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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: July 18, 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 SECOND QUARTER 2001
YOUNGSTOWN, Ohio (July 18, 2001) - United Community Financial Corp. (Nasdaq:
UCFC) today announced its financial results for the second quarter of 2001.
United Community is the holding company of The Home Savings and Loan Co. and
Butler Wick Corp.
For the three month period ended June 30, 2001, United Community reported net
income of $2.9 million, or $0.09 per diluted share, compared to net income of
$3.0 million, or $0.09 per diluted share, for the same three month period in
2000. United Community's net interest income increased $352,000 and noninterest
income increased $261,000, which were substantially offset by a $250,000
increase in provision for loan losses and a $325,000 increase in noninterest
expense. The improvement in net interest income is a result of an increase in
interest income on loans and a decrease in interest expense on borrowed funds,
partially offset by lower interest income on mortgage-related and investment
securities and margin accounts and an increase in interest expense on deposits.
Noninterest income increased due to higher levels of service fees and other
charges, underwriting and investment banking fees and gains on trading
securities, offset by a decline in commission income. The increase in
noninterest expense is largely due to increased equipment and data processing
expenses, as lower franchise taxes offset increases in advertising and other
expenses.
"We are pleased with our overall performance in the quarter, especially in light
of the current economic environment," said Douglas M. McKay, chairman and chief
executive officer of United Community. "Home Savings continues to show
profitable year-over-year growth, however the uneasiness of investors in the
stock market caused a significant decline in commission income at Butler Wick
compared to last year. We also are excited that we completed our acquisition of
Industrial Bancorp on July 1 and look forward to the future benefits of that
transaction."
Net income for the six months ended June 30, 2001 was $6.1 million, or $0.19 per
diluted share, compared to $6.1 million, or $.18 per diluted share, for the six
months ended June 30, 2000. Net interest income increased $914,000 primarily as
a result of an increase in loan interest income of $8.1 million and a decrease
of $1.1 million in interest expense on borrowed funds, partially offset by an
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increase of $4.6 million in interest expense on deposits, and decreases of $1.8
million in interest income on mortgage-related securities and $2.0 million in
interest income on investment securities available for sale.
Noninterest income for the six months declined by $1.2 million due to declines
of $2.6 million in commission income at Butler Wick and $422,000 in trading
securities gains. The lower commission income is attributable to the overall
volatility of the stock market, which has led to fewer transactions throughout
the brokerage industry. These declines were partially offset by increases of
$1.1 million in service fees and other charges, and higher gains on the sale of
mortgage-related and investment securities and loans. Noninterest expense
declined by $1.3 million due largely to a $1.7 million decline in salaries and
employee benefits and $851,000 in franchise taxes, partially offset by increases
in equipment and data processing, occupancy, advertising and other expenses. The
decline in salaries and employee benefits is primarily due to the decline in
commission income, and lower expenses related to the Butler Wick retention plan.
United Community's return on average assets and return on average equity were
0.92% and 4.72%, respectively, for the first half of 2001. The return on average
assets and return on average equity were 0.98% and 4.70%, respectively, for the
first half of 2000.
Total shareholders' equity decreased $5.3 million, or 2.0%, to $256.6 million at
June 30, 2001 from $261.9 million at December 31, 2000. The decrease was
primarily due to the quarterly dividend payments and treasury stock purchases,
offset by earnings for the quarter and an increase in other comprehensive
income. Book value as of June 30, 2001 was $7.90 per share.
Total assets increased $185.0 million, or 14.2%, from December 31, 2000 to June
30, 2001, primarily as a result of increases in cash and cash equivalents and
loans of $83.5 million and $171.0 million, respectively. Increases in deposits
of $67.1 million and other borrowed funds of $123.1 million and a reduction of
$48.6 million in investment securities available for sale funded these
increases.
Net loans increased $171.0 million, or 19.5%, from December 31, 2000 to June 30,
2001 due to increases of $64.3 million in gross mortgage loans, $58.1 million in
gross commercial loans, $46.6 million in gross construction loans and $16.3
million in gross consumer loans.
"The continued loan growth experienced by Home Savings is the result of our
focus to diversify our loan portfolio," McKay said. "We continue to see exciting
opportunities in areas like consumer lending, where we are offering a variety of
new products to our customers."
Deposits increased $67.1 million, or 7.4%, from December 31, 2000 to June 30,
2001, primarily due to a $49.3 million increase in certificates of deposit,
largely as a result of Home Savings offering competitive interest rates. Other
borrowed funds increased $123.1 million due to $87.0 million borrowed from the
Federal Home Loan Bank in anticipation of the acquisition of Industrial Bancorp
on July 1, 2001 and other borrowings to fund loan growth.
Home Savings and Butler Wick are wholly owned subsidiaries of United Community
Financial Corp. Home Savings operates 29 full service banking offices, including
the former Industrial offices, located throughout Northeastern and Northcentral
Ohio and 4 loan production offices in the Cleveland, Canton, Stow and Mentor
areas. Butler Wick has 11 full service offices and one trust office located
throughout Northeastern Ohio and Western Pennsylvania. Additional information on
United
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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 and anticipated earnings for the year 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
June 30, 2001 December 31, 2000
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(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 129,516 $ 45,972
Mortgage-related securities 182,155 199,415
Investment securities 57,631 105,254
Federal Home Loan Bank stock 14,293 13,793
Loans held for sale 10,453 3,850
Loans 1,044,308 879,356
Allowance for loan losses (7,063) (6,553)
Real estate owned 337 359
Other assets 53,596 58,753
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Total assets $ 1,485,226 $ 1,300,199
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LIABILITIES
Deposits $ 967,468 $ 900,413
Other borrowed funds 237,463 114,317
Other liabilities 23,675 23,570
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Total liabilities 1,228,606 1,038,300
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at June 30, 2001 -- --
Common stock-no par value; 499,000,000 shares authorized; 37,799,309
and 37,800,497 issued, respectively 137,020 136,967
Retained earnings 156,207 155,026
Other comprehensive income (loss) 1,074 (98)
Unearned compensation (24,922) (26,674)
Treasury stock, at cost; 1,858,500 and 483,500 shares, respectively (12,759) (3,322)
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Total shareholders' equity 256,620 261,899
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Total liabilities and shareholders' equity $ 1,485,226 $ 1,300,199
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Book value per share $ 7.90 $ 7.77
Dividends paid per share $ 0.075 $ 0.075
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Three Months Ended Three Months Ended Three Months Ended
June 30, March 31, June 30,
2001 2001 2000
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(In thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 24,645 $ 24,038 $ 22,420
Interest expense 12,244 11,681 10,371
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Net interest income 12,401 12,357 12,049
Provision for loan losses 250 330 --
Noninterest income:
Commissions 3,421 3,591 4,238
Service fees and other charges 1,848 1,919 1,385
Underwriting and investment banking 321 63 192
Net gains (losses)
Securities 264 (74) (158)
Other 69 16 (4)
Other income 195 273 204
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Total noninterest income 6,118 5,788 5,857
Noninterest expense
Salaries and employee benefits 8,534 7,864 8,470
Occupancy 621 573 532
Equipment and data processing 1,775 1,619 1,446
Other noninterest expense 2,622 2,723 2,779
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Total noninterest expense 13,552 12,779 13,227
Income before taxes 4,717 5,036 4,679
Income taxes 1,779 1,834 1,709
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Net income $ 2,938 $ 3,202 $ 2,970
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Basic earnings per share $ 0.09 $ 0.10 $ 0.09
Diluted earnings per share $ 0.09 $ 0.10 $ 0.09
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Six Months Ended Six Months Ended
June 30, June 30,
2001 2000
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(In thousands, except per share data)
SELECTED EARNINGS DATA:
Interest income $ 48,683 $ 44,299
Interest expense 23,924 20,454
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Net interest income 24,759 23,845
Provision for loan losses 580 --
Noninterest income:
Commissions 7,012 9,622
Service fees and other charges 3,767 2,640
Underwriting and investment banking 383 214
Net gains (losses)
Securities 191 223
Other 86 (3)
Other income 468 416
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Total noninterest income 11,907 13,112
Noninterest expense
Salaries and employee benefits 16,399 18,098
Occupancy 1,194 988
Equipment and data processing 3,394 2,746
Other noninterest expense 5,344 5,836
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Total noninterest expense 26,331 27,668
Income before taxes 9,755 9,289
Income taxes 3,614 3,217
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Net income $ 6,141 $ 6,072
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Basic earnings per share $ 0.19 $ 0.18
Diluted earnings per share $ 0.19 $ 0.18
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Three Months Ended Three Months Ended Three Months Ended
June 30, March 31, December 31,
2001 2001 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
of $7,063 $6,865 and $6,553, respectively) $ 980,455 $ 890,813 $ 851,889
Net loans held for sale 4,540 4,914 4,223
Mortgage-related securities 191,580 197,933 211,030
Investment securities 73,667 96,088 111,578
Margin accounts 26,902 32,874 42,273
Other interest-earning assets 51,287 45,586 38,876
Total interest-earning assets 1,328,431 1,268,208 1,259,869
Total assets 1,373,514 1,308,752 1,300,516
Certificates of deposit 579,160 553,389 506,886
Interest bearing checking, demand and savings accounts 351,587 344,909 346,319
Other interest bearing liabilities 135,841 104,430 141,943
Total interest-bearing liabilities 1,066,588 1,002,728 995,148
Total noninterest-bearing liabilities 48,787 43,902 42,793
Total liabilities 1,115,375 1,046,648 1,037,941
Shareholders' equity 258,139 262,104 262,575
Common shares outstanding for basic EPS calculation 31,824,605 32,671,313 33,130,228
Common shares outstanding for diluted EPS calculation 32,048,424 32,814,872 33,187,843
SUPPLEMENTAL LOAN DATA:
Loans originated $ 225,778 $ 113,590 $ 80,835
Loans purchased 450 900 4,409
Loans sold 4,984 1,305 --
Loan chargeoffs 45 32 87
Recoveries on loans 5 14 28
As of As of As of
June 30, 2001 March 31, 2001 December 31, 2000
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(Dollars in thousands)
SUPPLEMENTAL DATA:
Nonaccrual loans $ 6,313 $ 5,578 $ 9,458
Restructured loans 204 206 208
Other real estate owned 349 349 359
Total nonperforming assets 6,865 6,133 10,025
Loans serviced for others 4,653 4,780 4,906
Number of full time equivalent employees 605 591 573
Mortgage-related securities available for sale 88,443 97,741 91,731
Mortgage-related securities held to maturity 93,712 100,651 107,684
Investment securities trading 6,763 5,968 5,933
Investment securities available for sale 49,883 79,415 98,445
Investment securities held to maturity 985 881 876
Federal home loan bank stock 14,293 14,039 13,793
Fair value of held to maturity securities 96,791 103,639 109,129
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 182,426 $ 178,896 $ 175,340
Tangible capital ratio 12.89 14.05 14.51
Regulatory core capital 182,426 178,896 175,340
Core capital ratio 12.89 14.05 14.51
Regulatory total capital 188,311 185,330 181,460
Total risk adjusted assets 877,490 785,202 745,696
Total risk adjusted ratio 21.46 23.60 24.33