Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[ X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarter ended March 31, 1998.
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _________ to ___________________.
Commission File Number: 0-14815
Progress Financial Corporation
(Exact name of registrant as specified in its charter)
Delaware 23-2413363
- -------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4 Sentry Parkway
Suite 230
Blue Bell, Pennsylvania 19422
- ----------------------- -----
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 825-8800
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock ($1.00 par value) 4,952,066
------------------------------ -------------------------
Title of Each Class Number of Shares Outstanding
as of May 11, 1998
<PAGE>
PROGRESS FINANCIAL CORPORATION
Progress Financial Corporation
Table of Contents
PART I - Financial Information
<TABLE>
<CAPTION>
Page
Item 1. Financial Statements
<S> <C>
Consolidated Statements of Financial Condition as of March 31, 1998
and December 31, 1997 (unaudited).................................................3
Consolidated Statements of Operations for the three months ended
March 31, 1998 and 1997 (unaudited)...............................................4
Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and 1997 (unaudited)...............................................5
Notes to Consolidated Financial Statements (unaudited)............................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (unaudited) ...............................................9
PART II - Other Information
Item 1. Legal Proceeding................................................................23
Item 2. Changes in Securities...........................................................23
Item 3. Defaults upon Senior Securities ................................................23
Item 4. Submission of Matters to a Vote of Security Holders ............................23
Item 5. Other Information...............................................................23
Item 6. Exhibits and Reports on Form 8-K................................................23
Signatures......................................................................24
</TABLE>
<PAGE>
PART I- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
(Dollars in thousands)
(unaudited)
<S> <C> <C>
Assets
Cash and due from banks:
Interest bearing $2,644 $ 7,689
Non interest bearing 8,247 11,697
Investment securities
Available for sale at fair value (amortized cost:$3,985 in 1998 and $5,924 in 1997) 4,304 6,395
Held to maturity at amortized cost (fair value: $7,733 in 1998 and $4,070 in 1997) 7,700 4,051
Mortgage-backed securities:
Available for sale at fair value (amortized cost: $46,393 in 1998 and $44,246 in 1997) 46,482 44,518
Held to maturity at amortized cost (fair value: $45,250 in 1998 and $49,094 in 1997) 45,636 49,421
Loans and leases 343,523 340,276
Real estate owned, net 300 380
Premises and equipment 9,623 9,319
Accrued interest receivable 2,982 2,728
Deferred income taxes 177 274
Receivable for securities sold -- 21,043
Other assets 13,191 11,144
-------- --------
Total assets $484,809 $508,935
======== ========
Liabilities and Stockholder's Equity
Liabilities:
Deposits $343,580 $340,761
Advances from the Federal Home Loan Bank 45,900 33,450
Other borrowings 41,957 50,797
Advance payments by borrowers 1,994 3,561
Accrued interest payable 2,418 1,626
Payable for securities purchased -- 32,385
Other liabilities 7,207 5,886
------- -------
Total liabilities 443,056 468,466
======= =======
Corporation-obligated mandatorily redeemable capital securities of subsidiary
trust holding solely junior subordinated debentures of the Corporation 15,000 15,000
Commitments and contingencies
Stockholders' equity:
Serial preferred stock - 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; 6,000,000 shares authorized; 4,201,000 and
4,126,000 shares issued and outstanding at March 31, 1998 and
December 31, 1997, respectively 4,201 4,126
Capital surplus 21,478 20,950
Unearned Employee Stock Ownership Plan (151) (164)
Retained earnings 953 97
Unrealized gain on securities available for sale, net of deferred income taxes 272 460
--- ---
Total stockholder's equity 26,753 25,469
------ ------
Total liabilities, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior subordinated debentures
of the Corporation and stockholders' equity $484,809 $508,935
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statement of Operations
<TABLE>
<CAPTION>
For The Three Months
Ended March 31
1998 1997
---- ----
(Dollars in thousands)
(unaudited)
<S> <C> <C>
Interest Income:
Loans and leases, including fees $ 8,293 $ 6,671
Mortgage-backed securities 1,475 1,546
Investment securities 141 110
Other 23 25
-- --
Total interest income 9,932 8,352
===== =====
Interest expense:
Deposits 3,350 2,959
Advances from the Federal Home Loan Bank 682 407
Other borrowings 709 851
--- ---
Total interest expense 4,741 4,217
----- -----
Net interest income 5,191 4,135
Provision for possible loan and lease losses 202 193
--- ---
Net interest income after provision for possible loan and lease losses 4,989 3,942
----- -----
Other income:
Service charges on deposits 367 360
Lease financing fees 365 307
Teleservices fee income 174 --
Loan brokerage and advisory fees 445 30
Gain on sale of mortgage servicing rights -- 978
Gain from sales of securities 215 34
Loss on properties sold -- (193)
Fees and other 239 218
--- ---
Total other income 1,805 1,734
----- -----
Other expense:
Salaries and employee benefits 2,803 1,961
Occupancy 305 307
Data Processing 249 312
Furniture, fixtures, and equipment 254 189
Loan and real estate owned expense, net (68) 103
Professional services 191 239
Capital securities expense 398 --
Other 1,087 744
----- ---
Total other expense 5,219 3,855
----- -----
Income before income taxes 1,575 1,821
Income tax expense 579 671
--- ---
Net income $ 996 $1,150
===== ======
Net income per common share $.24 $.29
==== ====
Net income per common share, assuming dilution .22 .27
=== ===
Dividends per share $.03 $ .02
==== =====
Average common shares outstanding 4,136,876 4,011,462
Average common shares outstanding, assuming dilution 4,600,063 4,287,212
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
PROGRESS FINANCIAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
For the Three Months
Ended March 31,
1998 1997
(Dollars in thousands)
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 996 $1,150
Add (deduct) items not affecting cash flows from operating activities:
Depreciation and amortization 223 232
Provision for possible loan and lease losses 202 193
Deferred income tax expense 97 592
Gain from mortgage banking activities -- (955)
Gain from sales of securities available for sale (215) (34)
Loss on properties sold -- 193
Amortization (accretion) of deferred loan and lease fees and expenses 154 (203)
Amortization of premiums/discounts on securities 254 198
Sales of loans held for sale -- 72
Increase in accrued interest receivable (254) (125)
(Increase) decrease in other assets (2,047) 2,627
Increase in other liabilities 1,464 493
Increase in accrued interest payable 792 156
--- ---
Net cash flows provided by operating activities $1,666 $4,589
------ ------
</TABLE>
(continued)
See Notes to Consolidated Financial Statements.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31
1998 1997
---- ----
(Dollars in thousands)
(unaudited)
<S> <C> <C>
Cash flows from investing activities:
Capital expenditures $ (527) $ (168)
Purchases of mortgage-backed securities available for sale (38,223) (5,043)
Purchase of investment securities available for sale (500) --
Purchase of investment securities held to maturity ( 3,649) --
Repayments on mortgage-backed securities held to maturity 3,605 1,632
Repayments on mortgage-backed securities available for sale 3,627 1,659
Sales of mortgage-backed securities available for sale 21,043 3,039
Sale of investment securities available for sale 2,654 --
Maturities of investments held to maturity -- 220
Proceeds from sales of real estate owned 80 1,897
Net increase in loans (3,625) (22,168)
------ -------
Net cash flows used in investing activities $(15,515) $(18,932)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in demand, NOW and savings deposits (2,128) 10
Net increase in time deposits 4,947 3,684
Net increase in advances from the FHLB 12,450 10,000
Net increase (decrease) in advance payments by borrowers (1,567) 188
Net increase (decrease) in other borrowings (8,840) 1,720
Dividends paid (124) (76)
Net proceeds from issuance of common stock 411 26
Net proceeds from exercise of stock option 205 25
--- --
Net cash flows provided by financing activities 5,354 15,577
----- ------
Net increase (decrease) in cash and cash equivalents (8,495) 1,234
Cash and cash equivalents:
Beginning of year 19,386 11,131
------ ------
End of period $10,891 $ 12,365
======= ========
Supplemental disclosures:
Non-monetary transfer:
Net conversion of loans receivable to real estate owned $ -- $ 3,782
===== ========
Cash payments for:
Income taxes
$ 150 $ 57
======= ========
Interest
$ 3,949 $ 4,061
======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
PROGRESS FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Basis of Presentation
In the opinion of management, the financial information, which is unaudited,
reflects all adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial information as of March 31,
1998 and December 31, 1997 and for the three months ended March 31, 1998 and
1997 in conformity with generally accepted accounting principles. These
financial statements should be read in conjunction with Progress Financial
Corporation's (the "Company") 1997 Annual Report and Form 10-K. Earnings per
share have been adjusted to reflect all stock dividends and prior period amounts
have been reclassified when necessary to conform with current period
classification. The Company's principal subsidiaries are Progress Bank (the
"Bank"), Progress Realty Advisors, Inc., Progress Capital, Inc., Procall
Teleservices, Inc., and Progress Capital Management, Inc. All significant
intercompany transactions have been eliminated.
(2) Acquisitions
On January 14, 1998, the Company acquired PAM Holding Corporation and its
subsidiaries, PAM Financial and PAM Investment Company, which had unaudited
assets and stockholders' equity of $15.5 million and $.4 million respectively,
at December 31, 1997. The transaction was accounted for under the pooling of
interests method of accounting during 1998. The Company issued 61,835 shares of
common stock for all of PAM Holding Corporation's common shares outstanding. The
prior period financial information has been restated to include PAM Holding
Corporation and its subsidiaries. The acquisition did not have a material impact
on the financial statements.
(3) New Developments
The Company issued 750,000 shares of common stock in a secondary offering
and filed a Registration Statement on Form S-2 with the Securities and Exchange
Commission dated May 6, 1998, in connection therewith.
During the first quarter of 1998, the Company formed Progress Development
Corporation which generates fee income from the development of assisted living
communities.
(4) Capital Securities
During the quarter ended June 30, 1997, the Company issued $15.0 million of
10.5% capital securities due June 1, 2027 (the "Capital Securities"). The
Capital Securities were issued by the Company's subsidiary, Progress Capital
Trust I, a statutory business trust created under the laws of Delaware. The
Company is the owner of all of the common securities of the Trust (the "Common
Securities"). In June 1997, the Trust issued $15.0 million of 10.5% Capital
Securities (and together with the Common Securities, the "Trust Securities"),
the proceeds from which were used by the Trust, along with the Company's
$464,000 capital contribution for the Common Securities, to acquire $15.0
million aggregate principal amount of the Company's 10.5% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 (the "Debentures"), which
constitute the sole assets of the Trust. The Company has, through the
Declaration of Trust establishing the Trust, Common Securities and Capital
Securities Guarantee Agreements, the Debentures and a related Indenture, taken
together, fully irrevocably and unconditionally guaranteed all of the Trust's
obligations under the Trust Securities. The Company contributed approximately
$6.0 million of the net proceeds to Progress Bank, to increase its regulatory
capital ratios and support the growth of the expanded lending operations. Net
proceeds retained by the Company will be used for general purposes, including
investments in other subsidiaries and potential future acquisitions.
<PAGE>
PROGRESS FINANCIAL CORPORATION
(5) Sale of Mortgage Servicing Portfolio
In March 1997, the Company sold its FNMA/FHLMC mortgage servicing portfolio of
approximately $347.4 million. The transaction resulted in a gain of $978,000.
The impact on earnings of reduced servicing fee income and interest earned on
investable balances will be offset by lower compensation and administrative
costs and the earnings on the cash received in the sale.
(6) Other
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 specifies the computation,
presentation, and disclosure requirements for earnings per share. The statement
is effective for the Company for interim and annual periods ending after
December 15,1997. SFAS 128 requires restatement of all prior-period per share
data that is presented on a comparative basis. All prior period per share
amounts have been presented in accordance with the new standard.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (unaudited)
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's Consolidated
Financial Statements and accompanying notes. Certain reclassifications have been
made to prior period data throughout the following discussion and analysis for
comparability with 1997 data.
SUMMARY
The Company recorded net income of $ 996,000 or diluted earnings per share of
$.22 for the three months ended March 31, 1998, in comparison with net income of
$1.2 million or $.27 per share for the three months ended March 31, 1997. Return
on average stockholders' equity was 15.53% and return on average assets was .83%
for the three months ended March 31, 1998 compared to 22.22% and 1.14%,
respectively, for the three months ended March 31, 1997.
Net interest income was $5.2 million and $4.1 million for the three months ended
March 31, 1998 and 1997, respectively. Operating results for the three months
ended March 31, 1998 and 1997 included $202,000 and $193,000, respectively, in
provision for possible loan and lease losses. Other income for the three months
ended March 31, 1998 and March 31, 1997 included service charges on deposits of
$367,000 and $360,000, respectively. Loan brokerage and advisory fees were
$445,000 as compared to $30,000 for the same period in 1997. Gain on sale of
securities was $215,000 and $34,000 for the same period in 1997. Other expenses
totaled $5.2 million for the three months ended March 31, 1998 in comparison
with $3.8 million for the same period in 1997. The increase of $1.4 million is
primarily due to increased salaries and employee benefits relating to employees
of acquired companies and new staffing, and other operating expense (including
expense on capital securities of $398,000).
Total assets decreased to $484.8 million at March 31, 1998 from $508.9 million
at December 31, 1997. Loan and leases increased $3.5 million. The net interest
margin increased to 4.66% from 4.43% at March 31, 1997.
The Company's equity increased to $26.8 million from $25.5 million at December
31, 1997. The increase primarily relates to net income which was partially
offset by the quarterly dividend of $.03 per share.
RESULTS OF OPERATIONS
Net Interest Income
For the three months ended March 31, 1998 net interest income amounted to $5.2
million in comparison with $4.1 million for the same period in 1997. Net
interest income for the three months ended March 31, 1998 was positively
impacted by a $72.6 million increase in average interest-earning assets, while
average interest-bearing liabilities increased $48.7 million. The interest rate
spread increased 5 basis points in the first quarter of 1998 compared to the
same period in 1997, primarily due to a 7 basis point decrease in the average
rate on interest-bearing liabilities and a 2 basis point decrease in the average
yield on interest-earning assets.
<PAGE>
The following table sets forth, for the periods indicated, information regarding
(I) the total dollar amount of interest income on average interest-earning
assets and the resultant average yield; (ii) the total dollar amount of interest
expense on average interest-bearing liabilities and the resultant average cost;
(iii) net interest income; (iv) interest rate spread; and (v) net interest
margin. Information is based on average daily balances during the indicated
periods. For the purposes of this table, non-accrual loans have been included in
the appropriate average balance category.
<TABLE>
<CAPTION>
For The Three Months Ended March 31,
1998 1997
---- ----
(Dollars in Thousands)
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Investment securities and other interest-earning asssets $ 13,286 $ 164 5.01% $9,187 135 5.96%
Mortgage-backed securities 90,518 1,475 6.61 89,743 1,546 6.99
Single family residential loans 56,744 1,091 7.80 64,369 1,244 7.84
Commercial real estate loans 113,784 2,519 8.98 93,560 2,132 9.24
Construction loans 25,596 682 10.81 21,570 600 11.28
Commercial business loans 68,313 1,695 10.06 34,026 794 9.46
Lease financing 57,698 1,770 12.44 42,789 1,417 13.43
Consumer loans 25,535 536 8.51 23,669 484 8.29
------ --- ---- ------ --- ----
Total interest-earning assets 451,474 9,932 8.92% 378,913 8,352 8.94%
------- ----- ---- ------- ----- ----
Non-interest-earning assets 32,377 29,420
------ ------
Total assets $483,851 $408,333
-------- --------
Interest-bearing liabilities:
Interest-bearing deposits $38,750 218 2.29% $30,855 161 2.12%
NOW and SuperNOW 32,553 245 3.05 38,661 317 3.33
Passbook and statement savings 31,317 211 2.73 29,364 198 2.73
Time deposits 195,151 2,676 5.56 171,919 2,283 5.39
------- ----- ---- ------- ----- ----
Total interest-bearing deposits 297,591 3,350 4.57 270,799 2,959 4.43
Advances from the Federal Home Loan Bank 47,942 682 5.77 24,736 407 6.67
Other borrowings 47,116 709 6.10 48,433 851 7.13
Total interest-bearing liabilities 392,649 4,741 4.90% 343,968 4,217 4.97%
Non-interest bearing liabilities 50,198 43,377
Total liabilities 442,847 387,345
Capital securities 15,000 ---
Stockholder's Equity 26,004 20,988
Total liabilities and stockholders' equity $483,851 $408,333
Net interest income: interest rate spread(2) $5,191 4.02% $4,135 3.97%
Net interest margin(3) 4.66% 4.43%
Average interest-earning assets to average interet-bearing
liabilities 114.98% 110.61%
</TABLE>
(1) Includes investment and mortgage-backed securities classified as available
for sale. Yield information does not give effect to changes in fair value that
are reflected in stockholders' equity. (2) Interest rate spread represents the
difference between the weighted average yield on interest-earning assets, and
the weighted average cost of interest-bearing liabilities. (3) Net interest
margin represents net interest income divided by average interest-earning
assets.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Total interest income amounted to $9.9 million for the three months ended March
31, 1998, a $1.6 million or 18.9% increase when compared to the same period in
1997. This increase was due to a $72.6 million increase in earning assets, which
was primarily the result of growth in loans. Income on commercial business loans
and commercial real estate loans increased $901,000 and $387,000, respectively,
due to commercial business loans and commercial real estate loans increasing by
$34.3 million and $20.2 million, respectively. These increases were partially
offset by a decrease of $7.6 million in single-family residential loans which
resulted in a $153,000 decrease in related income.
Total interest expense amounted to $4.7 million for the three months ended March
31, 1998, a $524,000 or 12.4% increase in comparison to the same period in 1997.
Interest expense on deposits increased $391,000 as the average balance on
deposits increased $26.8 million. Interest expense on advances from the Federal
Home Loan Bank increased $275,000, mainly due to $23.2 million increase in
average advances from the Federal Home Loan Bank. This increase was due to
additional borrowings necessary to fund the increase in interest-earning assets.
Other borrowings primarily consist of securities sold under agreements to
repurchase and subordinated debt.
Provision for Possible Loan and Lease Losses
The Company's provision for possible loan and lease losses represents the charge
against earnings that is required to fund the allowance for possible loan and
lease losses. The level of the allowance for possible loan and lease losses is
determined by inherent risks within the Company's loan and lease portfolio.
Management's periodic evaluation is based upon an examination of the portfolio,
past loss experience, current economic conditions, the results of the most
recent regulatory examinations and other relevant factors. See "Non-Performing
Assets."
During the three months ended March 31, 1998, the Company recorded a $202,000
provision compared with $193,000 for the comparable period in 1997, and had net
recoveries of $55,000 during the three months ended March 31, 1998 in comparison
with $45,000 in net charge-offs during the comparable period in 1997. At March
31, 1998, the allowance for loan and lease losses amounted to $4.1 million or
1.19% of total loans and leases and 215.1% of total non-performing loans. See
"Non-Performing Assets - Allowance for Possible Loan and Lease Losses."
The Company's allowance for possible loan and lease losses increased by
$204,000, from March 31, 1997. The provision for possible loan and lease losses
of $202,000 for the three months ended March 31, 1998 was considered necessary
by management to maintain the allowance for possible loan and lease losses at an
adequate level. The ratio of delinquent loans to the total loan portfolio
increased to 4.2% at March 31, 1998 versus 1.8% at March 31, 1997.
Although management utilizes its best judgement in providing for possible
losses, there can be no assurance that the Company will not have to increase its
provision for possible loan and lease losses in the future as a result of
adverse market conditions for loans in the Company's primary market area, future
increases in non-performing loans and leases or for other reasons. Any such
increase could adversely affect the Company's results of operations. In
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Company's allowance for possible loan and lease
losses and the carrying value of its other non-performing assets. Such agencies
may require the Company to recognize additions to its allowance for possible
losses on loans and leases and allowance for possible losses on REO based on
their judgement about information available to them at the time of their
examination.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Other Income
The following table details other income for the periods indicated.
For The Three Months
Ended March 31,
1998 1997
(Dollars in Thousands)
(unaudited)
Other income:
Service charges on deposits $367 $360
Leasing financing fees 365 307
Teleservices fee income 174 ---
Loan brokerage and advisory fees 445 30
Gain on sale of mortgage servicing
rights --- 978
Gain from sales of securities 215 34
Loss on properties sold --- (193)
Fees and other 239 218
Total other income $1,805 $1,734
Total other income amounted to $1.8 million for the three months ended March 31,
1998, an increase of $71,000 compared with the $1.7 million in other income for
the three months ended March 31, 1997. Other income for the three months ended
March 31, 1998 compared to the same period in 1997 primarily relates to loan
brokerage and advisory fees generated by the Company's commercial mortgage
banking subsidiary increased by $415,000 over first quarter 1997. Gain on
securities sales increased by $181,000 over 1997. The prior year included a gain
of $978,000 from the sale of mortgage servicing rights.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Other Expense
The following table details other expense for the periods indicated.
For The Three Months
Ended March 31,
1998 1997
(Dollars in Thousands)
(unaudited)
Other expense:
Salaries and employee benefits $2,803 $1,961
Occupancy 305 307
Data processing 249 312
Furniture, fixtures and equipment 254 189
Loan and real estate owned expense, net (68) 103
Professional services 191 239
Capital securities expense 398 --
Other 1,087 744
Total other expense $5,219 $3,855
Total other expense amounted to $5.2 million for the three months ended March
31, 1998. An increase of $1.4 million from the $3.8 million recognized during
the comparable 1997 period, was partially due to increases in salaries and
employee benefits of $842,000 relating to additional employees of companies
acquired and new staffing requirements within the bank. Capital securities
expense increased by $398,000 over 1997.
Income Tax Expense
The Company recorded income tax expense of $579,000 for the three months ended
March 31, 1998. For the three months ended March 31, 1997 the Company recorded
an income tax expense of $671,000.
<PAGE>
PROGRESS FINANCIAL CORPORATION
FINANCIAL CONDITION
Liquidity and Funding
The Company must maintain sufficient liquidity to meet the funding needs of
current loan demand, savings deposit withdrawals and to pay operating expenses.
The Company generally has no significant source of income other than dividends
from the Bank and its other subsidiaries and any fees paid by the Bank and its
other subsidiaries to the Company. The Bank pays a monthly management fee to the
Company in order to compensate the Company for certain operating expenses. The
Bank is required under applicable federal regulations to maintain specified
levels of "liquid" investments in qualifying types of United States Treasury,
federal agency and other investments having Maturities of five years or less.
Regulations currently in effect require the Bank to maintain liquid assets of
not less than 4% of its net withdrawable accounts plus short-term borrowings, of
which short-term liquid assets must consist of not less than 1%. These levels
are changed from time to time by the Office of Thrift Supervision to reflect
economic conditions. The Bank's average liquidity ratio for the three months
ended March 31, 1998 was 4.81%. The Company monitors its liquidity in accordance
with guidelines established by the Company and applicable regulatory
requirements. The Company's need for liquidity is affected by loan demand and
net changes in retail deposit levels. The Company can minimize the cash required
during the times of heavy loan demand by modifying its credit policies or
reducing its marketing efforts. Liquidity demand resulted from net reductions in
retail deposits is usually caused by factors over which the Company has limited
control. The Company derives its liquidity from both its assets and liabilities.
Liquidity is derived from assets by receipt of interest and principal payments
and prepayments, by the ability to sell assets at market prices and by utilizing
unpledged assets as collateral for borrowings. Liquidity is derived from
liabilities by maintaining a variety of funding sources, including retail
deposits and advances from the Federal Home Loan Bank (the "FHLB") and other
borrowings. The Company's primary source of funds has historically consisted of
deposits, amortization and prepayments of outstanding loans, borrowings from the
FHLB and other sources and sales of investment securities, loans and
mortgage-backed securities. During the three months ended March 31, 1998, the
Company used its resources primarily to meet its ongoing commitments to fund
maturing savings certificates and deposit withdrawals, fund existing and
continuing loan commitments and maintain its liquidity. For the three months
ended March 31, 1998, cash was provided by operating and financing activities
and used in investing activities. Operating activities provided $1.7 million of
cash. Investing activities used $15.5 million in cash as the purchases of
mortgage-backed securities exceeded repayments and sales of such securities by
$10.0 million. In addition, financing activities provided $5.4 million in cash
primarily from net increases of $12.5 million in advances from the FHLB,
partially offset by a decrease in other borrowings of $8.8 million, and net
increases in time deposits of $4.9 million. At March 31, 1998, the Company had
$103.4 million in loan commitments to extend credit and $580,000 in letters of
credit outstanding. At March 31, 1998, FHLB advances that are scheduled to
mature through March 31, 1999 totaled $2.9 million. Other borrowings that are
scheduled to mature within one year of March 31, 1998 totaled $30.8 million.
Subordinated debentures of $3.0 million are due June 30, 2004 and are redeemable
after July 1, 1996. The capital securities are due June 1, 2027. At March 31,
1998, the total amount of time deposits that are scheduled to mature through
March 31, 1999 totaled $139.0 million. Management has focused considerable
attention on the retention of the Company's core deposit base, which has been
impacted by increased competition for deposit funds.
<PAGE>
PROGRESS FINANCIAL CORPORATION
The Company's deposits are obtained primarily from residents near the Bank's
eight full service offices in Montgomery County, one office in Delaware County,
one office in Chester County and one office in the Andorra section of
Philadelphia. The Bank has drive-up banking facilities at four of its offices
and has automated teller machines at all of its offices and at three additional
locations. The Company offers a wide variety of options to its customer base,
including consumer and commercial demand deposit accounts, negotiable order of
withdrawal accounts, money market accounts, passbook accounts, certificates of
deposit and retirement plans. Deposits increased $2.8 million during the three
months ended March 31, 1998 from $340.8 million at December 31, 1997 to $343.6
million at March 31, 1998. The ability of the Company to attract and maintain
deposits and the Company's cost of funds on these deposit accounts have been,
and will continue to be, significantly affected by economic and competitive
conditions. As a member of the FHLB, the Bank is required to own capital stock
in the FHLB and is authorized to apply for advances on the security of such
stock and certain of its home mortgages and other assets (principally securities
which are obligations of, or guaranteed by, the United States), provided certain
standards related to creditworthiness have been met. Advances are made pursuant
to several different credit programs. Each credit program has its own interest
rate and range of maturities. Depending on the program, limitations on the
amount of advances are based either on a fixed percentage of a bank's assets or
on the FHLB's assessment of the bank's creditworthiness. The FHLB credit
policies may change from time to time at its discretion. The following table
presents certain information regarding FHLB advances and other borrowings for
the periods indicated.
At or For the Three Months
Ended March 31,
1998 1997
(Dollars in thousands)
Average balance outstanding $95,058 $73,169
Maximum amount outstanding at any
month-end during the period 101,440 82,557
Weighted average interest rate during the period 5.93% 6.97%
Weighted average interest rate at end of the period 6.09% 6.85%
The Company continued to utilize advances from the FHLB as a source of funds to
meet loan demand during the three months ended March 31, 1998. FHLB advances
increased $12.5 million to $45.9 million at March 31, 1998 from $33.4 million at
December 31, 1997. Other borrowings consisting primarily of securities sold
under agreements to repurchase and subordinated debt were $42.0 million at March
31, 1998 and $50.8 million at December 31, 1997.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Capital Resources
The Bank is required pursuant to OTS regulations to have (I) tangible capital
equal to at least 1.5% of adjusted total assets, (ii) core capital equal to at
least 3.0% of adjusted total assets, and (iii) total risk-based capital equal to
at least 8.0% of risk-weighted assets.
At March 31, 1998, the Bank met all regulatory capital requirements. The
following is a reconciliation of the Bank's capital determined in accordance
with generally accepted accounting principles ("GAAP") to regulatory tangible,
core, and risk-based capital at March 31, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Tangible Core Risk-Based
Capital % Capital % Capital %
GAAP Capital $35,277 $35,277 $35,277
General valuation allowance ---- ---- 4,085
Unrealized loss on securities available (62) (62) (62)
for sale
Goodwill (3,015) (3,015) (3,015)
Total 32,200 6.80% 32,200 6.80% 36,285 10.63%
Minimum capital requirement 7,101 1.50 14,202 3.00 27,296 8.00
Regulatory capital-excess 25,099 5.30% 17,998 3.80% 8,989 2.63%
</TABLE>
The prompt corrective action regulations under the Federal Deposit Insurance
Corporation Improvement Act of 1991 defined specific capital categories based on
an institution's capital ratios. The capital categories, in declining order, are
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." Institutions categorized
as "undercapitalized" or worse are subject to certain restrictions, including
the requirement to file a capital plan with their primary Federal regulator,
prohibitions on the payment of dividends and management fees, restrictions on
executive compensation, and increased supervisory monitoring, among other
things. To be considered "well capitalized," an institution must generally have
a leverage ratio of at least 5%, a Tier 1 risk-based capital ratio of at least
6%, and a total risk-based capital ratio of at least 10%.
At March 31, 1998, the Bank's leverage ratio was 6.80%, Tier 1 risk-based ratio
was 9.44%, total risk-based ratio was 10.63%, and tangible equity ratio was
6.80%, based on leverage capital of $ 32.2 million, Tier 1 capital of $32.2
million, total risk-based capital of $36.3 million and tangible equity capital
of $32.2 million. As of March 31, 1998, the Bank was classified as "well
capitalized."
Cash and Due From Banks
Interest-bearing deposits in other banks totaled $2.6 million at March 31, 1998
in comparison with $7.7 million at December 31, 1997. At March 31, 1998, the
Company also had $8.2 million in cash and non-interest bearing deposits in other
banks compared with $11.7 million at December 31, 1997.
Investment Securities
The Company is required under current OTS regulations to maintain defined levels
of liquidity and utilizes certain investments that qualify as liquid assets. The
Company utilizes deposits with the FHLB, including bankers' acceptances, loans
to financial institutions whose deposits are insured by the FDIC, Federal funds
and United States government and agency obligations. Investments held to
maturity are carried at amortized cost. Investments classified as available for
sale are carried at fair value in accordance with SFAS 115. The Company also
invests in equity investments from time to time and held $2.3 million of such
securities on its books at March 31, 1998.
<PAGE>
PROGRESS FINANCIAL CORPORATION
The following table sets forth the amortized cost, gross unrealized losses,
estimated fair value and carrying value of the investment portfolio at the dates
indicated:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---- ----- ------ ----- -----
(Dollars in thousands)
At March 31, 1998
<S> <C> <C> <C> <C> <C>
Available for sale:
U.S. agency obligations $2,000 $ 2 $-- $2,002 $2,002
Equity investments 1,985 317 -- 2,302 2,302
----- --- ----- -----
Total available for sale 3,985 319 -- 4,304 4,304
===== === ===== =====
Held to maturity:
FHLB stock, pledged $2,993 $ -- $-- $2,993 $2,993
FHLB investment securities 4,707 42 9 4,740 4,707
----- -- - ----- -----
Total held maturity $7,700 $ 42 $ 9 $7,733 $7,700
====== ==== === ====== ======
At December 31, 1997
--------------------
Available for sale:
U.S.agency obligations $3,000 $ 1 $ -- $3,001 $3,001
Equity Investments 2,924 470 -- 3,394 3,394
----- --- ----- -----
Total available for sale $5,924 $471 $ -- $6,395 $6,395
====== ==== == ====== ======
Held to maturity
FHLB stock pledged $1,728 $ -- $ -- $1,728 $1,728
FHLB investment securities 2,323 19 -- 2,342 2,323
----- -- ----- -----
Total held to maturity $4,051 $ 19 -- 4,070 4,051
====== ==== ===== =====
</TABLE>
The amortized cost and estimated fair value of investment securiteis by
contractual maturity at March 31, 1998 are as follows:
<TABLE>
<CAPTION>
Available for sale Held to maturity
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(Dolars in thousands)
<S> <C> <C> <C> <C>
Due after one year through five years $2,000 $2,002 $ -- $ --
Due after five years through ten years -- -- -- --
Due after ten years -- -- 4,707 4,740
No stated maturity 1,985 2,302 2,993 2,993
----- ----- ----- -----
Total investment securities $3,985 $4,304 $7,700 $7,733
====== ====== ====== ======
</TABLE>
<PAGE>
Mortgage-Backed Securities
The following tables detail the cost, gross unrealized gains and losses,
estimated fair value and carrying value of mortgage-backed securities by
classification at the dates indicated.
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---- ----- ------ ----- -----
(Dollars in thousands)
At March 31, 1998
<S> <C> <C> <C> <C> <C>
Held to maturity: $18,037 $ -- $ 295 $17,742 $18,037
GNMA 14,491 13 54 14,450 14,491
FHLMC 13,108 45 95 13,058 13,108
------ -- -- ------ ------
Total held to maturity $45,636 $ 58 444 45,250 45,636
======= ==== === ====== ======
Available for sale:
GNMA $41,920 $128 $ 71 $41,977 $41,977
FNMA 831 7 3 835 835
FHLMC 1,216 18 -- 1,234 1,234
Non-agency pass through certificate 2,426 10 -- 2,436 2,436
----- -- ----- -----
Total available for sale $46,393 $163 $ 74 $46,482 $46,482
======= ==== ===== ======= =======
At December 31, 1997
Held to maturity:
GNMA $19,509 $ -- $ 262 $19,247 $19,509
FNMA 15,900 14 42 15,872 15,900
FHLMC 14,012 75 112 13,975 14,012
------ -- --- ------ ------
Total held to maturity $49,421 $ 89 $ 416 $49,094 $49,421
======= ==== ===== ======= =======
Available for sale:
GNMA $39,553 $234 $ 15 $39,772 $39,772
FNMA 914 2 12 904 904
FHLMC 1,336 8 29 1,315 1,315
Non-agency pass through cerficate 2,443 84 -- 2,527 2,527
----- -- ----- -----
Total available for sale $44,246 $328 $ 56 $44,518 $44,518
======= ==== ==== ======= =======
</TABLE>
Mortgage-backed securities increase the credit quality of the Company's assets
by virtue of the guarantees that back them, are more liquid than individual
mortgage loans and may be used to collateralize borrowings or other obligations
of the Company. The mortgage-backed securities portfolio contains no speculative
derivative securities at March 31, 1998. In addition, the Company has classified
a portion of its mortgage-backed securities portfolio as available for sale and
has sold certain securities from this portfolio in accordance with the Company's
asset/ liability strategy or in response to changes in interest rates, changes
in prepayment rates, the need to increase the Company's regulatory capital or
similar factors. Mortgage-backed securities classified as held to maturity are
carried at amortized cost and are adjusted for amortization of premiums and
accretion of discounts over the life of the related security pursuant to the
level yield method. Mortgage-backed securities that are held for an indefinite
period of time are classified as available for sale and are carried at fair
value pursuant to SFAS 115. Mortgage-backed securities are classified as
available for sale primarily based on the yield and duration of specific
investments. The fixed-rate mortgage-backed securities held by the Company
approximate the duration of the type of loan the Company originates and
therefore, such securities may be sold to allow for additional loan growth
and/or other asset/liability management strategies. Although the Company's
mortgage-backed securities portfolio may have a shorter average term to maturity
and greater liquidity than the Company's single-family residential real estate
loans, the Company is subject to reinvestment risk with respect to such
portfolio. Specifically, as the Company's mortgage-backed securities amortize or
prepay, the Company may not be able to reinvest the proceeds of such repayment
and prepayments at a comparable favorable rate, particularly if the
mortgage-backed securities were acquired in a higher interest rate environment.
In addition, mortgage-backed securities classified as available for sale are
carried at fair value, which could result in fluctuations in the Company's
stockholders' equity, due to changes in the fair value of such securities.
Accordingly, the Company's portfolio of mortgage-backed securities classified as
available for sale may result in increased volatility in the Company's
liquidity, operations and capital. The Company attempts to address such risks by
actively managing its portfolio in relation to changes in interest rates and the
Company's liquidity needs. Mortgage-backed securities pledged under agreements
to repurchase in connection with borrowings amounted to $41.4 million at March
31, 1998. Mortgage-backed securities pledged as collateral for public funds
amounted to $28.8 million at March 31, 1998.
Loans and Leases
The Company's netloan and lease portfolio, totaled $343.5 million at March 31,
1998 or 70.9% of its total assets, an increase of $3.2 million or .10% from the
$340.3 million outstanding at December 31, 1997. The following table depicts the
composition of the Company's loan and lease portfolio at the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
March 31, 1998 December 31, 1997
Amount Percent Amount Percent
Single family residential real estate $56,867 16.36 $56,565 16.44
Commercial real estate 116,529 33.52 109,938 31.94
Construction (net of loans in process of
$17,494 and $23,641, respectively) 25,322 7.28 26,695 7.76
Consumer loans 24,141 6.94 24,639 7.16
Credit card receivables 865 .25 918 .27
Commercial business 65,394 18.81 69,312 20.14
Lease financing 70,557 20.30 67,439 19.59
Unearned income (12,032) (3.46) (11,367) (3.30)
Total loans and leases 347,643 100.00% 344,139 100.00
Allowance for possible loan and lease losses (4,120) (3,863)
Net loans and leases 343,523 340,276
</TABLE>
<PAGE>
PROGRESS FINANCIAL CORPORATION
NON-PERFORMING ASSETS
General
Non-performing assets consist of non-accrual loans and REO. Total non-performing
assets amounted to $2.2 million at March 31, 1998, $2.6 million at December 31,
1997 and $5.7 million at March 31, 1997.
The accrual of interest on commercial and mortgage loans is generally
discontinued when loans become 90 days past due and when, in management's
judgement, it is determined that a reasonable doubt exists as to its
collectibility. The accrual of interest is also discontinued on residential and
consumer loans when such loans become 90 days past due, except for those loans
in the process of collection which are secured by real estate with a loan to
value less than 80% where the accrual of interest ceases at 180 days. Consumer
loans generally are charged-off when the loan becomes over 120 days delinquent,
unless secured by real estate and meeting the above-mentioned criteria. When a
loan is placed on non-accrual status, interest accruals cease and uncollected
accrued interest is reversed and charged against current income. Additional
interest income on such loans is recognized only when received. A loan remains
on non-accrual status until the factors which indicate doubtful collectibility
no longer exist, or the loan is liquidated, or when the loan is determined to be
uncollectible and is charged-off against the allowance for loan losses.
Real estate acquired in partial or full satisfaction of loans is recorded at the
lower of cost (recorded balance of the loan at foreclosure plus foreclosure
costs) or fair value through a charge to the allowance for possible loan and
lease losses and the lower of this new cost basis or fair value less estimated
costs to sell thereafter. Valuations are periodically performed by management,
and any subsequent decline in fair value is charged to operations. Costs
relating to the development and improvement of property are capitalized, when
carrying value does not exceed fair value. Gains on the sale of real estate are
recognized upon disposition of the property and losses are charged to operations
as incurred.
The following table details the Company's non-performing assets at the dates
indicated:
March 31, December 31, March 31,
1998 1997 1997
Loans and leases accounted for on
a non-accrual basis $1,915 $2,179 $1,694
REO, net of related reserves 300 381 4,035
Total non-performing assets $2,215 $2,560 $5,729
Non-performing loans and leases as a
percentage of total loans and leases 1.76% 1.46% 1.74%
Non-performing assets as a percentage
of total assets .46% .50% 1.38%
Accruring loans 90 or more days past due $4,118 $2,770 $3,272
Non-performing assets decreased $345,000 to $2.2 million at March 31, 1998 from
$2.6 million at December 31, 1997. This decrease is mainly due to a lower level
of non-accrual loans at March 31, 1998.
The $1.9 million of non-accrual loans at March 31, 1998 consists of $1.2 million
of loans secured by single family residential property, $174,000 of consumer
loans, $125,000 of commercial mortgages, and $415,000 of lease financing. The
$300,000 of REO at March 31, 1998 consists of one single-family property.
<PAGE>
PROGRESS FINANCIAL CORPORATION
Delinquencies
All loans and leases are reviewed on a regular basis and are placed on
non-accrual status when, in the opinion of management, the collection of
additional interest is deemed unlikely to warrant further accrual. See
"Non-Performing Assets-General."
The following table sets forth informationconcerning the principal balances and
percent of the total loan and lease portfolio represented by delinquent loans
and leases at the dates indicated:
March 31, December 31, March 31,
1998 1997 1997
Amount Percent Amount Percent Amount Percent
Delinquencies:
30 to 59 $7,479 2.18% $6,167 1.81% $3,624 1.27%
60 to 89 2,844 .83 1,971 .58 1,625 .57
90 or more days 4,118 1.20 2,770 .81 3,272 1.15
Total $14,441 4.21% $10,908 3.20% 8,521 2.99
<PAGE>
PROGRESS FINANCIAL CORPORATION
Allowance for Possible Loan and Lease Losses
The following table details the Company's allowance for possible loan and lease
losses for the periods indicated:
At or
For the Three Months
Ended March 31,
1998 1997
(Dollars in thousands)
Average loans and leases outstanding $347,670 $279,983
Balance beginning of period $3,863 $3,768
Charge-offs
Residential real estate --- 3
Commercial real estate --- 29
Consumer --- 6
Commercial --- 26
Leases 52 39
Total charge-offs 52 103
Recoveries
Residential real estate --- 4
Consumer 1 -
Commercial 6 37
Leases 100 17
Total recoveries 107 58
Net charge-offs (recoveries) (55) 45
Additions charged to operations 202 193
Balance at end of period 4,120 3,916
Ratio of net charge-offs (recoveries)
during the period to average loans
and leases outstanding during the
period (.02)% .02%
Ratio of allowance for possible loan
and lease losses to average loans
and leases outstanding during the
perios 68.3% 78.9%
<PAGE>
PROGRESS FINANCIAL CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in routine legal proceeding occurring in the ordinary
course of business which management, after reviewing the foregoing actions with
legal counsel, is of the opinion that the liability, if any, resulting from such
actions will not have a material effect on the financial condition or results of
operations of the Company.
Item 2. Changes in Securities
On March 16, 1998, the Company filed a Form S-3 with the Securities and Exchange
Commission to register 82,988 shares of common stock in connection with the PAM
Holding Corp. acquisition and the sale of securities to an individual.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 11 - Statement re: Computation of per share earnings
On January 15, 1998, the Company filed a current report on Form 8-K with the
Securities and Exchange Commission under Item 5 that it had completed its
acquisition of PAM Holding Corp. based in Bethlehem, Pennsylvania.
<PAGE>
PROGRESS FINANCIAL CORPORATION
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
(Registrant)
May 15, 1998
Date Frederick E. Schea,
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
PROGRESS FINANCIAL CORPORATION
Exhibit (11)
Computation of Earnings Per Share
For the Three Months
Ended March 31,
1998 1997
A. Net Income applicable to common stock $996,000 $1,150,000
Earnings Per Share
B. Average common shares outstanding 4,136,876 4,011,462
Earnings Per Share:
Net income (A/B) $.24 $.29
Average common shares outstanding 4,136,876 4,011,462
Dilutive average common shares outstanding
under options and warrants 713,178 616,408
Exercise prices $.95 to $.95 to
$16.5 10.83
Assumed proceeds on exercise $ 4,170,351 $3,008,695
Market value per share $ 16.682 $8.832
Less: Treasury stock purchases
with the assumed proceeds
from exercise of options
and warrants 249,991 340,658
C. Adjusted average common shares -
assuming dilution 4,600,063 4,287,212
Earnings Per Share Assuming Dilution:
Net Income (A/C) $.22 $.27
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000790183
<NAME> David Kiefer
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<CASH> 8,247
<INT-BEARING-DEPOSITS> 2,644
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 50,786
<INVESTMENTS-CARRYING> 53,336
<INVESTMENTS-MARKET> 52,983
<LOANS> 347,643
<ALLOWANCE> 4,120
<TOTAL-ASSETS> 484,809
<DEPOSITS> 343,580
<SHORT-TERM> 87,857
<LIABILITIES-OTHER> 11,619
<LONG-TERM> 0
0
0
<COMMON> 4,201
<OTHER-SE> 22,552
<TOTAL-LIABILITIES-AND-EQUITY> 484,809
<INTEREST-LOAN> 8,293
<INTEREST-INVEST> 1,616
<INTEREST-OTHER> 23
<INTEREST-TOTAL> 9,932
<INTEREST-DEPOSIT> 3,350
<INTEREST-EXPENSE> 4,741
<INTEREST-INCOME-NET> 5,191
<LOAN-LOSSES> 202
<SECURITIES-GAINS> 215
<EXPENSE-OTHER> 5,219
<INCOME-PRETAX> 1,575
<INCOME-PRE-EXTRAORDINARY> 1,575
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 996
<EPS-PRIMARY> .24
<EPS-DILUTED> .22
<YIELD-ACTUAL> 8.92
<LOANS-NON> 1,915
<LOANS-PAST> 4,118
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,863
<CHARGE-OFFS> 52
<RECOVERIES> 107
<ALLOWANCE-CLOSE> 4,120
<ALLOWANCE-DOMESTIC> 4,120
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,120
</TABLE>
