Disappointing 2Q Profit Seen At Progress Financial of Pa.

Progress Financial Corp. in Blue Bell, Pa., is expected to report disappointing second-quarter earnings because of troubles with its leasing portfolio.

Cassandra Toroian, an analyst at Ryan, Beck & Co. in Livingston, N.J., has cut her estimate from 27 cents per share to 23 cents on the basis of a projection that the $665 million-asset thrift holding company will boost its allowance for loan losses.

Ms. Toroian said she expects Progress' second-quarter allowance to be about $700,000, up 56% from the first quarter. And that increase may not be enough, she warned.

"We do not have an extreme amount of confidence that the company will succeed in meeting our new estimate," Ms. Toroian said.

She said she expects Progress to try to build its reserves to 1.20% of loans, from 1.11% at the end of the first quarter, "which could prove to be difficult if the chargeoff levels in the leasing portfolio do not contract."

Progress, based in a Philadelphia suburb, said it will release second- quarter results late this month. But W. Kirk Wycoff, the president and chief executive officer, confirmed that the company intends to add to its loan-loss reserve because of troubles with a large leasing customer.

"For the quarter we might come in short," he said.

Lower-than-projected earnings would not help Progress' already sagging stock price.

After peaking at $22.75 a share in April 1998, the stock has not closed above $17.25 this year. At midday Friday, the shares were at $14.4375.

Ms. Toroian said the stock price will not rise until Progress can prove to Wall Street that it can manage its equipment leasing and other nonbank businesses. In recent years, the company has expanded into insurance, financial planning, high-tech funding, telemarketing, and commercial mortgage lending.

"There is concern out there that they have too many things going on," she said.

But not all analysts agree with Ms. Toroian's assessment. John M. Kline, an analyst with Sandler O'Neill & Partners in New York, said he is willing to give Progress time.

"Kirk Wycoff is very entrepreneurial, and by nature that means a little bit more risk taking," he said.

"But he has experienced a lot more successes than failures."

Mr. Kline said he is leaving his estimate at 25 cents for the quarter, despite the leasing problems.

"You never like to see any weakness in asset quality," he said. "But I believe it is pretty well contained."

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