SECURITIES AND EXCHANGE COMMISSION
FORM 11-K
(Mark One)
[X]
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2003 | ||
OR | ||
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-24399
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
THE HOME SAVINGS AND LOAN COMPANY 401(K) SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
United Community Financial Corp.
275 Federal Plaza West
Youngstown, Ohio 44503
1
REQUIRED INFORMATION
The following financial statements and supplemental schedules for The Home Savings and Loan Company 401(k) Savings Plan are being filed herewith:
Description |
Page No. |
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4 | ||||||||
5 | ||||||||
Audited Financial Statements: |
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6 | ||||||||
7 | ||||||||
8 | ||||||||
Supplemental Schedule: |
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14 | ||||||||
EX-23.1 Consent of Crowe Chizek |
The following exhibit is being filed herewith:
Exhibit No. |
Description |
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23.1
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Consent of Crowe, Chizek and Company LLC Independent Auditors | 19 |
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THE HOME SAVINGS AND LOAN COMPANY
401(k) SAVINGS PLAN
FINANCIAL STATEMENTS
December 31, 2003 and 2002
3
Youngstown, Ohio
FINANCIAL STATEMENTS
December 31, 2003 and 2002
CONTENTS
REPORT OF INDEPENDENT AUDITORS |
1 | |||
FINANCIAL STATEMENTS |
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STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS |
2 | |||
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS |
3 | |||
NOTES TO FINANCIAL STATEMENTS |
4 | |||
SUPPLEMENTAL SCHEDULE |
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SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR) |
10 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Home Savings & Loan Company
401(k) Savings Plan
Youngstown, Ohio
We have audited the accompanying statements of net assets available for benefits of The Home Savings & Loan Company 401(k) Savings Plan as of December 31, 2003 and 2002, and the related statement of changes in net assets available for benefits for the year ended December 31, 2003. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2003 and 2002, and the changes in net assets available for benefits for the year ended December 31, 2003 in conformity with U.S. generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2003 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2003 financial statements taken as a whole.
Crowe Chizek and Company LLC |
Columbus, Ohio
April 21, 2004
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2003 and 2002
2003 |
2002 |
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ASSETS |
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Investments
Shares of registered investment companies |
$ | 7,888,033 | $ | 5,284,943 | ||||
United Community Financial Corp. common stock |
5,400,022 | 3,881,765 | ||||||
Loans to plan participants |
214,335 | 171,659 | ||||||
13,502,390 | 9,338,367 | |||||||
Receivables
Participant contributions |
| 44,217 | ||||||
Employer contribution |
| 90,739 | ||||||
| 134,956 | |||||||
Total assets |
13,502,390 | 9,473,323 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS |
$ | 13,502,390 | $ | 9,473,323 | ||||
See accompanying notes to financial statements and
report of independent registered public accounting firm.
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2003
Additions to net assets attributed to: |
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Investment income |
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Net appreciation in fair value of investments |
$ | 2,579,196 | ||
Interest and dividends |
245,924 | |||
2,825,120 | ||||
Contributions |
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Employer |
433,548 | |||
Participant |
1,116,814 | |||
Rollovers |
195,379 | |||
1,745,741 | ||||
Total additions |
4,570,861 | |||
Deductions from net assets attributed to: |
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Benefits paid to participants |
537,804 | |||
Administrative expenses |
3,990 | |||
Total deductions |
541,794 | |||
Net increase |
4,029,067 | |||
Net assets available for benefits |
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Beginning of year |
9,473,323 | |||
End of year |
$ | 13,502,390 | ||
See accompanying notes to financial statements and
report of independent registered public accounting firm.
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 1 DESCRIPTION OF PLAN
The following description of The Home Savings & Loan Company 401(k) Savings Plan (the Plan) is provided for general information purposes only. Participants should refer to the Plan document for a more complete description of the Plans provisions.
General: The Plan was established by The Home Savings & Loan Company (Company) effective January 1, 1993. The Plan is subject to the provisions of the Employee Retirement Income Security Act (ERISA). Employees of the Company are eligible to become a participant in the Plan upon completion of six months of service and after reaching age 20, if not a member of a union with which the Company has a collective bargaining agreement, a nonresident alien, a leased employee, a limited service employee, or a seasonal employee.
Contributions: Participants may authorize up to 100% of their annual pretax compensation, subject to Internal Revenue Code limitations, to be withheld by the Company through payroll deductions. The Plan also allows any participant who has attained age 50 by the end of the Plan year to make catch-up contributions in accordance with Code Section 414(v). The Company may make a matching contribution based on a percentage of participant contributions, as determined each year by the Company. For 2003, the Company matched 50% of up to the first 6% of the participant compensation deferred. Additional amounts may be contributed at the option of the Company and are subject to certain limitations.
Participant Accounts: Each participant account is credited with the participants contribution, and an allocation of the (a) the Companys contributions, (b) net investment earnings, (c) withdrawals, and (d) forfeitures. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account. Each participant directs the investment of their account to any of the investment options available under the Plan, including common stock of United Community Financial Corporation, the Companys parent.
Vesting: Participants are immediately vested in their contributions plus actual earnings thereon. Any employer contributions vest accordingly to the following schedule:
Years of Service |
Vest % |
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Less than 1 | 0 | % | ||||||
1 | 0 | % | ||||||
2 | 0 | % | ||||||
3 | 100 | % |
Forfeited Accounts: At December 31, 2003 and 2002, forfeited non-vested accounts totaled $13,769 and $8,863, respectively. These accounts are first used to restore the previously forfeited account balances of qualifying participants that resume employment with the Company.
(Continued)
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
Any remaining forfeitures are used to reduce future Company contributions or are reallocated to the remaining Plan participants. During 2003, forfeitures of $33,093 were allocated to remaining participants.
(Continued)
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 1 DESCRIPTION OF PLAN (Continued)
Retirement, Death and Disability: A participant is entitled to 100% of his or her account balance upon retirement, death or disability.
Payment of Benefits: Participants who have attained age 59-1/2 may elect to withdraw all or part of their employee deferral account balances. Withdrawals can also be made at any time if an employee encounters a severe financial hardship. Vested amounts are distributed to participants upon termination of employment. Participants may receive their distribution in either a lump sum payment or in installment payments.
Participant Loans: Participants may borrow from their fund accounts up to $50,000 or 50 percent of their vested account balance, whichever is less. The loans are secured by the balance in the participants account and bear interest at the prime rate plus 1% as of the beginning of the quarter.
NOTE 2 SUMMARY OF ACCOUNTING POLICIES
Accounting Method: The Plans financial statements are prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles.
Investment Valuation and Income Recognition: The Plans investments other than participant loans are stated at fair value as measured by quoted market prices. Loans to participants are valued at their outstanding balances, which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures and actual results could differ from those estimates. Estimates of investment valuation are particularly subject to change in the near term.
Payment of Benefits: Benefits are recorded when paid.
Risk and Uncertainties: The Plan provides for various investment options including any combination of certain mutual funds and common stock of the parent of the Company (United Community Financial Corp.). The underlying investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts
(Continued)
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
reported in the statement of net assets available for benefits and participants individual account balances.
(Continued)
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 2 SUMMARY OF ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk: At December 31, 2003, approximately 40% of the Plans assets were invested in United Community Financial Corp. common stock.
NOTE 3 RIGHTS UPON PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants would become 100% vested in their accounts.
NOTE 4 INVESTMENTS
The following presents investments that represent 5% or more of the Plans net assets.
December 31, 2003 |
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Units or Shares |
Fair Value |
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United Community Financial Corp. common stock |
473,271 | $ | 5,400,022 | |||||
Registered Investment Companies
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American Investment Company of America Fund |
27,590 | 795,690 | ||||||
American Fundamental Investors Fund |
28,469 | 821,343 | ||||||
AIM Charter Fund |
67,344 | 800,722 |
December 31, 2002 |
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Units or Shares |
Fair Value |
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United Community Financial Corp. common stock |
448,759 | $ | 3,881,765 | |||||
Registered Investment Companies
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AIM Charter Fund |
25,679 | 602,940 | ||||||
American Investment Company of America Fund |
24,780 | 550,862 | ||||||
American Fundamental Investors Fund |
482,754 | 482,754 |
During 2003, the Plans investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:
Shares of registered investment companies |
$ | 1,301,703 | ||
United Community Financial Corp. common stock |
1,277,493 | |||
$ | 2,579,196 | |||
(Continued)
12
THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 5 PARTY-IN-INTEREST TRANSACTIONS
Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering services to the Plan, the employer and certain others. All administrative expenses of the Plan other than fees for investment management services are paid for by the Company. The Plan paid fees of $3,990 to Riggs Bank for investment management services. Approximately $137,860 of cash dividends were paid to the Plan by United Community Financial Corp. during 2003 based on shares held by the Plan on the dates of declaration. United Community Financial Corp. is the parent of the plan sponsor.
At year-end, the Plan held the following party-in-interest investments (at fair value):
2003 |
2002 |
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United Community Financial Corp. common stock |
$ | 5,400,022 | $ | 3,881,765 | ||||
Loans to plan participants |
$ | 214,335 | $ | 171,659 |
NOTE 6 TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to individuals who have elected to withdraw from the Plan, but who have not yet been paid. Plan assets allocated to these participants were $68,047 and $19,171 at December 31, 2003 and 2002, respectively.
NOTE 7 TAX STATUS
Effective January 1, 2002, the Plan document was restated for recent law changes. The plan sponsor adopted the restated version of the Standardized Prototype Plan Document. The Internal Revenue Service has determined and informed the prototype plan sponsor, by a letter dated August 7, 2001, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
Name of plan sponsor:
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The Home Savings & Loan Company | |||
Employer identification number:
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34-0296160 | |||
Three digit plan number:
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001 |
(c) | ||||||||||
(b) | Description of Investment Including | (e) | ||||||||
Identity of Issue, Borrower, | Maturity Date Rate of Interest, | (d) | Current | |||||||
(a) |
Lessor, or Similar Party |
Collateral, Par or Maturity Date |
Cost |
Value |
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Common stock | ||||||||||
* |
United Community Financial | |||||||||
Corp. | Common stock, 473,271 shares | ** | $ | 5,400,022 | ||||||
Shares of registered investment companies | ||||||||||
AIM Investments | AIM Money Market Cash Reserves Fund, 13,769 shares | ** | 13,769 | |||||||
AIM Investments | AIM Charter Fund, 67,344 shares | ** | 800,722 | |||||||
AIM Investments | AIM Constellation Fund, 6,871 shares | ** | 147,804 | |||||||
Federated Investors | Federated Automated Cash Management Trust Fund, 523,690 shares | ** | 523,690 | |||||||
AIM Investments | AIM International Equity Fund, 13,588 shares | ** | 221,629 | |||||||
Alliance Capital | Alliance Balanced Shares Fund, 34,078 shares | ** | 540,144 | |||||||
Alliance Capital Management | Alliance Technology Fund, 2,225 shares | ** | 120,887 | |||||||
American Funds | American Balanced Fund, 31,957 shares | ** | 552,535 | |||||||
American Funds | The Bond Fund of America,13,434 shares | ** | 181,497 | |||||||
Davis Funds | Davis New York Venture Fund, 17,579 shares | ** | 483,775 |
* | - Denotes party-in-interest | |
** | - All investments are participant directed, therefore, historical cost information is not required. |
(Continued)
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THE HOME SAVINGS & LOAN COMPANY
401(k) SAVINGS PLAN
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
Name of plan sponsor: The Home Savings & Loan Company
Employer identification number: 34-0296160
Three digit plan number: 001
(c) | ||||||||||
(b) | Description of Investment Including | (e) | ||||||||
Identity of Issue, Borrower, | Maturity Date Rate of Interest, | (d) | Current | |||||||
(a) |
Lessor, or Similar Party |
Collateral, Par or Maturity Date |
Cost |
Value |
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American Funds | EuroPacific Growth Fund, 7,347 shares | ** | 221,966 | |||||||
American Funds | Fundamental Investors, 28,469 shares | ** | 821,343 | |||||||
American Funds | The Growth Fund of America, 18,736 shares | ** | 459,786 | |||||||
American Funds | The Investment Company of America Fund, 27,590 shares | ** | 795,690 | |||||||
American Funds | SMALLCAP World Fund, 5,803 shares | ** | 155,354 | |||||||
MFS Investment Management | MFS Total Return Fund, 36,919 shares | ** | 557,475 | |||||||
Franklin Templeton Investments | Franklin Small Mid Cap Growth Fund, 4,815 shares | ** | 145,529 | |||||||
Franklin Templeton Investments | Franklin U.S. Government Securities Fund, 26,283 shares | ** | 177,412 | |||||||
American Funds | AMCAP Fund, 26,616 shares | ** | 448,476 | |||||||
Victory/Capital Management | Victory/Gradison Government Reserve Fund, 1,002 shares | ** | 1,002 | |||||||
Seligman | Seligman Communications & Information Fund, 5,192 shares | ** | 119,354 |
* | - Denotes party-in-interest | |
** | - All investments are participant directed, therefore, historical cost information is not required. |
(Continued)
15
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
Name of plan sponsor:
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The Home Savings & Loan Company | |||
Employer identification number:
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34-0296160 | |||
Three digit plan number:
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001 |
(c) | ||||||||||
(b) | Description of Investment Including | (e) | ||||||||
Identity of Issue, Borrower, | Maturity Date Rate of Interest, | (d) | Current | |||||||
(a) |
Lessor, or Similar Party |
Collateral, Par or Maturity Date |
Cost |
Value |
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Franklin Templeton Investments | Templeton Foreign Fund, 20,272 shares | ** | 215,694 | |||||||
Pimco Advisors | Pimco Low Duration Fund, 17,822 shares | ** | 182,500 | |||||||
* |
Participant loans | Participant loans with interest rates ranging from 5.0% - 10.5% | 214,335 | |||||||
$ | 13,502,390 | |||||||||
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
THE HOME SAVINGS AND LOAN COMPANY 401(k) SAVINGS PLAN |
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By: | The Home Savings and Loan Company of Youngstown, Ohio | |||||
Its: | Administrator | |||||
Date: June 28, 2004
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By: | /s/ David G. Lodge | ||||
David G. Lodge, President |
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THE HOME SAVINGS AND LOAN COMPANY
401(k) SAVINGS PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2003
INDEX TO EXHIBITS
Exhibit No. |
Description |
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23.1
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Consent of Crowe, Chizek and Company LLC Independent Auditors |
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