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
July 21, 1999
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(Date of earliest event reported)
Progress Financial Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-14815 25-2413363
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(State of other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identified No.)
4 Sentry Parkway, Suite 230, Blue Bell, Pennsylvania 19422-0764
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(Address of principal executive offices) (Zip Code)
(610)-825-8800
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name,former address and former fiscal year,if changed since last report)
Exhibit Index appears on page 4.
<PAGE>
Item 5. Other Events
On July 21, 1999, Progress Financial Corporation reported first quarter
net income of $1.1 million or diluted earnings per share of $.21 compared with
net income of $1.1 million or diluted earnings per share of $.21 for the second
quarter of 1998. For further information see the press release attached as
Exhibit 99(a) and incorporated herein by reference.
Also on July 21, 1999, Progress Financial Corporation declares
increased quarterly cash dividend from $.04 to $.05 per share to stockholders of
record on July 31, 1999, which will be paid on August 13, 1999. In addition,
Progress Financial Corporation announced the declaration of a 5% stock dividend
to shareholders of record on August 6, 1999 to be distributed August 31, 1999.
For further information, see the press release attached as Exhibit 99(b) and
incorporated herein by reference.
<PAGE>
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: July 22, 1999 By: /s/ Michael B. High
---------------------------------------
Michael B. High
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
99(a) Press Release on Second Quarter 1999 earnings
issued on July 21, 1999
99(b) Press Release on dividend declaration issued on
July 21, 1999
<PAGE>
Exhibit 99(a)
Press Release on Second Quarter 1999 earnings
issued on July 21, 1999
<PAGE>
Exhibit 99(a)
NEWS RELEASE
Contact: Michael B. High, CFO/Senior Vice President
(610) 941-4804
Patricia Ellick, Director of Investor Relations
(610) 941-4838
For immediate release:
Progress Financial Corporation Announces Second Quarter Earnings of $1.1 Million
Blue Bell, PA, July 21, 1999 - Progress Financial Corporation (the
"Company" - Nasdaq: PFNC) today reported second quarter 1999 net income of $1.1
million or diluted earnings per share of $.21, compared to net income of $1.1
million or diluted earnings per share of $.21 for the second quarter of 1998.
Commenting on the second quarter results, W. Kirk Wycoff, President and
CEO, stated, "Although the Company reported flat earnings, I am pleased with the
$965,000 increase in fee based income and the 16 basis point expansion of our
margin over the first quarter of 1999. In the first six months of 1999
non-interest income was 35% of total revenue which has been one of our strategic
goals. The growth in fee income was partially offset by a one-time increase in
provision for loan and lease losses amounting to $675,000. The increase in
provision was the result of the Company adopting a new charge-off policy at
Progress Leasing Company, which resulted in lease net charge-offs amounting to
$1.1 million for the quarter. We experienced some deterioration in the PAM
portfolio which was acquired in January 1998 and elected to charge-off a number
of leases in the chiropractic and dry cleaning areas."
Average earning assets for the second quarter of 1999 were $621.2
million compared to $500.0 million for the same period in 1998. The growth in
assets relates to higher loan and lease production. Average loans and leases
increased $87.0 million to $447.6 million compared to the same quarter of 1998.
Consequently, tax-equivalent net interest income for the second quarter of 1999
increased $1.2 million or 21.7 % over the same period in 1998. The net interest
margin was, however, compressed by an increased percentage of securities and
investments acquired to leverage the new capital raised in May 1998 and lower
yields on commercial business loans and lease financing.
Loans and leases outstanding totaled $457.0 million at June 30, 1999,
including commercial business loans of $107.6 million, which increased
$32.5 million or 43.2% from June 30, 1998. In addition, commercial real estate
loans totaled $143.2 million, an increase of $23.3 million or 19.4% from
June 30, 1998.
Loans and Leases Outstanding *
<TABLE>
(Dollars in Thousands) June 30, December 31,
- ---------------------------- --------------------------------------------------------------------------------------------
1999 1998 1998
- ---------------------------- ---------------------------- ------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Actual % of Total Actual % of Total Actual % of Total
Commercial
Business $107,614 23.55% $ 75,145 20.32% $ 92,737 21.87%
Commercial
Real Estate 143,184 31.33 119,889 32.41 134,380 31.69
Lease
Financing 76,798 16.81 62,139 16.80 73,499 17.34
Residential
Mortgages 45,749 10.01 56,350 15.24 50,086 11.81
Construction 52,920 11.58 30,841 8.34 44,546 10.51
Consumer 30,687 6.72 25,479 6.89 28,738 6.78
---------- ---------- ---------- --------- ---------- -------
Total $456,952 100.00% $369,843 100.00% $423,986 100.00%
========== ========== ========== ========= ========== =======
</TABLE>
o Includes loans held for sale
The Company reported non-performing assets of $4.8 million at June 30,
1999 up from $2.5 million at June 30, 1998. The increase in non-performing
assets was related entirely to the lease portfolio. Non-performing leases
increased $2.0 million compared to June 30, 1998. The Company's non-performing
assets to total assets at June 30, 1999 were .72% compared to .41% at June 30,
1998. During the quarter ended June 30, 1999, the Company recorded a $1.2
million provision for possible loan and lease losses compared with $224,000 for
the comparable period in 1998. The increase of $992,000 included a non-recurring
charge of $675,000 as result of the new charge-off policy at Progress Leasing
Company. As of June 30, 1999, the allowance for possible loan and lease losses
increased to $5.0 million from $4.3 million at June 30, 1998. The ratio of
the allowance for possible loan and lease losses to total loans and leases was
1.09% at June 30, 1999 compared to 1.16% at June 30, 1998.
Non-interest income for the quarter ended June 30, 1999 amounted to
$4.3 million, compared to $2.3 million for the same period in 1998. During the
1999 quarter, the Company earned $574,000 in insurance commissions. Teleservices
fee income of $990,000 represents an increase of $652,000 over the second
quarter of 1998 due to new inbound clients. Loan brokerage and advisory fees
were $652,000, an increase of $262,000 compared to the same period in the prior
year. Service charges on deposits increased $112,000 over the second quarter of
1998. The Company also recognized client warrant income amounting to $482,000
during the second quarter of 1999 due to the public offering of IQE plc on the
EASDAQ exchange.
Total non-interest expense was $7.9 million for the quarter ended June
30, 1999 compared to $5.7 million for the quarter ended June 30, 1998. The
increase in non-interest expense for the quarter ended June 30, 1999 over the
comparable quarter in 1998 was primarily due to increases in salaries and
employee benefits of $1.5 to $4.3 million as a result of additional employees of
the newly formed insurance agency, Progress Financial Resources, and the
staffing of Progress Capital Management, Inc. to pursue our SBIC license, and
from other new positions established within the Company. Furniture, fixtures and
equipment expenses increased by $143,000 to $425,000 mainly due to two new
branch openings in the quarter and recent acquisitions. Professional services
expense increased $391,000 to $580,000 primarily due to the increased usage of
an interactive voice response system in handling new inbound clients and the
outsourcing of the internal audit function.
Total assets increased to $666.4 million at June 30, 1999 from $600.4
million at June 30, 1998 and from $647.4 million at year end 1998. Total
deposits increased 21.8% to $445.1 million at June 30, 1999 from $365.3 million
at June 30, 1998 and 9.1% from $408.2 million at year end 1998. Deposit growth
is the result of the continuing expansion of our retail delivery network into
Bucks and Chester Counties.
On July 16, 1999, Ravisent Technologies Inc., a corporation with which
the Company holds warrants, went public at an initial offering price of $12.00
per common share. The warrants were obtained through the Company's Specialized
Lending Division which provides customized financial services to leading-edge
companies in technology, health care and insurance. The Company holds warrants
to purchase 50,000 common shares of Ravisent Technologies at $3.56 per share.
The Company is prohibited from selling or otherwise disposing of the warrants or
any shares of common stock received from the exercise of such warrants for a
period of 180 days from July 16, 1999. At July 20, 1999, the closing price of a
share of common stock of Ravisent Technologies was $14.625.
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 thirteen full service offices. The Company also offers a
diversified array of financial services including equipment leasing through
Progress Leasing Corporation, with offices in Blue Bell, Pennsylvania and
Timonium, Maryland, and insurance and financial planning services through
Progress Financial Resources, Inc., headquartered in Philadelphia, 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; Woodbridge, New Jersey;
Wilmington, Delaware; and Raleigh, North Carolina. The Company also conducts
business-to-business telemarketing through Procall Teleservices, Inc. and
construction and 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
<PAGE>
Progress Financial Corporation
Financial Highlights
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30
------------------------------ -----------------------------
1999 1998 1999 1998
---------------- ------------- ------------- ---------------
Reported Results:
<S> <C> <C> <C> <C>
Basic net income per common share (1) $ .22 $ .23 $ .48 $ .46
Diluted net income per common share (1) .21 .21 .45 .41
Dividends per common share (1) .04 .03 .08 .06
Book value per share 7.95 7.93 7.95 7.93
Tangible book value per share 6.98 7.08 6.98 7.08
Basic average common shares outstanding (1) 5,198,004 4,854,734 5,148,906 4,602,630
Diluted average common shares outstanding(1) 5,504,047 5,389,865 5,495,757 5,121,013
Net interest margin (FTE) 4.29% 4.38% 4.21% 4.52%
Net interest spread (FTE) 3.70 3.72 3.61 3.86
Return on average assets .68 .85 .75 .84
Return on average equity 10.60 12.89 11.72 14.05
Efficiency ratio 69.03 69.03 68.12 68.97
Average equity to average assets 6.44 6.60 6.40 6.00
Ratio of allowance for possible loan and lease losses
to total loan and leases receivable 1.09 1.16 1.09 1.16
Ratio of non-performing assets to total assets .72 .41 .72 .41
Ratio of allowance for possible loan losses to non-performing
loans and leases 104.36 197.39 104.36 197.39
Selected Average Balances:
Loans, gross $447,561 $360,603 $438,160 $354,138
Earning assets 621,155 499,992 618,194 475,735
Total assets 664,684 528,561 659,300 506,170
Deposits 432,033 353,352 424,779 344,439
Equity 42,775 34,882 42,216 30,384
</TABLE>
(1) Per share amounts have been restated to reflect the 5% stock dividend
distributed to shareholders on August 31, 1998.
<PAGE>
Progress Financial Corporation
Consolidated Statements of Financial Condition
(Dollars in Thousands)
<TABLE>
Ending Balance
June 30, June 30, December 31,
1999 1998 1998
---------- ---------- --------------
Assets:
<S> <C> <C> <C>
Cash and due from banks:
Non-interest bearing $14,113 $12,183 $14,189
Interest bearing 11,743 922 6,498
Trading account assets -- -- --
Loans held for sale (fair value: $9,210, $0 and $25,326) 9,155 -- 25,250
Investments:
Available for sale at fair value (amortized cost: $7,437, $7,834, and 7,165 8,050 17,909
$18,208)
Held to maturity at amortized cost (fair value: $27,963, $11,295, and 28,459 11,222 12,401
$12,547)
Mortgage-backed securities:
Available for sale at fair value (amortized cost: $120,095, $134,312, 117,629 134,079 146,459
and $146,910)
Held to maturity at amortized cost (fair value: $0, $39,789, and $0) -- 40,219 --
Loans and leases, net (net of reserve: $4,984, $4,307, and $4,490) 442,812 365,536 394,246
Premises and equipment 12,065 9,755 10,707
Other assets 23,230 18,465 19,723
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Total assets $666,371 $600,431 $647,382
========= ========= ========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing $57,201 $53,375 $54,934
Interest-bearing 387,927 311,934 353,228
Short-term borrowings 31,978 76,260 45,941
Other liabilities 9,337 8,282 15,250
Long-term Debt:
Federal Home Loan Bank advances 80,000 53,000 83,000
Other debt 42,182 41,000 38,475
-------- ---------- ---------
Total liabilities 608,625 543,851 590,828
-------- ------- -------
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trust holding solely junior subordinated debentures of the 15,000 15,000 15,000
Corporation
Stockholders' equity:
Serial preferred, $.01 par value;
1,000,000 shares authorized and unissued -- -- --
Junior participating preferred stock - $.01 par value -
1,010 shares authorized but unissued -- -- --
Common stock, $1 par value; 12,000,000 shares authorized; 5,397,000 and
4,996,000 and 5,263,000 shares issued including treasury shares of 0,
6,000 and 177,000; and unallocated shares held by the Employee Stock 5,397 4,996 5,263
Ownership Plan of 19,000, 28,000 and 24,000
Other common stockholders' equity, net 39,245 36,594 36,786
Net accumulated other comprehensive income (loss) (1,896) (10) (495)
-------- -------- --------
Total stockholders' equity 42,746 41,580 41,554
-------- -------- --------
Total liabilities, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior subordinated
debentures of the Corporation and stockholders' equity $666,371 $600,431 $647,382
========== ======== ========
</TABLE>
<PAGE>
Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
<TABLE>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Interest income:
<S> <C> <C> <C> <C>
Loans and leases, including fees $10,071 $8,659 $19,628 $16,952
Mortgage-backed securities 1,969 1,877 4,094 3,352
Investment securities 526 226 948 367
Other 167 16 360 39
------- ------ ------- -------
Total interest income 12,733 10,778 25,030 20,710
Interest expense:
Deposits 3,880 3,547 7,648 6,897
Short-term borrowings 84 702 1,240 1,282
Long-term borrowings 2,170 1,068 3,328 1,879
------- ------ ------ ------
Total interest expense 6,134 5,317 12,216 10,058
------- ------ ------ ------
Net interest income 6,599 5,461 12,814 10,652
Provision for possible loan and lease losses 1,216 224 1,665 426
------- ------ ------ ------
Net interest income after provision for possible loan and lease 5,383 5,237 11,149 10,226
losses
Non-interest income:
Service charges on deposits 521 409 941 776
Lease financing fees 477 384 864 749
Insurance commissions 574 -- 1,054 --
Teleservices fee income 990 338 1,233 512
Loan brokerage and advisory fees 652 390 1,175 835
Gain (loss) from sale of securities 4 122 (156) 337
Client warrant income 482 -- 482 --
Fees and other 550 619 1,419 858
----- ----- ----- -----
Total non-interest income 4,250 2,262 7,012 4,067
----- ----- ----- -----
Non-interest expense:
Salaries and employee benefits 4,275 2,773 7,779 5,391
Occupancy 316 353 661 658
Data processing 264 262 482 511
Furniture, fixtures and equipment 425 282 715 536
Professional services 580 189 947 380
Capital securities expense 399 399 797 797
Other 1,662 1,472 2,984 2,676
----- ----- ----- -----
Total non-interest expense 7,921 5,730 14,365 10,949
----- ----- ------ ------
Income before income taxes 1,712 1,769 3,796 3,344
Income tax expense 582 648 1,343 1,227
------ ------ ------ -------
Net Income $1,130 $1,121 $2,453 $ 2,117
====== ====== ====== =======
Basic net income per common share $.22 $.23 $.48 $.46
==== ==== ==== ====
Diluted net income per common share $.21 $.21 $.45 $.41
==== ==== ==== ====
Dividends per common share $.04 $.03 $.08 $.06
==== ==== ==== ====
Basic average common shares outstanding 5,198,004 4,854,734 5,148,906 4,602,630
========= ========= ========= =========
Diluted average common shares outstanding 5,504,047 5,389,865 5,495,757 5,121,013
========= ========= ========= =========
</TABLE>
###
Exhibit 99(b)
Exhibit 99(b)
Press Release on dividend declaration
issued on July 21, 1999
<PAGE>
Exhibit 99(b)
NEWS RELEASE
Contact: Michael B. High--(610) 941-4804
CFO/Senior Vice President
Progress Financial Corporation
4 Sentry Parkway - Suite 200
Blue Bell, PA 19422
For immediate release:
Progress Financial Corporation Declares Increased Cash Dividend from $.04 to
$.05 and a 5% Stock Dividend
Blue Bell, PA, July 21, 1999 - The Board of Directors of Progress Financial
Corporation (the "Company" - Nasdaq: PFNC) increased the regular quarterly cash
dividend to $.05 per share from $.04 per share in the prior quarter. The cash
dividend will be paid on August 13, 1999 to shareholders of record on July 31,
1999.
In addition, the Board of Directors, citing the company's continued strong
financial performance, declared a 5% stock dividend to shareholders. One
additional new share of common stock will be distributed for every 20 shares
owned and a check will be issued for any fractional shares created by the
dividend. The stock dividend will be distributed August 31, 1999 to shareholders
of record on August 6, 1999.
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 thirteen full service offices. The Company
<PAGE>
also offers a diversified array of financial services including equipment
leasing through Progress Leasing Corporation, with offices in Blue Bell,
Pennsylvania and Timonium, Maryland, and insurance and financial planning
services through Progress Financial Resources, Inc., headquartered in
Philadelphia, 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;
Woodbridge, New Jersey; Wilmington, Delaware; and Raleigh, North Carolina. The
Company also conducts business-to-business telemarketing through Procall
Teleservices, Inc. and construction and 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".
####
