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 2004
YOUNGSTOWN, Ohio (April 14, 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
$5.5 million, or $0.18 per diluted share, for the quarter ended March 31, 2004,
compared to $5.0 million, or $0.16 per diluted share, for the first quarter of
2003.
Commenting on the first quarter, Douglas M. McKay, Chairman and Chief
Executive Officer of United Community noted, "United Community continues to
maintain strong profitability. Earnings per share increased 12.5% compared to
the same period last year. Furthermore, return on equity continues to improve.
During the first quarter of 2004, return on equity increased 8.02% or a 77
basis point increase when compared to the first quarter of last year."
First Quarter Results
Net interest income for the first quarter was $18.0 million, down from $18.5
million in the first quarter of last year. The average volume of interest
earning assets increased 1.4% from the first quarter of last year, with
continued strong growth in average loans. The average volume loans increased
11.0% from last year. Average deposits were down 6.9% from the same quarter last
year. The net interest margin was 3.76%, an increase of 6 basis points from the
last quarter and a decrease of 16 basis points from the first quarter a year
ago. The lower net interest margin over the year primarily reflects the impact
of the extended low rate environment.
Noninterest income increased $2.3 million to $10.3 million for the first three
months ended March 31, 2004, compared to $8.0 million for the same period in
2003. The primary reason for the increase is an increase in service fees and
other charges of $1.1 million and a $1.5 million increase in commissions
received as a result of increased brokerage activity. These increases were
partially offset by a decrease in gains on loans sold of $1.1 million during the
first quarter. It is anticipated the level of loan sales will be significantly
lower during 2004 as compared to the previous year.
The provision for loan losses declined $237,000 for the three months ended March
31, 2004, compared to the same period in 2003. This decrease was based on an
analytical review of the allowance for loan losses; after consideration was
given to levels and trends of delinquencies, reserve coverage ratios and other
factors in relation to the loan portfolio.
Noninterest expense increased $1.4 million in the first quarter of 2004 compared
to the same period in 2003, primarily as a result of a $1.8 million increase in
salaries and employee benefits. The increase in salaries and employee benefits
is primarily due to the change in market value of retention plan assets and
increased provisions for commissions earned as a result of increased brokerage
activity. This increase was partially offset by a decrease of $324,000 in other
noninterest expense.
Financial Condition
United Community's return on average assets and return on average equity were
1.07% and 8.02%, respectively, for the three months ended March 31, 2004. The
returns on average assets and average equity were 1.00% and 7.25 %,
respectively, for the three months ended March 31, 2003.
Total assets increased by $9.5 million, or 0.46%, to $2.1 billion at March 31,
2004, compared to December 31, 2003. The net change in assets was a result of
increases of $93.8 million in loans, $12.6 million in trading securities and
$4.4 million in other assets partially offset by decreases of $47.3 million in
cash and cash equivalents, $37.3 million in available for sale securities and
$16.9 million in loans held for sale. Total liabilities increased $46.5 million
primarily as a result of a $6.1 million increase in non-interest bearing
deposits, a $13.1 million increase in short-term borrowings and a $32.7 million
increase in accrued other expenses and other liabilities.
Net loans increased $93.8 million, or 6.0%, from December 31, 2003 to March 31,
2004. Home Savings had increases of $26.7 million in real estate loans, $37.6
million in construction loans, $32.2 million in consumer loans and $17.8 million
in commercial loans. The allowance for loan losses increased $200,000 at March
31, 2004 to $15.3 million from $15.1 million at December 31, 2003. The allowance
for loan losses is monitored closely and may be increased or decreased depending
on a variety of factors such as levels and trends of delinquencies, chargeoffs
and recoveries and perceived risk in the portfolios. The allowance for loan
losses as a percentage of total loans was 0.90% at March 31, 2004, compared to
0.96% at December 31, 2003.
The increase in short-term borrowed funds of $13.1 million from December 31,
2003 to March 31, 2004 was to fund loan growth in excess of deposit growth.
Additionally, accrued expenses and other liabilities increased by $32.7 million
at March 31, 2004 compared to December 31, 2003. This increase was primarily due
to unsettled securities transactions at both Butler Wick and Home Savings.
Total shareholders' equity decreased $37.0 million from December 31, 2003 to
March 31, 2004, largely due to the self-tender offer. Tangible book value and
book value as of March 31, 2004, were $6.61 and $7.80 per share, respectively.
During the first quarter of 2004, United Community announced the commencement of
a self-tender offer to purchase up to four million shares of its common stock at
a price of $12.50 per share. At the end of the offer period United Community
announced it had repurchased 3,667,227 shares. The purchase represented
approximately 10.4 % of the shares then outstanding while the purchase price
totaled $45.9 million.
Mr. McKay expressed that, "We are pleased with the results of the self-tender
offer. Our goals in this transaction were to generate additional liquidity for
our shareholders, increase earnings per share growth and return on shareholders'
equity. We were successful in achieving all of these goals."
Home Savings and Butler Wick are wholly owned subsidiaries of United Community
Financial Corp. Home Savings operates 36 full service banking offices and 6 loan
production offices located throughout 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 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, 2004 December 31, 2003
-------------- -----------------
(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
ASSETS
Cash and cash equivalents $ 33,880 $ 81,155
Securities 218,338 243,125
Federal Home Loan Bank stock 22,142 21,924
Loans held for sale 20,771 37,715
Loans 1,685,567 1,591,605
Allowance for loan losses (15,253) (15,111)
Real estate owned 1,449 1,299
Goodwill 33,593 33,593
Core deposit intangible 3,530 3,787
Cash surrender value of life insurance 20,735 20,496
Other assets 58,583 54,245
----------- -----------
Total assets $ 2,083,335 $ 2,073,833
=========== ===========
LIABILITIES
Deposits $ 1,428,329 $ 1,423,698
Other borrowed funds 350,092 338,463
Other liabilities 62,105 31,836
----------- -----------
Total liabilities 1,840,526 1,793,997
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at March 31, 2004 -- --
Common stock-no par value; 499,000,000 shares authorized; 37,804,457
and 37,804,457 issued, respectively 140,076 139,526
Retained earnings 187,910 185,495
Other comprehensive income 1,639 1,124
Unearned compensation (16,296) (16,752)
Treasury stock, at cost; 6,670,900 and 3,718,542 shares, respectively (70,520) (29,557)
----------- -----------
Total shareholders' equity 242,809 279,836
----------- -----------
Total liabilities and shareholders' equity $ 2,083,335 $ 2,073,833
=========== ===========
Book value per share $ 7.80 $ 8.21
Tangible book value per share $ 6.61 $ 7.11
Three Months Ended
March 31,
---------------------------
2004 2003
-------- --------
(In thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 27,075 $ 29,741
Interest expense 9,067 11,232
-------- --------
Net interest income 18,008 18,509
Provision for loan losses 459 696
Noninterest income:
Commissions 4,652 3,175
Service fees and other charges 2,890 1,800
Underwriting and investment banking 372 118
Net gains (losses)
Loans sold 901 2,010
Securities 837 348
Other (9) (59)
Other income 688 583
-------- --------
Total noninterest income 10,331 7,975
Noninterest expense:
Salaries and employee benefits 12,665 10,901
Occupancy 914 829
Equipment and data processing 2,335 2,344
Amortization of core deposit intangible 257 389
Other noninterest expense 3,343 3,692
-------- --------
Total noninterest expense 19,514 18,155
-------- --------
Income before taxes 8,366 7,633
Income taxes 2,893 2,653
-------- --------
Net income $ 5,473 $ 4,980
======== ========
Basic earnings per share $ 0.18 $ 0.16
Diluted earnings per share $ 0.18 $ 0.16
Dividends paid per share $ 0.075 $ 0.075
Three Months Ended Three Months Ended Three Months Ended
March 31 December 31, September 30,
2004 2003 2003
------------------ ------------------ ------------------
(In thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL
CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses
of $15,253, $15,111 and $15,973, respectively) $1,619,186 $1,549,363 $1,483,019
Loans held for sale 18,756 32,230 51,796
Securities 236,330 236,584 269,890
Margin accounts 13,783 14,654 14,106
Other interest-earning assets 28,030 29,773 30,728
Total interest-earning assets 1,916,085 1,862,604 1,849,539
Total assets 2,045,992 1,989,801 1,974,949
Certificates of deposit 730,139 751,531 741,432
Interest-bearing checking, demand and savings accounts 619,102 630,277 645,213
Other-interest bearing liabilities 314,336 239,798 235,520
Total interest-bearing liabilities 1,663,577 1,621,606 1,622,165
Noninterest-bearing deposits 68,199 65,436 61,379
Total noninterest-bearing liabilities 109,358 87,508 73,255
Total liabilities 1,772,935 1,709,114 1,695,420
Shareholders' equity 273,057 280,687 279,529
Common shares outstanding for basic EPS calculation 30,861 31,052 31,440
Common shares outstanding for diluted EPS calculation 31,328 31,664 31,884
SUPPLEMENTAL LOAN DATA:
Loans originated $ 256,624 $ 232,725 $ 435,636
Loans purchased 46,135 52,398 52,428
Loans sold 46,539 55,646 163,290
Loan chargeoffs 352 1,181 889
Recoveries on loans 35 109 13
As of As of As of
March 31, December 31, September 30,
2004 2003 2003
--------- ------------ -------------
(In thousands, except employee data)
SUPPLEMENTAL DATA:
Nonaccrual loans $ 12,178 $ 12,981 $ 14,423
Restructured loans 944 2,025 1,923
Other real estate owned 1,449 1,299 546
Total nonperforming assets 14,571 16,305 16,892
Loans serviced for others 633,703 633,189 615,352
Number of full time equivalent employees 782 779 773
Securities trading 28,159 15,600 12,735
Securities available for sale 190,179 227,525 234,649
Federal Home Loan Bank stock 22,142 21,924 21,705
REGULATORY CAPITAL DATA:
Tier 1 leverage ratio 8.35 8.22 9.08
Tier 1 risk-based capital ratio 9.68 9.64 10.97
Total risk-based capital ratio 10.58 10.56 11.98