8-K 1 efinalregapproval.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 26, 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,former address and former fiscal year,if changed since last report) Item 5. Other Events and Regulation FD Disclosure On January 26, 2004 Progress Financial Corporation announced the final regulatory approval for Merger with FleetBoston Financial Corporation. A copy of the press release is included as Exhibit 99.1 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 26, 2004 By: /s/ Michael B. High ----------------------------------- Michael B. High Chief Operating Officer and Chief Financial Officer Exhibit 99.1 Press Release on Final Regulatory Approval FOR IMMEDIATE RELEASE Contacts: January 26, 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 Final Regulatory Approval for Merger with FleetBoston Financial Corporation Blue Bell, PA, January 26, 2004 - Progress Financial Corporation (Nasdaq: "PFNC") today announced that final regulatory approval for the previously announced merger with FleetBoston Financial Corporation (NYSE: "FBF") has been received. Under the merger agreement, Progress will merge with and into FleetBoston and each outstanding share of common stock of Progress 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 for the ten day period ending on the date final regulatory approval has been received, plus cash in lieu of any fractional share interest. Based on this formula, shareholders will receive .7105 shares of FBF for each share of Progress stock. The merger is expected to close on or about February 1, 2004. Progress Financial Corporation is a unitary thrift holding company headquartered in Blue Bell, Pennsylvania. The business of Progress consists primarily of the operation of Progress Bank, which serves businesses and consumers through twenty-one offices. Progress also offers financial planning services, life insurance, group employee benefits and investments through Progress Financial Resources, Inc., headquartered in Philadelphia, PA. Progress's common stock is traded on The Nasdaq Stock Market under the Symbol "PFNC". ####

December 31, December 31, 2003 2002 --------------------- ------------------ Assets Cash and due from banks: Non-interest earning $ 27,433 $ 20,650 Interest earning 1,382 17,570 Investments and mortgage-backed securities: Available for sale at fair value (amortized cost: $305,694 and $353,688) 302,768 359,290 Held to maturity at amortized cost (fair value: $241,624 and $121,968) 241,095 120,006 Loans and leases, net (net of reserve: $6,859 and $6,463) 557,531 459,350 Premises and equipment 22,000 26,726 Other assets 17,364 14,252 ---------------------- ------------------ Total assets $1,169,573 $1,017,844 ====================== ================== Liabilities and Shareholders' Equity Liabilities: Deposits $ 766,449 $ 691,538 Short-term borrowings 136,023 96,882 Other liabilities 9,148 12,132 Long-term debt: Federal Home Loan Bank advances 160,500 120,500 Other debt 1,102 1,227 Capital securities 28,869 28,836 ---------------------- ------------------ Total liabilities 1,102,091 951,115 ---------------------- ------------------ Commitments and contingencies Shareholders' Equity: Common stock - $1 par value; 12,000,000 shares authorized; 7,562,000, and 7,058,000 shares issued and outstanding at 7,562 7,058 December 31, 2003 and December 31, 2002, respectively Treasury stock (194,000 and 114,000 shares at December 31, 2003 and December, 31, 2002, respectively) (3,703) (1,050) Unearned Employee Stock Ownership Plan shares (162,000 and 169,000 shares at December 31, 2003 and December 31, 2002) (1,225) (1,341) Unearned compensation - restricted stock awards (37) (75) Capital surplus 58,173 51,536 Retained earnings 8,660 6,936 Net accumulated other comprehensive income (loss) (1,948) 3,665 ---------------------- ------------------ Total shareholders' equity 67,482 66,729 ---------------------- ------------------ Total liabilities and shareholders' equity $ 1,169,573 $1,017,844 ====================== ==================

Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 ------------ ------------ ----------------------- Interest income: Loans and leases, including fees $ 8,723 $7,911 $34,034 $33,636 Mortgage-backed securities 4,757 4,784 18,621 16,929 Investment securities 1,009 543 3,462 2,451 Other 20 38 80 219 --------- --------- --------- --------- Total interest income 14,509 13,276 56,197 53,235 Interest expense: Deposits 3,232 3,793 13,454 15,665 Borrowings 2,126 2,117 8,662 8,430 Capital securities 582 537 2,342 2,230 --------- --------- -------- -------- Total interest expense 5,940 6,447 24,458 26,325 Net interest income 8,569 6,829 31,739 26,910 Provision for loan and lease losses 500 875 2,260 3,814 --------- --------- -------- -------- Net interest income after provision for loan and lease losses 8,069 5,954 29,479 23,096 Non-interest income: Service charges on deposits 917 937 3,540 3,685 Mutual fund, annuity and insurance commissions 632 685 2,389 2,781 Loan brokerage and advisory fees 276 489 1,793 1,142 Private equity fund management fees 65 65 261 247 Gain on sale of securities 573 219 1,674 655 Gain on sale of loans and lease receivables 216 206 760 701 Gain on sale of real estate --- 76 1,201 1,646 Loss on extinguishment of debt --- (80) (559) (55) Client warrant income 71 20 268 1,947 Fees and other 245 591 1,438 2,570 --------- -------- -------- -------- Total non-interest income 2,995 3,208 12,765 15,319 Non-interest Expense: Salaries and employee benefits 4,142 3,814 15,916 16,025 Occupancy 740 624 2,712 2,591 Data processing 271 209 966 911 Furniture, fixtures and equipment 457 505 1,884 2,071 Professional services 423 712 2,261 2,528 Goodwill and other intangible assets impairment losses and amortization 113 213 556 1,032 Other 1,388 1,660 5,691 6,992 --------- -------- -------- -------- Total non-interest expense 7,534 7,737 29,986 32,150 --------- -------- -------- -------- Income before income taxes 3,530 1,425 12,258 6,265 Income tax expense 1,016 401 3,518 2,269 --------- -------- --------- -------- Net income $ 2,514 $1,024 $ 8,740 $3,996 ========= ======== ========= ======== Basic earnings per common share $0.35 $0.14 $1.25 $0.57 ========== ========= ========= ======== Diluted earnings per common share $0.33 $0.14 $1.19 $0.56 ========== ========= ========= ======== Dividends per common share $0.13 $0.05 $0.33 $0.10 ========== ========= ========= ======== Basic average common shares outstanding 7,096,178 7,150,092 6,979,332 6,991,517 ========== ========= ========== ========= Diluted average common shares outstanding 7,427,731 7,365,569 7,331,493 7,168,587 ========== ========= ========== =========

Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 -------------- --------------- --------------- ------------------- Profitability Measures: Return on average assets 0.85% 0.43% 0.78% 0.44% Return on average equity 15.18 6.09 13.57 6.38 Net interest spread (tax-equivalent) 2.89 2.67 2.80 2.83 Net interest margin (tax-equivalent) 3.17 3.09 3.10 3.23 Efficiency ratio (excludes non-recurring items) 59.56 73.78 64.25 75.88 Efficiency ratio (GAAP) 62.81 75.73 65.34 75.13 Diluted net income per common share $0.33 $0.14 $1.19 $0.56 Selected Loan Data: Non-performing assets $2,401 $5,447 2,401 $5,447 Ratio of non-performing assets to total assets 0.21% 0.54% 0.21% 0.54% Ratio of allowance for loan and lease losses to total loans and leases receivable 1.22 1.39 1.22 1.39 Ratio of allowance for loan and lease losses to non-performing loans and leases 285.67 118.65 285.67 118.65 Loan delinquency ratio 1.09 1.21 1.09 1.21 Ratio of loans and leases to deposits 73.64 67.36 73.64 67.36 Selected Equity Data: Book value per share $ 9.36 $ 9.38 $ 9.36 $ 9.38 Tangible book value per share 9.28 9.22 9.28 9.22 Dividends per common share 0.13 0.05 0.33 0.10 Average equity to average assets 5.60% 7.00% 5.75% 6.93% Tier 1 risk-based capital ratio (Bank) 13.29 14.09 13.29 14.09 Total risk-based capital ratio (Bank) 14.27 15.20 14.27 15.20 Tier 1 leverage capital ratio (Bank) 7.64 7.82 7.64 7.82 Selected Average Balances: Loans, gross $570,078 $463,363 $531,822 $479,604 Earning assets 1,126,869 900,209 1,069,202 851,250 Total assets 1,174,094 953,315 1,120,194 903,429 Deposits 763,894 671,380 732,934 642,496 Equity 65,711 66,718 64,392 62,585

December 31, December 31, % Period-End Balances At: 2003 2002 Change ----------------------------------------------------------- Loans and Leases, Net: Commercial business $ 76,236 $ 83,994 (9.2)% Commercial real estate 240,495 199,672 20.4 Construction, net of loans in process 118,976 87,728 35.6 Single family residential real estate 28,312 26,870 5.4 Consumer 95,029 50,105 89.7 Lease receivable 5,342 17,444 (69.4) -------- -------- ----- Total loans and leases 564,390 465,813 21.2 Allowance for loan and lease losses (6,859) (6,463) 6.1 -------- --------- ----- Loans and leases, net $557,531 $ 459,350 21.4% ======== ========= ===== Deposits: Non-interest-bearing demand $118,757 $100,075 18.7 % NOW and SuperNow 85,640 93,182 (8.1) Money Market 172,790 105,563 63.7 Passbook and Statement Savings 37,930 34,148 11.1 Time deposits 351,332 358,570 (2.0) -------- -------- ----- Total Deposits $766,449 $ 691,538 10.8 % ======== ========= =====

Three Months Ended Twelve Months Ended December 31, December 31, Percent Percent 2003 2002 change 2003 2002 change -------- --------- ------------- ---------- ---------- ------------ Per Common Share Data* ---------------------- Net income: Basic $ 0.35 $0.14 150.00% $ 1.25 $0.57 119.30% Diluted 0.33 $0.14 135.71% 1.19 $0.56 112.50% Cash dividends declared 0.13 $0.05 160.00% 0.33 $0.10 230.00% Book value 9.36 9.38 -0.16% 9.36 9.38 -0.16% Tangible book value 9.28 9.22 0.65% 9.28 9.22 0.65% Average shares outstanding: Basic 7,096,178 7,150,092 -0.75% 6,979,332 6,991,517 -0.17% Diluted 7,427,731 7,365,569 0.84% 7,331,493 7,168,587 2.27% Financial Ratios ---------------- Return on average shareholders' equity 15.18% 6.09% 149.26% 13.57% 6.38% 112.53% Return on average total assets 0.85% 0.43% 97.67% 0.78% 0.44% 76.35% Average yield on earning assets 5.26% 5.93% -11.30% 5.39% 6.32% -14.72% Average rate on interest bearing liabilities 2.37% 3.26% -27.30% 2.59% 3.49% -25.79% Net interest spread 2.89% 2.67% 8.24% 2.80% 2.83% -1.06% Net interest margin (FTE) 3.17% 3.09% 2.59% 3.10% 3.23% -4.02% Efficiency ratio (excluding non-recurring items) 59.56% 73.78% -19.27% 64.25% 75.88% -15.33% Efficiency ratio (GAAP) 62.81% 75.73% -17.06% 65.34% 75.13% -13.03% Risk-based capital - Tier 1 13.29% 14.09% -5.68% 13.29% 14.09% -5.68% - Total capital 14.27% 15.20% -6.12% 14.27% 15.20% -6.12% Tier 1 leverage ratio 7.64% 7.82% -2.30% 7.64% 7.82% -2.30% Average shareholders' equity/average total assets 5.60% 7.00% -20.00% 5.75% 6.93% -17.03% Asset Quality (dollars in thousands) ------------------------------------ Allowance for loan losses $ 6,859 $ 6,463 6.13% $ 6,859 $ 6,463 6.13% Allowance for loan losses/Loans 1.22% 1.39% -12.23% 1.22% 1.39% -12.23% Net charge-offs (recoveries) $ 924 $ 1,512 -38.89% $ 1,864 $ 7,268 -74.35% Net charge-offs/Average loans (annualized) 0.64% 1.29% -50.39% 0.35% 1.52% -76.87% Nonperforming assets $ 2,401 $ 5,447 -55.92% $ 2,401 $ 5,447 -55.92% Nonperforming assets/Total loans plus OREO 0.43% 1.19% -63.87% 0.43% 1.19% -63.87% Nonperforming assets/Total assets 0.21% 0.54% -61.11% 0.21% 0.54% -61.11% Allowance for loan losses/Nonperforming loans 285.67% 118.65% 140.77% 285.67% 118.65% 140.77% Average Balances (in thousands) ------------------------------- Loans and leases (gross of reserves) $570,078 $ 463,363 23.03% $ 531,822 $ 479,604 10.89% Earning assets 1,126,869 900,209 25.18% 1,069,202 851,250 25.60% Total assets 1,174,094 953,315 23.16% 1,120,194 903,429 23.99% Deposits 763,894 671,380 13.78% 732,934 642,496 14.08% Interest bearing liabilities 995,193 785,719 26.66% 945,154 753,288 25.47% Shareholders' equity 65,711 66,718 -1.51% 64,392 62,585 2.89% Period End Balances (in thousands) ---------------------------------- Loans and leases (gross of reserves) $564,390 $ 465,813 21.16% $564,390 $ 465,813 21.16% Total assets 1,169,573 1,017,844 14.91% 1,169,573 1,017,844 14.91% Deposits 766,449 691,538 10.83% 766,449 691,538 10.83% Total liabilities 1,102,091 951,115 15.87% 1,102,091 951,115 15.87% Shareholders' equity 67,482 66,729 1.13% 67,482 66,729 1.13% *Prior Period Information has been restated to reflect the 5% Stock Dividend distributed 2nd Quarter 2003.

Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended December 31, September 30, June 30, March 31, December 31, -------------------- ----------------- --------------- ------------------ ------------------- Percent Percent Percent Percent Percent 2003 2002 change 2003 2002 change 2003 2002 change 2003 2002 change 2003 2002 change ---- ---- ------- ---- ---- ------- ---- ---- ------- ---- ---- ------ ---- ---- ------- TAX EQUIVALENT INCOME STATEMENT ------------------------------ ($ in thousands, except per share data) Net interest income(FTE) $9,000 $7,008 28% $8,537 $6,965 23% $8,137 $7,021 16% $7,452 $6,479 15% $33,126$27,473 21% FTE adjustment (431) (179)-141% (402) (145) -177% (309) (128)-141% (245) (111)-121% (1,387) (563)-146% ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ----- ---- ------- ------- ---- Net interest income 8,569 6,829 25% 8,135 6,820 19% 7,828 6,893 14% 7,207 6,368 13% 31,739 26,910 18% Provision for losses on loans 500 875 -43% 560 500 12% 500 1,000 -50% 700 1,439 -51% 2,260 3,814 -41% Non-Interest Income: Service charges on deposits 917 937 -2% 950 916 4% 867 978 -11% 806 854 -6% 3,540 3,685 -4% Lease financing fees 32 42 -24% 23 50 -54% 29 63 -54% 37 63 -41% 121 218 -44% Mutual fund, annuity and insurance commissions 632 685 -8% 502 478 5% 645 678 -5% 610 940 -35% 2,389 2,781 -14% Loan brokerage and advisory fees 276 489 -44% 565 78 624% 641 302 112% 311 273 14% 1,793 1,142 57% Private equity fund management fees 65 65 0% 66 65 2% 65 65 0% 65 52 25% 261 247 6% Gain on securities 573 219 162% 55 84 -35% 723 352 105% 323 - - 1,674 655 156% Gain on sale of real estate - 76 -100% 1,201 1,570 -24% - - - - - - 1,201 1,646 -27% Client warrant income 71 20 255% - 466 -100% - 35 -100% 197 1,426 -86% 268 1,947 -86% Equity (loss) in unconsolidated entities 40 (14) 386% (10) 1 -1100% 111 6 1750% (12) 95 -113% 129 88 47% Fees and other income 389 689 -44% (21) 643 -103% 522 737 -29% 499 841 -41% 1,389 2,910 -52% ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ----- ---- ------- ------- ---- Total non-interest income 2,995 3,208 -7% 3,331 4,351 -23% 3,603 3,216 12% 2,836 4,544 -38% 12,765 15,319 -17% Non-Interest Expenses: Salaries and employee benefits 4,142 3,814 9% 3,847 3,906 -2% 4,035 3,904 3% 3,892 4,401 -12% 15,916 16,025 -1% Occupancy 740 624 19% 691 720 -4% 565 661 -15% 716 586 22% 2,712 2,591 5% Data processing 271 209 30% 225 215 5% 243 230 6% 227 257 -12% 966 911 6% Furniture, fixtures and equipment 457 505 -10% 459 511 -10% 477 509 -6% 491 546 -10% 1,884 2,071 -9% Loan and real estate owned expenses, net 112 231 -52% 196 226 -13% 159 243 -35% (103) 295 -135% 364 995 -63% Professional services 423 712 -41% 513 597 -14% 678 641 6% 647 578 12% 2,261 2,528 -11% Other 1,389 1,642 -15% 1,420 2,115 -33% 1,623 1,579 3% 1,451 1,693 -14% 5,883 7,029 -16% ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ----- ---- ------- ------- ---- Total non-interest expenses 7,534 7,737 -3% 7,351 8,290 -11% 7,780 7,767 0% 7,321 8,356 -12% 29,986 32,150 -7% ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ----- ---- ------- ------- ---- Income before income taxes 3,530 1,425 148% 3,555 2,381 49% 3,151 1,342 135% 2,022 1,117 81% 12,258 6,265 96% Provision for income tax expense 1,016 401 153% 1,153 1,066 8% 774 435 78% 575 367 57% 3,518 2,269 55% ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ----- ---- ------- ------- ---- Net income $ 2,514 $1,024 146% $2,402 $1,315 83% $2,377 $ 907 162%$1,447 $ 750 93% $ 8,740 $ 3,996 119% ======= ====== ===== ====== ====== ==== ====== ===== ========== ===== === ======= ======= ===

($ in thousands, except per share) Fourth Third Second First Year- 2003 Quarter Quarter Quarter Quarter to-date ----------------------------- ----------- ----------- ----------- ----------- ----------- FTE interest income $14,940 $14,410 $14,409 $13,825 $57,584 Interest expense 5,940 5,873 6,272 6,373 24,458 ------- ------- ------- ------- ------- FTE net interest income 9,000 8,537 8,137 7,452 33,126 Less: FTE adjustment (431) (402) (309) (245) (1,387) ------- ------- ------- ------- ------- Net Interest Income 8,569 8,135 7,828 7,207 31,739 Provision for Losses on Loans 500 560 500 700 2,260 Non-Interest Income: Service charges on deposits 917 950 867 806 3,540 Lease financing fees 32 23 29 37 121 Mutual fund, annuity and insurance commissions 632 502 645 610 2,389 Loan brokerage and advisory fees 276 565 641 311 1,793 Private equity fund management fees 65 66 65 65 261 Gain on securities 573 55 723 323 1,674 Gain on sale of real estate - 1,201 - - 1,201 Client warrant income 71 - - 197 268 Equity (loss) in unconsolidated entities 40 (10) 111 (12) 129 Fees and other income 389 (21) 522 499 1,389 ------- ------- ------- ------- ------- Total non-interest income 2,995 3,331 3,603 2,836 12,765 Non-Interest Expenses: Salaries and employee benefits 4,142 3,847 4,035 3,892 15,916 Occupancy 740 691 565 716 2,712 Data processing 271 225 243 227 966 Furniture, fixtures and equipment 457 459 477 491 1,884 Loan and real estate owned expenses, net 112 196 159 (103) 364 Professional services 423 513 678 647 2,261 Other 1,389 1,420 1,623 1,451 5,883 ------- ------- ------- ------- ------- Total non-interest expenses 7,534 7,351 7,780 7,321 29,986 Income Before Income Taxes 3,530 3,555 3,151 2,022 12,258 Provision for income tax expense 1,016 1,153 774 575 3,518 ------- ------- ------- ------- ------- Net Income $ 2,514 $ 2,402 $ 2,377 $ 1,447 $ 8,740 ======= ======= ======= ======= ======= Other Data: EPS - Basic* $ 0.35 $ 0.35 $ 0.34 $ 0.21 $ 1.25 EPS - Diluted* $ 0.33 $ 0.33 $ 0.33 $ 0.20 $ 1.19 ROA 0.85% 0.83% 0.86% 0.56% 0.78% ROE 15.18% 15.70% 14.65% 8.87% 13.57% Net interest margin (FTE) 3.17% 3.09% 3.10% 3.02% 3.10% Dividends declared on common stock * $ 0.13 $ 0.08 $ 0.06 $ 0.06 $ 0.33 FTE employees 248 256 264 266 256 *Prior Period Information has been restated to reflect the 5% Stock Dividend distributed 2nd Quarter 2003.

($ in thousands, except per share) Fourth Third Second First Year- 2002 Quarter Quarter Quarter Quarter to-date ----------------------------- ----------- ----------- ----------- ----------- ----------- FTE interest income $13,455 $13,618 $13,602 $13,123 $53,798 Interest expense 6,447 6,653 6,581 6,644 26,325 ------- ------- ------- ------- ------- FTE net interest income 7,008 6,965 7,021 6,479 27,473 Less: FTE adjustment (179) (145) (128) (111) (563) ------- ------- ------- ------- ------- Net Interest Income 6,829 6,820 6,893 6,368 26,910 Provision for Losses on Loans 875 500 1,000 1,439 3,814 Non-Interest Income: Service charges on deposits 937 916 978 854 3,685 Lease financing fees 42 50 63 63 218 Mutual fund, annuity and insurance commissions 685 478 678 940 2,781 Loan brokerage and advisory fees 489 78 302 273 1,142 Private equity fund management fees 65 65 65 52 247 Gain on securities 219 84 352 - 655 Gain on sale of real estate 76 1,570 - - 1,646 Client warrant income 20 466 35 1,426 1,947 Equity (loss) in unconsolidated entities (14) 1 6 95 88 Fees and other income 689 643 737 841 2,910 ------- ------- ------- ------- ------- Total non-interest income 3,208 4,351 3,216 4,544 15,319 Non-Interest Expenses: Salaries and employee benefits 3,814 3,906 3,904 4,401 16,025 Occupancy 624 720 661 586 2,591 Data processing 209 215 230 257 911 Furniture, fixtures and equipment 505 511 509 546 2,071 Loan and real estate owned expenses, net 231 226 243 295 995 Professional services 712 597 641 578 2,528 Other 1,642 2,115 1,579 1,693 7,029 ------- ------- ------- ------- ------- Total non-interest expenses 7,737 8,290 7,767 8,356 32,150 Income Before Income Taxes 1,425 2,381 1,342 1,117 6,265 Provision for income tax expense 401 1,066 435 367 2,269 ------- ------- ------- ------- ------- Net Income $ 1,024 $ 1,315 $ 907 $ 750 $ 3,996 ======= ======= ======= ======= ======= Other Data: EPS - Basic* $0.14 $0.19 $0.13 $0.11 $0.57 EPS - Diluted* $0.14 $0.18 $0.13 $0.11 $0.56 ROA 0.43% 0.57% 0.41% 0.35% 0.44% ROE 6.09% 8.05% 5.90% 5.33% 6.38% Net interest margin (FTE) 3.09% 3.24% 3.35% 3.25% 3.23% Dividends declared on common stock* $0.05 $0.05 $0.00 $0.00 $0.10 FTE employees 268 271 282 277 271 *Restated to reflect the 5% Stock Dividend distributed 2nd Quarter 2003.

ASSET QUALITY (Unaudited) 2003 2002 -------------------------------------------- -------------------------------------------- ($ in thousands) Fourth Third Second First Year- Fourth Third Second First Year- Allowance for Loan Losses Quarter Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date ------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Balance at beginning of period $7,283 $7,245 $7,214 $6,463 $6,463 $7,100 $8,024 $8,775 $9,917 $9,917 Provision 500 560 500 700 2,260 875 500 1,000 1,439 3,814 Charge-offs 1,426 600 590 150 2,766 1,689 1,827 1,817 2,721 8,054 Recoveries (502) (78) (121) (201) (902) (177) (403) (66) (140) (786) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Net loan charge-offs (recoveries) 924 522 469 (51) 1,864 1,512 1,424 1,751 2,581 7,268 Balance at end of period $6,859 $7,283 $7,245 $7,214 $6,859 $6,463 $7,100 $8,024 $8,775 $6,463 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Allowance as percentage of loans 1.22% 1.30% 1.36% 1.44% 1.22% 1.39% 1.55% 1.67% 1.84% 1.39% Net charge-offs/average loans 0.16% 0.10% 0.09% -0.01% 0.35% 0.33% 0.30% 0.36% 0.51% 1.52% Allowance as percentage of non-performing loans 285.67% 141.06% 142.45% 132.49% 285.67% 118.65% 94.14% 91.83% 93.93% 118.65% Non-performing assets Non-accrual loans and leases $2,401 $5,163 $5,086 $5,445 $2,401 $5,447 $7,542 $8,738 $9,342 $5,447 Other real estate owned - - - - - - 872 4,495 4,243 - ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total non-performing assets $2,401 $5,163 $5,086 $5,445 $2,401 $5,447 $8,414 $13,233 $13,585 $5,447 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Non-performing assets to: Loans and leases plus OREO 0.43% 0.93% 0.97% 1.10% 0.43% 1.19% 1.86% 2.77% 2.87% 1.19% Total assets 0.21% 0.44% 0.46% 0.49% 0.21% 0.54% 0.91% 1.46% 1.55% 0.54% Loans past due 90 days $ 3,147 $ 2,682 $ 1,416 $ 2,213 $ 3,147 $ 918 $ 2,735 $ 1,766 $ 3,244 $ 918 Total under-performing assets $ 5,548 $ 7,845 $ 6,502 $ 7,658 $ 5,548 $ 6,365 $11,149 $14,999 $16,829 $ 6,365

AVERAGE BALANCE SHEET DATA (Unaudited) 2003 2002 ----------------------------------------------- --------------------------------------------- ($ in thousands) Fourth Third Second First Year- Fourth Third Second First Year- Average balances Quarter Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date -------------------------------------------------- ---------------------------------------------- Cash and due from banks (Interest-earning) $ 9,110 $ 8,293 $ 8,927 $ 8,241 $ 8,644 $ 12,202 $ 14,743 $ 9,022 $ 22,496 $ 14,588 Loans,net of unearned discounts: Commercial business 81,635 80,590 84,189 83,795 82,541 84,226 87,127 96,440 123,173 97,606 Commercial mortgage 242,524 230,815 231,308 210,014 228,760 199,731 193,867 196,331 193,250 195,807 Construction loans 115,751 112,679 103,781 92,886 106,355 82,566 84,863 86,253 83,831 84,376 Residential real estate 29,226 28,710 27,839 28,651 28,608 27,339 28,764 27,929 25,688 27,438 Consumer 94,500 87,504 63,989 51,826 74,607 49,179 47,547 45,416 44,437 46,660 Lease financing 6,442 8,306 12,805 16,388 10,951 20,322 24,954 30,080 35,712 27,717 --------- --------- --------- -------- -------- -------- -------- ------- ------- -------- Total loans 570,078 548,604 523,911 483,560 531,822 463,363 467,122 482,449 506,091 479,604 Investment securities (available for sale) 19,011 19,754 13,075 11,362 15,832 10,667 6,110 6,465 5,967 7,312 Investment securities (held to maturity) 85,624 79,675 62,288 51,555 69,906 37,113 40,600 40,977 38,224 39,229 Mortgage-backed securities 443,046 439,029 444,950 445,032 442,998 376,864 323,706 302,946 236,869 310,517 --------- --------- --------- -------- -------- -------- -------- ------- ------- -------- Earning assets 1,126,869 1,095,355 1,053,151 999,750 1,069,202 900,209 852,281 841,859 809,647 851,250 Cash and due from banks (non-interest bearing) 22,117 20,298 18,513 17,198 19,547 16,181 15,408 14,445 15,563 15,401 Other non-earning assets 25,108 28,513 36,035 36,279 31,445 36,925 40,436 35,854 33,822 36,778 --------- --------- --------- -------- -------- -------- -------- ------- -------- ------- Total assets $1,174,094 $1,144,166 $1,107,699 $1,053,227 $1,120,194 $953,315 $908,125 $892,158 $859,032 $903,429 ========== ========== ========== ========== ========== ======== ======== ======== ======== ======== Deposits: Demand $ 107,701 $ 106,596 $ 103,741 $ 98,498 $ 104,166 $ 92,744 $ 74,920 $ 77,860 $ 73,734 $ 79,853 Interest bearing: NOW and Supernow accounts 88,295 90,242 90,092 88,846 89,370 88,918 105,115 116,734 119,129 107,385 Money Market Accounts 172,880 147,489 133,621 109,209 140,993 98,823 89,022 75,009 61,776 81,281 Passbook and Stmt Savings 37,822 38,017 36,966 35,202 37,012 33,470 31,963 33,081 30,956 32,373 Time deposits 357,196 356,854 370,747 360,865 361,393 357,425 357,784 321,895 328,822 341,604 --------- --------- --------- -------- -------- -------- -------- ------- -------- ------- Total interest bearing deposits 656,193 632,602 631,426 594,122 628,768 578,636 583,884 546,719 540,683 562,643 Federal Home Loan Bank borrowings 197,837 206,316 180,186 145,539 182,678 133,438 120,500 117,609 120,333 122,999 Other borrowings 112,300 104,221 91,627 111,276 104,857 51,364 36,303 61,377 39,311 47,092 Capital securities 28,863 28,855 28,847 28,839 28,851 22,281 19,394 20,269 20,263 20,554 --------- --------- --------- -------- -------- -------- -------- ------- -------- ------- Interest bearing liabilities 995,193 971,994 932,086 879,776 945,154 785,719 760,081 745,974 720,590 753,288 Non-interest bearing liabilities 5,489 4,894 6,788 8,814 6,482 8,134 8,316 6,675 7,674 7,703 Total shareholders' equity 65,711 60,682 65,084 66,139 64,392 66,718 64,808 61,649 57,034 62,585 Total Liabilities and --------- --------- --------- -------- -------- -------- -------- ------- -------- ------- Shareholders' Equity $1,174,094 $1,144,166 $1,107,699 $1,053,227 $1,120,194 $953,315 $908,125 $892,158 $859,032 $903,429 ========== ========== ========== ========== ========== ======== ======== ======== ======== ========

AVERAGE BALANCE SHEET DATA - continued (Unaudited) 2003 2002 ------------------------------------------ ------------------------------------------------ Fourth Third Second First Year- Fourth Third Second First Year- Average yields and rates Quarter Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date ------------------------ ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Interest - earning assets Interest-earning deposits 0.83% 0.86% 0.99% 1.03% 0.93% 1.24% 1.59% 1.60% 1.55% 1.50% Investment securities 5.43% 5.46% 5.75% 5.96% 5.61% 5.91% 6.86% 6.29% 6.47% 6.38% Mortgage-backed securities 4.26% 3.80% 4.19% 4.57% 4.20% 5.04% 5.50% 5.67% 5.77% 5.45% Commercial business loans 4.91% 5.13% 5.32% 5.11% 5.12% 5.29% 5.76% 5.50% 6.55% 5.84% Commercial real estate loans 6.84% 7.33% 7.69% 7.35% 7.30% 7.57% 7.72% 7.85% 7.48% 7.65% Construction loans 6.06% 6.15% 6.20% 6.17% 6.14% 6.40% 6.40% 6.44% 6.47% 6.42% Single family residential loans 5.63% 6.32% 5.82% 6.53% 6.07% 6.36% 6.94% 7.07% 7.44% 6.94% Consumer loans 5.02% 4.96% 5.09% 5.66% 5.13% 5.64% 6.07% 6.44% 6.38% 6.12% Lease financing 9.85% 9.98% 9.12% 10.12% 9.76% 10.13% 9.98% 10.21% 10.27% 10.16% ------ ------ ------ ------ ----- ------- ------ ------ ------ ----- Total interest - earning assets 5.26% 5.22% 5.49% 5.61% 5.39% 5.93% 6.34% 6.48% 6.57% 6.32% Interest - bearing liabilities Interest - bearing deposits NOW and SuperNOW 0.65% 0.63% 0.88% 1.01% 0.79% 1.14% 1.11% 1.20% 1.40% 1.22% Money Market 1.66% 1.49% 1.80% 1.85% 1.68% 2.11% 2.26% 2.11% 1.91% 2.11% Passbook and Statement Savings 0.29% 0.30% 0.60% 0.74% 0.48% 0.85% 0.98% 0.99% 1.02% 0.96% Time deposits 2.59% 2.68% 2.89% 3.13% 2.82% 3.26% 3.47% 3.76% 4.00% 3.61% ------ ------ ------ ------ ----- ------- ------ ------ ------ ----- Total interest - bearing deposits 1.95% 1.97% 2.24% 2.43% 2.14% 2.60% 2.73% 2.82% 3.02% 2.78% FHLB borrowings 3.56% 3.52% 3.87% 4.57% 3.56% 4.87% 5.47% 5.52% 5.43% 5.38% Other borrowings 1.24% 1.22% 1.88% 2.12% 1.60% 3.48% 4.41% 3.39% 4.24% 3.84% Capital securities 8.00% 8.03% 8.15% 8.30% 8.12% 9.56% 11.21% 11.34% 11.45% 10.85% ------ ------ ------ ------ ----- ------- ------ ------ ------ ----- Total interest - bearing liabilities 2.37% 2.40% 2.70% 2.94% 2.59% 3.26% 3.47% 3.54% 3.74% 3.49% ------ ------ ------ ------ ----- ------- ------ ------ ------ ----- Interest Rate Spread 2.89% 2.82% 2.79% 2.67% 2.80% 2.67% 2.87% 2.94% 2.83% 2.83% Net Interest Margin 3.17% 3.09% 3.10% 3.02% 3.10% 3.09% 3.24% 3.35% 3.25% 3.23% Avg Int-earning assets to int-bearing liabilities 113.23% 112.69% 112.99% 113.64% 113.12% 114.57% 112.13% 112.85% 112.36% 113.00%

2003 2002 --------------------------------------- --------------------------------------- Fourth Third Second First Fourth Third Second First ($ in thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Assets Cash and due from bank(interest bearing) $ 1,382 $ 17,506 $ 3,812 $ 6,650 $ 17,570 $ 3,506 $ 5,603 $ 12,130 Loans and lease(net) 557,531 554,924 526,793 494,914 459,350 451,237 473,435 469,173 Investment securities: Held-to-maturity: Book 85,178 85,649 73,358 60,257 46,536 29,778 43,912 39,570 Market 85,689 86,083 75,577 61,472 47,134 30,787 44,532 38,660 Available-for-sale 18,625 18,772 19,730 9,385 20,193 5,419 5,962 5,941 Mortgage-backed securities: Held-to-maturity: Book 155,917 131,340 82,924 82,429 73,470 59,440 44,870 25,304 Market 155,935 309,344 84,024 83,908 74,834 60,736 45,262 24,952 Available-for-sale 284,143 309,616 339,770 386,218 339,097 298,888 265,056 263,908 ---------- ---------- ---------- ---------- ---------- -------- -------- -------- Earning assets 1,102,776 1,117,807 1,046,387 1,039,853 956,216 848,268 838,838 816,026 Cash and due from bank(non-interest bearing) 27,433 22,856 22,161 22,166 20,650 20,434 17,030 11,906 Other non-earning assets 39,364 37,887 41,334 44,915 40,978 58,993 48,134 47,047 ---------- ---------- ---------- ---------- ---------- -------- -------- -------- Total assets $1,169,573 $1,178,550 $1,109,882 $1,106,934 $1,017,844 $927,695 $904,002 $874,979 ========== ========== ========== ========== ========== ======== ======== ======== Liabilities and shareholders' equity Deposits: Demand $ 118,757 $ 110,137 $ 108,873 $ 106,799 $ 100,075 $ 74,261 $ 83,538 $ 72,567 Interest bearing 647,692 636,421 631,979 604,751 591,463 588,721 548,084 546,240 ---------- ---------- ---------- ---------- ---------- -------- -------- -------- Total deposits 766,449 746,558 740,852 711,550 691,538 662,982 631,622 618,807 Federal Home Loan Bank borrowings 195,500 210,500 195,500 150,500 135,500 120,500 120,500 117,000 Other borrowings 102,125 118,279 57,192 138,910 83,109 41,062 55,012 46,087 Capital Securities 28,869 28,861 28,853 28,844 28,836 18,824 20,274 20,267 ---------- ---------- ---------- ---------- ---------- -------- -------- -------- Interest bearing liabilities 1,092,943 1,104,198 1,022,397 1,029,804 938,983 843,368 827,408 802,161 Other Liabilities 9,148 10,014 23,029 12,674 12,132 17,815 13,178 13,498 ---------- ---------- ---------- ---------- ---------- -------- -------- -------- Total liabilities 1,102,091 1,114,212 1,045,426 1,042,478 951,115 861,183 840,586 815,659 Total shareholders' equity 67,482 64,338 64,456 64,456 66,729 66,512 63,416 59,320 ---------- ---------- ---------- ---------- ---------- -------- -------- -------- Total liabilities and equity $1,169,576 $1,178,550 $1,109,882 $1,106,934 $1,017,844 $927,695 $904,002 $874,979 ========== ========== ========== ========== ========== ======== ======== ======== Other selected balances Intangible assets -- Goodwill $ 608 $ 722 $ 1,037 $ 1,121 $ 1,164 $ 1,155 $ 1,757 $ 1,865 Amount included in shareholders' equity for net unrealized gains on investments available-for-sale $ (1,948) $ (201) $ 2,615 $ 3,404 $ 3,665 $ 3,634 $ 1,643 $ (1,269)

Capital Data (Unaudited) 2003 2002 ------------------------------------------------- -------------------------------------------------- Fourth Third Second First Year- Fourth Third Second First Year- Quarter Quarter Quarter Quarter to-date Quarter Quarter Quarter Quarter to-date ---------------------------------------------------- -------------------------------------------------- Per common share* Shares outstanding: Average-basic 7,096,178 6,877,012 6,896,326 7,048,410 6,979,332 7,150,092 7,156,448 7,134,571 6,516,178 6,991,517 Average-diluted 7,427,731 7,260,264 7,174,239 7,281,337 7,331,493 7,365,569 7,315,752 7,311,470 6,658,896 7,168,587 Period-end 7,206,342 6,920,918 6,852,203 6,911,130 7,206,342 7,113,359 7,157,013 7,140,092 7,106,573 7,113,359 Book value $ 9.36 $ 9.30 $ 9.41 $ 9.33 $ 9.36 $ 9.38 $ 9.29 $ 8.88 $ 8.35 $ 9.38 Tangible Book Value 9.28 9.19 9.26 9.16 9.28 9.22 9.13 8.64 8.08 9.22 Price: High $ 30.83 $ 27.85 $ 15.23 $ 12.57 $ 30.83 $ 11.06 $ 9.67 $ 9.90 $ 9.19 $ 11.06 Low 27.92 14.51 12.29 10.88 10.88 9.43 7.10 8.20 7.09 7.09 Close 30.83 27.38 13.80 12.30 30.83 11.06 8.95 9.28 8.51 11.06 Capital ratios ($ in thousands) Risk-based capital: Tier 1 capital $88,776 $85,959 $82,843 $79,988 $88,776 $77,879 $76,071 $73,567 $71,957 $77,879 % risk adjusted assets 13.29% 12.95% 12.88% 13.24% 13.29% 14.09% 14.76% 13.97% 13.58% 14.09% Total capital $95,344 $92,883 $89,726 $86,902 $95,344 $84,028 $82,519 $80,167 $78,606 $84,028 % risk adjusted assets 14.27% 13.99% 13.95% 14.39% 14.27% 15.20% 16.01% 15.22% 14.84% 15.20% Tier 1 leverage ratio 7.64% 7.33% 7.54% 7.31% 7.64% 7.82% 8.31% 8.23% 8.30% 7.82% Average shareholders' equity to total average assets 5.60% 5.30% 5.88% 6.28% 5.75% 7.00% 7.14% 6.91% 6.64% 6.93% *Prior Period Information has been restated to reflect the 5% Stock Dividend distributed 2nd Quarter 2003.

Filing Compare · PROGRESS FINANCIAL CORP