8-K 1 l90776ae8-k.txt UNITED COMMUNITY FINANCIAL CORP. 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: October 17, 2001 ---------------- United Community Financial Corp. ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Ohio 0-24399 34-1856319 ------------------------------------------------------------------------ (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification Number) 275 Federal Plaza West Youngstown, Ohio 44503-1203 ------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (330) 742-0500 --------------------- Not Applicable -------------------------------------------------------------- (Former name or former address, if changes since last report.) UNITED COMMUNITY FINANCIAL CORP. 275 Federal Plaza West Youngstown, Ohio 44503-1203 FOR IMMEDIATE RELEASE Patrick A. Kelly Chief Financial Officer (330) 742-0500, Ext. 592 UNITED COMMUNITY FINANCIAL CORP. ANNOUNCES EARNINGS FOR THIRD QUARTER 2001 ITEM 5: OTHER EVENTS YOUNGSTOWN, Ohio (October 17, 2001) - United Community Financial Corp. (Nasdaq: UCFC) today announced its financial results for the third quarter of 2001. United Community is the holding company of The Home Savings and Loan Co. and Butler Wick Corp. For the three month period ended September 30, 2001, United Community reported net income of $4.0 million, or $0.12 per diluted share, compared to net income of $3.1 million, or $0.09 per diluted share, for the same three month period in 2000. United Community's net interest income for the three months ended September 30, 2001 increased $4.3 million over the same period in 2000, which was offset by a $1.8 million increase in noninterest expense, a $478,000 decrease in noninterest income and a $315,000 increase in provision for loan losses. The increase in net interest income is a result of a large increase in interest income on loans due to increased loan volume in 2001 and the acquisition of Industrial Bancorp's (Industrial) loan portfolio. This increase was partially offset by an increase in interest expense on deposits, which was primarily due to the acquisition of Industrial's deposits. The reduction in noninterest income was primarily due to a decrease in commissions and a loss on trading securities, which were partially offset by an increase in service fees and other charges. "United Community has had a very positive quarter showing growth in earnings," said Douglas M. McKay, chairman and chief executive officer of United Community. "The acquisition of Industrial Bancorp was immediately accretive to earnings and added 12 additional branches to Home Savings. In addition to the acquisition, Home Savings has continued growth of the loan portfolio and deposit base. These achievements are helping United Community succeed in its strategic initiatives of growth, profitability and capital management." Net income for the nine months ended September 30, 2001 was $10.1 million, or $0.31 per diluted share, compared to $9.2 million, or $0.27 per diluted share, for the nine months ended September 30, 2000. Net interest income increased $5.2 million primarily as a result of an increase in loan interest income of $19.6 million, partially offset by an increase of $9.2 million in interest expense on deposits, and decreases of $6.1 million in interest income on securities and $1.1 million in interest on margin accounts. Noninterest income for the nine months declined by $1.7 million due to declines of $3.5 million in commission income at Butler Wick and $1.0 million in trading securities losses. The lower commission income is attributable to the overall volatility of the stock market, which has led to fewer transactions throughout the brokerage industry. These declines were partially offset by increases of $1.9 million in service fees and other charges, and higher gains on the sale of mortgage-related and investment securities and loans. Noninterest expense increased by $469,000 due largely to a $1.1 million increase in equipment and data processing, offset by a $3.0 million decline in salaries and employee benefits and a decrease of $1.3 million in franchise taxes. The decline in salaries and employee benefits is primarily due to the decline in commission income, and lower expenses related to the Butler Wick retention plan. The increase in noninterest expense was also affected by a $2.9 million gain on postretirement curtailment and a $1.0 million loss on pension termination, both of which were recognized in 2000. United Community's annualized return on average assets and annualized return on average equity were 0.86% and 5.19%, respectively, for the nine months ended September 30, 2001. The annualized return on average assets and annualized return on average equity were 0.98% and 4.71%, respectively, for the nine months ended September 30, 2000. Total shareholders' equity decreased $2.9 million, or 1.1%, to $259.0 million at September 30, 2001 from $261.9 million at December 31, 2000. The decrease was primarily due to the quarterly dividend payments and treasury stock purchases, offset by earnings for the year and an increase in other comprehensive income. Book value as of September 30, 2001 was $7.99 per share. Total assets increased $603.0 million, or 46.4%, from December 31, 2000 to September 30, 2001, primarily as a result of the acquisition of Industrial's assets. Cash and cash equivalents increased $29.8 million, loans and loans held for sale increased $502.7 million and $121.0 million, respectively. Increases in deposits of $442.6 million and other borrowed funds of $161.3 million and a reduction of $78.1 million in securities funded these increases. Net loans increased $502.7 million, or 57.3%, from December 31, 2000 to September 30, 2001, of which $380.1 million are attributable to the purchase of Industrial. Home Savings had increases of $598.1 million in gross mortgage loans, $101.2 million in gross construction loans and $56.0 million in gross consumer loans, which were offset by a $94.6 million decline in commercial loans. During the third quarter there was a reclassification of $123.6 million in commercial loans, of which $105.2 million and $18.4 million were reclassified to mortgage loans and construction loans, respectively. Home Savings has become active in the secondary loan market during 2001. Net loans held for sale increased by $121.0 million. Home Savings is anticipating selling a majority of these loans during the fourth quarter of 2001. "The continued loan growth experienced by Home Savings is the result of our focus to diversify our loan portfolio," McKay said. "We continue to see many opportunities, particularly in consumer and commercial lending, where we are offering a variety of new products to our customers." Deposits increased $442.6 million, or 49.2%, from December 31, 2000 to September 30, 2001, of which $313.6 million is attributable to the acquisition of Industrial. Increases in Home Savings' deposits are primarily due to a $61.0 million increase in certificates of deposit and $39.2 million increase in checking accounts, largely as a result of Home Savings offering competitive interest rates and products. Other borrowed funds increased $161.3 million due primarily to $87.0 million borrowed from the Federal Home Loan Bank to fund the acquisition of Industrial Bancorp on July 1, 2001. Other borrowed funds were used primarily to fund loan growth. Home Savings and Butler Wick are wholly owned subsidiaries of United Community Financial Corp. Home Savings operates 29 full service banking offices, including the former Industrial offices, located throughout Northeastern and Northcentral Ohio and 4 loan production offices in the Cleveland, Canton, Stow and Mentor areas. Butler Wick has 12 office locations providing full service retail brokerage, capital markets and trust services throughout Northern Ohio and Western Pennsylvania. Additional information on United Community, Home Savings and Butler Wick may be found on United Community's web site: www.ucfconline.com. ### This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements regarding continued implementation of United Community's strategic plan and anticipated earnings for the year are forward-looking in nature. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Such risks include, among other factors, the acceptance of new products in the marketplace and the success of finding additional opportunities for product and geographic expansion. For a more complete list of risk factors, read United Community's Form 10-K filed with the Securities and Exchange Commission. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED COMMUNITY FINANCIAL CORP. By: /s/ Patrick A. Kelly ----------------------------------- Patrick A. Kelly Chief Financial Officer Dated: October 17, 2001 UNITED COMMUNITY FINANCIAL CORP.
As of As of September 30, 2001 December 31, 2000 ------------------ ----------------- (In thousands, except per share data) SELECTED FINANCIAL CONDITION DATA: ASSETS Cash and cash equivalents $ 75,740 $ 45,972 Mortgage-related securities 165,598 199,415 Marketable securities 60,942 105,254 Federal Home Loan Bank stock 18,503 13,793 Loans held for sale 120,981 - Education loans available for sale 6,030 3,850 Loans 1,383,491 879,356 Allowance for loan losses (10,127) (6,553) Real estate owned 410 359 Goodwill 19,650 - Core deposit intangible 7,068 - Other assets 54,933 58,753 ----------- ----------- Total assets $ 1,903,219 $ 1,300,199 =========== =========== LIABILITIES Deposits $ 1,342,997 $ 900,413 Other borrowed funds 275,572 114,317 Other liabilities 25,649 23,570 ----------- ----------- Total liabilities 1,644,218 1,038,300 SHAREHOLDERS' EQUITY Preferred stock-no par value; 1,000,000 shares authorized and unissued at September 30, 2001 - - Common stock-no par value; 499,000,000 shares authorized; 37,754,086 and 37,800,497 issued, respectively 136,859 136,967 Retained earnings 157,748 155,026 Other comprehensive income (loss) 1,683 (98) Unearned compensation (23,832) (26,674) Treasury stock, at cost; 1,958,500 and 483,500 shares, respectively (13,457) (3,322) ----------- ----------- Total shareholders' equity 259,001 261,899 ----------- ----------- Total liabilities and shareholders' equity $ 1,903,219 $ 1,300,199 =========== =========== Book value per share $ 7.99 $ 7.77
Three Months Ended Three Months Ended Three Months Ended September 30, June 30, September 30, 2001 2001 2000 -------- -------- -------- (In thousands, except per share data) SELECTED EARNINGS DATA (UNAUDITED): Interest income $ 32,872 $ 24,645 $ 23,236 Interest expense 16,819 12,244 11,443 -------- -------- -------- Net interest income 16,053 12,401 11,793 Provision for loan losses 465 250 150 Noninterest income: Commissions 3,019 3,421 3,910 Service fees and other charges 2,156 1,848 1,404 Underwriting and investment banking 127 321 113 Net gains (losses) Loans sold 258 - - Securities (655) 264 1 Other 46 69 8 Other income 285 195 278 -------- -------- -------- Total noninterest income 5,236 6,118 5,714 Noninterest expense Salaries and employee benefits 8,097 8,534 9,483 Gain from curtailment of postretirement benefits - - (2,928) Loss from settlement of pension - - 1,008 Occupancy 702 621 552 Equipment and data processing 1,930 1,775 1,477 Other noninterest expense 3,789 2,622 3,148 -------- -------- -------- Total noninterest expense 14,518 13,552 12,740 Income before taxes 6,306 4,717 4,617 Income taxes 2,341 1,779 1,528 -------- -------- -------- Net income $ 3,965 $ 2,938 $ 3,089 ======== ======== ======== Basic earnings per share $ 0.12 $ 0.09 $ 0.09 Diluted earnings per share $ 0.12 $ 0.09 $ 0.09 Dividends paid per share $ 0.075 $ 0.075 $ 0.075
Nine Months Ended Nine Months Ended September 30, September 30, 2001 2000 -------- -------- (In thousands, except per share data) SELECTED EARNINGS DATA: Interest income $ 81,555 $ 67,535 Interest expense 40,744 31,897 -------- -------- Net interest income 40,811 35,638 Provision for loan losses 1,045 150 Noninterest income: Commissions 10,031 13,532 Service fees and other charges 5,923 4,017 Underwriting and investment banking 511 327 Net gains (losses) Loans sold 339 - Securities (465) 224 Other 52 5 Other income 753 694 -------- -------- Total noninterest income 17,144 18,799 Noninterest expense Salaries and employee benefits 24,496 27,554 Gain on postretirement curtailment - (2,928) Loss on pension termination - 1,008 Occupancy 1,896 1,540 Equipment and data processing 5,324 4,222 Other noninterest expense 9,134 8,985 -------- -------- Total noninterest expense 40,850 40,381 Income before taxes 16,060 13,906 Income taxes 5,954 4,745 -------- -------- Net income $ 10,106 $ 9,161 ======== ======== Basic earnings per share $ 0.31 $ 0.27 Diluted earnings per share $ 0.31 $ 0.27 Dividends paid per share $ 0.225 $ 0.225
Three Months Ended Three Months Ended Three Months Ended September 30, June 30, March 31, 2001 2001 2001 ------------------ ------------------ ------------------- (Dollars in thousands) AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED): Net loans held for investment (including allowance for loan losses $ 1,456,973 $ 980,455 $ 890,813 of $10,197 $7,063 and $6,865, respectively) Net loans held for sale 9,204 4,540 4,914 Mortgage-related securities 174,578 191,580 197,933 Marketable securities 64,282 73,667 96,088 Margin accounts 25,568 26,902 32,874 Other interest-earning assets 68,144 51,287 45,586 Total interest-earning assets 1,798,749 1,328,431 1,268,208 Total assets 1,880,134 1,373,514 1,308,752 Certificates of deposit 821,786 579,160 553,389 Interest bearing checking, demand and savings accounts 430,089 328,173 330,020 Noninterest bearing deposits 29,670 23,414 14,889 Other interest bearing liabilities 276,963 135,841 104,430 Total interest bearing liabilities 1,558,508 1,066,588 1,002,728 Total noninterest bearing liabilities 62,920 48,787 43,902 Total liabilities 1,621,428 1,115,375 1,046,648 Shareholders' equity 258,706 258,139 262,104 Common shares outstanding for basic EPS calculation 31,920,741 31,824,605 32,671,313 Common shares outstanding for diluted EPS calculation 32,196,557 32,048,424 32,814,872 SUPPLEMENTAL LOAN DATA: Loans originated $ 175,659 $ 225,778 $ 113,590 Loans purchased 1,227 450 900 Loans sold 13,044 4,984 1,305 Loan chargeoffs 132 45 32 Recoveries on loans 5 5 14
Three Months Ended Three Months Ended Three Months Ended September 30, June 30, March 31, 2001 2001 2001 ------------------ ------------------ ------------------- SUPPLEMENTAL DATA: Nonaccrual loans $ 12,979 $ 6,313 $ 5,578 Restructured loans 185 204 206 Other real estate owned 410 349 349 Total nonperforming assets 13,574 6,865 6,133 Loans serviced for others 6,741 4,653 4,780 Number of full time equivalent employees 716 605 591 Mortgage-related securities available for sale 79,496 88,443 97,741 Mortgage-related securities held to maturity 86,102 93,712 100,651 Marketable securities trading 6,126 6,763 5,968 Marketable securities available for sale 54,232 49,883 79,415 Marketable securities held to maturity 584 985 881 Federal home loan bank stock 18,503 14,293 14,039 Fair value of held to maturity securities 89,238 96,791 103,639 REGULATORY CAPITAL DATA: Regulatory tangible capital $ 160,917 $ 182,426 $ 178,896 Tangible capital ratio 8.90 12.89 14.05 Regulatory core capital 160,917 182,426 178,896 Core capital ratio 8.90 12.89 14.05 Regulatory total capital 169,805 188,311 185,330 Total risk adjusted assets 1,212,252 877,490 785,202 Total risk adjusted ratio 14.01 21.46 23.60