<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
October 8, 1996
- -------------------------------------------------------------------------------
(Date of earliest event reported)
Progress Financial Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-14815 25-2413363
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4 Sentry Parkway, Suite 230, Blue Bell, Pennsylvania 19422-0764
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(610) 825-8800
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Exhibit Index appears on page 4.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 8, 1996, Progress Financial Corporation ("PFC"), a unitary
thrift holding company headquartered in Blue Bell, Pennsylvania, announced
that it had completed its previously announced acquisition of The Equipment
Leasing Company, Timonium, Maryland ("ELC"), for a cash purchase price of
$6.6 million. The source of funds for the cash purchase price consisted
general operating funds. Under the terms of the purchase agreement, The
Equipment Leasing Company became a wholly-owned subsidiary of Progress Bank,
a Federally chartered stock savings bank and wholly-owned subsidiary of PFC.
On October 23, 1996, PFC filed a Form 8-K (the "Form 8-K") which
discussed this matter. The purpose of this Amendment to the Form 8-K is to
provide financial statements of ELC and pro forma financial information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of ELC are attached hereto as Exhibit 99(a).
(b) Pro forma financial information is attached hereto as Exhibit 99(b).
(c) The following exhibits are filed with this report:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ------------
<C> <S>
99(a) Financial Statements of ELC
99(b) Pro Forma Financial Information
</TABLE>
2
<PAGE>
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
Date: December 23, 1996 By: /s/ Frederick E. Schea
---------------------------------------
Frederick E. Schea
Senior Vice President and
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
99(a) Financial Statements of ELC
99(b) Pro Forma Financial Information
</TABLE>
4
<PAGE>
Exhibit 99(a)
Financial Statements of ELC
<PAGE>
THE EQUIPMENT LEASING COMPANY
REPORT ON AUDITS OF COMBINED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
AND FOR THE YEARS THEN ENDED
<PAGE>
To the Shareholders and Board of Directors of
The Equipment Leasing Company:
We have audited the accompanying combined statements of financial
condition of The Equipment Leasing Company and the leasing division of
American Manufacturing Company, Inc. ("AMCOIN"), herein referred to
collectively as The Equipment Leasing Company, as of December 31, 1995 and
1994 and the related statements of operations, shareholder's equity and cash
flows for the years then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statement referred to above
present fairly, in all material respects, the financial position of The
Equipment Leasing Company as of December 31, 1995 and 1994 and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 20, 1996
1
<PAGE>
THE EQUIPMENT LEASING COMPANY
COMBINED STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 25,738 $ 28,993
Cash surrender value of life insurance 145,666 124,484
Direct finance lease receivables, net 21,915,642 21,302,884
Less: Allowance for lease losses (750,000) (650,000)
----------- -----------
Net Leases 21,165,642 20,652,884
Other accounts receivable 218,126 157,732
Premises and equipment, net of accumulated
depreciation of $183,316 and $186,364 39,571 24,392
Income taxes receivable from Parent 157,527 1,625,159
Other assets 68,557 121,624
----------- -----------
Total assets $21,820,827 $22,735,268
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Notes payable $14,957,000 $15,904,000
Overdrafts payable 206,640 128,760
Accounts payable 759,902 386,828
Security deposits 2,084,955 2,089,206
Accrued expenses 232,850 215,391
Deferred income taxes 6,116 183,952
Other liabilities 65,566 11,331
----------- -----------
Total liabilities $18,313,029 $18,919,468
----------- -----------
Commitments and contingencies
Shareholder's equity
Common stock, $1 par value (At December 31,
1995 and 1994, respectively, 100,000 shares
authorized and 52,000 shares issued and
outstanding) 52,000 52,000
Retained earnings 3,455,798 3,763,800
----------- -----------
Total shareholder's equity 3,507,798 3,815,800
----------- -----------
Total liabilities and shareholder's equity $21,820,827 $22,735,268
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to the combined financial statements.
2
<PAGE>
THE EQUIPMENT LEASING COMPANY
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Finance lease income $2,770,107 $2,649,758
Interest expense 1,034,724 981,213
---------- ----------
Net interest income 1,735,383 1,668,545
Provision for lease losses 363,669 189,852
---------- ----------
Net interest income after provision for lease
losses 1,371,714 1,478,693
Broker fees 146,141 180,931
Gain on sale of residuals 291,563 242,281
Other income 285,591 319,898
---------- ----------
Total income 2,095,009 2,221,803
---------- ----------
---------- ----------
Other expense
Salaries and employee benefits 760,402 957,581
Occupancy 80,958 93,018
Management fee 180,000 180,000
Professional services 67,519 69,774
Marketing 8,857 13,260
Data processing 8,436 16,632
Contract termination fee 0 180,000
Depreciation 14,470 20,431
Other 172,806 199,328
---------- ----------
Total other expense 1,293,448 1,730,024
---------- ----------
Income before income taxes 801,561 491,779
Federal and state income tax provision 309,563 189,925
---------- ----------
Net income $ 491,998 $ 301,854
---------- ----------
---------- ----------
Earnings per share $9.46 $5.80
Average shares outstanding 52,000 52,000
</TABLE>
See accompanying notes to the combined financial statements.
3
<PAGE>
THE EQUIPMENT LEASING COMPANY
COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Common Retained Shareholder's
Stock Earnings Equity
------ -------- -------------
<S> <C> <C> <C>
Balance, January 1, 1994 $52,000 $3,461,946 $3,513,946
Net income -- 301,854 301,854
------- ---------- ----------
Balance, December 31, 1994 52,000 3,763,800 3,815,800
Net income -- 491,998 491,998
Cash dividend -- (800,000) (800,000)
------- ---------- ----------
Balance, December 31, 1995 $52,000 $3,455,798 $3,507,798
------- ---------- ----------
------- ---------- ----------
</TABLE>
See accompanying notes to the combined financial statements.
4
<PAGE>
THE EQUIPMENT LEASING COMPANY
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 491,998 $ 301,854
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 14,470 20,431
Deferred income taxes (177,836) 1,011,270
Provision for lease losses 363,669 189,852
Loss (gain) on the sale of fixed assets (1,931) 69,690
Amortization of deferred loan cost 78,347 88,225
(Increase) decrease in other accounts
receivable, net (60,394) 2,218
Increase (decrease) in accounts payable and
other liabilities 522,648 253,631
Increase (decrease) in security lease deposits (4,251) 36,533
Increase in cash surrender value of life
insurance (21,182) (12,497)
Decrease (increase) in income taxes receivable
from parent 1,467,632 (1,140,743)
Other assets, net (210,602) (432,538)
----------- -----------
Net cash flows provided by operating activities 2,462,568 387,926
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in direct financing leases (691,105) (1,463,306)
Capital expenditures (29,649) 84,342
Proceeds from asset sales 1,931 --
----------- -----------
Net cash flows used in investing activities (718,823) (1,378,964)
Cash flows from financing activities
Total Borrowings
Increase (decrease) in line of credit (947,000) 1,005,360
Dividends paid in cash (800,000) 0
----------- -----------
Net cash flows (used in) provided by
financing activities (1,747,000) 1,005,360
Net increase (decrease) in cash and cash
equivalents (3,255) 14,322
Cash and cash equivalents:
Beginning of year 28,993 14,671
----------- -----------
End of year $ 25,738 $ 28,993
----------- -----------
----------- -----------
Supplemental disclosures:
Income taxes paid $ 37,032 $ 22,720
Interest paid $ 1,022,902 $ 888,000
----------- -----------
----------- -----------
</TABLE>
See the accompanying notes to the combined financial statements.
5
<PAGE>
THE EQUIPMENT LEASING COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Equipment Leasing Company (the "Company") is a 100% owned subsidiary of
American Manufacturing Company, Inc. ("AMC"). The combined financial
statements include the equipment leasing business of a division of AMC called
AMCOIN which were contributed to the Company at September 30, 1996. The
Company primarily leases computer and telecommunications equipment on the
east coast of the United States. The Company has specialized in serving the
small business leasing market through direct sales contact and telemarketing
for over 25 years.
BASIS OF PRESENTATION
The Company reports revenue and expenses on the accrual basis in accordance
with generally accepted accounting principles. Significant intercompany
transactions are disclosed in notes 4 and 7 to the financial statements.
A. METHOD OF ACCOUNTING FOR DIRECT FINANCE LEASE RECEIVABLES
The Company uses the direct finance method of accounting to record income
from its leases, in accordance with the Statement of Financial Accounting
Standards (SFAS) No. 13. Under this method, the excess of minimum rentals
over the cost of equipment plus estimated residual value is amortized to
income over the lease term and produces a constant periodic rate of return on
the net investment in direct finance leases. At December 31, 1995 and 1994
unearned income amounted to $4,202,019 and $4,137,336, respectively.
In accordance with SFAS No. 91, "Accounting for Nonrefundable Fees and Costs
Associated with Originating or Acquiring Loans and Initial Direct Costs of
Leases", lease origination and commitment fees and related costs are
deferred and the amount is amortized as an adjustment to the related lease's
yield. At December 31, 1995 and 1994 net deferred costs amount to $644,856
and $723,203, respectively.
All leases past due 105 days or more are placed on non-accrual status.
B. ESTIMATED RESIDUAL VALUE
Certain leases include an estimated residual value, at the lease termination
date, payment of which is a requirement to transfer title of the property
leased. This residual value represents an estimate of fair market value of the
lease property at the lease termination date. At December 31, 1995 and 1994
the estimated residual values amounted to $2,544,758 and $2,436,792,
respectively.
6
<PAGE>
C. ALLOWANCE FOR LEASE LOSSES
An allowance for lease losses is maintain at a level that management
considers adequate to provide for potential losses based upon an evaluation
of known and inherent risks in the lease portfolio. Management's periodic
evaluation of the adequacy of the allowance for lease losses is based upon
examination of the portfolio, past loss experience, adverse situations that
may affect the borrower's ability to repay, the estimated value of the
underlying collateral, current economic conditions, and other relevant
factors. Management considers the portfolio to be homogeneous and therefore
evaluates the entire portfolio for impairment. While management uses the best
information available to make such evaluations, future adjustments to the
allowance may be necessary if economic conditions differ substantially from
the assumptions used in making the evaluations.
D. PREMISES AND EQUIPMENT AND DEPRECIATION
The property, plant and equipment are stated at cost. The Company uses the
straight-line method of computing depreciation for financial reporting and the
accelerated cost recovery system basis for Federal income tax purposes. Gains
and losses are recognized upon disposal of the assets. Maintenance and
repairs are recorded as expenses.
E. INCOME TAXES
Deferred income taxes are recorded for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities.
The Company participates in the consolidated return of AMC. Income tax
payable amounts are due to AMC for their respective share on a stand alone
basis.
F. CASH AND CASH EQUIVALENTS
The Company's cash and cash equivalents include cash and debt securities
with an original maturity of three months or less.
G. DIRECT FINANCE LEASE RECEIVABLE
Direct finance lease receivables are stated at the principal amount
outstanding, net of unearned income and unamortized deferred costs. Interest
income is recognized under the effective interest method.
7
<PAGE>
2. DIRECT FINANCE LEASE RECEIVABLES, NET
The Company is a lessor of equipment and machinery under agreements expiring
at various dates through the year 2000. At December 31, 1995, the components
of direct finance lease receivables, net, are as follows:
<TABLE>
<S> <C>
1996 $10,362,000
1997 6,829,000
1998 3,296,000
1999 1,110,000
2000 319,000
-----------
$21,916,000
-----------
</TABLE>
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Total future minimum lease payments receivable,
including estimated residual values $25,472,805 $24,717,017
Unearned income (4,202,019) (4,137,336)
Deferred costs, net 644,856 723,203
----------- -----------
Direct finance lease receivables, net 21,915,642 21,302,884
Allowance for lease losses (750,000) (650,000)
----------- -----------
Lease receivables, net $21,165,642 $20,652,884
----------- -----------
----------- -----------
</TABLE>
Non-accrual lease receivables amounted to $200,167 and $339,234 at December
31, 1995 and 1994, respectively.
A summary of the changes in the allowance for lease losses is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Balance, January 1 $ 650,000 $ 650,000
--------- ---------
Charge-offs (356,293) (333,858)
Recoveries 92,624 144,006
--------- ---------
Net charge-offs (263,669) (189,852)
--------- ---------
Lease loss provision (363,669) 189,852
--------- ---------
Balance, December 31 $ 750,000 $ 650,000
--------- ---------
--------- ---------
</TABLE>
3. PREMISES AND EQUIPMENT:
A summary of property, plant and equipment at December 31 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Computer system $ 25,087 $ 12,245
Furniture and Fixtures 197,800 198,511
Accumulated depreciation (183,316) (186,364)
--------- ---------
Premises and equipment, net $ 39,571 $ 24,392
--------- ---------
--------- ---------
</TABLE>
8
<PAGE>
4. NOTES PAYABLE
At December 31, 1995 and 1994, notes payable to AMC consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revolving line of credit agreement,
Federal funds rate plus 1.5% $ 957,000 $ 1,904,000
6.0% note, due December 31, 1996 6,000,000 6,000,000
8.5% note, due October 16, 1997 2,000,000 2,000,000
7.0% note, due December 31, 1998 6,000,000 6,000,000
----------- -----------
Total Notes Payable $14,957,000 $15,904,000
----------- -----------
----------- -----------
Notes with:
Fixed interest rates $14,000,000 $14,000,000
Floating interest rates $ 957,000 $ 1,904,000
</TABLE>
Maturities of notes payable at December 31, 1995 are:
<TABLE>
<S> <C>
1996 $ 6,957,000
1997 2,000,000
1998 6,000,000
1999 0
2000 0
-----------
Total $14,957,000
-----------
-----------
</TABLE>
9
<PAGE>
5. INCOME TAXES
Under SFAS No. 109, a valuation allowance may be provided for deferred tax
assets to the extent it is more likely than not that they will not be
realized. Management believes that a valuation allowance is not required.
The tax effects of significant temporary differences between the financial
statement carrying amounts and tax bases of assets and liabilities that
represent the net deferred tax asset (liability) are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
Allowance for Lease Losses $289,650 $ 251,030
Direct finance lease receivables 0 0
-------- ---------
Gross deferred tax assets 289,650 251,030
-------- ---------
Direct finance lease receivables 46,722 155,681
Deferred costs, net 249,042 279,982
-------- ---------
Gross deferred tax liability 295,764 434,982
-------- ---------
Net deferred tax (liability) asset $ (6,116) $(183,952)
-------- ---------
</TABLE>
There were no differences between the total provision for income taxes and
the amounts computed at the statutory federal income tax rate of 34% and the
effective statutory state income tax rate of 4.62% in 1995 and 1994.
6. BENEFIT PLANS
The Company participates in the employee benefit plans of AMC. Employee
benefit plan expense amounted to $16,670 in 1995 and $8,028 in 1994.
10
<PAGE>
7. TRANSACTIONS WITH RELATED PARTIES
The Company has the following intercompany items with AMC:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
At year end:
Notes payable $14,957,000 $15,904,000
Accrued interest payable 104,513 92,691
Income tax receivable 157,527 1,625,159
For the year ended:
Interest expense 1,034,724 981,213
Management fee 180,000 180,000
</TABLE>
8. SIGNIFICANT RISKS AND UNCERTAINTIES
The Company's earnings are dependent upon the level of net interest income.
Accordingly, the earnings of the Company are subject to risks and
uncertainties surrounding both its exposure to changes in the interest rate
environment and movements in financial markets, particularly to interest rate
changes in its variable rate notes payable.
Most of the Company's leasing activity is with customers located on the East
Coast.
The financial statements of the Company are prepared in conformity with
generally accepted accounting principles that require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from these
estimates.
Significant estimates are made by management in determining the allowance for
lease losses. Consideration is given to a variety of factors in establishing
these estimates, including current economic conditions, the results of the
internal credit review process, delinquency statistics, lessees perceived
financial and managerial strengths and the adequacy of supporting collateral,
including customer deposits, if collateral dependent, or the present value of
future cash flows. Since the allowance for lease losses are dependent, to a
great extent, on general and other economic conditions that may be beyond the
Company's control, it is at least reasonably possible that the estimates of
the allowance for lease losses could differ materially from currently
reported values in the near term.
11
<PAGE>
9. COMMITMENTS AND CONTINGENCIES
At December 31, 1995, the Company was obligated under noncancelable operating
leases for office space with aggregate minimum rentals of $72,672 in each of
the years ending 1996, 1997, 1998, 1999 respectively and $60,560 in 2000. The
lease expires in October 2000.
10. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments (SFAS No. 107), requires disclosure of the
fair value information about financial instruments, whether or not recognized
in the consolidated balance sheet, for which it is practicable to estimate
such value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other market value
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard the derived fair value estimates cannot be substantiated by
comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. SFAS No. 107 excludes certain
financial instruments and all non-financial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it practicable to estimate that
value:
CASH AND CASH EQUIVALENTS:
The carrying amounts reported in the combined balance sheet for cash and cash
equivalents approximate their fair values.
LEASE RECEIVABLES:
For the lease receivables the estimated fair values are the present values of
cash flows generated by the receivables discounted at a market interest rate.
The carrying amounts and estimated fair values are as follows:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------ ------------------------------------
Estimated Fair Estimated Fair
Carrying Value Value Carrying Value Value
- -------------- -------------- -------------- --------------
<S> <C> <C> <C>
$21,915,642 $21,795,908 $21,302,884 $20,732,163
</TABLE>
12
<PAGE>
NOTES PAYABLE:
The fair values of notes payable are estimated using discounted cash flow
analysis using the Company's incremental borrowing rate as the discount rate.
The carrying amounts and the estimated fair value are as follows:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------ ------------------------------------
Estimated Fair Estimated Fair
Carrying Value Value Carrying Value Value
- -------------- -------------- -------------- --------------
<S> <C> <C> <C>
$14,957,000 $14,978,212 $15,904,000 $15,426,438
</TABLE>
11. SUBSEQUENT EVENTS
At the close of business, October 1, 1996, the Company was acquired by
Progress Bank. The transaction was accounted for as a purchase.
In addition, effective October 30, 1996, Quaker State Financial Corporation,
a subsidiary of Progress Financial Corporation, the parent of Progress Bank,
was merged into the Company.
13
<PAGE>
Exhibit 99(b)
Pro Forma Financial Information
<PAGE>
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
The
Equipment Pro Forma
Leasing Pro Forma Condensed
The Company Company Adjustments Consolidated
----------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Interest and fee income $26,569 $2,770 $ 44(3) $29,383
Interest expense 15,335 1,035 0 16,370
------- ------ ----- -------
Net interest income 11,234 1,735 44 13,013
Provision for possible loan and lease losses 625 363 0 988
------- ------ ----- -------
Net interest income after provision for possible
loan and lease losses 10,609 1,372 44 12,025
Other income 2,265 723 0 2,988
Other expense 12,071 1,293 212(2) 13,576
------- ------ ----- -------
Income before income taxes 803 802 (168) 1,437
Tax expense (benefit) (1,868) 310 (13)(4) (1,571)
------- ------ ----- -------
Net income $ 2,671 $ 492 $(155) $ 3,008
------- ------ ----- -------
------- ------ ----- -------
Earnings per share $ .79 $ 9.46 $ .89
Average shares outstanding 3,385,727 52,000 3,385,727
</TABLE>
<PAGE>
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
The
Equipment Pro Forma
Leasing Pro Forma Condensed
The Company Company Adjustments Consolidated
----------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Interest and fee income $20,229 $2,491 $ 33(3) $22,753
Interest expense 10,633 803 0 11,436
------- ------ ----- -------
Net interest income 9,596 1,688 33 11,317
Provision for possible loan and lease losses 500 192 0 692
------- ------ ----- -------
Net interest income after provision for possible
loan and lease losses 9,096 1,496 33 10,625
Other income 3,367 488 0 3,855
Other expense 11,589 1,246 159(2) 12,994
------- ------ ----- -------
Income before income taxes 874 738 (126) 1,486
Tax expense 322 284 13 619
------- ------ ----- -------
Net income $ 552 $ 454 $(139) $ 867
------- ------ ----- -------
------- ------ ----- -------
Earnings per share $ .14 $ 8.73 $ .22
Average shares outstanding 3,856,474 52,000 3,856,474
</TABLE>
<PAGE>
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
The
Equipment Pro Forma
Leasing Pro Forma Condensed
The Company Company Adjustments Consolidated
----------- --------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investment securities available for sale $ 3,422 $ 0 $ 0 $ 3,422
Investment securities held to maturity 2,785 0 0 2,785
Mortgage-backed securities available for sale 52,828 0 0 52,828
Mortgage-backed securities held to maturity 48,939 0 0 48,939
Net loans and leases 229,342 20,025 0 249,367
Loans and leases held for sale 637 0 0 637
Real estate owned, net 2,247 0 0 2,247
Other assets 26,971 184 (3,711)(1) 23,444
-------- ------- ------- --------
Total assets $367,171 $20,209 $(3,711) $383,669
-------- ------- ------- --------
-------- ------- ------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Deposits $290,076 $ 0 $ 0 $290,076
Borrowings 51,862 $13,725 0 65,587
Other liabilities 6,546 2,773 0 9,319
-------- ------- ------- --------
Total liabilities 348,484 16,498 0 364,982
-------- ------- ------- --------
Stockholders' equity: 18,687 3,711 (3,711)(1) 18,687
-------- ------- ------- --------
Total liabilities and stockholders' equity $367,171 $20,209 $(3,711) $383,669
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>
<PAGE>
NOTES TO PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) Reflects payment of $6,600 for the acquisition of The Equipment Leasing
Company ("ELC"), recording of goodwill of $2,889 and elimination of
ELC's equity.
(2) Amortization of goodwill over 15 years.
(3) Accretion of purchase accounting adjustment re: net lease carrying value.
(4) Record tax expense (benefit) related to purchase accounting adjustments.
