<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
UNITED COMMUNITY FINANCIAL CORP.
-------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------
3) Filing Party:
--------------------------------------
4) Date Filed:
--------------------------------------
<PAGE>
UNITED COMMUNITY FINANCIAL CORP.
275 FEDERAL PLAZA WEST
YOUNGSTOWN, OHIO 44503-1203
(330) 742-0500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
United Community Financial Corp. (UCFC) will be held at Mr. Anthony's, 7440
South Avenue, Boardman, Ohio , on April 29 1999, at 10:00 a.m., Eastern Time
(Annual Meeting), for the following purposes, all of which are more completely
set forth in the accompanying Proxy Statement:
1. To reelect five directors of UCFC for terms expiring in 2000;
2. To ratify the selection of Deloitte & Touche LLP as the auditors
of UCFC for the current fiscal year; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of UCFC of record at the close of business on March
5, 1999, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING MAY BE ASSURED. The giving of a proxy does not affect your right to vote
in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
Youngstown, Ohio Douglas M. McKay
March 31, 1999 President and Chairman of the Board
<PAGE>
UNITED COMMUNITY FINANCIAL CORP.
275 FEDERAL PLAZA WEST
YOUNGSTOWN, OHIO 44503-1203
(330) 742-0500
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of
United Community Financial Corp., an Ohio corporation (UCFC), for use at the
1999 Annual Meeting of Shareholders of UCFC to be held at Mr. Anthony's, 7440
South Avenue, Boardman, Ohio on April 29, 1999, at 10:00 a.m., Eastern Time, and
at any adjournments thereof (Annual Meeting). Without affecting any vote
previously taken, the proxy may be revoked by a shareholder by execution of a
later dated proxy which is received by UCFC before the proxy is exercised or by
giving notice of revocation to UCFC in writing or in open meeting before the
proxy is exercised. Attendance at the Annual Meeting will not, of itself, revoke
a proxy.
Each properly executed proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the re-election of Richard M. Barrett, Gary Keller,
Douglas M. McKay, Herbert F. Schuler, Sr. and John F.
Zimmerman, Jr. as directors of UCFC for terms expiring in
2000; and
FOR the ratification of the selection of Deloitte & Touche LLP
(Deloitte & Touche) as the auditors of UCFC for the current
fiscal year.
Proxies may be solicited by the directors, officers and other employees
of UCFC and The Home Savings and Loan Company of Youngstown, Ohio, a
wholly-owned subsidiary of UCFC (Home Savings), in person or by telephone,
telecopy, telegraph or mail, only for use at the Annual Meeting. Such proxies
will not be used for any other meeting. The cost of soliciting proxies will be
borne by UCFC.
Only shareholders of record as of the close of business on March 5,
1999 (Voting Record Date), are entitled to vote at the Annual Meeting. Each such
shareholder will be entitled to cast one vote for each share owned. UCFC's
records disclose that, as of the Voting Record Date, there were 34,715,625 votes
entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to the shareholders of UCFC
on or about March 31, 1999.
<PAGE>
VOTE REQUIRED
ELECTION OF DIRECTORS
Under Ohio law and UCFC's Code of Regulations (Regulations), the five
nominees receiving the greatest number of votes will be elected as directors.
Each shareholder will be entitled to cast one vote for each share owned. Shares
as to which the authority to vote is withheld are not counted toward the
election of directors or toward the election of the individual nominees
specified in the enclosed Proxy. If the enclosed Proxy is signed and dated by
the shareholder but no vote is specified thereon, the shares held by such
shareholder will be voted FOR the re-election of the five nominees. No
shareholder may cumulate votes in the election of directors.
RATIFICATION OF SELECTION OF AUDITORS
The affirmative vote of the holders of a majority of the shares of UCFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Deloitte & Touche as the auditors of UCFC for the current
fiscal year. Shares which are held by a nominee for a beneficial owner and which
are represented in person or by proxy at the Annual Meeting but not voted with
respect to such proposals (non-votes) will have the same effect as a vote
against the approval of such ratification, as will abstentions. If, however, a
shareholder has signed and dated a Proxy but has not voted on the ratification
of the selection of Deloitte & Touche by checking an appropriate block on the
Proxy, such person's shares will be voted FOR the ratification of the selection
of Deloitte & Touche and will not be considered non-votes.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only person known to UCFC to own beneficially more than five percent of the
outstanding common shares of UCFC as of March 1, 1999:
<TABLE>
<CAPTION>
Amount and nature of Percent of
Name and address beneficial ownership shares outstanding
- --------------------- --------------------- -------------------
<S> <C> <C>
United Community Financial Corp. Employee Stock
Ownership Plan 2,677,250 (1) 7.71%
5700 RiverTech Court
Riverdale, Maryland 20737
</TABLE>
- ------------------------
(1) Includes 2,586,161 unallocated shares with respect to which Riggs Bank
N.A., as the Trustee for the United Community Financial Corp. Employee
Stock Ownership Plan (the "ESOP"), has shared voting power.
2
<PAGE>
The following table sets forth certain information with respect to the
number of common shares of UCFC beneficially owned by each director and by the
directors and executive officers of UCFC as a group as of March 1, 1999:
<TABLE>
<CAPTION>
Amount and nature of
beneficial ownership
--------------------------------------------
Sole voting and Shared voting and Percent of
Name and address (1) investment power investment power shares outstanding
- -------------------- ---------------- ---------------- ------------------
<S> <C> <C> <C>
Richard M. Barrett 17,770 17,529 0.11%
Gary Keller 13,837 44,467 0.16
Douglas M. McKay 35,007 78,764 0.33
Herbert F. Schuler, Sr. 9,684 40,860 0.15
John F. Zimmerman, Jr. 590 11,480 0.03
All directors and executive
officers as a group (7 persons) 123,834 248,467 1.07%
</TABLE>
- ----------------------------
(1) Each of the persons listed in this table may be contacted at the
address of UCFC.
PROPOSAL ONE - ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Regulations provide for a Board of Directors consisting of five
persons. In accordance with Section 2.03 of the Regulations, nominees for
election as directors may be proposed only by the directors or by a shareholder
entitled to vote for directors if such shareholder has submitted a written
nomination to the Secretary of UCFC by the sixtieth day before the first
anniversary of the most recent annual meeting of shareholders held for the
election of directors. If the annual meeting for the election of directors in
any year is not held on or before the thirty-first day next following such
anniversary, then the written notice shall be received by the Secretary within a
reasonable time prior to the date of the annual meeting. Each written nomination
must state the name, age, business or residence address of the nominee, the
principal occupation or employment of the nominee, the number of common shares
of UCFC owned either beneficially or of record by each nominee and the length of
time the UCFC shares have been so owned.
3
<PAGE>
The Board of Directors proposes the re-election of the following
persons to serve until the Annual Meeting of Shareholders in 2000 and until
their successors are duly elected and qualified:
<TABLE>
<CAPTION>
Director of Director of
Name Age (1) Positions held UCFC since (2) Home Savings since
- ---- ------- -------------- -------------- ------------------
<S> <C> <C> <C> <C>
Richard M. Barrett 60 Director 1998 1976
Gary Keller 57 Director 1998 1982
Douglas M. McKay 51 Director, Chairman of the 1998 1995
Board and President
Herbert F. Schuler, Sr. 58 Director 1998 1977
John F. Zimmerman, Jr. 50 Director 1998 1991
- -----------------------------
</TABLE>
(1) As of March 1, 1999.
(2) Each person became a director of UCFC in connection with the conversion
of Home Savings from mutual to stock form (Conversion) and the
formation of UCFC as the holding company for Home Savings.
If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.
RICHARD M. BARRETT. Prior to his retirement in 1995, Mr. Barrett
was the President of Barrett Cadillac, Inc., an automobile dealership located
in Youngstown, Ohio.
GARY KELLER. Mr. Keller is the Chairman, President and Chief Executive
Officer of Salem China Company and Urfic, Inc., which manufacture, import and
distribute ceramic products and solid brass decorative hardware. Mr. Keller is
also the President and Chief Executive Officer of Sebring Industries, Inc., an
import business located in Salem, Ohio.
DOUGLAS M. MCKAY. Mr. McKay joined Home Savings in 1971. Since 1995,
Mr. McKay has served as Chief Executive Officer and Chairman of the Board of
Home Savings and, since 1996, has also served as President of Home Savings. From
1991 to 1995, Mr. McKay was the Executive Vice President of Home Savings.
HERBERT F. SCHULER, SR. Mr. Schuler is the President and Chief
Executive Officer of General Extrusions, Inc., an aluminum parts manufacturer,
and the President and Treasurer of Genex Tool & Die, Inc. Mr. Schuler has been
employed by each company since the 1960s.
JOHN F. ZIMMERMAN, JR. Mr. Zimmerman, an attorney, is a partner in the
law firm of Manchester, Bennett, Powers and Ullman, a Legal Professional
Association, located in Youngstown, Ohio, and has been associated with the firm
since 1974.
4
<PAGE>
MEETINGS OF DIRECTORS
UCFC was incorporated in February 1998. The Board of Directors of UCFC
met nine times for regularly scheduled and special meetings during the year
ended December 31, 1998. Except for Mr. Keller who attended 66% of the meetings,
each director attended at least 75% of the meetings of the Board of Directors.
Mr. Keller's absences were due to special board meetings called while he was
traveling for his companies' business.
Each UCFC director is also a member of the Board of Directors of Home
Savings. The Board of Directors of Home Savings met 18 times for regularly
scheduled meetings during the year ended December 31, 1998.
COMMITTEES OF DIRECTORS
The Board of Directors of UCFC has an Audit Committee but does not have
a nominating committee or a compensation committee. Nominees for election to the
Board of Directors are selected by the entire Board of Directors.
The Audit Committee of UCFC is responsible for reviewing and reporting
to the full Board of Directors on the independent audit of UCFC and related
matters to ensure effective compliance with regulatory and internal policies and
procedure. The members of the Audit Committee are Richard M. Barrett, Gary
Keller, Herbert F. Schuler, Sr. and John F. Zimmerman, Jr. The Audit Committee
did not meet during 1998.
The Board of Directors of Home Savings has a Salary Committee. Each of
the outside directors of Home Savings serves on the Salary Committee of Home
Savings. The function of the Salary Committee is to determine the compensation
of Home Savings' three senior officers and to make decisions regarding employee
benefits and related matters. The Salary Committee met once during 1998.
5
<PAGE>
EXECUTIVE OFFICERS
In addition to Mr. McKay, the President of UCFC and Home Savings, the
following persons are executive officers of UCFC and hold the designated
positions:
<TABLE>
<CAPTION>
Name Age (1) Position(s) held
- ---- ------- ------------------
<S> <C> <C>
Patrick A. Kelly 40 Treasurer of UCFC,
Treasurer, Chief Financial Officer and
Senior Vice President of Home Savings
Donald J. Varner 67 Secretary of UCFC,
Secretary and Senior Vice President/ Retail
Banking of Home Savings
</TABLE>
- ------------------------
(1) As of March 1, 1999.
PATRICK A. KELLY. Mr. Kelly was appointed Treasurer of Home Savings in
April 1992 and named Senior Vice President of Home Savings in November 1995. Mr.
Kelly has been employed by Home Savings since February 1983, and has been a
director of Home Savings since 1996.
DONALD J. VARNER. Mr. Varner, an attorney, has worked for Home Savings
for the past 41 years, and from 1976 to 1995, he served Home Savings as Vice
President and Corporate Counsel. Mr. Varner is currently the Corporate Secretary
of Home Savings and Senior Vice President of Home Savings' Retail Banking
Division. Mr. Varner has been a director of Home Savings since 1987.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table presents certain information regarding the
compensation paid to the chief executive officer of UCFC and each executive
officer of UCFC who received cash and cash equivalent compensation in excess of
$100,000 from UCFC and Home Savings for services rendered to UCFC and Home
Savings during 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -------------------------------- ------------------ -------------------------------------- ----------------------------
Annual compensation
------------------- ------------------
Name and principal Year Salary ($)(1) Bonus ($) All other
position compensation ($)
- -------------------------------- ------------------ ------------------- ------------------ ----------------------------
<S> <C> <C> <C> <C>
Douglas M. McKay 1998 $300,000 $185,481 $41,717 (2)
President 1997 239,934 120,614 28,455 (3)
Donald J. Varner 1998 $135,800 $76,671 $41,795 (4)
Secretary 1997 126,588 56,418 24,823 (5)
Patrick A. Kelly 1998 $133,700 $76,057 $41,738 (6)
Treasurer 1997 115,184 54,859 24,412 (7)
- -------------------------------- ------------------ ------------------- ------------------ ----------------------------
</TABLE>
(1) Does not include amounts attributable to other miscellaneous benefits
received by executive officers. The cost to Home Savings of providing
such benefits to each named executive officer was less than 10% of his
cash compensation.
(2) Consists of directors' fees of $16,800, a matching contribution of
$2,500 paid by Home Savings to Mr. McKay's account in The Home Savings
and Loan Company 401(k) Savings Plan (the 401(k) Plan) and the $22,417
value at December 31, 1998, of 1,507 shares allocated to Mr. McKay's
ESOP account.
(3) Consists of directors' fees of $16,000, a matching contribution of
$9,595 and a discretionary contribution of $2,860 paid by Home Savings
to Mr. McKay's account in the 401(k) Plan.
(4) Consists of directors' fees of $17,200, a matching contribution of
$2,178 paid by Home Savings to Mr. Varner's account in the 401(k)
Plan and the $22,417 value at December 31, 1998, of 1,507 shares
allocated to Mr. Varner's ESOP account.
(Footnotes continued on next page)
7
<PAGE>
(5) Consists of directors' fees of $15,600, a matching contribution of
$7,777 and a discretionary contribution of $1,446 paid by Home Savings
to Mr. Varner's account in the 401(k) Plan.
(6) Consists of directors' fees of $17,200, a matching contribution of
$2,121 paid by Home Savings to Mr. Kelly's account in the 401(k) Plan
and the $22,417 value at December 31, 1998, of 1,507 shares allocated
to Mr. Kelly's ESOP account.
(7) Consists of directors' fees of $16,000, a matching contribution of
$7,127 and a discretionary contribution of $1,285 paid by Home Savings
to Mr. Kelly's account in the 401(k) Plan.
EMPLOYMENT AGREEMENTS
On December 17, 1998, Home Savings entered into employment agreements
with Douglas M. McKay, Donald J. Varner and Patrick A. Kelly (collectively,
Employment Agreements). Each of the Employment Agreements provide for a term of
three years and performance reviews by the Board of Directors not less often
than annually at which time the Employment Agreement may be extended for a
period of one year. The Employment Agreements also provide for the inclusion of
the officers in any formally established employee benefit, bonus, pension, and
profit-sharing plans for which senior management personnel are eligible and for
vacation and sick leave in accordance with Home Savings' prevailing policies.
The Employment Agreements are terminable by Home Savings at any time.
In the event of termination by Home Savings for "cause," as defined in the
Employment Agreements, the employee has no right to receive any compensation or
other benefits for any period after such termination. In the event of
termination by Home Savings other than for cause or in connection with a "change
of control," as defined in the Employment Agreements, the employee is entitled
to a continuation of salary payments for a period of time equal to the remaining
term of the Employment Agreement, a continuation of benefits substantially equal
to those being provided at the date of termination of his employment until the
earliest to occur of the end of the term of the Employment Agreement or the date
on which the employee becomes employed full-time by another employer, and a cash
bonus equal to the cash bonus, if any, paid to the employee in the twelve-month
period prior to the termination of his employment.
In the event of termination in connection with a "change in control,"
the employee is entitled to payment of an amount equal to 2.99 times the
employee's annual compensation immediately preceding the termination of his
employment. In addition, the employee is entitled to continued coverage under
benefit plans until the earliest of the end of the term of his Employment
Agreement or the date on which he is included in another employer's benefit
plans as a full-time employee. The maximum which the employee may receive,
however, is limited to an amount which will not result in the imposition of a
penalty tax pursuant to Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (Code). "Control," as defined in the Employment Agreements, generally
refers to the acquisition by any person or entity of the ownership or power to
vote 10% or more of the voting stock of Home Savings or UCFC, the control of the
election of a majority of the directors of Home Savings or UCFC, or the exercise
of a controlling influence over the management or policies of Home Savings or
UCFC.
8
<PAGE>
The aggregate payments that would have been made to Messrs. McKay,
Varner and Kelly pursuant to the Employment Agreements, assuming their
termination at January 1, 1999, following a change of control, would have been
approximately $923,910, $418,223 and $411,756, respectively.
PENSION PLAN
Home Savings maintains and currently administers a defined benefit
retirement plan (Pension Plan). Prior to December 31, 1998, employees became
eligible to participate in the Pension Plan on the first day of the plan year
coincident with or next following the later of the date the employee (i)
attained age 20, or (ii) completed six months of continuous employment with Home
Savings. As of December 31, 1998, the Pension Plan is not accepting new
participants and Home Savings is considering terminating the Pension Plan due to
the implementation of the ESOP.
Participants become 100% vested in the Pension Plan upon completion of
five years of service or upon termination of the Pension Plan. Upon retirement
at age 65, vested participants are entitled to annual benefits equal to the sum
of: (i) .95% of the average of a participant's highest five of the last ten
consecutive years of service (the Final Average Compensation), multiplied by the
number of years of credited service, not to exceed 35 years; plus (ii) .65% of
the Final Average Compensation in excess of the Social Security taxable wage
bases multiplied by the participant's credited service, not to exceed 35 years;
plus (iii) 1.5% of the Final Average Compensation multiplied by the
participant's credited service in excess of 35 years, but not to exceed five
years. The Pension Plan permits early retirement after age 60 with 15 or more
years of service at a reduced benefit level.
Home Savings funding policy is to contribute amounts to the Pension
Plan sufficient to meet the minimum funding requirements set forth in the
Employee Retirement Income Security Act of 1974, plus such additional amounts as
Home Savings may determine to be appropriate from time to time. Contributions
are intended to provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.
The following table indicates the annual retirement benefit that would
be payable under the Pension Plan upon retirement at age 65 to a participant
electing to receive his retirement benefit in the standard form of benefit:
<TABLE>
<CAPTION>
Years of credited service
Average compensation ------------------------------------------------------------------------
(highest 5 years) (1) 15 20 25 30 35
----------------------- -------- --------- ------ -------- ---------
<S> <C> <C> <C> <C> <C>
$ 20,000 $ 2,545 $ 3,393 $ 4,242 $ 5,090 $ 5,938
35,000 3,818 5,090 6,363 7,635 8,908
40,000 5,538 7,384 9,230 11,076 12,922
50,000 7,681 10,242 12,802 15,363 17,923
60,000 9,824 13,099 16,374 19,649 22,924
70,000 11,968 15,957 19,946 23,935 27,925
100,000 18,398 24,530 30,663 36,795 42,928
150,000 29,114 38,818 48,523 58,227 67,932
- ------------------------
</TABLE>
(1) The maximum amount of annual compensation which can be considered in
computing benefits under Section 401(a)(17) of the Code is $160,000.
9
<PAGE>
Mr. McKay, Mr. Kelly and Mr. Varner have approximately 26, 16 and 42
years of credited service under the Pension Plan, respectively. Their base
salary and bonuses are reported above in the Summary Compensation Table.
COMPENSATION COMMITTEE REPORT
As a unitary savings and loan holding company, the business of UCFC
consists principally of holding the stock of Home Savings. The functions of the
executive officers of UCFC, who are also executive officers of Home Savings,
pertain primarily to the operations of Home Savings. The executive officers
receive their compensation, therefore, from Home Savings, rather than from UCFC.
The Salary Committee of the Home Savings Board of Directors has furnished the
following report concerning executive compensation.
PROCESS FOR DETERMINING COMPENSATION
The compensation of the executive officers is reviewed annually by the
Salary Committee. The Salary Committee utilizes industry survey data and takes
into consideration asset bases and geographic location. In addition, the Salary
Committee assesses each executive officer's contribution to UCFC and Home
Savings, the skills and experiences required for each officer's position and
potential contributions of the officer to the future of UCFC and Home Savings.
Based on these assessments, the Salary Committee makes a recommendation to the
Board of Directors of Home Savings. The Board reviews the recommendations of the
Salary Committee, except that the executive officers that also serve as Board
members do not participate in discussions or decisions relative to their own
compensation.
COMPENSATION POLICIES
The executive compensation program of UCFC and Home Savings is designed
to attract and retain key executives by providing comparable compensation
opportunities to those offered by peer group companies. The program includes a
pay-for-performance component that is intended to provide rewards to executive
officers for corporate performance and to motivate the officers to reach
specific strategic business objectives.
DETERMINATION OF CEO'S COMPENSATION
The Salary Committee recommended and the Board approved the 1998
compensation of Mr. McKay, the President and Chief Executive Officer of UCFC and
Home Savings, pursuant to the policies described above for executive officers.
The increase in Mr. McKay's compensation was based on comparative salary data
gathered from various industry compensation surveys, as well as the Salary
Committee's assessment of the performance of Mr. McKay, Home Savings and UCFC
during 1998.
Submitted by the Salary Committee of Home Savings' Board of Directors:
<TABLE>
<S><C>
Richard M. Barrett Charles B. Cushwa, III Gary Keller Clarence R. Smith, Jr.
James E. Bennett Donald R. Inglis Herbert F. Schuler, Sr. John F. Zimmerman, Jr.
</TABLE>
10
<PAGE>
DIRECTOR COMPENSATION
No fees are paid for service as a director of UCFC. Each director of
Home Savings currently receives a retainer of $10,000 per year and $400 per
meeting of the full Board attended. Non-employee directors of Home Savings
receive an additional fee of $400 per committee meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, no member of the Salary Committee was a current or former
executive officer or employee of UCFC or Home Savings or had a reportable
business relationship with UCFC or Home Savings.
PERFORMANCE GRAPH
The following graph compares the cumulative total return on UCFC's
common shares during 1998 with the total return of an index of companies whose
shares are traded on The Nasdaq Stock Market and an index of savings and loan
associations and savings and loan holding companies. The graph assumes that 100
UCFC shares were purchased on July 9, 1998, at a purchase price of $15 per
share, the closing price on that date, and not $10 per share, the initial public
offering price of UCFC shares.
[Performance Graph Represented by the Following Chart]
<TABLE>
<CAPTION>
PERIOD ENDING
---------------------------------------------------------------------------
INDEX 7/9/98 7/31/98 8/31/98 9/30/98 10/31/98 11/30/98 12/31/98
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
United Community Financial Corp. 100.0 113.33 93.33 93.33 93.33 87.97 99.70
NASDAQ - Total US 100.0 96.75 77.78 88.52 92.14 101.22 114.17
SNL Thrift Index 100.0 91.68 70.11 76.33 79.36 83.47 82.99
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS
Home Savings makes loans to executive officers and directors of Home
Savings and UCFC in the ordinary course of business and on the same terms and
conditions, including interest rates and collateral, as those of comparable
loans to other persons. All outstanding loans to executive officers and
directors were made pursuant to such policy, do not involve more than the normal
risk of collectibility or present other unfavorable features and are current in
their payments.
PROPOSAL TWO - SELECTION OF AUDITORS
The Board of Directors has selected Deloitte & Touche as the auditors
of UCFC for the current fiscal year and recommends that the shareholders ratify
such selection. Management expects that a representative of Deloitte & Touche
will be present at the Annual Meeting, will have the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of qualified shareholders intended to be included in the
proxy statement for the 2000 Annual Meeting of Shareholders of UCFC should be
sent to UCFC by certified mail and must be received by UCFC not later than
November 25, 1999. In addition, if a shareholder intends to present a proposal
at the 2000 Annual Meeting without including the proposal in the proxy materials
related to that meeting, and if the proposal is not received by February 8,
2000, then the proxies designated by the Board of Directors of UCFC for the 2000
Annual Meeting of Shareholders of UCFC may vote in their discretion on any such
proposal any shares for which they have been appointed proxies without mention
of such matter in the proxy statement or on the proxy card for such meeting.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Youngstown, Ohio Douglas M. McKay
March 31, 1999 President and Chairman of the Board
12
<PAGE>
REVOCABLE PROXY
UNITED COMMUNITY FINANCIAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
UNITED COMMUNITY FINANCIAL CORP.
UNITED COMMUNITY FINANCIAL CORP. 1999 ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1999
The undersigned shareholder of United Community Financial Corp. (UCFC)
hereby constitutes and appoints Donald J. Varner and Patrick A. Kelly, or either
of them, as the Proxy or Proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of UCFC to be held at Mr. Anthony's, 7440 South Avenue, Boardman, Ohio on April
29, 1999, at 10:00 a.m. local time (the "Annual Meeting"), all of the shares of
UCFC which the undersigned is entitled to vote at the Annual Meeting, or at any
adjournment thereof, on each of the following proposals, all of which are
described in the accompanying Proxy Statement:
1. The reelection of five directors:
/ / FOR / / AGAINST / / FOR ALL EXCEPT
Richard M. Barrett, Gary Keller, Douglas M. McKay,
Herbert F. Schuler Sr. and John F. Zimmerman, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below).
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2. The ratification of the selection of Deloitte & Touche LLP, certified
public accountants, as the auditors of UCFC for the current fiscal
year.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES AND THE
PROPOSALS LISTED ABOVE.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. Unless otherwise specified, the
shares will be voted FOR proposals 1 and 2.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the 1999 Annual Meeting of Shareholders of UCFC and of
the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
Please be sure to sign and date this Proxy in the box below.
Date
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Stockholder sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
UNITED COMMUNITY FINANCIAL CORP.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE USA
