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 FOURTH QUARTER 2003
YOUNGSTOWN, Ohio (January 21, 2004) - United Community Financial Corp. (United
Community) (Nasdaq: UCFC), holding company of The Home Savings and Loan Co.
(Home Savings) and Butler Wick Corp. (Butler Wick), today reported net income of
$5.2 million, or $0.17 per diluted share, for the quarter ended December 31,
2003 compared to $5.4 million, or $0.17 per diluted share, for the fourth
quarter of 2002. For the year ended December 31, 2003, net income was $22.9
million, or $0.72 per diluted share, compared with $20.8 million, or $0.65 per
diluted share, for the year ended December 31, 2002.
"United Community is pleased to report record earnings for the sixth consecutive
year since becoming a publicly traded company, " said Douglas M. McKay, Chairman
and Chief Executive Officer of United Community. "Additionally, we are happy to
see the realization of our strategic initiatives unfold as demonstrated by our
performance for 2003. Furthermore, we look forward to the new year with a
continued focus on profit, balance sheet management and capital levels."
Fourth Quarter Results
- ----------------------
Net income decreased $210,000 for the three months ended December 31, 2003
compared to the same period in 2002. Net interest income decreased by $1.1
million and the provision for loan losses decreased by $1.4 million during the
same period. Additionally, noninterest income increased $496,000, which was
partially offset by a $50,000 increase in noninterest expense.
The decrease in net interest income is a result of declining interest rates on
loans and securities, which was partially offset by a lowering of interest rates
on deposits. As a result of this activity, the net interest margin declined 18
basis points to 3.70% for the three months ended December 31, 2003 compared to
the same period in 2002.
The provision for loan losses declined $1.4 million for the three months ended
December 31, 2003 compared to the same period in 2002. This decrease was based
on the needed level of the allowance for loan losses, as a result of a decline
in delinquent and nonperforming loans.
The increase in noninterest income was primarily a result of increases in
service fees, commissions earned and underwriting and investment banking income.
These increases were partially offset by decreases in gains recognized on the
sale of securities and loans.
Noninterest expense increased primarily as a result of an increase in salaries
and employee benefits, which was offset by a decrease in other expenses related
to regulatory fees and disaster recovery preparation. The increase in salaries
and benefits is principally related to the change in the market value of
retention plan assets and a charge for post retirement medical benefits as a
result of rising health care costs. In addition, provisions for bonuses and
commissions earned rose as a result of increased underwriting and investment
banking activity in the fourth quarter of 2003.
"During the fourth quarter of 2003 we expanded our market again through the
opening of a full service banking branch in Aurora, Ohio", said Douglas M.
McKay. "This expansion, along with a loan production office opened in the
Columbus area earlier this year and the strong growth we have seen in our loan
portfolio, has helped us continue to position ourselves for the future."
Year to Date Results
- --------------------
Net income increased $2.1 million, or 10.2%, for the year ended December 31,
2003. During the same time period, net interest income decreased $313,000, the
provision for loan losses was reduced by $399,000, while noninterest income
increased $9.0 million. This increase was partially offset by a $5.2 million
increase in total noninterest expense.
The decrease in net interest income for the year ended December 31, 2003
compared to 2002 is primarily due to a decrease in interest earned on loans and
securities. This decrease was substantially offset by decreases in interest
rates on deposits. Further offsetting this decrease was a change in the average
balance of interest-bearing liabilities.
Noninterest income increased $9.0 million for the year ended December 31, 2003
compared to 2002 as a result of increases in gains recognized on the sale of
loans, commissions earned and underwriting and investment banking income. The
increase in commissions and underwriting are predominately related to an
increase in the dollar volume of bond issues underwritten by Butler Wick
throughout the year. Net gain on loan sales increased in 2003 due to the
historically low interest rate environment and the volume of loans sold. Home
Savings has been selling new loan originations to help manage interest rate
risk.
Noninterest expense increased $5.2 million primarily as a result of increases in
salaries and employee benefits and equipment and data processing costs. The
increase in salaries and employee benefits is primarily related to a charge for
post retirement benefits as a result of increased health care costs, personnel
additions from the acquisition of Potters Financial Corporation that occurred in
the second quarter of 2002, an increase in the valuation of the Butler Wick
retention plan and increases in commissions paid and bonus accruals. These
increases were partially offset by a decrease in other noninterest expense
predominately due to charges recognized in the first quarter of 2002 as a result
of the early extinguishments 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
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United Community's return on average assets and return on average equity were
1.15% and 8.27%, respectively, for the year ended December 31, 2003. The returns
on average assets and average equity were 1.04% and 7.74%, respectively, for the
year ended December 31, 2002.
Total assets increased by $83.7 million, or 4.21%, to $2.1 billion at December
31, 2003 compared with December 31, 2002. The net change in assets was a result
of increases of $109.6 million in loans, $20.5 million in bank owned life
insurance and $2.2 million in other assets partially offset by decreases of
$29.8 million in cash and cash equivalents and $19.5 million in loans held for
sale. Total liabilities changed $78.4 million as a result of a $128.4 million
increase in other borrowed funds offset by a decrease of $58.2 million in
deposits.
Net loans increased $109.6 million, or 7.42%, from December 31, 2002 to December
31, 2003. Home Savings had increases of $161.9 million in commercial real estate
loans, $148.6 million in construction loans, $63.2 million in consumer loans and
$8.2 million in commercial loans. These increases were partially offset by a
decrease of $275.4 million in one to four family real estate loans. This
decrease was mainly the result of the sale of approximately $90.4 million of
fixed rate loans from the portfolio to help manage interest rate risk and
continued refinancing activity of loans in the portfolio as a result of the
interest rate environment. The allowance for loan losses increased $12,000, or
0.08%, to $15.1 million at December 31, 2003. The allowance for loan losses is
monitored closely and may be increased or decreased depending on current data.
The allowance for loan losses as a percentage of total loans was 0.94% at
December 31, 2003 and 2002.
During the second quarter of 2003, Home Savings invested $20.0 million in bank
owned life insurance, which represents insurance on the lives of certain
employees where Home Savings is the beneficiary. Bank owned life insurance
provides a long-term asset to offset long-term benefit liabilities, while
generating competitive investment yields. Home Savings has recognized a $496,000
increase in the cash value of the policies, which is tax deferred. Any death
benefit proceeds received by Home Savings are tax-free.
Deposits decreased $58.2 million, or 3.93%, from December 31, 2002 to December
31, 2003. Decreases in Home Savings' deposits are mainly due to a $76.1 million
decrease in certificates of deposit, which was partially offset by increases of
$10.4 million in savings accounts and $7.5 million in NOW accounts.
Other borrowed funds increased $128.4 million, or 61.15%, from December 31, 2002
to December 31, 2003. The increase consisted of increases in short term advances
from the Federal Home Loan Bank (FHLB) of $101.2 million, long term FHLB
advances of $14.4 million, $4.8 million in repurchase agreements and $8.0
million in other short term borrowings as a result of bond positions entered
into by Butler Wick.
Total shareholders' equity increased $5.3 million from December 31, 2002 to
December 31, 2003, largely due to income for the year partially offset by
treasury stock purchases and quarterly dividend payments. Tangible book value
and book value as of December 31, 2003 were $7.11 and $8.21 per share,
respectively.
Home Savings and Butler Wick are wholly owned subsidiaries of United Community
Financial Corp. Home Savings operates 35 full service banking offices and 5 loan
production offices located throughout Northern Ohio and Western Pennsylvania.
Butler Wick has 13 office locations providing full service retail brokerage,
capital markets or 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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When used in this 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
December 31, 2003 December 31, 2002
----------------- -----------------
(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
ASSETS
Cash and cash equivalents $ 81,155 $ 110,936
Securities 243,125 242,328
Federal Home Loan Bank stock 21,924 21,069
Loans held for sale 26,374 45,825
Loans 1,602,946 1,493,312
Allowance for loan losses (15,111) (15,099)
Real estate owned 1,299 994
Goodwill 33,593 33,593
Core deposit intangible 3,787 5,101
Bank Owned Life Insurance 20,496 --
Other assets 54,245 52,072
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Total assets $ 2,073,833 $ 1,990,131
=========== ===========
LIABILITIES
Deposits $ 1,423,698 $ 1,481,901
Other borrowed funds 338,463 210,024
Other liabilities 31,836 23,637
----------- -----------
Total liabilities 1,793,997 1,715,562
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at December 31, 2003 -- --
Common stock-no par value; 499,000,000 shares authorized; 37,804,457
and 37,803,269 issued, respectively 139,526 138,207
Retained earnings 185,495 172,080
Other comprehensive income 1,124 2,363
Unearned compensation (16,752) (19,724)
Treasury stock, at cost; 3,718,542 and 2,558,214 shares, respectively (29,557) (18,357)
----------- -----------
Total shareholders' equity 279,836 274,569
----------- -----------
Total liabilities and shareholders' equity $ 2,073,833 $ 1,990,131
=========== ===========
Book value per share $ 8.21 $ 7.79
Tangible book value per share $ 7.11 $ 6.69
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
--------- --------- --------- ---------
(In thousands, except
per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 26,573 $ 30,828 $ 111,663 $ 125,960
Interest expense 9,328 12,465 40,252 54,236
--------- --------- --------- ---------
Net interest income 17,245 18,363 71,411 71,724
Provision for loan losses 210 1,600 3,179 3,578
Noninterest income:
Commissions 3,913 3,429 14,925 13,677
Service fees and other charges 2,716 1,987 8,382 7,976
Underwriting and investment banking 502 119 1,528 312
Net gains (losses)
Loans sold 818 1,161 11,707 5,919
Securities 757 1,655 1,689 1,476
Other (61) (260) (105) (515)
Other income 753 811 2,719 2,961
--------- --------- --------- ---------
Total noninterest income 9,398 8,902 40,845 31,806
Noninterest expense:
Salaries and employee benefits 11,993 10,679 46,511 39,917
Occupancy 945 817 3,658 3,186
Equipment and data processing 2,240 2,277 9,459 8,309
Amortization of core deposit intangible 477 516 1,314 2,167
Other noninterest expense 2,664 3,980 12,630 14,780
--------- --------- --------- ---------
Total noninterest expense 18,319 18,269 73,572 68,359
Income before taxes 8,114 7,396 35,505 31,593
Income taxes 2,965 2,037 12,565 10,776
--------- --------- --------- ---------
Net income $ 5,149 $ 5,359 $ 22,940 $ 20,817
========= ========= ========= =========
Basic earnings per share $ 0.17 $ 0.17 $ 0.73 $ 0.65
Diluted earnings per share $ 0.17 $ 0.17 $ 0.72 $ 0.65
Dividends paid per share $ 0.075 $ 0.075 $ 0.30 $ 0.30
Three Months Ended Three Months Ended Three Months Ended
December 31, September 30, June 30,
2003 2003 2003
------------ ------------- ----------
(In thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL
CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses $1,549,363 $1,483,019 $1,494,086
of $15,111, $15,973 and $16,278, respectively)
Loans held for sale 32,230 51,796 40,496
Securities 236,584 269,890 306,260
Margin accounts 14,654 14,106 14,255
Other interest-earning assets 29,773 30,728 31,562
Total interest-earning assets 1,862,604 1,849,539 1,886,659
Total assets 1,989,801 1,974,949 1,991,983
Certificates of deposit 751,531 741,432 756,609
Interest-bearing checking, demand and savings accounts 630,277 645,213 659,000
Other-interest bearing liabilities 239,798 235,520 235,362
Total interest-bearing liabilities 1,621,606 1,622,165 1,650,971
Noninterest-bearing deposits 65,436 61,379 59,130
Total noninterest-bearing liabilities 87,508 73,255 66,165
Total liabilities 1,709,114 1,695,420 1,717,136
Shareholders' equity 280,687 279,529 274,847
Common shares outstanding for basic EPS calculation 31,052 31,440 31,253
Common shares outstanding for diluted EPS calculation 31,664 31,884 31,839
SUPPLEMENTAL LOAN DATA:
Loans originated $ 232,725 $ 435,636 $ 455,674
Loans purchased 52,398 52,428 68,818
Loans sold 55,646 163,290 213,633
Loan chargeoffs 1,181 889 1,023
Recoveries on loans 109 13 15
As of As of As of
December 31, September 30, June 30,
2003 2003 2003
------------ ------------- ----------
(In thousands, except employee data)
SUPPLEMENTAL DATA:
Nonaccrual loans $ 12,981 $ 14,423 $ 15,625
Restructured loans 2,025 1,923 1,952
Other real estate owned 1,299 546 519
Total nonperforming assets 16,305 16,892 18,096
Loans serviced for others 633,189 615,352 577,716
Number of full time equivalent employees 779 773 776
Securities trading 15,600 12,735 13,170
Securities available for sale 227,525 234,649 274,709
Federal Home Loan Bank stock 21,924 21,705 21,488
REGULATORY CAPITAL DATA:
Tier 1 leverage ratio 8.22 9.08 8.78
Tier 1 risk-based capital ratio 9.61 10.97 11.13
Total risk-based capital ratio 10.56 11.98 12.13