Exhibit 99(a)
99(a)
Press Release on Third Quarter 2000
earnings issued on October 18, 2000
<PAGE>
Exhibit 99(a)
NEWS RELEASE
Contact: Michael B. High, CFO/Executive Vice President
(610) 941-4804
Dorothy Jaworski, Director of Investor Relations
(484) 322-4822
For immediate release:
Progress Financial Corporation Announces Third Quarter Earnings of $1.8 Million
Blue Bell, PA, October 18, 2000 - Progress Financial Corporation (the
"Company" - Nasdaq: PFNC) today reported third quarter 2000 net income of $1.8
million, or diluted earnings per share of $.29, compared to net income of $2.3
million, or diluted earnings per share of $.37, for the third quarter of 1999.
Results for the third quarter of 1999 included $2.8 million of client warrant
income, compared to a loss of $103,000 from client warrant income during the
current quarter. Net income from continuing operations remained virtually
unchanged at $1.7 million, or diluted earnings per share of $.29, compared to
$1.8 million or diluted earnings per share of $.30 for same period of 1999.
Net income for the nine months ended September 30, 2000 totaled $5.9
million, or diluted earnings per share of $.97, compared to net income of $4.7
million, or diluted earnings per share of $.77, for the nine months ended
September 30, 1999.
Commenting on the third quarter results, W. Kirk Wycoff, President and
CEO, stated, "Despite some compression of our net interest margin, we are
pleased with the increase during the quarter in financial services fee income,
which grew 47% to $3.7 million from $2.5 million for the comparable quarter of
1999. I am especially pleased with the growth in fee income primarily due to
<PAGE>
a $526,000 increase in management fees generated by the Company's subsidiary
Progress Capital Management, Inc. which manages the mezzanine debt and venture
capital funds, a $343,000 increase in mutual fund annuity and insurance
commissions and $193,000 in consulting fees generated by the Company's
subsidiary KMR Management, Inc. which provides financial and operational
management consulting services for commercial clients."
Average earning assets for the third quarter of 2000 were $777.1
million compared to $637.2 million for the same period in 1999. The growth in
assets relates to higher loan and lease production funded by significant deposit
growth. Average loans and leases increased $76.7 million, or 17%, compared to
the same quarter of 1999. Consequently, tax-equivalent interest income for the
third quarter of 2000 increased $4.0 million, or 31%, over the same period in
1999. Net interest income increased $1.3 million, or 19.5%, compared to the
third quarter of 1999. The net interest margin was 4.18% compared to 4.24% for
the same period in 1999.
Loans and leases outstanding totaled $562.1 million at September 30,
2000 compared to $503.7 million at December 31, 1999. This increase was
primarily due to a $41.8 million increase in commercial business loans. The
Company reported non-performing assets of $7.9 million at September 30, 2000
compared to $5.8 million at December 31, 1999. The increase in non-performing
assets was primarily related to residential real estate development projects
amounting to $3.5 million, classified as other real estate owned, acquired by
the Company through deeds in lieu of foreclosure. The Company has recorded these
projects at management's estimate of net realizable value and expects to dispose
of these during the next two quarters. The Company's non-performing assets to
total assets ratio at September 30, 2000 was .90% compared to .75% at
December 31, 1999. The non-performing loans to assets ratio was .50%
at September 30, 2000 compared to .74% at December 31, 1999.
During the quarter ended September 30, 2000, the Company recorded a
$517,000 provision for loan and lease losses due to loans and lease growth and
the level of non-performing loans and leases. This resulted in a slight decrease
in the provision for loan and lease losses from the comparable period in 1999.
The ratio of the allowance for loan and lease losses to total loans and leases
was 1.16% at September 30, 2000 compared to 1.11% at September 30, 1999.
Non-interest income for the quarter ended September 30, 2000 amounted
to $4.2 million, compared to $5.7 million for the same period in 1999. During
the quarter, the Company recognized a $103,000 loss in client warrant income
primarily due to a decrease in the market value of warrants held to acquire
common stock compared to a gain of $2.8 million in the same period of 1999
primarily the result of the expiration of restrictions on the sale of warrants
to acquire the common stock. Fee income increased $1.2 million primarily due to
a $526,000 increase in management fees generated by the Company's subsidiary
Progress Capital Management, Inc., which manages the mezzanine debt and venture
capital funds, a $343,000 increase in mutual fund annuity and insurance
commissions, and $193,000 in consulting fees generated by the Company's
subsidiary KMR Management, Inc., which provides financial and operational
management consulting services for commercial clients.
Total non-interest expense was $9.2 million for the quarter ended
September 30, 2000 compared to $9.1 million for the quarter ended September 30,
1999. Excluding non-recurring expenses of $1.1 million in the third quarter of
1999, non-interest expense increased $1.2 million. This increase was primarily
due to increases in salaries and employee benefits of $512,000 as a result of
additional employees to staff three new bank branches, the acquisition of KMR
Management, Inc., the staffing of Progress Capital Management, Inc., and from
other new positions established within the Company. Occupancy and furniture,
fixtures and equipment expenses increased $303,000 mainly due to a new
operations center, bringing data processing in-house, and new branch openings.
Capital securities expense increased $138,000 due to the issuance of $6.0
million of 11.445% capital securities in July 2000. Total assets increased to
$878.3 million at September 30, 2000 from $768.9 million at December 31, 1999.
Total deposits increased to $589.6 million at September 30, 2000 from $521.4
million at December 31, 1999. Deposit growth of 13.1% was primarily the result
of new commercial business customer relationships and retail branch expansion.
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 seventeen full service offices. The Company also offers a
diversified array of financial services including equipment leasing through
Progress Leasing Company, with offices in Blue Bell, Pennsylvania and Timonium,
Maryland, and financial planning services and investments through Progress
Financial Resources, Inc., headquartered in Philadelphia, Pennsylvania; and
asset based lending through Progress Business Credit. In addition, the Company
also conducts commercial mortgage banking and brokerage services through
Progress Realty Advisors, Inc. with locations in Blue Bell, Pennsylvania;
Richmond and Chesapeake, Virginia; Woodbridge, New Jersey; and Raleigh, North
Carolina. The Company also receives fees for the construction and development of
assisted living communities through Progress Development Corporation; venture
capital activities managed by Progress Capital Management, Inc.; and financial
and operational management consulting services for commercial clients through
KMR Management, Inc. located in Willow Grove, Pennsylvania. The Company's common
stock is traded on the Nasdaq Stock Market, National Market under the Symbol
"PFNC".
FINANCIAL DATA ATTACHED
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Progress Financial Corporation
Consolidated Statements of Financial Condition
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
--------------- -------------
Assets: (Unaudited) (Audited)
Cash and due from banks:
<S> <C> <C>
Non-interest bearing $18,076 $15,648
Interest bearing 16,380 24,278
Trading securities -- 3,267
Investments and mortgage-backed securities
Available for sale at fair value (amortized cost: $208,461 and $147,529) 203,518 149,518
Held to maturity at amortized cost (fair value: $32,031 and $32,914) 35,382 34,309
Loans and leases, net (net of reserve: $6,513 and $5,927) 555,630 497,738
Premises and equipment 17,986 15,600
Other assets 31,322 27,395
Net assets of discontinued operations --- 1,188
--------- --------
Total assets $878,294 $768,941
========= ========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $589,645 $521,439
Short-term borrowings 93,689 50,767
Other liabilities 27,912 22,475
Long-term Debt:
Federal Home Loan Bank advances 85,500 85,000
Other debt 10,000 24,000
Subordinated Debt 3,000 3,000
-------- --------
Total liabilities 809,746 706,681
-------- --------
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trust holding solely junior subordinated debentures of the 20,225 14,451
Corporation
Commitments and contingencies -- --
Shareholders' equity:
Serial preferred - 1,000,000 shares authorized but unissued -- --
Junior participating preferred stock - $.01 par value - 1,010 shares -- --
authorized but unissued
Common stock, $1 par value; 12,000,000 shares authorized; 5,822,000 and
5,680,000 shares issued; including treasury shares of 48,000 and 152,000;
and unallocated shares held by the Employee Stock Ownership Plan of 0 and 5,822 5,680
14,000
Other shareholders' equity, net 45,831 40,895
Net accumulated other comprehensive income (loss) (3,330) 1,234
--------- --------
Total shareholders' equity 48,323 47,809
--------- --------
Total liabilities, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding and shareholders' equity $878,294 $768,941
========= ========
</TABLE>
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Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-----------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income:
<S> <C> <C> <C> <C>
Loans and leases, including fees $13,037 $10,464 $37,488 $30,092
Mortgage-backed securities 2,810 1,859 7,336 5,953
Investment securities 1,015 560 2,994 1,508
Other 308 285 894 645
------- ------- ------- -------
Total interest income 17,170 13,168 48,712 38,198
Interest expense:
Deposits 6,318 4,303 17,159 11,951
Short-term borrowings 1,165 527 3,135 1,767
Long-term borrowings 1,608 1,576 4,812 4,904
------- ------- ------- -------
Total interest expense 9,091 6,406 25,106 18,622
Net interest income 8,079 6,762 23,606 19,576
Provision for loan and lease losses 517 658 2,750 2,323
------- ------- ------- -------
Net interest income after provision for loan and 7,562 6,104 20,856 17,253
lease losses
Non-interest income:
Service charges on deposits 493 572 1,722 1,513
Lease financing fees 372 256 1,036 925
Mutual fund, annuity and insurance commissions 1,056 713 2,895 1,767
Loan brokerage and advisory fees 591 522 1,653 1,697
Gain (loss) from sale of securities 373 (66) 263 (222)
Client warrant income (loss) (103) 2,775 3,482 3,257
Equity (loss) in unconsolidated entities 8 511 (1,989) 615
Fees and other 1,403 456 3,935 1,966
------- ------- ------- -------
Total noninterest income 4,193 5,739 12,997 11,518
------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits 4,903 4,391 14,774 11,550
Occupancy 576 440 1,684 1,047
Data processing 239 338 875 818
Furniture, fixtures and equipment 556 389 1,584 1,042
Professional services 500 539 1,639 1,302
Capital securities expense 537 399 1,335 1,196
Other 1,866 2,620 5,622 5,634
------- ------- ------- -------
Total non-interest expense 9,177 9,116 27,513 22,589
------- ------- ------- -------
Income from continuing operations before income taxes 2,578 2,727 6,340 6,182
Income tax expense 841 905 2,109 2,107
------- ------- ------- -------
Income from continuing operations 1,737 1,822 4,231 4,075
Gain on sale of discontinued operations, net of tax 6 --- 1,519 ---
Income from discontinued operations, net of tax 9 435 123 635
------- ------- ------- -------
Net income $1,752 $ 2,257 $ 5,873 $ 4,710
======= ======= ======= =======
Basic income from continuing operations per common share $.30 $.31 $.73 $.71
==== ==== ==== ====
Diluted income from continuing operations per common share $.29 $.30 $.70 $.67
==== ==== ==== ====
Basic net income per common share $.30 $.39 $1.01 $.82
==== ==== ===== ====
Diluted net income per common share $.29 $.37 $.97 $.77
==== ==== ==== ====
Dividends per common share $.06 $.04 $.15 $.12
==== ==== ==== ====
Basic average common shares outstanding 5,801,653 5,905,692 5,814,405 5,753,309
========= ========= ========= =========
Diluted average common shares outstanding 6,018,424 6,148,394 6,027,094 6,105,728
========= ========= ========= =========
</TABLE>
Progress Financial Corporation
Supplemental Data
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
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(Dollars in Thousands, except per share data)
Profitability Measures:
<S> <C> <C> <C> <C>
Return on average assets .83% 1.31% .97% .94%
Return on average equity 14.33 20.73 16.48 14.80
Net interest spread (FTE) 3.52 3.63 3.58 3.62
Net interest margin (FTE) 4.18 4.24 4.24 4.22
Efficiency ratio 69.86 60.70 70.33 64.97
Diluted net income per common share (1) $ .29 $ .37 $ .97 $ .77
Selected Loan Data:
Non-performing assets $7,884 $3,760 $7,884 $3,760
Ratio of non-performing assets to total assets .90% .53% .90% .53%
Ratio of allowance for loan and lease losses
to total loan and leases receivable 1.16 1.11 1.16 1.11
Ratio of allowance for loan and lease losses
to non-performing loan and leases receivable 149.79 137.87 149.79 137.87
Loan delinquency ratio .78 3.56 .78 3.56
Ratio of loans and leases to deposits 95.34 94.96 95.34 94.96
Selected Equity Data:
Book value per share (1) $8.37 $7.18 $8.37 $7.18
Tangible book value per share (1) 7.44 6.32 7.44 6.32
Dividends per common share (1) .06 .04 .15 .12
Average equity to average assets 5.79% 6.30% 5.86% 6.37%
Tier 1 risk-based capital ratio (Bank) 9.23 9.10 9.23 9.10
Total risk-based capital ratio (Bank) 10.32 10.15 10.32 10.15
Tier 1 leverage ratio (Bank) 6.42 6.44 6.42 6.44
Selected Average Balances:
Loans, gross $539,727 $463,056 $532,904 $446,458
Earning assets 777,115 637,235 752,626 624,540
Total assets 840,487 685,773 812,830 667,747
Deposits 567,608 460,227 547,161 427,595
Equity 48,649 43,190 47,614 42,540
(1) Per share amounts have been restated to reflect the 5% stock dividend
distributed to shareholders on August 31, 2000.
</TABLE>
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Progress Financial Corporation
Supplemental Balances
<TABLE>
<CAPTION>
Period-End Balances At : September 30, 2000 December 31, 1999 % Change
-----------------------------------------------------------------
Loans and Leases, Net:
<S> <C> <C> <C>
Commercial business $161,613 $119,807 34.9%
Commercial real estate 173,064 162,588 6.4
Construction, net of loans in process 54,508 58,813 (7.3)
Single family residential real estate 37,010 40,554 (8.7)
Consumer 38,659 34,918 10.7
Leases receivable 97,289 86,985 11.8
------------------------------------------------------------------
Total loans and leases 562,143 503,665 11.6
Allowance for loan and lease losses (6,513) (5,927) 9.9
------------------------------------------------------------------
Loans and leases, net $555,630 $497,738 11.6%
==================================================================
Deposits:
Non-interest-bearing demand deposits $ 77,558 $ 65,305 18.8%
NOW and SuperNow 91,046 80,086 13.7
Money Market 38,306 35,015 9.4
Passbook and Statement Savings 28,403 31,517 (9.9)
Time deposits 354,332 309,516 14.5
------------------------------------------------------------------
Total Deposits $589,645 $521,439 13.1%
==================================================================
</TABLE>
