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 19, 2000
--------------------------------------------------------------------------------
(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
<PAGE>
Item 5. Other Events
On July 19, 2000, Progress Financial Corporation reported
second quarter net income of $2.6 million or diluted earnings
per share of $.45 compared with net income of $1.1 million or
diluted earnings per share of $.19 for the second quarter of
1999. For further information see the press release attached
as Exhibit 99(a) 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: August 29, 2000 By: /s/ Michael B. High
-----------------------------
Michael B. High
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
99(a) Press Release on Second Quarter 2000 earnings
issued on July 19, 2000
<PAGE>
Exhibit 99(a)
99(a)
Press Release on Second Quarter 2000
earnings issued on July 19, 2000
<PAGE>
Exhibit 99 (a)
NEWS RELEASE
Contact: Michael B. High, CFO/Executive Vice President
(610) 941-4804
Dorothy Jaworski, Director of Investor Relations
(484) 322-4822
For immediate release:
Progress Financial Corporation Announces Second Quarter Earnings of
$2.6 Million, a 129% Increase Over Second Quarter 1999
Blue Bell, PA, July 19, 2000 - Progress Financial Corporation (the
"Company" - Nasdaq: PFNC) today reported second quarter 2000 net income of $2.6
million, or diluted earnings per share of $.45, compared to net income of $1.1
million, or diluted earnings per share of $.19, for the second quarter of 1999.
Net income excluding non-core earnings on the sale of the teleservices
subsidiary and the unrealized loss in unconsolidated subsidiaries amounted to
$1.6 million, or diluted earnings per share of $.28, compared to $1.1 million or
diluted earnings per share of $.19 for the same period of 1999.
Commenting on the second quarter results, W. Kirk Wycoff, President and
CEO, stated, "We are pleased with another successful quarter where core earnings
grew 46% to $1.6 million from $1.1 million for the comparable quarter of 1999.
The Company sold the assets of its teleservicing subsidiary recording a pre-tax
gain of $2.5 million, representing a continued movement towards focusing on core
competencies within financial services. This gain was partially offset by a
pre-tax unrealized loss of $1.0 million in unconsolidated subsidiaries which is
primarily the result of market value adjustments of the Company's investment in
the Ben Franklin/Progress Mezzanine Fund. I am especially pleased with the
growth in fee income primarily due to a $565,000 increase in management fees
generated by the Company's subsidiary Progress Capital Management, Inc. which
manages the mezzanine debt and
<PAGE>
venture capital funds, a $432,000 increase in banking-related fees and a
$386,000 increase in mutual fund annuity and insurance commissions. Also, the
Company's net interest margin remained virtually unchanged at 4.25% despite
numerous interest rate increases by the Federal Reserve."
Average earning assets for the second quarter of 2000 were $759.0
million compared to $621.2 million for the same period in 1999. The growth in
assets relates to higher loan and lease production funded by significant deposit
growth. Average loans and leases increased $89.8 million, or 20%, compared to
the same quarter of 1999. Consequently, tax-equivalent net interest income for
the second quarter of 2000 increased $1.4 million, or 21%, over the same period
in 1999. The net interest margin was 4.25% compared to 4.29% for the same period
in 1999.
Loans and leases outstanding totaled $541.9 million at June 30, 2000
compared to $503.7 million at December 31, 1999. This increase was primarily due
to a $30.0 million increase in commercial business loans and a $10.7 million
increase in leases. The Company reported non-performing assets of $9.7 million
at June 30, 2000 compared to $5.8 million at December 31, 1999. The increase in
non-performing assets was primarily related to $5.7 million in residential real
estate development projects, classified as other real estate owned, acquired by
the Company through deeds in lieu of foreclosure as a result of defaulted loans.
The Company has recorded these projects at management's estimate of net
realizable value. The Company's non-performing assets to total assets ratio at
June 30, 2000 was 1.16% compared to .75% at December 31, 1999.
During the quarter ended June 30, 2000, the Company recorded a $1.2
million provision for loan and lease losses, which included an increase in
excess of budget of $600,000 due to loans and lease growth and non-performing
loans and leases. This resulted in a slight decrease in the provision for loan
and lease losses from the comparable period in 1999 when a significant
additional provision was made for deterioration in the lease portfolio. The
ratio of the allowance for loan and lease losses to total loans and leases was
1.20% at June 30, 2000 compared to 1.09% at June 30, 1999.
Non-interest income for the quarter ended June 30, 2000 amounted to
$7.1 million, compared to $4.3 million for the same period in 1999. The Company
recognized a $2.5 million gain on the sale of its teleservicing subsidiary's
assets. During the quarter, the Company recognized $985,000 of client warrant
income primarily due to the expiration of restrictions on the sale of warrants
to acquire common stock of Internet Capital Group, Inc. These increases were
partially offset by net unrealized losses in the mezzanine and venture capital
funds amounting to $1.0 million during the quarter. Fee income increased $1.2
million primarily due to a $565,000 increase in investment advisory fees
generated by the Company's subsidiary Progress Capital Management, Inc. which
manages the mezzanine debt and venture capital funds, a $432,000 increase in
banking-related fees and a $386,000 increase in mutual fund annuity and
insurance commissions.
Total non-interest expense was $9.7 million for the quarter ended June
30, 2000 compared to $7.9 million for the quarter ended June 30, 1999. This
increase was primarily due to increases in salaries and employee benefits of
$1.2 million as a result of additional employees to staff four new bank
branches, the recent acquisition of KMR Management, Inc., the staffing of
Progress Capital Management, Inc., and from other new positions established
within the Company. Occupancy and furniture, fixtures and equipment expenses
increased $396,000 mainly due to a new operations center, bringing data
processing in-house, and new branch openings. The $195,000 increase in other
non-interest expense included nonrecurring system conversion related expenses of
approximately $119,000. Total assets increased to $839.3 million at June 30,
2000 from $765.5 million at December 31, 1999. Total deposits increased to
$570.3 million at June 30, 2000 from $521.4 million at December 31, 1999.
Deposit growth of 9.4% was primarily the result of new commercial business
customer relationships and retail branch expansion.
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 sixteen full service offices. The Company also offers a
diversified array of financial services including equipment leasing through
Progress Leasing Company, with offices in Blue Bell, Pennsylvania and Timonium,
Maryland, and financial planning services and investments through Progress
Financial Resources, Inc., headquartered in Philadelphia, Pennsylvania; and
asset based lending through Progress Business Credit. In addition, the Company
also 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; and Raleigh, North
Carolina. The Company also conducts construction and development of assisted
living communities through Progress Development Corporation; venture capital
activities managed by Progress Capital Management, Inc.; and financial and
operational management consulting services for commercial clients through KMR
Management, Inc. located in Willow Grove, Pennsylvania. 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
Consolidated Statements of Financial Condition
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- -------------
Assets: (Unaudited) (Audited)
Cash and due from banks:
<S> <C> <C>
Non-interest bearing $16,926 $15,648
Interest bearing 18,658 24,278
Trading securities -- 3,267
Investments and mortgage-backed securities
Available for sale at fair value (amortized cost: $187,182 and $147,529) 181,609 149,518
Held to maturity at amortized cost (fair value: $33,440 and $32,914) 35,103 34,309
Loans and leases, net (net of reserve: $6,527 and $5,927) 535,354 497,738
Premises and equipment 17,609 16,443
Other assets 34,050 24,333
-------- --------
Total assets $839,309 $765,534
======== ========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $570,333 $521,439
Short-term borrowings 72,630 50,767
Other liabilities 16,590 19,068
Long-term Debt:
Federal Home Loan Bank advances 100,500 85,000
Other debt 15,000 24,000
Subordinated Debt 3,000 3,000
-------- -------
Total liabilities 778,053 703,274
-------- -------
Corporation-obligated mandatorily redeemable capital securities of subsidiary
trust holding solely junior subordinated debentures of the Corporation 14,461 14,451
Commitments and contingencies
Shareholders' equity:
Serial preferred - 1,000,000 shares authorized but unissued -- --
Junior participating preferred stock - $.01 par value - 1,010 shares authorized -- --
but unissued
Common stock, $1 par value; 12,000,000 shares authorized; 5,692,000 and
5,680,000 shares issued; including treasury shares of 169,000 and 152,000;
and unallocated shares held by the Employee Stock Ownership Plan of 0 and 5,692 5,680
14,000
Other shareholders' equity, net 44,852 40,895
Net accumulated other comprehensive income (loss) (3,749) 1,234
-------- --------
Total shareholders' equity 46,795 47,809
-------- --------
Total liabilities, Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding and shareholders' equity $839,309 $765,534
======== ========
</TABLE>
<PAGE>
Progress Financial Corporation
Consolidated Statements of Operations
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
--------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income:
<S> <C> <C> <C> <C>
Loans and leases, including fees $12,506 $10,071 $24,451 $19,628
Mortgage-backed securities 2,462 1,969 4,526 4,094
Investment securities 1,016 526 1,979 948
Other 347 167 586 360
------- ------- ------- -------
Total interest income 16,331 12,733 31,542 25,030
Interest expense:
Deposits 5,632 3,880 10,841 7,648
Short-term borrowings 1,082 575 1,970 1,240
Long-term borrowings 1,686 1,679 3,204 3,328
------- ------- ------- -------
Total interest expense 8,400 6,134 16,015 12,216
Net interest income 7,931 6,599 15,527 12,814
Provision for loan and lease losses 1,175 1,216 2,233 1,665
------- ------- ------- -------
Net interest income after provision for loan and 6,756 5,383 13,294 11,149
lease losses
Non-interest income:
Service charges on deposits 687 521 1,229 941
Lease financing fees 374 401 664 669
Mutual fund, annuity and insurance commissions 960 574 1,839 1,054
Teleservices fee income 614 990 1,558 1,233
Loan brokerage and advisory fees 541 652 1,062 1,175
Gain (loss) from sale of securities 2 4 (110) (156)
Gain from sale of teleservices assets 2,545 -- 2,545 --
Client warrant income 985 482 3,585 482
Equity (loss) in unconsolidated entities (1,042) 48 (1,997) 104
Fees and other 1,417 578 2,532 1,510
------- ------- ------- -------
Total noninterest income 7,083 4,250 12,907 7,012
------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits 5,458 4,275 10,828 7,779
Occupancy 538 316 1,177 661
Data processing 235 264 642 482
Furniture, fixtures and equipment 599 425 1,124 715
Professional services 567 580 1,273 947
Capital securities expense 399 399 798 797
Other 1,857 1,662 3,858 2,984
------- ------- ------- -------
Total non-interest expense 9,653 7,921 19,700 14,365
------- ------- ------- -------
Income before income taxes 4,186 1,712 6,501 3,796
Income tax expense 1,603 582 2,380 1,343
------- ------- ------- -------
Net income $ 2,583 $ 1,130 $ 4,121 $2,453
======= ======= ======= =======
Basic net income per common share $.46 $.21 $.74 $.46
==== ==== ==== ====
Diluted net income per common share $.45 $.19 $.72 $.42
==== ==== ==== ====
Dividends per common share $.05 $.04 $.10 $.08
==== ==== ==== ====
Basic average common shares outstanding 5,519,440 5,457,518 5,544,054 5,385,965
========= ========= ========= =========
Diluted average common shares outstanding 5,720,185 5,834,733 5,743,395 5,767,923
========= ========= ========= =========
</TABLE>
<PAGE>
Progress Financial Corporation
Supplemental Data
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
----------------------------------------------------------------
Profitability Measures:
<S> <C> <C> <C> <C>
Return on average assets 1.27% .68% 1.04% .75%
Return on average equity 22.69 10.60 17.60 11.72
Net interest spread (FTE) 3.59 3.70 3.62 3.61
Net interest margin (FTE) 4.25 4.29 4.26 4.21
Efficiency ratio 72.78 69.03 71.32 68.12
Diluted net income per common share (1) $ .45 $ .19 $ .72 $ .42
Selected Loan Data:
Non-performing assets $9,719 $4,776 $9,719 $4,776
Ratio of non-performing assets to total assets 1.16% .72% 1.16% .72%
Ratio of allowance for loan and lease losses
to total loan and leases receivable 1.20 1.09 1.20 1.09
Ratio of allowance for loan and lease losses
to non-performing loan and leases receivable 162.08 104.36 162.08 104.36
Loan delinquency ratio 1.16 2.56 1.16 2.56
Ratio of loans and leases to deposits 95.01 102.66 95.01 102.66
Selected Equity Data:
Book value per share (1) $8.47 $7.57 $8.47 $7.57
Tangible book value per share (1) 7.48 6.65 7.48 6.65
Dividends per common share (1) .05 .04 .10 .08
Average equity to average assets 5.58% 6.44% 5.89% 6.40%
Tier 1 risk-based capital ratio (Bank) 9.22 8.96 9.22 8.96
Total risk-based capital ratio (Bank) 10.35 10.00 10.35 10.00
Tier 1 leverage ratio (Bank) 6.42 6.58 6.42 6.58
Selected Average Balances:
Loans, gross $537,400 $447,561 $529,494 $438,160
Earning assets 759,004 621,155 740,383 618,194
Total assets 820,157 664,122 799,007 658,738
Deposits 547,850 432,033 536,936 424,779
Equity 45,780 42,775 47,093 42,216
(1) Per share amounts have been restated to reflect the 5% stock dividend
distributed to shareholders on August 31, 1999.
</TABLE>
<PAGE>
Progress Financial Corporation
Supplemental Balances
<TABLE>
<CAPTION>
Period-End Balances At : June 30, 2000 December 31, 1999 % Change
--------------------------------------------------------------
Loans and Leases, Net:
<S> <C> <C> <C>
Commercial business $149,790 $119,807 25.0%
Commercial real estate 171,459 162,588 5.5
Construction, net of loans in process 44,752 58,813 (23.9)
Single family residential real estate 40,281 40,554 (.7)
Consumer 37,901 34,918 8.5
Leases receivable 97,698 86,985 12.3
---------------------------------------------------------------
Total loans and leases 541,881 503,665 7.6
Allowance for loan and lease losses (6,527) (5,927) 10.1
---------------------------------------------------------------
Loans and leases, net $535,354 $497,738 7.6%
===============================================================
Deposits:
Non-interest-bearing demand deposits $ 79,213 $ 65,305 21.3%
NOW and SuperNow 96,520 80,086 20.5
Money Market 36,236 35,015 3.5
Passbook and Statement Savings 30,376 31,517 (3.6)
Time deposits 327,988 309,516 6.0
------------------------------------------------------------
Total Deposits $570,333 $521,439 9.4%
============================================================
</TABLE>
###
