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 23, 2002
----------------
United Community Financial Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-24399 34-1856319
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer of
incorporation ) File Number) Identification Number)
275 Federal Plaza West
Youngstown, Ohio 44503-1203
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 742-0500
-----------------------------
Not Applicable
- --------------------------------------------------------------
(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 FOURTH QUARTER AND FULL YEAR 2001
ITEM 5: OTHER EVENTS
YOUNGSTOWN, Ohio (January 23, 2002) - United Community Financial Corp. (Nasdaq:
UCFC), holding company of The Home Savings and Loan Co. and Butler Wick Corp.,
today reported net income of $5.6 million, or $0.17 per diluted share, for the
quarter ended December 31, 2001, compared to $2.5 million, or $0.08 per diluted
share, for the fourth quarter of 2000. For the year ended December 31, 2001, net
income was $15.7 million, or $0.48 per diluted share, compared with $11.6
million, or $0.35 per diluted share, for the year ended December 31, 2000.
"United Community had a great quarter and year primarily due to growth in the
loan and deposit portfolios and the acquisition of Industrial Bancorp, which was
immediately accretive to earnings," said Douglas M. McKay, chairman and chief
executive officer of United Community. "The increase in loan originations has
allowed United Community to become active in the secondary market, adding
considerable gains from loan sales in the fourth quarter," McKay added.
"We made good progress on our strategic initiatives of growth, profitability and
capital management during 2001," said McKay. "In line with our strategic
objective of geographic expansion, we completed the acquisition of Industrial
Bancorp in July, adding 12 new full-service branches to the system. We will add
another four branches when we complete the previously announced acquisition of
Potters Financial Corporation. In addition to adding locations, both Home
Savings and Butler Wick introduced new products and services during the year.
The success of all these initiatives is reflected in the substantial increases
recorded in loans and deposits and the 35% increase in net income for the year."
FOURTH QUARTER RESULTS
United Community's net interest income for the three months ended December 31,
2001 increased $4.3 million over the same period in 2000, and noninterest income
increased $5.4 million over the same quarter in the previous year. The increases
were partially offset by a $3.0 million increase in noninterest expense and a
$1.3 million increase in the provision for loan losses.
The increase in net interest income is a result of higher interest income on
loans resulting from increased loan volume in 2001 and the addition of
Industrial's loan portfolio. This increase was partially offset by an increase
in interest expense on deposits, which was primarily due to the addition of
Industrial's deposits. The increase in noninterest income was primarily due to
an increase in gains on loans sold, as United Community became active in the
secondary market during 2001.
FULL YEAR RESULTS
Net interest income for the year ended December 31, 2001 increased $9.4 million
and noninterest income increased $3.7 million. The increase in net interest
income was primarily as a result of an increase in loan interest income of $30.1
million. This increase was partially offset by an increase of $12.6 million in
interest expense on deposits, and decreases of $8.0 million in interest income
on securities and $1.8 million in interest on margin accounts. The increase in
noninterest income was primarily a result of a $5.5 million increase in gains on
loans sold and a $2.2 million increase in service fees and other charges. These
increases were partially offset by a $3.8 million decline in commissions earned
and a $869,000 loss on securities, due to current market conditions.
Noninterest expense increased by $3.4 million due largely to a $1.6 million
increase in equipment and data processing and a $1.7 million increase in the
amortization of the core deposit intangible that was a result of the Industrial
acquisition. These increases were offset by a $1.7 million decline in salary and
employee benefits expenses and a decrease of $1.7 million in franchise taxes.
The decline in salary and employee benefits expenses is primarily due to a
decline in commission income and lower expenses related to the Butler Wick
retention plan. Noninterest expense was also affected by a $2.9 million gain on
postretirement benefits curtailment and a $1.0 million loss on pension
termination, both of which were recognized in 2000.
FINANCIAL CONDITION
United Community's return on average assets and return on average equity
improved to 0.97% and 6.03%, respectively, for the year ended December 30, 2001.
This compares with returns on average assets and average equity of 0.92% and
4.47%, respectively, for the year ended December 31, 2000.
Total shareholders' equity decreased $19,000 from December 31, 2000, to December
31, 2001. 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 December 31, 2001 was $7.34 per
share. As part of our capital management strategy, United Community acquired
1,604,126 shares of common stock for $11.0 million during the year ended
December 31, 2001. The company has remaining authorization to repurchase
1,688,032 shares as of year-end 2001.
Total assets increased by $644.6 million, or 49.6%, to $1.945 million at
December 31, 2001 compared with December 31, 2000. The increase was primarily a
result of the Industrial acquisition . Cash and cash equivalents increased
$159.9 million and loans and loans held for sale increased $525.6 million and
$24.4 million, respectively. Increases in deposits of $483.0 million and other
borrowed funds of $157.3 million and a reduction of $97.7 million in securities
funded these increases.
Net loans increased $525.6 million, or 60.0%, from December 31, 2000 to December
31, 2001, of which $380.1 million is attributable to the purchase of Industrial.
Home Savings had increases of $438.9 million in mortgage loans, $73.4 million in
construction loans, $52.4 million in consumer loans
and $4.6 million in commercial loans. Home Savings has become active in the
secondary loan market during 2001, increasing net loans held for sale by $24.4
million compared to December 31, 2000.
Due to growth in the loan portfolio and an increase in nonperforming loans and
delinquency rates, the allowance for loan losses increased $4.9 million, or
75.2%, to $11.5 million at December 31, 2001 compared to $6.6 million at
December 31, 2000. About 57% of the increase was a result of the Industrial
acquisition. Nonperforming assets increased $1.5 million to $11.6 million at
December 31, 2001, primarily due to delinquent construction loans. The allowance
for loan losses as a percentage of total loans increased to 0.80% at December
31, 2001 compared to 0.74% at December 31, 2000.
Deposits increased $483.0 million, or 53.6%, from December 31, 2000 to December
31, 2001, of which $313.6 million is attributable to the acquisition of
Industrial. Increases in Home Savings' deposits are primarily due to a $292.7
million increase in certificates of deposit, a $130.6 million increase in
checking accounts and a $57.9 million increase in savings accounts, largely as a
result of Home Savings offering competitive interest rates and products. Other
borrowed funds increased $157.3 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.
"We will continue to pursue our three initiatives of growth, profitability and
capital management in 2002," said McKay, "while we enhance the quality of
service we provide our customers. Recent operational changes and our expanded
array of banking products and services should provide the framework for another
good year for United Community in 2002.
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.
-------------------
###
When used in this Form 8-K or in future filings by United Community with
the SEC, in United Community's press releases or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, 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 which 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.
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
---------------------------
Patrick A. Kelly
Chief Financial Officer
Dated: January 23, 2002
UNITED COMMUNITY FINANCIAL CORP.
As of As of
December 31, 2001 December 31, 2000
----------------- -----------------
(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 205,884 $ 45,972
Mortgage-related securities 145,867 199,415
Marketable securities 61,131 105,254
Federal Home Loan Bank stock 18,760 13,793
Loans held for sale 24,438 -
Loans 1,413,713 883,206
Allowance for loan losses (11,480) (6,553)
Real estate owned 477 359
Goodwill 19,664 -
Core deposit intangible 6,312 -
Other assets 60,014 58,753
------------------- --------------------
Total assets $ 1,944,780 $ 1,300,199
=================== ====================
LIABILITIES
Deposits $ 1,383,418 $ 900,413
Other borrowed funds 271,631 114,317
Other liabilities 27,851 23,570
------------------- --------------------
Total liabilities 1,682,900 1,038,300
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at December 31, 2001 - -
Common stock-no par value; 499,000,000 shares authorized; 37,754,086
and 37,800,497 issued, respectively 136,903 136,967
Retained earnings 160,915 155,026
Other comprehensive income (loss) 1,402 (98)
Unearned compensation (22,988) (26,674)
Treasury stock, at cost; 2,086,500 and 483,500 shares, respectively (14,352) (3,322)
------------------- --------------------
Total shareholders' equity 261,880 261,899
------------------- --------------------
Total liabilities and shareholders' equity $ 1,944,780 $ 1,300,199
=================== ====================
Book value per share $ 7.34 $ 7.02
Three Months Ended Three Months Ended Three Months Ended
December31, September 30, December31,
2001 2001 2000
--------------------- ---------------------- -------------------
(In thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 32,434 $ 32,872 $ 24,087
Interest expense 16,303 16,819 12,207
--------------------- ---------------------- -------------------
Net interest income 16,131 16,053 11,880
Provision for loan losses 1,450 465 150
Noninterest income:
Commissions 3,380 3,019 3,645
Service fees and other charges 1,834 2,156 1,563
Underwriting and investment banking 806 127 320
Net gains (losses)
Loans sold 5,111 258 -
Securities (13) (655) 166
Other (14) 46 (7)
Other income 203 285 241
--------------------- ---------------------- -------------------
Total noninterest income 11,307 5,236 5,928
Noninterest expense
Salaries and employee benefits 10,033 8,097 8,611
Occupancy 679 702 553
Equipment and data processing 2,054 1,930 1,585
Other noninterest expense 4,093 3,789 3,150
--------------------- ---------------------- -------------------
Total noninterest expense 16,859 14,518 13,899
Income before taxes 9,129 6,306 3,759
Income taxes 3,555 2,341 1,306
--------------------- ---------------------- -------------------
Net income $ 5,574 $ 3,965 $ 2,453
===================== ====================== ===================
Basic earnings per share $ 0.18 $ 0.12 $ 0.08
Diluted earnings per share $ 0.17 $ 0.12 $ 0.08
Dividends paid per share $ 0.075 $ 0.075 $ 0.075
Year Ended Year Ended
December 31, December 31,
2001 2000
----------------------- ----------------------
(In thousands, except per share data)
SELECTED EARNINGS DATA:
Interest income $ 113,989 $ 91,622
Interest expense 57,047 44,104
----------------------- ----------------------
Net interest income 56,942 47,518
Provision for loan losses 2,495 300
Noninterest income:
Commissions 13,411 17,176
Service fees and other charges 7,757 5,607
Underwriting and investment banking 1,316 646
Net gains (losses)
Loans sold 5,450 -
Securities (477) 392
Other 37 (2)
Other income 955 935
----------------------- ----------------------
Total noninterest income 28,449 24,754
Noninterest expense
Salaries and employee benefits 34,528 36,193
Gain on postretirement curtailment - (2,928)
Loss on pension termination - 1,008
Occupancy 2,575 2,093
Equipment and data processing 7,378 5,807
Other noninterest expense 13,227 12,134
----------------------- ----------------------
Total noninterest expense 57,708 54,307
Income before taxes 25,188 17,665
Income taxes 9,509 6,051
----------------------- ----------------------
Net income $ 15,679 $ 11,614
======================= ======================
Basic earnings per share $ 0.49 $ 0.35
Diluted earnings per share $ 0.48 $ 0.35
Dividends paid per share $ 0.300 $ 0.300
Three Months Ended Three Months Ended Three Months Ended
December 31, September 30, June 30,
2001 2001 2001
----------------------- -------------------- --------------------
(Dollars in thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses $ 1,391,902 $ 1,456,973 $ 980,455
of $11,480, $10,197 and $7,063, respectively)
Loans held for sale 51,524 9,204 4,540
Mortgage-related securities 157,949 174,578 191,580
Marketable securities 60,028 64,282 73,667
Margin accounts 21,203 25,568 26,902
Other interest-earning assets 153,898 68,144 51,287
Total interest-earning assets 1,836,504 1,798,749 1,328,431
Total assets 1,925,300 1,880,134 1,373,514
Certificates of deposit 831,856 821,786 579,160
Interest-bearing checking, demand and savings accounts 494,023 459,759 351,587
Other-interest bearing liabilities 272,071 276,963 135,841
Total interest-bearing liabilities 1,597,950 1,558,508 1,066,588
Noninterest-bearing deposits 32,550 29,670 23,414
Total noninterest-bearing liabilities 65,223 62,920 48,787
Total liabilities 1,695,723 1,621,428 1,115,375
Shareholders' equity 262,127 258,706 258,139
Common shares outstanding for basic EPS calculation 31,788,375 31,920,741 31,824,605
Common shares outstanding for diluted EPS calculation 31,912,640 32,196,557 32,048,424
SUPPLEMENTAL LOAN DATA:
Loans originated $ 212,200 $ 175,659 $ 225,778
Loans purchased 1,200 1,227 450
Loans sold 146,470 13,044 4,984
Loan chargeoffs 173 132 45
Recoveries on loans 6 5 5
As of As of As of
December 31, September 30, June 30,
2001 2001 2001
----------------------- -------------------- --------------------
SUPPLEMENTAL DATA:
Nonaccrual loans $ 10,889 $ 12,979 $ 6,313
Restructured loans 1,572 185 204
Other real estate owned 477 410 349
Total nonperforming assets 12,938 13,574 6,865
Loans serviced for others 178,932 6,741 4,653
Number of full time equivalent employees 723 716 605
Mortgage-related securities available for sale 67,069 79,496 88,443
Mortgage-related securities held to maturity 78,798 86,102 93,712
Marketable securities trading 8,352 6,126 6,763
Marketable securities available for sale 51,081 54,232 49,883
Marketable securities held to maturity 1,698 584 985
Federal home loan bank stock 18,760 18,503 14,293
Fair value of held to maturity securities 82,339 89,238 96,791
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 168,233 $ 160,917 $ 182,426
Tangible capital ratio 9.07 8.90 12.89
Regulatory core capital 168,233 160,917 182,426
Core capital ratio 9.07 8.90 12.89
Regulatory total capital 178,196 169,805 188,311
Total risk adjusted assets 1,212,016 1,212,252 877,490
Total risk adjusted ratio 14.70 14.01 21.46