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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: January 26, 2000
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United Community Financial Corp.
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(Exact name of registrant as specified in its charter)
Ohio 0-24399 34-1856319
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(State or other jurisdiction (Commission (IRS Employer of
incorporation ) File Number) Identification Number)
275 Federal Plaza West
Youngstown, Ohio 44503-1203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 742-0500
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Not Applicable
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(Former name or former address, if changes since last report.)
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UNITED COMMUNITY FINANCIAL CORP.
275 Federal Plaza West
Youngstown, Ohio 44503-1203
FOR IMMEDIATE RELEASE
Douglas M. McKay
President
(330) 742-0500, Ext. 801
UNITED COMMUNITY FINANCIAL CORP. ANNOUNCES
EARNINGS FOR FOURTH QUARTER 1999
Youngstown, Ohio - January 26, 2000 - United Community Financial Corp.
(Nasdaq: UCFC), holding company for The Home Savings and Loan Company of
Youngstown, Ohio, and Butler Wick Corp., announced net income for the three
months ended December 31, 1999 of $1.9 million, or $0.05 per diluted share.
Net income for the comparable period in 1998 was $5.0 million or $0.15 per
diluted share. All prior period financial information has been restated for
the Butler Wick acquisition in August 1999, which was accounted for as a
pooling of interests. United Community's annualized return on average assets
and return on average equity were 0.58% and 2.96% respectively, for the three
months ended December 31, 1999. The annualized return on average assets and
return on average equity were 1.54% and 4.19% respectively, for the three
months ended December 31, 1998.
The primary reason for the decrease in net income of $3.1 million for the
three months ended December 31, 1999 compared to the same period in 1998 was
due to a decrease of $2.6 million in net interest income and an increase in
noninterest expense of $2.2 million which was partially offset by a $610,000
increase in noninterest income. The decrease in net interest income was
primarily due to an increase in interest expense on other borrowed funds, in
conjunction with the special $6.00 per share distribution declared on
September 30, 1999. An increase in salaries and employee benefits of $1.6
million is the primary reason for the increase in noninterest expense. This
increase was due to the recognition of $419,000 in expense related to the
United Community Recognition and Retention Plan (RRP), an increase in ESOP
expense of $561,000 and $813,000 in expense related to the Butler Wick
Retention Plan. The primary reason for the increase in noninterest income is
a $533,000 increase in gains recognized on securities.
Net income for the twelve months ended December 31, 1999 was $10.4 million, or
$0.30 per diluted share, compared to $10.1 million for the twelve months ended
December 31, 1998. Net interest income increased $4.5 million, or 8.8%,
resulting from an increase in interest-earning assets combined
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with a reduction in the interest rates of interest-bearing liabilities.
Noninterest expense increased $4.1 million for the year ended December 31,
1999 compared to 1998. The increase in noninterest expense was primarily due
to a $14.3 million increase in salaries and employee benefits. This increase
was primarily due to a $6.4 million one-time compensation expense due to the
effect of the $6.00 per share special capital distribution on the RRP and a
$3.3 million compensation expense for the first year of the RRP. The increase
in noninterest expense was partially offset by a decrease in charitable
contributions of $11.8 million due to United Community making a one-time
donation to the Home Savings and Loan Charitable Foundation in 1998. Through
this foundation, United Community will continue to have an impact in the
community in areas of education, civic pride, youth enrichment, cultural
activities and health care.
Total shareholders' equity decreased $217.9 million, or 45.9%, to $256.9
million at December 31, 1999 from $474.8 million at December 31, 1998. The
primary reason for the decrease was the $226.5 million special capital
distribution. Book value per share was $7.46 as of December 31, 1999. Total
assets increased $29.9 million, or 2.3%, from December 31, 1998 to December
31, 1999, primarily as a result of a $65.6 million, or 10.0%, increase in net
loans and a $20.4 million, or 5.1%, increase in securities. The increase in
loans and securities and the funds needed for the $6.00 per share special
capital distribution were funded by an increase in other borrowed funds of
$186.9 million, a $56.5 million increase in deposits and a reduction of $61.0
million in cash equivalents.
Douglas M. McKay, President of United Community, stated, "United Community
was able to take several steps throughout the year to provide a future
benefit to United Community's shareholders. Among the steps taken, a special
capital distribution of $6.00 per share was paid on October 26, 1999. The
Board of Directors, after careful analysis of United Community's capital
position combined with anticipated future needs, determined that this
distribution of capital will help United Community manage excess capital and
enhance the value of our shareholders' investment in United Community. During
1999, United Community implemented a RRP plan to retain the expertise of
individuals in key positions by providing them with an ownership interest in
United Community. The future impact to earnings caused by the RRP plan will
be greatly reduced in comparison to this initial year of implementation. We
also consummated the acquisition of Butler Wick Corp. The acquisition
compliments our growth plan which contains some stringent selection criteria.
As we continue to look for opportunities to enhance shareholder value, we
intend to pursue affiliations with companies that are well established,
successful, well managed, and have a commitment to providing exceptional
value to customers."
Home Savings and Butler Wick are wholly owned subsidiaries of United Community.
Home Savings has 14 offices located throughout Mahoning, Columbiana and Trumbull
Counties in Northeastern Ohio
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and Butler Wick has 9 offices located throughout Northeastern Ohio and
Western Pennsylvania. Additional information on United Community, Home
Savings and Butler Wick may be found on United Community's web site:
www.ucfcorp.com.
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UNITED COMMUNITY FINANCIAL CORP.
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<CAPTION>
As of As of
December 31, 1999 December 31,1998
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(In thousands, except per share data)
<S> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
ASSETS
Cash and cash equivalents $ 111,445 $ 172,409
Mortgage-backed securities 251,638 281,889
Investment securities 170,652 119,997
Federal Home Loan Bank stock 12,825 11,958
Net loans receivable:
Loans held for investment 725,632 659,903
Loans held for sale 3,860 3,993
Allowance for loan losses (6,405) (6,398)
Real estate owned 158 78
Other assets 57,768 53,860
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Total assets $ 1,327,573 $ 1,297,689
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LIABILITIES
Deposits $ 834,087 $ 777,583
Other borrowed funds 213,578 26,727
Other liabilities 23,040 18,558
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Total liabilities $ 1,070,705 $ 822,868
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at December 31, 1999 -- --
Common stock-no par value; 499,000,000 shares authorized; 37,758,166
shares issued and 34,420,931 outstanding at December 31, 1999 $ 136,509 $ 345,872
Retained earnings 153,553 154,078
Other comprehensive income (loss) (3,003) 733
Unearned compensation (30,191) (25,862)
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Total shareholders' equity $ 256,868 $ 474,821
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Total liabilities and shareholders' equity $ 1,327,573 $ 1,297,689
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Book value per share $ 7.46 $ 14.03
Dividends paid per share per quarter $ 0.075 $ 0.075
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<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Three Months Ended
December 31, September 30, December 31,
1999 1999 1998
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(In thousands, except per share data)
<S> <C> <C> <C>
SELECTED EARNINGS DATA (UNAUDITED):
Interest income $ 22,836 $ 22,699 $ 22,546
Interest expense 10,968 7,850 8,048
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Net interest income 11,868 14,849 14,498
Provision for loan losses - - 150
Noninterest income:
Commissions 4,294 3,563 4,224
Service fees and other charges 1,249 1,085 1,195
Underwriting and investment banking 93 40 92
Net gains (losses)
Securities 526 21 (7)
Other 7 (2) (10)
Other income 180 155 245
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Total noninterest income 6,349 4,862 5,739
Noninterest expense
Salaries and employee benefits 9,545 18,110 7,916
Occupancy 558 500 495
Equipment and data processing 1,356 1,234 1,259
Acquisition expense 48 431 -
Other noninterest expense 2,826 2,295 2,507
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Total noninterest expense 14,333 22,570 12,177
Income (loss) before taxes 3,884 (2,859) 7,910
Income taxes 1,974 (916) 2,942
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Net income (loss) $ 1,910 $ (1,943) $ 4,968
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Basic earnings (loss) per share $ 0.06 $ (0.06) $ 0.15
Diluted earnings (loss) per share $ 0.05 $ (0.06) $ 0.15
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<CAPTION>
Twelve Months Ended Twelve Months Ended
December 31, December 31,
1999 1998
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(In thousands, except per share data)
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SELECTED EARNINGS DATA:
Interest income $ 89,971 $ 87,755
Interest expense 34,284 36,570
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Net interest income 55,687 51,185
Provision for loan losses 100 650
Noninterest income:
Commissions 16,186 15,842
Service fees and other charges 4,644 4,232
Underwriting and investment banking 636 743
Net gains (losses)
Securities 559 272
Other (4) (68)
Other income 700 1,116
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Total noninterest income 22,721 22,137
Noninterest expense
Salaries and employee benefits 43,348 29,039
Occupancy 2,031 1,953
Equipment and data processing 5,148 4,946
Acquisition expense 478 -
Other noninterest expense 10,032 20,993
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Total noninterest expense 61,037 56,931
Income before taxes 17,271 15,741
Income taxes 6,876 5,612
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Net income $ 10,395 $ 10,129
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Basic earnings per share $ 0.31 N/A
Diluted earnings per share $ 0.30 N/A
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<TABLE>
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Three Months Ended Three Months Ended Three Months Ended
December 31, September 30, June 30,
1999 1999 1999
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(Dollars in thousands)
<S> <C> <C> <C>
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
Net loans held for investment (including allowance for loan losses $ 712,985 $ 694,989 $ 672,986
of $6,405, $6,422 and $6,446, respectively)
Net loans held for sale 3,526 3,473 4,051
Mortgage-backed securities 259,128 274,326 272,823
Investment securities 191,246 208,554 162,006
Margin accounts 31,771 33,063 30,456
Other interest-earning assets 78,452 63,075 128,737
Total interest-earning assets 1,277,108 1,277,480 1,271,059
Total assets 1,324,143 1,315,286 1,306,084
Certificates of deposit 440,658 418,177 423,562
Checking, demand and savings accounts 362,148 356,063 350,471
Other interest bearing liabilities 160,962 28,694 24,462
Total interest-bearing deposits 963,768 802,934 798,495
Total noninterest-bearing liabilities 101,980 33,883 28,956
Total liabilities 1,065,748 836,817 827,451
Shareholders' equity 258,395 478,469 478,633
Common shares outstanding 34,901,091 34,454,284 33,898,237
SUPPLEMENTAL LOAN DATA:
Loans originated $ 54,871 $ 69,720 $ 63,743
Loans purchased - - -
Loan chargeoffs 29 29 45
Recoveries on loans 13 5 4
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As of As of As of
December 31, 1999 September 30, 1999 June 30, 1999
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(Dollars in thousands)
<S> <C> <C> <C>
SUPPLEMENTAL DATA:
Nonaccrual loans $ 3,568 $ 3,687 $ 3,805
Restructured loans 317 1,651 1,712
Other real estate owned 158 222 152
Total nonperforming assets 4,043 5,560 5,669
Loans serviced for others 5,292 5,408 5,535
Number of full time equivalent employees 583 585 575
Mortgage-backed securities available for sale 113,559 120,202 126,501
Mortgage-backed securities held to maturity 138,079 145,128 155,112
Investment securities trading 7,657 6,746 -
Investment securities available for sale 161,904 197,104 205,469
Investment securities held to maturity 1,091 - -
Federal home loan bank stock 12,825 12,603 12,376
Fair value of held to maturity securities 137,091 144,265 155,838
REGULATORY CAPITAL DATA:
Regulatory tangible capital $ 320,119 $ 315,424 $ 307,885
Tangible capital ratio 26.75 27.71 27.00
Regulatory core capital 320,119 315,424 307,885
Core capital ratio 26.75 27.71 27.00
Regulatory total capital 326,376 321,693 314,235
Total risk adjusted assets 647,426 633,729 623,181
Total risk adjusted ratio 50.41 49.77 50.42
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