodwill 1,155 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 3,634 1,643 (1,269) (685) 1,848 48 130
Capital Data
(Unaudited)
2002 2001
----------------------------------------- ------------------------------------------------------------
Third Second First Year- Fourth Third Second First Year-
Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date
-------- --------- ------- --------- ------------ --------- --------- --------- ---------
Per common share
- ----------------
Shares outstanding:
Average-basic 6,815,956 6,795,122 6,206,177 6,607,985 5,545,478 5,584,133 5,584,582 5,684,940 5,599,358
Average-diluted 6,967,686 6,962,428 6,342,450 6,761,675 5,642,897 5,680,014 5,715,918 5,829,134 5,717,568
Period-end 6,816,494 6,800,380 6,768,458 6,816,494 5,551,535 5,584,361 5,563,378 5,648,895 5,551,535
Book value $9.76 $9.33 $8.76 $9.76 $9.11 $9.40 $8.92 $9.22 $9.11
Tangible Book Value $9.59 $9.07 $8.49 $9.59 $8.76 $8.96 $8.46 $8.76 $8.76
Price:
High 10.15 10.40 9.65 10.40 7.60 7.94 8.40 9.63 9.63
Low 7.46 8.61 7.44 7.44 5.90 5.60 6.88 7.06 5.60
Close 9.40 9.74 8.94 9.40 7.50 6.40 7.95 7.38 7.50
Capital ratios
- ---------------
($ in thousands)
Risk-based capital:
Tier 1 capital $76,071 $73,567 $71,957 $76,071 $66,395 $65,343 $61,449 $61,935 $66,395
% risk adjusted
assets 14.76% 13.97% 13.58% 14.76% 11.60% 11.34% 10.32% 10.61% 11.60%
Total capital $82,519 $80,167 $78,606 $82,519 $73,582 $72,583 $68,929 $69,236 $73,582
% risk adjusted
assets 16.01% 15.22% 14.84% 16.01% 12.85% 12.59% 11.57% 11.86% 12.85%
Tier 1 leverage ratio 8.31% 8.23% 8.30% 8.31% 7.90% 7.58% 6.83% 6.95% 7.90%
Average shareholders'
equity to total
average assets 7.14% 6.91% 6.64% 6.90% 6.05% 5.62% 5.73% 5.89% 5.82%