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 2003
YOUNGSTOWN, Ohio (April 17, 2003) - United Community Financial Corp. (Nasdaq:
UCFC), holding company of The Home Savings and Loan Co. and Butler Wick Corp.,
today reported net income of $5.0 million, or $0.16 per diluted share, for the
quarter ended March 31, 2003 compared to $4.3 million, or $0.13 per diluted
share, for the first quarter of 2002.
"United Community had another strong quarter with a 23% increase in earnings per
share over the prior year," said Douglas M. McKay, chairman and chief executive
officer of United Community. "Margin expansion and strong mortgage banking
operations contributed to this earnings growth. If the market remains stable we
are anticipating similar results for the second quarter," McKay added.
First Quarter Results
United Community's net interest income for the three months ended March 31, 2003
increased $2.1 million over the same period in 2002, and noninterest income
increased $217,000 over the same quarter in the previous year. These increases
were partially offset by a $1.4 million increase in noninterest expense.
The increase in net interest income is primarily a result of a decrease in
interest expense of $3.7 million, which was partially offset by a $1.5 million
decline in interest income. The decreases are a result of the decline in
interest rates over the past year. Interest rate spread increased 58 basis
points to 3.59% for the three months ended March 31, 2003 compared to 3.01% for
the three months ended March 31, 2002.
Noninterest income increased $217,000 to $8.0 million for the three months ended
March 31, 2003 compared to $7.8 million for the same period in 2002. The primary
reason for the increase is an increase in gains recognized on loans sold of $1.2
million. This increase was partially offset by a $257,000 decrease in gains
recognized on securities, a $482,000 decrease in other income, a $207,000
decline in commission income and a $98,000 decrease in service fees and other
charges. The decrease
in other income was primarily due to the acquisition of stock through the
demutualization of Anthem, Inc. in 2002, which Home Savings received since
Anthem is the health care provider for its employees.
Noninterest expense increased $1.4 million in the first quarter of 2003 compared
to the same period in 2002 primarily as a result of a $1.2 million increase in
salaries and employee benefits and a $525,000 increase in equipment and data
processing. The increase in salaries and employee benefits is primarily due to a
$500,000 charge for post retirement benefits as a result of increased heath care
costs and salaries from the acquisition of Potters Financial Corp. (Potters)
that occurred in the second quarter of 2002. These increases were partially
offset by decreases of $207,000 in other noninterest expense and $249,000 in the
amortization of the core deposit intangible related to the acquisitions of
Potters and Industrial Bancorp. The decline in other expense is primarily due to
charges recognized in the first quarter of 2002 as a result of the early
extinguishment of debt that did not reoccur in 2003. During 2002, United
Community determined that it was advantageous to extinguish debt early and incur
associated fees due to economic conditions and cash inflows from sales of loans.
Financial Condition
United Community's return on average assets and return on average equity were
1.00% and 7.25%, respectively, for the three months ended March 31, 2003. The
returns on average assets and average equity were 0.87% and 6.42%, respectively,
for the three months ended March 31, 2002.
Total assets increased by $3.7 million, or 0.19%, to $2.0 billion at March 31,
2003 compared with December 31, 2002. Securities increased $67.7 million, other
assets increased $1.0 million, loans increased $1.2 million and deposits
declined $1.3 million. These changes were funded by decreases of $56.5 million
in cash and cash equivalents and $9.3 million in loans held for sale and an
increase of $18.3 million in other borrowed funds.
Net loans increased $717,000, or 0.1%, from December 31, 2002 to March 31, 2003.
Home Savings had increases of $55.9 million in construction loans, $5.7 million
in consumer loans and $348,000 in commercial loans, which were partially offset
by a $69.5 million decline in real estate loans. Due to growth in the
construction and consumer loan portfolios, increases in nonperforming and
delinquent loans, and the current economic conditions the allowance for loan
losses increased $485,000, or 3.2%, to $15.6 million at March 31, 2003 compared
to $15.1 million at December 31, 2002. The allowance for loan losses as a
percentage of total loans increased to 1.04% at March 31, 2003 compared to 1.01%
at December 31, 2002.
Deposits decreased $13.0 million, or 0.88%, from December 31, 2002 to March 31,
2003. Decreases in Home Savings' deposits are primarily due to a $28.1 million
decrease in checking accounts and a $26.5 million decrease in certificates of
deposit, which were partially offset by a $41.6 million increase in savings
accounts. Other borrowed funds increased $18.3 million primarily as a result of
a repurchase agreement entered into by Butler Wick.
Total shareholders' equity decreased $4.4 million from December 31, 2002 to
March 31, 2003. The decrease was primarily due to treasury stock purchases and
quarterly dividend payments partially offset by income for the quarter. Tangible
book value and book value as of March 31, 2003 were $6.74 and $7.85 per share.
United Community has been actively acquiring shares of its stock under its
buy-back program. Currently, there are 276,247 shares eligible for repurchase
under the current program, which United Community anticipates completing in the
second quarter of 2003. "Stock repurchase programs continue to be a valuable
method of utilizing excess capital, helping us achieve our capital management
initiative," said McKay. "Since United Community became a public company in
1998, we have repurchased 3.5 million shares providing substantial liquidity for
our shareholders. These purchases also enhance our earnings per share growth and
return on shareholder equity," McKay added.
Home Savings and Butler Wick are wholly owned subsidiaries of United Community
Financial Corp. Home Savings operates 34 full service banking offices and 4 loan
production offices located throughout Northern 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.
###
When used in this Form 8-K or in United Community's 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 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.
UNITED COMMUNITY FINANCIAL CORP.
As of As of
March 31, 2003 December 31, 2002
-------------- -----------------
(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 54,389 $ 110,936
Securities 310,040 242,328
Federal Home Loan Bank stock 21,276 21,069
Loans held for sale 36,550 45,825
Loans 1,494,514 1,493,312
Allowance for loan losses (15,584) (15,099)
Real estate owned 1,236 994
Goodwill 33,593 33,593
Core deposit intangible 4,711 5,101
Other assets 53,108 52,072
---------------------- -----------------------
Total assets $ 1,993,833 $ 1,990,131
====================== =======================
LIABILITIES
Deposits $ 1,468,929 $ 1,481,901
Other borrowed funds 228,301 210,024
Other liabilities 26,407 23,637
---------------------- -----------------------
Total liabilities 1,723,637 1,715,562
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at March 31, 2003 - -
Common stock-no par value; 499,000,000 shares authorized; 37,802,081
and 37,803,269 issued, respectively 138,391 138,207
Retained earnings 174,637 172,080
Other comprehensive income 1,879 2,363
Unearned compensation (18,834) (19,724)
Treasury stock, at cost; 3,387,116 and 2,558,214 shares, respectively (25,877) (18,357)
---------------------- -----------------------
Total shareholders' equity 270,196 274,569
---------------------- -----------------------
Total liabilities and shareholders' equity $ 1,993,833 $ 1,990,131
====================== =======================
Book value per share $ 7.85 $ 7.79
Tangible book value per share $ 6.74 $ 6.69
Three Months Ended
March 31,
2003 2002
------------ -------------
(In thousands, except per
share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 29,741 $ 31,263
Interest expense 11,232 14,893
------------ -------------
Net interest income 18,509 16,370
Provision for loan losses 696 696
Noninterest income:
Commissions 3,175 3,382
Service fees and other charges 1,800 1,898
Underwriting and investment banking 118 33
Net gains (losses)
Loans sold 2,010 776
Securities 348 605
Other (59) (1)
Other income 583 1,065
------------ -------------
Total noninterest income 7,975 7,758
Noninterest expense:
Salaries and employee benefits 10,901 9,723
Occupancy 829 673
Equipment and data processing 2,344 1,819
Amortization of core deposit intangible 389 638
Other noninterest expense 3,692 3,899
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Total noninterest expense 18,155 16,752
Income before taxes 7,633 6,680
Income taxes 2,653 2,425
------------ -------------
Net income $ 4,980 $ 4,255
============ =============
Basic earnings per share $ 0.16 $ 0.13
Diluted earnings per share $ 0.16 $ 0.13
Dividends paid per share $ 0.075 $ 0.075
Three Months Ended Three Months Ended Three Months Ended
March 31, December 31, September 30,
2003 2002 2002
------------------ ------------------ ------------------
(In thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL
CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses $ 1,459,191 $ 1,500,940 $ 1,518,533
of $15,584, $15,099 and $14,865, respectively)
Loans held for sale 41,142 36,218 14,922
Securities 294,982 246,754 257,725
Margin accounts 14,382 15,683 16,980
Other interest-earning assets 79,498 94,420 85,323
Total interest-earning assets 1,889,195 1,894,015 1,893,483
Total assets 1,997,894 2,002,717 2,003,574
Certificates of deposit 805,590 824,516 855,939
Interest-bearing checking, demand and savings
accounts 644,270 599,144 595,866
Other-interest bearing liabilities 210,250 215,389 198,047
Total interest-bearing liabilities 1,660,110 1,639,049 1,649,852
Noninterest-bearing deposits 59,105 55,562 47,255
Total noninterest-bearing liabilities 63,073 89,736 83,463
Total liabilities 1,723,183 1,728,785 1,733,315
Shareholders' equity 274,711 273,932 270,259
Common shares outstanding for basic
EPS calculation 31,669 31,892 31,773
Common shares outstanding for diluted
EPS calculation 32,011 32,376 32,318
SUPPLEMENTAL LOAN DATA:
Loans originated $ 267,489 $ 260,383 $ 220,129
Loans purchased 37,726 1,000 7,317
Loans sold 113,649 108,034 42,434
Loan chargeoffs 246 1,394 261
Recoveries on loans 35 28 35
As of As of As of
March 31, December 31, September 30,
2003 2002 2002
-------------- ------------- -------------
SUPPLEMENTAL DATA: In (thousands, except employee data)
Nonaccrual loans $ 14,732 $ 14,196 $ 13,466
Restructured loans 1,877 1,271 1,255
Other real estate owned 1,236 994 1,622
Total nonperforming assets 17,845 16,461 16,343
Loans serviced for others 436,782 386,218 341,027
Number of full time equivalent employees 769 774 789
Securities trading 19,939 5,060 44,401
Securities available for sale 290,101 237,268 196,809
Securities held to maturity 0 0 59,917
Federal Home Loan Bank stock 21,276 21,069 20,832
Fair value of held to maturity securities 0 0 62,914
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 157,192 $ 150,821 $ 173,854
Tangible capital ratio 8.23 8.05 9.11
Regulatory core capital 157,192 150,821 173,854
Core capital ratio 8.23 8.05 9.11
Regulatory total capital 170,513 163,419 184,929
Total risk adjusted assets 1,351,232 1,295,667 1,318,398
Total risk adjusted ratio 12.62 12.61 14.03