Securities and Exchange Commission
                             Washington, D.C. 20549

                                    Form 10-K

     Annual Report  pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 for the fiscal year ended December 31, 1995




Commission File Number: 0-14815


                         PROGRESS FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)


           Delaware                                            23-2413363
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification Number)


Plymouth Meeting Executive Campus
600 West Germantown Pike
Plymouth Meeting, Pennsylvania                               19462-1060
(Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, including area code:          (610) 825-8800

Securities registered pursuant to Section 12(b) of the Act:  Not applicable

Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
                                                             $1.00 par value
                                                             (Title of class)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |X|

The aggregate market value of the voting stock,  held by  non-affiliates  of the
Registrant as a group, was $18,647,910 as of March 8, 1996.

As of March 8, 1996, there were 3,780,000  issued and outstanding  shares of the
Registrant's Common Stock.

Documents Incorporated By Reference:

(1)  Portions of the Annual Report to  Stockholders  for the year ended December
     31, 1995 are incorporated into Part II, Items 5 through 8 of this Form 10-K

(2)  Portions of the definitive  proxy  statement for the 1996 Annual Meeting of
     Stockholders  are  incorporated  into Part III, Items 10 through 13 of this
     Form 10-K.




<PAGE>


                         PROGRESS FINANCIAL CORPORATION
                                Table of Contents



                                   PART I                                  Page

Item 1.  Business..........................................................  3
Item 2.  Properties........................................................ 17
Item 3.  Legal Proceedings................................................. 17
Item 4.  Submission of Matters to a Vote of Security Holders............... 17



                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related 
           Stockholder Matters............................................. 17
Item 6.  Selected Consolidated Financial Data.............................. 17
Item 7.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations........................................... 17
Item 8.  Financial Statements and Supplementary Data....................... 17
Item 9.  Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure............................................ 17



                                    PART III

Item 10. Directors and Executive Officers of the Registrant................ 18
Item 11. Executive Compensation............................................ 18
Item 12. Security Ownership of Certain Beneficial Owners and Management.... 18
Item 13. Certain Relationships and Related Transactions.................... 18



                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K... 19

         Signatures........................................................ 20





<PAGE>




                                     PART I

Item 1.       Business

General

Progress  Financial  Corporation (the "Company") was incorporated under the laws
of the State of  Delaware  in  February  1986 by  authorization  of the Board of
Directors  of  Progress  Federal  Savings  Bank (the  "Bank") for the purpose of
becoming a unitary thrift holding company owning all of the outstanding stock of
the Bank. On July 18, 1986, pursuant to a plan of reorganization approved by the
Bank's shareholders,  all of the outstanding shares of capital stock of the Bank
were converted into shares of capital stock of the Company on a  share-for-share
basis so that  the  shareholders  of the Bank  became  the  shareholders  of the
Company,  and the Company became the sole  shareholder of the Bank. The business
activity of the Company as a unitary thrift holding company  consists  primarily
of the operation of the Bank as a wholly-owned savings bank subsidiary.

The Company is  authorized as a Delaware  corporation  to engage in any activity
permitted by the Delaware General Corporation Law. The holding company structure
permits  the Bank,  through  the  Company,  to expand  the size and scope of the
financial services offered beyond those that the Bank is permitted to offer.

The Bank is a  Federally  chartered  stock  savings  bank  conducting  community
banking business  through six offices in Montgomery  County,  Pennsylvania,  one
office  in  Delaware  County,  Pennsylvania,   one  office  in  Chester  County,
Pennsylvania   and  one  office  in  the  Andorra   community  of  Philadelphia,
Pennsylvania.

The  principal  business of the Bank  consists of  attracting  deposits from the
general  public  through its offices and using such deposits to originate  loans
secured by first  mortgage  liens on  existing  single-family  residential  real
estate  and  existing  multi-family  residential  and  commercial  real  estate,
construction loans,  commercial business loans consisting  primarily of loans to
small  and  medium-sized  businesses,  and  various  consumer  loans.  The  Bank
originates single-family residential real estate loans for sale in the secondary
market  and  secured  consumer  loans,  such as home  equity  loans and lines of
credit. The Bank also originates  commercial  business loans to small and medium
sized  businesses in the  communities  its branches  serve and  commercial  real
estate (including multi-family  residential) and residential construction loans.
In addition, the Bank invests in mortgage-backed securities which are insured or
guaranteed  by the U.S.  Government  and  agencies  thereof  and  other  similar
investments  permitted  by  applicable  laws and  regulations.  The Bank is also
involved  in  real  estate  development  and  related  activities,  through  its
subsidiaries,  primarily  to  facilitate  the  completion  and  sale of  certain
property held as real estate owned ("REO").

The Company also conducts commercial mortgage banking and brokerage services for
institutional  real estate  investors  and lenders as well as real estate owners
and  developers  and  provides  equipment  leasing  for small  and  medium-sized
companies through its subsidiaries,  Progress Realty Advisors,  L.P. ("PRA") and
Quaker State Financial  Corporation  ("QSFC").  PRA was established in September
1993, while a 75% majority interest in QSFC was recently acquired in July 1995.

On January 31, 1996, the Company successfully  completed the offering of 500,000
shares of common stock at a price of $5.25 per share.

                                        3
<PAGE>

Competition

The Company  faces strong  competition  both in  attracting  deposits and making
loans. As a provider of a wide range of financial services, the Company competes
with  national  and  state  banks,  savings  and loan  associations,  securities
dealers,  brokers,  mortgage bankers, finance and insurance companies, and other
financial  service  companies.  The ability of the Company to attract and retain
deposits depends on its ability to generally provide a rate of return, liquidity
and risk comparable to that offered by competing investment  opportunities.  The
Company competes for loans principally  through the interest rates and loan fees
it charges and the efficiency and quality of services it provides borrowers.

Subsidiaries

At  December  31,  1995,  in  addition  to the Bank,  the  Company had two other
subsidiaries,  Progress Realty Advisors, L.P. ("PRA") and Quaker State Financial
Corporation  ("QSFC").  PRA, which was formed in September  1993,  provides loan
sale advisory,  commercial  mortgage banking,  and commercial mortgage brokerage
services to both  institutional  real estate  investors and lenders,  as well as
real estate  owners and  developers.  QSFC,  which was acquired in July 1995, is
active in leasing a wide range of equipment and machinery generally to small and
medium sized businesses.


                           REGULATION AND SUPERVISION

General

The  Company's  non-banking   subsidiaries  are  subject  to  the  laws  of  the
Commonwealth of Pennsylvania.  The Company,  as a unitary thrift holding company
is subject to  comprehensive  examination,  supervision  and  regulation  by the
Office  of Thrift  Supervision  ("OTS").  As a  subsidiary  of a unitary  thrift
holding  company,  the Bank is subject to certain  restrictions  in its dealings
with the Company and affiliates thereof.

The Bank

Insurance of Deposits

The Bank's  deposits  are  insured by the  Savings  Association  Insurance  Fund
("SAIF")  to a maximum of  $100,000  for each  depositor.  The  Federal  Deposit
Insurance   Corporation   ("FDIC")  requires  an  annual  audit  by  independent
accountants  and may also  examine  Federal  savings  banks whose  deposits  are
insured.

The annual assessment for SAIF members for deposit insurance for the period from
January 1, 1995  through  December 31, 1995 was between .23% and .31% of insured
deposits, which was payable on a semi-annual basis. The Bank's deposit insurance
during 1995 was assessed at a rate of .29%.

Federal law requires  that the FDIC  maintain  the reserve  level of each of the
SAIF and the Bank Insurance Fund ("BIF") at 1.25% of insured  deposits.  The BIF
reached this level during 1995.  A one-time  assessment  on thrift  institutions
sufficient  to  recapitalize  the SAIF to a level which would at least  approach
that of BIF is in current  legislation.  The  current  legislation,  if enacted,
would result in a one-time assessment of approximately $2.4 million.

Qualified Thrift Lender Test

All savings  associations are required to meet a qualified thrift lender ("QTL")
test  set  forth in  Section  10(m) of the Home  Owners'  Loan  Act("HOLA")  and
regulations  of the OTS  thereunder  to  avoid  certain  restrictions  on  their
operations.

Currently, the QTL test requires that 65% of an institution's "portfolio assets"
(as defined) consist of certain housing and consumer related assets on a monthly
average basis in 9 out of every 12 months.

At December 31, 1995,  approximately 75.8% of the Bank's assets were invested in
qualified thrift investments,  which was in excess of the percentage required to
qualify under the QTL test. For all 12 months of 1995, the bank exceeded the QTL
requirement.

                                       4
<PAGE>

Federal Home Loan Bank System

The Bank is a member of the FHLB which  administers  the home  financing  credit
function and serves as a source of liquidity for member savings associations and
commercial  banks within its assigned  region.  It makes loans to members (i.e.,
advances) in accordance  with policies and procedures  establish by its Board of
Directors.  As of December 31, 1995, the Bank's  advances from the FHLB amounted
to $25.4 million.

As a member,  the Bank is required to purchase and maintain stock in the FHLB of
Pittsburgh in amount equal to the greater of 1% of its mortgage  related  assets
or .3% of total assets.  At December 31, 1995, the Bank had $2.1 million in FHLB
stock, which was in compliance with this requirement.

Federal Limitations on Transactions with Affiliates

Transactions  between  savings  associations  and any  affiliate are governed by
Sections 23A and 23B of the Federal Reserve Act. In addition to the restrictions
imposed,  no savings  associations may (i) loan or otherwise extend credit to an
affiliate,  except for any affiliate which engages only in activities  which are
permissable  for bank  holding  companies,  or (ii)  purchase  or  invest in any
stocks,  bonds,  debentures,  notes,  or similar  obligations  of any affiliate,
except for affiliates which are subsidiaries of the savings association.

In  addition,  Section  12  CRF-215  (Regulation  O)  of  the  Code  of  Federal
Regulations  places  restrictions on loans by savings  associations to executive
officers,  directors, and principal stockholders of the Company and the Bank. At
December 31, 1995, the Bank was in compliance with this regulation.

Employees

As of December 31, 1995, there were no employees of the Company. The Bank had 98
full-time and 22 part-time  employees,  while PRA and QSFC had 6 and 4 full-time
employees, respectively.

Statistical Information

Statistical  information is furnished  pursuant to the  requirements  of Guide 3
(Statistical  Disclosure  by  Bank  Holding  Companies)  promulgated  under  the
Securities Act of 1933.  The  information  required  herein is  incorporated  by
reference  from pages 10 to 18 of the Company's  Annual Report to  Stockholders.
Additional disclosures required in Guide 3 and not incorporated by reference are
included below.

                                       5
<PAGE>

Tabular information is provided in thousands of dollars except for share and per
share data.

Investment  securities are comprised of the following at December 31, 1995, 1994
and 1993:

--------------------------------------------------------------------------------
                                                        1995
                                                        ----
                                       Held to Maturity      Available for Sale
                                       ----------------      ------------------
                                     Amortized  Estimated   Amortized  Estimated
                                        Cost   Fair Value     Cost    Fair Value
--------------------------------------------------------------------------------
FHLB of Pittsburgh stock, pledged     $ 2,149    $ 2,149    $    --    $    --
U.S. agency obligations                    --         --      5,497      5,474
Equity investments                         --         --         30         30
--------------------------------------------------------------------------------
  Total investment securities         $ 2,149    $ 2,149    $ 5,527    $ 5,504
================================================================================

--------------------------------------------------------------------------------
                                                        1994
                                                        ----
                                       Held to Maturity      Available for Sale
                                       ----------------      ------------------
                                     Amortized  Estimated   Amortized  Estimated
                                        Cost   Fair Value     Cost    Fair Value
--------------------------------------------------------------------------------
FHLB of Pittsburgh stock, pledged     $ 2,303    $ 2,303    $    --    $    --
U.S. agency obligations                10,564      9,625      4,999      4,597
Equity investments                         --         --         30         30
--------------------------------------------------------------------------------
  Total investment securities         $12,867    $11,928    $ 5,029    $ 4,627
================================================================================

--------------------------------------------------------------------------------
                                                        1993
                                                        ----
                                       Held to Maturity      Available for Sale
                                       ----------------      ------------------
                                     Amortized  Estimated   Amortized  Estimated
                                        Cost   Fair Value     Cost    Fair Value
--------------------------------------------------------------------------------
FHLB of Pittsburgh stock, pledged     $ 2,632    $ 2,632    $    --    $    --
U.S. agency obligations                 2,000      1,977         --         --
--------------------------------------------------------------------------------
  Total investment securities         $ 4,632    $ 4,609    $    --    $    --
================================================================================


The investment securities which are classified as held to maturity and available
for sale have a weighted  average coupon rate of 6.75% and 6.63%,  respectively,
at December 31, 1995.


                                       6
<PAGE>

Mortgage-Backed Securities

The   following   table  details  the  Bank's   mortgage-backed   securities  by
classification at December 31, 1995, 1994 and 1993.

--------------------------------------------------------------------------------
                                                        1995
                                                        ----
                                       Held to Maturity      Available for Sale
                                       ----------------      ------------------
                                     Amortized  Estimated   Amortized  Estimated
                                        Cost   Fair Value     Cost    Fair Value
--------------------------------------------------------------------------------
GNMA                                  $26,618    $26,113    $   168    $   168
FNMA                                    8,620      8,529      8,801      8,631
FHLMC                                  17,595     17,448     19,040     18,863
Collateralized mortgage
   obligations                             --         --      7,501      7,440
Non-agency pass through certificate        --         --      1,734      1,740
--------------------------------------------------------------------------------
                                      $52,833    $52,090    $37,244    $36,842
================================================================================

--------------------------------------------------------------------------------
                                                        1994
                                                        ----
                                       Held to Maturity      Available for Sale
                                       ----------------      ------------------
                                     Amortized  Estimated   Amortized  Estimated
                                        Cost   Fair Value     Cost    Fair Value
--------------------------------------------------------------------------------
GNMA                                  $29,325    $27,080    $   227    $   219
FNMA                                   21,577     19,932      1,098      1,014
FHLMC                                  42,771     40,093      3,429      3,155
Collateralized mortgage
   obligations                             --         --      4,998      4,715
--------------------------------------------------------------------------------
                                      $93,673    $87,105    $ 9,752    $ 9,103
================================================================================

--------------------------------------------------------------------------------
                                                        1993
                                                        ----
                                       Held to Maturity      Available for Sale
                                       ----------------      ------------------
                                     Amortized  Estimated   Amortized  Estimated
                                        Cost   Fair Value     Cost    Fair Value
--------------------------------------------------------------------------------
GNMA                                  $34,739    $34,457    $   204    $   204
FNMA                                   32,145     31,910         --         --
FHLMC                                  45,010     44,710      5,683      5,695
Collateralized mortgage
   obligations                          5,160      5,163      3,006      3,000
--------------------------------------------------------------------------------
                                      $117,054   $116,240   $ 8,893    $ 8,899
================================================================================


                                       7
<PAGE>

The  following  table sets  forth the  activity  in the  Bank's  mortgage-backed
securities portfolio during the periods indicated:


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
For the years ended December 31,                                                  1995               1994             1993
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>              <C>      
Mortgage-backed securities at beginning of  period                             $ 102,776         $ 125,947        $  86,011
Purchases (1)                                                                     11,577            26,555          125,332
Conversion of existing loans to mortgage-backed securities                           241            24,979           64,530
Sales of loans converted to securities                                              (241)          (24,979)         (64,530)
Sales from portfolio                                                             (11,182)          (19,833)         (35,739)
Repayments                                                                       (13,096)          (27,299)         (46,912)
Premium amortization                                                                (553)           (2,001)          (2,806)
Other                                                                               (94)                55               61
Change in unrealized loss on securities available for sale                           247              (648)              --
------------------------------------------------------------------------------------------------------------------------------------
Mortgage-backed securities at end of period (2)                                $  89,675         $ 102,776        $ 125,947
------------------------------------------------------------------------------------------------------------------------------------
Weighted average coupon at end of period                                            7.63%             7.38%            7.64%
====================================================================================================================================
<FN>
 (1) Includes applicable premiums and discounts.
 (2) Includes  $36.8 million,  $9.1 million and $8.9 million of  mortgage-backed
     securities  classified  as  available  for sale (at fair  value in 1995 and
     1994;  at lower of  aggregate  cost or fair value in 1993) at December  31,
     1995, 1994 and 1993, respectively.
</FN>
</TABLE>


                                        8
<PAGE>

Loan Portfolio

The principal  categories of loans in the Bank's  portfolio are residential real
estate loans, which are secured by single-family (one-to-four units) residences;
commercial  real  estate  loans,  which are secured by  multi-family  (over five
units)  residential  and commercial real estate;  loans for the  construction of
single-family,   multi-family   and   commercial   properties,   including  land
acquisition and development loans; commercial business loans, consumer loans and
credit card receivables. Substantially all of the Bank's mortgage loan portfolio
consists  of  conventional  mortgage  loans,  which are loans  that are  neither
insured by the Federal Housing  Administration  nor partially  guaranteed by the
Department of Veterans Affairs.

The Bank's net loan portfolio,  including  loans held for sale,  totalled $224.8
million at December 31, 1995 or 65.1% of its total assets,  an increase of $18.7
million or 9.1% from the $206.1  million  outstanding  at December 31, 1994. The
following table depicts the composition of the Bank's loan portfolio at December
31 for the years indicated net of unearned discounts and fees.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                     1995                 1994                 1993                 1992                 1991
                                     ----                 ----                 ----                 ----                 ----
                               Amount    Percent   Amount     Percent    Amount    Percent   Amount     Percent    Amount    Percent
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>     <C>          <C>     <C>          <C>     <C>          <C>     <C>          <C>   
Real estate loans:
  Single family
    residential (1)          $  91,091    40.21%  $  99,917    48.12%  $  80,196    45.26%  $  54,560    34.27%  $  64,089    32.16%
  Commercial
    real estate                 81,535    36.00      71,273    34.33      68,530    38.69      70,646    44.38      73,229    36.75
Construction                    14,230     6.28       5,379     2.59       3,922     2.22       6,038     3.79      24,386    12.24
------------------------------------------------------------------------------------------------------------------------------------
    Total real estate
      loans                    186,856    82.49     176,569    85.04     152,648    86.17     131,244    82.44     161,704    81.15
------------------------------------------------------------------------------------------------------------------------------------
Commercial business loans       17,244     7.61      12,005     5.78       9,250     5.22      12,025     7.56      21,309    10.69
------------------------------------------------------------------------------------------------------------------------------------
Consumer loans:
  Consumer                      21,666     9.57      19,027     9.17      15,257     8.61      15,928    10.00      16,259     8.16
Credit card receivables            757      .33          24      .01          --       --          --       --          --       --
------------------------------------------------------------------------------------------------------------------------------------
  Total consumer loans          22,423     9.90      19,051     9.18      15,257     8.61      15,928    10.00      16,259     8.16
------------------------------------------------------------------------------------------------------------------------------------
  Total loans                  226,523   100.00%    207,625   100.00%    177,155   100.00%    159,197   100.00%    199,272   100.00%
------------------------------------------------------------------------------------------------------------------------------------
Allowance for possible
  loan losses                   (1,720)              (1,503)              (2,113)              (2,703)              (5,483)        
------------------------------------------------------------------------------------------------------------------------------------
  Net loans                  $ 224,803            $ 206,123            $ 175,042            $ 156,494            $ 193,789         
====================================================================================================================================
<FN>

(1)  Includes  $3.2 million,  $351,000 and $16.8 million of loans  classified as
     held for sale at December 31, 1995, 1994 and 1993, respectively.
</FN>
</TABLE>


                                       9
<PAGE>


The following table sets forth the scheduled  contractual  amortization of loans
in the Bank's total loan portfolio (including loans classified as held for sale)
at December  31,  1995.  Loans having no stated  schedule of  repayments  and no
stated  maturity are reported as due in one year or less.  The  following  table
also sets forth the dollar  amount of loans which are  scheduled to mature after
one year which have fixed or adjustable rates.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                         Real Estate      Real Estate     Commercial
                                                           Mortgage       Construction     Business        Consumer          Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>             <C>             <C>             <C>     
Amounts due:
  One year or less                                         $ 12,390         $ 6,409         $ 7,552         $ 1,147         $ 27,498
  After one year through
    five years                                               50,818           7,821           6,115           7,625           72,379
  Beyond five years                                         109,418              --           3,577          13,651          126,646
------------------------------------------------------------------------------------------------------------------------------------
      Total                                                $172,626         $14,230         $17,244         $22,423         $226,523
====================================================================================================================================
Interest rate terms on
  amounts due after one year:
Fixed                                                      $ 45,874         $    --         $ 1,593         $15,297         $ 62,764
------------------------------------------------------------------------------------------------------------------------------------
Adjustable                                                 $114,362         $ 7,821         $ 8,099         $ 5,979         $136,261
====================================================================================================================================
</TABLE>

Scheduled  contractual principal repayments do not reflect the actual maturities
of loans. The average  maturity of loans is less than their average  contractual
terms because of prepayments and, in the case of conventional mortgage loans due
and payable in the event,  among other things,  that the borrower sells the real
property subject to the mortgage and the loan is not repaid. The average life of
mortgage  loans tends to increase  when current  mortgage  loan rates are higher
than rates on existing  mortgage loans and,  conversely,  decrease when rates on
existing   mortgages  are  lower  than  current  mortgage  loan  rates  (due  to
refinancings of adjustable-rate and fixed rate loans at lower rates).  Under the
latter  circumstances,  the weighted  average yield on loans decreases as higher
yielding loans are paid or refinanced at lower rates.

The following  table shows total loans  originated,  purchased,  sold and repaid
during the periods ended December 31 for the years indicated.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                    1995              1994              1993
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>              <C>               <C>      
     Loan originations:
     Single family residential                                                    $ 18,404         $  56,210         $ 123,129
     Commercial real estate                                                         23,773            20,335            13,416
     Construction                                                                   21,798             7,833             8,595
     Commercial business                                                            11,201            18,168             4,285
     Consumer                                                                        9,398             8,943             6,294
------------------------------------------------------------------------------------------------------------------------------------
         Total loans originated                                                     84,574           111,489           155,719

         Purchases                                                                     447            10,827            11,175
------------------------------------------------------------------------------------------------------------------------------------
         Total loans originated and purchased                                       85,021           122,316           166,894
------------------------------------------------------------------------------------------------------------------------------------

     Sales and loan principal reductions:
       Loans sold (1)                                                               16,230            34,026            81,917
       Loan principal reductions                                                    49,205            55,760            58,808
------------------------------------------------------------------------------------------------------------------------------------
         Total loans sold and principal reductions                                  65,435            89,786           140,725
------------------------------------------------------------------------------------------------------------------------------------
     Net change due to other items                                                    (688)           (2,060)           (8,211)
------------------------------------------------------------------------------------------------------------------------------------
     Net increase (decrease) in loan portfolio, net of
       unearned discounts and deferred fees                                       $ 18,898         $  30,470         $  17,958
====================================================================================================================================
<FN>
(1)  For the years ended  December 31, 1995,  1994,  and 1993,  $241,000,  $25.0
     million,  and $64.5 million of loans,  respectively,  were  converted  into
     mortgage-backed securities and subsequently sold.
</FN>
</TABLE>

                                       10
<PAGE>


The  accrual  of  interest  on  commercial   and  mortgage  loans  is  generally
discontinued  when  loans  become  90 days past due and  when,  in  management's
judgement, it is determined that a reasonable doubt exists as to collectibility.
The accrual of interest is also  discontinued  on residential and consumer loans
when such loans  become 90 days past due,  except for those loans in the process
of  collection  which are  secured by real estate with a loan to value less than
80% where the accrual of interest  ceases at 180 days.  Consumer loans generally
are charged-off when the loan becomes over 120 days  delinquent,  unless secured
by real estate and meeting the above mentioned  criteria.  When a loan is placed
on non-accrual status,  interest accruals cease and uncollected accrued interest
is reversed and charged against current  income.  Additional  interest income on
such loans is  recognized  only when  received.  A loan  remains on  non-accrual
status until the factors which indicate doubtful collectibility no longer exist,
or the loan is  liquidated,  or when the loan is determined to be  uncollectible
and is charged-off against the allowance for possible loan losses.


The following table details the Bank's non-performing assets at December 31:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                              1995              1994             1993              1992            1991
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>              <C>               <C>              <C>    
     Loans accounted for on a
       non-accrual basis                    $  3,879          $ 4,369          $  5,743          $  6,539         $12,774
     Accruing loans 90 or
       more days past due                         --              182               308               423           1,234
------------------------------------------------------------------------------------------------------------------------------------
         Total non-performing loans            3,879            4,551             6,051             6,962          14,008
     REO, net of related reserves (1)            728            4,534            11,577            27,867          36,419
------------------------------------------------------------------------------------------------------------------------------------
         Total non-performing assets        $  4,607          $ 9,085          $ 17,628          $ 34,829         $50,427
------------------------------------------------------------------------------------------------------------------------------------
     Non-performing loans as a
       percentage of total loans                1.71%            2.19%             3.42%             4.37%           7.03% 
====================================================================================================================================
     Non-performing assets as a
       percentage of total assets               1.33%            2.61%             5.29%            11.95%          16.13% 
====================================================================================================================================
<FN>
(1)  Includes  real  estate  acquired  by  foreclosure  and by  deed  in lieu of
     foreclosure.  Prior to 1993,  also  includes  loans  deemed  in-  substance
     foreclosure.
</FN>
</TABLE>

Gross interest  income that would have been recorded  during 1995, 1994 and 1993
if the  Company's  non-performing  loans  at the end of such  periods  had  been
performing  in  accordance  with their terms during such  periods was  $242,000,
$430,000  and  $287,000,  respectively.  The amount of interest  income that was
actually recorded during 1995, 1994 and 1993 with respect to such non-performing
loans amounted to approximately $174,000, $23,000, and $20,000, respectively.

The $3.9 million of non-accrual  loans at December 31, 1995 consists of $995,000
of loans secured by single-family  residential  property,  $2.4 million of loans
secured by commercial property, $31,000 of commercial business loans, $17,000 of
construction  loans and  $400,000  of  consumer  loans.  The  $728,000 of REO at
December  31,  1995  consisted  of  three  single-family   residences  and  four
undeveloped residential lots.


                                       11
<PAGE>

Delinquencies

All loans are reviewed on a regular basis and are placed on  non-accrual  status
when, in the opinion of  management,  the  collection of additional  interest is
deemed insufficient to warrant further accrual.

The following table sets forth information concerning the principal balances and
percent of the total loan portfolio represented by delinquent loans at the dates
indicated:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
As of December 31,                                                 1995                   1994                   1993
------------------------------------------------------------------------------------------------------------------------------------
                                                            Amount     Percent     Amount    Percent      Amount    Percent
                                                            ------     -------     ------    -------      ------    -------
<S>                                                          <C>       <C>        <C>         <C>         <C>        <C> 
Delinquencies:
   30 to 59 days                                             $ 2,973   1.31%      $    719    .35%        $ 1,579    .89%
   60 to 89 days                                                 450    .20            282    .14             332    .19
   90 or more days and non-accrual loans (1)                   3,879   1.71          4,551   2.19           6,051   3.42
------------------------------------------------------------------------------------------------------------------------------------
           Total                                             $ 7,302   3.22%      $  5,552   2.68%        $ 7,962   4.50%
====================================================================================================================================
<FN>
(1)  Includes $0, $182,000,  and $308,000 in loans that are accruing interest at
     December 31, 1995, 1994 and 1993, respectively.
</FN>
</TABLE>


                                       12
<PAGE>




Allocation of the Allowance for Possible Losses

The following  table details the  allocation of the allowances for possible loan
losses to the various loan categories at the dates indicated.  The allocation is
not  necessarily  indicative of the  categories in which future loan losses will
occur, and the entire allowance is available to absorb losses in any category of
loans.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
December 31,                       1995                1994                 1993                 1992                 1991
------------------------------------------------------------------------------------------------------------------------------------
                                       Percent of          Percent of           Percent of           Percent of           Percent of
                                        Loans to            Loans to             Loans to             Loans to             Loans to
                                         Total                Total                Total                Total                Total
                              Amount     Loans     Amount     Loans     Amount     Loans     Amount     Loans     Amount     Loans
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>   
Residential real estate       $  148     40.21%    $  268     48.12%    $  194     45.26%    $  168     34.27%    $  139     32.16%
Commercial real estate         1,045     36.00        917     34.33      1,403     38.69      1,908     44.38      2,920     36.75
Real estate construction         286      6.28        125      2.59        149      2.22        207      3.79      1,784     12.24
Commercial business              166      7.61        152      5.78        294      5.22        315      7.56        534     10.69
Consumer                          75      9.90         41      9.18         73      8.61        105     10.00        106      8.16
------------------------------------------------------------------------------------------------------------------------------------
         Total                $1,720    100.00%    $1,503    100.00%    $2,113    100.00%    $2,703    100.00%    $5,483    100.00%
====================================================================================================================================

</TABLE>







                                       13
<PAGE>

The following  table  details the Bank's  allowance for possible loan losses for
the periods indicated:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
For the years ended December 31,                   1995             1994             1993             1992             1991
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>              <C>              <C>              <C>              <C>     
Average loans outstanding                          $213,525         $189,053         $166,419         $180,695         $250,127
------------------------------------------------------------------------------------------------------------------------------------
Balance beginning of period                        $  1,503         $  2,113         $  2,703         $  5,483         $  4,123

  Charge-offs:
  Residential real estate                                20               --              148               86                9
  Commercial real estate                                 --            1,160              810            1,395            3,339
  Real estate construction                              100               50                5              626            2,565
  Consumer                                               26               20               89              209              414
  Commercial                                            281               88              283              814            2,588
------------------------------------------------------------------------------------------------------------------------------------
      Total charge-offs                                 427            1,318            1,335            3,130            8,915
------------------------------------------------------------------------------------------------------------------------------------

Recoveries:
  Residential real estate                                --               --               42                5               --
  Commercial real estate                                 --               --               --               --               --
  Real estate construction                                1              137               72                4               --
  Consumer                                               15               14               25               30               38
  Commercial                                              3               36              137               36               93
------------------------------------------------------------------------------------------------------------------------------------
      Total recoveries                                   19              187              276               75              131
------------------------------------------------------------------------------------------------------------------------------------

Net charge-offs                                         408            1,131            1,059            3,055            8,784

Additions charged
  to operations                                         625              521              368              275           10,144

Additions acquired (1)                                   --               --              101               --               --
------------------------------------------------------------------------------------------------------------------------------------
      Total additions                                   625              521              469              275           10,144
------------------------------------------------------------------------------------------------------------------------------------

Balance at end
  of period                                        $  1,720         $  1,503         $  2,113         $  2,703         $  5,483
====================================================================================================================================
Ratio of net charge-
  offs during the period
  to average loans out-
  standing during the
  period                                                .19%             .60%             .64%            1.69%            3.51%
====================================================================================================================================
Ratio of allowance for
  possible loan losses to non-
  performing loans at end of period                   44.34%           33.03%           34.92%           38.83%           39.14%
====================================================================================================================================
<FN>

(1)  In conjunction with the Rosemont branch purchase on July 1, 1993.

</FN>
</TABLE>

An allowance for possible  loan losses is maintained at a level that  management
considers  adequate to provide for potential  losses based upon an evaluation of
known and inherent risks in the loan portfolio. Management's periodic evaluation
of the  adequacy  of the  allowance  for  possible  loan  losses  is based  upon
examination of the portfolio, past loss experience,  adverse situations that may
affect the borrower's  ability to repay,  the estimated  value of any underlying
collateral,  current  economic  conditions,  the  results  of  the  most  recent
regulatory  examinations,  and other relevant factors. While management uses the
best information  available to make such evaluations,  future adjustments to the
allowance may be necessary if economic conditions differ  substantially from the
assumptions used in making such  evaluations.  


                                       14
<PAGE>

<TABLE>
<CAPTION>

Average Balances of the Company's Deposits

------------------------------------------------------------------------------------------------------------------------------------
For the years ended December 31,                         1995                 1994                 1993                 1992
                                                         ----                 ----                 ----                 ----
                                                    Amount    Rate       Amount    Rate       Amount    Rate       Amount    Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>      <C>         <C>      <C>         <C>      <C>         <C>  
Interest-bearing deposits:
NOW and Super NOW                                 $ 26,661    2.69%    $ 21,932    2.43%    $ 17,488    2.39%    $ 15,677    3.39%
Money market accounts                               33,577    3.10       41,428    2.75       42,128    2.82       41,440    3.69
Passbook and statement
   savings                                          27,290    2.87       27,808    2.95       21,212    2.94       16,592    3.49
Time deposits                                      177,972    5.46      168,250    4.56      159,973    4.47      166,556    5.45
------------------------------------------------------------------------------------------------------------------------------------
   Total interest-bearing deposits                 265,500    4.62%     259,418    3.92%     240,801    3.89%     240,265    4.88%
------------------------------------------------------------------------------------------------------------------------------------
Non-interest-bearing deposits                       20,210               16,713               13,778               14,398        
------------------------------------------------------------------------------------------------------------------------------------
   Total deposits                                 $285,710             $276,131             $254,579             $254,663        
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following table presents the interest rate and maturity  information for the
Bank's time deposits at December 31, 1995.


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                             Maturity Date
                                          ----------------------------------------------------------------------------------
                                            One Year                                                Over
                                             or less           1-2 Years        2-3 Years          3 Years        Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                <C>              <C>                <C>            <C>     
 Interest Rate
  2.00 -- 3.99%                            $   1,972          $    62          $    121           $    77        $  2,232
  4.00 -- 5.99%                               97,637           34,739             4,880             4,105         141,361
  6.00 -- 7.99%                               16,179           12,032             2,801             8,772          39,784
  8.00 -- 9.99%                                  100               28                50                43             221
 10.00 -- 11.99%                                  --               --                --                13              13
------------------------------------------------------------------------------------------------------------------------------------
                                           $ 115,888          $46,861          $  7,852           $13,010        $183,611
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


The Bank's time deposits of $100,000 or more totalled  $22.4 million at December
31, 1995,  which  mature as follows:  $8.6 million  within  three  months;  $5.9
million  between  three and six  months;  $4.4  million  between  six and twelve
months; and $3.5 million after twelve months.

The ability of the Bank to attract and maintain  deposits and the Bank's cost of
funds  on  these  deposit   accounts  have  been,   and  will  continue  to  be,
significantly affected by economic and competitive conditions.




                                       15
<PAGE>

FHLB Advances

The following table presents certain information regarding FHLB advances:

--------------------------------------------------------------------------------
For the years ended December 31,            1995          1994           1993
--------------------------------------------------------------------------------

Average balance outstanding              $   44,177    $   44,007    $   48,702
Maximum amount outstanding at
  any month-end during the period            50,845        57,244        61,067
Weighted average interest rate
  during the period                            6.37%         5.00%         4.29%
Weighted average interest rate
  at end of the period                         6.53%         6.35%         4.45%


The Bank  continued to utilize  advances from the FHLB in 1995.  Total  advances
outstanding were $25.4 million at December 31, 1995, a decrease of $18.7 million
from year end 1994.






                                       16
<PAGE>


Item 2. Properties

The  Company's  and the Bank's  executive  offices are  located at the  Plymouth
Meeting Executive  Campus,  Plymouth  Meeting,  Pennsylvania.  The Bank conducts
business from nine branch offices in Bridgeport, Plymouth Meeting, Conshohocken,
King  of  Prussia,   Norristown,   Jeffersonville,   the  Andorra  community  of
Philadelphia,  Rosemont and Paoli,  Pennsylvania,  one of which one is owned and
eight are leased.

Item 3. Legal Proceedings

The Company is involved in routine legal  proceedings  occurring in the ordinary
course of business which management,  after reviewing the foregoing actions with
legal counsel, is of the opinion that the liability, if any, resulting from such
actions will not have a material effect on the financial condition or results of
operations of the Company.

Item 4. Submissions of Matters to a Vote of Security Holders

Not applicable.


                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

The information required herein is incorporated by reference from page 39 of the
Company's  1995  Annual  Report to  Stockholders,  which is  included  herein as
Exhibit 13 ("Annual Report")

Item 6. Selected Financial Data.

The information  required herein is incorporated by reference from page 9 of the
Company's 1995 Annual Report to Stockholders.

Item 7. Management's  Discussion and Analysis of 
        Financial Condition and Results of Operations.

The information required herein is incorporated by reference from pages 10 to 18
of the Company's 1995 Annual Report to Stockholders.

Item 8. Financial Statements and Supplementary Data.

The information required herein is incorporated by reference from pages 19 to 40
of the Company's 1995 Annual Report to Stockholders.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

Not applicable.



                                       17
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The information  contained in the section titled  "Election of Directors" in the
Company's  definitive  Proxy  Statement  for the 1996 Annual  Meeting to be held
April 30, 1996 (the "Proxy  Statement"),  with  respect to the  Directors of the
Company is incorporated herein by reference.

Item 11. Executive Compensation

The  information   appearing  in  the  caption   "Executive   Compensation   and
Transactions" in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The  information  appearing  in the  captions  "Security  Ownership  of  Certain
Beneficial  Owners"  and  "Election  of  Directors"  (with  respect to  security
ownership  by  Directors)  in the  Proxy  Statement  is  incorporated  herein by
reference.

Item 13. Certain Relationships and Related Transactions

The information  appearing in the caption   "Indebtedness  of Management" in the
Proxy Statement is incorporated herein by reference.





                                       18
<PAGE>


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

a.   The  financial  statements  listed on the index set forth in Item 8 of this
     Annual Report on Form 10-K are filed as part of this Annual Report.

     Financial   Statement   schedules  are  not  required   under  the  related
     instructions of the Securities and Exchange  Commission or are inapplicable
     and, therefore, have been omitted.

b.   The following exhibits are incorporated by reference herein or are filed as
     part of this Annual Report:

            No.                            Exhibits
            ---                            --------

          *3.1   Certificate  of  Incorporation  (Exhibit  3.1 to the  Company's
                 Annual  Report on Form  10-K for the year  ended  December  31,
                 1987)

          *3.2   By-Laws  (Exhibit 3.2 to the Company's  Registration  Statement
                 No. 33-3685 On Form S-4, filed with the Securities and Exchange
                 Commission on March 3, 1986 [the "1986 Form S-4"])

          *10.1  Key  Employee  Stock  Compensation  Program  (Exhibit 28 to the
                 Company's  Registration  Statement  No.  33-10160  on Form S-8,
                 filed with the Securities  and Exchange  Commission on November
                 13, 1986)

          *10.2  Amendment  dated  December  15,  1987  to  Key  Employee  Stock
                 Compensation Program (Exhibit 4.2 to the Company's Registration
                 Statement, No. 33-19570)

          *10.3  1993 Stock Incentive Plan (Exhibit 10.3 to the Company's Annual
                 Report in Form 10-K for the year ended December 31, 1994)

          *10.4  1993  Directors'   Stock  Option  Plan  (Exhibit  10.4  to  the
                 Company's  Annual  Report  on  Form  10-K  for the  year  ended
                 December 31, 1994)

          *10.5  Employment  Agreement between Progress  Financial  Corporation,
                 Progress  Federal Savings Bank and W. Kirk Wycoff dated January
                 1, 1995 (Exhibit 10.6 to the Company's Registration  Statement,
                 No.  33-60817  on Form  S-1,  filed  with  the  Securities  and
                 Exchange Commission on August 9, 1995)

          13     1995 Annual Report to Stockholders

          21     Subsidiaries of the Registrant

          23     Consent of Independent Accountants

c.   On November 6, 1995 the  Registrant  filed Form 8-K with the Securities and
     Exchange Commission announcing the termination of the Agreement and Plan of
     Reorganization  between Progress  Financial  Corporation and FJF Financial,
     M.H.C.  pursuant to which Progress  Federal  Savings Bank was to merge with
     Roxborough Manayunk Federal Savings Bank.


*Incorporated by reference.


                                       19
<PAGE>

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto being duly authorized.



                         PROGRESS FINANCIAL CORPORATION



     March 28, 1996                     BY: /s/ W. Kirk Wycoff    
    ----------------                        ------------------------------------
          Date                              W. Kirk Wycoff, Chairman, President
                                            and Chief Executive Officer


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report to be signed  below by the  following
persons  on  behalf of the  Registrant  and in the  capacities  and on the dates
indicated.


/s/ W. Kirk Wycoff                                      March 28, 1996
-----------------------------------                     --------------
W. Kirk Wycoff, Chairman, President                          Date
and Chief Executive Officer

/s/ William O. Daggett, Jr.                             March 28, 1996
-----------------------------------                     --------------
William O. Daggett, Jr., Director                            Date

/s/ Joseph R. Klinger                                   March 28, 1996
-----------------------------------                     --------------
Joseph R. Klinger, Director                                  Date

/s/ John E. Flynn Corson                                March 28, 1996
-----------------------------------                     --------------
John E. Flynn Corson, Director                               Date

/s/ Donald F. U. Goebert                                March 28, 1996
-----------------------------------                     --------------
Donald F. U. Goebert, Director                               Date

/s/ Paul M. LaNoce                                      March 28, 1996
-----------------------------------                     --------------
Paul M. LaNoce, Director                                     Date

/s/ William L. Mueller                                  March 28, 1996
-----------------------------------                     --------------
William L. Mueller, Director                                 Date

/s/ Charles J. Tornetta                                 March 28, 1996
-----------------------------------                     --------------
Charles J. Tornetta, Director                                Date

                                                                     
-----------------------------------                     --------------
A. John May, III, Director                                   Date

/s/ Frederick E. Schea                                  March 28, 1996
-----------------------------------                     --------------
Frederick E. Schea                                           Date
Sr. Vice President and
Chief Financial Officer




                                       20