<PAGE> 1
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
-------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 10, 1998
TELEBANC FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 33-76930 13-3759196
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
</TABLE>
<TABLE>
<S> <C>
1111 N. HIGHLAND STREET
ARLINGTON, VA 22201
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 247-3700
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 10, 1998, pursuant to the terms of an Agreement and Plan
of Merger dated January 14, 1998, as amended by the First Amendment to the
Agreement and Plan of Merger dated May 29, 1998 (the "Merger Agreement"),
TeleBanc Financial Corporation, a Delaware corporation ("TeleBanc"), consummated
a merger (the "Merger") whereby TBK Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of TeleBanc, was merged with and into Direct
Financial Corporation, a New Jersey corporation and thrift holding company
("Direct Financial"). TeleBanc canceled all outstanding shares of Direct
Financial, and merged Direct Financial's wholly owned subsidiary, Premium Bank
("Premium") (a federally chartered savings bank) into TeleBanc's wholly owned
subsidiary, TeleBank (a federally chartered savings bank). The Merger was
approved by the shareholders of TeleBanc and Direct Financial and by the Office
of Thrift Supervision.
TeleBanc paid $21.4 million in cash (or $12 per share) for all of
the outstanding shares of Direct Financial's common stock or common stock
equivalents. TeleBanc also assumed approximately $6.0 million in liabilities,
which TeleBanc repaid at the time the Merger was consummated. The consideration
received by the holders of Direct Financial stock in the Merger and the other
material terms of the Merger Agreement were determined through arms'-length
negotiations between TeleBanc and Direct Financial. The funds used to acquire
Direct Financial and Premium came out of TeleBanc's working capital reserves.
At June 30, 1998, Direct Financial reported total assets of $332.8
million, loans receivable (net) of $166.3 million, total deposits of $301.0
million and total stockholders' equity of $12.3 million.
For a more complete description of the terms of the Merger,
reference is made to the Merger Agreement, which is incorporated by reference in
this Current Report on Form 8-K, attached as Exhibit 10.4 to the Registration
Statement on Form S-2 filed with the U.S. Securities and Exchange Commission on
May 15, 1998 (File No. 333-52871).
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable.
ITEM 5. OTHER EVENTS.
Not Applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a)-(b) It is impracticable to provide the required financial statements
for Direct Financial at the date hereof . TeleBanc undertakes to file such
required financial statements by means of an amendment to this Current Report as
soon as practicable, but no later than October 24, 1998.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------------------------------------------------------------
<S> <C>
10.4 Agreement and Plan of Merger dated January 14, 1998, as amended by
the First Amendment to the Agreement and Plan of Merger dated May
29, 1998, between TeleBanc and Direct Financial (incorporated by
reference herein to Exhibit 10.4 to TeleBanc's Registration
Statement on Form S-2, dated May 15, 1998, File No. 333-52871).
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
99.1 Press Release issued August 10, 1998 (Filed herewith.)
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
TELEBANC FINANCIAL CORPORATION
Dated: August 25, 1998 By: /s/ Aileen Lopez Pugh
------------------------------
Aileen Lopez Pugh, Executive Vice President-
Chief Financial Officer
4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------------------------------------------------------------
<S> <C>
10.4 Agreement and Plan of Merger dated January 14, 1998, as amended by
the First Amendment to the Agreement and Plan of Merger dated May
29, 1998, between TeleBanc and Direct Financial (incorporated by
reference herein to Exhibit 10.4 to TeleBanc's Registration
Statement on Form S-2, dated May 15, 1998, File No. 333-52871).
99.1 Press Release issued August 10, 1998. (Filed herewith.)
</TABLE>
5
<PAGE> 1
EXHIBIT 99.1
[TELEBANC LOGO] PRESS RELEASE
FINANCIAL CORPORATION
FOR IMMEDIATE RELEASE
Media Contacts:
Aileen Lopez Pugh (TeleBanc Financial Corp.)
EVP-Chief Financial Officer
(703) 247-3705
[email protected]
Anita Sen/Karrie Kozar
Golin/Harris (for TeleBanc)
(213) 623-4200
[email protected]
[email protected]
TELEBANC FINANCIAL CORPORATION MERGES WITH DIRECT FINANCIAL
CORPORATION TO CREATE NATION'S LARGEST "BRANCHLESS" BANK
$1.5 BILLION FINANCIAL INSTITUTION NOW SERVES 40,000 ACCOUNTS NATIONWIDE VIA
ELECTRONIC DISTRIBUTION
Arlington, Va.(August 10, 1998)-TeleBanc Financial Corporation (NASDAQ:TBFC),
holding company for Telebank, a leading national provider of high value
savings, investment and other financial products, announced today the
completion of its merger with Direct Financial Corporation, Gibbsboro, N.J., the
holding company for Premium Bank, a Mid-Atlantic regional direct bank. The
merger forms the largest "branchless" bank in the nation, topping $1.5 billion
in assets and serving more than 40,000 accounts nationwide through the
Internet, telephone, facsimile and mail.
President and CEO Mitchell H. Caplan stated, "The merger of Premium Bank
with TeleBank furthers our goal of becoming the pre-eminent national provider
of banking and financial service products through a direct electronic delivery
platform. Because TeleBank and Premium share this 'branchless' strategy, we
believe that the merger will allow us to gain economies of scale in a
relatively short period of time while further enhancing the experience of our
customers through the introduction of new products and services."
--more--
<PAGE> 2
Michael D. Devlin, former CEO of Direct Financial, commented, "We've
strongly supported this merger from the beginning because it is truly the rare
occasion where two halves equal more than the whole. With Premium's strength
in the Northeast and TeleBank's larger scale, Internet banking products and
strong brand, the combined institution is well positioned to take advantage of
a rapidly changing financial services environment."
The merger consummates a definitive merger agreement signed in January
1998. As a result of the merger, TeleBank will gain approximately $300 million
in deposits and more than $330 million in assets. The Gibbsboro, N.J. location
will continue to serve as a deposit processing and telephone customer support
center.
TeleBanc Financial Corporation is the parent company of TeleBank and
TeleBanc Capital Markets. TeleBank provides high value financial products and
services to customers in all 50 states through use of alternative electronic
delivery channels including the telephone, Internet, automated teller machines,
facsimile and mail. TeleBanc Capital Markets is a registered investment advisor,
funds manager and broker-dealer specializing in single-family residential
mortgage acquisition. TeleBanc Financial Corporation and TeleBank can be
accessed at www.telebankonline.com or 1-800-TELEBANK.
###
Certain statements made in this press release are "forward-looking statements."
Without limiting the generality of the foregoing such information can be
identified by the use of forward-looking terminology such as "anticipate,"
"will," "would," "expect," "intend," or "believes" or other variations thereon
or comparable terminology. Actual results, performance or developments may
differ materially from those expressed or implied by such forward-looking
statements as a result of market uncertainties and other factors related to the
financial institution industry. Some important factors that may cause actual
results that differ materially from those in any forward-looking statements
include changes in interest rates; business, market, financial and legal
conditions; and the ability of TeleBanc Financial Corporation or its
subsidiaries to achieve the growth rates anticipated, including by gathering
deposits and acquiring assets at favorable interest rate spreads. TeleBanc
Financial Corporation disclaims any obligation or responsibility to update any
such forward-looking statements to reflect any changes in events, conditions or
circumstances or TeleBanc Financial Corporation's expectations with respect to
the effect thereof on TeleBanc Financial Corporation's future operating results
or financial condition.
