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: October 17, 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.)
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 THIRD QUARTER 2001
ITEM 5: OTHER EVENTS
YOUNGSTOWN, Ohio (October 17, 2001) - United Community Financial Corp. (Nasdaq:
UCFC) today announced its financial results for the third 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 September 30, 2001, United Community reported
net income of $4.0 million, or $0.12 per diluted share, compared to net income
of $3.1 million, or $0.09 per diluted share, for the same three month period in
2000. United Community's net interest income for the three months ended
September 30, 2001 increased $4.3 million over the same period in 2000, which
was offset by a $1.8 million increase in noninterest expense, a $478,000
decrease in noninterest income and a $315,000 increase in provision for loan
losses. The increase in net interest income is a result of a large increase in
interest income on loans due to increased loan volume in 2001 and the
acquisition of Industrial Bancorp's (Industrial) loan portfolio. This increase
was partially offset by an increase in interest expense on deposits, which was
primarily due to the acquisition of Industrial's deposits. The reduction in
noninterest income was primarily due to a decrease in commissions and a loss on
trading securities, which were partially offset by an increase in service fees
and other charges.
"United Community has had a very positive quarter showing growth in earnings,"
said Douglas M. McKay, chairman and chief executive officer of United Community.
"The acquisition of Industrial Bancorp was immediately accretive to earnings and
added 12 additional branches to Home Savings. In addition to the acquisition,
Home Savings has continued growth of the loan portfolio and deposit base. These
achievements are helping United Community succeed in its strategic initiatives
of growth, profitability and capital management."
Net income for the nine months ended September 30, 2001 was $10.1 million, or
$0.31 per diluted share, compared to $9.2 million, or $0.27 per diluted share,
for the nine months ended September 30,
2000. Net interest income increased $5.2 million primarily as a result of an
increase in loan interest income of $19.6 million, partially offset by an
increase of $9.2 million in interest expense on deposits, and decreases of $6.1
million in interest income on securities and $1.1 million in interest on margin
accounts.
Noninterest income for the nine months declined by $1.7 million due to declines
of $3.5 million in commission income at Butler Wick and $1.0 million in trading
securities losses. 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
$1.9 million in service fees and other charges, and higher gains on the sale of
mortgage-related and investment securities and loans.
Noninterest expense increased by $469,000 due largely to a $1.1 million increase
in equipment and data processing, offset by a $3.0 million decline in salaries
and employee benefits and a decrease of $1.3 million in franchise taxes. 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.
The increase in noninterest expense was also affected by a $2.9 million gain on
postretirement curtailment and a $1.0 million loss on pension termination, both
of which were recognized in 2000. United Community's annualized return on
average assets and annualized return on average equity were 0.86% and 5.19%,
respectively, for the nine months ended September 30, 2001. The annualized
return on average assets and annualized return on average equity were 0.98% and
4.71%, respectively, for the nine months ended September 30, 2000.
Total shareholders' equity decreased $2.9 million, or 1.1%, to $259.0 million at
September 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 year and an increase in other comprehensive income.
Book value as of September 30, 2001 was $7.99 per share.
Total assets increased $603.0 million, or 46.4%, from December 31, 2000 to
September 30, 2001, primarily as a result of the acquisition of Industrial's
assets. Cash and cash equivalents increased $29.8 million, loans and loans held
for sale increased $502.7 million and $121.0 million, respectively. Increases in
deposits of $442.6 million and other borrowed funds of $161.3 million and a
reduction of $78.1 million in securities funded these increases.
Net loans increased $502.7 million, or 57.3%, from December 31, 2000 to
September 30, 2001, of which $380.1 million are attributable to the purchase of
Industrial. Home Savings had increases of $598.1 million in gross mortgage
loans, $101.2 million in gross construction loans and $56.0 million in gross
consumer loans, which were offset by a $94.6 million decline in commercial
loans. During the third quarter there was a reclassification of $123.6 million
in commercial loans, of which $105.2 million and $18.4 million were reclassified
to mortgage loans and construction loans, respectively. Home Savings has become
active in the secondary loan market during 2001. Net loans held for sale
increased by $121.0 million. Home Savings is anticipating selling a majority of
these loans during the fourth quarter of 2001.
"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 many
opportunities, particularly in consumer and commercial lending, where we are
offering a variety of new products to our customers."
Deposits increased $442.6 million, or 49.2%, from December 31, 2000 to September
30, 2001, of which $313.6 million is attributable to the acquisition of
Industrial. Increases in Home Savings' deposits are primarily due to a $61.0
million increase in certificates of deposit and $39.2 million increase in
checking accounts, largely as a result of Home Savings offering competitive
interest rates and products. Other borrowed funds increased $161.3 million due
primarily to $87.0 million borrowed from the Federal Home Loan Bank to fund the
acquisition of Industrial Bancorp on July 1, 2001. Other borrowed funds were
used primarily 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 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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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 10-K filed with the
Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED COMMUNITY FINANCIAL CORP.
By: /s/ Patrick A. Kelly
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Patrick A. Kelly
Chief Financial Officer
Dated: October 17, 2001
UNITED COMMUNITY FINANCIAL CORP.
As of As of
September 30, 2001 December 31, 2000
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(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 75,740 $ 45,972
Mortgage-related securities 165,598 199,415
Marketable securities 60,942 105,254
Federal Home Loan Bank stock 18,503 13,793
Loans held for sale 120,981 -
Education loans available for sale 6,030 3,850
Loans 1,383,491 879,356
Allowance for loan losses (10,127) (6,553)
Real estate owned 410 359
Goodwill 19,650 -
Core deposit intangible 7,068 -
Other assets 54,933 58,753
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Total assets $ 1,903,219 $ 1,300,199
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LIABILITIES
Deposits $ 1,342,997 $ 900,413
Other borrowed funds 275,572 114,317
Other liabilities 25,649 23,570
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Total liabilities 1,644,218 1,038,300
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at September 30, 2001 - -
Common stock-no par value; 499,000,000 shares authorized; 37,754,086
and 37,800,497 issued, respectively 136,859 136,967
Retained earnings 157,748 155,026
Other comprehensive income (loss) 1,683 (98)
Unearned compensation (23,832) (26,674)
Treasury stock, at cost; 1,958,500 and 483,500 shares, respectively (13,457) (3,322)
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Total shareholders' equity 259,001 261,899
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Total liabilities and shareholders' equity $ 1,903,219 $ 1,300,199
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Book value per share $ 7.99 $ 7.77
Three Months Ended Three Months Ended Three Months Ended
September 30, June 30, September 30,
2001 2001 2000
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(In thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 32,872 $ 24,645 $ 23,236
Interest expense 16,819 12,244 11,443
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Net interest income 16,053 12,401 11,793
Provision for loan losses 465 250 150
Noninterest income:
Commissions 3,019 3,421 3,910
Service fees and other charges 2,156 1,848 1,404
Underwriting and investment banking 127 321 113
Net gains (losses)
Loans sold 258 - -
Securities (655) 264 1
Other 46 69 8
Other income 285 195 278
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Total noninterest income 5,236 6,118 5,714
Noninterest expense
Salaries and employee benefits 8,097 8,534 9,483
Gain from curtailment of postretirement benefits - - (2,928)
Loss from settlement of pension - - 1,008
Occupancy 702 621 552
Equipment and data processing 1,930 1,775 1,477
Other noninterest expense 3,789 2,622 3,148
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Total noninterest expense 14,518 13,552 12,740
Income before taxes 6,306 4,717 4,617
Income taxes 2,341 1,779 1,528
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Net income $ 3,965 $ 2,938 $ 3,089
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Basic earnings per share $ 0.12 $ 0.09 $ 0.09
Diluted earnings per share $ 0.12 $ 0.09 $ 0.09
Dividends paid per share $ 0.075 $ 0.075 $ 0.075
Nine Months Ended Nine Months Ended
September 30, September 30,
2001 2000
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(In thousands, except per share data)
SELECTED EARNINGS DATA:
Interest income $ 81,555 $ 67,535
Interest expense 40,744 31,897
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Net interest income 40,811 35,638
Provision for loan losses 1,045 150
Noninterest income:
Commissions 10,031 13,532
Service fees and other charges 5,923 4,017
Underwriting and investment banking 511 327
Net gains (losses)
Loans sold 339 -
Securities (465) 224
Other 52 5
Other income 753 694
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Total noninterest income 17,144 18,799
Noninterest expense
Salaries and employee benefits 24,496 27,554
Gain on postretirement curtailment - (2,928)
Loss on pension termination - 1,008
Occupancy 1,896 1,540
Equipment and data processing 5,324 4,222
Other noninterest expense 9,134 8,985
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Total noninterest expense 40,850 40,381
Income before taxes 16,060 13,906
Income taxes 5,954 4,745
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Net income $ 10,106 $ 9,161
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Basic earnings per share $ 0.31 $ 0.27
Diluted earnings per share $ 0.31 $ 0.27
Dividends paid per share $ 0.225 $ 0.225
Three Months Ended Three Months Ended Three Months Ended
September 30, June 30, March 31,
2001 2001 2001
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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 $ 1,456,973 $ 980,455 $ 890,813
of $10,197 $7,063 and $6,865, respectively)
Net loans held for sale 9,204 4,540 4,914
Mortgage-related securities 174,578 191,580 197,933
Marketable securities 64,282 73,667 96,088
Margin accounts 25,568 26,902 32,874
Other interest-earning assets 68,144 51,287 45,586
Total interest-earning assets 1,798,749 1,328,431 1,268,208
Total assets 1,880,134 1,373,514 1,308,752
Certificates of deposit 821,786 579,160 553,389
Interest bearing checking, demand and savings accounts 430,089 328,173 330,020
Noninterest bearing deposits 29,670 23,414 14,889
Other interest bearing liabilities 276,963 135,841 104,430
Total interest bearing liabilities 1,558,508 1,066,588 1,002,728
Total noninterest bearing liabilities 62,920 48,787 43,902
Total liabilities 1,621,428 1,115,375 1,046,648
Shareholders' equity 258,706 258,139 262,104
Common shares outstanding for basic EPS calculation 31,920,741 31,824,605 32,671,313
Common shares outstanding for diluted EPS calculation 32,196,557 32,048,424 32,814,872
SUPPLEMENTAL LOAN DATA:
Loans originated $ 175,659 $ 225,778 $ 113,590
Loans purchased 1,227 450 900
Loans sold 13,044 4,984 1,305
Loan chargeoffs 132 45 32
Recoveries on loans 5 5 14
Three Months Ended Three Months Ended Three Months Ended
September 30, June 30, March 31,
2001 2001 2001
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SUPPLEMENTAL DATA:
Nonaccrual loans $ 12,979 $ 6,313 $ 5,578
Restructured loans 185 204 206
Other real estate owned 410 349 349
Total nonperforming assets 13,574 6,865 6,133
Loans serviced for others 6,741 4,653 4,780
Number of full time equivalent employees 716 605 591
Mortgage-related securities available for sale 79,496 88,443 97,741
Mortgage-related securities held to maturity 86,102 93,712 100,651
Marketable securities trading 6,126 6,763 5,968
Marketable securities available for sale 54,232 49,883 79,415
Marketable securities held to maturity 584 985 881
Federal home loan bank stock 18,503 14,293 14,039
Fair value of held to maturity securities 89,238 96,791 103,639
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 160,917 $ 182,426 $ 178,896
Tangible capital ratio 8.90 12.89 14.05
Regulatory core capital 160,917 182,426 178,896
Core capital ratio 8.90 12.89 14.05
Regulatory total capital 169,805 188,311 185,330
Total risk adjusted assets 1,212,252 877,490 785,202
Total risk adjusted ratio 14.01 21.46 23.60