-----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, QCPIekKZitZGKy1NfN0IxzGRpp8nKItmGUWUfNioHWxyoIn/su18iGhtDvcPL5Wa 4M7viGtwyHh+Hi0qQiQBiw== /in/edgar/work/20000811/0000950152-00-005927/0000950152-00-005927.txt : 20000921 0000950152-00-005927.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950152-00-005927 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED COMMUNITY FINANCIAL CORP CENTRAL INDEX KEY: 0000707886 STANDARD INDUSTRIAL CLASSIFICATION: [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: 694296 BUSINESS ADDRESS: STREET 1: 275 FEDERAL PLAZA WEST CITY: YOUNGSTOWN STATE: OH ZIP: 44503-1203 BUSINESS PHONE: 3307420500 10-Q 1 e10-q.txt UNITED COMMUNITY FINANCIAL CORP. 10-Q 1 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 June 30, 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. 37,756,582 common shares as of July 31, 2000 2 TABLE OF CONTENTS ----------------- PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) Consolidated Statements of Financial Condition as of June 30, 2000 and December 31,1999......................... 1 Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2000 and 1999 ............... 2 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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.............. 7-13 Item 3. Quantitative and Qualitative Disclosure about Market Risk.. 13 PART II. OTHER INFORMATION............................................... 14 Signatures............................................................... 15 EXHIBITS................................................................. 16-17 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) June 30, December 31, 2000 1999 ----------- ----------- (In thousands) ASSETS: Cash and deposits with banks $ 23,654 $ 30,759 Federal funds sold and other 622 80,686 ----------- ----------- Total cash and cash equivalents 24,276 111,445 ----------- ----------- Investment securities: Trading (amortized cost of $5,161 and $7,647, respectively) 5,161 7,657 Available for sale (amortized cost of $145,501 and $163,515, respectively) 144,102 161,904 Held to maturity (fair value of $884 and $1,098, respectively) 875 1,091 Mortgage-backed securities: Available for sale (amortized cost of $106,330 and $116,569, respectively) 102,863 113,559 Held to maturity (fair value of $121,959 and $135,993, respectively) 125,115 138,079 Loans, net (including allowance for loan losses of $6,324 and $6,405, respectively) 781,432 723,087 Margin accounts 42,462 32,751 Federal Home Loan Bank stock 13,287 12,825 Premises and equipment 9,995 9,252 Accrued interest receivable 8,656 8,347 Real estate owned 302 158 Other assets 11,043 7,418 ----------- ----------- TOTAL ASSETS $ 1,269,569 $ 1,327,573 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits $ 830,019 $ 834,087 Other borrowed funds 151,410 213,578 Advance payments by borrowers for taxes and insurance 3,960 4,038 Accrued interest payable 1,997 4,168 Accrued expenses and other liabilities 22,625 14,834 ----------- ----------- TOTAL LIABILITIES $ 1,010,011 $ 1,070,705 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock-no par value; 1,000,000 shares authorized and unissued at June 30, 2000 -- -- Common stock-no par value; 499,000,000 shares authorized; 37,756,582 shares issued and outstanding at June 30, 2000 136,616 136,509 Retained earnings 154,546 153,553 Other comprehensive income (3,163) (3,003) Unearned stock compensation (28,441) (30,191) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 259,558 256,868 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,269,569 $ 1,327,573 =========== ===========
See Notes to Consolidated Financial Statements. 1 4 UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Three Months Ended For the Six Months Ended June 30, June 30, ----------------------------- ---------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ (In thousands) (In thousands) INTEREST INCOME Loans $ 15,050 $ 13,503 $ 29,364 $ 26,757 Mortgage-backed securities: Available for sale 1,727 1,699 3,540 3,151 Held to maturity 2,236 2,814 4,589 5,863 Investment securities: Trading 30 22 71 49 Available for sale 2,104 2,231 4,335 3,907 Held to maturity 17 8 34 97 Margin accounts 926 524 1,671 918 FHLB stock dividend 239 212 463 419 Other interest-earning assets 91 1,377 232 3,275 ------------ ------------ ------------ ------------ Total interest income 22,420 22,390 44,299 44,436 INTEREST EXPENSE Interest expense on deposits 8,268 7,488 16,429 14,996 Interest expense on other borrowed funds 2,103 276 4,025 470 ------------ ------------ ------------ ------------ Total interest expense 10,371 7,764 20,454 15,466 ------------ ------------ ------------ ------------ NET INTEREST INCOME 12,049 14,626 23,845 28,970 PROVISION FOR LOAN LOSS ALLOWANCES -- 25 -- 100 ------------ ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSS ALLOWANCES 12,049 14,601 23,845 28,870 ------------ ------------ ------------ ------------ NONINTEREST INCOME Commissions 4,238 4,224 9,622 8,328 Service fees and other charges 1,385 1,234 2,640 2,310 Underwriting and investment banking 192 92 214 494 Net gains (losses): Mortgage-backed securities -- (7) -- 40 Investment securities (14) -- (4) -- Trading securities (144) 40 227 (18) Other (4) (10) (3) (9) Other income 204 188 416 365 ------------ ------------ ------------ ------------ Total noninterest income 5,857 5,761 13,112 11,510 ------------ ------------ ------------ ------------ NONINTEREST EXPENSES Salaries and employee benefits 8,470 7,864 18,098 15,693 Occupancy 532 515 988 973 Equipment and data processing 1,446 1,308 2,746 2,557 Deposit insurance premiums 43 114 84 230 Franchise tax 932 474 1,865 936 Advertising 316 394 817 738 Other expenses 1,488 1,374 3,070 3,007 ------------ ------------ ------------ ------------ Total noninterest expenses 13,227 12,043 27,668 24,134 ------------ ------------ ------------ ------------ INCOME BEFORE INCOME TAXES 4,679 8,319 9,289 16,246 INCOME TAXES 1,709 3,017 3,217 5,818 ------------ ------------ ------------ ------------ NET INCOME $ 2,970 $ 5,302 $ 6,072 $ 10,428 ============ ============ ============ ============ EARNINGS PER SHARE: Basic and diluted $ 0.09 $ 0.16 $ 0.18 $ 0.31 Average common shares outstanding 32,903,672 33,898,237 32,913,530 33,877,622 Average common and common equivalent shares outstanding 33,442,391 33,898,237 33,438,734 33,877,622
See Notes to Consolidated Financial Statements. 2 5
UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, ---------------------------- 2000 1999 --------- --------- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,072 $ 10,427 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for loan loss allowances -- 100 Net losses (gains) 7 (31) Accretion of discounts and amortization of premiums (186) (309) Depreciation 713 676 ESOP compensation 1,019 1,069 Amortization of restricted stock compensation 839 -- FHLB stock dividends (462) (418) Decrease in trading securities 2,496 961 Increase in margin accounts (9,711) (11,933) Increase in interest receivable (310) (1,525) Increase in prepaid and other assets (3,626) (2,883) Decrease in accounts receivable -- 63 (Decrease) increase in interest payable (2,171) 132 Increase in other liabilities 7,877 5,455 --------- --------- Net cash provided by operating activities 2,557 1,784 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from principal repayments and maturities of: Mortgage-backed securities held to maturity 13,015 28,018 Mortgage-backed securities available for sale 10,198 16,178 Investment securities held to maturity 693 5,000 Investment securities available for sale 24,066 5,000 Proceeds from sale of: Investment securities available for sale 8,502 -- Mortgage-backed securities available for sale -- 4,951 Purchases of: Investment securities available for sale (14,729) (102,505) Investment securities held to maturity (476) -- Mortgage-backed securities available for sale -- (50,532) Net principal disbursed on loans (53,572) (29,614) Loans purchased (4,603) -- Purchases of premises and equipment (1,456) (690) Other 30 81 --------- --------- Net cash used in investing activities (18,332) (124,113) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (decrease) increase in NOW, savings and money market accounts (3,481) 15,899 Net decrease in certificates of deposit (587) (11,555) Net decrease in advance payments by borrowers for taxes and insurance (78) (198) Net (decrease) increase in borrowed funds (62,168) 15,523 Dividends paid (5,080) (4,819) --------- --------- Net cash (used in) provided by financing activities (71,394) 14,850 --------- --------- Decrease in cash and cash equivalents (87,169) (107,479) Cash and cash equivalents, beginning of period 111,445 171,874 --------- --------- Cash and cash equivalents, end of period $ 24,276 $ 64,395 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest on deposits and borrowings $ 22,696 $ 15,331 Income taxes 885 5,017 Supplemental schedule of noncash activities: Transfers from loans to real estate owned 178 156
See Notes to Consolidated Financial Statements. 3 6 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). 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 six months ended June 30, 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. 4 7 3. COMPREHENSIVE INCOME United Community's comprehensive income for the three and six months ended June 30, 2000 and 1999 are as follows:
Three Months Ended June 30, ---------------------------- 2000 1999 ------ ------- (In thousands) Net income $2,970 $ 5,302 Unrealized holding gains (losses) arising during the period, net of tax effect of $169 and ($808), respectively 306 (1,474) Reclassification adjustment for losses included in net income, net of tax effect of $5 and ($14), respectively 9 (26) ------ ------- Comprehensive income $3,285 $ 3,802 ====== ======= Six Months Ended June 30, -------------------------- 2000 1999 ------ ------- (In thousands) Net income $ 6,072 $ 10,427 Unrealized holding losses arising during the period, net of tax effect of ($86) and ($1,047), respectively (162) (1,918) Reclassification adjustment for losses included in net income, net of tax effect of $1 and ($14), respectively 2 (26) ------- -------- Comprehensive income $ 5,912 $ 8,483 ======= ========
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 corporate 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 and six months ended June 30, 2000 and 1999 are as follows: THREE MONTHS ENDED JUNE 30, 2000
Investment Advisory Retail Banking Services Eliminations Total - -------------------------------------------------------------------------------------------------------- (In thousands) Interest income $21,936 $ 983 $ 499 $22,420 Interest expense 10,315 555 499 10,371 ------- ------- ------- ------- Net interest income after provision for loan loss 11,621 428 -- 12,049 Non-interest income 374 5,483 -- 5,857 Non-interest expense 7,815 5,412 -- 13,227 ------- ------- ------- ------- Income before tax 4,180 499 -- 4,679 Income tax 1,529 180 -- 1,709 ------- ------- ------- ------- Net income $ 2,651 $ 319 $ -- $ 2,970 ======= ======= ======= =======
5 8
THREE MONTHS ENDED JUNE 30, 1999 Investment Advisory Retail Banking Services Eliminations Total - --------------------------------------------------------------------------------------------------------- (In thousands) Interest income $22,362 $ 574 $ 546 $22,390 Interest expense 8,037 273 546 7,764 Provision for loan loss 25 -- -- 25 ------- ------- ------- ------- Net interest income after provision for loan loss 14,300 301 -- 14,601 Non-interest income 504 5,257 -- 5,761 Non-interest expense 7,113 4,930 -- 12,043 ------- ------- ------- ------- Income before tax 7,691 628 -- 8,319 Income tax 2,800 217 -- 3,017 ------- ------- ------- ------- Net income $ 4,891 $ 411 $ -- $ 5,302 ======= ======= ======= ======= SIX MONTHS ENDED JUNE 30, 2000 Investment Advisory Retail Banking Services Eliminations Total - -------------------------------------------------------------------------------------------------------- (In thousands) Interest income $43,507 $ 1,791 $ 999 $44,299 Interest expense 20,457 996 999 20,454 ------- ------- ------- ------- Net interest income after provision for loan loss 23,050 795 -- 23,845 Non-interest income 1,210 11,902 -- 13,112 Non-interest expense 15,802 11,866 -- 27,668 ------- ------- ------- ------- Income before tax 8,458 831 -- 9,289 Income tax 2,918 299 -- 3,217 ------- ------- ------- ------- Net income $ 5,540 $ 532 $ -- $ 6,072 ======= ======= ======= ======= SIX MONTHS ENDED JUNE 30, 1999 Investment Advisory Retail Banking Services Eliminations Total - --------------------------------------------------------------------------------------------------------- (In thousands) Interest income $44,508 $ 1,021 $ 1,093 $44,436 Interest expense 16,091 468 1,093 15,466 Provision for loan loss 100 -- -- 100 ------- ------- ------- ------- Net interest income after provision for loan loss 28,317 553 -- 28,870 Non-interest income 894 10,616 -- 11,510 Non-interest expense 14,227 9,907 -- 24,134 ------- ------- ------- ------- Income before tax 14,984 1,262 -- 16,246 Income tax 5,382 436 -- 5,818 ------- ------- ------- ------- Net income $ 9,602 $ 826 $ -- $10,428 ======= ======= ======= =======
6 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS UNITED COMMUNITY FINANCIAL CORP. At or For the Three At or For the Six Months Ended Months Ended June 30, June 30, ----------------------- ---------------------- SELECTED FINANCIAL RATIOS AND OTHER DATA: (1) 2000 1999 2000 1999 ----------- --------- -------- ---------- Performance ratios: Return on average assets (2) 0.96% 1.62% 0.98% 1.60% Return on average equity (3) 4.59% 4.43% 4.70% 4.37% Interest rate spread (4) 3.07% 3.14% 3.05% 3.11% Net interest margin (5) 4.02% 4.61% 3.98% 4.58% Noninterest expense to average assets 4.26% 3.69% 4.47% 3.71% Efficiency ratio (6) 73.87% 59.07% 74.87% 59.62% Average interest-earning assets to average interest- bearing liabilities 127.41% 159.83% 127.31% 160.12% Capital ratios: Average equity to average assets 20.88% 36.64% 20.86% 36.69% Equity to assets, end of period 20.44% 36.44% 20.44% 36.44% Tangible capital 13.53% 27.00% 13.53% 27.00% Core capital 13.53% 27.00% 13.53% 27.00% Risk-based capital 23.86% 50.42% 23.86% 50.42% Asset quality ratio: Nonperforming loans to total loans at end of period (7) 0.51% 0.80% 0.51% 0.80% Nonperforming assets to average assets (8) 0.34% 0.43% 0.34% 0.44% Nonperforming assets to total assets at end of period (8) 0.34% 0.43% 0.34% 0.43% Allowance for loan losses as a percent of loans 0.80% 0.93% 0.80% 0.93% Allowance for loan losses as a percent of nonperforming loans (7) 159.25% 116.84% 159.25% 116.84% Number of full service offices 14 14 14 14 Number of full service brokerage offices 10 10 10 10 Per share data: Basic earnings per share (9) $ 0.09 $ 0.16 $ 0.18 $ 0.31 Diluted earnings per share (9) 0.09 0.16 0.18 0.31 Book value (10) 7.63 14.11 7.63 14.11 _________________________________________________________ (1) Ratios for the three and six month periods 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, adjusted for the dilutive effect of restrictive stock, as necessary. (10) Equity divided by number of shares outstanding less unallocated ESOP shares.
7 10 COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2000 AND DECEMBER 31, 1999 Total assets were $1.3 billion at June 30, 2000, a $58.0 million, or 4.4%, decrease compared to December 31, 1999. The primary reasons for the decrease in total assets were a decrease in cash and cash equivalents of $87.2 million and a decrease in securities of $44.2 million. These decreases were partially offset by increases of $58.3 million in net loans, $9.7 million in margin accounts and a $3.6 million increase in other assets primarily due to a $1.9 million increase in prepaid Ohio franchise taxes, a $642,000 increase in deferred tax assets and a $584,000 increase in receivables. Net loans increased $58.3 million, or 8.1%, to $781.4 million at June 30, 2000, compared to $723.1 million at December 31, 1999. The most significant increase was in commercial loans, which increased $33.9 million, or 38.3%. Mortgage loans increased $17.9 million, or 3.02%, and consumer loans increased $6.5 million, or 15.4%. In accordance with strategic goals, Home Savings hired several individuals to manage and develop existing and new loan products to continue loan growth. In July 2000, Home Savings has also announced plans to open loan origination offices in the Cleveland, Akron, Canton and Stow markets to expand its geographic market. Home Savings is aware that there can be risks associated with this type of expansion. 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 $80.1 million, or 99.2%, to $622,000 at June 30, 2000 from $80.7 million at December 31, 1999. Securities available for sale, which include both investment and mortgage-related securities, decreased $28.5 million, or 10.3%, since December 31, 1999. Securities held to maturity, which also consist of both investment securities and mortgage-related securities, decreased $13.2 million, or 9.5%, since December 31, 1999. The net decrease in overnight funds and securities, along with a $7.1 million decrease in cash and deposits with banks, were primarily used to reduce other borrowed funds by $62.2 million, reduce deposits $4.1 million, fund an increase in net loans of $58.3 million and fund an increase in margin accounts of $9.7 million. Trading securities, which consist of investment securities, decreased $2.5 million, or 32.6%, to $5.2 million at June 30, 2000. Securities available for sale, 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 have been relatively stable since December 31, 1999. At June 30, 2000, total nonaccrual and restructured loans accounted for 0.51% of net loans receivable, compared to 0.54% at December 31, 1999. Total nonperforming assets were 0.34% of total assets as of June 30, 2000 compared to 0.30% as of December 31, 1999. Total deposits decreased $4.1 million from $834.1 million at December 31, 1999 to $830.0 million at June 30, 2000. The decrease was due to a decrease in savings accounts of $7.2 million and certificates of deposits of $671,000, which were partially offset by an increase in checking accounts of $3.6 million. Other borrowed funds decreased $62.2 million to $151.4 million at June 30, 2000 compared to $213.6 million at December 31, 1999. This decrease was funded by decreases in cash and cash equivalents and investments. As of June 30, 2000, $110.5 million of the other borrowed funds consisted of short term Federal Home Loan Bank advances. The remaining funds consist of a revolving line of credit and other short-term borrowings. Accrued expenses and other liabilities increased $7.8 million to $22.6 million at June 30, 2000 compared to $14.8 million at December 31, 1999. This increase is primarily due to an increase of $3.1 million in accrued federal income taxes, an increase in outstanding office checks of $2.6 million and an increase in deferred compensation related to the Butler Wick retention plan of $625,000. Shareholders' equity increased $2.7 million, or 1.0%, to $259.6 million at June 30, 2000 from $256.9 million at December 31, 1999. The increase was primarily due to earnings for the six months, which were partially offset by quarterly dividends of $0.075 per share paid in March and June of 2000. Book value per share was $7.63 as of June 30, 2000. 8 11 COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999 NET INCOME. Net income for the three months ended June 30, 2000 was $3.0 million, or $0.09 per diluted share. Net income for the comparable period in 1999 was $5.3 million, or $0.16 per diluted share. The primary reason for the decrease in net income of $2.3 million for the three months ended June 30, 2000, compared to the same period in 1999, was a decrease of $2.6 million in net interest income and an increase in noninterest expense of $1.2 million. United Community's annualized return on average assets and return on average equity were 0.96% and 4.59%, respectively, for the three months ended June 30, 2000. The annualized return on average assets and return on average equity for the comparable period in 1999 were 1.62% and 4.43%, respectively. NET INTEREST INCOME. Net interest income declined $2.6 million for the three months ended June 30, 2000, compared to the second quarter of 1999, primarily due to an increase in interest expense of $2.6 million. The increase in interest expense was due to two factors. First, interest on other borrowed funds increased $1.8 million due to an increase in borrowed funds in connection with the $6.00 per share special capital distribution paid in October 1999. The second factor was an increase in expense on deposits of $780,000, which was due to an increase in average deposits and interest rates for the three months ended June 30, 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 second quarter of 2000, compared to a provision of $25,000 for the second quarter of 1999. Home Savings' allowance for loan losses totaled $6.3 million at June 30, 2000, which was 0.80% of total loans. NONINTEREST INCOME. Noninterest income increased $96,000, or 1.7%, from $5.8 million for the three months ended June 30, 1999, to $5.9 million for the three months ended June 30, 2000. The primary reason for the increase was a $151,000 increase in service fees and other charges and a $100,000 increase in underwriting and investment banking. These increases were partially offset by a $184,000 loss on trading securities. NONINTEREST EXPENSE. Total noninterest expense increased $1.2 million, or 9.8%, to $13.2 million for the three months ended June 30, 2000, from $12.0 million for the three months ended June 30, 1999. The increase was primarily due to an increase in salaries and employee benefits of $606,000 and an increase in franchise tax expense of $458,000. The increase in salaries and employee benefits for the second quarter of 2000 was primarily due to recognition of expenses related to the United Community Recognition and Retention Plan and the Butler Wick Retention Plan and expenses related to new hires and merit increases between the periods. 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 tax return compared to its 1999 tax return. FEDERAL INCOME TAXES. The provision for federal income taxes decreased $1.3 million, or 43.4%, for the three months ended June 30, 2000, compared to the three months ended June 30, 1999, primarily due to the lower pre-tax income for the second quarter of 2000 compared to the second quarter of 1999. The effective tax rates were 36.5% and 36.3% for the three months ended June 30, 2000 and 1999, respectively. COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999 NET INCOME. Net income for the six months ended June 30, 2000 was $6.1 million, or $0.18 per diluted share. Net income for the comparable period in 1999 was $10.4 million, or $0.31 per diluted share. The primary reason for the decrease in net income of $4.3 million for the six months ended June 30, 2000, compared to the same period in 1999, was a decrease of $5.1 million in net interest income and an increase in noninterest expense of $3.5 million. These increases were partially offset by a $1.6 million increase in noninterest income. United Community's annualized return on average assets and return on average equity were 0.98% and 4.70%, 9 12 respectively, for the six months ended June 30, 2000. The annualized return on average assets and return on average equity for the comparable period in 1999 were 1.60% and 4.37%, respectively. NET INTEREST INCOME. Net interest income declined $5.1 million for the six months ended June 30, 2000, compared to the same period of 1999, primarily due to an increase in interest expense of $5.0 million. The increase in interest expense was due to two factors. First, interest on other borrowed funds increased $3.6 million due to an increase in borrowed funds in connection with the $6.00 per share special capital distribution paid in October 1999. The second factor was an increase in expense on deposits of $1.4 million, which was due to an increase in average deposits of $39.8 million and an increase in interest rates from June 30, 1999 to June 30, 2000. PROVISION FOR LOAN LOSSES. No provision for loan losses was recorded for the six months ended June 30, 2000, compared to a provision of $100,000 for the six months ended June 30, 1999. The decrease in the provision resulted from management's consideration of the same factors previously mentioned. NONINTEREST INCOME. Noninterest income increased $1.6 million, or 13.9%, from $11.5 million for the six months ended June 30, 1999, to $13.1 million for the six months ended June 30, 2000. The primary reason for the increase was a $1.3 million increase in commissions earned by Butler Wick due to an increase in the volume of brokerage transactions. NONINTEREST EXPENSE. Total noninterest expense increased $3.5 million, or 14.6%, to $27.7 million for the six months ended June 30, 2000, from $24.1 million for the six months ended June 30, 1999. The increase was primarily due to an increase in salaries and employee benefits of $2.4 million and an increase in franchise tax expense of $929,000. The increase in salaries and employee benefits for the six months ended June 30, 2000 was primarily due to expenses related to the Butler Wick Retention Plan and 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 brokerage transactions at Butler Wick, new hires and merit increases between the periods. 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 tax return compared to its 1999 tax return. FEDERAL INCOME TAXES. The provision for federal income taxes decreased $2.6 million, or 44.7%, for the six months ended June 30, 2000, compared to the six months ended June 30, 1999, primarily due to the lower pre-tax income for the first six months of 2000 compared to the first six months of 1999. The effective tax rates were 34.6% and 35.8% for the six months ended June 30, 2000 and 1999, respectively. 10 13 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 June 30, 2000 and June 30, 1999. Average balance calculations were based on daily balances.
THREE MONTHS ENDED JUNE 30, ----------------------------------------------------------------------------------- 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) $ 750,572 $ 15,050 8.02% $ 677,037 $ 13,503 7.98% Mortgage-backed securities: Available for sale 106,130 1,727 6.51% 111,347 1,699 6.10% Held to maturity 128,597 2,236 6.96% 161,476 2,814 6.97% Investment securities: Trading 6,517 30 1.84% 1,777 22 4.95% Available for sale 144,228 2,104 5.84% 159,575 2,231 5.59% Held to maturity 1,125 17 6.04% 654 8 4.89% Margin accounts 42,881 926 8.64% 29,725 524 7.05% Other interest-earning assets 19,107 330 6.91% 128,664 1,589 4.94% ---------- ---------- --------- ---------- ---------- --------- Total interest-earning assets 1,199,157 22,420 7.48% 1,270,255 22,390 7.05% Noninterest-earning assets 41,680 35,910 ---------- ---------- Total assets $1,240,837 $1,306,165 ========== ========== Interest-bearing liabilities: Checking and demand accounts $ 147,288 $ 1,022 2.78% $ 126,194 $ 764 2.42% Savings accounts 218,833 1,353 2.47% 224,277 1,384 2.47% Certificates of deposit 443,474 5,893 5.32% 423,562 5,340 5.04% Other borrowed funds 131,566 2,103 6.39% 20,744 276 5.32% ---------- ---------- --------- ---------- ---------- --------- Total interest-bearing liabilities 941,161 10,371 4.41% 794,777 7,764 3.91% ---------- --------- ---------- --------- Noninterest-bearing liabilities 40,595 32,755 ---------- ---------- Total liabilities 981,756 827,532 Equity 259,081 478,633 ---------- ---------- Total liabilities and equity $1,240,837 $1,306,165 ========== ========== Net interest income and Interest rate spread $ 12,049 3.07% $ 14,626 3.14% ========== ========== ========== ========= Net interest margin 4.02% 4.61% ========== ========= Average interest-earning assets to average interest-bearing liabilities 127.41% 159.83% ========= ========= ____________________ (1) Nonaccrual loans are included in the average balance.
11 14 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 six month periods ended June 30, 2000 and June 30, 1999. Average balance calculations were based on daily balances.
SIX MONTHS ENDED JUNE 30, --------------------------------------------------------------------------------- 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) $ 739,663 $ 29,364 7.94% $ 670,683 $ 26,757 7.98% Mortgage-backed securities: Available for sale 108,853 3,540 6.50% 103,481 3,151 6.09% Held to maturity 131,867 4,589 6.96% 168,270 5,863 6.97% Investment securities: Trading 6,616 71 2.15% 3,148 49 3.11% Available for sale 149,357 4,335 5.80% 139,001 3,907 5.62% Held to maturity 1,143 35 6.12% 3,175 97 6.11% Margin accounts 39,588 1,671 8.44% 26,500 918 6.93% Other interest-earning assets 21,155 694 6.56% 150,527 3,694 4.91% ---------- ---------- ---------- ---------- ---------- ---------- Total interest-earning assets 1,198,242 44,299 7.39% 1,264,785 44,436 7.03% Noninterest-earning assets 40,631 35,763 ---------- ---------- Total assets $1,238,873 $1,300,548 ========== ========== Interest-bearing liabilities: Checking and demand accounts $ 145,406 $ 1,963 2.70% $ 120,686 $ 1,413 2.34% Savings accounts 220,358 2,722 2.47% 224,850 2,760 2.45% Certificates of deposit 445,982 11,744 5.27% 426,428 10,823 5.08% Other borrowed funds 129,443 4,025 6.22% 17,914 470 5.25% ---------- ---------- ---------- ---------- ---------- --------- Total interest-bearing liabilities 941,189 20,454 4.35% 789,878 15,466 3.92% ---------- ---------- ---------- --------- Noninterest-bearing liabilities 39,257 33,488 ---------- ---------- Total liabilities 980,446 823,366 Equity 258,427 477,182 ---------- ---------- Total liabilities and equity $1,238,873 $1,300,548 ========== ========== Net interest income and Interest rate spread $ 23,845 3.05% $ 28,970 3.11% ========== ========= ========== ========== Net interest margin 3.98% 4.58% ========= ========== Average interest-earning assets to average interest-bearing liabilities 127.31% 160.12% =========== ========= - ------------------------------ (1) Nonaccrual loans are included in the average balance.
12 15
UNITED COMMUNITY FINANCIAL CORP. RATE/VOLUME ANALYSIS For the Three Months Ended June 30, For the Six Months Ended June 30, -------------------------------------- -------------------------------------- 2000 vs. 1999 2000 vs. 1999 -------------------------------------- -------------------------------------- Increase Increase (decrease) due to Total (decrease) due to Total ------------------------ increase --------------------- increase Rate Volume (decrease) Rate Volume (decrease) --------- -------- ---------- -------- ------- --------- (In thousands) (In thousands) Interest-earning assets: Loans $ 73 $ 1,474 $ 1,547 $ (131) $ 2,738 $ 2,607 Mortgage-backed securities: Available for sale 95 (67) 28 221 168 389 Held to maturity (6) (572) (578) (7) (1,267) (1,274) Investment securities: Trading securities (2) 10 8 (9) 31 22 Available for sale 105 (232) (127) 130 298 428 Held to maturity 2 7 9 -- (63) (63) Margin accounts 135 267 402 232 521 753 Other interest-earning assets 1,107 (2,366) (1,259) 1,933 (4,932) (2,999) ------- ------- ------- ------- ------- ------- Total interest-earning assets $ 1,509 $(1,479) 30 $ 2,369 $(2,506) (137) ======= ======= ======= ======= ======= ======= Interest-bearing liabilities: Savings accounts 3 (34) (31) 18 (56) (38) Checking accounts 120 138 258 235 315 550 Certificates of deposit 296 257 553 415 506 921 Other borrowed funds 66 1,761 1,827 104 3,451 3,555 ------- ------- ------- ------- ------- ------- Total interest-bearing liabilities $ 485 $ 2,122 2,607 $ 772 $ 4,216 4,988 ======= ======= ------- ======= ======= ------- Change in net interest income $(2,577) $(5,125) ======= =======
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. 13 16 PART II. OTHER INFORMATION UNITED COMMUNITY FINANCIAL CORP. ITEMS 1, 3 AND 5 - NOT APPLICABLE ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS On May 30, 2000, United Community registered 3,471,562 shares for the Long-Term Incentive Plan approved by shareholders on July 12, 1999. On March 23, 2000, stock options to purchase 638,483 shares were granted to key individuals of Home Savings and Butler Wick at an exercise price of $6.97. As of June 30, 2000 none of the options have been exercised. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On April 27, 2000, United Community held its Annual Meeting of Shareholders. In connection therewith, two matters were submitted to shareholders for a vote. First, shareholders elected six directors to the terms indicated by the following votes:
Director Term expiring in For Withhold ---------------------------- ---------------- ----------------- Herbert F. Schuler, Sr. 2001 28,041,314 1,381,849 Donald J. Varner 2001 27,988,122 1,435,041 John F. Zimmerman, Jr. 2001 28,013,412 1,409,751 Richard M. Barrett 2002 27,946,768 1,476,395 Thomas J. Cavalier 2002 27,974,480 1,448,683 Douglas M. McKay 2002 27,812,530 1,610,633
The shareholders also ratified the selection of Deloitte & Touche LLP, certified public accountants, as auditors for the 2000 fiscal year by the following vote:
For Against Abstain --------------------- ----------------- ---------------- 28,246,865 804,061 372,237
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits Exhibit Number Description ............... ........................................................... 10.1 Employment Agreement between The Home Savings and Loan Company of Youngstown, Ohio and David G. Lodge, dated June 9, 2000. 10.1 Employment Agreement between The Home Savings and Loan Company of Youngstown, Ohio and Patrick W. Bevack, dated June 19, 2000. 11 Statement regarding computation of earnings per share 27 Financial Data Schedule - EDGAR only b. Reports on Form 8-K On April 19, 2000 United Community filed a Form 8-K disclosing operating results for the quarter ended March 31, 2000. 14 17 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: August 11, 2000 /s/ Douglas M. McKay ------------------------------------------ Douglas M. McKay, President Date: August 11, 2000 /s/ Patrick A. Kelly ------------------------------------------ Patrick A. Kelly, Treasurer 15 EX-10.1 2 ex10-1.txt EXHIBIT 10.1 1 EXHIBIT 10.1 ------------ EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this "AGREEMENT"), is entered into this 9th day of June, 2000, by and between The Home Savings and Loan Company of Youngstown, Ohio, a savings and loan association incorporated under Ohio Law (hereinafter referred to as the "COMPANY"), and David G. Lodge, an individual (hereinafter referred to as the "EMPLOYEE"); WITNESSETH: WHEREAS, as a result of the skill, knowledge and experience of the EMPLOYEE, the Board of Directors of the COMPANY desires to retain the services of the EMPLOYEE as the President and Chief Operating Officer of the COMPANY; WHEREAS, the EMPLOYEE desires to serve as the President and Chief Operating Officer of the COMPANY; and WHEREAS, the EMPLOYEE and the COMPANY desire to enter into this AGREEMENT to set forth the terms and conditions of the employment relationship between the COMPANY and the EMPLOYEE; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the COMPANY and the EMPLOYEE hereby agree as follows: 1. Employment and Term. - ----------------------------- (a) TERM. Upon the terms and subject to the conditions of this AGREEMENT, the COMPANY hereby employs the EMPLOYEE, and the EMPLOYEE hereby accepts employment, as the President and Chief Operating Officer of the COMPANY. The term of this AGREEMENT shall commence on June 9, 2000, and shall end on December 31, 2002, unless extended by the COMPANY, with the consent of the EMPLOYEE, as provided in subsection (b) of this Section 1 (hereinafter referred to, together with such extensions, as the "TERM"). (b) EXTENSION. On or before each anniversary of the date of this AGREEMENT, the Board of Directors of the COMPANY shall review this AGREEMENT and, upon approval by the Board of Directors, shall extend the term of this AGREEMENT for a one-year period beyond the then effective expiration date. Any such extension shall be subject to the written consent of the EMPLOYEE. The Board of directors shall document its reasons for extending the term of this AGREEMENT in the minutes of the meeting at which such action is taken. 2 2. DUTIES OF THE EMPLOYEE. (a) General Duties and Responsibilities. The EMPLOYEE shall serve as the President and Chief Operating Officer of the COMPANY. Subject to the direction of the Board of Directors of the COMPANY shall perform all duties and shall have all powers which are commonly incident to the office of President and Chief Operating Officer or which, consistent therewith, are delegated to him by the Board of Directors. (b) Devotion of Entire Time to the Business of the COMPANY. The EMPLOYEE shall devote his entire productive time, ability and attention during normal business hours throughout the TERM to the faithful performance of his duties under this AGREEMENT. The EMPLOYEE shall not directly or indirectly render any services of a business, commercial or professional nature to any person or organization other than the COMPANY, United Community Financial Corp. (hereinafter referred to as the "HOLDING COMPANY"), the sole shareholder of the COMPANY, or any subsidiary of the COMPANY or the HOLDING COMPANY without the prior written consent of the Board of directors of the COMPANY; provided, however, that the EMPLOYEE shall not be precluded from (i) vacations and other leave time in accordance with Section 3 (d) below, (ii) reasonable participation in community, civic, charitable or similar organizations, (iii) reasonable participation in industry-related activities, including, but not limited to, attending state and national trade association meetings and serving as an officer, director or trustee of a state or national trade association or Federal Home Loan Bank, (iv) serving as an officer or director of the HOLDING COMPANY or any subsidiary of the COMPANY or the HOLDING COMPANY and receiving a salary, director's fees or other compensation or benefits, as appropriate, or (v) pursuing personal investments which do not interfere or conflict with the performance of the EMPLOYEE's duties to the COMPANY. 3. COMPENSATION. (a) TOTAL COMPENSATION. The EMPLOYEE shall receive during the TERM total compensation established by the Compensation Committee of the Board of Directors. In making its determination, the Compensation Committee shall consider the average total compensation for the President and Chief Operating Officer of a peer group of companies. The companies comprising the peer group shall be selected by Deloitte & Touche LLP or another third party consultant acceptable to the EMPLOYEE and the Compensation Committee of the Board of Directors of the COMPANY. The selection of the peer group shall take into account the asset size and performance ratios of the COMPANY, and such other factors as the consultant considers appropriate under the circumstances. It is the intent of the COMPANY that the EMPLOYEE'S total compensation shall include the following components: (1) a base salary, payable in installments not less often than monthly; (2) cash incentive compensation, payable not Page 2 3 less often than annually; and (3) long term incentive compensation. The percentage of total compensation derived from each of the three components described in the preceding sentence shall be comparable to the peer group average. Until the COMPANY has implemented a compensation program which includes the three components described above, the EMPLOYEE shall receive an annual salary of not less than $190,000.00, payable in equal installments not less often than monthly, and cash incentive compensation payable not less often than annually. (b) ANNUAL REVIEW. On or before March 20th of each year, commencing in 2001, the total compensation of the EMPLOYEE shall be reviewed by the Board of Directors of the COMPANY and shall be set at an amount not less than $210,000.00, based upon the EMPLOYEE'S individual performance and such other factors as the Board of Directors may deem appropriate (hereinafter referred to as the "ANNUAL REVIEW"). The results of the ANNUAL REVIEW shall be reflected in the minutes of the Board of Directors of the COMPANY. (c) EMPLOYEE BENEFIT PROGRAMS. During the TERM, the EMPLOYEE shall be entitled to participate in all formally established employee benefit, bonus, pension, insurance, profit sharing plans, stock benefit plans and similar programs (hereinafter collectively referred to as "BENEFIT PLANS"), in accordance with the terms and conditions of such BENEFIT PLANS that are maintained by the COMPANY or the HOLDING COMPANY from time to time and all employee benefit plans or programs hereafter adopted in writing by the Board of Directors of the COMPANY or the HOLDING COMPANY for which senior management personnel of the COMPANY are eligible. Notwithstanding any statement to the contrary contained elsewhere in this AGREEMENT, the COMPANY may at any time discontinue or terminate any BENEFIT PLAN now existing or hereafter adopted, to the extent permitted by the terms of such BENEFIT PLAN, and shall not be required to compensate the EMPLOYEE for such discontinuance or termination to the extent such discontinuance or termination pertains to all employees of the COMPANY who are eligible participants at the time. (d) VACATION AND SICK LEAVE. The EMPLOYEE shall be entitled, without loss of pay, to be absent voluntarily from the performance of his duties under this AGREEMENT, in accordance with the policies periodically established by the Board of Directors of the COMPANY for senior management officials of the COMPANY. The EMPLOYEE shall be entitled to annual sick leave as established by the Board of Directors of the COMPANY for senior management officials of the COMPANY. (e) EXPENSES. The COMPANY shall pay or reimburse the EMPLOYEE for reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this AGREEMENT, including participation in industry-related activities. 4. Termination of Employment. Page 3 4 (a) General. The employment of the EMPLOYEE shall terminate at any time during the TERM (i) at the option of the COMPANY, upon the delivery by the COMPANY of written notice of termination to the EMPLOYEE, or (ii) at the option of the EMPLOYEE, upon delivery by the EMPLOYEE of written notice of termination to the COMPANY if the present capacity or circumstances in which the EMPLOYEE is employed are materially adversely changed (including, but not limited to, a material reduction in responsibilities or authority or the assignment of duties or responsibilities substantially inconsistent with those normally associated with the EMPLOYEE'S position described in Section 2 (a) of this AGREEMENT, change of title or removal as a director of the COMPANY or the HOLDING COMPANY, the requirement that the EMPLOYEE regularly perform his principal executive functions more than thirty-five (35) miles from his primary office as of the date of this AGREEMENT or the EMPLOYEE'S benefits provided under this AGREEMENT are reduced, unless the benefit reductions are part of a Company-wide reduction. The following subsections (A), (B) and (C) of this Section 4 (a) shall govern the obligations of the COMPANY to the EMPLOYEE upon the occurrence of the events described in such subparagraphs: (A) TERMINATION FOR CAUSE. In the event that the COMPANY terminates the employment of the EMPLOYEE during the TERM because of the EMPLOYEE'S personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure or refusal to perform the duties and responsibilities assigned in this AGREEMENT, willful violation of any law, rule or regulation (other than traffic violations or other minor offenses), or final cease-and desist order or material breach of any provision of this AGREEMENT (hereinafter collectively referred to as "CAUSE"), the EMPLOYEE shall not receive, and shall have no right to receive, any compensation or other benefits for any period after such termination. (B) TERMINATION IN CONNECTION WITH CHANGE OF CONTROL. In the event that the employment of the EMPLOYEE is terminated by COMPANY in connection with a CHANGE OF CONTROL (hereinafter defined) for any reason other than CAUSE or is terminated by the EMPLOYEE as provided in Section 4 (a) (ii) above, then the following shall occur: (I) The COMPANY shall promptly pay to the EMPLOYEE or to his beneficiaries, dependents or estate an amount equal to the product of 2.99 multiplied by the EMPLOYEE'S "base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (hereinafter collectively referred to as "SECTION 280G"; (II) The EMPLOYEE, his dependents, beneficiaries and estate shall continue to be covered at the COMPANY'S expense under all health, life, disability and other benefit plans of the COMPANY, as described in Section 3 (c) of this AGREEMENT, in which the EMPLOYEE was a participant prior to the effective date of the termination of his employment as if the EMPLOYEE were still employed under this AGREEMENT until the earlier of the expiration of the TERM or the date on which the Page 4 5 EMPLOYEE is included in another employer's benefit plans as a full-time employee; and (III) The EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this AGREEMENT by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the COMPANY hereunder, except as specifically stated in subparagraph (II) above. (C) TERMINATION NOT IN CONNECTION WITH CHANGE OF CONTROL. In the event that the employment of the EMPLOYEE is terminated before expiration of the TERM for any reason other than death, termination for CAUSE or termination in connection with a CHANGE OF CONTROL, then the following shall occur: (I) The COMPANY shall be obligated to continue to pay on at least a monthly basis, until the expiration of the TERM, to the EMPLOYEE, his designated beneficiaries or his estate, the total compensation in effect at the time of termination pursuant to Section 3 above, plus a cash bonus equal to the cash bonus, if any, paid to the EMPLOYEE in the twelve month period prior to the termination of employment. (II) The COMPANY shall continue to provide to the EMPLOYEE, at the COMPANY'S expense, health, life, disability and other benefits, as described in Section 3(C) of this AGREEMENT, substantially equal to those being provided to the EMPLOYEE at the date of termination of his employment until the earliest to occur expiration of the TERM or the date on which the EMPLOYEE is included in another employer's benefit plans as a full-time employee; and (III) The EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this AGREEMENT by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the COMPANY hereunder, except as specifically stated in subparagraph II above. (b) DEATH OF THE EMPLOYEE. The TERM shall automatically expire upon the death of the EMPLOYEE. In such event, the EMPLOYEE'S estate shall be entitled to receive the compensation due the EMPLOYEE through the last day of the calendar month in which the death occurred, except as otherwise specified herein. (c) "GOLDEN PARACHUTE" PROVISION. In the event that any payments pursuant to this Section 4 would result in the imposition of a penalty tax pursuant to SECTION 280G, such payments shall be reduced to the maximum amount which may be paid under SECTION 280G without exceeding such limits. Any payments made to the EMPLOYEE pursuant to this AGREEMENT are subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder. Page 5 6 (d) DEFINITION OF "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean any one of the following events: (i) the acquisition of ownership or power to vote more than 25% of the voting stock of the COMPANY or the HOLDING COMPANY; (ii) the acquisition of the ability to control the election of a majority of the directors of COMPANY or the HOLDING COMPANY (iii) during any period of three or less consecutive years individuals who at the beginning of such period constitute the Board of Directors of the COMPANY or the HOLDING COMPANY cease for any reason to constitute at least a majority thereof; provided, however, that any individual whose election or nomination for election as a member of the Board of Directors of the COMPANY or the HOLDING COMPANY was approved by a vote of at least two-thirds of the directors then in office shall be considered to have continued to be a member of the Board of Directors of the COMPANY or the HOLDING COMPANY; (iv) the acquisition by any person or entity of "conclusive control" of the COMPANY within the meaning of 12 C.F.R. Section 574.4(a), or the acquisition by any person or entity of "rebuttable control" within the meaning of 12 C.F.R. section 574.4(b) that has not been rebutted in accordance with 12 C.F.R. Section 574.4(c); or (v) an event that would be required to be reported in response to Item 1 (a) of Form 8-K or Item 6 (e) of Schedule 14A pursuant to the Securities Exchange Act of 1934, as amended (hereinafter referred to as the "EXCHANGE ACT"), or any successor thereto, whether or not any class of securities of the Corporation is registered under the EXCHANGE ACT. For purposes of this paragraph, the term "person" refers to an individual or corporation, partnership, trust, association or other organization, but does not include the EMPLOYEE and any person or persons with whom the EMPLOYEE is "acting in concert" within the meaning of 12C.F.R. Part 574. For purposes of this AGREEMENT, an event shall be deemed to have occurred "in connection with a CHANGE OF CONTROL" if such event occurs within one year before or after a CHANGE OF CONTROL. (e) TERMINATION BY EMPLOYEE. If the EMPLOYEE terminates this AGREEMENT without the written consent of the COMPANY, other than pursuant to Section 4(a)(ii) of this AGREEMENT, the EMPLOYEE shall not engage in the financial institutions business as a director, officer, employee or consultant for any business or enterprise which competes with the principal business of the COMPANY or the HOLDING COMPANY or any of their subsidiaries within Mahoning, Trumbull and Page 6 7 Columbiana counties or any other geographic area in which the COMPANY or the HOLDING COMPANY is doing business for the unexpired TERM of this AGREEMENT. This provision shall not apply in the event of the termination of the employment of the EMPLOYEE by the EMPLOYER prior to the expiration of the TERM or the termination of the employment of the EMPLOYEE by the EMPLOYEE pursuant to Section 4(a)(ii) of this AGREEMENT. 5. SPECIAL REGULATORY EVENTS. Notwithstanding the provisions of Section 4 of this AGREEMENT, the obligations of the COMPANY to the EMPLOYEE shall be as follows in the event of the following circumstances: (a) If the EMPLOYEE is suspended and/or temporarily prohibited from participating in the conduct of the COMPANY'S affairs by a notice served under section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (hereinafter referred to as the "FDIA"), the COMPANY'S obligations under this AGREEMENT shall be suspended as of the date of service of such notice, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the COMPANY shall pay the EMPLOYEE all or part of the compensation withheld while the obligations in this AGREEMENT were suspended and reinstate, in whole or in part, any of the obligations that were suspended; (b) If the EMPLOYEE is removed and/or permanently prohibited from participating in the conduct of the COMPANY'S affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDIA, all obligations of the COMPANY under this AGREEMENT shall terminate as of the effective date of such order; provided, however, that vested rights of the EMPLOYEE shall not be affected by such termination; (c) If the COMPANY is in default, as defined in section 3(x)(1) of the FDIA, all obligations under this AGREEMENT shall terminate as of the date of default; provided, however, that vested rights of the EMPLOYEE SHALL NOT BE AFFECTED; (d) All obligations under this AGREEMENT shall be terminated, except to the extent of a determination that the continuation of this AGREEMENT is necessary for the continued operation of the COMPANY, (i) by the Director of the Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his or her designee, at the time that the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the COMPANY under the authority continued in Section 13(c) of the FDIA or (ii) by the Director of the OTS, or his or her designee, at any time the Director of the OTS approves a supervisory merger to resolve problems related to the operation of the COMPANY or when the COMPANY is determined by Director of the OTS to be in an unsafe or unsound condition; provided, however that no vested rights of the EMPLOYEE shall not be affected by any such termination; and (e) The provisions of this Section 5 are governed by the requirements of 12 C.F.R. Section 563.39 (b) and in the event that any statements in this Section 5 are Page 7 8 inconsistent with 12 C.F.R. Section 563.39(b), the provisions of 12 C.F.R. Section 563.39(b) shall be controlling. 6. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT shall preclude the COMPANY or the HOLDING COMPANY from consolidating with, merging into, or transferring all, or substantially all, of their assets to another corporation that assumes all their obligations and undertakings hereunder. Upon such a consolidation, merger or transfer of assets, the term "COMPANY" as used herein, shall mean such other corporation or entity, and this AGREEMENT shall continue in full force and effect. 7. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his employment he will learn and have access to confidential information regarding the COMPANY and its customers and businesses. The EMPLOYEE agrees and covenants not to disclose or use for his own benefit, or the benefit of any other person or entity, any confidential information, unless or until the COMPANY consents to such disclosure or use of such information is otherwise legally in the public domain. The EMPLOYEE shall not knowingly disclose or reveal to any unauthorized person any confidential information relating to the COMPANY, its subsidiaries, or affiliates, or any of the businesses operated by them, and the EMPLOYEE confirms that such information constitutes the exclusive property of the COMPANY. The EMPLOYEE shall not otherwise knowingly act or conduct himself to the material detriment of the COMPANY, its subsidiaries, or affiliates or in a manner which is inimical or contrary to the interests of the COMPANY. 8. NON-ASSIGNABILITY. Neither this AGREEMENT nor any right or interest hereunder shall be assignable by the EMPLOYEE, by the EMPLOYEE, his beneficiaries or legal representatives without the COMPANY'S prior written consent; provided, however, that nothing in this Section 8 shall preclude the EMPLOYEE from designating, a beneficiary to receive any benefits payable hereunder upon his death or the executors, administrators or legal representatives of the EMPLOYEE or his estate from assigning any rights hereunder to the person or persons entitled thereto. 9. NO ATTACHMENT Except as required by law, no right to receive payment under this AGREEMENT shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or similar process of assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 10. BINDING AGREEMENT. This AGREEMENT shall be binding upon, and inure to the benefit of, the EMPLOYEE and the COMPANY and their respective permitted successors and assigns. 11. AMENDMENT OF AGREEMENT. This AGREEMENT may not be modified or amended, except by an instrument in writing signed by the parties hereto. Page 8 9 12. WAIVER. No term or condition of this AGREEMENT shall deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of this AGREEMENT, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver, unless specifically stated therein, and each waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than the act specifically waived. 13. SEVERABILITY. If, for any reason, any provision of this AGREEMENT is held invalid, such invalidity shall not affect the other provisions of this AGREEMENT not held so invalid, and each such other provision shall, to the full extent consistent with applicable law, continue in full force and effect. If this AGREEMENT is held invalid or cannot be enforced, then any prior AGREEMENT between the COMPANY (or any predecessor thereof) and the EMPLOYEE shall be deemed reinstated to the full extent permitted by law, as this AGREEMENT had not been executed. 14. HEADINGS. The headings of the paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this AGREEMENT. 15. GOVERNING LAW. This AGREEMENT has been executed and delivered in the State of Ohio and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Ohio, except to the extent that federal law is governing. 16. EFFECT OF PRIOR AGREEMENTS. This AGREEMENT contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the COMPANY or any predecessor of the COMPANY and the EMPLOYEE. 17. The attached addendum #1 shall be incorporated into this agreement. 18. NOTICES. Any notice or other communication required or permitted pursuant to this AGREEMENT shall be deemed delivered if such notice or communication is in writing and is delivered personally or by facsimile transmission or is deposited in the United States mail, postage prepaid, addressed as follows: If to the COMPANY: The Home Savings and Loan Company Of Youngstown, Ohio 275 Federal Plaza West Post Office Box 1111 Youngstown, Ohio 44501-1111 Page 9 10 If to the EMPLOYEE: David G. Lodge 9560 Windy Lakes Circle Bainbridge, Ohio 44023 IN WITNESS WHEREOF, the COMPANY has caused this AGREEMENT to be executed by its duly authorized officer, and the EMPLOYEE has signed this AGREEMENT, each as of the day and year first above written. Attest: THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO Mary Jane Botsko By: /s/ Douglas M. McKay Douglas M. McKay Chief Executive Officer and Chairman of the Board of Directors Attest: Donna Ruane /s/ David G. Lodge David G. Lodge Page 10 EX-10.2 3 ex10-2.txt EXHIBIT 10.2 1 EXHIBIT 10.2 ------------ EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this "AGREEMENT"), is entered into this 19th day of June, 2000, by and between The Home Savings and Loan Company of Youngstown, Ohio, a savings and loan association incorporated under Ohio Law (hereinafter referred to as the "COMPANY"), and Patrick W. Bevack, an individual (hereinafter referred to as the "EMPLOYEE"); WITNESSETH: WHEREAS, as a result of the skill, knowledge and experience of the EMPLOYEE, the Board of Directors of the COMPANY desires to retain the services of the EMPLOYEE as the Senior Vice President, Mortgage Banking Division of the COMPANY; WHEREAS, the EMPLOYEE desires to serve as Senior Vice President, Mortgage Banking Division of the COMPANY; and WHEREAS, the EMPLOYEE and the COMPANY desire to enter into this AGREEMENT to set forth the terms and conditions of the employment relationship between the COMPANY and the EMPLOYEE; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the COMPANY and the EMPLOYEE hereby agree as follows: 1. EMPLOYMENT AND TERM. - ----------------------------- (a) TERM. Upon the terms and subject to the conditions of this AGREEMENT, the COMPANY hereby employs the EMPLOYEE, and the EMPLOYEE hereby accepts employment, as the Senior Vice President, Mortgage Banking Division of the COMPANY. The term of this AGREEMENT shall commence on June 19, 2000, and shall end on December 31, 2002, unless extended by the COMPANY, with the consent of the EMPLOYEE, as provided in subsection (b) of this Section 1 (hereinafter referred to, together with such extensions, as the "TERM"). (b) EXTENSION. On or before each anniversary of the date of this AGREEMENT, the Board of Directors of the COMPANY shall review this AGREEMENT and, upon approval by the Board of Directors, shall extend the term of this AGREEMENT for a one-year period beyond the then effective expiration date. Any such extension shall be subject to the written consent of the EMPLOYEE. The Board of 2 directors shall document its reasons for extending the term of this AGREEMENT in the minutes of the meeting at which such action is taken. 2. DUTIES OF THE EMPLOYEE. - -------------------------------- (a) General Duties and Responsibilities. The EMPLOYEE shall serve as the Senior Vice President, Mortgage Banking Division of the COMPANY. Subject to the direction of the Board of Directors of the COMPANY shall perform all duties and shall have all powers which are commonly incident to the office Senior Vice President, Mortgage Banking Division or which, consistent therewith, are delegated to him by the Board of Directors. (b) Devotion of Entire Time to the Business of the COMPANY. The EMPLOYEE shall devote his entire productive time, ability and attention during normal business hours throughout the TERM to the faithful performance of his duties under this AGREEMENT. The EMPLOYEE shall not directly or indirectly render any services of a business, commercial or professional nature to any person or organization other than the COMPANY, United Community Financial Corp. (hereinafter referred to as the "HOLDING COMPANY"), the sole shareholder of the COMPANY, or any subsidiary of the COMPANY or the HOLDING COMPANY without the prior written consent of the Board of directors of the COMPANY; provided, however, that the EMPLOYEE shall not be precluded from (i) vacations and other leave time in accordance with Section 3 (d) below, (ii) reasonable participation in community, civic, charitable or similar organizations, (iii) reasonable participation in industry-related activities, including, but not limited to, attending state and national trade association meetings and serving as an officer, director or trustee of a state or national trade association or Federal Home Loan Bank, (iv) serving as an officer or director of the HOLDING COMPANY or any subsidiary of the COMPANY or the HOLDING COMPANY and receiving a salary, director's fees or other compensation or benefits, as appropriate, or (v) pursuing personal investments which do not interfere or conflict with the performance of the EMPLOYEE's duties to the COMPANY. 3. COMPENSATION. ------------- (a) TOTAL COMPENSATION. The EMPLOYEE shall receive during the TERM total compensation established by the Compensation Committee of the Board of Directors. In making its determination, the Compensation Committee shall consider the average total compensation for the Senior Vice President, Mortgage Banking Division of a peer group of companies. The companies comprising the peer group shall be selected by Deloitte & Touche LLP or another third party consultant acceptable to the EMPLOYEE and the Compensation Committee of the Board of Directors of the COMPANY. The selection of the peer group shall take into account the asset size and performance ratios of the COMPANY, and such other factors as the consultant considers Page 2 3 appropriate under the circumstances. It is the intent of the COMPANY that the EMPLOYEE'S total compensation shall include the following components: (1) a base salary, payable in installments not less often than monthly; (2) cash incentive compensation, payable not less often than annually; and (3) long term incentive compensation. The percentage of total compensation derived from each of the three components described in the preceding sentence shall be comparable to the peer group average. Until the COMPANY has implemented a compensation program which includes the three components described above, the EMPLOYEE shall receive an annual salary of not less than $125,000.00, payable in equal installments not less often than monthly, and cash incentive compensation payable not less often than annually. (b) ANNUAL REVIEW. On or before June 19th of each year, commencing in 2001, the total compensation of the EMPLOYEE shall be reviewed by the Board of Directors of the COMPANY and shall be set at an amount not less than $125,000.00, based upon the EMPLOYEE'S individual performance and such other factors as the Board of Directors may deem appropriate (hereinafter referred to as the "ANNUAL REVIEW"). The results of the ANNUAL REVIEW shall be reflected in the minutes of the Board of Directors of the COMPANY. (c) EMPLOYEE BENEFIT PROGRAMS. During the TERM, the EMPLOYEE shall be entitled to participate in all formally established employee benefit, bonus, pension, insurance, profit sharing plans, stock benefit plans and similar programs (hereinafter collectively referred to as "BENEFIT PLANS"), in accordance with the terms and conditions of such BENEFIT PLANS that are maintained by the COMPANY or the HOLDING COMPANY from time to time and all employee benefit plans or programs hereafter adopted in writing by the Board of Directors of the COMPANY or the HOLDING COMPANY for which senior management personnel of the COMPANY are eligible. Notwithstanding any statement to the contrary contained elsewhere in this AGREEMENT, the COMPANY may at any time discontinue or terminate any BENEFIT PLAN now existing or hereafter adopted, to the extent permitted by the terms of such BENEFIT PLAN, and shall not be required to compensate the EMPLOYEE for such discontinuance or termination to the extent such discontinuance or termination pertains to all employees of the COMPANY who are eligible participants at the time. (d) VACATION AND SICK LEAVE. The EMPLOYEE shall be entitled, without loss of pay, to be absent voluntarily from the performance of his duties under this AGREEMENT, in accordance with the policies periodically established by the Board of Directors of the COMPANY for senior management officials of the COMPANY. The EMPLOYEE shall be entitled to annual sick leave as established by the Board of Directors of the COMPANY for senior management officials of the COMPANY. (e) EXPENSES. The COMPANY shall pay or reimburse the EMPLOYEE for reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this AGREEMENT, including participation in industry-related activities. Page 3 4 4. Termination of Employment. (a) General. The employment of the EMPLOYEE shall terminate at any time during the TERM (i) at the option of the COMPANY, upon the delivery by the COMPANY of written notice of termination to the EMPLOYEE, or (ii) at the option of the EMPLOYEE, upon delivery by the EMPLOYEE of written notice of termination to the COMPANY if the present capacity or circumstances in which the EMPLOYEE is employed are materially adversely changed (including, but not limited to, a material reduction in responsibilities or authority or the assignment of duties or responsibilities substantially inconsistent with those normally associated with the EMPLOYEE'S position described in Section 2 (a) of this AGREEMENT, change of title or removal as a director of the COMPANY or the HOLDING COMPANY, the requirement that the EMPLOYEE regularly perform his principal executive functions more than thirty-five (35) miles from his primary office as of the date of this AGREEMENT or the EMPLOYEE'S benefits provided under this AGREEMENT are reduced, unless the benefit reductions are part of a Company-wide reduction. The following subsections (A), (B) and (C) of this Section 4 (a) shall govern the obligations of the COMPANY to the EMPLOYEE upon the occurrence of the events described in such subparagraphs: (A) TERMINATION FOR CAUSE. In the event that the COMPANY terminates the employment of the EMPLOYEE during the TERM because of the EMPLOYEE'S personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure or refusal to perform the duties and responsibilities assigned in this AGREEMENT, willful violation of any law, rule or regulation (other than traffic violations or other minor offenses), or final cease-and desist order or material breach of any provision of this AGREEMENT (hereinafter collectively referred to as "CAUSE"), the EMPLOYEE shall not receive, and shall have no right to receive, any compensation or other benefits for any period after such termination. (B) TERMINATION IN CONNECTION WITH CHANGE OF CONTROL. In the event that the employment of the EMPLOYEE is terminated by COMPANY in connection with a CHANGE OF CONTROL (hereinafter defined) for any reason other than CAUSE or is terminated by the EMPLOYEE as provided in Section 4(a)(ii) above, then the following shall occur: (I) The COMPANY shall promptly pay to the EMPLOYEE or to his beneficiaries, dependents or estate an amount equal to the product of 2.99 multiplied by the EMPLOYEE'S "base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (hereinafter collectively referred to as "SECTION 280G"; (II) The EMPLOYEE, his dependents, beneficiaries and estate shall continue to be covered at the COMPANY'S expense under all health, life, disability and other benefit plans of the COMPANY, as described in Section 3 (c) of this Page 4 5 AGREEMENT, in which the EMPLOYEE was a participant prior to the effective date of the termination of his employment as if the EMPLOYEE were still employed under this AGREEMENT until the earlier of the expiration of the TERM or the date on which the EMPLOYEE is included in another employer's benefit plans as a full-time employee; and (III) The EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this AGREEMENT by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the COMPANY hereunder, except as specifically stated in subparagraph (II) above. (C) TERMINATION NOT IN CONNECTION WITH CHANGE OF CONTROL. In the event that the employment of the EMPLOYEE is terminated before expiration of the TERM for any reason other than death, termination for CAUSE or termination in connection with a CHANGE OF CONTROL, then the following shall occur: (I) The COMPANY shall be obligated to continue to pay on at least a monthly basis, until the expiration of the TERM, to the EMPLOYEE, his designated beneficiaries or his estate, the total compensation in effect at the time of termination pursuant to Section 3 above, plus a cash bonus equal to the cash bonus, if any, paid to the EMPLOYEE in the twelve month period prior to the termination of employment. (II) The COMPANY shall continue to provide to the EMPLOYEE, at the COMPANY'S expense, health, life, disability and other benefits, as described in Section 3(C) of this AGREEMENT, substantially equal to those being provided to the EMPLOYEE at the date of termination of his employment until the earliest to occur expiration of the TERM or the date on which the EMPLOYEE is included in another employer's benefit plans as a full-time employee; and (III) The EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this AGREEMENT by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the COMPANY hereunder, except as specifically stated in subparagraph II above. (b) DEATH OF THE EMPLOYEE. The TERM shall automatically expire upon the death of the EMPLOYEE. In such event, the EMPLOYEE'S estate shall be entitled to receive the compensation due the EMPLOYEE through the last day of the calendar month in which the death occurred, except as otherwise specified herein. (c) "GOLDEN PARACHUTE" PROVISION. In the event that any payments pursuant to this Section 4 would result in the imposition of a penalty tax pursuant to SECTION 280G, such payments shall be reduced to the maximum amount which may be paid under SECTION 280G without exceeding such limits. Any payments made to the EMPLOYEE Page 5 6 pursuant to this AGREEMENT are subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder. (d) DEFINITION OF "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean any one of the following events: (i) the acquisition of ownership or power to vote more than 25% of the voting stock of the COMPANY or the HOLDING COMPANY; (ii) the acquisition of the ability to control the election of a majority of the directors of COMPANY or the HOLDING COMPANY (iii) during any period of three or less consecutive years individuals who at the beginning of such period constitute the Board of Directors of the COMPANY or the HOLDING COMPANY cease for any reason to constitute at least a majority thereof; provided, however, that any individual whose election or nomination for election as a member of the Board of Directors of the COMPANY or the HOLDING COMPANY was approved by a vote of at least two-thirds of the directors then in office shall be considered to have continued to be a member of the Board of Directors of the COMPANY or the HOLDING COMPANY; (iv) the acquisition by any person or entity of "conclusive control" of the COMPANY within the meaning of 12 C.F.R. Section 574.4(a), or the acquisition by any person or entity of "rebuttable control" within the meaning of 12 C.F.R. section 574.4(b) that has not been rebutted in accordance with 12 C.F.R. Section 574.4(c); or (v) an event that would be required to be reported in response to Item 1 (a) of Form 8-K or Item 6 (e) of Schedule 14A pursuant to the Securities Exchange Act of 1934, as amended (hereinafter referred to as the "EXCHANGE ACT"), or any successor thereto, whether or not any class of securities of the Corporation is registered under the EXCHANGE ACT. For purposes of this paragraph, the term "person" refers to an individual or corporation, partnership, trust, association or other organization, but does not include the EMPLOYEE and any person or persons with whom the EMPLOYEE is "acting in concert" within the meaning of 12C.F.R. Part 574. For purposes of this AGREEMENT, an event shall be deemed to have occurred "in connection with a CHANGE OF CONTROL" if such event occurs within one year before or after a CHANGE OF CONTROL. (e) TERMINATION BY EMPLOYEE. If the EMPLOYEE terminates this AGREEMENT without the written consent of the COMPANY, other than pursuant to Section 4(a)(ii) of this AGREEMENT, the EMPLOYEE shall not engage in the financial Page 6 7 institutions business as a director, officer, employee or consultant for any business or enterprise which competes with the principal business of the COMPANY or the HOLDING COMPANY or any of their subsidiaries within Mahoning, Trumbull and Columbiana counties or any other geographic area in which the COMPANY or the HOLDING COMPANY is doing business for the unexpired TERM of this AGREEMENT. This provision shall not apply in the event of the termination of the employment of the EMPLOYEE by the EMPLOYER prior to the expiration of the TERM or the termination of the employment of the EMPLOYEE by the EMPLOYEE pursuant to Section 4(a)(ii) of this AGREEMENT. 5. SPECIAL REGULATORY EVENTS. Notwithstanding the provisions of Section 4 of this AGREEMENT, the obligations of the COMPANY to the EMPLOYEE shall be as follows in the event of the following circumstances: (a) If the EMPLOYEE is suspended and/or temporarily prohibited from participating in the conduct of the COMPANY'S affairs by a notice served under section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (hereinafter referred to as the "FDIA"), the COMPANY'S obligations under this AGREEMENT shall be suspended as of the date of service of such notice, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the COMPANY shall pay the EMPLOYEE all or part of the compensation withheld while the obligations in this AGREEMENT were suspended and reinstate, in whole or in part, any of the obligations that were suspended; (b) If the EMPLOYEE is removed and/or permanently prohibited from participating in the conduct of the COMPANY'S affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDIA, all obligations of the COMPANY under this AGREEMENT shall terminate as of the effective date of such order; provided, however, that vested rights of the EMPLOYEE shall not be affected by such termination; (c) If the COMPANY is in default, as defined in section 3(x)(1) of the FDIA, all obligations under this AGREEMENT shall terminate as of the date of default; provided, however, that vested rights of the EMPLOYEE SHALL NOT BE AFFECTED; (d) All obligations under this AGREEMENT shall be terminated, except to the extent of a determination that the continuation of this AGREEMENT is necessary for the continued operation of the COMPANY, (i) by the Director of the Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his or her designee, at the time that the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the COMPANY under the authority continued in Section 13(c) of the FDIA or (ii) by the Director of the OTS, or his or her designee, at any time the Director of the OTS approves a supervisory merger to resolve problems related to the operation of the COMPANY or when the COMPANY is determined by Director of the OTS to be in an unsafe or unsound condition; provided, however that no vested rights of the EMPLOYEE shall not be affected by any such termination; and Page 7 8 (e) The provisions of this Section 5 are governed by the requirements of 12 C.F.R. Section 563.39 (b) and in the event that any statements in this Section 5 are inconsistent with 12 C.F.R. Section 563.39(b), the provisions of 12 C.F.R. Section 563.39(b) shall be controlling. 6. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT shall preclude the COMPANY or the HOLDING COMPANY from consolidating with, merging into, or transferring all, or substantially all, of their assets to another corporation that assumes all their obligations and undertakings hereunder. Upon such a consolidation, merger or transfer of assets, the term "COMPANY" as used herein, shall mean such other corporation or entity, and this AGREEMENT shall continue in full force and effect. 7. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his employment he will learn and have access to confidential information regarding the COMPANY and its customers and businesses. The EMPLOYEE agrees and covenants not to disclose or use for his own benefit, or the benefit of any other person or entity, any confidential information, unless or until the COMPANY consents to such disclosure or use of such information is otherwise legally in the public domain. The EMPLOYEE shall not knowingly disclose or reveal to any unauthorized person any confidential information relating to the COMPANY, its subsidiaries, or affiliates, or any of the businesses operated by them, and the EMPLOYEE confirms that such information constitutes the exclusive property of the COMPANY. The EMPLOYEE shall not otherwise knowingly act or conduct himself to the material detriment of the COMPANY, its subsidiaries, or affiliates or in a manner which is inimical or contrary to the interests of the COMPANY. 8. NON-ASSIGNABILITY. Neither this AGREEMENT nor any right or interest hereunder shall be assignable by the EMPLOYEE, by the EMPLOYEE, his beneficiaries or legal representatives without the COMPANY'S prior written consent; provided, however, that nothing in this Section 8 shall preclude the EMPLOYEE from designating, a beneficiary to receive any benefits payable hereunder upon his death or the executors, administrators or legal representatives of the EMPLOYEE or his estate from assigning any rights hereunder to the person or persons entitled thereto. 9. NO ATTACHMENT Except as required by law, no right to receive payment under this AGREEMENT shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or similar process of assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 10. BINDING AGREEMENT. This AGREEMENT shall be binding upon, and inure to the benefit of, the EMPLOYEE and the COMPANY and their respective permitted successors and assigns. Page 8 9 11. AMENDMENT OF AGREEMENT. This AGREEMENT may not be modified or amended, except by an instrument in writing signed by the parties hereto. 12. WAIVER. No term or condition of this AGREEMENT shall deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of this AGREEMENT, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver, unless specifically stated therein, and each waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than the act specifically waived. 13. SEVERABILITY. If, for any reason, any provision of this AGREEMENT is held invalid, such invalidity shall not affect the other provisions of this AGREEMENT not held so invalid, and each such other provision shall, to the full extent consistent with applicable law, continue in full force and effect. If this AGREEMENT is held invalid or cannot be enforced, then any prior AGREEMENT between the COMPANY (or any predecessor thereof) and the EMPLOYEE shall be deemed reinstated to the full extent permitted by law, as this AGREEMENT had not been executed. 14. HEADINGS. The headings of the paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this AGREEMENT. 15. GOVERNING LAW. This AGREEMENT has been executed and delivered in the State of Ohio and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Ohio, except to the extent that federal law is governing. 16. EFFECT OF PRIOR AGREEMENTS. This AGREEMENT contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the COMPANY or any predecessor of the COMPANY and the EMPLOYEE. 17. The attached addendum #1 shall be incorporated into this agreement. 18. NOTICES. Any notice or other communication required or permitted pursuant to this AGREEMENT shall be deemed delivered if such notice or communication is in writing and is delivered personally or by facsimile transmission or is deposited in the United States mail, postage prepaid, addressed as follows: If to the COMPANY: The Home Savings and Loan Company Of Youngstown, Ohio 275 Federal Plaza West Post Office Box 1111 Youngstown, Ohio 44501-1111 Page 9 10 If to the EMPLOYEE: Patrick W. Bevack 6075 Castle Hill Drive Highland Heights, Ohio 44143 IN WITNESS WHEREOF, the COMPANY has caused this AGREEMENT to be executed by its duly authorized officer, and the EMPLOYEE has signed this AGREEMENT, each as of the day and year first above written. Attest: THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO /s/ Mary Jane Botsko By:/s/ Douglas M. McKay Douglas M. McKay Chief Executive Officer and Chairman of the Board of Directors Attest: /s/ David Lodge /s/ Patrick W. Bevack Patrick W. Bevack 10 EX-11 4 ex11.txt EXHIBIT 11 1 UNITED COMMUNITY FINANCIAL CORP. EXHIBIT 11
COMPUTATIONS OF EARNINGS PER COMMON SHARE Three Months Ended Six Months Ended June 30, June 30, ------------------------------- -------------------------- 2000 1999 2000 1999 ------------- ------------ ---------- ---------- (In thousands, (In thousands, except per share data) except per share data) BASIC EARNINGS PER SHARE: Net income applicable to common stock $ 2,970 $ 5,302 $ 6,072 $ 10,427 Weighted average common shares outstanding 32,904 33,898 32,914 33,878 ------------- ------------ ---------- ---------- Basic earnings per share $ 0.09 $ 0.16 $ 0.18 $ 0.31 ============= ============ ========== ========== DILUTED EARNINGS PER SHARE: Net income applicable to common stock $ 2,970 $ 5,302 $ 6,072 $ 10,427 Weighted average common shares outstanding 32,904 33,898 32,914 33,878 Dilutive effect of restricted stock 538 - 525 - ------------- ------------ ---------- ---------- Weighted average common shares outstanding for dilutive computation 33,442 33,898 33,439 33,878 ------------- ------------ ---------- ---------- Diluted earnings per share $ 0.09 $ 0.16 $ 0.18 $ 0.31 ============= ============ ========== ==========
EX-27 5 ex27.txt 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 SIX MONTHS ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 23,654 0 622 5,161 246,965 125,990 122,843 781,432 6,324 1,269,569 830,019 0 179,992 0 0 0 136,616 122,942 1,269,569 29,364 14,240 695 44,299 16,429 20,454 23,845 0 223 27,668 9,289 9,289 0 0 6,072 0.18 0.18 3.98 3,757 0 214 0 6,390 70 5 6,324 6,324 0 0
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