EXHIBIT 99
UNITED COMMUNITY FINANCIAL CORP.
275 Federal Plaza West
Youngstown, Ohio 44503-1203
FOR IMMEDIATE RELEASE
Patrick A. Kelly
Chief Financial Officer
(330) 742-0500, Ext. 2592
United Community Financial Corp. Announces
Earnings for First Quarter 2005
YOUNGSTOWN, Ohio (April 20, 2005) — United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Co. (Home Savings) and Butler Wick Corp. (Butler Wick), today reported net income of $4.9 million, or $0.17 per diluted share, for the quarter ended March 31, 2005, compared to $5.5 million, or $0.18 per diluted share, for the quarter ended March 31, 2004. Annualized return on average equity for the first quarter of 2005 was 7.62% versus 8.02% for the same period in 2004.
Chairman and Chief Executive Officer Douglas M. McKay said the company was pleased with the quarter. “Our focus on growth in our core products resulted in continued increases in net loans and deposits during the first quarter of 2005, and we believe there is ample opportunity for this momentum to continue through 2005,” McKay said. “Our priorities remain to grow our core banking products and our Butler Wick financial services business, maintain credit quality and provide value for our shareholders. Our recent increase in cash dividends paid represents a dividend payout ratio of 49% of our first quarter earnings.”
First Quarter Results
Net interest income for the first quarter was $18.8 million, up from $18.0 million in the first quarter of last year as a result of average interest earning assets increasing 13.1%. Growth in average loans continued into 2005 as the average balance of net loans increased $234.5 million or 14.5% over the first three months of 2004.
The net interest margin for the first quarter of 2005 was 3.46% compared to 3.76% for the same period a year ago. The 30 basis point compression in the Company’s margin was a result of funding costs increasing at a faster rate than the yield on average interest earning assets.
The provision for loan losses increased $174,000 for the three months ended March 31, 2005, compared to the same period in 2004. The increase was a result of management’s review of the
allowance for loan losses after consideration was given to levels and trends of delinquencies, reserve coverage ratio and other factors in relation to the portfolio.
Total non-interest income decreased $1.5 million to $8.9 million for the three months ended March 31, 2005, compared to $10.3 million for the same period in 2004. During the first quarter of 2005, Home Savings realized lower gains on the sale of securities compared to the first quarter of 2004. Home Savings also sold fewer loans, resulting in lower gains than were realized in the first quarter of 2004.
Financial Condition
United Community’s return on average assets and return on average equity were 0.85% and 7.62%, respectively, for the three months ended March 31, 2005. The returns on average assets and average equity were 1.07% and 8.02%, respectively, for the three months ended March 31, 2004.
Total assets increased by $57.4 million, or 2.5%, to $2.3 billion at March 31, 2005, compared to December 31, 2004. The net change in assets was a result of increases of $103.0 million in net loans, $5.1 million in trading securities, $1.3 million in real estate and other repossessed assets and $574,000 in other assets, offset by decreases of $38.7 million in loans held for sale and $14.1 million in available for sale securities. Total liabilities increased $56.8 million primarily as a result of a $34.1 million increase in borrowed funds and a $24.0 million increase in deposits.
Net loans increased $102.9 million, or 5.7%, from December 31, 2004 to March 31, 2005. Home Savings had increases of $49.3 million in real estate loans, $24.1 million in construction loans, $27.9 million in consumer loans and $1.4 million in commercial loans.The allowance for loan losses decreased $104,000 at March 31, 2005 to $15.8 million from $15.9 million at December 31, 2004. The allowance for loan losses is monitored closely and may be increased or decreased depending on a variety of factors such as levels and trends of delinquencies, chargeoffs and recoveries, and potential risk in the portfolios. The allowance for loan losses as a percentage of total loans was 0.82% at March 31, 2005, compared to 0.87% at December 31, 2004.
The increase in borrowed funds was due primarily to an increase in short-term borrowings of $34.2 million from December 31, 2004 to March 31, 2005. These funds were used to fund loan growth in excess of deposit growth.
Total shareholders’ equity increased $560,000 from December 31, 2004 to March 31, 2005, largely due to earnings for the quarter, partially offset by an increase in unrealized losses in the available for sale portfolio and dividends paid to shareholders. Tangible book value and book value as of March 31, 2005, were $6.95 and $8.12 per share, respectively. For the period ending December 31, 2004, tangible book value and book value were $6.92 and $8.09 per share, respectively.
Home Savings and Butler Wick are wholly owned subsidiaries of United Community Financial Corp. Home Savings operates 36 full service banking offices and 5 loan production offices located throughout Ohio and Western Pennsylvania. Butler Wick has 12 office locations providing full service retail brokerage, capital markets and trust services throughout Northern Ohio and Western Pennsylvania. Additional information on United Community, Home Savings and Butler Wick may be found on United Community’s web site: www.ucfconline.com.
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When used in this press release the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in United Community’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in Home Savings’ market area, demand for investments in Butler Wick’s market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. United Community cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. United Community advises readers that the factors listed above could affect United Community’s financial performance and could cause United Community’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
United Community does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions, that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
UNITED COMMUNITY FINANCIAL CORP.
| | | | | | | | |
| | As of | | | As of | |
| | March 31, 2005 | | | December 31, 2004 | |
| | (Dollars in thousands, except per share data) | |
SELECTED FINANCIAL CONDITION DATA (UNAUDITED): | | | | | | | | |
| | | | | | | | |
ASSETS | | | | | | | | |
Cash and cash equivalents | | $ | 40,310 | | | $ | 40,281 | |
Securities | | | 221,702 | | | | 230,720 | |
Federal Home Loan Bank stock, at cost | | | 23,096 | | | | 22,842 | |
Loans held for sale | | | 20,438 | | | | 59,099 | |
Loans: | | | | | | | | |
Real estate | | | 1,196,560 | | | | 1,147,261 | |
Construction | | | 372,558 | | | | 348,423 | |
Consumer | | | 295,594 | | | | 267,646 | |
Commercial | | | 69,925 | | | | 68,523 | |
Allowance for loan losses | | | (15,773 | ) | | | (15,877 | ) |
Real estate owned and other repossessed assets | | | 2,980 | | | | 1,682 | |
Goodwill | | | 33,593 | | | | 33,593 | |
Core deposit intangible | | | 2,701 | | | | 2,887 | |
Cash surrender value of life insurance | | | 21,616 | | | | 21,406 | |
Other assets | | | 59,876 | | | | 59,302 | |
| | | | | | |
Total assets | | $ | 2,345,176 | | | $ | 2,287,788 | |
| | | | | | |
| | | | | | | | |
LIABILITIES | | | | | | | | |
Deposits |
Interest-bearing | | $ | 1,462,421 | | | $ | 1,437,987 | |
Noninterest-bearing | | | 84,559 | | | | 84,965 | |
Other borrowed funds | | | | | | | | |
Short-term | | | 309,826 | | | | 275,583 | |
Long-term | | | 207,755 | | | | 207,920 | |
Other liabilities | | | 27,703 | | | | 28,981 | |
| | | | | | |
Total liabilities | | | 2,092,264 | | | | 2,035,436 | |
| | | | | | | | |
SHAREHOLDERS’ EQUITY | | | | | | | | |
Preferred stock-no par value; 1,000,000 shares authorized and unissued at March 31, 2004 | | | — | | | | — | |
Common stock-no par value; 499,000,000 shares authorized; 37,804,457 and 37,804,457 issued, respectively | | | 142,675 | | | | 142,337 | |
Retained earnings | | | 196,064 | | | | 193,690 | |
Other comprehensive income | | | (963 | ) | | | 1,063 | |
Unearned compensation | | | (14,475 | ) | | | (14,930 | ) |
Treasury stock, at cost; 6,654,951 and 6,602,477 shares, respectively | | | (70,389 | ) | | | (69,808 | ) |
| | | | | | |
Total shareholders’ equity | | | 252,912 | | | | 252,352 | |
| | | | | | |
Total liabilities and shareholders’ equity | | $ | 2,345,176 | | | $ | 2,287,788 | |
| | | | | | |
| | | | | | | | |
Book value per share | | $ | 8.12 | | | $ | 8.09 | |
Tangible book value per share | | $ | 6.95 | | | $ | 6.92 | |
| | | | | | | | |
| | Three Months Ended | |
| | March 31, | |
| | 2005 | | | 2004 | |
| | (Dollars in thousands, except per share data) | |
SELECTED EARNINGS DATA (UNAUDITED): | | | | | | | | |
Interest income | | $ | 30,763 | | | $ | 27,075 | |
Interest expense | | | 12,011 | | | | 9,067 | |
| | | | | | |
Net interest income | | | 18,752 | | | | 18,008 | |
| | | | | | | | |
Provision for loan losses | | | 633 | | | | 459 | |
Noninterest income: | | | | | | | | |
Brokerage commissions | | | 4,624 | | | | 4,652 | |
Service fees and other charges | | | 3,118 | | | | 2,890 | |
Underwriting and investment banking | | | 121 | | | | 372 | |
Net gains (losses): | | | | | | | | |
Loans sold | | | 248 | | | | 901 | |
Securities | | | 21 | | | | 837 | |
Other | | | 5 | | | | (9 | ) |
Other income: | | | 731 | | | | 688 | |
| | | | | | |
Total noninterest income | | | 8,868 | | | | 10,331 | |
| | | | | | | | |
Noninterest expense: | | | | | | | | |
Salaries and employee benefits | | | 12,612 | | | | 12,665 | |
Occupancy | | | 1,048 | | | | 914 | |
Equipment and data processing | | | 2,329 | | | | 2,335 | |
Amortization of core deposit intangible | | | 186 | | | | 257 | |
Other noninterest expense | | | 3,482 | | | | 3,343 | |
| | | | | | |
Total noninterest expense | | | 19,657 | | | | 19,514 | |
| | | | | | |
| | | | | | | | |
Income before taxes | | | 7,330 | | | | 8,366 | |
Income taxes | | | 2,449 | | | | 2,893 | |
| | | | | | |
Net income | | $ | 4,881 | | | $ | 5,473 | |
| | | | | | |
| | | | | | | | |
Basic earnings per share | | $ | 0.17 | | | $ | 0.18 | |
Diluted earnings per share | | $ | 0.17 | | | $ | 0.18 | |
Dividends paid per share | | $ | 0.0825 | | | $ | 0.0750 | |
| | | | | | | | | | | | |
| | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| | March 31, | | | December 31, | | | September 30, | |
| | 2005 | | | 2004 | | | 2004 | |
| | (Dollars and share data in thousands) | |
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED): | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net loans (including allowance for loan losses of $15,773, $15,877 and $25,128, respectively) | | $ | 1,853,715 | | | $ | 1,788,141 | | | $ | 1,794,576 | |
Loans held for sale | | | 47,709 | | | | 65,910 | | | | 17,852 | |
Securities | | | 223,623 | | | | 226,122 | | | | 229,524 | |
Margin accounts | | | 15,324 | | | | 14,308 | | | | 14,427 | |
Other interest-earning assets | | | 26,526 | | | | 26,447 | | | | 26,368 | |
Total interest-earning assets | | | 2,166,897 | | | | 2,120,928 | | | | 2,082,747 | |
Total assets | | | 2,305,007 | | | | 2,257,697 | | | | 2,216,353 | |
Certificates of deposit | | | 845,650 | | | | 820,739 | | | | 791,591 | |
Interest-bearing checking, demand and savings accounts | | | 599,008 | | | | 619,847 | | | | 610,603 | |
Other interest-bearing liabilities | | | 485,558 | | | | 447,762 | | | | 451,931 | |
Total interest-bearing liabilities | | | 1,930,216 | | | | 1,888,348 | | | | 1,854,125 | |
Noninterest-bearing deposits | | | 85,411 | | | | 82,719 | | | | 76,297 | |
Total noninterest-bearing liabilities | | | 118,594 | | | | 118,727 | | | | 112,791 | |
Total liabilities | | | 2,048,810 | | | | 2,007,075 | | | | 1,966,898 | |
Shareholders’ equity | | | 256,197 | | | | 250,620 | | | | 249,455 | |
Common shares outstanding for basic EPS calculation | | | 28,815 | | | | 28,724 | | | | 28,629 | |
Common shares outstanding for diluted EPS calculation | | | 29,140 | | | | 29,114 | | | | 29,031 | |
| | | | | | | | | | | | |
SUPPLEMENTAL LOAN DATA: | | | | | | | | | | | | |
| | | | | | | | | | | | |
Loans originated | | $ | 289,680 | | | $ | 270,835 | | | $ | 300,806 | |
Loans purchased | | | 71,240 | | | | 74,947 | | | | 48,910 | |
Loans sold | | | 44,765 | | | | 49,750 | | | | 49,151 | |
Loan chargeoffs | | | 762 | | | | 7,885 | | | | 404 | |
Recoveries on loans | | | 25 | | | | 317 | | | | 36 | |
| | | | | | | | | | | | |
| | As of | | | As of | | | As of | |
| | March 31, | | | December 31, | | | September 30, | |
| | 2005 | | | 2004 | | | 2004 | |
| | (Dollars in thousands) | |
SUPPLEMENTAL DATA: | | | | | | | | | | | | |
| | | | | | | | | | | | |
Nonaccrual loans | | $ | 27,233 | | | $ | 19,225 | | | $ | 14,432 | |
Restructured loans | | | 1,697 | | | | 1,366 | | | | 1,183 | |
Real estate owned and other repossessed assets | | | 2,980 | | | | 1,682 | | | | 699 | |
Total nonperforming assets | | | 32,134 | | | | 23,864 | | | | 16,314 | |
Mortgage loans serviced for others | | | 677,833 | | | | 666,997 | | | | 646,670 | |
Securities trading, at fair value | | | 37,419 | | | | 32,316 | | | | 28,827 | |
Securities available for sale, at fair value | | | 184,283 | | | | 198,404 | | | | 189,864 | |
Federal Home Loan Bank stock, at cost | | | 23,096 | | | | 22,842 | | | | 22,601 | |
| | | | | | | | | | | | |
Number of full time equivalent employees | | | 799 | | | | 789 | | | | 804 | |
| | | | | | | | | | | | |
REGULATORY CAPITAL DATA: | | | | | | | | | | | | |
| | | | | | | | | | | | |
Tier 1 leverage ratio | | | 8.43 | % | | | 8.36 | % | | | 8.05 | % |
Tier 1 risk-based capital ratio | | | 10.02 | % | | | 9.88 | % | | | 9.41 | % |
Total risk-based capital ratio | | | 10.87 | % | | | 10.75 | % | | | 10.66 | % |