SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 22, 1998
(Date of earliest event reported)
Progress Financial Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-14815 25-2413363
(State of other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identified No.)
4 Sentry Parkway, Suite 230, Blue Bell, Pennsylvania 19422-0764
(Address of principal executive offices) (Zip Code)
(610)-825-8800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Exhibit Index appears on page 4.
Item 5. Other Events
On April 22, 1998, Progress Financial Corporation reported first
quarter net income of $996 thousand or diluted earnings per share of $.22
compared with net income of $1.2 million or $.27 per share for the first quarter
of 1997. After excluding a gain on the sale of mortgage servicing rights in
1997, net income from operations was $524 thousand or $.12 per share for the
quarter ended March 31, 1997, an increase of 83% on an operating basis.
For further information see the press release attached as Exhibit 99(a)
and incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PROGRESS FINANCIAL CORPORATION
Dated: April 28, 1998 By: /s/ Frederick E. Schea
-------------------------------------------
Frederick E. Schea
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number Description
99(a) Press Release issued on
April 22, 1998
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Exhibit 99(a)
Press Release issued
On April 22, 1998
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NEWS RELEASE
Contact: Frederick E. Schea, CFO/Senior Vice President
(610) 825-8800 ext. 4804
Patricia Ellick, Director of Investor Relations
(610) 825-8800 ext. 4838
Progress Financial Corporation Announces First Quarter
Operating Earnings Increased 83% Over 1997
Blue Bell, PA, April 22, 1998 - Progress Financial Corporation (the
"Company" - NASDAQ: PFNC) today reported first quarter net income of
$996 thousand or diluted earnings per share of $.22 compared with net
income of $1.2 million or $.27 per share for the first quarter of 1997.
After excluding a gain on the sale of mortgage servicing rights in
1997, net income from operations was $524 thousand or $.12 per share
for the quarter ended March 31, 1997, an increase of 83% on an
operating basis. First quarter results for 1998 included PAM Holding
Corp. and subsidiaries which the Company acquired in 1998 in a
transaction which was accounted for under the pooling of interests
method of accounting. The prior period financial information has been
restated to include PAM Holding Corp. In addition, during the first
quarter of 1998, the Company formed Progress Development Corp., which
generates fee income from the development of assisted living
communities.
Commenting on the first quarter results, W. Kirk Wycoff, President and
CEO, stated "The acquisition of PAM Holding Corp. along with the formation of
Progress Development Corp.
Progress Financial Corporation
First Quarter Results
Page 2
has enhanced our growth in fee income. These new companies reinforce our
subsidiary strategy to diversify and increase sources of non-interest income
which are synergistic to our core corporate banking business."
The Company's higher operating results for the quarter can be tied to
improved margins from loan and lease growth and favorable deposit mix changes,
largely due to increasing commercial relationships. The net interest margin for
the first quarter of 1998 was 4.66% on average earning assets of $451.5 million
compared to 4.43% for the first quarter of 1997 on average earning assets of
$378.9 million. Consequently, net interest income for the first quarter of 1998
increased $1.1 million or 26% over the same period in 1997. This increase
relates to the growth in the loan and lease portfolio to $347.6 million from
$288.8 million at March 31, 1997.
Loans and leases outstanding at March 31, 1998 included
commercial business loans of $65.4 million, an increase of $27.8 million
or 74% from March 31, 1997. In addition, commercial real estate loans
totaled $116.5 million which increased $25.0 million or 27% from March 31,1997.
Loans and Leases Outstanding
(Dollars in Thousands)
March 31,
---------
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<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1998 1997
YTD Average YTD
Actual % of Total Actual % of Total Average
Commercial
Business $ 65,394 18.81% $68,312 $37,551 13.00% $34,026
Commercial
Real Estate 116,529 33.52 113,784 91,568 31.71 93,560
Lease
Financing 58,525 16.84 57,698 45,478 15.75 42,789
Residential
Mortgages 56,867 16.36 56,744 64,001 22.16 64,369
Construction 25,322 7.28 25,596 26,468 9.17 21,570
Consumer 25,006 7.19 25,536 23,718 8.21 23,669
------
Total $347,643 100.00% $347,670 $288,784 100.00% $279,983
======== ======= ======== ======== ======= ========
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Progress Financial Corporation
First Quarter Results
Page 3
The Company reported non-performing assets of $2.2 million at March 31,
1998 down from $2.6 million at December 31, 1997 and $5.7 million at March 31,
1997. The Company's non-performing assets to total assets at March 31, 1998 of
.46% includes $300 thousand of real estate owned. This compares to a
non-performing asset ratio of .50% at December 31, 1997 and 1.38% at March 31,
1997. During the three months ended March 31, 1998, the Company recorded a $202
thousand provision compared with $193 thousand for the comparable period in
1997. As of March 31, 1998, the allowance for possible loan and lease losses
increased to $4.1 million from $3.9 million at December 31, 1997 and $3.9
million at March 31, 1997. The ratio of the allowance for possible loan and
lease losses to non-performing assets was 186% at March 31, 1998 compared to
151% at year-end 1997.
Non-interest income for the quarter ended March 31, 1998 amounted to
$1.8 million including $215 thousand in gains on investment sales. Non-interest
income for the quarter ended March 31, 1997 amounted to $1.7 million, including
a gain of $978 thousand from the sale of mortgage servicing rights. Loan
brokerage and advisory fees were $445 thousand compared to $30 thousand for the
same period in the prior year. These fees resulted from expanded activities at
Progress Realty Advisors, Inc., partially through divisions acquired in 1997.
Total non-interest expense was $5.2 million for the quarter ended March
31, 1998 and $3.9 million for the quarter ended March 31, 1997. The increase in
non-interest expense for the quarter ended March 31, 1998 over the comparable
quarter in 1997 was partially due to increases in salaries and employee benefits
of $842 thousand relating to employees of acquired companies and new positions
within the Bank. Other expenses increased by $762 thousand, including $398
thousand in interest on capital securities. Offsetting these increases was a
decrease of $171 thousand in loan and REO expenses.
Progress Financial Corporation
First Quarter Results
Page 4
Total assets decreased to $484.8 million at March 31, 1998 from $508.9
million at December 31, 1997 and increased from $416.6 million at
March 31, 1997.Total deposits increased to $343.6 million at March 31, 1998
from $340.8 million at December 31, 1997 and $309.9 million at March 31, 1997.
Progress Financial Corporation is a unitary thrift holding company
headquartered in Blue Bell, Pennsylvania. The business of the Company consists
primarily of the operation of Progress Bank, which serves businesses and
consumers through eleven full service offices. The Company also offers a
diversified array of other financial services including equipment leasing
through the Bank's subsidiaries, Quaker State Leasing Company, Blue Bell,
Pennsylvania; The Equipment Leasing Company, Timonium, Maryland; and PAM
Financial Corp., Bethlehem, Pennsylvania. In addition, the Company conducts
commercial mortgage banking and brokerage services through Progress Realty
Advisors, Inc. with locations in Blue Bell, Pennsylvania, Richmond and
Chesapeake, Virginia and Woodbridge, New Jersey; business to business
telemarketing through Procall Teleservices, Inc. and construction development of
assisted living communities through Progress Development Corp. The Company's
common stock is traded on the NASDAQ Stock Market, National Market under the
Symbol "PFNC".
FINANCIAL DATA ATTACHED
Progress Financial Corporation
Financial Highlights
(unaudited)
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<S> <C> <C>
Three Months Ended March 31,
1998 1997
Reported Results:
Basic earnings per share (1) .24 $ .29
Diluted earnings per share (1) .22 .27
Dividends per common share (1) .03 .02
Book value per share $6.37 $5.55
Weighted average shares outstanding: (1)
Basic 4,136,876 4,011,462
Diluted 4,600,063 4,287,212
Net interest margin 4.66% 4.43%
Return on average assets .83 1.14
Return on average equity 15.53 22.22
Equity to assets 5.52 5.17
Ratio of allowance for loan and lease losses
to loan and leases receivable 1.19 1.36
Ratio of non-performing assets to total assets .46 1.38
Ratio of allowance for loan losses
to non-performing assets 185.98% 68.35%
(1)Per share amounts have been restated to reflect the 5% stock dividend
distributed to shareholders on September 15, 1997.
*All prior period financial information has been restated to include the 1998
acquisition of PAM Holding Corp. and subsidiaries.
Progress Financial Corporation
Consolidated Statements of Financial Condition
(Dollars in Thousands)
(unaudited)
Ending Balance Average Balance
March 31, March 31,
<S> <C> <C> <C> <C>
1998 1997 1998 1997
Assets:
Cash and due from banks:
Interest bearing $2,644 $3,351 $2,187 $1,614
Non-interest bearing 8,247 9,014 9,310 7,691
Investments:
Available for sale at fair value
(amortized cost: $3,985 in 1998 and $3,490 in 1997) 4,304 3,441 5,823 3,433
Held to maturity at amortized cost
(fair value: $7,733 in 1998 and $1,717 in 1997) 7,700 1,717 5,276 4,140
Mortgage-backed securities:
Available for sale at fair value
(amortized cost: $46,393 in 1998 and $43,194 in 1997) 46,482 42,672 43,045 43,159
Held to maturity at amortized cost
(fair value: $45,250 in 1998 and $44,343 in 1997) 45,636 45,602 47,473 46,584
Loans and leases receivable: 346,973 288,150 346,882 279,474
Deferred fees, net 670 634 788 509
Allowance for loan losses (4,120) (3,916) (4,065) (3,856)
Loans receivable, net 343,523 284,868 343,605 276,127
Real estate owned, net 300 4,035 384 2,189
Premises and equipment 9,623 7,697 9,422 7,743
Accrued interest receivable 2,982 2,281 2,672 1,928
Deferred income taxes 177 2,535 241 2,922
Other assets 13,191 9,375 14,413 10,803
------ ------- -------- -------
Total assets $484,809 $416,588 $483,851 $408,333
======== ======== ======== ========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $343,580 $309,942 $335,167 $304,226
Advances from Federal Home Loan
Bank 45,900 28,000 47,942 24,736
Other borrowings 41,957 47,123 47,116 48,433
Advance payments from borrowers 1,994 5,834 2,704 5,599
Accrued interest payable 2,418 1,266 2,577 1,638
Other liabilities 7,207 2,900 7,341 2,713
----- ------- ----- ------
Total liabilities 443,056 395,065 442,847 387,345
------- ------- ------- -------
Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior
subordinated debentures of the Corporation 15,000 --- 15,000 ---
Commitments & contingencies
Stockholders' equity:
Serial preferred, $1 par value;
1,000,000 shares authorized and unissued --- --- --- ---
Common stock, $1 par value;
6,000,000 shares authorized; 4,201,000
and 3,876,000 shares issued and
outstanding at March 31, 1998 and March 31, 1997, respectively 4,201 3,876 4,137 3,862
Capital surplus 21,478 18,183 21,094 18,168
Unearned Employee Stock
Ownership Plan shares (151) (202) (158) (208)
Retained earnings (deficit) 953 80 572 (528)
Unrealized gain (loss) on securities
available for sale, net of deferred income taxes 272 (414) 359 (306)
--- ----- --- -----
Total stockholders' equity 26,753 21,523 26,004 20,988
------ ------ ------ ------
Total liabilities, Corporation-obligated mandatorily
redeemable capital securities of subsidiary trust
holding solely junior subordinated debentures of the
Corporation and stockholders' equity $484,809 $416,588 $483,851 $408,333
======== ======== ======== ========
Consolidated Statements of Income
(Dollars in Thousands)
(unaudited)
Three Months Ended March 31,
1998 1997
Interest income:
Loans and leases, including fees $8,293 $6,671
Mortgage-backed securities 1,475 1,546
Investment securities 141 110
Other 23 25
-- --
Total interest income 9,932 8,352
Interest expense:
Deposits 3,350 2,959
Advances from the Federal Home Loan Bank 423 407
Other borrowings 968 851
--- ----
Total interest expense 4,741 4,217
----- -----
Net interest income 5,191 4,135
Provision for possible loan and lease losses 202 193
Net interest income after provision for possible
loan and lease losses 4,989 3,942
Non-interest income:
Service charges on deposits 367 360
Leasing fees 365 307
Loan brokerage and advisory fees 445 30
Mortgage origination and servicing 33 111
Gain on sale of mortgage servicing rights --- 978
Gain from sale of securities 215 34
Loss on properties sold --- (193)
Fees and other 380 107
--- ----
Total non-interest income 1,805 1,734
----- -----
Non-interest expense:
Salaries and employee benefits 2,803 1,961
Occupancy 305 307
Data processing 249 312
Furniture, fixtures and equipment 254 189
Deposit insurance premiums 25 46
Loan and real estate owned expenses, net (68) 103
Professional services 191 239
Other 1,460 698
----- ----
Total other expense 5,219 3,855
----- -----
Income before income taxes 1,575 1,821
Income tax expense 579 671
--- ------
Net income $ 996 $1,150
====== ======
Earnings Per Share:
Basic $.24 $.29
Diluted .22 .27
Weighted average number of shares outstanding:
Basic 4,136,876 4,011,462
Diluted 4,600,063 4,287,212
Dividends declared per share $0.03 $0.02
###
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