JOINT PROXY STATEMENT OFFERING CIRCULAR

Transcription

1 JOINT PROXY STATEMENT OFFERING CIRCULAR MERGER PROPOSED YOUR VOTE IS VERY IMPORTANT Progress Financial Corporation ( Progress ) and First Partners Financial, Inc. ( First Partners ) have entered into an Agreement and Plan of Merger (the Merger Agreement ), that will result in the merger of First Partners with and into Progress (the Merger ), with Progress being the surviving holding company in the Merger. The Merger Agreement and the Merger have received the unanimous approval of the Boards of Directors of Progress (with a mandatory abstention by one director) and First Partners. The Merger Agreement provides that a shareholder of record of First Partners common stock who (i) is either an individual whose principal residence is in the State of Alabama or an entity with its principal place of business located in the State of Alabama and (ii) has properly completed, executed and delivered the Eligible Shareholder Certification and Election Form (the Shareholder Form ), specifically Part A thereof, which is enclosed with this Joint Proxy Statement Offering Circular for recipients who are shareholders of First Partners, will be an Eligible Shareholder and will receive, for each share of First Partners common stock owned by that Eligible Shareholder, 1.8 shares of Progress common stock, subject to the right of the Eligible Shareholder to elect under Part B of the Shareholder Form to receive $27.00 in cash in exchange for up to (but no more than) ten percent (10%) of the total number of shares of First Partners common stock owned by that Eligible Shareholder. Shareholders of First Partners who are not Eligible Shareholders will receive $27.00 in cash, without interest, for each of their shares of First Partners common stock. See The Merger Proposal; Eligible Shareholders, on page 28. Any shares of First Partners common stock with respect to which an Eligible Shareholder either has not submitted a properly completed Part B of the Shareholder Form prior to the deadline described in more detail below, or has submitted a Shareholder Form prior to the deadline but has elected under Part B thereof not to receive cash, will be converted into Progress common stock at the exchange ratio described above. In addition, any cash elections received from an Eligible Shareholder with respect to shares of First Partners common stock in excess of ten percent (10%) of the total number of shares of First Partners common stock held by that Eligible Shareholder will be disregarded, and such shares in excess of the ten percent (10%) limitation will be converted into Progress common stock. Fractional shares of Progress common stock will not be issued to Eligible Shareholders; instead, these shareholders will receive cash, without interest, equal to the product of (i) $15.00 multiplied by (ii) the fraction of a share of Progress common stock to which such holder would otherwise be entitled. Only individual residents of the State of Alabama or entities with their principal place of business located in the State of Alabama are eligible to receive Progress common stock; all First Partners shareholders who are not Alabama residents or entities with their principal place of business in Alabama will receive cash, without interest, in the amount of $27.00 per share. The Merger Proposal; Conversion of Shares; Cash Limitation; Exchange of Share Certificates, on page 29. Based on Progress estimate of the number of shares of First Partners common stock held by shareholders who are residents of Alabama and assuming that (i) all of those shareholders return Part A of the i

2 Shareholder Form indicating that they are Alabama residents, (ii) none of those shareholders make a cash election on Part B of the Shareholder Form, (iii) all outstanding First Partners options and warrants are exercised prior to closing of the Merger, and (iv) there are no dissenting shareholders, Progress anticipates that it would issue approximately 2,600,000 shares of Progress common stock in the Merger. The Merger cannot be completed unless all necessary regulatory approvals are obtained, the shareholders of First Partners and Progress approve the Merger Agreement and the shareholders of Progress also approve an increase in the authorized capital stock of Progress, among other conditions. First Partners and Progress are asking their respective shareholders to consider and vote on the Merger proposal, among other matters (including the election of directors), at their annual meetings of shareholders. Whether or not you plan to attend the annual meeting of your company, please take the time to vote by following the voting instructions included in the enclosed proxy card and related materials. If you sign, date and return your proxy card without indicating how you want to vote, your proxy will be counted as a vote FOR approval of the Merger Agreement, FOR the election of directors and (in the case of Progress shareholders) FOR the increase in authorized capital stock. Progress shareholders have also received instructions with this document on how they may grant a proxy to vote their shares online at The online option will be available until 5:00 p.m. Central Time, on April 17, Each shareholder of First Partners and Progress has dissenters rights under Alabama law in connection with the proposed Merger, if the dissenting shareholder complies with all of the requirements set forth in the statute. You should read carefully the more detailed description of these requirements in this document, as well as the full text of the relevant statutory provisions, which are attached to this document as Appendix B. See The Merger Proposal; Dissenters Rights, on page 69. This document contains a more complete description of each company s annual meeting, the terms of the Merger Agreement and information about the additional matters to be voted upon. You are urged to review this entire document carefully. The Board of Directors of First Partners recommends that the shareholders of First Partners vote FOR approval of the Merger Agreement and FOR the election of directors. The Board of Directors of Progress recommends that the shareholders of Progress vote FOR approval of the Merger Agreement, FOR the increase in authorized capital stock and FOR the election of directors. THE SHARES OF COMMON STOCK OF PROGRESS ARE NOT DEPOSITS, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE ALABAMA SECURITIES COMMISSION OR ANY OTHER AGENCY, NOR HAS ANY AGENCY OR COMMISSION PASSED UPON THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE SHARES OF COMMON STOCK OF PROGRESS TO BE ISSUED IN CONNECTION WITH THE MERGER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT ), OR THE SECURITIES LAWS OF ANY STATE, AND ARE BEING OFFERED SOLELY TO RESIDENTS OF THE STATE OF ALABAMA AND ENTITIES WITH THEIR PRINCIPAL PLACE OF BUSINESS LOCATED IN THE STATE OF ALABAMA IN RELIANCE ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALABAMA LAW. THE COMMON STOCK RECEIVED IN THE MERGER MAY NOT BE SOLD OR TRANSFERRED UNLESS REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR TRANSFERRED IN A TRANSACTION EXEMPT FROM REGISTRATION THEREUNDER. IN ADDITION, THE COMMON STOCK RECEIVED IN THE MERGER MAY NOT, IN ANY EVENT, BE TRANSFERRED TO ANY PERSON OR ENTITY THAT IS ii

3 NOT A RESIDENT OF THE STATE OF ALABAMA FOR A PERIOD OF SIX (6) MONTHS FOLLOWING THE CONSUMMATION OF THE MERGER. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE COMMON STOCK OF PROGRESS IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION OF THE COMMON STOCK OF PROGRESS SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PROGRESS OR PROGRESS BANK & TRUST, OR THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF THIS PROXY STATEMENT. THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS BEING DELIVERED TO FIRST PARTNERS AND PROGRESS S SHAREHOLDERS FOR THE SOLE PURPOSE OF MAKING AVAILABLE TO SUCH SHAREHOLDERS INFORMATION THAT MAY BE MATERIAL TO EVALUATING THE PROPOSALS DESCRIBED HEREIN. BY ACCEPTING THIS DOCUMENT, EACH RECIPIENT AGREES: (1) NOT TO COPY, REPRODUCE OR DISTRIBUTE THE INFORMATION ABOUT FIRST PARTNERS OR PROGRESS CONTAINED HEREIN, IN WHOLE OR IN PART, AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF FIRST PARTNERS OR PROGRESS, AS THE CASE MAY BE; (2) TO KEEP PERMANENTLY CONFIDENTIAL ALL INFORMATION ABOUT FIRST PARTNERS, FIRST PARTNERS BANK, PROGRESS OR PROGRESS BANK & TRUST CONTAINED HEREIN THAT IS NOT ALREADY PUBLIC; AND (3) TO USE THE INFORMATION CONTAINED HEREIN ONLY FOR THE LIMITED EXPRESS PURPOSE SET FORTH ABOVE. [The remainder of this page left blank intentionally] iii

4 PROGRESS FINANCIAL CORPORATION 201 Williams Avenue Huntsville, Alabama NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD TUESDAY, APRIL 18, 2017 To the Shareholders of Progress Financial Corporation: Notice is hereby given that the 2017 Annual Meeting of Shareholders (the Progress Annual Meeting ) of Progress Financial Corporation, an Alabama corporation ( Progress ), will be held at 4:00 p.m., Central Time, on Tuesday, April 18, 2017 at 201 Williams Avenue, Huntsville, Alabama The Progress Annual Meeting is being called for the following purposes: 1. To elect four (4) Class III directors to serve on the Board of Directors of Progress until the Annual Meeting of Shareholders in 2020 or until their respective successors are elected, and one (1) Class II director to serve on the Board of Directors of Progress until the Annual Meeting of Shareholders in 2019 or until his successor is elected; 2. To authorize, approve and adopt an amendment to the Articles of Incorporation of Progress increasing the number of shares of authorized common stock; 3. To authorize, approve and adopt the Agreement and Plan of Merger dated February 14, 2017 (the Merger Agreement ), by and between Progress and First Partners Financial, Inc. ( First Partners ), pursuant to which First Partners will merge with and into Progress on and subject to the terms and conditions contained therein (the Merger ); and 4. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. The Board of Directors of Progress has fixed the close of business on February 28, 2017 as the record date for the Progress Annual Meeting. Only shareholders of record of Progress at the close of business on February 28, 2017 are entitled to notice of and to vote at the Progress Annual Meeting and at any adjournment or postponement thereof. With respect to the Merger, shareholders of Progress are entitled to assert dissenters rights pursuant to the Alabama Business Corporation Law (the ABCL ). A copy of the dissenters rights provisions of the ABCL is attached to the accompanying Joint Proxy Statement Offering Circular as Appendix B. Progress shareholders have received with this Joint Proxy Statement Offering Circular instructions on how they may grant a proxy to vote their shares online at The online option will be available until 5:00 p.m. Central Time, on April 17, In addition, accompanying the enclosed Joint Proxy Statement Offering Circular is a form of proxy. Whether or not you expect to attend the Annual Meeting, please either grant your proxy to vote online or complete, sign and date the enclosed proxy and return it promptly. If you plan to attend the Progress Annual Meeting and wish to vote your shares personally, you may do so even if you have previously granted your proxy online or submitted a completed proxy card. iv

5 BY ORDER OF THE BOARD OF DIRECTORS Huntsville, Alabama March 17, 2017 David L. Nast President and Chief Executive Officer WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE TAKE THE TIME TO VOTE BY COMPLETING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD OR VOTING ONLINE IN ACCORDANCE WITH THE ENCLOSED INSTRUCTIONS. RETURNING YOUR PROXY CARD OR VOTING ONLINE DOES NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE ANNUAL MEETING AND TO VOTE YOUR SHARES IN PERSON. v

6 FIRST PARTNERS FINANCIAL, INC Highland Avenue South Birmingham, Alabama NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD TUESDAY, APRIL 18, 2017 To the Shareholders of First Partners Financial, Inc.: Notice is hereby given that the 2017 Annual Meeting of Shareholders (the First Partners Annual Meeting ) of First Partners Financial, Inc., an Alabama corporation ( First Partners ), will be held at 10:00 a.m., Central Time, on Tuesday, April 18, 2017 at 2121 Highland Avenue South, Birmingham, Alabama The First Partners Annual Meeting is being called for the following purposes: 1. To elect three (3) Class I directors to serve on the Board of Directors of First Partners until the Annual Meeting of Shareholders in 2020 or until their respective successors are elected; 2. To authorize, approve and adopt the Agreement and Plan of Merger dated February 14, 2017 (the Merger Agreement ), by and between Progress Financial Corporation ( Progress ) and First Partners, pursuant to which First Partners will merge with and into Progress on and subject to the terms and conditions contained therein (the Merger ); and 3. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. The Board of Directors of First Partners has fixed the close of business on March 15, 2017 as the record date for the First Partners Annual Meeting. Only shareholders of record of First Partners at the close of business on March 15, 2017 are entitled to notice of and to vote at the First Partners Annual Meeting and at any adjournment or postponement thereof. Shareholders should note that, as a result of the consummation of the Merger, the Board of Directors of First Partners will cease to exist, and the current members of the Board of Directors of Progress will be the directors of the combined company, with the addition of three (3) directors of First Partners, as described in more detail in the accompanying Joint Proxy Statement Offering Circular. With respect to the Merger, shareholders of First Partners are entitled to assert dissenters rights pursuant to the Alabama Business Corporation Law (the ABCL ). A copy of the dissenters rights provisions of the ABCL is attached to the accompanying Joint Proxy Statement Offering Circular as Appendix B. Accompanying the enclosed Joint Proxy Statement Offering Circular are two documents that we request that you review, complete and return to Progress. The first document is a form of proxy. Whether or not you expect to attend the First Partners Annual Meeting, please complete, sign and date the enclosed proxy, and return it promptly. If you plan to attend the First Partners Annual Meeting and wish to vote your shares personally, you may do so even if you have previously submitted a completed proxy card. The second document is an Eligible Shareholder Certification and Election Form relating to the Merger that should be completed and returned with your proxy card. All First Partners shareholders should complete Part A of the Eligible Shareholder Certification and Election Form, and Eligible Shareholders vi

7 wishing to make an election to receive part of the merger consideration in cash should also complete Part B thereof. Regardless of how you intend to vote with respect to the Merger, it is very important that you return a completed and signed Eligible Shareholder Certification and Election Form to First Partners no later than 5:00 p.m. on April 17, 2017, the day before the First Partners Annual Meeting. BY ORDER OF THE BOARD OF DIRECTORS Birmingham, Alabama March 17, 2017 Elam P. Holley, Jr. President and Chief Executive Officer WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE TAKE THE TIME TO VOTE BY COMPLETING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD AND ELIGIBLE SHAREHOLDER CERTIFICTION AND ELECTION FORM. RETURNING YOUR PROXY CARD DOES NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE ANNUAL MEETING AND TO VOTE YOUR SHARES IN PERSON. vii

8 ABOUT THIS DOCUMENT This Joint Proxy Statement Offering Circular (this Proxy Statement ) serves as a proxy statement for both Progress and First Partners, and is being furnished to: shareholders of Progress in connection with the solicitation of proxies by the Board of Directors of Progress for use at its Annual Meeting of Shareholders (including any adjournment or postponement thereof), to be held on Tuesday, April 18, 2017 (the Progress Annual Meeting ); and shareholders of First Partners in connection with the solicitation of proxies by the Board of Directors of First Partners for use at its Annual Meeting of Shareholders (including any adjournment or postponement thereof), to be held on Tuesday, April 18, 2017 (the First Partners Annual Meeting ). This Proxy Statement, the enclosed proxy card and related materials included herein are first being mailed to the shareholders of First Partners and Progress on or about March 17, This Proxy Statement is divided into three sections: Part I provides general information regarding the Progress Annual Meeting and a description of the matters to be voted upon at the Progress Annual Meeting other than the Merger proposal, including the election of directors and the proposal to approve an increase in Progress s authorized capital stock. This information can be found in Part I Information About the Progress Annual Meeting, beginning on page 1. Part II provides general information about the First Partners Annual Meeting and a description of the proposed election of directors, which can be found in Part II Information About the First Partners Annual Meeting, beginning on page 19. Finally, Part III provides information concerning the Merger proposal, including a summary of the Merger Agreement, in the form of a joint proposal by both Progress and First Partners for consideration by their respective shareholders. This information can be found in Part III Progress and First Partners Joint Proposal, beginning on page 27. As used in this Proxy Statement, the terms Progress and First Partners refer to Progress Financial Corporation and First Partners Financial, Inc., respectively. Where the context requires, Progress may refer to Progress and its subsidiary, Progress Bank & Trust, which may be referred to individually as Progress Bank. First Partners may refer to First Partners and its subsidiary, First Partners Bank, which may be referred to individually as First Partners Bank. Unless the context indicates otherwise, all references to the Agreement and Plan of Merger or the Merger Agreement refer to the Agreement and Plan of Merger, dated February 14, 2017, by and between Progress and First Partners, which is attached to this Proxy Statement as Appendix A. viii

9 A WARNING ABOUT FORWARD-LOOKING STATEMENTS This Proxy Statement includes forward-looking statements that discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Forward-looking statements are generally identifiable by the use of forwardlooking terminology such as anticipate, believe, continue, could, endeavor, estimate, expect, forecast, goal, intend, may, objective, potential, predict, project, seek, should, will and other similar words and expressions of future intent. The ability of Progress and First Partners to predict results or the actual effect of future plans or strategies is inherently uncertain. Although Progress and First Partners believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results and performance to differ from those expressed in the forward-looking statements include, but are not limited to: the costs of integrating Progress s and First Partners operations, which may be greater than expected; potential customer loss and deposit attrition as a result of the Merger and the failure to achieve expected gains, revenue growth and/or expense savings from the Merger transaction; Progress s ability to effectively manage interest rate risk and other market risk, credit risk and operational risk both before and after the Merger; Progress s ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Progress s business; Progress s ability to keep pace with technological changes; Progress s ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by its customers and potential customers; Progress s ability to expand into new markets; the cost and other effects of material contingencies, including litigation contingencies; further easing of restrictions on participants in the financial services industry, such as banks, securities brokers and dealers, investment companies and finance companies, which may increase competitive pressures and affect Progress s ability to preserve its customer relationships and margins; possible changes in general economic and business conditions in the United States in general and in the region and communities Progress serves in particular, which may lead to deterioration in credit quality, thereby requiring increases in its provision for credit losses, or a reduced demand for credit, thereby reducing earning assets; the threat or occurrence of war or acts of terrorism and the existence or exacerbation of general geopolitical instability and uncertainty; and possible changes in trade, monetary and fiscal policies, laws, and regulations, and other activities of governments, agencies, and similar organizations, including changes in accounting standards. ix

10 The cautionary statements in the Risk Factors section and elsewhere in this Proxy Statement also identify important factors and possible events that involve risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Progress and First Partners do not intend, and undertake no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements. [The remainder of this page left blank intentionally] x

11 TABLE OF CONTENTS ABOUT THIS DOCUMENT... viii A WARNING ABOUT FORWARD-LOOKING STATEMENTS... ix QUESTIONS AND ANSWERS... xv PART I THE PROGRESS ANNUAL MEETING... 1 INFORMATION ABOUT THE PROGRESS ANNUAL MEETING... 1 General... 1 Solicitation of Proxies... 1 Shareholders Entitled To Vote... 2 Quorum Information... 2 Votes Necessary... 2 Submission of Proxies... 2 Revocability of Proxies... 3 Costs of Solicitation... 3 PROGRESS PROPOSAL NO. 1 ELECTION OF DIRECTORS... 3 General... 3 Information About the Nominees... 4 Recommendation of the Progress Board of Directors... 5 Other Directors... 6 Additional Directors After the Merger... 7 Non-Director Executive Officers... 7 Information Regarding the Boards and Board Committees of Progress and Progress Bank... 9 Compensation Committee Interlocks SECURITY OWNERSHIP OF PROGRESS DIRECTORS AND MANAGEMENT COMPENSATION OF PROGRESS DIRECTORS AND MANAGEMENT Director Compensation Compensation Agreements Organizer Warrants Progress Bank and Trust 2008 Incentive Stock Compensation Plan Progress Financial Corporation 2016 Equity Incentive Plan Outstanding Options at February 28, RELATED PARTY TRANSACTIONS PROGRESS PROPOSAL NO. 2 APPROVAL OF INCREASE IN AUTHORIZED CAPITAL STOCK The Amendment Proposal Reasons for the Amendment Proposal Effect of the Amendment Proposal Outstanding Capital Stock and Shares of Capital Stock Available for Issuance Vote Required Recommendation of the Progress Board of Directors xi

12 PART II INFORMATION ABOUT THE FIRST PARTNERS ANNUAL MEETING INFORMATION ABOUT THE FIRST PARTNERS ANNUAL MEETING General Solicitation of Proxies Shareholders Entitled To Vote Quorum Information Votes Necessary Submission of Proxies Revocability of Proxies Costs of Solicitation FIRST PARTNERS PROPOSAL NO. 1 ELECTION OF DIRECTORS General Information About the Nominees Recommendation of the First Partners Board of Directors Other Directors Non-Director Executive Officers Information Regarding the Boards and Board Committees of First Partners and First Partners Bank Compensation Committee Interlocks SECURITY OWNERSHIP OF FIRST PARTNERS DIRECTORS AND MANAGEMENT COMPENSATION OF FIRST PARTNERS DIRECTORS AND MANAGEMENT Director Compensation Compensation Agreements Organizer Warrants First Partners 2007 Incentive Stock Compensation Plan Outstanding Options at March 15, RELATED PARTY TRANSACTIONS PART III PROGRESS AND FIRST PARTNERS JOINT PROPOSAL THE MERGER AGREEMENT THE MERGER PROPOSAL Structure of the Merger Eligible Shareholders Restrictions on Transfer Conversion of Shares; Cash Limitation; Exchange of Share Certificates Effective Time Background of the Merger Reasons for the Merger Opinion of First Partners Financial Advisor Opinion of Progress s Financial Advisor Regulatory and Other Required Approvals Description of the Merger Agreement Interests of Certain Persons in the Merger Resale of Progress Common Stock xii

13 Voting Agreements Non-Competition Agreements Claims Letters with Directors Accounting Treatment of the Merger DISSENTERS RIGHTS MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER U.S. Shareholders Qualification of the Merger as a Reorganization Tax Consequences to U.S. Shareholders Tax Consequences to Progress and First Partners Tax Consequences if the Merger Does Not Qualify as a Reorganization Backup Withholding and Information Reporting Tax Consequences for Progress Shareholders BUSINESS OF PROGRESS AND PROGRESS BANK Organization Business of Progress Bank Strategy Competition Properties Legal Proceedings Employees BUSINESS OF FIRST PARTNERS AND FIRST PARTNERS BANK Organization Business of First Partners Bank Strategy Competition Properties Legal Proceedings Employees DESCRIPTION OF PROGRESS COMMON STOCK General Voting Rights Marketability of Shares and Preemptive Rights Dividend Rights Liquidation or Dissolution Redemption of Shares Indemnification of Directors and Officers Comparison of Shareholder Rights CAPITALIZATION Recommendation of the Progress and First Partners Boards of Directors SUPERVISION AND REGULATION xiii

14 Federal and State Regulation in General Dividend Restrictions Capital Requirements Community Reinvestment Act Dodd-Frank Act RISK FACTORS Risks Associated with the Merger Risks Associated with the Business of Progress and the Banking Business Generally Risks Relating to Ownership of Progress Common Stock INDEPENDENT AUDITORS LEGAL MATTERS APPENDICES Appendix A - Agreement and Plan of Merger, dated February 14, 2017, by and between Progress and First Partners Appendix B - Applicable Dissent Provisions Appendix C - Fairness Opinion of BSP Securities, LLC, to the First Partners Board of Directors Appendix D - Fairness Opinion of Stephens Inc., to the Progress Board of Directors Appendix E - Selected Financial Statements xiv

15 Q; Why am I receiving this Proxy Statement? QUESTIONS AND ANSWERS A: You are receiving this Proxy Statement because you are a shareholder of record of either the shares of common stock of Progress or the shares of common stock of First Partners as of the record date for determining shareholders entitled to vote at the Progress Annual Meeting or the First Partners Annual Meeting, as the case may be. Q: When and where are the annual meetings? A: The Progress Annual Meeting will be held at 4:00 p.m., Central Time, on Tuesday, April 18, 2017, at 201 Williams Avenue, Huntsville, Alabama The First Partners Annual Meeting will be held at 10:00 a.m., Central Time, on Tuesday, April 18, 2017 at 2121 Highland Avenue South, Birmingham, Alabama Q: On what am I being asked to vote? A: You are being asked to approve, among other matters, the Agreement and Plan of Merger, by and between Progress and First Partners, which we may refer to as the Merger Agreement, and which provides for the Merger of First Partners with and into Progress. The laws governing both Progress and First Partners require the approval of the Merger Agreement by the shareholders of both companies. Specifically, Alabama law requires that the shareholders of First Partners vote to approve the Merger Agreement because First Partners will merge out of existence, and First Partners shareholders will become Progress shareholders. Alabama law also requires that Progress s shareholders vote to approve the Merger Agreement because, as a result of the Merger, Progress will trigger the 20% statutory threshold on the issuance of shares of common stock outstanding as of the date of effectiveness of the Merger. Q: Why have Progress and First Partners decided to merge? A: Progress and First Partners have agreed to merge for strategic reasons that they believe will benefit both parties. Their respective Boards of Directors believe that the Merger will enhance First Partners operations while allowing Progress to expand and enter into new markets. See The Merger Proposal; Reasons for the Merger, on page 30. Q: How does my Board of Directors recommend I vote on the Merger Agreement? A: The Boards of Directors of both Progress and First Partners have unanimously approved and adopted the Merger Agreement (with a mandatory abstention by one director of Progress) and recommend that their respective shareholders vote FOR approval of the Merger Agreement. Q: What will happen to Progress Bank and First Partners Bank as a result of the Merger? A: If the Merger occurs, First Partners Bank, which is a wholly owned subsidiary of First Partners, is expected to be merged with and into Progress Bank & Trust ( Progress Bank ), which is a wholly owned subsidiary of Progress, on that date or as soon as practicable thereafter. We may refer to this transaction as the Bank Merger. Progress Bank will be the surviving entity in the Bank Merger. Q: What vote is required to approve the Merger Agreement? A: Approval of the Merger Agreement requires the affirmative vote of two-thirds of the outstanding shares of First Partners common stock as of March 15, 2017 and the affirmative vote of a majority of the outstanding shares of Progress common stock as of February 28, xv

16 Q: What are the other matters on which shareholders are being asked to vote at the annual meetings? A: Shareholders of both First Partners and Progress will be asked to vote on the election of directors at their respective annual meetings; provided, however, that, as a result of the consummation of the Merger, the Board of Directors of First Partners will cease to exist, and the current members of the Board of Directors of Progress will be the directors of the combined company, with the addition of three (3) directors of First Partners, as described in more detail in this Proxy Statement. See Progress Proposal No. 1 Election of Directors, on page 3 and First Partners Proposal No. 1 Election of Directors, on page 21. In addition, Progress shareholders are being asked to vote on a proposed amendment to the Articles of Incorporation of Progress to increase the authorized capital stock. See Progress Proposal No. 2 Approval of Increase in Authorized Capital Stock, on page 17. Q: Why are Progress shareholders being asked to vote on an increase in authorized capital? A: Under the terms of the Merger Agreement, Progress will issue shares of its common stock to eligible First Partners shareholders in exchange for their shares of First Partners common stock, at the exchange ratio of 1.8 shares of Progress common stock for each share of First Partners common stock. The Articles of Incorporation of Progress currently authorize Progress to issue 10,000,000 shares of common stock. As of the date of this Proxy Statement, 7,570,854 shares of Progress common stock are outstanding, and there are currently outstanding options with the right to purchase a total of 1,123,694 shares of Progress common stock and warrants with the right to purchase a total of 390,021 shares of Progress common stock. Accordingly, in order to consummate the Merger, Progress needs to increase its authorized capital stock. Approval of the amendment to the Articles of Incorporation is a condition to the consummation of the Merger. See Progress Proposal No. 2 Approval of Increase in Authorized Capital Stock, on page 17. Q: I am a First Partners shareholder. What type of consideration will I receive in the Merger? A: A First Partners shareholder who (i) is either an individual whose principal residence is in the State of Alabama or an entity with its principal place of business located in the State of Alabama, and (ii) has properly executed and delivered the Eligible Shareholder Certification and Election Form (the Shareholder Form ) which is enclosed with this Proxy Statement (specifically, Part A thereof), is an Eligible Shareholder and will receive, for each share of First Partners common stock owned, 1.8 shares of Progress common stock, subject to the right of that Eligible Shareholder to elect under Part B of the Shareholder Form to receive $27.00 in cash in exchange for up to (but no more than) ten percent (10%) of the total number of shares of First Partners common stock owned by that Eligible Shareholder. In addition, fractional shares of Progress common stock will not be issued to Eligible Shareholders; instead, these shareholders will receive cash, without interest, equal to the product of (i) $15.00 multiplied by (ii) the fraction of a share of Progress common stock to which such holder would otherwise be entitled. Shareholders of First Partners who are not Eligible Shareholders will receive $27.00 in cash, without interest, for each of their shares of First Partners common stock. See The Merger Proposal; Eligible Shareholders, on page 28. Q: How does the cash election work? A: Each Eligible Shareholder may elect to receive cash in exchange for up to (but no more than) ten percent (10%) of the total number of shares of First Partners common stock held by such Eligible Shareholder. Any shares of First Partners common stock with respect to which the Eligible Shareholder either has not made a proper election prior to the deadline described in more detail below, or has elected not to receive cash, will be converted into Progress common stock at the exchange ratio. In addition, any cash elections received xvi

17 from any Eligible Shareholder with respect to shares of First Partners common stock in excess of ten percent (10%) of the total number of shares of First Partners common stock held by such Eligible Shareholder will be disregarded, and such shares in excess of the ten percent (10%) limit will be converted into Progress common stock. Fractional shares of Progress common stock will not be issued to Eligible Shareholders; instead, these shareholders will receive cash, without interest, equal to the product of (i) $15.00 multiplied by (ii) the fraction of a share of Progress common stock to which such holder would otherwise be entitled. Only individual residents of the State of Alabama or entities with their principal place of business located in the State of Alabama are eligible to receive Progress common stock; all First Partners shareholders who are not Alabama residents or entities will receive cash, without interest, in the amount of $27.00 per share. See The Merger Proposal; Conversion of Shares; Cash Limitation; Exchange of Share Certificates, on page 29. Q: How do I make a cash election for up to 10% of my total shares of First Partners common stock? A: The Shareholder Form described above is included with this Proxy Statement being delivered to First Partners shareholders. You should carefully review and follow the instructions included with the Shareholder Form. All First Partners shareholders should complete Part A of the Shareholder Form, and Eligible Shareholders wishing to make an election to receive part of the merger consideration in cash should complete Part B. The deadline to submit the Shareholder Form with an election under Part B thereof is 5:00 p.m. Central Time on Monday, April 17, 2017, the day before the First Partners Annual Meeting. Cash elections received from any Eligible Shareholder with respect to shares of First Partners common stock in excess of ten percent (10%) of the shares of First Partners common stock held by such Eligible Shareholder will be disregarded, and such shares in excess of the ten percent (10%) limit will be converted into Progress common stock. If you transfer your shares after the election deadline, any election made under Part B of the Shareholder Form will be void and of no effect, you will receive no merger consideration, and the transferee of the shares, if an Eligible Shareholder, will be deemed to have made no cash election under Part B of the Shareholder Form and will receive Progress stock only. See The Merger Proposal; Conversion of Shares; Cash Limitation; Exchange of Share Certificates, on page 29. Q: I am an Alabama resident or entity. What happens if I do not complete Part B of the Shareholder Form? A: If you are a resident of Alabama, and you check the appropriate box in Part A and sign the Shareholder Form but do not make an election in Part B, each of your shares of First Partners common stock will be converted into Progress common stock at the exchange ratio described above. If you are a resident of Alabama, and you check the appropriate box in Part A, make a valid election in Part B and sign the Shareholder Form, each of your shares of First Partners common stock for which you do not make a valid cash election will be converted into Progress common stock at the exchange ratio described above, and each of your shares of First Partners common stock for which you have made a valid cash election will be converted into cash, without interest, in the amount of $27.00 per share. Q: I am not an Alabama resident or entity. What happens if I do not complete, sign and submit the Shareholder Form? A: If you are not a resident of Alabama or an entity with its principal place of business located in the State of Alabama, you will receive cash, without interest, in the amount of $27.00 per share for each share of First Partners common stock you own. Q: How do individual shareholders determine their state of residence? A: If you are an individual, you are a resident of the state in which your principal residence is located; that is, the primary place that you inhabit and spend most of your time, even if you are temporarily out of the state. xvii

18 Q: I am an officer, director, partner, manager, managing member or trustee of a corporation, partnership, limited liability company or trust. How do I determine the state of residence of the entity? A: A corporation, partnership, limited liability company, trust or other form of business organization is deemed to be a resident of the state where it has its principal place of business. The principal place of business is the nerve center of the entity; that is, the place from which the officers, partners or managers of the entity primarily direct, control and coordinate the activities of the entity. Q: Do all of the owners of the entity need to be residents of Alabama for the entity to be deemed a resident of the State of Alabama? No. As long as the entity s principal place of business under the test described above is located in the State of Alabama, the entity is an Alabama resident, even if some or all of its individual owners are not Alabama residents. Q: I am the trustee of a trust and my principal place of business is located outside of Alabama. However, the trust beneficiaries are residents of Alabama. Does the trust qualify as a resident of Alabama? A: Yes. If the trust s principal place of business is located outside the State of Alabama, the trust would still qualify as an Alabama resident if all of the trust beneficiaries are individual residents of the State of Alabama. Q: Why is the election to receive Progress common stock available only to residents of Alabama? A: The shares of Progress common stock offered as consideration in the Merger are being issued without registration under the Securities Act in reliance upon an exemption provided by Section 3(a)(11) thereof and Rule 147 thereunder for intrastate offerings of securities. This exemption limits the offer and issuance of Progress s common stock to residents of the same state where Progress is incorporated and is doing business. See The Merger Proposal; Eligible Shareholders, on page 28. Q: How was the Merger consideration determined? A: The consideration to be issued to First Partners shareholders in the Merger was the result of an arm s length negotiation between Progress and First Partners, subject to the direction of their respective Boards of Directors and advice provided by their respective legal counsel and independent financial advisors. See The Merger Proposal; Background of the Merger, on page 29. Q: What are the federal income tax consequences of the Merger to me? A: It is a condition to the closing of the Merger transaction that the parties receive an opinion from Maynard, Cooper & Gale, P.C., that the Merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code. First Partners shareholders receiving stock consideration in the Merger will not recognize gain for U.S. federal income tax purposes as a result of the surrender of First Partners common stock for receipt of Progress common stock. However, to the extent that shareholders receive cash, either as a result of their election to receive cash, their residence outside of the State of Alabama or their exercise of dissenters rights, and to the extent that shareholders receive cash in lieu of their fractional shares, they may recognize gain for U.S. federal income tax purposes. With the exception of Progress shareholders who exercise their dissenters rights, the Merger should result in no tax consequences for Progress shareholders. Notwithstanding the foregoing, your tax treatment will depend on your specific situation and many variables not within our control. You should consult your own tax advisor for a full understanding of the xviii

19 tax consequences of the Merger to you. See Material United States Federal Income Tax Consequences of the Merger, on page 72. Q: When do you expect the Merger to be completed? A: We are working to complete the Merger in the second quarter of 2017, assuming that First Partners and Progress shareholders and the applicable bank regulatory agencies approve the Merger and that other conditions to closing are met. Q: Will I be able to sell the Progress common stock that I receive pursuant to the Merger? A: The Progress common stock to be issued in the Merger is not publicly traded, and a liquid market for the stock does not exist and is not likely to develop soon after the Merger. In addition, the shares of Progress common stock to be issued in the Merger will be issued pursuant to exemptions from registration under federal and state securities laws, and may not be resold or transferred absent registration or an applicable exemption. The shares of Progress common stock received in the Merger may not be resold or transferred to any person who is not a resident of the State of Alabama for a period of six (6) months after the consummation of the Merger. See The Merger Proposal Restrictions on Transfer, on page 28 and Description of Progress Common Stock; Marketability of Shares and Preemptive Rights, on page 81. Q: What should I do now? A: Progress Shareholders. After carefully reading and considering the information in this Proxy Statement, follow the voting instructions included with this Proxy Statement. Specifically, you should go to to grant your proxy to vote your shares online. Progress shareholders may also follow the voting instructions included in the enclosed proxy card in order to grant your proxy. The deadline for receiving proxies to vote, whether online or by mail, is 5:00 p.m. Central Time, on April 17, First Partners Shareholders. After carefully reading and considering the information in this Proxy Statement, follow the voting instructions included with this Proxy Statement and on the enclosed proxy card. You should also follow the instructions on the enclosed Shareholder Form and complete, sign and return the Shareholder Form with your proxy card. NOTE: If you sign and send in your proxy card and do not indicate how you want to vote, your proxy will be voted FOR the proposal to approve the Merger Agreement, FOR the election of directors to your company s Board of Directors and (in the case of Progress shareholders) FOR approval of the proposal to increase authorized capital stock. Q: What if I do not vote? A: If you do not vote, (i) the effect will be a vote against the Merger Agreement and (ii) (in the case of Progress shareholders) there will be no effect as to the increase in authorized capital and (iii) there will be no effect as to the election of directors. Q: Can I change my vote after I deliver my proxy? A: Yes. You can change your vote at any time before your proxy is voted at your company s annual meeting. You can do this in three ways. First, you can revoke your proxy by giving written notice of revocation to your company s corporate Secretary. Second, you can submit a new properly executed proxy with a later date at or before your company s annual meeting. The latest proxy actually received before the meeting will be counted, and any earlier proxies will be revoked. Third, you can attend your company s annual xix

20 meeting, give notice of your revocation and vote your shares in person. Any earlier proxy will be thereby revoked. However, simply attending your company s meeting without voting will not revoke your proxy. Q: Are dissenters rights available to me in connection with this transaction? A: Yes. Shareholders of First Partners and Progress have dissenters rights in connection with the proposed Merger under the Alabama Business Corporation Law, which we refer to as the ABCL. The ABCL provides that a dissenting shareholder is entitled to receive cash in an amount equal to the fair value of his or her shares. The fair value of your shares may be more or less than the value of the consideration you would receive in the Merger. See Dissenters Rights, on page 69. To perfect dissenters rights, you must (i) give either First Partners or Progress, respectively (depending upon whether you are a shareholder of First Partners or Progress), written notice of your intent to dissent from the Merger prior to the vote of the shareholders at your company s annual meeting, (ii) not vote your shares in favor of the Merger proposal and (iii) comply technically with proper procedure as set forth under the ABCL. You should read carefully the more detailed description of this procedure beginning on page 69, as well as the full text of the relevant sections of the ABCL, which are attached to this Proxy Statement as Appendix B. Pursuant to the Merger Agreement, the Progress Board of Directors may terminate the Merger Agreement and abandon the Merger if holders of more than 5% of the outstanding shares of common stock of either Progress or First Partners properly assert their dissenters rights of appraisal. Q: I am a shareholder of First Partners. Should I send in my stock certificates now? A: No. If you are a First Partners shareholder and the Merger is completed, Progress or its designee will send all former First Partners shareholders written instructions for exchanging their stock certificates for the Merger consideration they are entitled to receive. In any event, do not send your stock certificates with your proxy card or your Shareholder Form. Q: Who can help answer my questions? A: If you would like additional copies of this document, or if you would like to ask any questions about the Merger and related matters, you should contact: For shareholders of Progress: Ms. Dabsey Maxwell Progress Financial Corporation 201 Williams Avenue Huntsville, Alabama Telephone: (256) For shareholders of First Partners: Mr. Kenneth W. Till First Partners Financial, Inc Highland Avenue South Birmingham, Alabama Telephone: (205) xx

21 PROGRESS FINANCIAL CORPORATION 201 Williams Avenue Huntsville, Alabama FIRST PARTNERS FINANCIAL, INC Highland Avenue South Birmingham, Alabama JOINT PROXY STATEMENT OFFERING CIRCULAR PART I THE PROGRESS ANNUAL MEETING INFORMATION ABOUT THE PROGRESS ANNUAL MEETING General The Board of Directors of Progress has sent you this Proxy Statement to solicit your vote at the 2017 Annual Meeting of Shareholders, including any adjournment or postponement thereof (the Progress Annual Meeting ). The Progress Annual Meeting will be held on Tuesday, April 18, 2017, at 4:00 p.m., Central Time, at 201 Williams Avenue, Huntsville, Alabama The Progress Annual Meeting is being held to: elect four (4) Class III directors to serve on the Board of Directors of Progress until the Annual Meeting of Shareholders in 2020 and one (1) Class II director to serve on the Board of Directors of Progress until the Annual Meeting of Shareholders in See Progress Proposal No. 1 Election of Directors, on page 3; consider and vote on a proposal to adopt an Amendment to the Articles of Incorporation of Progress to increase authorized capital stock (the Amendment ). See Progress Proposal No. 2 Approval of Increase in Authorized Capital Stock, on page 17; consider and vote on a proposal to authorize, approve and adopt the Agreement and Plan of Merger dated February 14, 2017 (the Merger Agreement ), by and between Progress and First Partners Financial, Inc. ( First Partners ), pursuant to which First Partners will merge with and into Progress on and subject to the terms and conditions contained therein (the Merger ). See Part III Progress and First Partners Joint Proposal The Merger Agreement, on page 27; and transact such other business as may properly come before the Annual Meeting. The Board of Directors of Progress knows of no other business that will be presented for consideration at the Annual Meeting other than the items noted above. Solicitation of Proxies The Board of Directors of Progress has sent you this Proxy Statement to solicit your vote at the Progress Annual Meeting (including any adjournment or postponement of the Progress Annual Meeting). This Proxy Statement is designed to assist you in voting your shares. On or about March 17, 2017, Progress began distributing this Proxy Statement to all shareholders of record at the close of business on February 28,

22 Shareholders Entitled To Vote The Board of Directors of Progress has set February 28, 2017 as the record date for the Progress Annual Meeting. Only shareholders of record at the close of business on the record date will be entitled to notice of and to vote at the Progress Annual Meeting. At the close of business on February 28, 2017, there were 7,570,854 shares of common stock of Progress, par value $1.00 per share, outstanding. Each shareholder is entitled to one vote in person or by proxy for each share of common stock held on all matters properly to come before the Progress Annual Meeting. Quorum Information At the Progress Annual Meeting, the presence of a majority of the outstanding shares of common stock that are entitled to vote, represented in person or by proxy, shall constitute a quorum for the transaction of business. No business may be transacted without a quorum. Votes Necessary Assuming the presence of a quorum: directors will be elected at the Progress Annual Meeting by an affirmative vote of a majority of the votes cast, whether in person or by proxy, and entitled to vote. Abstentions will be counted for purposes of establishing a quorum only and will not affect the election of directors; the proposal to approve the adoption of the Amendment will require the affirmative vote of a majority of the shares of Progress voting at the Progress Annual Meeting; and the proposal to approve the adoption of the Merger Agreement will require the affirmative vote of a majority of the shares of Progress outstanding and entitled to vote at the Progress Annual Meeting. Unless instructed to the contrary, the shares represented by proxies will be voted FOR the nominees for directors named therein, FOR the adoption of the Amendment and FOR the adoption of the Merger Agreement. Submission of Proxies Shares of common stock represented by a properly executed proxy, if such proxy is received by Dabsey Maxwell, the Chief Financial Officer/Chief Operations Officer of Progress and Progress Bank, prior to the vote at the Progress Annual Meeting and not revoked, will be voted at the Progress Annual Meeting in accordance with the instructions indicated in such proxy. Progress shareholders have received instructions with this Proxy Statement on how to grant a proxy to vote their shares online at Progress shareholders may also complete, sign, date and return the proxy. The deadline for submitting proxies, whether online or by mail, is 5:00 p.m. Central Time, on April 17, The persons named in the enclosed proxy, unless a contrary instruction is indicated on the enclosed proxy, intend to vote the shares appointing them as proxies FOR the nominees named therein, FOR the adoption of the Amendment and FOR the adoption of the Merger Agreement. Additionally, with respect to such other matters as may properly come before the Annual Meeting, if no direction is made on the proxy, the proxies will be voted as the proxy holders deem advisable. 2

23 Revocability of Proxies If you desire to revoke your proxy, you may do so by (i) giving written notice of revocation to Dabsey Maxwell, the Chief Financial Officer/Chief Operations Officer of Progress and Progress Bank, at any time prior to the time of voting at the Progress Annual Meeting, (ii) properly submitting a duly executed proxy bearing a later date or (iii) attending the Progress Annual Meeting and voting in person. All written notices of revocation or other communications with respect to revocation of proxies should be addressed as follows: Progress Financial Corporation, 201 Williams Avenue, Huntsville, Alabama 35801, Attention: Dabsey Maxwell. Costs of Solicitation The cost of preparing, assembling and mailing the Proxy Statement is being borne by Progress. Progress will also bear any additional costs of soliciting proxies. General PROGRESS PROPOSAL NO. 1 ELECTION OF DIRECTORS Progress s bylaws set the minimum number of directors at five and the maximum number at 25, with the exact number to be determined by resolution of the Progress Board of Directors. There are currently 11 members of the Progress Board of Directors. As set forth in the Articles of Incorporation of Progress, directors of Progress serve staggered terms of three (3) years, which terms correspond to the terms in place for Progress Bank s directors. At the Progress Annual Meeting this year, Progress s shareholders will consider and vote upon the election of four (4) Class III directors. On July 19, 2016, the Board of Directors of Progress increased the size of the Board from 10 to 11 and appointed Bradley Sklar to serve as a Class II director of Progress. Under Alabama law and Progress s bylaws the term of a director appointed by the Board of Directors to fill a vacancy expires at the next meeting of shareholders at which directors are elected. Accordingly, Progress s shareholders will also consider and vote upon the election of Mr. Sklar as a Class II director. The Board of Directors of Progress recommends the four (4) persons listed below for election as Class III directors to serve until the 2020 Annual Meeting of Shareholders and recommends Mr. Sklar for election as a Class II director to serve until the 2019 Annual Meeting of Shareholders, or until their respective successors have been elected and qualified. Each of these nominees currently serves as a director of Progress and Progress Bank. The persons named in the enclosed proxy card, unless a contrary direction is indicated on the enclosed proxy card, intend to vote the shares appointing them as proxies in favor of the nominees named herein. If any of the nominees should be unable to serve, which the Progress Board of Directors does not anticipate will occur, the persons designated as proxies will cast votes for a substitute selected by the Progress Board of Directors, or the Progress Board of Directors may decide not to select an additional person as a director. Following the Progress Annual Meeting, Progress, as the sole shareholder of Progress Bank, intends to re-elect each of the nominees listed below as directors of Progress Bank. Unless otherwise specified in the enclosed proxy card, it is intended that votes will be cast for the election of the nominees listed below. Proxies cannot be voted for a greater number of persons than the number of actual nominees so named. 3

24 Information About the Nominees The following provides certain biographical information about the individuals who have been nominated for election as Class III directors of Progress. Bhavani Kakani. Mrs. Kakani, age 69, President of the AshaKiran, A Ray of Hope and is a former board chair of Leadership Huntsville-Madison County. She is an advocate of better health for all persons and currently serves on the Healthcare Authority of the City of Huntsville. She served as past board chair of the Alabama Council of Hospital Trustees and served on The Statewide Health Coordinating Council board. She also served in leadership roles with the Madison County Medical Alliance (president), Alliance to the Medical Society of the State of Alabama (president), Southern Medical Association Alliance, Alliance to the American Medical Association, National Children s Advocacy Center (board president), Alabama Coalition Against Domestic Violence and Hospice. She believes in expanding opportunities for an improved quality of life through education. She has been a mentor for Women s Economic Development Council Foundation for more than seven (7) years, has served on the board of the UAH Foundation and has served on the Alabama Space Education Commission. She was an active member of the Randolph School, Women s Business Center of North Alabama and Women s Economic Development Council Foundation boards. Mrs. Kakani is a community supporter and volunteer. She served on the boards of the Huntsville Botanical Garden, the Huntsville India Association, the Huntsville Telugu Association (president), the Women s Guild of the Huntsville Museum of Art (president), the Symphony Guild and the Arts Council, and she has chaired the United Way Professional Division Campaign and served as co-chair of Legacy of Huntsville Bicentennial Celebration Committee. Mrs. Kakani holds a Bachelor of Science in Finance, summa cum laude, and a Master s of Administrative Science in Business Administration and Finance from the University of Alabama in Huntsville. David L. Nast. Mr. Nast, age 57, serves as the President and CEO for Progress Bank and has served on the Board of Directors of the Bank since its inception. Mr. Nast worked in various capacities for AmSouth Bank from 1982 until 2006 in Birmingham and Huntsville, including Management Trainee, Branch Manager, Vice President/Branch Administration, Senior Vice President/Consumer Banking Manager, Senior Vice President/Business Banking Sales Manager, Senior Vice President/Regional Director of Mortgage Lending and Senior Vice President/Regional Sales Manager for AmSouth Investment Services, Inc. He holds B.S. and M.B.A. degrees from Jacksonville State University, as well as Certificates from the Louisiana State University Banking School of the South and Georgia State University s Leadership Institute. He also holds the Series 7, Series 66 and Series 24 Securities licenses. Mr. Nast s involvement in the community includes serving on past boards for Junior Achievement, The Land Trust of Huntsville/Madison County, Boys and Girls Club of Huntsville, North Alabama Boys Scouts Council, Huntsville City Schools Foundation, Huntsville Country Club and the Huntsville High School Booster Club. He is a member of Leadership Huntsville Class 10 and Leadership Alabama Class 20, where he serves currently on the Board of Directors. Mr. Nast is a member of the Huntsville Rotary Club and is a Paul Harris Fellow. He serves as a Board Member of the Alabama Bankers Association, Huntsville Hospital Foundation, Huntsville Sports Commission, Committee of 100 and the Huntsville Museum of Art. Mr. Nast and his wife Lee have 4 sons and 3 grandchildren. He enjoys trail running, golf and spending time on the lake with family and friends. Charles G. Vaughn. Mr. Vaughn, age 73, is the current chairman of the Progress and Progress Bank Boards of Directors. Mr. Vaughn has a B.S. degree from the University of Alabama and an M.B.A. from Tulane University. He retired from the United States Army in 1986 with 21 years of experience as an officer. After retirement, Mr. Vaughn worked as a Director at General Research Corporation for 2 years, and as a Vice President and then President of a local privately owned corporation, CAS, Inc. for 21 years. In 2006, CAS was sold to EDO Corporation, at which time he became a Senior Vice President at EDO. In 2007, ITT Corporation acquired EDO, and Mr. Vaughn worked as Senior Vice President at ITT until his retirement in During those years, he worked as project manager, Vice President for Business Development, a Group President and 4

25 then as the company President. He was directly responsible for more than $300 million of business operations in dozens of locations throughout the United States providing technical support across all services of the Department of Defense. Mr. Vaughn currently serves as a member of the Board of the Business School at the University of Alabama. He also serves on the boards of three technology companies in Huntsville, including as chairman of the board of directors of N-Logic and GaN. He serves on the local community nonprofit boards of the Land Trust of North Alabama and the Huntsville Arts Council. Mr. Vaughn is a past president of the board for Valley Hill Country Club and president of Tera Corporation, a development company. He is a former member of the Rotary Club of Huntsville. Mr. Vaughn is a graduate of the Leadership Huntsville-Madison County program, and is a past member of the Tennessee Valley BRAC Committee. He has previously served on the boards of directors of the Huntsville Hospital Foundation, CAS, Inc., MEADS, LLC, Junior Achievement and the Association of the United States Army. Larry C. Weaver. Mr. Weaver, age 63, is the current vice chairman of the Progress Financial Corporation and Progress Bank and Trust boards of directors and he is an attorney with and member of Wilmer & Lee, P.A. in its Decatur office, where he has practiced since December, Previously, Mr. Weaver was an attorney with Eyster, Key, Tubb, Weaver & Roth, LLP in Decatur from 1979 to His practice areas include taxation, estates and trusts, probate, commercial transactions, corporations, and real estate law. Mr. Weaver holds a Bachelor of Science degree in accounting from the University of Alabama; a Juris Doctorate degree from Cumberland School of Law, Samford University; and a Master of Laws in Taxation (LLM) degree from the University of Alabama School of Law. He has been admitted to the Alabama Bar and to practice before the U.S. Tax Court, the U.S. Claims Court, the U.S. District Courts for the Northern and Southern Districts of Alabama, and the U.S. Supreme Court. Mr. Weaver is a member of the Morgan County and American Bar Associations (Taxation and Probate and Property Sections), the Alabama State Bar and the National Council of Farmers Cooperatives (Legal Tax Accounting Committee). He is also a past board member of Habitat for Humanity of Morgan County and Hospice of Morgan County and was a founding member of the Morgan County Treasure Forest Association. He is a member of the Decatur Rotary Club (Paul Harris Fellow) and a past director of the Decatur Rotary Foundation. Mr. Weaver serves as vice chairman of the board of trustees of the Northwest District of the North Alabama Conference of the United Methodist Church, Inc. and as a trustee of the North Alabama Conference of the United Methodist Church. He is past chairman of the board of stewards and of the administrative board of First United Methodist Church in Decatur. He serves as regional counsel to John Deere Company and as general counsel to Alabama Farmers Cooperative, Inc.; Bonnie Plants, Inc.; Cooperative Financial Services, Inc.; Alabama Farmers Insurance Company for Cooperatives; and SouthFresh Aquaculture, LLC. The following provides certain biographical information about the individual who has been nominated for election as a Class II director of Progress. Bradley Sklar. Mr. Sklar, age 55, is an attorney at Sirote & Permutt, P.C. in Birmingham, Alabama, where he serves on the firm s Board of Directors. His legal practice focuses on tax and business planning, economic development, real estate investments and incentives, succession planning and entity formation, as well as mergers and acquisitions. Mr. Sklar earned an undergraduate degree in Accounting at the University of Texas, a law degree from the University of Alabama, and a Master of Laws in Taxation from New York University. Mr. Sklar is an active member of the community, having served in leadership roles for a number of organizations and boards. His current involvement includes serving as President of the Mountain Brook Board of Education and as co-chair of the Finance and Taxation Committee of the Birmingham Business Alliance. He is a graduate of the 2001 Class of Leadership Birmingham and the Class of Leadership Alabama. Recommendation of the Progress Board of Directors The Progress Board of Directors unanimously recommends a vote FOR the election as directors of each of the nominees. 5

26 Other Directors The following provides certain information as to each of Progress s other directors, along with any officer positions held by such directors with Progress or Progress Bank. Class I Directors (Term Expires 2018) Phillip W. Trey Bentley, III. Mr. Bentley, age 53, graduated from Huntsville High School and from Auburn University in 1987 with a degree in business administration. Upon graduation from Auburn University, Mr. Bentley attended the National Automobiles Dealers Associations dealer candidate academy. Bentley previously served as chairman of the board of the Automobile Dealers Association of Alabama. He operates Bentley Buick GMC Cadillac and Bentley Hyundai, all located in Huntsville. Mr. Bentley is the owner of Colonial Printing and is also the Chevrolet and Cadillac dealer in Florence, Alabama. He is also a founding director of Progress Bank. He is actively involved in the community, having served on the boards of the Better Business Bureau, the Arts Council and the Huntsville Hospital Foundation, and he is past Chairman and current member of the board of directors of the Downtown Rescue Mission. He also serves as a trustee of the Alabama Auto Dealers Workman Compensation Fund and a board member of the Huntsville Madison County Airport Authority. He was a member of the Huntsville Madison County Leadership Class 12. Mr. Bentley and his family attend Central Presbyterian Church, where he has served on the board of deacons. Sheila B. Brown. Ms. Brown, age 57, is founder and CEO of QuantiTech, a business supplying quality value-added technical and management services in studies, software development, analytical method application and program assessments to customers in government and commerce. Ms. Brown has lived in Huntsville since 1967, when her parents moved to Redstone Arsenal with the United States Army. She attended Huntsville City Schools and graduated from J.O. Johnson High School, graduated cum laude from Vanderbilt University in Civil Engineering, and received certification as an Engineer-in-Training from the State of Tennessee in She has taken graduate courses in statistics and has received a professional certification in contracts management. She graduated from the Minority Business Executive Program at the Amos Tuck School at Dartmouth College in Ms. Brown is an active community leader and serves on the Board of Directors for Cummings Research Park. She was a member of Class 10 of Leadership Huntsville-Madison County and served as day chair for Class 11. Ms. Brown has served on the boards of the Huntsville/Madison County Chamber of Commerce and the Huntsville Hospital Foundation, and she is a past president of the Women s Economic Development Council. Doug Ruggles. Mr. Ruggles, age 54, is the CEO and third-generation co-owner of Martin, Inc., the parent company for Martin Industrial Supply, Martin Plant Services, Martin Fastening Solutions, Martin Safety Solutions, Townsend Door Hardware and Townsend Systems. Headquartered in Florence, Alabama, Martin, Inc. has grown into a multi-state distribution company and is ranked as one of the top 100 industrial distributors in the United States. Mr. Ruggles graduated from the University of Alabama in 1985 with degrees in public relations and business. In 2005, he completed the Owner/President management program (OPM) at Harvard Business School. He is a member of First Presbyterian Church and is actively involved with the Shoals Economic Development Authority, the Shoals Entrepreneurial Center, Special Olympics of the Shoals, United Way and the University of Alabama President s Cabinet. Class II Directors (Term Expires 2019) Jim D. Caudle, Jr. Mr. Caudle, age 59, is chairman and CEO of United Plating Inc., which comprises 11 production facilities for metal finishing, anodizing and painting. Mr. Caudle also serves as the CEO of Carina Technology, Inc., an Energy Intelligence hardware and software company that provides multiple solutions to electric utilities. He is a member of the Bosch Supplier Leadership Team, the Alabama Automobile Manufacturers Association and the Automotive Industry Action Group. Mr. Caudle holds a degree from Auburn University and previously served as Huntsville chairman of the Auburn Alumni Association Scholarship Committee. He is a member of the Huntsville Chamber of Commerce Existing Business Committee, Leadership 6

27 Huntsville-Madison County Class 8, the National Association of Metal Finishers, the Young Business Leaders of Huntsville, past member of the Young Presidents Organization, a current member of WPO, and Ramey Forum. Mr. Caudle is a past president of the Huntsville Acme Club, serves on the board of the Huntsville Metropolitan YMCA, served as chairman of the board of the downtown YMCA and is currently serving as chairman of the YMCA Camp advisory board. He has worked with the National Cancer Society and with the Multiple Sclerosis Society as a fundraiser captain. He is a member of the National Diabetes Association and contributes to the Big Oak Ranch for homeless children. He has supported the Blount Hospitality House, the Huntsville Botanical Garden, Boys & Girls Club of North Alabama, and Huntsville Museum of Art. He is a member of First United Methodist Church. Lee R. Hoekenschnieder. Mr. Hoekenschnieder, age 65, serves as the Huntsville Market President and General Banking Executive for Progress Bank. A native of Huntsville, he began his banking career more than 40 years ago and has held senior leadership positions in several areas of banking, including consumer banking, branch administration and commercial lending, and he previously served as Wealth Management Executive for a large regional bank. He attended the University of Alabama and UAH, as well as the School of Banking of the South at Louisiana State University and Canon Trust School at Pepperdine University, and he also has his Series 7, 63 and 65 securities licenses. Mr. Hoekenschnieder has been active in the Huntsville community and has held leadership positions in several organizations, including the Rotary Club of Huntsville (president), Huntsville Hospital Foundation (chairman), Huntsville Museum of Art (chairman), Huntsville-Madison County Library Foundation (president), American Cancer Society (president), American Heart Association (president), Huntsville Rehabilitation Foundation/Phoenix Industries, New Futures (treasurer), Madison County Veterans Memorial Foundation (president) and Class 1 of Leadership Huntsville-Madison County. Currently, he serves as treasurer of First Community Health, chairman of the Board of Directors for BIZTECH, chairman of Creative Cities Committee (Committee of 100) and chairman emeritus of the Huntsville Hospital Foundation. Eric W. Janssen, M.D. Dr. Janssen, age 56, is an orthopedic surgeon, founder and principal partner at SportsMed Orthopaedic Surgery & Spine Center in Huntsville. He has practiced medicine for more than 20 years, specializing in advanced knee and shoulder surgery. As a graduate of Marshall University School of Medicine, Dr. Janssen completed his residency at Mount Carmel Medical Center in Columbus, Ohio and his sports medicine fellowship at the Hughston Orthopedic Clinic in Columbus, Georgia. Dr. Janssen has served on various community boards, including the boards of directors of the Chamber of Commerce and the Fellowship of Christian Athletes, and he currently serves on the Board of Directors of Crestwood Medical Center. Dr. Janssen is the team physician for a number of local sports teams, including area high schools and universities, and is a past volunteer medical team member for USA Gymnastics. Additional Directors After the Merger The Merger Agreement provides that at the time of the closing of the Merger, the size of the Board of Directors of Progress will increase from 11 to 14, and the directors of Progress as the surviving corporation in the Merger will be the directors of Progress immediately prior to the closing of the Merger, with the addition of Messrs. Elam P. Holley, Jr., Kevin B. Kynerd and Charles A. McCallum, III, who have been designated by First Partners pursuant to the Merger Agreement to serve on Progress s Board of Directors and will be nominated to serve as directors in their designated classes at the first annual meeting of shareholders following the closing of the Merger. See First Partners Proposal No. 1 Election of Directors, on page 21 for information about these three individuals. Non-Director Executive Officers The following is a list of individuals who serve as executive officers of Progress but do not also serve as directors, along with selected biographical information. Dabsey Maxwell. Mrs. Maxwell serves as the Chief Financial Officer and Chief Operations Officer for Progress Bank. A certified public accountant, Mrs. Maxwell previously served as the Director of Finance for 7

28 Charter Communications at its state headquarters in Birmingham, Alabama. Mrs. Maxwell has also served as Vice President, Controller and Corporate Assistant Secretary for ITC Holding Company in West Point, Georgia, and as an accountant for Ernst & Young in Atlanta, Georgia. Her background includes leadership roles in a holding company with a portfolio of companies with a market capitalization of $2.5 billion and sales exceeding $500 million. Mrs. Maxwell holds a B.S. degree with Highest Honors in Business Administration from Auburn University with a major in accounting. She is a member of Huntsville First United Methodist Church. She is also a member of Leadership Focus Class 20 of Huntsville-Madison County, and Class 23 of Leadership Huntsville-Madison County. She served two terms on the board of Leadership Huntsville-Madison County as well. She has previously served as an appointed member of the Alabama Space Education Commission and is currently in her second year as co-chair of the Randolph Community Network Arts Board. She has served on the Huntsville Museum of Art Foundation Board for the past six (6) years and served as chairman of that board for the last two (2) years. J.E.P. Buchanan. Mr. Buchanan serves as Chief Credit Officer and Senior Lender for Progress Bank. Mr. Buchanan graduated from Huntsville High School and from Auburn University in 1990 with a degree in Business Administration. In his banking career, he has focused on commercial lending to both small and large businesses. Mr. Buchanan has served on the board of Huntsville Eastern Park League and on numerous other nonprofit boards in Huntsville. He is a member of the Huntsville Rotary and was a member of Class 19 of Leadership Huntsville-Madison County. Mr. Buchanan and his family attend Cornerstone Presbyterian Church. Bruce Pylant. Mr. Pylant, a founding officer of Progress Bank, serves as the Decatur Market President and Executive Vice-President for Progress Bank. Mr. Pylant worked in various sales management capacities for AmSouth Bank for 21 years in Huntsville and Decatur, Alabama. Most recently, he served as Decatur City President and Senior Vice President from 1994 to After AmSouth Bancorporation merged with Regions Financial Corporation, Mr. Pylant served as Consumer Sales Manager for Regions Bank. He is a career banker with more than 40 years of experience. Mr. Pylant received his B.S. in Commerce and Business Administration from the University of Alabama and holds banking certificates from the Louisiana State University Graduate School of Banking of the South and Georgia State University Leadership Institute. Mr. Pylant was a longtime instructor in the Huntsville Chapter of the American Institute of Banking and received Basic, Standard and Graduate Certificates of Achievement. Mr. Pylant and his family are members of First United Methodist Church, where he has been involved as an Administrative Board Member, as a member of the Finance Committee and in youth leadership activities. Mr. Pylant has previously served as chairman of the Decatur- Morgan County Industrial Development Board, membership chairman of the board of the Decatur Country Club and chairman of the board of trustees of Parkway Medical Center Hospital. A member of the Rotary Club of Decatur, Mr. Pylant is also active with the Reading Rotarians for Banks-Caddell Elementary School. Other groups with which Mr. Pylant has been actively involved include United Way of Morgan County (past campaign chairman and president of the board), United Way of Madison County (division chair and board member), Family Services Center of Madison County (past president), the Mental Health Center of Morgan County, the Limestone County Economic Development Association, the American Red Cross HEROs Campaign, Alabama Young Bankers (school coordinator and vice-chair), Huntsville/Madison County Chamber of Commerce, Leadership Huntsville-Madison County Class 2, Morgan County/Decatur Chamber of Commerce Board of Directors, Leadership Decatur and others. Andy Mann. Mr. Mann serves as Shoals Market President for Progress Bank. A native of Florence, Alabama, Mr. Mann s banking career of more than 20 years has included commercial lending, private banking and various management roles. He has held senior management positions at both community and regional banks, including service as Community Bank President in North Alabama for Regions Bank. Mr. Mann graduated with a B.S. degree in Finance from the University of North Alabama and has attended commercial banking school and leadership schools focused on the banking industry. Mr. Mann is a past board member of the Shoals Economic Development Authority and Big Brothers Big Sisters of the Shoals and is a graduate of the Leadership Shoals Class of He served as Director for the Industrial Development Board for the City of Scottsboro and as Chairman of the Jackson County Chamber of Commerce. He is a member of the Florence 8

29 Rotary Club, Chairman of the Board for Shoals Chamber of Commerce, Executive Council member for the University of North Alabama College of Business and a member of Leadership Alabama Class XXV. Sean Johnson. Mr. Johnson serves as Birmingham Market President for Progress Bank. A native of Anniston, Alabama, Mr. Johnson s career has comprised numerous banking and investment roles over a 24-year period in the Birmingham, Montgomery, Tuscaloosa and Nashville areas, including area president, regional sales manager, retail executive and city president. Mr. Johnson holds a B.S. in Management from Auburn University, as well as the Series 6, 63, 65, 53, 7, and 24 securities licenses. He is active in the community and has served as a board member of River Region United Way, Business in the Arts Council, Alabama Shakespeare Festival, Montgomery Area Chamber of Commerce, Museum of Natural History and Boy Scouts. Mr. Johnson was awarded the Montgomery Business in the Arts award for He is a member of the Vestavia Chamber of Commerce and the Birmingham Business Alliance. He also served on the Montgomery Leadership Committee of 100, the President s Club of the Montgomery Area Chamber of Commerce, the United Way Campaign (chairman, ), the United Way (board chairman, 2010), the Rotary Club, and the American Cancer Society. Information Regarding the Boards and Board Committees of Progress and Progress Bank The Board of Directors of Progress and the Board of Directors of Progress Bank consist of the same 11 individuals. The Board of Directors of Progress and Progress Bank conduct business through meetings of both the full Board of Directors and certain committees. The Board of Directors currently has five (5) committees: (i) the Executive/Loan Committee; (ii) the Audit Committee (which is also responsible for audit-related matters for Progress); (iii) the Asset/Liability Investment Committee; (iv) the Human Resources/Compensation Committee; and (v) the Technology Committee. Each committee is chaired by a member of the Board of Directors and consists of two (2) to five (5) members, with appropriate members of management and other employees also serving as advisory members as appropriate. The committees meet as needed, but at least quarterly. Minutes from each committee meeting are presented to the entire Board of Directors at its next scheduled meeting. The duties and composition of the committees are as follows: Executive/Loan Committee. This committee serves as the management committee of Progress Bank when the full Board of Directors is not in session within the limitations set forth in Progress Bank s bylaws. Generally, this committee has the same powers as the Board of Directors in the day-to-day management of the business affairs of Progress Bank but is not intended to take the place of the Board of Directors. This committee is also responsible for examining and approving loans in compliance with Progress Bank s lending and credit policies. The committee has the power to engage outside resources to serve as loan review and is expected to manage the loan portfolio, including credit risk, credit pricing, loan loss reserves and concentrations. David Nast chairs this committee, and its membership consists of Lee Hoekenschnieder and Trey Bentley, with J.E.P. Buchanan, Bruce Pylant, Andy Mann, Chuck Kramer and Scott Seeley serving as ex officio members. Audit Committee. The Audit Committee monitors management, financial statements and internal and external audit reports and ensures staff compliance with the policies of the Board of Directors, laws and regulations. It has sole discretion in hiring an outside firm to conduct annual reviews of Progress s and Progress Bank s financial condition, compliance with regulations and internal controls. The external accounting firm reports directly to this committee. The Audit Committee meets with external auditors as often as is necessary to ensure that risk is being managed and that the appropriate measures are in place to correct deficiencies. Jim Caudle, Jr. chairs this committee, and its membership consists of Bhavani Kakani, Doug Ruggles and Larry Weaver, with James Brown serving as an ex officio member. Asset/Liability Investment Committee. This committee ensures compliance with the investment policy of the Board of Directors and has the authority to approve investments when the full Board of Directors is not in session. The committee oversees Progress Bank s interest rate and liquidity risk, maintains its tier one 9

30 capital leverage ratio, approves special loan and deposit programs and helps to manage its net interest margin. The committee includes ex officio members of Progress Bank s executive management team, as well as external consultants in Progress Bank s correspondent banking partnerships. Lee Hoekenschnieder chairs this committee, and its membership consists of David Nast and Charlie Vaughn, with Dabsey Maxwell, Bruce Pylant, J.E.P. Buchanan, Beth Martin, Andy Mann and Stuart Bridges serving as ex officio members. Human Resources/Compensation Committee. This committee makes recommendations to the Board of Directors and management with respect to human capital and personnel issues. The committee monitors the costs of salary and benefits and gives guidance accordingly. The committee is kept apprised of all actions regarding Progress Bank s employee work force. It makes certain that Progress Bank s compensation and benefits are competitive in the marketplace so that Progress Bank will be able to attract and retain top quality associates. This committee recommends executive management compensation plans to the Board of Directors annually based on the performance standards set forth in Progress Bank s strategic business plan. Sheila Brown chairs this committee, and its membership consists of Charlie Vaughn, Brad Sklar and Eric Janssen. Technology Committee. This committee oversees all technological resources used or purchased by Progress Bank. This committee monitors all computer systems, programs, security and information technology used to protect client and Progress Bank assets. The committee also ensures that Progress Bank is efficiently using current technology to serve clients and to allow associates to effectively perform their jobs. Bruce Pylant chairs this committee, and its membership consists of Shelia Brown, David Nast and Lee Hoekenschnieder, with Dabsey Maxwell, J.E.P. Buchanan, Beth Martin, Randy Tidwell and other selected Bank personnel serving as ex officio members. Compensation Committee Interlocks None of the members of Progress Bank s Human Resources/Compensation Committee at any time has been an officer or employee of Progress Bank. None of Progress Bank s executive officers currently serves, or in the past year has served, as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on Progress Bank s Board of Directors or Compensation Committee. SECURITY OWNERSHIP OF PROGRESS DIRECTORS AND MANAGEMENT The following table shows the number and percentage of the outstanding shares of Progress s common stock beneficially owned by the current members of the Board of Directors and executive officers of Progress and Progress Bank as of February 28, The numbers in the table below have been rounded down to the nearest whole number of shares, with any fractional shares beneficially owned described in the appropriate footnote. Name and Address Number of Shares Beneficially Owned (1) Percentage of Outstanding Shares of Common Stock (2) Phillip W. Bentley, III 107, % Sheila B. Brown 225, % James Edward Propst (J.E.P.) Buchanan 100,500 (3) 1.31% Jim D. Caudle, Jr. 197,267 (4) 2.59% Lee R. Hoekenschnieder 236,006 (5) 3.08% Eric W. Janssen 150,400 (6) 1.97% Sean Johnson 47,950 (7) 0.63% 10

31 Name and Address Number of Shares Beneficially Owned (1) Percentage of Outstanding Shares of Common Stock (2) Bhavani K. D. Kakani 227, % Andy Mann 66,374 (8) 0.87% Dabsey G. Maxwell 112,500 (9) 1.47% David L. Nast 327,500 (10) 4.21% Bruce W. Pylant 114,500 (11) 1.50% Doug Ruggles 12, % Brad Sklar 17, % Charles G. Vaughn 130,540 (12) 1.71% Larry C. Weaver 75,000 (13) 0.99% All Current Directors and Executive Officers as a Group (16 Persons) 2,149, % (1) The number of shares reflected in the table is that number of shares that are deemed to be beneficially owned under the federal securities laws. Shares deemed to be beneficially owned include shares as to which, directly or indirectly, through any contract, relationship, arrangement, understanding or otherwise, either voting power or investment power is held or shared and shares that such person has the right to acquire on or within sixty (60) days after February 28, (2) For each individual included in the table above, percentage of ownership is calculated by dividing the number of shares beneficially owned by such person by the sum of (i) 7,570,854 shares outstanding on February 28, 2017 and (ii) the number of shares that such person has the right to acquire on or within sixty (60) days after February 28, Therefore, the denominator used in calculating the percentage of ownership is unique to each person. For All Directors and Executive Officers as a Group, percentage of ownership is calculated by dividing the total shares beneficially owned by all 16 persons by the sum of (i) the total number shares outstanding on February 28, 2017 (7,570,854) and (ii) the total number of shares that the members of the group have the right to acquire on or within sixty (60) days after February 28, 2017 pursuant to organizer warrants and incentive stock options. The percentages presented in this table have been rounded to the nearest hundredth. (3) Includes 78,500 shares underlying options that are exercisable on or within sixty (60) days after February 28, (4) Includes 52,522 shares acquirable on or within sixty (60) days after February 28, 2017 pursuant to organizer warrants. (5) Includes 86,000 shares underlying options that are exercisable on or within sixty (60) days after February 28, (6) Includes 44,996 shares acquirable on or within sixty (60) days after February 28, 2017 pursuant to organizer warrants. (7) Includes 4,000 shares underlying options that are exercisable on or within sixty (60) days after February 28, (8) Includes 50,374 shares underlying options that are exercisable on or within sixty (60) days after February 28,

32 (9) Includes 86,000 shares underlying options that are exercisable on or within sixty (60) days after February 28, (10) Includes 112,500 shares acquirable on or within sixty (60) days after February 28, 2017 pursuant to organizer warrants and 98,500 shares underlying options that are exercisable on or within sixty (60) days after February 28, (11) Includes 78,500 shares underlying options that are exercisable on or within sixty (60) days after February 28, (12) Includes 60,003 shares acquirable on or within sixty (60) days after February 28, 2017 pursuant to organizer warrants. (13) Includes 37,500 shares acquirable on or within sixty (60) days after February 28, 2017 pursuant to organizer warrants. Director Compensation COMPENSATION OF PROGRESS DIRECTORS AND MANAGEMENT On February 4, 2011, the members of the Progress Board of Directors (with the exception of Messrs. Nast and Hoekenschnieder) began receiving cash compensation for their services on the Progress Board of Directors and the committees of the Progress Board of Directors. Board members receive an annual retainer, as well as fees for board and committee meeting attendance. In January 2017, the Progress Board of Directors determined to permit directors of Progress to elect to receive the amount of their fees in the form of Progress common stock. The awards of Progress common stock to directors pursuant to this arrangement are made pursuant to the 2016 Equity Incentive Plan, described below. Compensation Agreements Officers of Progress Bank serve at the discretion of the Board of Directors. Progress Bank s current executive officers are David Nast, President and Chief Executive Officer, Lee Hoekenschnieder, Huntsville President and General Banking Executive, Dabsey Maxwell, Chief Financial Officer/Chief Operations Officer, J.E.P. Buchanan, Chief Credit Officer and Senior Lender, Bruce Pylant, Decatur Market President, Sean Johnson, Birmingham Market President and Andy Mann, Shoals Market President. Each of the executive officers has an employment agreement with Progress Bank that provides specific terms of compensation and other benefits. Organizer Warrants The organizers of Progress Bank purchased a total of 530,004 shares of common stock at a price of $10.00 per share in the initial offering. In addition, in recognition of the efforts made and financial risks undertaken by the organizers in organizing Progress Bank, Progress Bank issued to each organizer a warrant to purchase one (1) share of Progress Bank s common stock for every one share of Progress Bank s common stock purchased in the initial offering. Thus, the organizers received warrants to purchase an aggregate of up to 530,004 shares of Progress Bank s common stock, at an exercise price of $10.00 per share. Pursuant to the share exchange of Progress Bank s common stock for Progress s common stock approved by Progress Bank s shareholders in 2013, the outstanding warrants were converted into warrants for an equal number of shares of Progress s common stock at the same exercise price as for Progress Bank s common stock. Giving effect to this conversion and the November 18, 2008 stock split, the organizers held in the aggregate warrants to purchase up to 795,006 shares of Progress s common stock, at an exercise price of $

33 The warrants, which are now fully vested, vested in equal increments over a period of five (5) years, beginning on the first anniversary of the date of grant, and are exercisable for a ten (10) year period. If Progress Bank s capital falls below the minimum level determined by the Alabama State Banking Department, then Progress may be directed to require all of its organizers to exercise or forfeit their warrants. The following table provides the total number of shares subject to the warrants (i) when issued to each of the organizers at the time of the initial offering, as adjusted to reflect the November 18, 2008 stock split, and (ii) that are unexercised as of February 28, 2017: Organizer s Name Warrants Issued Warrants Unexercised Philip W. Bentley, III 52,500 0 Sheila B. Brown 97,500 0 Jim D. Caudle, Jr. 97,500 52,522 John C. Eyster, Jr. 45,000 30,000 Lee R. Hoekenschnieder 75,003 0 Eric W. Janssen 75,000 44,996 Bhavani K. D. Kakani 90,000 0 David L. Nast 112, ,500 (Estate of) Roger T. Pangle 52,500 52,500 Charles G. Vaughn 60,003 60,003 Larry C. Weaver 37,500 37,500 TOTAL 795, ,021 Progress Bank and Trust 2008 Incentive Stock Compensation Plan The Progress Bank Board of Directors adopted and Progress Bank s shareholders approved the Progress Bank and Trust 2008 Incentive Stock Compensation Plan, as amended by Amendment One, which was approved by Progress Bank s shareholders in 2012, and by Amendment Two, which was approved in 2014 (as amended, the 2008 Incentive Plan ). The selection of those individuals who are to be granted options under the 2008 Incentive Plan is entirely within the discretion of the Human Resources/Compensation Committee of the Board of Directors of Progress Bank. The 2008 Incentive Plan is administered by the Human Resources/Compensation Committee, which has the authority to: (a) determine the persons to whom options will be granted; (b) interpret and construe the provisions of the 2008 Incentive Plan and to establish rules relating to the 2008 Incentive Plan; (c) prescribe the terms and conditions of the stock option agreements; and (d) make all other determinations necessary or advisable to administer the 2008 Incentive Plan. For incentive stock options qualified as such under section 422(b) of the Internal Revenue Code of 1986, as amended, the aggregate value of the shares for which an employee may be granted options in any year cannot exceed $100,000, measured by the fair market value at the date of grant. The option price of any option granted pursuant to the 2008 Incentive Plan cannot be less than 100% of the fair market value of the shares on the date the option is granted, except as to persons who hold more than 10% of the voting power of Progress, in which case the option price cannot be less than 110% of fair market of the shares on the date the option is granted. 13

34 No option granted pursuant to the 2008 Incentive Plan may be exercised more than ten (10) years after it has been granted. An option becomes exercisable, subject to the foregoing limitation, any time after it is granted unless vesting requirements are imposed with the grant. The form option agreement provides that options will vest and become exercisable in equal amounts over a five (5) year period measured from the date of grant. All options granted pursuant to the 2008 Incentive Plan will terminate, to the extent not previously exercised, within ninety (90) days of the date on which the option holder ceases to be an employee of Progress Bank for any reason, including retirement; provided, however, that, if the employee s termination of employment with Progress Bank is a result of the employee s death or disability, then the option shall remain exercisable for a period of one (1) year after the date on which the employee ceases to be an employee of Progress Bank due to death or disability. The 2008 Incentive Plan also provides that, notwithstanding any other provision in the 2008 Incentive Plan or any agreement under the 2008 Incentive Plan, Progress Bank s primary regulator shall at any time have the right to require any holder of options to exercise such options or forfeit options not exercised if Progress Bank s capital falls below minimum capital required by Progress Bank s primary regulator. The 2008 Incentive Plan also provides that options shall not be transferable other than by testamentary disposition or the laws of descent and distribution. Progress Financial Corporation 2016 Equity Incentive Plan At the 2016 Annual Meeting of Shareholders, the Progress shareholders adopted the Progress Financial Corporation 2016 Equity Incentive Plan (the 2016 Equity Incentive Plan ). The purpose of the 2016 Equity Incentive Plan is the same as that of the 2008 Incentive Plan that it replaces: to promote the interests of Progress and its shareholders by granting equity and equity-related incentives to employees of Progress and its affiliates, including Progress Bank, in order to provide an additional incentive to each employee to work to increase the value of Progress s stock and to provide each employee with a stake in the future of Progress that corresponds to the stake of each of Progress s shareholders. The 2016 Equity Incentive Plan provides for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, phantom stock, performance awards and other stock-based awards to employees of Progress and its affiliates, including Progress Bank. In general, employees, officers and certain directors of Progress and its affiliates, including Progress Bank, are eligible to receive grants of awards under the 2016 Equity Incentive Plan. A total of 7% of the 6,666,305 outstanding shares of common stock and treasury stock as of December 31, 2015 (466,641 shares) were reserved for issuance under the 2016 Equity Incentive Plan. The number of shares reserved for issuance may be adjusted in the event of a recapitalization, stock split or similar event. The 2016 Equity Incentive Plan is administered by the Human Resources/Compensation Committee of the Board of Directors of Progress Bank. Outstanding Options at February 28, 2017 The following table provides information on the holdings of unexercised stock options by each of the executive officers of Progress and Progress Bank and by certain other Progress Bank employees as a group as of February 28, Awards of stock options to our officers and employees are made on a discretionary basis by the Human Resources/Compensation Committee of the Board of Directors of Progress Bank. 14

35 15 Grantee Grant Date Number of Shares Underlying Unexercised Options (Vested) Number of Shares Underlying Unexercised Options (Unvested) Exercise Price of Option Awards ($/Sh) Option Expiration Date David Nast 2/19/2008 1/20/2009 3/23/2010 1/18/2011 3/20/2012 3/19/2013 3/18/2014 3/17/2015 2/11/ ,000 6,000 7,500 10,000 10,000 8,000 6,000 4,000 2, ,000 4,000 6,000 8,000 $6.67 $10.00 $10.00 $10.00 $12.50 $12.50 $12.50 $12.50 $ /19/2018 1/20/2019 3/23/2020 1/18/2021 3/20/2022 3/19/2023 3/18/2024 3/17/2025 2/11/2026 Lee Hoekenschnieder 2/19/2008 1/20/2009 3/23/2010 1/18/2011 3/20/2012 3/19/2013 3/18/2014 3/17/2015 2/11/ ,000 5,000 6,000 7,500 7,500 6,000 4,500 3,000 1, ,500 3,000 4,500 6,000 $6.67 $10.00 $10.00 $10.00 $12.50 $12.50 $12.50 $12.50 $ /19/2018 1/20/2019 3/23/2020 1/18/2021 3/20/2022 3/19/2023 3/18/2024 3/18/2025 2/11/2026 Dabsey Maxwell 2/19/2008 1/20/2009 3/23/2010 1/18/2011 3/20/2012 3/19/2013 3/18/2014 3/17/2015 2/11/ ,000 5,000 6,000 7,500 7,500 6,000 4,500 3,000 1, ,500 3,000 4,500 6,000 $6.67 $10.00 $10.00 $10.00 $12.50 $12.50 $12.50 $12.50 $ /19/2018 1/20/2019 3/23/2020 1/18/2021 3/20/2022 3/19/2023 3/18/2024 3/18/2025 2/11/2026 J.E.P. Buchanan 2/19/2008 1/20/2009 3/23/2010 1/18/2011 3/20/2012 3/19/2013 3/18/2014 3/17/2015 2/11/ ,500 5,000 6,000 7,500 7,500 6,000 4,500 3,000 1, ,500 3,000 4,500 6,000 $6.67 $10.00 $10.00 $10.00 $12.50 $12.50 $12.50 $12.50 $ /19/2018 1/20/2019 3/23/2020 1/18/2021 3/20/2022 3/19/2023 3/18/2024 3/18/2025 2/11/2026 Bruce Pylant 2/19/2008 1/20/2009 3/23/ ,500 5,000 6, $6.67 $10.00 $ /19/2018 1/20/2019 3/23/2020

36 Grantee Grant Date Number of Shares Underlying Unexercised Options (Vested) Number of Shares Underlying Unexercised Options (Unvested) Exercise Price of Option Awards ($/Sh) Option Expiration Date 1/18/2011 3/20/2012 3/19/2013 3/18/2014 3/17/2015 2/11/2016 7,500 7,500 6,000 4,500 3,000 1, ,500 3,000 4,500 6,000 $10.00 $12.50 $12.50 $12.50 $12.50 $ /18/2021 3/20/2022 3/19/2023 3/18/2024 3/18/2025 2/11/2026 Andy Mann 11/16/2010 9/20/2011 3/20/2012 3/19/2013 3/18/2014 3/17/2015 2/11/ ,000 7,874 7,500 6,000 4,500 3,000 1, ,500 3,000 4,500 6,000 $10.00 $10.00 $12.50 $12.50 $12.50 $12.50 $ /16/2020 9/20/2021 3/20/2022 3/19/2023 3/18/2024 3/17/2025 2/11/2026 Sean Johnson 4/19/2016 4,000 16,000 $ /19/2026 All Other Bank Employees as a Group Various Various Various Various Various Various Various 2014 Various 2015 Various 2016 Various ,650 33,250 58,250 58,120 64,500 63,200 40,500 10,900 7, ,800 27,000 16,350 29,840 20,000 $6.67 $10.00 $10.00 $10.00 $12.50 $12.50 $12.50 $12.50 $12.50 $15.00 Various-2018 Various-2019 Various-2020 Various-2021 Various-2022 Various-2023 Various-2024 Various-2025 Various-2026 Various-2026 RELATED PARTY TRANSACTIONS Progress Bank may engage in transactions with directors, officers, employees and other related parties only to the extent that such activities are permitted by, and consistent with, applicable laws and regulations. Federal and state regulations impose a number of restrictions on transactions and dealings between Progress Bank and related parties. In general, the regulations require that transactions between Progress Bank and these related parties be on substantially the same terms and conditions as are available for transactions between Progress Bank and unrelated parties, and these transactions are subject to certain quantitative limitations. Related parties include Progress Bank s directors and officers, their spouses and certain members of their immediate families, as well as other persons or entities with which Progress Bank has certain relationships, as set forth in federal and state regulations. Neither Progress nor Progress Bank has entered into any related party transactions other than deposit, loan and other banking transactions in the ordinary course of Progress Bank s business. 16

37 PROGRESS PROPOSAL NO. 2 APPROVAL OF INCREASE IN AUTHORIZED CAPITAL STOCK In connection with the approval of the Merger Agreement, the Progress Board of Directors unanimously approved a resolution recommending that Section 1 of Article IV of the Articles of Incorporation of Progress be amended to increase the number of shares of authorized common stock, par value $1.00 per share, to 20 million shares from 10 million shares, subject to the approval of the Progress shareholders. The Amendment Proposal The proposed Amendment would amend Section 1 of Article IV of the Progress Articles of Incorporation to read in its entirety as follows with respect to the total number of shares of capital stock authorized: ARTICLE IV AUTHORIZED SHARES Section 1. The aggregate number of shares of capital stock which the Corporation is authorized to issue shall be 20,000,000 shares of Common Stock of the par value of $1.00 per share. The shares may be issued by the Corporation from time to time as approved by the Board of Directors of the Corporation without the approval of the shareholders except as otherwise provided herein or the rules of a national securities exchange if applicable. Reasons for the Amendment Proposal The Articles of Incorporation currently authorize the issuance of up to 10,000,000 shares of common stock. As of February 28, 2017, 7,570,854 shares of Progress common stock were outstanding, and there are currently outstanding options with the right to purchase a total of 1,123,694 shares of Progress common stock and warrants with the right to purchase a total of 390,021 shares of Progress common stock. This leaves only 915,431 authorized and unreserved shares of common stock (including 126,115 treasury shares) available for issuance in connection with the proposed Merger, in capital raising transactions, as stock dividends, stock splits or for other corporate purposes. Accordingly, Progress has insufficient flexibility to issue additional shares as may be needed for proper corporate purposes. Based on Progress estimate of the number of shares of First Partners common stock held by shareholders who are residents of Alabama and assuming that (i) all of those shareholders return Part A of the Shareholder Form indicating that they are Alabama residents, (ii) none of those shareholders make a cash election on Part B of the Shareholder Form, (iii) all outstanding First Partners options and warrants are exercised prior to closing of the Merger, and (iv) there are no dissenting shareholders, Progress anticipates that it would issue approximately 2,600,000 shares of Progress common stock in the Merger. Accordingly, if this proposal is not approved by the Progress shareholders, Progress will be unable to consummate the Merger in accordance with the terms of the Merger Agreement. In addition, Progress will have limited flexibility to raise capital when and as needed, which could adversely affect its ability to maintain its capital adequacy, including in the event bank regulators impose higher capital requirements on the industry generally, and to take advantage of opportunities that Progress believes may be advantageous to its shareholders. Effect of the Amendment Proposal Adoption of the Amendment will facilitate the ability to consummate the Merger and permit Progress to issue shares of its common stock as agreed upon in the Merger Agreement. In connection with future corporate transactions, if any, the adoption of the Amendment could affect the rights of the holders of currently outstanding common stock. If additional authorized shares of common stock or 17

38 securities convertible into or exchangeable or exercisable for shares of common stock are issued, our existing shareholders could, depending upon the price realized, experience dilution of earnings per common share and equity per common share, and their voting rights could be diminished proportionately. In addition, the issuance of additional shares of common stock could be deemed under certain circumstances to have an anti-takeover effect where, for example, the shares were issued to dilute the equity ownership and corresponding voting power of a shareholder or group of shareholders who may oppose the policies or strategic plan of the existing management of Progress. Therefore, the proposed increase in authorized shares could enable the Progress Board of Directors to render more difficult or discourage an attempt by another person or entity to obtain control of Progress. Progress knows of no such takeover proposal and is not seeking additional authorized shares in response to any takeover threat. When shares of Progress common stock are issued in the Merger, and if additional shares of Progress common stock are issued in the future, these new shares will have the same voting and other rights and privileges as the currently outstanding shares of common stock, including the right to one vote per share and to participate in dividends when and to the extent declared and paid. See Description of Progress Common Stock, on page 81. Outstanding Capital Stock and Shares of Capital Stock Available for Issuance As of February 28, 2017 Upon Effectiveness of the Amendment Shares of Progress Common Stock Authorized 10,000,000 20,000,000 Shares of Progress Common Stock Outstanding 7,570,854 7,570,854 Shares of Progress Common Stock Reserved for Issuance 1,513,715 1,513,715 Approximate Number of Shares of Progress Common Stock Expected to be Issued in the Merger Shares of Progress Common Stock Available for Future Issuance (including treasury shares) - 2,600,000 (1) 915,431 8,315,431 (1) Based on Progress estimate of the number of shares of First Partners common stock held by shareholders who are residents of Alabama and assuming that (i) all of those shareholders return Part A of the Shareholder Form indicating that they are Alabama residents, (ii) none of those shareholders make a cash election on Part B of the Shareholder Form, (iii) all outstanding First Partners options and warrants are exercised prior to closing of the Merger, and (iv) there are no dissenting shareholders, Progress anticipates that it would issue approximately 2,600,000 shares of Progress common stock in the Merger. Vote Required The proposal to approve the adoption of the Amendment will require the affirmative vote of a majority of the shares of Progress common stock voting at the Progress Annual Meeting. Recommendation of the Progress Board of Directors The Progress Board of Directors unanimously recommends a vote FOR the proposed Amendment. 18

39 PART II INFORMATION ABOUT THE FIRST PARTNERS ANNUAL MEETING INFORMATION ABOUT THE FIRST PARTNERS ANNUAL MEETING General The Board of Directors of First Partners has sent you this Proxy Statement to solicit your vote at the 2017 Annual Meeting of Shareholders, including any adjournment or postponement thereof (the First Partners Annual Meeting ). The First Partners Annual Meeting will be held on Tuesday, April 18, 2017, at 10:00 a.m., Central Time, at 2121 Highland Avenue South, Birmingham, Alabama The First Partners Annual Meeting is being held to: elect three (3) Class I directors to serve on the Board of Directors of First Partners until the Annual Meeting of Shareholders in 2020 or until their respective successors are elected; provided, however, that, as a result of the consummation of the Merger, the Board of Directors of First Partners will cease to exist, and the current members of the Board of Directors of Progress will be the directors of the combined company, with the addition of three (3) directors of First Partners. See First Partners Proposal No. 1 Election of Directors, on page 21; consider and vote on a proposal to authorize, approve and adopt the Merger Agreement by and between Progress and First Partners, pursuant to which First Partners will merge with and into Progress on and subject to the terms and conditions contained therein. See Part III Progress and First Partners Joint Proposal The Merger Agreement, on page 27; and transact such other business as may properly come before the Annual Meeting. The Board of Directors of First Partners knows of no other business that will be presented for consideration at the Annual Meeting other than the items noted above. Solicitation of Proxies The Board of Directors of First Partners has sent you this Proxy Statement to solicit your vote at the First Partners Annual Meeting (including any adjournment or postponement of the First Partners Annual Meeting). This Proxy Statement is designed to assist you in voting your shares. On or about March 17, 2017, First Partners began distributing this Proxy Statement to all shareholders of record at the close of business on March 15, Shareholders Entitled To Vote The Board of Directors of First Partners has set March 15, 2017 as the record date for the First Partners Annual Meeting. Only shareholders of record at the close of business on the record date will be entitled to notice of and to vote at the First Partners Annual Meeting. At the close of business on March 15, 2017, there were 1,417,185 shares of common stock of First Partners, par value $1.00 per share, outstanding. Each shareholder is entitled to one vote in person or by proxy for each share of common stock held on all matters properly to come before the First Partners Annual Meeting. 19

40 Quorum Information At the First Partners Annual Meeting, the presence of a majority of the issued and outstanding shares of common stock that are entitled to vote, represented in person or by proxy, shall constitute a quorum for the transaction of business. No business may be transacted without a quorum. Votes Necessary Assuming the presence of a quorum: directors will be elected at the First Partners Annual Meeting by an affirmative vote of a majority of the votes cast, whether in person or by proxy, and entitled to vote. Abstentions will be counted for purposes of establishing a quorum only and will not affect the election of directors; and the proposal to approve the adoption of the Merger Agreement will require the affirmative vote of two-thirds of the shares of First Partners issued and outstanding and entitled to vote at the First Partners Annual Meeting. Unless instructed to the contrary, the shares represented by proxies will be voted FOR the nominees for directors named therein and FOR the adoption of the Merger Agreement. Submission of Proxies Please complete, sign, date and return the proxy so that the common stock that you own will be voted in accordance with your wishes. Shares of common stock represented by a properly executed proxy, if such proxy is received by Kenneth W. Till, Chief Financial Officer of First Partners and First Partners Bank, prior to the vote at the First Partners Annual Meeting and not revoked, will be voted at the First Partners Annual Meeting in accordance with the instructions indicated in such proxy. The persons named in the enclosed proxy, unless a contrary instruction is indicated on the enclosed proxy, intend to vote the shares appointing them as proxies FOR the nominees named therein and FOR the adoption of the Merger Agreement. Additionally, with respect to such other matters as may properly come before the Annual Meeting, if no direction is made on the proxy, the proxies will be voted as the proxy holders deem advisable. Revocability of Proxies If you desire to revoke your proxy, you may do so by (i) giving written notice of revocation to Kenneth W. Till, Chief Financial Officer of First Partners and First Partners Bank, at any time prior to the time of voting at the First Partners Annual Meeting, (ii) properly submitting a duly executed proxy bearing a later date or (iii) attending the First Partners Annual Meeting and voting in person. All written notices of revocation or other communications with respect to revocation of proxies should be addressed as follows: First Partners Financial, Inc., 2121 Highland Avenue South, Birmingham, Alabama 35205, Attention: Kenneth W. Till. Costs of Solicitation The cost of preparing, assembling and mailing the Proxy Statement is being borne by First Partners. First Partners will also bear any additional costs of soliciting proxies. 20

41 FIRST PARTNERS PROPOSAL NO. 1 ELECTION OF DIRECTORS General First Partners bylaws set the minimum number of directors at five and the maximum number at 25, with the exact number to be determined by resolution of the First Partners Board of Directors. There are currently nine members of the First Partners Board of Directors. As set forth in the First Partners Articles of Incorporation, directors of First Partners serve staggered terms of three (3) years, which terms correspond to the terms in place for First Partners Bank s directors. At the First Partners Annual Meeting this year, First Partners shareholders will consider and vote upon the election of three (3) Class I directors. The Board of Directors of First Partners recommends the three (3) persons listed below for election as Class I directors to serve until the 2020 Annual Meeting of Shareholders, or until their respective successors have been elected and qualified provided, however, that, if the Merger is consummated, the Board of Directors of First Partners will cease to exist. Each of these nominees currently serves as a director of First Partners and First Partners Bank. The persons named in the enclosed proxy card, unless a contrary direction is indicated on the enclosed proxy card, intend to vote the shares appointing them as proxies in favor of the nominees named herein. If any of the nominees should be unable to serve, which the First Partners Board of Directors does not anticipate will occur, the persons designated as proxies will cast votes for a substitute selected by the First Partners Board of Directors, or the First Partners Board of Directors may decide not to select an additional person as a director. Following the First Partners Annual Meeting, First Partners, as the sole shareholder of First Partners Bank, intends to re-elect each of the nominees listed below as directors of First Partners Bank. Unless otherwise specified in the enclosed proxy card, it is intended that votes will be cast for the election of the nominees listed below. Proxies cannot be voted for a greater number of persons than the number of actual nominees so named. Information About the Nominees The following provides certain biographical information about the individuals who have been nominated for election as Class I directors of First Partners. Elam P. Holley, Jr., age 66, serves as President and CEO of First Partners and First Partners Bank. Mr. Holley has more forty (40) years of banking experience in Alabama. Kevin B. Kynerd, age 50, is President of Bradford Building Company, Inc. Mr. Kynerd s prior banking experience includes serving as a member of the Young Executive Board of Compass Bank. Mr. Kynerd is active in business and civic affairs in Birmingham. William A. Visintainer, age 57, is the CEO and President of Atlas Welding Supply Co., Inc. headquartered in Tuscaloosa, Alabama. He is the past President and serves on the executive committee of his industry s North American trade association, GAWDA. He is also a member of the board of directors of the American Welding Society Foundation. Mr. Visintainer was elected and served six years on the City Council for Vestavia Hills, where he continues to be active in community affairs. Recommendation of the First Partners Board of Directors The First Partners Board of Directors unanimously recommends a vote FOR the election as directors of each of the nominees. 21

42 Other Directors The following provides certain information as to each of First Partners other directors, along with any officer positions held by such directors with First Partners or First Partners Bank. Class II Directors (Term Expires 2018) Christopher R. Cooper, age 41, is the President and CEO of Boyd Bros. Transportation in Clayton, Alabama. He has been with Boyd Bros. for 19 years. In addition, Mr. Cooper is active in various civic organizations. Richard A. Freese, age 57, practices law, with offices in Birmingham, Alabama; Jackson, Mississippi; and Dallas, Texas. Charles A. McCallum, III, age 58, is an attorney practicing in Vestavia Hills, Alabama. Mr. McCallum is a Vestavia Hills native and is a past president of the Vestavia Hills Chamber of Commerce. Class III Directors (Term Expires 2019) Mark Clark, age 65 is an oral and maxillofacial surgeon practicing with Clark Holmes Oral & Facial Surgery of Alabama, P.C. Jane Solomon, age 48, is the owner and President of Barlovento, LLC, a global government general contractor headquartered in Dothan, Alabama. Ms. Solomon is active in business and civic affairs in Alabama and northwest Florida. Kenneth W. Till, age 46, serves as Chief Financial Officer of First Partners and First Partners Bank. Mr. Till has twenty-five (25) years of banking experience in Alabama, previously having served as Assistant Comptroller of Regions Financial Corporation. Non-Director Executive Officers The following is a list of individuals who serve as executive officers of First Partners but do not also serve as directors, along with selected biographical information. Scott Mathews, age 52, serves as Chief Credit Officer of First Partners Bank. Mr. Mathews has 27 years of credit administration background. His previous experience includes 18 years with First Commercial Bank as First Vice President/Credit Administration and one year with ServisFirst Bank as Senior Vice President and Chief Credit Officer. Art Freeman, age 43, serves as Chief Lending Officer of First Partners Bank. Mr. Freeman has 16 years of experience in commercial real estate finance, including loan origination for development, construction, bridge and term facilities for multi-family, office, medical office, retail, industrial and self-storage properties. He has previously held leadership positions at BancSource Advisors, Red Mountain Bank, and AmSouth Bank. Information Regarding the Boards and Board Committees of First Partners and First Partners Bank The Board of Directors of First Partners and the Board of Directors of First Partners Bank consist of the same nine individuals. The Boards of Directors of First Partners and First Partners Bank conduct business through meetings of both the full Boards of Directors and certain committees. The Board of Directors currently has four (4) committees: (i) the Loan Committee; (ii) the Risk Management/Audit/Trust Committee (which is also responsible for audit-related matters for First Partners); (iii) the Compensation Committee; and (iv) the Information Technology Committee. Each committee is chaired by a 22

43 member of the Board of Directors and consists of two (2) to four (4) members, with appropriate members of management and other employees also serving as advisory members as appropriate. The committees meet as needed, but at least quarterly. Minutes from each committee meeting are presented to the entire Board of Directors at its next scheduled meeting. The duties and composition of the committees are as follows: Loan Committee. This committee has the power to engage outside resources to serve as loan review and is expected to manage the loan portfolio, including credit risk, credit pricing, loan loss reserves and concentrations. Elam P. Holley, Jr. chairs this committee, and its membership consists of Mark Clark, Charles A. McCallum, III, William A. Visintainer, and Kevin B. Kynerd. Risk Management/Audit/Trust Committee. The Risk Management/Audit/Trust Committee is responsible for examining or causing First Partners Bank to be examined at least once in each calendar year by certified public accountants in accordance with applicable law. This committee makes recommendations to the Board of Directors regarding the independent accountants to be selected, reviewing the audit plan, financial statements and audit results, accounting policies and practices, reviewing overall accounting and financial controls, and conducting appropriate reviews of any related party transactions and potential conflict of interest situations. The committee is responsible for selecting any outside consultants to perform internal loan audits, compliance audits, IT audits, and Regulation O audits. The committee also oversees all Trust operations. Charles A. McCallum, III chairs this committee, and its membership consists of Mark Clark, Jane Solomon, and Christopher R. Cooper. Compensation Committee. This committee makes recommendations to the Board of Directors and management with respect to human capital and personnel issues. The committee monitors the costs of salary and benefits and gives guidance accordingly. The committee is kept apprised of all actions regarding First Partners Bank s employee workforce. It makes certain that First Partners Bank s compensation and benefits are competitive in the marketplace so that First Partners Bank will be able to attract and retain top quality associates. This committee recommends executive management compensation plans to the Board of Directors annually based on the performance standards set forth in First Partners Bank s strategic business plan. Charles A. McCallum, III chairs this committee, and its membership consists of William A. Visintainer, Kevin B. Kynerd, and Richard A. Freese. Information Technology Committee. This committee oversees all technological resources used or purchased by First Partners Bank. This committee monitors all computer systems, programs, security and information technology used to protect client and First Partners Bank assets. The committee also ensures that First Partners Bank is efficiently using current technology to serve clients and to allow associates to effectively perform their jobs. Elam P. Holley, Jr. chairs this committee, and its membership consists of Richard A. Freese, Jane Solomon, Christopher R. Cooper, and Kenneth W. Till. Compensation Committee Interlocks None of the members of First Partners Compensation Committee at any time has been an officer or employee of First Partners. None of First Partners Bank s executive officers currently serves, or in the past year has served, as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on First Partners Bank s Board of Directors or Compensation Committee. SECURITY OWNERSHIP OF FIRST PARTNERS DIRECTORS AND MANAGEMENT The following table shows the number and percentage of the issued and outstanding shares of First Partners common stock beneficially owned by the current members of the Board of Directors and executive officers of First Partners and First Partners Bank as of March 15, The numbers in the table below have been rounded down to the nearest whole number of shares, with any fractional shares beneficially owned described in the appropriate footnote. 23

44 Name and Address Number of Shares Beneficially Owned (1) Percentage of Issued and Outstanding Shares of Common Stock (2) Mark Clark 88,833 (3) 6.16% Christopher R. Cooper 10, % Arthur M. Freeman, IV 5, % Richard A. Freese 91,716 (4) 6.36% Elam P. Holley, Jr. 123,702 (5) 8.46% Kevin B. Kynerd 42, % Scott Mathews 34,800 (6) 2.42% Charles A. McCallum, III 43,750 (7) 3.04% Jane Solomon % Kenneth W. Till 61,675 (8) 4.26% William A. Visintainer 22, % All Current Directors and Executive Officers as a Group (11 Persons) 524, % (1) The number of shares reflected in the table is that number of shares that are deemed to be beneficially owned under the federal securities laws. Shares deemed to be beneficially owned include shares as to which, directly or indirectly, through any contract, relationship, arrangement, understanding or otherwise, either voting power or investment power is held or shared and shares that such person has the right to acquire on or within sixty (60) days after March 15, (2) For each individual included in the table above, percentage of ownership is calculated by dividing the number of shares beneficially owned by such person by the sum of (i) 1,417,185 shares issued and outstanding on March 15, 2017 and (ii) the number of shares that such person has the right to acquire on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants and incentive stock options. Therefore, the denominator used in calculating the percentage of ownership is unique to each person. For All Directors and Executive Officers as a Group, percentage of ownership is calculated by dividing the total shares beneficially owned by all eleven (11) persons by the sum of (i) the total number shares issued and outstanding on March 15, 2017 (1,417,185) and (ii) the total number of shares that the members of the group have the right to acquire on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants and incentive stock options. The percentages presented in this table have been rounded to the nearest hundredth. (3) Includes 25,000 shares acquirable on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants. (4) Includes 25,001 shares acquirable on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants. (5) Includes 20,033 shares acquirable on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants and 25,000 shares underlying options that are exercisable on or within sixty (60) days after March 15,

45 (6) Includes 7,550 shares acquirable on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants and 15,000 shares underlying options that are exercisable on or within sixty (60) days after March 15, (7) Includes 20,000 shares acquirable on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants. (8) Includes10,000 shares acquirable on or within sixty (60) days after March 15, 2017 pursuant to organizer warrants and 20,000 shares underlying options that are exercisable on or within sixty (60) days after March 15, Director Compensation COMPENSATION OF FIRST PARTNERS DIRECTORS AND MANAGEMENT In November 2010, the members of the First Partners Board of Directors (with the exception of Messrs. Holley and Till) began receiving cash compensation for their services on the First Partners Board of Directors and the committees of the First Partners Board of Directors. Board members receive fees for board and committee meeting attendance. Compensation Agreements Officers of First Partners serve at the discretion of the Board of Directors. First Partners Bank s current executive officers are Elam P. Holley, Jr., President and Chief Executive Officer, Kenneth W. Till, Chief Financial Officer, Scott Mathews, Chief Credit Officer, and Arthur M. Freeman, IV, Chief Lending Officer. Each of Messrs. Holley, Till, and Mathews has an employment agreement with First Partners Bank, and Mr. Freeman has a change in control agreement with First Partners Bank, that provides specific terms of compensation and other benefits. Organizer Warrants The current directors who were organizers of First Partners Bank purchased a total of 200,068 shares of common stock at a price of $10.00 per share in the initial offering. In addition, in recognition of the efforts made and financial risks undertaken by the organizers in organizing First Partners Bank, First Partners Bank issued to each organizer a warrant to purchase one (1) share of First Partners Bank s common stock for every two (2) shares of First Partners Bank s common stock purchased in the initial offering. Thus, the current directors who were organizers received warrants to purchase an aggregate of up to 100,034 shares of First Partners Bank s common stock, at an exercise price of $10.00 per share. Pursuant to the share exchange of First Partners Bank s common stock for First Partners common stock approved by First Partners Bank s shareholders in 2013, the outstanding warrants were converted into warrants for an equal number of shares of First Partners common stock at the same exercise price as for First Partners Bank s common stock. Giving effect to this conversion, the current directors who were organizers currently hold in the aggregate warrants to purchase up to 100,034 shares of First Partners common stock, at an exercise price of $ The warrants, which are now fully vested, vested in equal increments over a period of five (5) years, beginning on the first anniversary of the date of grant, and are exercisable for a ten (10) year period. If First Partners Bank s capital falls below the minimum level determined by the Alabama State Banking Department, then First Partners may be directed to require all of its organizers to exercise or forfeit their warrants. The following table provides the total number of shares subject to the warrants (i) when issued to each of the current 25

46 directors who were organizers at the time of the initial offering, and (ii) that are unexercised as of March 15, Organizer s Name Warrants Issued Warrants Unexercised Mark Clark 25,000 25,000 Richard A. Freese 25,001 25,001 Elam P. Holley, Jr. 20,033 20,033 Charles A. McCallum, III 20,000 20,000 Kenneth W. Till 10,000 10,000 TOTAL 100, ,034 For a discussion of the treatment of the outstanding warrants in connection with the Merger, see The Merger Proposal; Interests of Certain Persons in the Merger, on page 66. First Partners 2007 Incentive Stock Compensation Plan The following discussion outlines some of the essential features of the First Partners 2007 Incentive Stock Compensation Plan (the Incentive Plan ), but is qualified in its entirety by reference to the full text of the Incentive Plan, form stock option agreement, and form restricted stock agreement, a copy of which may be obtained on request. First Partners may grant options and restricted stock under the Incentive Plan. The Incentive Plan is administered by the Compensation Committee of the Board of Directors, which has the authority to: (a) determine the persons to whom options and restricted stock will be granted in its sole discretion; (b) interpret and construe the provisions of the Incentive Plan and to establish rules relating to the Incentive Plan; (c) prescribe the terms and conditions of the stock option agreements and restricted stock agreements; and (d) make all other determinations necessary or advisable to administer the Incentive Plan. First Partners has reserved a total of 300,000 shares of common stock for issuance under the Incentive Plan. For incentive stock options qualified as such under section 422(b) of the Internal Revenue Code of 1986, as amended, the aggregate value of the shares for which an employee may be granted options in any year cannot exceed $100,000, measured by the fair market value at date of grant. The option price of any option granted pursuant to the Incentive Plan cannot be less than 100% of the fair market value of the shares on the date the option is granted, except as to persons who hold more than 10% of the voting power of First Partners, in which case the option price for an incentive stock option cannot be less than 110% of the fair market value of the shares on the date the option is granted. No option granted pursuant to the Incentive Plan may be exercised more than ten (10) years after it has been granted. An option becomes exercisable, subject to the foregoing limitation, any time after it is granted unless vesting requirements are imposed with the grant. The form option agreement provides that options will vest and become exercisable in equal amounts over a five (5) year period measured from the date of grant. All options granted pursuant to the Incentive Plan will terminate, to the extent that they have not been previously exercised, within ninety (90) days of retirement or within ninety (90) days after the date on which the option holder ceases to be an employee of First Partners; provided, however, that if the employee s termination of employment with First Partners is a result of the employee s death or disability, the option shall remain exercisable for a period of one (1) year after the date of the employee ceases to be an employee of First Partners due to death or disability. Of the 300,000 shares of common stock reserved for issuance under the Incentive Plan, 25,000 shares are reserved for restricted stock. Restricted stock shall be awarded as described in the Incentive Plan. Executives who receive restricted stock will be prohibited from selling such stock during the restriction period, although the owners of such stock will be permitted to receive dividends and vote such shares. 26

47 Outstanding Options at March 15, 2017 The following table provides information on the holdings of unexercised stock options by each of the executive officers of First Partners and First Partners Bank and by certain other First Partners Bank employees as a group as of March 15, Awards of stock options to our officers and employees are made on a discretionary basis by the Compensation Committee of the Board of Directors of First Partners Bank. Name of Grantee Grant Date Number of Shares Underlying Unexercised Options (Vested) Number of Shares Underlying Unexercised Options (Unvested) Exercise Price of Option Awards ($/Sh) Option Expiration Date Elam P. Holley, Jr. 10/15/ ,000 - $ /15/2017 Kenneth W. Till 10/15/ ,000 - $ /15/2017 Scott Mathews 10/15/ ,000 - $ /15/2017 All Other Bank Employees as a Group 10/15/ ,000 - $ /15/2017 For a discussion of the treatment of the outstanding options in connection with the Merger, see The Merger Proposal; Interests of Certain Persons in the Merger, on page 66. RELATED PARTY TRANSACTIONS First Partners Bank may engage in transactions with directors, officers, employees and other related parties only to the extent that such activities are permitted by, and consistent with, applicable laws and regulations. Federal and state regulations impose a number of restrictions on transactions and dealings between First Partners Bank and related parties. In general, the regulations require that transactions between First Partners Bank and these related parties be on substantially the same terms and conditions as are available for transactions between First Partners Bank and unrelated parties, and these transactions are subject to certain quantitative limitations. Related parties include First Partners Bank s directors and officers, their spouses and certain members of their immediate families, as well as other persons or entities with which First Partners Bank has certain relationships, as set forth in federal and state regulations. Neither First Partners nor First Partners Bank has entered into any related party transactions other than deposit, loan and other banking transactions in the ordinary course of First Partners Bank s business. PART III PROGRESS AND FIRST PARTNERS JOINT PROPOSAL THE MERGER AGREEMENT Structure of the Merger THE MERGER PROPOSAL The Merger Agreement provides that at the Effective Time, as defined below, First Partners will merge with and into Progress, with Progress as the surviving corporation. As soon as practicable after the Merger, First Partners Bank is expected to merge with and into Progress Bank, with Progress Bank as the surviving bank. The Merger Agreement provides that a shareholder of record of First Partners common stock who (i) is either an individual whose principal residence is in the State of Alabama or an entity with its principal place of business 27

48 located in the State of Alabama, and (ii) has properly executed and delivered the Eligible Shareholder Certification and Election Form (the Shareholder Form ) which is enclosed with this Proxy Statement being delivered to shareholders of First Partners (specifically, Part A thereof) is an Eligible Shareholder and will receive, for each share of First Partners common stock owned by that Eligible Shareholder, 1.8 shares of Progress common stock, subject to the right of the Eligible Shareholder to elect under Part B of the Shareholder Form to receive $27.00 in cash in exchange for up to (but no more than) ten percent (10%) of the total number of shares of First Partners common stock owned by that Eligible Shareholder. Fractional shares of Progress common stock will not be issued to Eligible Shareholders; instead, these shareholders will receive cash, without interest, equal to the product of (i) $15.00 multiplied by (ii) the fraction of a share of Progress common stock to which such holder would otherwise be entitled. Shareholders of First Partners who are not Eligible Shareholders will receive $27.00 in cash, without interest, for each of their shares of First Partners common stock. Based on Progress estimate of the number of shares of First Partners common stock held by shareholders who are residents of Alabama and assuming that (i) all of those shareholders return Part A of the Shareholder Form indicating that they are Alabama residents, (ii) none of those shareholders make a cash election on Part B of the Shareholder Form, (iii) all outstanding First Partners options and warrants are exercised prior to closing of the Merger, and (iv) there are no dissenting shareholders, Progress anticipates that it would issue approximately 2,600,000 shares of Progress common stock in the Merger. Accordingly, immediately following the Merger, current Progress shareholders will own approximately 75% of the outstanding common stock of Progress, and current First Partners shareholders will own approximately 25% of the outstanding common stock of Progress. Eligible Shareholders The shares of Progress common stock offered as consideration in the Merger will be issued without registration under the Securities Act in reliance upon an exemption provided by Section 3(a)(11) thereof and Rule 147 thereunder for intrastate offerings of securities, and in reliance on an exemption from the registration and qualification requirements under the blue sky securities laws of the State of Alabama available for shares issued in connection with a merger transaction. Therefore, the Progress common stock may be issued only to an Eligible Shareholder, as defined in the Merger Agreement and described above. Only shareholders of First Partners who are Eligible Shareholders may receive Progress common stock in connection with the Merger. All other shareholders of First Partners will receive a cash payment, without interest, in the amount of $27.00 per share for the value of their shares. Restrictions on Transfer Eligible Shareholders may not sell or otherwise transfer the shares of Progress common stock received in the Merger unless such sale or transfer satisfies the requirements of the Securities Act, applicable state securities laws and the rules promulgated pursuant to each. In addition, for a period of six (6) months following the consummation of the Merger, the shares of Progress common stock received by Eligible Shareholders may not, in any event, be sold or transferred to any individual whose principal residence is outside of the State of Alabama or to any entity with its principal place of business located outside of the State of Alabama. Accordingly, in addition to collecting the Shareholder Forms in connection with the issuance of Progress common stock, Progress will also: (i) place legends on each of the certificates representing shares of Progress common stock issued in connection with the Merger stating that the securities have not been registered under the Securities Act and setting forth the limitations on transfer contained in applicable laws, as well as the limitations on transfer imposed by the Merger Agreement; and (ii) make a notation of the restrictions in its shareholder records. 28

49 Conversion of Shares; Cash Limitation; Exchange of Share Certificates Each Eligible Shareholder may elect to receive cash in exchange for up to (but no more than) ten percent (10%) of the total number of shares of First Partners common stock held by such Eligible Shareholder. Any shares of First Partners common stock with respect to which the Eligible Shareholder either has not submitted a properly completed Part B of the Shareholder Form prior to the election deadline, or has submitted a Shareholder Form prior to the deadline but has elected not to receive cash under Part B thereof, will be converted into Progress common stock at the exchange ratio described above. In addition, any cash elections received from an Eligible Shareholder with respect to shares of First Partners common stock in excess of ten percent (10%) of the total number of shares of First Partners common stock held by that Eligible Shareholder will be disregarded, and such shares in excess of the ten percent (10%) limitation will be converted into Progress common stock. Fractional shares of Progress common stock will not be issued to Eligible Shareholders; instead, these shareholders will receive cash, without interest, equal to the product of (i) $15.00 multiplied by (ii) the fraction of a share of Progress common stock to which such holder would otherwise be entitled. Each share of First Partners common stock that is owned by a person who is not an Eligible Shareholder will be converted solely into the right to receive cash, without interest, in an amount equal $27.00 per share. After the Merger, either Progress or its designee will mail to all persons holding shares of First Partners common stock immediately prior to the Effective Time a letter of transmittal, together with instructions with respect to the exchange of certificates representing First Partners common stock for either certificates representing Progress common stock or cash, as the case may be. Holders of shares of First Partners common stock should not send in their stock certificates until they receive written instructions from Progress or its designee. As soon as practicable after the Effective Time, and upon surrender of one or more certificates of First Partners common stock, together with the properly completed letter of transmittal, each holder of First Partners common stock will be issued and mailed a certificate or certificates representing shares of Progress common stock or a check for the amount of cash into which such holder s shares of First Partners common stock have been converted. Progress will not issue any certificates for shares of Progress common stock in any name other than the name in which the surrendered certificate is registered unless the certificate so surrendered is properly endorsed and is otherwise in proper form for transfer, and the person requesting the issuance of such certificate either pays to Progress any transfer or other taxes required by reason of the issuance of the certificates for such shares in the name other than the registered holder of the certificates surrendered, or establishes to the satisfaction of Progress that such tax has been paid or is not applicable. In no event will Progress be liable to any person for any Progress common stock or dividends thereon delivered or paid in good faith to a public official pursuant to any applicable abandoned property, escheat or similar law. Effective Time The effective time of the Merger (the Effective Time ) will occur on the date and at the time that Articles of Merger are filed with the appropriate authorities. It is currently intended that the Merger will be consummated on the last day of the month in which all required regulatory and shareholder approvals have been obtained and the other conditions to the Merger have been satisfied or waived. However, no assurances can be provided that the conditions precedent to the Merger can or will be satisfied or waived. Background of the Merger Progress Bank s CEO, David L. Nast, has known Elam P. Holley, Jr. and First Partners Bank s executive team for many years. The two banks were chartered within about a year of each other. Mr. Nast was familiar with the performance of First Partners and Mr. Holley knew of Progress s growth over the past nine years. 29

50 Progress s board and management team have been considering an acquisition for a while in order to maximize opportunities within the Alabama market and address growing regulatory burden associated with banking after the 2008 financial crisis. In addition, each bank saw the hometown of the other as an opportunity for growth. In 2015, First Partners opened a branch in Huntsville. In 2016, Progress established a loan production office in Birmingham. Like Progress, First Partners Board of Directors has consistently focused on taking actions with the goal of maximizing shareholder value. Prior to entering into a transaction with Progress, First Partners Board of Directors met with BSP on December 13, 2015 to discuss the state of the banking market and provide an independent assessment of alternatives available to First Partners. The First Partners Board of Directors formally engaged BSP on February 10, 2016 to represent the company in evaluating and pursuing strategic alternatives to accelerate shareholder value creation. These options included whole-bank acquisitions, branch acquisitions, or a strategic merger transaction. The First Partners Board of Directors worked, with the assistance of BSP, over the course of 2016 to vet multiple such opportunities. The First Partners Board of Directors ultimately determined that there were limited, if any, branch or whole-bank acquisition opportunities available to First Partners that were both financially and strategically compelling. Regarding potential merger partners, the First Partners Board of Directors decided to explore opportunities with a limited group of depository institutions with growth ambitions and interest in First Partners markets which could offer a balance of current valuation, market and product compatibility and synergies, compelling pro forma geography, employee opportunities and future upside potential. Ultimately, the First Partners Board of Directors elected to move forward exclusively with Progress. Mr. Nast and Mr. Holley s discussions then grew to an earnest and arms-length negotiation. The management teams reached an agreement on price and the form of consideration after substantial due diligence on both parts and the boards of each institution approved the terms of the transaction. The acquisition and merger deal terms were formalized in a written Merger Agreement, which was presented to and approved by First Partners and Progress Board of Directors on February 13, 2017 and executed by Mr. Nast and Mr. Holley. Reasons for the Merger General The financial and other terms of the Merger Agreement resulted from arm s length negotiations between Progress s and First Partners representatives. The following discussion of the information and factors considered by the Progress and First Partners Boards of Directors is not intended to be exhaustive but includes all of the material factors the respective boards considered in determining whether to enter into the Merger Agreement. In reaching their determinations to approve the Merger and to recommend that their respective shareholders approve the Merger, neither the Progress Board of Directors nor the First Partners Board of Directors assigned any relative or specific weight to the following factors, and individual directors may have given certain factors greater weight than others. First Partners In deciding to engage in the Merger transaction, First Partners Board of Directors consulted with its management, as well as its legal counsel and financial advisor, and considered numerous factors, including the following: the value of the consideration to be received by First Partners shareholders compared to shareholder value of First Partners as an independent entity; 30

51 information concerning the business, operations, earnings, asset quality, financial condition, prospects and capital levels of First Partners and Progress, both individually and as a combined entity; the perceived risks and uncertainties attendant to First Partners operation as an independent banking organization, including risks and uncertainties related to the continuing low-interest rate environment and the high and increasing cost of regulatory compliance; the enhanced capital position and earnings of the combined entity on a pro forma basis, and the potential positive implications for the ability to grow; the compatibility of Progress s management team, strategic objectives, culture and geographic footprint with those of First Partners; the financial terms of recent business combinations in the financial services industry and a comparison of the multiples of selected combinations with the terms of the proposed Merger; the increased importance of scale in the banking industry and the fact that the Merger would increase the pro forma combined company s size to approximately $1 billion in total assets; the benefits of structuring the Merger to be exempt from securities registration; the stock component of the Merger consideration, providing eligible First Partners shareholders the opportunity to participate in potential further appreciation of Progress s stock after the Merger; the receipt of the stock consideration by eligible First Partners shareholders on a tax-free basis; the cash component of the Merger consideration, providing certain First Partners shareholders with certainty of value and liquidity with respect to shares to be cashed out; the existence of certain restrictions on the conduct of First Partners and First Partners Bank s business prior to the consummation of the Merger, which may delay or prevent First Partners and First Partners Bank from undertaking business opportunities prior to consummation of the Merger or termination of the Merger Agreement; whether or not the Merger is consummated, the potential negative impact on certain customer relationships and uncertainties surrounding those relationships; the fact that some of First Partners directors and executive officers have other interests in the Merger that are in addition to their interests as First Partners shareholders; the opinion of Banks Street Partners, LLC, a subsidiary BSP Securities, Inc. (together with Banks Street Partners, LLC, BSP ) that the consideration to be received by First Partners shareholders in the Merger is fair from a financial point of view; and the likelihood of the Merger being approved by applicable regulatory authorities without undue conditions or delay. 31

52 Progress In deciding to engage in the Merger transaction, Progress s management and Board of Directors considered, among other things, the following: information concerning the business, operations, earnings, asset quality, and financial condition of First Partners and First Partners Bank; the financial terms of the Merger, including the relationship of the value of the consideration issuable in the Merger to the tangible book value and earnings per share of First Partners common stock; the ability of First Partners operations to contribute to Progress s earnings after the Merger; the recent comparative earnings and financial performance of First Partners and Progress; the financial terms of recent business combinations in the financial services industry and a comparison of the financial terms of such business combinations with the terms of the proposed Merger; the market for alternative merger or acquisition transactions in the banking industry and the likelihood of other material strategic transactions; the increased importance of scale in the banking industry and the fact that the Merger would increase Progress s size to approximately $1 billion in total assets and provide Progress s banking franchise with additional access to a broader base of middle market and small business prospects; the compatibility of First Partners management team, strategic objectives, culture and geographic footprint with those of Progress; the opportunity to leverage the infrastructure of Progress Bank; the nonfinancial terms of the Merger, including the treatment of the Merger as a tax-free reorganization for U.S. federal income tax purposes; the opinion of Stephens Inc. ( Stephens ) that Merger is fair, from a financial point of view, to the shareholders of Progress; the likelihood of the Merger being approved by applicable regulatory authorities without undue conditions or delay; and the prospects for the Merger accelerating Progress s plans to expand into the Birmingham, Alabama market. Opinion of First Partners Financial Advisor First Partners retained BSP on an exclusive basis to render financial advisory and investment banking services and to render a written opinion to the Board of Directors of First Partners as to the fairness, from a financial point of view, of the merger consideration to be paid by Progress to shareholders of First Partners, as set forth in the Merger Agreement. BSP is an investment banking firm that specializes in providing financial advisory and investment banking services to financial institutions. BSP has been involved in numerous bank 32

53 related business combinations. No limitations were imposed by First Partners upon BSP with respect to rendering its opinion. At the February 13, 2017 meeting at which the First Partners Board of Directors considered and approved the Merger Agreement, BSP delivered its written opinion that, as of such date, the merger consideration was fair to the shareholders of First Partners from a financial point of view. The full text of BSP s opinion is attached as Appendix C to this Proxy Statement. The opinion outlines the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by BSP in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the opinion. We urge you to read the entire opinion carefully in connection with your consideration of the proposed Merger. The opinion speaks only as of the date of the opinion. The opinion was directed to the First Partners Board of Directors and is directed only to the fairness, from a financial point of view, of the merger consideration to the shareholders of First Partners. It does not address the underlying business decision to engage in the Merger or any other aspect of the Merger and is not a recommendation to any shareholder as to how such shareholder should vote at the First Partners Annual Meeting with respect to the Merger or any other matter. For purposes of opinion and in connection with its review of the proposed transactions, BSP, among other things, did the following: reviewed the terms of the Merger Agreement; participated in discussions with First Partners management concerning First Partners financial condition, asset quality and regulatory standing, capital position, historical and current earnings, management succession and First Partners and Progress s future financial performance; reviewed First Partners audited financial statements for the years ended December 31, 2015, 2014 and 2013 and unaudited financial statements for the year ended December 31, 2016; reviewed Progress s audited financial statements for the years ended December 31, 2015, 2014 and 2013 and unaudited financial statements for the year ended December 31, 2016; reviewed certain financial forecasts and projections of First Partners, prepared by its management, as well as the estimated cost savings and related transaction expenses expected to result from the Merger; analyzed certain aspects of First Partners financial performance and condition and compared such financial performance with similar data of publicly-traded companies BSP deemed similar to First Partners; reviewed historical trading activity of Progress and management s projections for future financial performance; compared the proposed financial terms of the Merger with the financial terms of certain other recent merger and acquisition transactions involving acquired companies that BSP deemed to be relevant to First Partners; and performed such other analyses and considered such other information, financial studies, and investigations and financial, economic and market criteria as BSP deemed relevant. 33

54 BSP assumed and relied, without independent verification, upon the accuracy and completeness of all of the financial and other information provided to it by First Partners, Progress, and each company s respective representatives. BSP is not an expert in the evaluation of allowances for loan losses and has not independently verified such allowances, and relied on and assumed that such allowances of First Partners and Progress at December 31, 2016 were adequate to cover such losses and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. BSP was not retained to, and did not, conduct a physical inspection of any of the properties or facilities of First Partners. BSP also did not make any independent evaluation or appraisal of the assets, liabilities or prospects of First Partners, was not furnished with any such evaluation or appraisal, and did not review any individual credit files. The opinion of BSP was necessarily based on economic, market and other conditions as in effect on, and the information made available to it as of, the date thereof. BSP expressed no opinion on matters of a legal, regulatory, tax or accounting nature or the ability of the Merger, as set forth in the Merger Agreement, to be consummated. No opinion was expressed as to whether any alternative transaction might be more favorable to holders of First Partners common stock than the Merger. BSP, as part of its investment banking business, is regularly engaged in the valuation of banks and bank holding companies and various other financial services companies in connection with mergers and acquisitions, private placements of securities, and valuations for other purposes. In rendering its fairness opinion, BSP acted on behalf of the First Partners Board of Directors. BSP s opinion is limited to the fairness, from a financial point of view, of the merger consideration to be paid to holders of First Partners common stock in the Merger and does not address the ability of the Merger to be consummated, the satisfaction of the conditions precedent contained in the Merger Agreement, or the likelihood of the Merger receiving regulatory approval. Although BSP was retained on behalf of the First Partners Board of Directors, BSP s opinion did not constitute a recommendation to any director of First Partners as to how such director or any shareholder should vote with respect to the Merger Agreement. Based upon and subject to the foregoing and based on BSP s experience as investment bankers, BSP s activities as described above, and other factors deemed relevant, BSP rendered its opinion that, as of February 13, 2017, the merger consideration to be paid to the holders of First Partners common stock in the Merger is fair, from a financial point of view, to the holders of First Partners common stock. The following is a summary of material analyses performed by BSP in connection with its opinion to First Partners Board of Directors on February 13, The summary does not purport to be a complete description of the analyses performed by BSP but summarizes the material analyses performed and presented in connection with such opinion. Financial Analysis In rendering its opinion, BSP performed a variety of financial analyses. The summary below is not a complete description of all the analyses underlying BSP s opinion or the presentation made by BSP to First Partners Board of Directors, but is a summary of the material analyses performed and presented by BSP. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. BSP believes that its analysis must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in the comparative analyses described below is identical to First Partners or Progress, and no 34

55 transaction is identical to the Merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of First Partners and Progress and the companies to which they are being compared. In arriving at its opinion, BSP did not attribute any particular weight to any analysis or factor that it considered. Rather, BSP made qualitative judgments as to the significance and relevance of each analysis and factor. BSP did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion; rather, BSP made its determination as to the fairness of the merger consideration on the basis of its experience and professional judgment after considering the results of all of the analyses taken as a whole. In performing its analysis, BSP also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which are beyond the control of First Partners, Progress and BSP. The analyses performed by BSP are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. BSP prepared its analyses solely for purposes of rendering its opinion and presented such analyses to First Partners Board of Directors at its February 13, 2017 meeting. Estimates of the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty, and actual values may be materially different. Accordingly, BSP s analysis does not necessarily reflect the value of First Partners common stock or the prices at which First Partners common stock or Progress common stock may be sold at any time. BSP s analysis was among a number of factors taken into consideration by First Partners Board of Directors in making its determination to approve the Merger Agreement and should not be viewed as determinative of the merger consideration or the decision of First Partners Board of Directors or management with respect to the fairness of the Merger. Summary of Merger Consideration and Implied Transaction Metrics. Under the terms of the Merger Agreement, each share of First Partners common stock outstanding prior to the Merger will be converted into either $27.00 in cash or 1.8 shares of Progress common stock, subject to certain limitations. Outstanding options and warrants of First Partners will be converted into either $17.00 in cash or shares of Progress common stock, subject to certain limitations. Both parties agreed upon a $15.00 per share valuation for Progress common stock in the transaction, and BSP used a $15.00 per share valuation for Progress common stock in calculating the aggregate transaction consideration and transaction multiples. BSP summarized the Merger terms, based on First Partners financial information as of December 31, 2016, in the table below: Pricing Offer Price, Per Common Share $27.00 Total Transaction Value 1 $41,920,440 Transaction Metrics Price/LTM Earnings 15.1x Price/Tangible Book 159.9% Price/Assets 15.3% Core Deposit Premium 8.3% 1 Total transaction value and transaction metrics include consideration for options and warrants; all transaction metrics are shown on a fully diluted basis unless otherwise noted Sources: BSP, Merger Agreement, First Partners 35

56 As part of its analysis, BSP looked at both recent transactions in Progress common stock and at valuations for comparable publicly traded peer institutions. In December 2016, Progress completed a $9,267,435 common equity offering with shares priced at $ Shares sold in the offering represent the only recent trades in Progress common stock of which Progress, First Partners or BSP are aware. BSP also looked at a peer group for Progress of publicly traded banks headquartered in the Southeast with total assets between $600 million and $1.2 billion, with return on average assets ( ROAA ) greater than 0.75%, tangible common equity-to-tangible assets ( TCE Ratio ) between 8% and 12% and average daily trading volume of at least 1,000 shares, all as of or for the 12 months ended December 31, No company used in the comparable peer group analysis described above is identical to Progress. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the Merger, public trading or other values of the companies to which they are being compared. The results derived from the peer group and the implied minority value for Progress based on peer multiples can be seen in the following chart. Company Name Ticker State HQ City Total Assets ($000) Financial and Performance Figures TCE Ratio (%) LTM ROAA (%) LTM ROAE (%) LTM NIM (%) LTM Eff. Ratio (%) Implied/ Proposed/ Closing Price Market Cap. ($mm) ADV (shares) Trading Data 2016 EPS (x) 2017E Price/ EPS 1 (x) TBV (%) Assets (%) Current Div. Yield (%) Progress Financial Corp. AL Huntsville 729, * 8.38* 3.33* 68.6* Implied Valuation at Group Median (Average Implied Value) $16.75 $15.80 $15.99 $18.48 $14.28 Implied Valuation at Group Median with 10% Discount for Illiquidity (Average Implied Value) $ Implied Multiples at Proposed Valuation (Proposed) $ Median 911, , th Percentile 846, , th Percentile 1,075, , Auburn National Bancorporation AUBN AL Auburn 831, $ , NA Commerce Union Bancshares CUBN TN Brentwood 911, $ , NA Eagle Financial Services EFSI VA Berryville 700, $ , NA First Community Corporation FCCO SC Lexington 914, $ , FVCBankcorp FVCB VA Fairfax 909, $ , NA John Marshall Bank JMSB VA Reston 1,075, $ , NA NA Peoples Bancorp of North Carolina PEBK NC Newton 1,087, $ , NA Select Bancorp, Inc. SLCT NC Dunn 846, $ , NA Southern National Bancorp of Virginia SONA VA McLean 1,142, $ , NM Source: S&P Global Market Intelligence BSP calculated the median Price/2016 EPS multiple, median Price/Estimated 2017 EPS multiple, and median Price/Tangible Book Value for the comparable peer group based on trading information as of February 7, 2017, and applied those multiples to the relevant metrics for Progress to calculate a set of implied, peer-based valuations for Progress common stock, which ranged from $18.48 per share to $15.80 per share. BSP then took the average of the valuations implied by the three metrics and calculated an average implied value for Progress common stock of $16.75 per share. Due to the privately-held nature of Progress common stock, BSP also applied a 10% illiquidity discount to the implied, peer-based valuation; the average implied value for Progress common stock with the 10% illiquidity discount was $15.08 per share. Both the recent trading information from the common equity offering and the range of implied peerbased valuations support the $15.00 per share value for Progress common stock agreed upon by both parties in the transaction. As part of its analysis, BSP also looked at valuations for comparable publicly traded peer institutions of First Partners. The peer group for First Partners consisted of publicly traded banks headquartered in the Southeast with total assets between $100 million and $500 million, with ROAA greater than 0.75%, and 36

57 nonperforming assets-to-total assets ( NPAs/Assets ) less than 3%, all as of or for the most recent 12-month period available as of February 7, No company used in the comparable peer group analysis described above is identical to First Partners. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the Merger, public trading or other values of the companies to which they are being compared. The results derived from the peer group and the implied minority value for First Partners based on peer multiples can be seen in the following chart. Financial and Performance Figures Trading Data Price/ Company Name Ticker State HQ City Total Assets ($000) NPAs/ TCE LTM LTM Assets Ratio ROAA ROAE (%) (%) (%) (%) LTM NIM (%) LTM Eff. Ratio (%) Implied/ Proposed/ Closing Price Market Cap. ($mm) LTM ADV EPS TBV (shares) (x) (%) Assets (%) Current Div. Yield (%) First Partners Financial, Inc. AL Birmingham 273, $1.98 $18.49 $ Implied Valuation at Group Median (No Discount for Illiquidity) (Average Implied Value) $21.24 $24.37 $18.45 $20.91 Implied Valuation at Group Median (w/ 15% Discount for Illiquidity) (Average Implied Value) $18.05 $20.71 $15.68 $17.77 Median 248, th Percentile 225, th Percentile 372, Athens Bancshares Corporation AFCB TN Athens 426, $ Bank of McKenney BOMK VA McKenney 222, $ Cornerstone Bancorp CTOT SC Easley 146, $ NA Exchange Bankshares, Inc. EXCH GA Milledgeville 236, $ Farmers Bank of Appomattox FBPA VA Appomattox 234, $ Pinnacle Bankshares Corporation PPBN VA Altavista 440, $ Southeastern Banking Corporation SEBC GA Darien 407, $ Surrey Bancorp SRYB NC Mount Airy 268, $ NA Virginia Bank Bankshares, Incorporated VABB VA Danville 187, $ West Town Bancorp, Inc. WTWB NC Raleigh 259, $ NA Source: S&P Global Market Intelligence BSP calculated the median price/ltm EPS multiple, median Price/Tangible Book Value, and median Price/Assets for the comparable peer group based on trading information as of February 7, 2017, and applied those multiples to the relevant metrics for First Partners to calculate a set of implied, peer-based valuations for First Partners common stock, which ranged from $18.45 per share to $24.37 per share. BSP then took the average of the valuations implied by the three metrics and calculated an average implied value for Progress common stock of $21.24 per share. Due to the privately-held nature of First Partners common stock, BSP also applied a 15% illiquidity discount to the implied, peer-based valuation. Because First Partners is significantly smaller than Progress and has had less recent trading activity in its common stock, BSP determined that a larger illiquidity discount was warranted for First Partners. The average implied value for First Partners common stock with the 15% illiquidity discount was $18.05 per share. In its analysis, BSP reviewed four groups of selected merger and acquisition transactions involving U.S. banks: the Major Southeast ( SE ) Markets Group; the SE Profitability Group; the SE Asset Quality Group; and the SE Capital Group. The Major SE Markets Group consisted of transactions announced since January 1, 2014, involving sellers with total assets between $200 million and $600 million and based in a southeastern MSA with a population greater than 500,000 and consisted of the following transactions: 37

58 Buyer HCBF Holding Company, Inc. CenterState Banks, Inc. National Commerce Corporation Stonegate Bank Sunshine Bancorp, Inc. Charter Financial Corporation CenterState Banks, Inc. Fidelity Southern Corporation CenterState Banks, Inc. Ameris Bancorp BNC Bancorp Farmers and Merchants Bankshares, Inc. National Commerce Corporation Stonegate Bank Commerce Union Bancshares, Inc. Home BancShares, Inc. Simmons First National Corporation Seller Jefferson Bankshares, Inc. Platinum Bank Holding Company Private Bancshares, Inc. Insignia Bank FBC Bancorp, Inc. CBS Financial Corporation Hometown of Homestead Banking Company American Enterprise Bankshares, Inc. Community Bank of South Florida, Inc. Jacksonville Bancorp, Inc. Southcoast Financial Corporation Bankshares of Fayetteville, Inc. Reunion Bank of Florida Community Bank of Broward Reliant Bank Florida Traditions Bank Delta Trust & Banking Corporation The SE Profitability Group consisted of transactions announced since January 1, 2014, involving sellers based in the Southeast with total assets between $100 million and $600 million and last twelve months ROAA greater than 0.75% and consisted of the following transactions: Buyer Simmons First National Corporation CenterState Banks, Inc. National Commerce Corporation Citco Community Bancshares Equity Bancshares, Inc. Simmons First National Corporation State Bank Financial Corporation Blue Ridge Bankshares, Inc. Carolina Financial Corporation Entegra Financial Corp. First National Bancorp, Inc. Ameris Bancorp BNC Bancorp River Financial Corporation Ameris Bancorp NewBridge Bancorp Home BancShares, Inc. Home BancShares, Inc. Seller Hardeman County Investment Co. Platinum Bank Holding Company Private Bancshares, Inc. American Trust Bank of East TN Community First Bancshares, Inc. Citizens National Bank NBG Bancorp, Inc. River Bancorp, Inc. Congaree Bancshares, Inc. Oldtown Bank Twin Lakes Community Bank Jacksonville Bancorp, Inc. Southcoast Financial Corporation Keystone Bancshares, Inc. Merchants & Southern Banks of Florida, Inc. Premier Commercial Bank Broward Financial Holdings, Inc. Florida Traditions Bank 38

59 Simmons First National Corporation First Citizens Bancshares, Inc. Delta Trust & Banking Corporation Southern Heritage Bancshares, Inc. The SE Asset Quality Group consisted of transactions announced since January 1, 2014, involving sellers based in the Southeast with total assets between $100 million and $600 million and NPAs/Assets less than 1.00% and consisted of the following transactions: Buyer Simmons First National Corporation Trustmark Corporation Seacoast Banking Corporation of Florida IBM Southeast Employees' Credit Union CenterState Banks, Inc. HomeTrust Bancshares, Inc. Stonegate Bank Pinnacle Financial Corporation State Bank Financial Corporation Sunshine Bancorp, Inc. State Bank Financial Corporation Coastal Banking Company, Inc. Renasant Corporation National Commerce Corporation Sunshine Bancorp, Inc. Community & Southern Holdings, Inc. United Community Banks, Inc. First Horizon National Corporation NewBridge Bancorp IBERIABANK Corporation Home BancShares, Inc. Seller Hardeman County Investment Co. RB Bancorporation GulfShore Bancshares, Inc. Mackinac Savings Bank, FSB Platinum Bank Holding Company TriSummit Bancorp, Inc. Insignia Bank Independence Bank of Georgia S Bankshares, Inc. FBC Bancorp, Inc. NBG Bancorp, Inc. First Avenue National Bank KeyWorth Bank Reunion Bank of Florida Community Southern Holdings, Inc. Community Business Bank MoneyTree Corporation TrustAtlantic Financial Corporation Premier Commercial Bank Florida Bank Group, Inc. Broward Financial Holdings, Inc. The SE Capital Group consisted of transactions announced since January 1, 2014, involving sellers based in the Southeast with total assets between $100 million and $600 million and tangible equity-to-tangible assets ( TE ) ratio between 8.0% and 10.0% and consisted of the following transactions: Buyer HCBF Holding Company, Inc. Trustmark Corporation CenterState Banks, Inc. HomeTrust Bancshares, Inc. National Commerce Corporation Stonegate Bank Summit Financial Group, Inc. Seller Jefferson Bankshares, Inc. RB Bancorporation Platinum Bank Holding Company TriSummit Bancorp, Inc. Private Bancshares, Inc. Insignia Bank First Century Bankshares, Inc. 39

60 Sunshine Bancorp, Inc. Charter Financial Corporation CenterState Banks, Inc. Fidelity Southern Corporation CenterState Banks, Inc. Ameris Bancorp BNC Bancorp Farmers and Merchants Bankshares, Inc. HCBF Holding Company, Inc. National Commerce Corporation Premier Financial Bancorp, Inc. Ameris Bancorp Stonegate Bank Commerce Union Bancshares, Inc. Heritage Financial Group, Inc. Home BancShares, Inc. Simmons First National Corporation FBC Bancorp, Inc. CBS Financial Corporation Hometown of Homestead Banking Company American Enterprise Bankshares, Inc. Community Bank of South Florida, Inc. Jacksonville Bancorp, Inc. Southcoast Financial Corporation Bankshares of Fayetteville, Inc. OGS Investments, Inc. Reunion Bank of Florida First National Bankshares Corp. Merchants & Southern Banks of Florida, Inc. Community Bank of Broward Reliant Bank Alarion Financial Services, Inc. Florida Traditions Bank Delta Trust & Banking Corporation Using the latest publicly available information prior to the announcement of the relevant transaction, BSP reviewed the following transaction metrics for each selected merger transaction group: transaction price to last-12-months earnings, transaction price to tangible book value, transaction price to total assets and tangible book premium to core deposits. BSP compared the indicated transaction multiples for the Merger to the high, low, and median multiples of each merger transaction group. 40

61 Source: S&P Global Market Intelligence Transaction Value/ Target Announcement Financials Premium/ Transaction Value LTM Earnings MRQ TBV MRQ Assets Core Deposits Total Assets TE Ratio LTM ROAA LTM ROAE NPAs/ Assets ($mm) (x) (%) (%) (%) ($000) (%) (%) (%) (%) First Partners Financial, Inc. 273, Total Transaction Value Major SE Markets SE Profitability Group Median SE Asset Quality Group Median SE Capital Group Median Median: , Minimum: , Maximum: , Median: , Minimum: , Maximum: , Median: , Minimum: , Maximum: , Median: , Minimum: , Maximum: , BSP performed an analysis that estimated the net present value per share of First Partners common stock on a standalone basis assuming First Partners performed in accordance with management projections through To approximate the terminal value of a share of First Partners common stock at December 31, 2020, BSP applied price to 2020 earnings per share multiples ranging from 11.0x to 14.0x and price to December 31, 2020 tangible book value per share multiples ranging from 90% to 120%. The terminal values were then discounted to present values using different discount rates ranging from 11.0% to 15.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of First Partners common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of First Partners common stock of $20.14 to $29.54 when applying multiples of earnings per share and $14.25 to $21.90 when applying multiples of tangible book value per share. 41

62 Discount Rates Discount Rates Discount Rates Discount Rates Terminal Tangible Book Multiples 90% 100% 110% 120% 11% $16.42 $18.25 $20.07 $ % $15.84 $17.60 $19.36 $ % $15.29 $16.99 $18.69 $ % $14.76 $16.40 $18.04 $ % $14.25 $15.84 $17.42 $19.00 Terminal Earnings Multiples % $23.21 $25.32 $27.43 $ % $22.39 $24.43 $26.46 $ % $21.61 $23.57 $25.54 $ % $20.86 $22.76 $24.65 $ % $20.14 $21.98 $23.81 $25.64 Source: BSP Similarly, BSP performed an analysis that estimated the net present value per share of Progress common stock on a standalone basis assuming Progress performed in accordance with management projections through 2020, as provided to BSP. To approximate the terminal value of a share of Progress common stock at December 31, 2020, BSP applied price to 2020 earnings per share multiples ranging from 18.0x to 21.0x and price to December 31, 2020 tangible book value per share multiples ranging from 130% to 160%. The terminal values were then discounted to present values using different discount rates ranging from 10.0% to 14.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Progress common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of First Partners common stock of $17.58 to $23.66 when applying multiples of earnings per share and $11.86 to $16.84 when applying multiples of tangible book value per share. Terminal Tangible Book Multiples 130% 140% 150% 160% 10% $13.68 $14.73 $15.78 $ % $13.19 $14.21 $15.22 $ % $12.73 $13.71 $14.69 $ % $12.28 $13.23 $14.17 $ % $11.86 $12.77 $13.68 $14.60 Terminal Earnings Multiples % $20.28 $21.41 $22.54 $ % $19.56 $20.65 $21.74 $ % $18.87 $19.92 $20.97 $ % $18.21 $19.23 $20.24 $ % $17.58 $18.56 $19.54 $20.51 Source: BSP BSP then performed an analysis that estimated the net present value per share of the combined company s common stock, based on the expected impact of the merger, including initial fair value balance sheet adjustments and future cost savings, as projected by BSP in consultation with both parties. To approximate the 42

63 Discount Rates Discount Rates terminal value of a share of the combined company s common stock at December 31, 2020, BSP applied price to 2020 earnings per share multiples ranging from 19.0x to 22.0x and price to December 31, 2020 tangible book value per share multiples ranging from 160% to 190%. The terminal values were then discounted to present values using different discount rates ranging from 10.0% to 14.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of the combined company s common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per current share of First Partners common stock, based on the transaction stock exchange ratio, of $38.97 to $52.05 when applying multiples of earnings per share and $25.97 to $35.58 when applying multiples of tangible book value per share. Terminal Tangible Book Multiples 160% 170% 180% 190% 10% $29.96 $31.83 $33.70 $ % $28.89 $30.70 $32.51 $ % $27.88 $29.62 $31.36 $ % $26.90 $28.58 $30.26 $ % $25.97 $27.59 $29.22 $30.84 Terminal Earnings Multiples % $44.95 $47.32 $49.69 $ % $43.36 $45.64 $47.92 $ % $41.83 $44.03 $46.23 $ % $40.37 $42.49 $44.62 $ % $38.97 $41.02 $43.07 $45.12 Conclusion Source: BSP Based on the results of the various analyses described above, BSP concluded that the merger consideration to be received under the terms of the Merger Agreement is fair, from a financial point of view, to First Partners shareholders. The opinion expressed by BSP was based upon market, economic and other relevant considerations as they existed and could be evaluated as of the date of the opinion. Events occurring after the date of issuance of the opinion, including, but not limited to, changes affecting the securities markets, the results of operations or material changes in the assets or liabilities of First Partners or Progress, could materially affect the assumptions used in preparing the opinion. As described above, BSP s opinion was among the many factors taken into consideration by First Partners Board of Directors in making its determination to approve the Merger Agreement. For purposes of rendering its opinion, BSP assumed that, in all respects material to its analyses: the Merger will be consummated in accordance with the terms of the Merger Agreement without waiver, modification or amendment of any term, condition or agreement thereof; the representations and warranties of each party in the Merger Agreement and in all related documents and instruments referred to in the Merger Agreement are true and correct; each party to the Merger Agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents; 43

64 all conditions to the completion of the Merger will be satisfied without any waivers; and in the course of obtaining the necessary regulatory, contractual or other consents or approvals for the Merger, no restrictions, including any divestiture requirements, termination, or other payments or amendments or modifications, will be imposed that will have a material adverse effect on the future results of operations or financial condition of the combined entity or the contemplated benefits of the Merger. BSP cannot provide assurance as to when or if all of the conditions to the Merger can or will be satisfied or, if applicable, waived by the appropriate party. As of the date of this Proxy Statement, BSP has no reason to believe that any of these conditions will not be satisfied. Compensation to BSP BSP was engaged as First Partners financial advisor in connection with the Merger. Pursuant to the terms of the engagement agreement, First Partners has already paid BSP certain fees in conjunction with this transaction, a portion of which was paid upon its execution of the Merger Agreement and BSP s rendering of the fairness opinion. Additional compensation will be paid to BSP upon the closing of the transaction. In addition, First Partners has agreed to reimburse BSP for reasonable out-of-pocket expenses and to indemnify BSP and its directors, officers and employees from liability in connection with the transaction, and to hold BSP harmless from any losses, actions, claims, damages, expenses or liabilities related to any of BSP s acts or decisions made in good faith and in the best interest of First Partners. During the two years preceding the current engagement associated with the Merger, BSP has provided advisory services to First Partners where compensation was received. BSP has not provided financial advisory services to Progress within the past two years but may seek to do so in the future. BSP may receive fees for the rendering of such services. Opinion of Progress s Financial Advisor On January 10, 2017, the Progress Board of Directors engaged Stephens to act as financial advisor to Progress regarding a potential merger transaction with First Partners. As part of the engagement, Stephens was asked to assess the fairness, from a financial point of view, of the transaction to Progress. Stephens is a nationally recognized investment banking firm, with headquarters in Little Rock, Arkansas, and with significant experience in the banking and financial institutions industry. Progress retained Stephens based upon its experience as a financial advisor in mergers and acquisitions of financial institutions and its knowledge of financial institutions. As part of Stephens engagement, representatives participated in Progress s Board of Directors meeting held on February 13, 2017, during which Progress s Board of Directors evaluated the proposed Merger. At this meeting, Stephens reviewed the financial aspects of the proposed transaction and rendered an opinion that, as of the date of the Merger Agreement, the transaction with First Partners was fair, from a financial point of view, to Progress. Progress s Board of Directors approved the Merger Agreement at this meeting. The full text of Stephens written opinion, dated February 14, 2017, is attached as Appendix D to this Proxy Statement and is incorporated herein by reference. Progress s shareholders are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Stephens. The description of the opinion set forth herein is qualified in its entirety by reference to the full text of such opinion. Stephens has approved the inclusion and summary of its opinion in this Proxy Statement. Stephens opinion speaks only as of the date of the opinion and addresses only the fairness, from a financial point of view, of the Merger to Progress. Stephens opinion does not address the merits of the underlying decision by Progress to enter into the Merger Agreement, the merits of the Merger as compared to other alternatives potentially available to Progress or the relative effects of any alternative transaction in which Progress might engage, nor is it intended to be a recommendation to any person as 44

65 to how to vote on the proposal to approve the Merger. Stephens fairness opinion committee approved the issuance of Stephens opinion. In connection with rendering the opinion, Stephens: analyzed certain publicly available financial statements and reports regarding Progress and First Partners; analyzed the audited financial statements and certain management reports regarding Progress and First Partners; analyzed certain internal financial statements and other financial and operating data concerning Progress and First Partners prepared by management of Progress and First Partners, respectively; compared the financial performance of Progress with that of certain publicly-traded companies and their securities that Stephens deemed relevant to its analysis of the Merger; compared the financial contribution of each of Progress and First Partners of certain historical and projected financial information to the pro forma entity to be created by the Merger relative to the exchange ratio and each institutions pro forma ownership; analyzed the Merger consideration relative to First Partners tangible book value, last twelve months earnings and core deposits as of December 31, 2016; reviewed the financial terms, to the extent publicly available, of certain merger or acquisition transactions that Stephens deemed relevant to its analysis of the Merger; analyzed, on a pro forma basis, the effect of the Merger on the balance sheet, capitalization ratios, earnings and tangible book value both in the aggregate and, where applicable, on a per share basis of Progress; reviewed the most recent draft of the Merger Agreement and related documents provided to Stephens by Progress; discussed with management of Progress the operations of and future business prospects for Progress and First Partners and the anticipated financial consequences of the Merger to Progress; assisted in the deliberations of the Progress Board of Directors regarding the material terms of the Merger and Progress s negotiations with First Partners; and performed such other analyses and provided such other services as Stephens deemed appropriate. Stephens has relied on the accuracy and completeness of the information and financial data provided to Stephens by Progress and First Partners and of the other information reviewed by Stephens in connection with the preparation of Stephens opinion, and its opinion is based upon such information. Stephens has not independently verified the accuracy or completeness of the information and financial data on which Stephens opinion is based. Members of the Progress management team have assured Stephens that they are not aware of any relevant information that has been omitted or remains undisclosed to Stephens. Stephens has not assumed any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of Progress or of First Partners, and Stephens has not been furnished with any such evaluations or appraisals; nor has Stephens evaluated the solvency or fair value of Progress or of First Partners under any laws relating to bankruptcy, insolvency or similar matters. In addition, Stephens has not received or reviewed any individual credit files, nor has Stephens made an evaluation of the adequacy of the allowance for loan losses of 45

66 Progress or First Partners. Stephens has not assumed any obligation to conduct any physical inspection of the properties or facilities of Progress or of First Partners. With respect to the financial forecasts prepared by the managements of Progress and First Partners, Stephens has assumed that such financial forecasts have been reasonably prepared and reflect the best currently available estimates and judgments of the management of Progress and First Partners as to the future financial performance of Progress and First Partners and that the financial results reflected by such projections will be realized as predicted. Stephens has also assumed that the representations and warranties contained in the Merger Agreement and all related documents including the disclosure schedules provided to Progress, are true, correct and complete in all material respects. The projections furnished to Stephens and used by it in certain of its analyses were prepared by Progress s executive management team. Progress and First Partners do not publicly disclose internal management projections of the type provided to Stephens in connection with its review of the Merger. As a result, such projections were not prepared with a view towards public disclosure. The projections were based on numerous variables and assumptions, which are inherently uncertain, including factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in the projections. For purposes of rendering its opinion, Stephens assumed that, in all respects material to its analyses: the Merger will be completed substantially in accordance with the terms set forth in the Merger Agreement with no adjustments; the representations and warranties of each party in the Merger Agreement and in all related documents and instruments referred to in the Merger Agreement are true and correct; each party to the Merger Agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents; all conditions to the completion of the Merger will be satisfied without any waiver; and in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the Merger, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, will be imposed that will have a material adverse effect on the future results of operations or financial condition of the combined entity or the contemplated benefits of the Merger, including the cost savings and related expenses expected to result from the Merger. Stephens further assumed that the Merger will be accounted for as a purchase transaction under generally accepted accounting principles, and that the Merger will qualify as a tax-free reorganization for United States federal income tax purposes. Stephens opinion is not an expression of an opinion as to the price at which shares of Progress common stock will trade following the announcement of the Merger, the actual value of the shares of common stock of the combined company when issued pursuant to the Merger, or the price at which the shares of common stock of the combined company will trade following the completion of the Merger. Stephens opinion is necessarily based upon market, economic and other conditions as they existed and can be evaluated on, and on the information made available to Stephens as of, the date of the opinion. It should be understood that subsequent developments may affect the opinion and that Stephens does not have any obligation to update, revise or reaffirm its opinion. Stephens has assumed that the Merger will be consummated on the terms of the latest draft of the Merger agreement provided to Stephens, without material waiver or modification. Stephens has assumed that in the course of obtaining the necessary regulatory, lending or other consents or approvals (contractual or otherwise) for the Merger, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the Merger to Progress or its shareholders. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, Stephens opinion was among several factors taken into consideration by the Progress Board of Directors in making its determination to approve the Merger 46

67 Agreement and the Merger. Consequently, the analyses described below should not be viewed as determinative of the decision of the Progress Board of Directors with respect to the fairness of the consideration. The following is a summary of the material financial analyses performed and material factors considered by Stephens in connection with its opinion. Stephens performed certain procedures, including each of the financial analyses described below, and reviewed with Progress s executive management and Board of Directors the assumptions upon which the analyses were based, as well as other factors. Although the summary does not purport to describe all of the analyses performed or factors considered by Stephens within this regard, it does set forth those considered by Stephens to be material in arriving at its opinion. The order of the summaries of analyses described does not represent the relative importance or weight given to those analyses by Stephens. It should be noted that in arriving at its opinion, Stephens did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Stephens believes that its analysis must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion. Summary of Proposal. Stephens reviewed the financial terms of the proposed transaction. Pursuant to the terms of the Merger Agreement, upon the consummation of the Merger, each outstanding share of First Partners common stock will be cancelled, will cease to exist and will no longer be outstanding. Each share of First Partners common stock that is owned by a shareholder who (A) is either (i) an individual whose principal residence is in the State of Alabama or (ii) an entity the principal place of business of which is located in the State of Alabama and (B) has executed and delivered to Progress the Shareholder Form, will be converted into the right to receive $27.00 in cash for up to 10% of shares held, with each remaining share converted to 1.8 shares of Progress s common stock. Each share of First Partners common stock that is not owned by an Eligible Shareholder will be converted solely into the right to receive $27.00 in cash. Contribution Analysis. Stephens compared certain historical and projected financial information for Progress and First Partners relative to the exchange ratio and their shareholders ownership in the combined company. Based on the analysis, the implied exchange ratio ranged from to The analysis is illustrated below: Balance Sheet - 12/31/16 Premium / (Discount) Contribution (%) Implied Exchange to Merger Agreement Ratio of x Progress First Partners (x) (%) Total Assets x 15.9% Gross Loans HFI % Deposits % Tangible Common Equity % Average x 12.2% Profitability FY 2015 Net Income % FY 2016 Net Income % Average x 67.1% FY 2017E Net Income % FY 2018E Net Income % FY 2019E Net Income (12.2%) Average x 5.4% Pro Forma Ownership High x 78.9% Ownership - 100% Stock (1) Mean % Ownership - As Structured (1) Median % Low (12.2%) Note: Dollars in millions; financial data as of December 31, Shaded Avg x 21.9%

68 (1) Based on fully diluted shares outstanding at close. As Structured assumes that AL shareholders elect 95% stock / 5% cash. Data Source: Company documents, SNL Financial, Progress Management Estimates Comparable Transaction Analysis Stephens reviewed publicly available information related to three groups of precedent transactions involving a depository institution as a selling entity: (1) Selected nationwide transactions since 2015 with a publicly disclosed deal value, target assets between $150 million and $400 million, NPAs / Assets less than 3.00% and last twelve months return on average assets greater than 0.75%. Buyer First Merchants Corp. Hope Bancorp, Inc. Texas State Bankshares Inc. National Commerce Corp. First Defiance Financial Monona Bankshares Inc. Middlefield Banc Corp. Oak Star Bancshares Inc. Pinnacle Financial Corp. Sunshine Bancorp Inc. First Interstate BancSystem State Bank Financial Corp. DNB Financial Corp. CVB Financial Corp. NexTier Inc. Glacier Bancorp Inc. Home Bancorp Inc. River Financial Corp. LINCO Bancshares Inc. Target Arlington Bank U & I Financial Corp. Blanco National Holdings Inc. Private Bancshares Inc. Commercial Bancshares Inc. MCB Bankshares Inc. Liberty Bank NA Bancshares of Urbana Inc. Independence Bank of Georgia FBC Bancorp Inc. Flathead Bank of Bigfork Montana NBG Bancorp Inc. East River Bank County Commerce Bank Eureka Financial Corp. Canon Bank Corp. Louisiana Bancorp Inc. Keystone Bancshares Inc. Community First Bank 48

69 (2) Selected Southeast transactions since 2014 with a publicly disclosed deal value, target assets between $100 million and $500 million, NPAs / Assets less than 3.00% and last twelve months return on average assets greater than 0.75%. Buyer Target Target State Simmons First National Corp. Hardeman County Investment Co. TN National Commerce Corp. Private Bancshares Inc. GA Citco Community Bancshares Inc. American Trust Bank of East TN TN Pinnacle Financial Corp. Independence Bank of Georgia GA Sunshine Bancorp Inc. FBC Bancorp Inc. FL State Bank Financial Corp. NBG Bancorp Inc. GA Blue Ridge Bankshares Inc. River Bancorp Inc. VA Carolina Financial Corp. Congaree Bancshares Inc. SC First National Bancorp Inc. Twin Lakes Community Bank AR Southern States Bancshares Inc. Columbus Community Bank GA River Financial Corp. Keystone Bancshares Inc. AL Ameris Bancorp. Merchant & Southern Banks of FL Inc. FL First Horizon National Corp. TrustAtlantic Financial Corp. NC New Bridge Bancorp. Premier Commercial Bank NC Home BancShares Inc. Broward Financial Holdings Inc. FL BNC Bancorp Harbor Bank Group Inc. SC Home BancShares Inc. Florida Traditions Bank FL Simmons First National Corp. Delta Trust & Banking Corp. AR First Citizens Bancshares Inc. Southern Heritage Bancshares TN (3) Selected nationwide transactions since 2014 with a publicly disclosed deal value, target assets between $100 million and $500 million, NPAs / Assets less than 3.00% and last twelve months return on average assets greater than 1.00%. 49

70 Buyer First Merchants Corp. Hope Bancorp, Inc. Dickinson Financial Corp. II Glacier Bancorp Inc. Equity Bancshares Inc. CVB Financial Corp. First Defiance Financial Monona Bankshares Inc. Citco Community Bancshares Inc. Equity Bancshares Inc. OakStar Bancshares Inc. First Interstate BancSystem State Bank Financial Corp. Blue Ridge Bankshares Inc. Ohio Valley Banc Corp. Carolina Financial Corp. RBB Bancorp. First National Bancorp Inc. NexTier Inc. River Financial Corp. Veritex Holdings Inc. Cathay General Bancorp. Olney Bancshares of Texas Inc. First Southern Bancorp Inc. First Citizens Banc Corp Target Arlington Bank U & I Financial Corp. Community Bancshares of KS Inc. TFB Bancorp Inc. Prairie State Bancshares Inc. Valley Commerce Bancorp Commercial Bancshares Inc. MCB Bankshares Inc. American Trust Bank of East TN Community First Bancshares Inc. Bancshares of Urbana Inc. Flathead Bank of Bigfork Montana NBG Bancorp Inc. River Bancorp Inc. Milton Bancorp Inc. Congaree Bancshares Inc. TFC Holding Co Twin Lakes Community Bank Eureka Financial Corp. Keystone Bancshares Inc. IBT Bancorp Inc. Asia Bancshares Inc. Vintage Shares Inc. First United Inc. TCNB Financial Corp. 50

71 Home BancShares Inc. Old National Bancorp Olney Bancshares of Texas Inc. Univest Corp of Pennsylvania Home BancShares Inc. Simmons First National Corp. First Citizens Bancshares Inc. Broward Financial Holdings Inc. Founders Financial Corp. HBank Texas Valley Green Bank Florida Traditions Bank Delta Trust & Banking Corp. Southern Heritage Bancshares Transaction multiples for the Merger were calculated based on a price of $27.00 per share for First Partners, and compared to the median multiples for each group of precedent transactions. The analysis is illustrated below: Price per Share: $ Current Aggregate Transaction Value: (1) $ 41.9 Million First Partners Precedent Transactions (4) Per Share Nationwide Southeast ROAA > 100 bps Transaction Multiples: Value (2) Multiple Median Median Median P / TBV $ % 1.47x 1.46x 1.55x P / LTM EPS $ x 18.1x 15.6x 14.1x Core Deposit Premium (3) $ % 8.3% 7.6% 8.8% Note: Dollars in millions, except per share data (1) Based on 1,417,185 common shares outstanding, 75,000 options with a weighted average exercise price of $10.00, and 140,085 warrants with a weighted average exercise price of $10.00 (2) Financial data as of December 31, 2016 (3) Assumes time deposits greater than $100,000 are non-core deposits. As of December 31, 2016, First Partners reported $166.9 million in non-core deposits. (4) Selected bank transactions since 2013 with a publicly disclosed deal value, target assets between $100 million and $500 million, NPAs / Assets less than 3.00%, and last twelve months return on average assets greater than 0.75%. Data Source: SNL Financial; Company Documents In addition, using the multiples from the three groups of precedent transactions, Stephens calculated ranges of implied values for First Partners and compared these values to the offer price of $27.00 per share. The results of this analysis are illustrated below: 51

72 (1) Selected bank transactions since 2015 with a publicly disclosed deal value, target assets between $150 and $400 million, NPAs / Assets less than 3.00%, and LTM ROAA greater than 0.75%. (2) Selected southeast bank transactions since 2014 with a publicly disclosed deal value, target assets between $100 and $500 million, NPAs / Assets less than 3.00%, and LTM ROAA greater than 0.75%. (3) Selected bank transactions since 2014 with a publicly disclosed deal value, target assets between $100 and $500 million, NPAs / Assets less than 3.00% and LTM ROAA greater than 1.00%. Data Source: SNL Financial; Company Documents No company or transaction used as a comparison in the above analysis is identical to Progress, First Partners or the Merger. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies. Discounted Cash Flow Analysis. Progress Stephens estimated the present value of all shares of Progress common stock based on Progress s estimated future earnings stream beginning in the first quarter of In performing this analysis, Stephens used Progress s management s guidance for fiscal years 2017 to 2021 to derive projected after-tax cash flows. In determining cash flows available to shareholders, Stephens assumed that Progress would maintain a tangible common equity/tangible asset ratio of 9.0% and would retain sufficient earnings to maintain that level. Any earnings in excess of what would need to be retained represented cash flows available for dividends. The analysis assumed discount rates ranging from 12.6% to 14.6% and terminal multiples ranging from 13.0 times to 17.0 times fiscal year 2021 forecasted earnings. This resulted in a standalone range of value for Progress of $13.29 to $17.95 per share. For the purposes of the Merger, Progress s per share value equaled $ First Partners Stephens estimated the present value of all shares of First Partners common stock based on First Partners estimated future earnings stream beginning in the first quarter of In performing this analysis, 52