8-K 1 eqtr4-earndivana.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 January 20, 2004 -------------------------------------------------------------------------------- (Date of earliest event reported) -------------------------------------------------------------------------------- Progress Financial Corporation -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-14815 23-2413363 -------------------------------------------------------------------------------- (State of other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identified No.) 4 Sentry Parkway, Suite 200, 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, ormer address and former fiscal year,if changed since last report) Item 5. Other Events and Regulation FD Disclosure ----------------------------------------- On January 20, 2004, Progress Financial Corporation released the cash dividend press release for the fourth quarter 2003. A copy of this press release is included as Exhibit 99.1 and is incorporated herein by reference. On January 20, 2004 Progress Financial Corporation announced the Shareholders approval of the merger with FleetBoston Financial Corporation. A copy of this press release is included as Exhibit 99.2 and is incorporated herein by reference. On January 20, 2004, Progress Financial Corporation distributed an earnings package to analysts, a copy of which is furnished as Exhibit 99.4 to this report. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ (a) Not applicable. (b) Not applicable. (c) The following exhibits are included with this Report: Exhibit No. Description ----------- ----------- 99.1 Dividend Press Release dated January 20, 2004 99.2 Approval of Merger Announcement dated January 20, 2004 99.3 Press Release reporting fourth quarter earnings dated January 20, 2004 99.4 Earnings Package distributed to Analysts dated January 20, 2004 Item 12. Results of Operations and Financial Condition --------------------------------------------- On January 20, 2004 Progress Financial Corporation reported fourth quarter net income of $2.4 million, or diluted earnings of $.33 per share. A copy of the press release is included as Exhibit 99.3 and is incorporated herein by reference. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROGRESS FINANCIAL CORPORATION Dated: January 20, 2004 By: /s/ Michael B. High ----------------------------------- Michael B. High Chief Operating Officer and Chief Financial Officer Exhibit 99.1 Press Release on Fourth Quarter Cash Dividend FOR IMMEDIATE RELEASE Contacts: January 20, 2004 Michael B. High, COO/CFO 610-941-4804 mhigh@progressbank.com Dorothy Jaworski, Director of Investor Relations 484-322-4822 djaworski@progressbank.com Progress Financial Corporation Announces Quarterly Cash Dividend Blue Bell, PA, January 20, 2004 - The Board of Directors of Progress Financial Corporation (the "Company" - Nasdaq: PFNC) declared its quarterly cash dividend on its common stock, according to W. Kirk Wycoff, Chairman, President and Chief Executive Officer. The Board approved the quarterly cash dividend of $.13 per share. The dividend will be paid on February 6, 2004 to shareholders of record on January 26, 2004. Progress Financial Corporation is a unitary thrift holding company headquartered in Blue Bell, Pennsylvania. The business of the Company consists primarily of the operation of Progress Bank, which serves businesses and consumers through twenty-one offices. The Company also offers financial planning services, life insurance, group employee benefits and investments through Progress Financial Resources, Inc., headquartered in Philadelphia, Pa. The Company's common stock is traded on The Nasdaq Stock Market under the Symbol "PFNC". #### Exhibit 99.2 Press Release on Shareholder Approval of Merger FOR IMMEDIATE RELEASE Contacts: January 20, 2004 Michael B. High, COO/CFO 610-941-4804 mhigh@progressbank.com Dorothy Jaworski, Director of Investor Relations 484-322-4822 djaworski@progressbank.com Shareholders of Progress Financial Corporation Approve Merger With FleetBoston Financial Corporation Blue Bell, PA, January 20, 2004 - Progress Financial Corporation (the "Company" - Nasdaq: PFNC) announced that its shareholders approved its merger agreement with FleetBoston Financial Corporation at a special meeting of shareholders held today. Under the merger agreement, the Company will merge with and into FleetBoston and each outstanding share of common stock of the Company will be converted into the right to receive the number of shares of common stock of FleetBoston determined by dividing $30.80 by the average closing trading price of FleetBoston common stock during a specified period preceding the merger, plus cash in lieu of any fractional share interest. The merger is expect to close on or about February 1, 2004, subject to the receipt of all required regulatory approvals. Progress Financial Corporation is a unitary thrift holding company headquartered in Blue Bell, Pennsylvania. The business of the Company consists primarily of the operation of Progress Bank, which serves businesses and consumers through twenty-one offices. The Company also offers financial planning services, life insurance, group employee benefits and investments through Progress Financial Resources, Inc., headquartered in Philadelphia, Pa. The Company's common stock is traded on The Nasdaq Stock Market under the Symbol "PFNC". #### Exhibit 99.3 Press Release on Fourth Quarter 2003 Earnings FOR IMMEDIATE RELEASE Contacts: January 20, 2004 Michael B. High, COO/CFO 610-941-4804 mhigh@progressbank.com Dorothy Jaworski, Director of Investor Relations 484-322-4822 djaworski@progressbank.com Progress Financial Corporation Announces 146% Increase in Fourth Quarter 2003 Earnings Per Share Blue Bell, PA, January 20, 2004 - Progress Financial Corporation (the "Company" - Nasdaq: PFNC), reported fourth quarter 2003 net income of $2.5 million, or diluted earnings per share of $.33, compared to net income of $1.0 million, or diluted earnings per share of $.14, for the fourth quarter of 2002. Net income for the year ended December 31, 2003 was $8.7 million, or diluted earnings per share of $1.19, compared to net income of $4.0 million, or diluted earnings per share of $.56, for the year ended December 31, 2002. Message to Shareholders from W. Kirk Wycoff, Chairman and CEO ------------------------------------------------------------- "It is with regret that I am communicating such stellar financial results for the final time, as later this quarter Progress will become part of FleetBoston Financial Corporation. I hope our shareholders recognize and appreciate the incredible effort put forth by our 248 employees in 2003 which resulted in more than doubling our income from 2002 of $4.0 million to $8.7 million. I want to personally thank each and every one of those employees for their commitment to our mission to be the best bank in the region. The significance of these final annual results should not be diminished due to our pending merger for two reasons. First, the ability to serve our community and our clients at a high level is what drives this financial performance and the extremely high level of client satisfaction we enjoy. Second, the Fleet shareholders (soon to include all of us) are the beneficiaries of all the benefits, and more, which they forecast from the Progress merger last August. This phenomenon that all to infrequently in corporate America today. On behalf of all the employees of Progress, thank you for your support, enthusiasm and confidence in us. It has been a pleasure working for you, our shareholders." Commenting on the fourth quarter results, W. Kirk Wycoff, President and CEO, stated, "The fourth quarter earnings for Progress Financial Corporation of $.33 and 2003 earnings of $1.19 per share exceeded our expectations. Also, in the fourth quarter we achieved two key performance metrics; an ROE of 15.18% and an efficiency ratio of 59.56%, that have been long term targets for our Board and Management team." Focusing on the financial results, tax-equivalent net interest income for the quarter ended December 31, 2003 increased $2.0 million, or 28%, compared to the fourth quarter of 2002. The increase in tax-equivalent interest income in the current quarter was primarily due to growth in consumer and commercial real estate loans and additional investments in tax-exempt municipal securities. Interest expense decreased in the current quarter primarily due to lower interest rates on time deposits. The tax-equivalent net interest margin for the fourth quarter of 2003 was 3.17% compared to 3.09% for the fourth quarter of 2002 and 3.09% for the third quarter of 2003. Tax-equivalent net interest income for the twelve months ended December 31, 2003 increased $5.7 million, or 21%, compared to the same period in 2002. The increase in tax-equivalent interest income during the year ended December 31, 2003 was primarily due to growth in commercial real estate loans and additional investments in mortgage-backed and tax-exempt municipal securities. Interest expense decreased during the twelve months ended December 31, 2003 primarily due to lower interest rates on time deposits. The tax-equivalent net interest margin for the twelve months ended December 31, 2003 was 3.10% compared to 3.23% for the same period in 2002. The provision for loan and lease losses was $500,000 for the quarter ended December 31, 2003, compared to $875,000 for the same period in 2002. The provision for loan and lease losses was $2.3 million for the twelve months ended December 31, 2003, compared to $3.8 million for the same period in 2002. The higher provision during 2002 was primarily due to charge-offs in the TechBanc portfolio (which was subsequently sold) and the reserve additions to address credit and economic concerns which have now been reduced as a result of the reduction in the Company's classified assets. Non-interest income for the quarter ended December 31, 2003 was $3.0 million, a decrease of 7% compared to $3.2 million for the same period in 2002. Fee income for the three months ended December 31, 2003 decreased $613,000 from the comparable quarter in 2002 primarily due to a reduction in loan brokerage and advisory fees and consulting fees of $170,000 from the Company's subsidiary KMR Management, Inc. ("KMR"), during the fourth quarter of 2002 compared to none in the current quarter since the business was exited during the third quarter of 2003. Gain on sale of securities was $573,000 for the three months ended December 31, 2003, an increase of $354,000 compared to $219,000 for the same period in 2002. Non-interest income for the twelve months ended December 31, 2003 was $12.8 million, a decrease of 17% compared to $15.3 million for the same period in 2002. This decrease was the result of a variety of factors, including, among others, a decline in client warrant income. Fee income for the twelve months ended December 31, 2003 decreased $936,000 primarily due to a decrease in mutual fund, annuity and insurance commissions from the Company's subsidiary Progress Financial Resources, Inc. ("PFR") and a reduction in consulting fees from KMR, partially offset by an increase in loan brokerage and advisory fees. During 2003, a loss on extinguishment of debt of $559,000 was recognized compared to a loss of $55,000 in 2002. Gain on sale of real estate was $1.2 million during 2003 compared to $1.6 million in 2002. The twelve months ended December 31, 2003 included client warrant income of $268,000 compared to $1.9 million during the same period in 2002. Gain on sale of securities was $1.7 million for the twelve months ended December 31, 2003, an increase of $1.0 million compared to $655,000 for the same period in 2002. Total non-interest expense was $7.5 million for the quarter ended December 31, 2003, a decrease of 3% compared to $7.7 million for the same period in 2002. Professional services expenses decreased $289,000 primarily due to recoveries of legal expenses during the fourth quarter of 2003 and legal expenses during the fourth quarter of 2002 related to collecting on loans and leases and for KMR. Other expenses decreased $272,000 primarily due to lower advertising expense during the fourth quarter of 2003 and expenses during the fourth quarter of 2002 for loan workouts and real estate owned. During the current quarter, the Company recognized non-recurring expenses amounting to $150,000 related to an anticipated settlement associated with leasing activities. Compensation and benefits expense increased $328,000 for the three months ended December 31, 2003 from the comparable period in 2002 primarily due to bonus expense related to increased earnings and additional Employee Stock Ownership Plan costs associated with the increase in the Company's stock price partially offset by reduced expenses for KMR. Total non-interest expense was $30.0 million for the twelve months ended December 31, 2003, a decrease of 7% compared to $32.2 million for same period in 2002. During the year, the Company recognized non-recurring expenses associated with the impairment of goodwill for KMR and leasing of $353,000 compared to $685,000 for the same period in 2002. As of December 31, 2003, the Company had no remaining goodwill for KMR. Other expenses decreased $1.3 million for the twelve months ended December 31, 2003 primarily due to recoveries of real estate owned expenses during 2003 and expenses during 2002 related to real estate owned, loan workouts, and write-downs of used asset inventory for Progress Leasing. Average earning assets for the fourth quarter of 2003 were $1.13 billion, an increase of $226.7 million or 25%, compared to $900.2 million for the fourth quarter of 2002. Average earning assets for the twelve months ended December 31, 2003 were $1.07 billion, an increase of $218.0 million or 26%, compared to $851.3 million for the same period in 2002. The increases in earning assets during the three and twelve months ended December 31, 2003 from the comparable periods in 2002 were primarily due to higher levels of loans and securities. Tax-equivalent interest income for the fourth quarter of 2003 increased $1.5 million, or 11%, over the same period in 2002 while interest expense decreased $507,000, or 8%, for the same period. Tax-equivalent interest income for the twelve months ended December 31, 2003 increased $3.8 million, or 7%, over the same period in 2002 while interest expense decreased $1.9 million, or 7%, for the same period. Loans and leases outstanding increased $98.6 million, or 21%, to $564.4 million at December 31, 2003 from $465.8 million at December 31, 2002. This increase was primarily due to growth in commercial real estate loans, construction loans and consumer loans. The Company reported non-performing assets of $2.4 million at December 31, 2003, compared with $5.4 million at December 31, 2002. The decrease was primarily due to the payment and partial charge-off of commercial business loans for one borrower during the fourth quarter of 2003. The Company reported net charge-offs of $1.9 million for the twelve month period ended December 31, 2003 as compared to $7.3 million of net charge-offs for the comparable period in 2002. As of December 31, 2003 and December 31, 2002, the Company had no real estate owned. The Company's non-performing assets to total assets ratio and non-performing loans to assets ratio were .21% at December 31, 2003 compared to .54% at December 31, 2002. The ratio of the allowance for loan and lease losses to total loans and leases was 1.22% at December 31, 2003 compared to 1.39% at December 31, 2002. Total deposits increased $74.9 million, or 11%, to $766.4 million at December 31, 2003 from $691.5 million at December 31, 2002. Total assets increased 15% to $1.17 billion at December 31, 2003 from $1.02 billion at December 31, 2002. At December 31, 2003, Progress Bank's Tier 1 leverage and total risk-based capital ratios were 7.64% and 14.27%, respectively, as compared to 7.82% and 15.20% at December 31, 2002. Progress Financial Corporation is a unitary thrift holding company headquartered in Blue Bell, Pennsylvania. The business of the Company consists primarily of the operation of Progress Bank, which serves businesses and consumers through twenty-one full service offices. The Company also offers financial planning services, life insurance, group employee benefits, and investments through Progress Financial Resources, Inc., headquartered in Philadelphia, Pa. The Company's common stock is traded on The Nasdaq Stock Market under the symbol "PFNC". #### This release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from estimates. When used in filings by the Company with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. FINANCIAL DATA ATTACHED Progress Financial Corporation Consolidated Statements of Financial Condition (Dollars in thousands)

Progress Financial Corporation Consolidated Statements of Operations (Dollars in thousands, except per share data)

Progress Financial Corporation Supplemental Data (Dollars in Thousands, Except Per Share Data)

Progress Financial Corporation Supplemental Balances (Dollars in Thousands)

Exibit 99.4 Earnings Package Distributed to Analysts

QUARTERLY INCOME STATEMENT (Unaudited)

QUARTERLY INCOME STATEMENT (Unaudited)

PERIOD END BALANCE SHEET DATA (Unaudited)

PROGRESS FINANCIAL CORP 8-K