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
October 20, 1999
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(Date of earliest event reported)
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Progress Financial Corporation
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(Exact name of registrant as specified in its charter)
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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 October 20, 1999, Progress Financial Corporation reported third
quarter net income of $2.3 million or diluted earnings per share of $.39
compared with net income of $1.3 million or diluted earnings per share of $.23
for the third quarter of 1998. For further information see the press release
attached as Exhibit 99(a) and incorporated herein by reference.
Also on October 20, 1999, Progress Financial Corporation declares
increased quarterly cash dividend of $.05 per share to stockholders of record on
October 31, 1999, which will be paid on November 12, 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: November 1, 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 Third Quarter 1999 earnings issued
on October 20, 1999
99(b) Press Release on dividend declaration issued on
October 20, 1999
<PAGE>
Exhibit 99(a)
Press Release on Third Quarter 1999 earnings
issued on October 20, 1999
<PAGE>
Exhibit 99(a)
NEWS RELEASE
Contact: Michael B. High, CFO/Senior Vice President
(610) 941-4804
Dorothy Jaworski, Director of Investor Relations
(610) 941-4822
For immediate release:
Progress Financial Corporation Announces Third Quarter Earnings
of $2.3 Million, a 67.7% Increase Over Third Quarter 1998
Blue Bell, PA, October 20, 1999 - Progress Financial Corporation (the
"Company" - Nasdaq: PFNC) today reported third quarter 1999 net income of $2.3
million, or diluted earnings per share of $.39, compared to net income of $1.3
million, or diluted earnings per share of $.23 for the third quarter of 1998.
Commenting on the third quarter results, W. Kirk Wycoff, President and
CEO, stated, "We are pleased to announce a 67.7% increase in third quarter 1999
earnings over 1998. This increase is primarily due to $2.8 million of pre-tax
income ($1.8 after tax) which was recorded in the period due to the expiration
of restrictions on the sale of warrants to acquire shares of common stock of
VerticalNet Inc, a customer of the Company. Additionally, fee based income
increased $2.1 million, primarily due to mutual fund, annuity and insurance
commissions and teleservice income, and our margin increased eight basis points.
These increases were partially offset by one-time charges of $1.1 million in
write-offs associated with prior leasing acquisition and certain unrelated prior
period tax adjustments; and a $425,000 increase in the provision for possible
loan and lease losses, primarily due to increases in the loan and lease balances
and an increase in non-performing loans and leases.
Average earning assets for the third quarter of 1999 were $637.2
million compared to $573.4 million for the same period in 1998. The growth in
assets relates to higher loan and lease production. Average loans and leases
increased $83.1 million to $463.1 million compared to the same quarter of 1998.
Consequently, tax-equivalent net interest income for the third quarter of 1999
increased $795,000 or 13.2% over the same period in 1998. The net interest
margin increased by eight basis points primarily due to increases in the volume
of commercial business, commercial real estate and construction loans.
Loans and leases outstanding totaled $466.8 million at September 30,
1999, including commercial real estate loans of $155.0 million, which
increased $29.2 million or 23.2% from September 30, 1998. In addition,
commercial business loans totaled $106.5 million, an increase of $21.7 million
or 25.6% from September 30,1998.
<TABLE>
Loans and Leases Outstanding *
<CAPTION>
(Dollars in Thousand) September 30, December 31,
- ------------------------------ -------------------------------------------------------------- ----------------------------
1999 1998 1998
- ------------------------------ ------------------------------ ------------------------------- ----------------------------
Actual % of Total Actual % of Total Actual % of Total
<S> <C> <C> <C> <C> <C> <C>
Commercial Business $106,508 22.82% $ 84,794 21.80% $ 92,737 21.87%
Commercial Real Estate 154,984 33.20 125,818 32.35 134,380 31.69
Lease Financing 81,268 17.41 61,208 15.73 73,499 17.34
Residential Mortgages 40,817 8.75 53,704 13.81 50,086 11.81
Construction 50,899 10.90 36,160 9.30 44,546 10.51
Consumer 32,309 6.92 27,288 7.01 28,738 6.78
-------- ------- --------- -------- -------- -------
Total $466,785 100.00% $388,972 100.00% $423,986 100.00%
======== ======== ========= ======== ======== =======
</TABLE>
* Includes loans held for sale
The Company reported non-performing assets of $3.8 million at September
30, 1999 up from $2.9 million at September 30, 1998. The increase in
non-performing assets was related to the lease portfolio and commercial business
loans. Non-performing leases increased $525,000 and non-performing commercial
business loans increased $382,000 compared to September 30, 1998. The Company's
non-performing assets to total assets ratio at September 30, 1999 was .54%
compared to .46% at September 30, 1998. During the quarter ended
September 30, 1999, the Company recorded a $658,000 provision for possible
loan and lease losses compared with $233,000 for the comparable period in 1998.
The increase of $425,000 was the result of the charge-off policy implemented in
the second quarter for in the lease portfolio. The current leasing delinquency
levels have declined from 5.40% at June 30, 1999 to 3.89% at September 30, 1999.
As of September 30, 1999, the allowance for possible loan and lease losses
increased by $573,000 from $4.6 million at September 30, 1998.
The ratio of the allowance for possible loan and lease losses to total loans and
leases was 1.11% at September 30, 1999 compared to 1.19% at
September 30, 1998.
Non-interest income for the quarter ended September 30, 1999 amounted
to $7.1 million, compared to $2.3 million for the same period in 1998. The
Company recognized $2.8 million of pre-tax income ($1.8 after tax) during the
period due to the expiration of restrictions on the sale of warrants to acquire
common stock of VerticalNet Inc. During the 1999 quarter, the Company earned
$713,000 in mutual fund, annuity and insurance commissions. Teleservices fee
income of $1.4 million represents an increase of $1.1 million over the third
quarter of 1998 due to new inbound clients. Service charges on deposits
increased $117,000 over the third quarter of 1998.
Total non-interest expense was $9.8 million for the quarter ended
September 30, 1999 compared to $5.9 million for the quarter ended September
30, 1998. The increase in non-interest expense for the quarter ended September
30, 1999 over the comparable quarter in 1998 was primarily due to increases in
salaries and employee benefits of $2.0 million to $4.9 million as a result of
additional employees of the newly formed insurance agency, Progress Financial
Resources, the staffing of Progress Capital Management, Inc. to pursue our SBIC
license, and from other new positions established within the Company.
Non-recurring incentives relating to client warrant income amounted to $100,000
during the 1999 quarter. Occupancy and furniture, fixtures and equipment
expenses increased $295,000 mainly due to two new branch openings in the second
quarter and recent acquisitions. Professional services expense increased
$137,000 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. Other non-interest expense included one-time charges of $1.1 million
associated with prior leasing acquisition and unrelated prior period tax
adjustments.
Total assets increased to $702.0 million at September 30, 1999 from
$617.4 million at September 30, 1998 and from $646.8 million at year end 1998.
Total deposits increased 29.8% to $491.6 million at September 30, 1999 from
$378.8 million at September 30, 1998 and 20.4% 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.
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 financial planning services and investments 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.;
construction and development of assisted living communities through Progress
Development Corp., and venture capital activities managed by Progress Capital
Management, Inc. 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>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30
------------------------------ -----------------------------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
---------------- ------------- ------------- ---------------
Reported Results:
Basic net income per common share (1) $ .40 $ .24 $ .85 $ .68
Diluted net income per common share (1) .39 .23 .81 .62
Dividends per common share (1) .05 .04 .13 .10
Book value per share (1) 7.54 7.71 7.54 7.71
Tangible book value per share (1) 6.63 6.89 6.63 6.89
Basic average common shares outstanding (1) 5,634,130 5,484,234 5,482,856 5,051,061
Diluted average common shares outstanding(1) 5,865,209 5,978,048 5,818,296 5,555,741
Net interest margin (FTE) 4.24% 4.16% 4.22% 4.38%
Net interest spread (FTE) 3.63 3.50 3.62 3.72
Return on average assets 1.31 .88 .94 .86
Return on average equity 20.73 12.70 14.80 13.51
Efficiency ratio 59.27 66.19 64.48 67.97
Average equity to average assets 6.30 6.90 6.37 6.34
Ratio of allowance for possible loan and lease losses
to total loan and leases receivable 1.11 1.19 1.11 1.19
Ratio of non-performing assets to total assets .54 .46 .54 .46
Ratio of allowance for possible loan losses to non-performing
loans and leases 137.87 161.68 137.87 161.68
Selected Average Balances:
Loans, gross $463,056 $379,997 $446,458 $362,757
Earning assets 637,235 573,378 624,540 508,282
Total assets 685,773 609,005 667,747 540,092
Deposits 460,227 370,504 436,595 353,127
Equity 43,190 42,033 42,540 34,267
</TABLE>
(1) Per share amounts have been restated to reflect the 5% stock dividend
distributed to shareholders on August 31, 1999.
<PAGE>
Progress Financial Corporation
Consolidated Statements of Financial Condition
(Dollars in Thousands)
<TABLE>
<CAPTION>
Ending Balance
<S> <C> <C> <C>
September 30, September 30 December 31,
1999 1998 1998
-------------- ------------- -------------
Assets:
Cash and due from banks:
Non-interest bearing $13,356 $8,900 $14,189
Interest bearing 16,460 695 6,498
Loans held for sale (fair value: $9,181, $0 and $25,326) 9,104 -- 25,250
Investments:
Available for sale at fair value (amortized cost: $23,097, $10,487 and 21,274 10,389 17,909
$18,208)
Held to maturity at amortized cost (fair value: $27,660, $12,374, and 28,721 12,265 12,401
$12,547)
Mortgage-backed securities:
Available for sale at fair value (amortized cost: $123,555, $157,912 119,926 157,624 146,459
and $146,910)
Loans and leases, net (net of reserve: $5,184, $4,611 and $4,490) 452,497 384,361 394,246
Premises and equipment 14,380 9,663 10,707
Other assets 26,241 33,471 19,154
---------- ----------- ----------
Total assets $701,959 $617,368 $646,813
========= ========= ========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing $56,516 $45,459 $54,934
Interest-bearing 435,040 333,376 353,228
Short-term borrowings 19,319 57,143 45,941
Other liabilities 12,427 8,578 15,250
Long-term Debt:
Federal Home Loan Bank advances 80,000 83,000 83,000
Other debt 42,030 33,648 38,475
-------- ------- -------
Total liabilities 645,332 561,204 590,828
-------- ------- -------
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trust holding solely junior subordinated debentures of the 14,446 14,426 14,431
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; 5,681,000 and
5,263,000 and 5,263,000 shares issued including treasury shares of
72,000, 71,000 and 177,000; and unallocated shares held by the 5,681 5,263 5,263
Employee Stock Ownership Plan of 17,000, 27,000 and 24,000
Other common stockholders' equity, net 40,181 36,731 36,786
Net accumulated other comprehensive income (loss) (3,681) (495)
-------- -------- --------
(256)
Total stockholders' equity 42,181 41,738 41,554
-------- -------- --------
Total liabilities, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior subordinated
debentures of the Corporation and stockholders' equity $701,959 $617,368 $646,813
========== ======== =========
</TABLE>
<PAGE>
Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
<S> <C> <C> <C> <C>
1999 1998 1999 1998
Interest income:
Loans and leases, including fees $10,464 $9,102 $30,092 $26,054
Mortgage-backed securities 1,859 2,860 5,953 6,212
Investment securities 560 295 1,508 662
Other 285 9 645 48
------- ------- ------- -------
Total interest income 13,168 12,266 38,198 32,976
Interest expense:
Deposits 4,303 3,739 11,951 10,636
Short-term borrowings 527 1,249 1,767 2,531
Long-term borrowings 1,576 1,263 4,904 3,142
------- ------ ------ -------
Total interest expense 6,406 6,251 18,622 16,309
------- ------ ------ -------
Net interest income 6,762 6,015 19,576 16,667
Provision for possible loan and lease losses 658 233 2,323 659
------- ------ ------ -------
Net interest income after provision for possible loan and lease 6,104 5,782 17,253 16,008
losses
Non-interest income:
Service charges on deposits 572 455 1,513 1,231
Lease financing fees 334 315 1,198 1,064
Mutual fund, annuity and insurance commissions 713 -- 1,767 --
Teleservices fee income 1,377 277 2,610 789
Loan brokerage and advisory fees 522 583 1,697 1,418
Gain (loss) from sale of securities (66) 100 (222) 437
Client warrant income 2,775 -- 3,257 --
Fees and other 889 608 2,308 1,466
------- ------ ------ ------
Total non-interest income 7,116 2,338 14,128 6,405
------- ------ ------ ------
Non-interest expense:
Salaries and employee benefits 4,895 2,919 12,674 8,310
Occupancy 470 337 1,131 995
Data processing 339 287 821 798
Furniture, fixtures and equipment 429 267 1,144 803
Professional services 568 431 1,515 811
Capital securities expense 399 398 1,196 1,195
Other 2,653 1,288 5,637 3,964
------ ------ ------- ------
Total non-interest expense 9,753 5,927 24,118 16,876
------ ------ ------- ------
Income before income taxes and cumulative effect of accounting change 3,467 2,193 7,263 5,537
Income tax expense 1,210 801 2,553 2,028
------ ------ ------ ------
Income before cumulative effect of accounting change 2,257 1,392 4,710 3,509
Cumulative effect of accounting change (net of tax benefit of $26) -- (46) -- (46)
------- ------ ------- -------
Net Income $2,257 $1,346 $4,710 $3,463
======= ====== ======= =======
Basic income per common share before cumulative effect of accounting $.40 $.25 $.85 $.69
==== ==== ==== ====
change
Diluted income per common share before cumulative effect of accounting $.39 $.24 $.81 $.63
==== ==== ==== ====
change
Basic net income per common share $.40 $.24 $.85 $.68
==== ==== ==== ====
Diluted net income per common share $.39 $.23 $.81 $.62
==== ==== ==== ====
Dividends per common share $.05 $.04 $.13 $.10
==== ==== ==== ====
Basic average common shares outstanding 5,634,130 5,484,234 5,482,856 5,051,061
========= ========= ========= =========
Diluted average common shares outstanding 5,865,209 5,978,048 5,818,296 5,555,741
========= ========= ========= =========
</TABLE>
###
<PAGE>
Exhibit 99(b)
Exhibit 99(b)
Press Release on dividend declaration
issued on October 20, 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 Cash Dividend
Blue Bell, PA, October 20, 1999 - The Board of Directors of Progress
Financial Corporation (the "Company" - Nasdaq: PFNC) has declared its regular
quarterly cash dividend on its common stock, according to W. Kirk Wycoff,
Chairman, President and Chief Executive Officer. The cash dividend of $.05 will
be paid on November 12, 1999 to shareholders of record on October 31, 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 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 financial planning services and investments 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.;
construction and development of assisted living communities through Progress
Development Corp., and venture capital activities managed by Progress Capital
Management, Inc. The Company's common stock is traded on the Nasdaq Stock
Market, National Market under the Symbol "PFNC".
####
