<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 Section 240.14a-11(c) or
Section 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
0-11.
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 0-11 (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
0-11(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 2000 Annual Meeting of Shareholders of
United Community Financial Corp. (UCFC) will be held at Mr. Anthony's, 7440
South Avenue, Boardman, Ohio , on April 27, 2000, 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 three directors of UCFC for terms expiring
in 2001;
2. To reelect three directors of UCFC for terms expiring
in 2002;
3. To ratify the selection of Deloitte & Touche LLP as
the auditors of UCFC for the current fiscal year; and
4. 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
6, 2000, 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 15, 2000 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
2000 Annual Meeting of Shareholders of UCFC to be held at Mr. Anthony's, 7440
South Avenue, Boardman, Ohio on April 27, 2000, 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 Herbert F. Schuler, Sr., Donald J.
Varner, and John F. Zimmerman, Jr., as directors of UCFC for
terms expiring in 2001; and
FOR the re-election of Richard M. Barrett, Thomas J. Cavalier
and Douglas M. McKay as directors of UCFC for terms expiring
in 2002;
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 6,
2000 (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 37,756,582 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 24, 2000.
<PAGE>
VOTE REQUIRED
ELECTION OF DIRECTORS
Under Ohio law and UCFC's Code of Regulations (Regulations), the six
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 six 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.
SECURITIES 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, 2000:
<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 4,276,060 (1) 11.33%
5700 RiverTech Court
Riverdale, Maryland 20737
</TABLE>
- ------------------------
(1) Riggs Bank N.A., as the Trustee for the United Community Financial
Corp. Employee Stock Ownership Plan (the ESOP), has sole investment
power over the ESOP shares. The Trustee may be deemed to have voting
power over the 3,890,170 unallocated shares, although the plan provides
that unallocated shares shall be voted by the Trustee in the same
proportion as participants direct the voting of allocated ESOP shares.
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, 2000:
<TABLE>
<CAPTION>
Amount and nature of
beneficial ownership
--------------------------------------------
Sole voting or Shared voting or Percent of
Name and address (1) investment power investment power shares outstanding
- -------------------- ---------------- ---------------- ------------------
<S> <C> <C> <C>
Richard M. Barrett 82,572 17,975 0.27
Thomas J. Cavalier 75,550 20,000 0.25
Douglas M. McKay 328,552 77,257 1.08
Herbert F. Schuler, Sr. 110,831 8,447 0.32
Donald J. Varner 146,156 32,838 0.47
John F. Zimmerman, Jr. 61,271 - 0.16
All directors and executive
officers as a group (7 persons) 970,821 179,046 3.05
</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 UCFC Regulations provide that the number of directors may be fixed
by the Board of Directors or by the shareholders at between five and 15 persons.
Prior to 2000, the Board had five members, and under Ohio law a board of fewer
than six members cannot have more than one class of directors. In January 2000,
a sixth director was added to the UCFC Board in connection with the acquisition
of Butler Wick Corp (Butler Wick), which was completed in August 1999. Under
Ohio law and the Regulations, the UCFC Board may now be divided into two
classes. At this Annual Meeting, which will be the first shareholders meeting at
which there are six incumbent directors, the Board will be divided into two
classes by electing three directors for one-year terms expiring in 2001 and
three directors for two-year terms expiring in 2002.
The three nominees in each class receiving the greatest number of votes
will be elected to serve the term indicated and until each of their successors
is duly elected and qualified. At the annual meeting in 2001, the class which is
elected at this Annual Meeting for terms expiring in 2001 will then be elected
for two-year terms expiring in 2003 such that three directors will thereafter be
elected every year for a two year term.
In accordance with 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
3
<PAGE>
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.
The Board of Directors proposes the re-election of the following
persons:
<TABLE>
<CAPTION>
Director of Term
Name Age (1) Positions held UCFC since (2) Expiring in
- ---- ------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Richard M. Barrett 61 Director 1998 2002
Thomas J. Cavalier 47 Director, President of Butler
Wick Corp. 2000 2002
Douglas M. McKay 52 Director, Chairman of the Board
and President 1998 2002
Herbert F. Schuler, Sr. 59 Director 1998 2001
Donald J. Varner 68 Director, Secretary 1999 2001
John F. Zimmerman, Jr. 51 Director 1998 2001
</TABLE>
- -----------------------------
(1) As of March 1, 2000.
(2) Messrs. Barrett, McKay, Schuler and Zimmerman became directors 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 in 1998. Mr. Varner became a director of UCFC in 1999 when
he was appointed to fill the vacancy created by the death of Gary
Keller. Mr. Cavalier became a director of UCFC in 2000 in connection
with the acquisition of Butler Wick Corp. (Butler Wick).
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.
THOMAS J. CAVALIER. Mr. Cavalier is the Chairman of the Board and Chief
Executive Officer of Butler Wick, positions which he has held since 1985. Mr.
Cavalier joined Butler Wick in 1975.
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.
DONALD J. VARNER. Mr. Varner, an attorney, has worked for Home Savings
for the past 43 years, and from 1976 to 1995, he served Home Savings as Vice
President and Corporate Counsel. Mr. Varner
4
<PAGE>
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.
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.
MEETINGS OF DIRECTORS
The Board of Directors of UCFC met 16 times for regularly scheduled and
special meetings during the year ended December 31, 1999. Each director attended
at least 75% of the meetings of the Board of Directors and the committees on
which he serves.
COMMITTEES OF DIRECTORS
The Board of Directors of UCFC has an Audit Committee and a
Compensation Committee, but it does not have a nominating 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, Herbert F.
Schuler, Sr. and John F. Zimmerman, Jr. The Audit Committee met four times
during 1999
The Compensation Committee is primarily responsible for evaluating,
reviewing and administering UCFC's stock benefit plans. In consultation with the
Salary Committee of Home Savings, the UCFC Compensation Committee also
determines the compensation of Home Savings' three senior officers who also
serve as executive officers of UCFC. The Compensation Committee met two times
during 1999.
EXECUTIVE OFFICERS
In addition to Mr. McKay, the President of UCFC and Home Savings, and
Mr. Varner, the Corporate Secretary of UCFC and the Corporate Secretary and
Senior Vice President of Retail Banking of Home Savings, the following person is
an executive officer of UCFC and holds the designated position:
<TABLE>
<CAPTION>
Name Age (1) Position held
- ----- ------ -------------
<S> <C> <C>
Patrick A. Kelly 41 Treasurer of UCFC
</TABLE>
- ------------------------
(1) As of March 1, 2000.
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.
5
<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 to each executive
officer of UCFC who received cash and cash equivalent compensation in excess of
$100,000 from UCFC or one of its subsidiaries for services rendered during 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Fiscal Year ------------------- ----------------------
Name and Principal Ended Restricted Stock All Other
Position December 31 Salary ($)(1) Bonus ($) Award(s)(2) Compensation
- ------------------------- -------------- --------------- ----------------- --------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Douglas M. McKay 1999 $309,000 $150,000 $2,757,622 $754,731 (3)
President 1998 300,000 185,481 - 41,717 (4)
1997 239,934 120,614 - 28,455 (5)
- ------------------------- -------------- --------------- ----------------- --------------------------- ---------------------
Donald J. Varner 1999 $139,874 $60,000 $1,208,389 $367,459 (6)
Secretary 1998 135,800 76,671 - 41,795 (7)
1997 126,588 56,418 - 24,823 (8)
- ------------------------- -------------- --------------- ----------------- --------------------------- ---------------------
Patrick A. Kelly 1999 $137,711 $60,000 $1,191,925 $362,906 (9)
Treasurer 1998 133,700 76,057 - 41,738 (10)
1997 115,184 54,859 - 24,412 (11)
- ------------------------- -------------- --------------- ----------------- --------------------------- ---------------------
</TABLE>
(1) Does not include amounts attributable to other miscellaneous benefits
received by executive officers. The cost to UCFC of providing such
benefits to each named executive officer was less than 10% of his cash
compensation.
(2) Consists of unearned and forfeitable awards of 225,112 shares to Mr.
McKay, 98,644 shares to Mr. Varner and 97,300 shares to Mr. Kelly made
under the UCFC Recognition and Retention Plan (the "RRP") on August 19,
1999, based on the closing market price of UCFC's common shares on The
Nasdaq Stock Market on the award date. One-fourth of the award vests on
each of the first four anniversaries of the award subject to certain
conditions. The RRP awards had a value of $2,237,051, $980,275 and
$966,919, based on UCFC's closing market price on December 31, 1999.
Messrs. McKay, Varner and Kelly each received a number of RRP shares
which were immediately earned and nonforfeitable on the award date and
are included in the "Other Compensation" column of the above table.
(3) Consists of directors' fees of $16,000, a matching contribution of
$2,241 to Mr. McKay's account in The Home Savings and Loan Company
401(k) Savings Plan (the 401(k) Plan), the $47,084 value at December
31, 1999, of 4,738 shares allocated to Mr. McKay's ESOP account, and
the $689,406 value on the award date of the 56,278 earned and
nonforfeitable RRP shares awarded to Mr. McKay in 1999.
(4) Consists of directors' fees of $16,800, a 401(k) Plan matching
contribution of $2,500 and the $22,417 value at December 31, 1998, of
1,507 shares allocated to Mr. McKay's ESOP account in 1998.
(Footnotes continued on next page)
6
<PAGE>
(5) Consists of directors' fees of $16,000, a 401(k) Plan matching
contribution of $9,595 and a 401(k) Plan discretionary contribution of
$2,860.
(6) Consists of directors' fees of $16,000, a 401(k) Plan matching
contribution of $2,241, the $47,084 value at December 31, 1999, of
4,738 shares allocated to Mr. Varner's ESOP account, and the $302,134
value of the 24,664 earned and nonforfeitable RRP shares awarded to Mr.
Varner in 1999.
(7) Consists of directors' fees of $17,200, a 401(k) Plan matching
contribution of $2,178 and the $22,417 value at December 31, 1998, of
1,507 shares allocated to Mr. Varner's ESOP account.
(8) Consists of directors' fees of $15,600, a 401(k) Plan matching
contribution of $7,777 and a 401(k) Plan discretionary contribution of
$1,446.
(9) Consists of directors' fees of $15,600, a 401(k) Plan matching
contribution of $2,241, the $47,084 value at December 31, 1999, of
4,738 shares allocated to Mr. Kelly's ESOP account, and the $297,981
value of the 24,325 earned and nonforfeitable RRP shares awarded to Mr.
Kelly in 1999.
(10) Consists of directors' fees of $17,200, a 401(k) Plan matching
contribution of $2,121 and the $22,417 value at December 31, 1998, of
1,507 shares allocated to Mr. Kelly's ESOP account.
(11) Consists of directors' fees of $16,000, a 401(k) Plan matching
contribution of $7,127 and a 401(k) Plan discretionary contribution of
$1,285.
EMPLOYMENT AGREEMENTS
On December 17, 1998, Home Savings entered into three-year employment
agreements with Douglas M. McKay, Donald J. Varner and Patrick A. Kelly
(collectively, Employment Agreements). 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.
7
<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, 2000, following a change of control, would have been
approximately $923,910, $418,223 and $411,756, respectively.
PENSION PLAN
Home Savings has a defined benefit retirement plan (Pension Plan) which
it maintains for employees who were eligible to participate as of December 31,
1998. Due to the implementation of the ESOP, the Pension Plan is not available
to new participants, and Home Savings is terminating the Pension Plan.
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.
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 $2,850 $3,800 $4,750 $5,700 $6,650
35,000 5,188 6,918 8,647 10,377 12,106
50,000 6,388 8,518 10,647 12,777 14,906
60,000 8,788 11,718 14,647 17,577 20,506
70,000 11,188 14,918 18,647 22,377 26,106
80,000 13,588 18,118 22,647 27,177 31,706
100,000 20,788 27,718 34,647 41,577 48,506
150,000 32,788 43,718 54,647 65,577 76,506
160,000 35,188 46,918 58,647 70,377 82,106
</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.
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.
8
<PAGE>
COMPENSATION COMMITTEE REPORT
The business of UCFC consists principally of holding the stock of its
subsidiaries, Home Savings and Butler Wick. The functions of the executive
officers of UCFC pertain primarily to the operations of Home Savings, and the
executive officers receive their compensation from the appropriate subsidiary.
The Compensation Committee of UCFC has furnished the following report concerning
executive compensation.
PROCESS FOR DETERMINING COMPENSATION. The compensation of the executive
officers is reviewed annually by the Compensation Committee. The Compensation
Committee utilizes industry survey data and takes into consideration asset bases
and geographic location. In addition, the Compensation Committee, with input
from the outside directors of Home Savings, assesses each executive officer's
contribution to UCFC, the skills and experiences required for each officer's
position and potential contributions of the officer to the future of UCFC. Based
on these assessments, the Compensation Committee makes a recommendation to the
Board of Directors of Home Savings, which makes the final decision. Directors
who are also executive officers 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 performance incentive 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 Compensation Committee
recommended and the outside Board members of UCFC and Home Savings approved the
same base salary for Mr. McKay, the President and Chief Executive Officer of
UCFC and Home Savings, for the year 2000, and a performance incentive award for
1999 of $150,000, pursuant to the policies described above for executive
officers. The decision was based on Mr. McKay's current compensation and
comparative salary data gathered from various industry compensation surveys,
which indicate that his compensation level as compared to that of peer companies
falls within the "market average", as well as the Compensation Committee's
assessment of the performance of Mr. McKay, Home Savings and UCFC during 1999.
Submitted by the Compensation Committee of UCFC Board of Directors:
RICHARD M. BARRETT HERBERT F. SCHULER, SR. JOHN F. ZIMMERMAN, JR.
DIRECTOR COMPENSATION
Each director of UCFC who is also a director of Home Savings receives a
$10,000 retainer for 2000 from Home Savings, and each UCFC director who is not a
Home Savings director receives a $10,000 retainer for 2000 from UCFC. Each
director also receives a fee of $400 per UCFC board meeting attended, and each
non-employee director receives a fee of $400 per committee meeting attended if
he is a committee member, or $600 per committee meeting attended if he is the
committee chairman.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, no member of the Compensation 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 since July 9, 1988 with the total return of an index of companies
whose shares are traded on The Nasdaq Stock Market and an index of publicly
traded thrift institutions and thrift holding companies. The graph assumes that
$100 was invested in UCFC shares on July 9, 1998, and that the purchase price
per share was $15, which was the closing price on that date, and not the $10 per
share initial public offering price of UCFC shares.
[GRAPH]
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
PERIOD ENDING
------------------------------------------------------------------------------------------------------------------------
INDEX 07/09/98 09/30/98 12/31/98 03/31/99 06/30/99 09/30/99 12/31/99
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
United Community Financial Corp. 100.00 93.33 99.70 79.23 99.64 94.29 110.05
------------------------------------------------------------------------------------------------------------------------
NASDAQ - Total US 100.00 88.27 114.55 128.14 140.20 143.40 206.95
------------------------------------------------------------------------------------------------------------------------
SNL Thrift Index 100.00 76.33 82.99 83.56 82.57 72.70 67.79
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<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 2001 Annual Meeting of Shareholders of UCFC should be
sent to UCFC by certified mail and must be received by UCFC not later than
November 24, 2000. In addition, if a shareholder intends to present a proposal
at the 2001 Annual Meeting without including the proposal in the proxy materials
related to that meeting, and if the proposal is not received by February 7,
2001, then the proxies designated by the Board of Directors of UCFC for the 2001
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 15, 2000 President and Chairman of the Board
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REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNITED COMMUNITY FINANCIAL CORP.
UNITED COMMUNITY FINANCIAL CORP. 2000 ANNUAL MEETING Of SHAREHOLDERS
April 27, 2000
The undersigned shareholder of United Community Financial Corp.
("UCFC") hereby constitutes and appoints Patrick A. Kelly and Donald J. Varner,
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 27, 2000, at 10:00 a.m. Eastern 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 three directors for terms expiring in 2001:
FOR all nominees WITHHOLD authority to
/ / listed below / / vote for all nominees
(except as marked to the listed below:
contrary below):
Herbert F. Schuler, Sr.
Donald J. Varner
John F. Zimmerman, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
_______________________________________________________________________________
2. The reelection of three directors for terms expiring in 2002:
FOR all nominees WITHHOLD authority to
/ / listed below / / vote for all nominees
(except as marked to the listed below:
contrary below):
Richard M. Barrett
Thomas J. Cavalier
Douglas M. McKay
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
_______________________________________________________________________________
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3. 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
4. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
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, 2 and 3.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the 2000 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.
____________________________ ______________________________
Signature Signature
____________________________ ______________________________
Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE USA
