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: April 17, 2002
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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 FIRST QUARTER 2002
YOUNGSTOWN, Ohio (April 17, 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 $4.3 million, or $0.13 per diluted share, for the
quarter ended March 31, 2002, compared to $3.2 million, or $0.10 per diluted
share, for the first quarter of 2001.
"United Community had a strong first quarter with a 33% increase in net income
over the prior year," said Douglas M. McKay, chairman and chief executive
officer of United Community. "In addition, United Community has been able to
reduce debt while it continues to meet its growth initiative by increasing both
loans and deposits in 2002," McKay added.
First Quarter Results
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United Community's net interest income for the three months ended March 31, 2002
increased $4.0 million over the same period in 2001, and noninterest income
increased $2.0 million over the same quarter in the previous year. These
increases were partially offset by a $2.7 million increase in noninterest
expense, a $822,000 extraordinary item due to fees associated with the early
extinguishment of debt with the Federal Home Loan Bank and a $366,000 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 2002 and from income earned on
loans acquired from Industrial Bancorp (Industrial). This increase was partially
offset by increases in interest expense on deposits and borrowed funds. The
increase in interest expense was primarily the result of an increase in deposit
volume and the acquisition of deposits from Industrial. The increase in
noninterest income was primarily due to an increase in gains on loans sold, an
increase in the gains recognized on securities and an increase in other income
as a result of the acquisition of stock through the demutualization of Anthem,
Inc., which Home Savings received since Anthem is the health care provider for
its employees.
The increase in noninterest expense was due to a $1.9 million increase in
salaries and employee benefits primarily as a result of the additional staff
acquired from Industrial Bancorp and an increase of $638,000 in the amortization
of core deposit intangible from the acquisition of Industrial.
Extraordinary items increased $822,000 net of tax from December 31, 2001 to
March 31, 2002 due to the fees associated with the early extinguishment of debt
with the Federal Home Loan Bank. Due to current economic conditions and cash
inflow from loans sold, it was advantageous for United Community to extinguish
the debt early and incur the associated fees.
Financial Condition
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United Community's return on average assets and return on average equity were
0.87% and 6.42%, respectively, for the three months ended March 31, 2002. The
returns on average assets and average equity were 0.98% and 4.89%, respectively,
for the three months ended March 31, 2001.
Total shareholders' equity increased $1.4 million from December 31, 2001 to
March 31, 2002. The increase was primarily due to income for the quarter, offset
by quarterly dividend payments, treasury stock purchases and a decline in other
comprehensive income. Book value as of March 31, 2002 was $7.40 per share.
Total assets decreased by $8.8 million, or 0.45%, to $1.9 billion at March 31,
2002 compared with December 31, 2001. Cash and cash equivalents decreased $49.2
million and loans held for sale decreased $13.4 million. These decreases were
used to fund a $40.5 million increase in loans and a $16.8 million increase in
securities.
Net loans increased $40.5 million, or 2.9%, from December 31, 2001 to March 31,
2002. Home Savings had increases of $19.9 million in real estate loans, $4.5
million in construction loans and $16.3 million in commercial loans, which were
partially offset by a $1.2 million decline in consumer loans. Due to growth in
the loan portfolio, the allowance for loan losses increased $542,000, or 4.7%,
to $12.0 million at March 31, 2002 compared to $11.5 million at December 31,
2001. The allowance for loan losses as a percentage of total loans increased to
0.82% at March 31, 2002 compared to 0.81% at December 31, 2001.
Deposits increased $35.7 million, or 2.6%, from December 31, 2001 to March 31,
2002. Increases in Home Savings' deposits are primarily due to a $14.2 million
increase in checking accounts, a $13.0 million increase in certificates of
deposit, and a $8.9 million increase in savings accounts, largely as a result of
Home Savings offering competitive interest rates and products. Other borrowed
funds decreased $44.9 million due primarily to the maturity and early
extinguishment of Federal Home Loan Bank debt.
"We are continuing to pursue our three initiatives of growth, profitability and
capital management in 2002," said McKay. "Assuming the economy continues to
improve, we anticipate good results in the balance of the year. We are pleased
with our previously announced acquisition of Potters Bancorp, which was
completed on April 1, 2002. The acquisition will give us additional growth
opportunities in new market areas and allow us to begin offering our variety of
products and services to customers in these market areas."
Home Savings and Butler Wick are wholly owned subsidiaries of United Community
Financial Corp. Home Savings operates 33 full service banking offices and 5 loan
production offices, including the former Potters 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.
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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.
UNITED COMMUNITY FINANCIAL CORP.
As of As of
March 31, 2002 December 31, 2001
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(In thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 156,680 $ 205,883
Mortgage-related securities 124,760 145,867
Marketable securities 99,012 61,131
Federal Home Loan Bank stock 18,968 18,760
Loans held for sale 6,810 20,192
Loans 1,458,963 1,417,959
Allowance for loan losses (12,022) (11,480)
Real estate owned 1,186 477
Goodwill 21,873 19,664
Core deposit intangible 5,674 6,312
Other assets 54,037 60,015
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Total assets $ 1,935,941 $ 1,944,780
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LIABILITIES
Deposits $ 1,419,134 $ 1,383,418
Other borrowed funds 226,754 271,631
Other liabilities 26,745 27,851
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Total liabilities 1,672,633 1,682,900
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at March 31, 2002 - -
Common stock-no par value; 499,000,000 shares authorized; 37,753,294
and 37,754,086 issued, respectively 136,996 136,903
Retained earnings 162,751 160,915
Other comprehensive income 696 1,402
Unearned compensation (22,058) (22,988)
Treasury stock, at cost; 2,186,500 and 2,086,500 shares, respectively (15,077) (14,352)
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Total shareholders' equity 263,308 261,880
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Total liabilities and shareholders' equity $ 1,935,941 $ 1,944,780
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Book value per share $ 7.40 $ 7.34
Three Months Ended Three Months Ended Three Months Ended
March 31, December 31, March 31,
2002 2001 2001
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(In thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 31,263 $ 32,434 $ 24,038
Interest expense 14,893 16,303 11,681
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Net interest income 16,370 16,131 12,357
Provision for loan losses 696 1,450 330
Noninterest income:
Commissions 3,382 3,380 3,591
Service fees and other charges 1,898 1,834 1,919
Underwriting and investment banking 33 806 63
Net gains (losses)
Loans sold 776 5,111 -
Securities 605 (13) (74)
Other (1) (14) 16
Other income 1,065 203 273
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Total noninterest income 7,758 11,307 5,788
Noninterest expense:
Salaries and employee benefits 9,723 10,033 7,864
Occupancy 673 679 573
Equipment and data processing 1,819 2,054 1,619
Amortization of core deposit intangible 638 756 -
Other noninterest expense 2,634 3,337 2,723
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Total noninterest expense 15,487 16,859 12,779
Income before taxes and extraordinary items 7,945 9,129 5,036
Income taxes 2,868 3,555 1,834
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Income before extraordinary items 5,077 5,574 3,202
Extraordinary items:
Early extinguishment of debt (net of tax
of $443) 822 - -
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Net Income $ 4,255 $ 5,574 $ 3,202
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Basic earnings per share before extraordinary items $ 0.16 $ 0.18 $ 0.10
Diluted earnings per share before extraordinary items $ 0.16 $ 0.17 $ 0.10
Basic earnings per share $ 0.13 $ 0.18 $ 0.10
Diluted earnings per share $ 0.13 $ 0.17 $ 0.10
Dividends paid per share $ 0.075 $ 0.075 $ 0.075
Three Months Ended Three Months Ended Three Months Ended
March 31, December 31, September 30,
2002 2001 2001
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(Dollars in thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL
CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses $ 1,428,867 $ 1,391,902 $ 1,456,973
of $12,022, $11,480 and $10,197, respectively)
Loans held for sale 15,852 51,524 9,204
Mortgage-related securities 136,163 157,949 174,578
Marketable securities 101,730 60,028 64,282
Margin accounts 20,440 21,203 25,568
Other interest-earning assets 165,669 153,898 68,144
Total interest-earning assets 1,868,721 1,836,504 1,798,749
Total assets 1,952,630 1,925,300 1,880,134
Certificates of deposit 839,288 831,856 821,786
Interest-bearing checking, demand and savings accounts 523,731 494,023 459,759
Other-interest bearing liabilities 254,272 272,071 276,963
Total interest-bearing liabilities 1,617,291 1,597,950 1,558,508
Noninterest-bearing deposits 37,005 32,550 29,670
Total noninterest-bearing liabilities 33,249 65,223 62,920
Total liabilities 1,687,545 1,695,723 1,621,428
Shareholders' equity 265,085 262,127 258,706
Common shares outstanding for basic EPS calculation 31,951,231 31,788,375 31,920,741
Common shares outstanding for diluted EPS calculation 32,212,143 31,912,640 32,196,557
SUPPLEMENTAL LOAN DATA:
Loans originated $ 198,712 $ 212,200 $ 175,659
Loans purchased 5,450 1,200 1,227
Loans sold 52,505 146,470 13,044
Loan chargeoffs 208 173 132
Recoveries on loans 54 6 5
As of As of As of
March 31, December 31, September 30,
2002 2001 2001
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SUPPLEMENTAL DATA:
Nonaccrual loans $ 9,479 $ 10,889 $ 12,979
Restructured loans 1,459 1,572 185
Other real estate owned 1,186 477 410
Total nonperforming assets 12,124 12,938 13,574
Loans serviced for others 215,001 178,932 6,741
Number of full time equivalent employees 726 723 716
Mortgage-related securities available for sale 54,533 67,069 79,496
Mortgage-related securities held to maturity 70,227 78,798 86,102
Marketable securities trading 6,514 8,352 6,126
Marketable securities available for sale 90,301 51,081 54,232
Marketable securities held to maturity 2,197 1,698 584
Federal Home Loan Bank stock 18,968 18,760 18,503
Fair value of held to maturity securities 73,654 82,339 89,238
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 171,759 $ 168,233 $ 160,917
Tangible capital ratio 9.28 9.07 8.90
Regulatory core capital 171,759 168,233 160,917
Core capital ratio 9.28 9.07 8.90
Regulatory total capital 182,158 178,196 169,805
Total risk adjusted assets 1,227,142 1,212,016 1,212,252
Total risk adjusted ratio 14.84 14.70 14.01
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: April 16, 2002