UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| For the quarterly period ended September 30, 2002 | ||
| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-24399
UNITED COMMUNITY FINANCIAL
CORP.
(Exact name of registrant as specified in its charter)
| Ohio (State or other jurisdiction of incorporation or organization) |
34-1856319 (IRS Employer Identification Number) |
|
| 275 Federal Plaza West Youngstown, Ohio (Address of principal executive offices) |
44503-1203 (Zip Code) |
(330) 742-0500
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
TABLE OF CONTENTS
| PAGE | ||||||
Part I. FINANCIAL INFORMATION |
||||||
Item 1. Financial Statements |
||||||
Consolidated Statements of Financial Condition as of
September 30, 2002 (Unaudited) and December 31, 2001 |
1 | |||||
Consolidated Statements of Income for the Three and Nine Months Ended
September 30, 2002 and 2001 (Unaudited) |
2 | |||||
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2002 and 2001 (Unaudited) |
3 | |||||
Notes to Consolidated Financial Statements |
4 - 9 | |||||
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations |
10-15 | |||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
16 | |||||
Item 4. Controls and Procedures |
16 | |||||
Part II. OTHER INFORMATION |
17 | |||||
Signatures |
18 | |||||
Certifications |
19-20 | |||||
Exhibits |
21-23 | |||||
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| September 30, | December 31, | |||||||||
| 2002 | 2001 | |||||||||
| (unaudited) | ||||||||||
| (Dollars in thousands) | ||||||||||
Assets: |
||||||||||
Cash and deposits with banks |
$ | 33,434 | $ | 35,588 | ||||||
Federal funds sold and other |
24,346 | 170,296 | ||||||||
Total cash and cash equivalents |
57,780 | 205,884 | ||||||||
Marketable securities: |
||||||||||
Trading, at fair value |
44,401 | 8,352 | ||||||||
Available for sale, at fair value |
82,437 | 51,081 | ||||||||
Held to maturity (fair value of $2,670 and $1,695, respectively) |
2,596 | 1,698 | ||||||||
Mortgage-related securities: |
||||||||||
Available for sale, at fair value |
114,372 | 67,069 | ||||||||
Held to maturity (fair value of $60,244 and $80,644, respectively) |
57,321 | 78,798 | ||||||||
Loans, net (including allowance for loan losses of $14,865 and $11,480, respectively) |
1,529,847 | 1,406,479 | ||||||||
Loans held for sale, net |
22,124 | 20,192 | ||||||||
Margin accounts |
17,360 | 20,979 | ||||||||
Federal Home Loan Bank stock |
20,832 | 18,760 | ||||||||
Premises and equipment |
19,667 | 17,481 | ||||||||
Accrued interest receivable |
10,182 | 9,575 | ||||||||
Real estate owned |
1,622 | 477 | ||||||||
Goodwill |
33,593 | 19,664 | ||||||||
Identified intangible assets |
5,534 | 6,312 | ||||||||
Other assets |
9,603 | 11,979 | ||||||||
Total assets |
$ | 2,029,271 | $ | 1,944,780 | ||||||
Liabilities and Shareholders’ Equity |
||||||||||
Liabilities: |
||||||||||
Deposits |
$ | 1,485,174 | $ | 1,383,418 | ||||||
Other borrowed funds |
252,751 | 271,631 | ||||||||
Advance payments by borrowers for taxes and insurance |
3,367 | 5,760 | ||||||||
Accrued interest payable |
1,515 | 2,983 | ||||||||
Accrued expenses and other liabilities |
16,102 | 19,108 | ||||||||
Total liabilities |
1,758,909 | 1,682,900 | ||||||||
Shareholders’ Equity: |
||||||||||
Preferred stock-no par value; 1,000,000 shares authorized and unissued
at September 30, 2002 |
— | — | ||||||||
Common stock-no par value; 499,000,000 shares authorized; 37,804,457
and 37,754,086 shares issued, respectively |
137,953 | 136,903 | ||||||||
Retained earnings |
169,126 | 160,915 | ||||||||
Accumulated other comprehensive income |
1,401 | 1,402 | ||||||||
Unearned stock compensation |
(20,616 | ) | (22,988 | ) | ||||||
Treasury stock, at cost; 2,465,742 and 2,086,500 shares, respectively |
(17,502 | ) | (14,352 | ) | ||||||
Total shareholders’ equity |
270,362 | 261,880 | ||||||||
Total liabilities and shareholders’ equity |
$ | 2,029,271 | $ | 1,944,780 | ||||||
See Notes to Consolidated Financial Statements.
1
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||||
| (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | ||||||||||||||||||
Interest Income |
|||||||||||||||||||
Loans |
$ | 27,745 | $ | 28,242 | $ | 83,661 | $ | 65,714 | |||||||||||
Loans held for sale |
223 | 69 | 474 | 69 | |||||||||||||||
Mortgage-related securities: |
|||||||||||||||||||
Available for sale |
1,230 | 1,236 | 2,974 | 4,112 | |||||||||||||||
Held to maturity |
1,015 | 1,523 | 3,384 | 4,957 | |||||||||||||||
Marketable securities: |
|||||||||||||||||||
Trading |
45 | 15 | 106 | 80 | |||||||||||||||
Available for sale |
765 | 698 | 2,508 | 3,053 | |||||||||||||||
Held to maturity |
21 | 8 | 57 | 33 | |||||||||||||||
Margin accounts |
204 | 389 | 638 | 1,512 | |||||||||||||||
FHLB stock dividend |
246 | 321 | 696 | 821 | |||||||||||||||
Other interest-earning assets |
276 | 371 | 1,135 | 1,204 | |||||||||||||||
Total interest income |
31,770 | 32,872 | 95,633 | 81,555 | |||||||||||||||
Interest expense |
|||||||||||||||||||
Deposits |
11,040 | 13,735 | 34,749 | 34,736 | |||||||||||||||
Other borrowed funds |
2,112 | 3,084 | 7,023 | 6,008 | |||||||||||||||
Total interest expense |
13,152 | 16,819 | 41,772 | 40,744 | |||||||||||||||
Net interest income |
18,618 | 16,053 | 53,861 | 40,811 | |||||||||||||||
Provision for loan losses |
750 | 465 | 1,978 | 1,045 | |||||||||||||||
Net interest income after provision for
loan losses |
17,868 | 15,588 | 51,883 | 39,766 | |||||||||||||||
Noninterest income |
|||||||||||||||||||
Brokerage commissions |
3,189 | 3,019 | 10,248 | 10,031 | |||||||||||||||
Service fees and other charges |
2,209 | 2,156 | 6,123 | 5,923 | |||||||||||||||
Underwriting and investment banking fees |
22 | 127 | 193 | 511 | |||||||||||||||
Net gains (losses): |
|||||||||||||||||||
Mortgage-related securities |
— | — | 45 | 140 | |||||||||||||||
Marketable securities |
— | — | 604 | 245 | |||||||||||||||
Loans sold |
1,309 | 258 | 4,758 | 339 | |||||||||||||||
Trading securities |
(490 | ) | (655 | ) | (829 | ) | (850 | ) | |||||||||||
Other |
(89 | ) | 46 | (254 | ) | 52 | |||||||||||||
Other income |
124 | 285 | 1,515 | 753 | |||||||||||||||
Total noninterest income |
6,274 | 5,236 | 22,403 | 17,144 | |||||||||||||||
Noninterest expenses |
|||||||||||||||||||
Salaries and employee benefits |
9,568 | 8,097 | 29,238 | 24,496 | |||||||||||||||
Occupancy |
818 | 702 | 2,369 | 1,896 | |||||||||||||||
Equipment and data processing |
2,048 | 1,930 | 6,033 | 5,324 | |||||||||||||||
Franchise tax |
522 | 500 | 1,521 | 1,514 | |||||||||||||||
Advertising |
372 | 428 | 1,651 | 1,416 | |||||||||||||||
Amortization of core deposit intangible |
507 | 915 | 1,746 | 915 | |||||||||||||||
Other expenses |
2,138 | 1,946 | 7,532 | 5,289 | |||||||||||||||
Total noninterest expenses |
15,973 | 14,518 | 50,090 | 40,850 | |||||||||||||||
Income before income taxes |
8,169 | 6,306 | 24,196 | 16,060 | |||||||||||||||
Income taxes |
2,964 | 2,341 | 8,739 | 5,954 | |||||||||||||||
Net income |
$ | 5,205 | $ | 3,965 | $ | 15,457 | $ | 10,106 | |||||||||||
Comprehensive income |
$ | 5,293 | $ | 4,575 | $ | 15,368 | $ | 11,465 | |||||||||||
Earnings per share: |
|||||||||||||||||||
Basic and diluted |
$ | 0.16 | $ | 0.12 | $ | 0.48 | $ | 0.31 | |||||||||||
See Notes to Consolidated Financial Statements.
2
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, | ||||||||||||
| 2002 | 2001 | |||||||||||
| (Dollars in thousands) | ||||||||||||
Cash Flows from Operating Activities: |
||||||||||||
Net income |
$ | 15,457 | $ | 10,106 | ||||||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
||||||||||||
Provision for loan loss allowances |
1,978 | 1,045 | ||||||||||
Net gains |
(5,153 | ) | (776 | ) | ||||||||
Amortization of premiums (accretion of discounts) |
1,128 | (1,846 | ) | |||||||||
Depreciation |
2,082 | 1,664 | ||||||||||
ESOP compensation |
1,804 | 1,486 | ||||||||||
Amortization of restricted stock compensation |
1,618 | 1,248 | ||||||||||
FHLB stock dividends |
(696 | ) | (821 | ) | ||||||||
Increase in trading securities |
(36,049 | ) | (193 | ) | ||||||||
Decrease in margin accounts |
3,619 | 11,317 | ||||||||||
Decrease (increase) in interest receivable |
160 | (533 | ) | |||||||||
Decrease in prepaid and other assets |
3,123 | 1,189 | ||||||||||
(Decrease) increase in interest payable |
(1,563 | ) | 1,324 | |||||||||
Increase in loans held for sale |
(1,932 | ) | — | |||||||||
Proceeds from sale of loans held for sale |
122,517 | — | ||||||||||
(Decrease) increase in other liabilities |
(8,398 | ) | 1,269 | |||||||||
Net cash provided by operating activities |
99,695 | </ | ||||||||||