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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: January 24, 2001
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United Community Financial Corp.
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(Exact name of registrant as specified in its charter)
Ohio 0-24399 34-1856319
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(State or other jurisdiction (Commission (IRS Employer of
incorporation) File Number) Identification Number)
275 Federal Plaza West
Youngstown, Ohio 44503-1203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 742-0500
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Not Applicable
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(Former name or former address, if changes since last report.)
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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. 592
UNITED COMMUNITY FINANCIAL CORP. ANNOUNCES
EARNINGS FOR FOURTH QUARTER 2000
YOUNGSTOWN, Ohio (January 24, 2001) - United Community Financial Corp. (Nasdaq:
UCFC) today announced its financial results for the fourth quarter of fiscal
2000. United Community is the holding company of The Home Savings and Loan Co.
and Butler Wick Corp.
For the three month period ended December 31, 2000, United Community reported
net income of $2.5 million, or $0.08 per diluted share, compared to net income
of $1.9 million, or $0.05 per diluted share, for the same three month period in
the prior year. United Community's net interest income increased $12,000 and
noninterest expense declined $434,000, which were partially offset by a $421,000
decrease in noninterest income.
Net income for the year ended December 31, 2000 was $11.6 million, or $0.35 per
diluted share, compared to $10.4 million, or $0.30 per diluted share, for the
year ended December 31, 1999. Net interest income decreased $8.2 million, or
14.7%, resulting primarily from an increase in interest expense on deposits of
$5.0 million, due to an increase in deposits and an increase in rates paid on
deposits over this time period. Also contributing to the decrease in net
interest income was an increase in interest expense on other borrowed funds of
$4.9 million, primarily in conjunction with the special capital distribution
paid in 1999. Noninterest expense for 2000 decreased $6.7 million, primarily
attributable to a decrease in salaries and employee benefits due largely to
expenses recognized in 1999 for the special capital distribution related to
shares in the United Community Recognition and Retention Plan. A gain recognized
on the curtailment of postretirement benefits also contributed to the decrease
in noninterest expense. These decreases were partially offset due to a loss
recognized on the termination of the pension plan and an increase in franchise
tax expense. Noninterest income increased $2.0 million, primarily due to a
$990,000 increase in commissions earned at Butler Wick and a $963,000 increase
in service fees and other charges.
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United Community's return on average assets and return on average equity were
0.92% and 4.47%, respectively, for 2000. The return on average assets and return
on average equity were 0.79% and 2.46%, respectively, for 1999.
Total shareholders' equity increased $5.0 million, or 2.0%, to $261.9 million at
December 31, 2000 from $256.9 million at December 31, 1999. The increase was
primarily due to earnings for the year, and was partially offset by quarterly
dividend payments. Book value as of December 31, 2000 was $7.77 per share.
Total assets decreased $27.4 million, or 2.1%, from December 31, 1999 to
December 31, 2000, primarily as a result of a decline in cash and cash
equivalents of $65.5 million, or 58.7%, and a reduction in securities of $117.6
million, or 27.9%. United Community used these assets to reduce its other
borrowed funds by $99.3 million and to fund increases in net loans of $153.6
million.
Net loans increased $153.6 million, or 21.2%, from December 31, 1999 to December
31, 2000 due to increases of $106.2 million in gross mortgage loans, $35.9
million in gross commercial loans, $31.3 million in gross construction loans and
$15.2 million in gross consumer loans. These increases were due to a continual
effort to increase loans in both United Community's traditional market and new
markets such as Canton, Stow and Cleveland.
Deposits increased $66.3 million, or 8.0%, from December 31, 1999 to December
31, 2000, primarily due to a $82.4 million increase in certificates of deposit
and a $7.3 million increase in checking accounts, which were partially offset by
a $23.4 million decrease in savings accounts. The increases in certificates of
deposits and checking accounts were primarily due to Home Savings providing
competitive interest rates.
In December 2000, the board of directors of United Community entered into a
definitive agreement to acquire Industrial Bancorp Inc. (Industrial).
Industrial, based in Bellevue, Ohio, is the holding company for Industrial
Savings and Loan Association and operates 12 branches throughout north central
Ohio. Under the terms of the agreement, United Community has agreed to pay
$20.375 per share, or approximately $91.8 million, to Industrial shareholders, a
majority of which will be financed through various borrowing structures. The
transaction will be accounted for as a purchase and is expected to close before
the end of the second quarter of 2001, subject to shareholder approval and
regulatory filings.
"United Community was able to take several important steps in implementing our
strategic plan to grow our company through product and geographic expansion
throughout the year," said Douglas M. McKay, chairman and chief executive
officer of United Community. "We have made banking more convenient for our
customers by introducing telebanking services, online banking and by opening
three new banking branches in Howland, Ohio, Youngstown, Ohio and Youngstown
State University and five new loan production offices in the Cleveland, Canton,
Stow, Medina and Mentor areas earlier in the year."
McKay also pointed out that Butler Wick has grown with the opening of a new
branch to serve trust clients and by offering expanded services during the year.
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"The acquisition of Industrial, which is one of Ohio's most profitable thrifts,"
McKay stated, "will give United Community additional growth opportunities in new
markets and will complement the expansion we have achieved in fiscal year 2000."
McKay pointed out that Industrial has had good growth in recent years, which
United Community hopes to build on by offering new services such as online
banking, telephone banking and a broadened array of financial products.
Home Savings and Butler Wick are wholly owned subsidiaries of United Community
Financial Corp. Home Savings operates 17 full service banking offices located
throughout Mahoning, Columbiana and Trumbull counties in Northeastern Ohio and 5
loan production offices in the Cleveland, Canton, Stow, Medina and Mentor areas.
Butler Wick has 10 full service offices and one trust office located throughout
Northeastern 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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This press release includes statements that may constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The statements regarding continued implementation
of United Community's strategic plan are forward-looking in nature. These
statements are subject to risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements. Such risks
include, among other factors, the acceptance of new products in the marketplace
and the success of finding additional opportunities for product and geographic
expansion. For a more complete list of risk factors, read United Community's
Form 10K filed with the Securities and Exchange Commission.
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UNITED COMMUNITY FINANCIAL CORP.
As of As of
December 31, 2000 December 31,1999
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(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 45,972 $ 111,445
Mortgage-backed securities 199,415 251,638
Investment securities 105,254 170,652
Federal Home Loan Bank stock 13,793 12,825
Net loans receivable:
Loans held for investment 879,356 725,632
Loans held for sale 3,850 3,860
Allowance for loan losses (6,553) (6,405)
Real estate owned 359 158
Other assets 58,753 57,768
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Total assets $ 1,300,199 $ 1,327,573
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LIABILITIES
Deposits $ 900,413 $ 834,087
Other borrowed funds 114,317 213,578
Other liabilities 23,570 23,040
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Total liabilities 1,038,300 1,070,705
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at December 31, 2000 - -
Common stock-no par value; 499,000,000 shares authorized; 37,800,497
shares issued and 37,316,997 outstanding at December 31, 2000 136,967 136,509
Retained earnings 155,026 153,553
Other comprehensive loss (98) (3,003)
Unearned compensation (26,674) (30,191)
Treasury stock, at cost, 483,500 shares (3,322) -
Total shareholders' equity 261,899 256,868
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Total liabilities and shareholders' equity $ 1,300,199 $ 1,327,573
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Book value per share $ 7.77 $ 7.46
Dividends paid per share $ 0.075 $ 0.075
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Three Months Ended Three Months Ended Three Months Ended
December 31, September 30, December 31,
2000 2000 1999
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(In thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 24,087 $ 23,236 $ 22,836
Interest expense 12,207 11,443 10,968
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Net interest income 11,880 11,793 11,868
Provision for loan losses 150 150 -
Noninterest income:
Commissions 3,645 3,910 4,294
Service fees and other charges 1,563 1,404 1,249
Underwriting and investment banking 320 113 93
Net gains (losses)
Securities 166 1 526
Other (7) 8 7
Other income 241 278 180
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Total noninterest income 5,928 5,714 6,349
Noninterest expense
Salaries and employee benefits 8,611 9,483 9,545
Gain from curtailment of postretirement benefits - (2,928) -
Loss from settlement of pension - 1,008 -
Occupancy 553 552 558
Equipment and data processing 1,585 1,477 1,356
Acquisition expense - - 48
Other noninterest expense 3,150 3,148 2,826
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Total noninterest expense 13,899 12,740 14,333
Income before taxes 3,759 4,617 3,884
Income taxes 1,306 1,528 1,974
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Net income $ 2,453 $ 3,089 $ 1,910
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Basic earnings per share $ 0.08 $ 0.09 $ 0.06
Diluted earnings per share $ 0.08 $ 0.09 $ 0.05
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Twelve Months Ended Twelve Months Ended
December 31, December 31,
2000 1999
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(In thousands, except per share data)
SELECTED EARNINGS DATA:
Interest income $ 91,622 $ 89,971
Interest expense 44,104 34,284
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Net interest income 47,518 55,687
Provision for loan losses 300 100
Noninterest income:
Commissions 17,176 16,186
Service fees and other charges 5,607 4,644
Underwriting and investment banking 646 636
Net gains (losses)
Securities 392 559
Other (2) (4)
Other income 935 700
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Total noninterest income 24,754 22,721
Noninterest expense
Salaries and employee benefits 36,193 43,348
Gain on postretirement curtailment (2,928) -
Loss on pension termination 1,008 -
Occupancy 2,093 2,031
Equipment and data processing 5,807 5,148
Acquisition expense - 478
Other noninterest expense 12,134 10,032
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Total noninterest expense 54,307 61,037
Income before taxes 17,665 17,271
Income taxes 6,051 6,876
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Net income $ 11,614 $ 10,395
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Basic earnings per share $ 0.35 $ 0.31
Diluted earnings per share $ 0.35 $ 0.30
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Three Months Ended Three Months Ended Three Months Ended
December 31, September 30, June 30,
2000 2000 2000
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(Dollars in thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
Net loans held for investment (including allowance for loan losses $ 851,889 $ 800,785 $ 746,430
of $6,553, $6,461 and $6,324, respectively)
Net loans held for sale 4,223 3,908 4,142
Mortgage-backed securities 211,030 222,108 234,727
Investment securities 111,578 141,482 151,870
Margin accounts 42,273 43,702 42,881
Other interest-earning assets 38,876 20,630 19,107
Total interest-earning assets 1,259,869 1,232,615 1,199,157
Total assets 1,300,516 1,275,354 1,240,837
Certificates of deposit 506,886 471,751 443,474
Checking, demand and savings accounts 346,319 358,298 366,121
Other interest bearing liabilities 141,943 139,447 131,566
Total interest-bearing deposits 995,148 969,496 941,161
Total noninterest-bearing liabilities 42,793 45,401 40,595
Total liabilities 1,037,941 1,014,897 981,756
Shareholders' equity 262,575 260,457 259,081
Common shares outstanding for basic EPS calculation 33,130,228 33,252,174 32,903,672
Common shares outstanding for diluted EPS calculation 33,874,324 34,093,040 33,442,391
SUPPLEMENTAL LOAN DATA:
Loans originated $ 80,835 $ 92,587 $ 93,366
Loans purchased 4,409 3,262 4,281
Loan chargeoffs 87 16 70
Recoveries on loans 28 4 5
As of As of As of
December 31, 2000 September 30, 2000 June 30, 2000
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(Dollars in thousands)
SUPPLEMENTAL DATA:
Nonaccrual loans $ 9,458 $ 3,409 $ 3,757
Restructured loans 208 212 214
Other real estate owned 359 307 302
Total nonperforming assets 10,025 3,928 4,273
Loans serviced for others 4,906 5,015 5,134
Number of full time equivalent employees 573 566 547
Mortgage-backed securities available for sale 91,731 99,097 102,863
Mortgage-backed securities held to maturity 107,684 117,847 125,115
Investment securities trading 5,933 5,813 5,161
Investment securities available for sale 98,445 113,010 144,102
Investment securities held to maturity 876 875 875
Federal home loan bank stock 13,793 13,538 13,287
Fair value of held to maturity securities 109,129 116,930 122,843
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 175,340 $ 159,552 $ 155,816
Tangible capital ratio 14.51 13.50 13.53
Regulatory core capital 175,340 159,552 155,816
Core capital ratio 14.51 13.50 13.53
Regulatory total capital 181,460 165,954 162,078
Total risk adjusted assets 745,696 710,548 679,300
Total risk adjusted ratio 24.33 23.36 23.86