-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BFHyxiRRreHN7CtPi5xQ0Rbhl9E6UYtvnGBOHsy6AML2s1+tB9M1ieUMlQ4HZiS0 4ZQlFg79h2YVKDM5jg/n6g== 0000912057-00-023866.txt : 20000515 0000912057-00-023866.hdr.sgml : 20000515 ACCESSION NUMBER: 0000912057-00-023866 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED COMMUNITY FINANCIAL CORP CENTRAL INDEX KEY: 0000707886 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 341856319 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24399 FILM NUMBER: 628930 BUSINESS ADDRESS: STREET 1: 275 FEDERAL PLAZA WEST CITY: YOUNGSTOWN STATE: OH ZIP: 44503-1203 BUSINESS PHONE: 3307420500 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 0-24399 UNITED COMMUNITY FINANCIAL CORP. (Exact name of registrant as specified in its charter) Ohio 34-1856319 ------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 275 Federal Plaza West Youngstown, Ohio 44503-1203 ---------------- ---------- (Address of principal executive offices) (Zip Code) (330) 742-0500 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if change since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 34,007,939 common shares as of April 30, 2000 TABLE OF CONTENTS
PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Financial Condition as of March 31, 2000 and December 31,1999.................................................................... 1 Consolidated Statements of Income for the Three Months Ended March 31, 2000 and 1999............................................................................ 2 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999............................................................................ 3 Notes to Consolidated Financial Statements ......................................... 4 - 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 6 - 10 Item 3. Quantitative and Qualitative Disclosure About Market Risk........................... 10 PART II. OTHER INFORMATION......................................................................... 11 Signatures......................................................................................... 12 EXHIBITS........................................................................................... 13 - 14
UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
March 31, December 31, 2000 1999 ----------- ------------ (In thousands) ASSETS: Cash and deposits with banks $ 18,362 $ 30,759 Federal funds sold and other 2,056 80,686 ----------- ----------- Total cash and cash equivalents 20,418 111,445 ----------- ----------- Investment securities: Trading 6,590 7,657 Available for sale (amortized cost of $152,484 and $163,515, respectively) 150,865 161,904 Held to maturity (fair value of $1,178 and $1,098, respectively) 1,175 1,091 Mortgage-backed securities: Available for sale (amortized cost of $112,402 and $116,569, respectively) 108,670 113,559 Held to maturity (fair value of $128,287 and $135,993, respectively) 131,657 138,079 Loans, net (including allowance for loan losses of $6,390 and $6,405, respectively) 735,950 723,087 Margin accounts 41,034 32,751 Federal Home Loan Bank stock 13,048 12,825 Premises and equipment 9,400 9,252 Accrued interest receivable 8,546 8,347 Real estate owned 204 158 Other assets 10,804 7,418 ----------- ----------- TOTAL ASSETS $ 1,238,361 $ 1,327,573 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits $ 824,838 $ 834,087 Other borrowed funds 129,274 213,578 Advance payments by borrowers for taxes and insurance 2,287 4,038 Accrued interest payable 2,903 4,168 Accrued expenses and other liabilities 21,121 14,834 ----------- ----------- TOTAL LIABILITIES 980,423 1,070,705 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock-no par value; 1,000,000 shares authorized and unissued at March 31, 2000 - - Common stock-no par value; 499,000,000 shares authorized; 37,756,582 shares issued; and 33,940,113 outstanding at March 31, 2000 136,616 136,509 Retained earnings 154,115 153,553 Other comprehensive income (3,478) (3,003) Unearned stock compensation (29,315) (30,191) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 257,938 256,868 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,238,361 $ 1,327,573 =========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 1 UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31, ------------------------------ 2000 1999 ------------ ------------ (In thousands) INTEREST INCOME Loans $ 14,314 $ 13,254 Mortgage-backed securities: Available for sale 1,814 1,452 Held to maturity 2,353 3,050 Investment securities: Trading 41 37 Available for sale 2,230 1,675 Held to maturity 17 78 Margin accounts 746 411 FHLB stock dividend 223 206 Other interest-earning assets 141 1,883 ----------- ----------- Total interest income 21,879 22,046 INTEREST EXPENSE Interest expense on Deposits 8,161 7,507 Interest expense on Other borrowed funds 1,922 195 ----------- ----------- Total interest expense 10,083 7,702 ----------- ----------- NET INTEREST INCOME 11,796 14,344 PROVISION FOR LOAN LOSS ALLOWANCES - 75 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSS ALLOWANCES 11,796 14,269 ----------- ----------- NONINTEREST INCOME Commissions 5,384 4,104 Service fees and other charges 1,255 1,077 Underwriting and investment banking 21 255 Net gains: Investment securities 10 - Trading securities 371 136 Other 2 1 Other income 212 177 ----------- ----------- Total noninterest income 7,255 5,750 ----------- ----------- NONINTEREST EXPENSES Salaries and employee benefits 9,628 7,827 Occupancy 456 457 Equipment and data processing 1,300 1,250 Deposit insurance premiums 41 117 Franchise tax 934 462 Advertising 501 275 Other expenses 1,581 1,705 ----------- ----------- Total noninterest expenses 14,441 12,093 ----------- ----------- INCOME BEFORE INCOME TAXES 4,610 7,926 INCOME TAXES 1,508 2,801 ----------- ----------- NET INCOME $ 3,102 $ 5,125 =========== =========== EARNINGS PER SHARE: Basic and diluted $ 0.09 $ 0.15 Average common shares outstanding 33,995,082 33,856,778 Average common and common equivalent shares outstanding 33,437,697 33,856,778
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 2 UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ---------------------------- 2000 1999 ----------- ---------- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,102 $ 5,125 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for loan loss allowances - 75 Net gains (11) (1) Accretion of discounts and amortization of premiums (69) (178) Depreciation 347 347 ESOP compensation 564 537 Amortization of restricted stock compensation 420 - FHLB stock dividends (223) (206) Decrease in trading securities 1,067 821 Increase in margin accounts (8,283) (6,489) (Increase) decrease in interest receivable (200) 127 Increase in prepaid and other assets (3,386) (1,839) Increase in accounts receivable - (462) (Decrease) increase in interest payable (1,264) 11 Increase in other liabilities 6,542 2,035 --------- --------- Net cash used in operating activities (1,394) (97) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from principal repayments and maturities of: Mortgage-backed securities held to maturity 6,392 15,911 Mortgage-backed securities available for sale 4,205 8,419 Investment securities held to maturity 293 5,000 Investment securities available for sale 14,224 2,500 Proceeds from sale of Investment securities available for sale 2,579 - Purchases of: Investment securities available for sale (5,864) (21,331) Investment securities held to maturity (377) - Mortgage-backed securities available for sale - (6,894) Principal collected on loans 33,217 43,288 Loans originated (45,642) (56,542) Loans purchased (322) - Purchases of premises and equipment (496) (343) Other 2 10 --------- --------- Net cash provided by (used in) investing activities 8,211 (9,982) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (decrease) increase in Now, savings and money market accounts (388) 5,341 Net decrease in certificates of deposit (8,861) (1,623) Net decrease in advance payments by borrowers for taxes and insurance (1,751) (1,633) Net (decrease) increase in borrowed funds (84,304) 5,334 Dividends paid (2,540) (2,410) --------- --------- Net cash (used in) provided by financing activities (97,844) 5,009 --------- --------- Decrease in cash and cash equivalents (91,027) (5,070) Cash and cash equivalents, beginning of period 111,445 171,874 --------- --------- Cash and cash equivalents, end of period $ 20,418 $ 166,804 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest on deposits and borrowings $ 11,396 $ 7,690 Income taxes 445 2,216 Supplemental schedule of noncash activities: Transfers from loans to real estate owned 48 128
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 3 UNITED COMMUNITY FINANCIAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION United Community Financial Corp. (United Community) was incorporated under Ohio law in February 1998 by The Home Savings & Loan Company of Youngstown, Ohio (Home Savings) in connection with the conversion of Home Savings from an Ohio mutual savings and loan association to an Ohio capital stock savings and loan association (Conversion), the issuance of Home Savings' stock to United Community and the offer and sale of United Community's common stock. Upon consummation of the Conversion on July 8, 1998, United Community became the unitary savings and loan holding company for Home Savings. Home Savings has 14 offices located throughout Mahoning, Columbiana and Trumbull Counties in northeastern Ohio. Butler Wick Corp. (Butler Wick) became a wholly owned subsidiary of United Community on August 12, 1999. Butler Wick is the parent company for three wholly owned subsidiaries: Butler Wick & Co., Inc., Butler Wick Asset Management Company and Butler Wick Trust Company. Through these subsidiaries, Butler Wick's business includes investment brokerage services, which it has conducted for over 70 years, and a network of integrated financial services, including asset management, trust and estate services, public finance and insurance. Butler Wick and its subsidiaries have ten offices throughout northeastern Ohio and western Pennsylvania. See Note 2 for a more detailed description of the acquisition of Butler Wick. The accompanying consolidated financial statements of United Community have been prepared in accordance with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for fair statement of results for the interim periods. Financial data for all prior periods have been restated to reflect the third quarter 1999 acquisition of Butler Wick, which was accounted for as a pooling of interests. The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000. The consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1999, contained in United Community's Form 10-K for the year ended December 31, 1999. 2. ACQUISITION OF BUTLER WICK CORP. On August 12, 1999, United Community acquired Butler Wick, which became a wholly owned subsidiary of United Community. In connection with the acquisition, United Community issued approximately 1.7 million common shares in exchange for all of Butler Wick's outstanding shares. The acquisition was accounted for by the pooling of interests method. Accordingly, the assets, liabilities and shareholders' equity of Butler Wick were recorded on the books of United Community at their values as reported on the books of Butler Wick immediately prior to the consummation of the acquisition by United Community. This presentation required the restatement of prior periods as if the companies had been combined for all periods presented. The contributions of Butler Wick to consolidated net interest income, non-interest income and net income for the periods prior to the acquisition were as follows:
Three Months Ended March 30, 1999 (in thousands) Net Interest Total Noninterest Net Income Income Income United Community $14,091 $ 390 $ 4,711 Butler Wick 253 5,360 414 Combined $14,344 $ 5,750 $ 5,125 ======= ======= =======
4 3. COMPREHENSIVE INCOME United Community's comprehensive income for the three months ended March 31, 2000 and 1999 are as follows:
Three Months Ended March 31, ----------------------------------- 2000 1999 -------------- -------------- (In thousands) Net income $3,102 $5,125 Unrealized holding losses arising during the period, net of tax effect of ($290) and ($239), respectively (532) (444) Reclassification adjustment for losses included in net income, net of tax effect of ($4) (7) - -------------- -------------- Comprehensive income $2,563 $4,681 ============== ==============
4. SEGMENT INFORMATION Statement of Financial Accounting Standard (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information" requires financial disclosure and descriptive information about reportable operating segments, based on how chief decision-makers manage the business. United Community has two principal segments, retail banking and investment advisory services. Retail banking provides consumer and business banking services. Investment advisory services provide an investment brokerage and a network of integrated financial services. Condensed statements of income and selected financial information by operating segment for the three months ended March 31, 2000 and 1999 are as follows:
THREE MONTHS ENDED MARCH 31, 2000 Retail Banking Investment Advisory Services Eliminations Total -------------- ---------------------------- ------------ ----- Interest income $ 21,571 $807 $(499) $21,879 Interest expense 10,142 440 (499) 10,083 Net interest income after Provision for loan loss 11,429 367 - 11,796 Non-interest income 836 6,419 - 7,255 Non-interest expense 7,987 6,454 - 14,441 Income before tax 4,278 332 - 4,610 Income tax 1,389 119 - 1,508 Net income 2,889 213 - 3,102
THREE MONTHS ENDED MARCH 31, 1999 Retail Banking Investment Advisory Services Eliminations Total -------------- ---------------------------- ------------ ----- Interest income $ 22,144 $ 448 $(546) $22,046 Interest expense 8,053 195 (546) 7,702 Net interest income after Provision for loan loss 14,016 253 - 14,269 Non-interest income 390 5,360 - 5,750 Non-interest expense 7,113 4,980 - 12,093 Income before tax 7,293 633 - 7,926 Income tax 2,582 219 - 2,801 Net income 4,711 414 - 5,125
5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS UNITED COMMUNITY FINANCIAL CORP.
At or For the Three Months Ended March 31, March 31, 2000 1999 ------------- -------------- SELECTED FINANCIAL RATIOS AND OTHER DATA: (1) Performance ratios: Return on average assets (2) 1.00% 1.58% Return on average equity (3) 4.81% 4.31% Interest rate spread (4) 3.02% 3.09% Net interest margin (5) 3.94% 4.55% Noninterest expense to average assets 4.67% 3.73% Efficiency ratio (6) 75.80% 60.18% Average interest-earning assets to average interest- bearing liabilities 127.21% 159.77% Capital ratios: Average equity to average assets 20.84% 36.74% Equity to assets, end of period 20.83% 36.76% Tangible capital 13.66% 26.97% Core capital 13.66% 26.97% Risk-based capital 24.69% 51.19% Asset quality ratio: Nonperforming loans to total loans at end of period (7) 0.57% 1.00% Nonperforming assets to average assets (8) 0.35% 0.53% Nonperforming assets to total assets at end of period 0.35% 0.53% Allowance for loan losses as a percent of loans 0.86% 0.95% Allowance for loan losses as a percent of nonperforming loans (7) 153.31% 96.75% Number of full service banking offices 14 14 Number of full service brokerage offices 10 10 Per share data: Basic earnings per share (9) 0.09 0.15 Diluted earnings per share (9) 0.09 0.15 Book value (10) 7.60 14.08
- ------------------------------------------------------------------------ (1) Ratios for the three month period are annualized where appropriate. (2) Net income divided by average total assets. (3) Net income divided by average total equity. (4) Difference between weighted average yield on interest-earning assets and weighted average cost of interest-bearing liabilities. (5) Net interest income as a percentage of average interest-earning assets. (6) Noninterest expense divided by the sum of net interest income and noninterest income. (7) Nonperforming loans consist of nonaccrual loans and restructured loans. (8) Nonperforming assets consist of nonperforming loans and real estate acquired in settlement of loans. (9) Net income divided by average number of shares outstanding. (10) Equity divided by number of shares outstanding. 6 COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND DECEMBER 31, 1999 Total assets were $1.2 billion at March 31, 2000, a $89.2 million, or 6.7%, decrease compared to December 31, 1999. The primary reasons for the decrease in total assets was a result of a decrease in cash and cash equivalents of $91.0 million and a decrease in securities of $23.3 million. These decreases were partially offset by increases of 12.9 million in net loans, $8.3 million in margin accounts and a $3.4 million increase in other assets primarily due to a $1.6 million increase in prepaid Ohio Franchise taxes and a $1.1 million increase in deferred tax assets. Net loans increased $12.9 million, or 1.8%, to $736.0 million at March 30, 2000, compared to $723.1 million at December 31, 1999. The most significant increases were in commercial loans, which increased $8.4 million, or 7.3%, loans secured by one-to four-family residences, which increased $4.3 million, or 0.8%, and consumer loans which increased $2.1 million, or 4.8%. Funds that are available for general corporate purposes, such as loan originations, enhanced customer services and possible acquisitions, are invested in overnight funds, investment securities and mortgage-related securities. Overnight funds decreased $78.6 million, or 97.5%, to $2.1 million at March 31, 2000 from $80.7 million at December 31, 1999. Securities available for sale, which include both investment and mortgage-related securities, increased $15.9 million, or 5.8%, since December 31, 1999. Securities held to maturity, which also consist of both investment securities and mortgage-related securities, decreased $6.3 million, or 4.6%, since December 31, 1999. The net decrease in overnight funds and securities were primarily used to reduce other borrowed funds by $84.3 million, to fund an increase in net loans of $12.9 million and to fund an increase in margin accounts of $8.3 millon. Trading securities, which consist of investment securities, decreased $1.1 million, or 13.9%, to $6.6 million at March 31, 2000. Securities available for sale and trading securities, in conjunction with overnight funds, enable United Community to utilize excess funds while providing a great deal of liquidity and flexibility as United Community pursues other investment opportunities. Nonaccrual and restructured loans increased approximately $297,000 to $4.2 million at March 31, 2000 from $3.9 million at December 31, 1999, primarily due to the reclassification of four loans as nonperforming. At March 31, 2000, total nonaccrual and restructured loans accounted for 0.57% of net loans receivable, compared to 0.54% at December 31, 1999. Total nonperforming assets were 0.35% of total assets as of March 31, 2000 compared to 0.30% as of December 31, 1999. Total deposits decreased $9.2 million from $834.1 million at December 31, 1999 to $824.8 million at March 31, 2000. The decrease was due to a decrease in certificates of deposits of $8.9 million and savings accounts of $1.2 million, which were partially offset by an increase in checking accounts of $757,000. Accrued expenses and other liabilities increased $6.3 million to $21.1 million at March 31, 2000 compared to $14.8 million at December 31, 1999. This increase is primarily due to a $2.7 million liability for real estate taxes, an increase of $1.8 million in accrued federal income taxes, an increase in outstanding office checks of $595,000 and an increase in deferred compensation related to the Butler Wick retention plan of $567,000. Shareholders' equity increased $1.0 million, or 0.4%, to $257.9 million at March 31, 2000 from $256.9 million at December 31, 1999. The increase was primarily due to earnings for the three months, which were partially offset by dividends of $0.075 per share paid in March 2000. Book value per share was $7.60 as of March 31, 2000. COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999 NET INCOME. Net income for the three months ended March 31, 2000 was $3.1 million, or $0.09 per diluted share. Net income for the comparable period in 1999 was $5.1 million, or $0.15 per diluted share. The primary reason for the decrease in net income of $2.0 million for the three months ended March 31, 2000, compared to the same period in 1999, was a decrease of $2.5 million in net interest income and an increase in noninterest expense of $2.4 million, which were partially offset by a $1.5 million increase in noninterest income and a $1.3 million decrease in income taxes. United Community's annualized return on average assets and return on average equity were 1.00% and 4.81%, respectively, for the three months ended March 31, 2000. The annualized return on average assets and return on average equity for the comparable period in 1999 were 1.58% and 4.31%, respectively. NET INTEREST INCOME. Net interest income declined $2.5 million for the three months ended March 31, 2000, compared to the first quarter of 1999, primarily due to an increase in interest expense of $2.4 million. The increase in interest expense was due to two factors. First, interest on other borrowed funds increased $1.7 million due to an increase in borrowed funds in connection with the 7 $6.00 per share special capital dividend paid in October 1999. The second factor was an increase in expense on deposits of $654,000, which was due to an increase in deposits held over the three months ended March 31, 2000 compared to the same period in 1999. PROVISION FOR LOAN LOSSES. A provision for loan losses is charged to operations to bring the total allowance for loan losses to a level considered by management to be adequate to provide for estimated losses based on management's evaluation of such factors as the delinquency status of loans, current economic conditions, the net realizable value of the underlying collateral, changes in the composition of the loan portfolio and prior loan loss experience. No provision for loan loss allowance was recorded for the first quarter of 2000, compared to a provision of $75,000 for the first quarter of 1999. Home Savings' allowance for loan losses totaled $6.4 million at March 31, 2000, which was 0.86% of total loans. NONINTEREST INCOME. Noninterest income increased $1.5 million, or 26.2%, from $5.8 million for the three months ended March 31, 1999, to $7.3 million for the three months ended March 31, 2000. The primary reason for the increase is a $1.3 million increase in commissions earned by Butler Wick due to an increase in the volume of transactions. NONINTEREST EXPENSE. Total noninterest expense increased $2.3 million, or 19.4%, to $14.4 million for the three months ended March 31, 2000, from $12.1 million for the three months ended March 31, 1999. The increase was primarily due to an increase in salaries and employee benefits of $1.8 million and an increase in franchise tax expense of $472,000. The increase in salaries and employee benefits for the first quarter of 2000 was primarily due to $567,000 in expense related to the Butler Wick Retention Plan and the recognition of $419,000 in expense related to the United Community Recognition and Retention Plan. The remainder of the increase is primarily due to increases in commissions paid due to an increase in the volume of transactions and merit increases. Home Savings' franchise tax is based on its level of equity at year-end. Franchise tax expense has increased due to Home Savings having higher equity for its 2000 return compared to its 1999 return. FEDERAL INCOME TAXES. The provision for federal income taxes decreased $1.3 million, or 46.2%, for the three months ended March 31, 2000, compared to the three months ended March 31, 1999, primarily due to the lower pre-tax income for the first quarter of 2000 compared to the first quarter of 1999. The effective tax rates were 32.7% and 35.3% for the three months ended March 31, 2000 and 1999, respectively. 8 UNITED COMMUNITY FINANCIAL CORP. AVERAGE BALANCE SHEETS The following table presents the total dollar amounts of interest income and interest expense on the indicated amounts of average interest-earning assets or interest-bearing liabilities together with the weighted average interest rates for the three month periods ended March 31, 2000 and 1999. Average balance calculations were based on daily balances.
THREE MONTHS ENDED MARCH 31, --------------------------------------------------------------------------------- 2000 1999 --------------------------------------------------------------------------------- AVERAGE INTEREST AVERAGE INTEREST OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/ YIELD/ BALANCE PAID RATE BALANCE PAID RATE --------------- ----------- --------- ------------- ---------- --------- (IN THOUSANDS) Interest-earning assets: Net loans (1) $ 728,755 $ 14,314 7.86% $ 664,260 $ 13,254 7.98% Mortgage-backed securities: Available for sale 111,576 1,814 6.50% 95,528 1,452 6.08% Held to maturity 135,137 2,353 6.96% 175,140 3,050 6.97% Investment securities: Trading 6,715 41 2.44% 5,338 37 2.77% Available for sale 154,488 2,230 5.77% 118,200 1,675 5.67% Held to maturity 1,161 17 5.86% 4,940 78 6.32% Margin accounts 36,295 746 8.22% 24,156 411 6.81% Other interest-earning assets 23,203 364 6.28% 173,376 2,089 4.82% --------------- ----------- --------- ------------- ---------- --------- Total interest-earning assets 1,197,330 21,879 7.31% 1,260,938 22,046 6.99% Noninterest-earning assets 39,586 34,041 --------------- ------------- Total assets $1,236,916 $1,294,979 =============== ============= Interest-bearing liabilities: Checking and demand accounts $ 143,528 $ 941 2.62% $ 115,024 $ 649 2.26% Savings accounts 221,884 1,369 2.47% 225,430 1,376 2.44% Certificates of deposit 448,488 5,851 5.22% 429,325 5,482 5.11% Other borrowed funds 127,320 1,922 6.04% 19,425 195 4.02% --------------- ----------- --------- ------------- ---------- --------- Total interest-bearing liabilities 941,220 10,083 4.29% 789,204 7,702 3.90% ----------- --------- ---------- --------- Noninterest-bearing liabilities 37,925 30,047 --------------- ------------- Total liabilities 979,145 819,251 Equity 257,771 475,728 --------------- ------------- Total liabilities and equity $1,236,916 $1,294,979 =============== ============= Net interest income and interest rate spread $ 11,796 3.02% $ 14,344 3.09% =========== ========= ========== ========= Net interest margin 3.94% 4.55% ========= ========= Average interest-earning assets to average interest-bearing liabilities 127.21% 159.77% ========= =========
- ----------------------------------------- (1) Nonaccrual loans are included in the average balance. 9 UNITED COMMUNITY FINANCIAL CORP. RATE/VOLUME ANALYSIS
For the Three Months Ended March 31 --------------------------------------------------- 2000 vs. 1999 --------------------------------------------------- Increase (decrease) due to Total --------------------------------- increase Rate Volume (decrease) ---- ------ ---------- (In thousands) Interest-earning assets: Loans $ (203) $ 1,263 $ 1,060 Mortgage-backed securities: Available for sale 106 256 362 Held to maturity - (697) (697) Investment securities: Trading securities (3) 7 4 Available for sale 32 523 555 Held to maturity (5) (56) (61) Margin accounts 98 237 335 Other interest-earning assets 923 (2,648) (1,725) -------------- --------------- -------------- Total interest-earning assets $ 948 $ (1,115) (167) ============== =============== ============== Interest-bearing liabilities: Savings accounts 15 (22) (7) Checking accounts 115 177 292 Certificates of deposit 121 248 369 Other borrowed funds 144 1,583 1,727 -------------- --------------- -------------- Total interest-bearing liabilities $ 395 $ 1,986 2,381 ============== =============== -------------- Change in net interest income $ (2,548) ==============
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK A comprehensive qualitative and quantitative analysis regarding Home Savings' market risk was disclosed in United Community's 1999 Annual Report under the caption "Asset and Liability Management and Market Risk." No material change in the methodology has occurred. Home savings continues to fall under the criteria of being well capitalized under all interest rate shock scenarios required by the Office of Thrift Supervision's Thrift Bulletin 13a. 10 PART II. OTHER INFORMATION UNITED COMMUNITY FINANCIAL CORP. ITEMS 1, 2, 3, 4 AND 5 - NOT APPLICABLE ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits
Exhibit Number Description ............... ............................................ 11 Statement regarding computation of earnings per share 27 Financial Data Schedule - EDGAR only
b. Reports on Form 8-K On January 26, 2000 United Community filed a Form 8-K disclosing operating results for the quarter ended December 31, 1999. 11 UNITED COMMUNITY FINANCIAL CORP. 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. Date: May 10, 2000 /s/ Douglas M. McKay ---------------------------------------- Douglas M. McKay, President Date: May 10, 2000 /s/ Patrick A. Kelly ---------------------------------------- Patrick A. Kelly, Treasurer 12 EX-11 2 EXHIBIT 11 UNITED COMMUNITY FINANCIAL CORP. EXHIBIT 11 COMPUTATIONS OF EARNINGS PER COMMON SHARE
Three Months Ended March 31, --------------------- 2000 1999 ------- ------- (In thousands, except per share data) BASIC EARNINGS PER SHARE: Net income applicable to common stock $ 3,102 $ 5,125 Weighted average common shares outstanding 32,923 33,857 ------- ------- Basic earnings per share $ 0.09 $ 0.15 ======= ======= DILUTED EARNINGS PER SHARE: Net income applicable to common stock $ 3,102 $ 5,125 Weighted average common shares outstanding 32,923 33,857 Dilutive effect of restricted stock 515 - ------- ------- Weighted average common shares outstanding for dilutive computation 33,438 33,857 ------- ------- Diluted earnings per share $ 0.09 $ 0.15 ======= =======
13 EX-27 3 EXHIBIT 27
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF UNITED COMMUNITY FINANCIAL CORP. AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 18,362 0 2,056 6,590 259,535 132,832 129,465 735,950 6,390 1,238,361 824,838 0 155,585 0 0 0 136,616 121,322 1,238,361 14,314 6,455 1,110 21,879 8,161 10,083 11,796 0 381 14,441 4,610 4,610 0 0 3,102 0.09 0.09 3.94 3,952 0 216 0 6,405 28 12 6,390 6,390 0 0
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