Until W. Kirk Wycoff came along, Progress Financial Corp. rarely strayed from its core business of making residential loans.

But since Mr. Wycoff joined Progress in 1991 as its chairman and chief executive officer, the once ailing, $260 million-asset thrift company has plunged headfirst into such nonthrift-and even nonbank-activities as high- tech lending, venture capital funding, and telemarketing.

The result: The thrift's assets have more than doubled, to $602 million, and its stock, which traded at $3.50 a share in 1993, peaked at $20 this summer before sliding into the teens in the recent market fall.

"Mr. Wycoff was wise to the fact early on that traditional thrifts are going to be dead if they don't move past what they have done in the past," said Cassandra Toroian, research analyst at Ryan, Beck & Co., Livingston, N.J.

Soon after arriving at Progress from another Philadelphia-area thrift, Mr. Wycoff wrote off $18 million of bad real estate loans and quickly shifted the company's focus away from the individual consumer. In his view, there is little profit in making mortgage loans or collecting deposits but plenty in serving young businesses.

"The consumer banking wallet is increasingly unprofitable, in our opinion," said Mr. Wycoff, who is 40. "MBNA is taking the credit cards, and Vanguard the money funds. All that is left is the checking account, which isn't very profitable without a reasonable balance."

Mr. Wycoff has transformed Progress, a unitary thrift holding company and parent of Progress Bank, into a specialty lending and leasing company emphasizing higher-yielding, albeit somewhat riskier, loans. Progress' commercial assets have grown 50% per year for the past three years and now make up almost 80% of the thrift's loan portfolio.

"Our core competency is understanding and accepting credit risk," Mr. Wycoff said. "We do not claim to be great marketers of consumer products."

Progress has been able to grow as fast as it has by embracing borrowers most community banks avoid: high-tech start-ups.

With many small banks afraid to lend to start-ups and most large banks preferring to lend to larger companies, Progress can charge higher rates to these customers than it could to more typical small-business borrowers. And for taking a chance on these companies, Progress has been repaid with stock warrants in 26 of them.

"Even if only a couple of those companies were to do well in an (initial public offering), the bank will get a pretty nice windfall," Ms. Toroian said.

Mr. Wycoff insisted that these loans-made mostly to companies with venture capitalist backing-are no more dangerous than most credits to new small businesses.

"I have never known a venture capitalist who has invested $1 million in a company to just walk away if it doesn't work," he said. "If that happens, they invest $2 million more."

Of course, the thrift has limits on who will qualify for a loan. A borrower does not have to be earning a profit but must have a developed product and some source of revenue. That way, if the borrower goes belly up, there are receivables for the thrift to collect.

To boost its high-tech lending, Progress hired Steven D. Hobman, the former top technology lender at Meridian Bank, when his company was merged into CoreStates Financial Corp. in 1996.

Progress beat out other employers interested in his services by forming a fee-based venture capital company and making him an equity partner. That fund, called Progress Capital Inc., lends to companies that have not yet turned a profit but have a promising product. The holding company makes money on any profits from the ventures, but as importantly, Mr. Wycoff said, the fund helps get Progress' name out to companies not yet ready for bank financing.

Luring Mr. Hobman to Progress was a wise move, Ms. Toroian said.

"You can mitigate a lot of the risks associated with these high-tech loans by having the right people in charge," she said. "Steve Hobman is the premiere tech lender in the Philadelphia market."

Meanwhile, Progress has also assembled a formidable collection of nonbanking subsidiaries.

In 1993, convinced that competition would shrink margins on commercial real estate loans, the company founded Progress Realty Advisors, a commercial mortgage originator that would sell its loan production and make money off the fees. Progress Realty, which operates throughout the Middle Atlantic states, expects to earn fees on loan volume of $425 million this year.

Progress Financial also owns three equipment leasing companies and recently bought an interest in a firm that builds assisted living communities for the elderly. It has even launched a telemarketing division that is thriving, thanks in part to its strategy of hiring only retired business executives as phone solicitors.

"Treasurers and CFOs are much more willing to talk if someone who is on their level is on the other (end), not just a college kid," Mr. Wycoff said.

Telemarketing has been so successful that Progress spun it off last year as a subsidiary called Procall Teleservices Inc. Besides making calls for Progress subsidiaries, Procall handles telemarketing for clients ranging from the Small Business Administration to the Relationship Center, a family therapy group.

Combined, these nonbank businesses will account for 33% of the holding company's earnings this year.

"There is a real entrepreneurial attitude to the company," said Kenneth F. Puglisi, principal at Sandler O'Neill & Partners, New York. "The management team are businessmen first and foremost, and it has paid off in their subsidiaries."

That's not to say Mr. Wycoff wants to be a part of every new specialty in banking. One business Progress will not be entering is insurance.

He compared banks' buying insurance agencies to hospitals' buying doctors' practices, a common occurrence a few years ago.

Hospital administrators had hoped doctors' referrals would boost their profits. But patients chose their hospital based on where they felt comfortable, not on a doctor's referral, said Mr. Wycoff, who was on a hospital's board at the time.

"I am not convinced that my business customers want to buy insurance from my bank," he said. "I worry that we as an industry are spending a lot of money on insurance agencies and there will not be a lot of beef in terms of the bottom line."

In fact, there are a lot of things community banks are doing that do not interest Progress. For example, Mr. Wycoff said, he will not add branches to tap deposit bases.

Progress will only branch into areas targeted by its lending division. Once there, the thrift makes an effort to attract consumers, but unlike many competitors, it does not offer perks like free checking.

Referring to the oft-cited rule that 20% of customers deliver 80% of profits, he predicted that rate wars and nonbank competition might soon squeeze profits so much that only 10% of customers will provide 90% of profits.

"I don't see how a bank can rationalize a branch network if it doesn't make you money," he said.

In lieu of funding loan growth through deposits, Mr. Wycoff said, he envisions a time when his company is large enough to turn to the capital markets. He estimated that his company needs to at least triple its $60 million capital base.

By that time, Progress Financial may be on its way to a transformation just as radical as the one Mr. Wycoff pulled off at the beginning of this decade.

"We will have to ask ourselves whether or not we need to be a bank," Mr. Wycoff said.

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