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"Profitable UCFC Ready for More Growth, Shareholders Told"
"BOARDMAN, Ohio -- Since United Community Financial Corp. was formed in July 1998, shareholders who participated in its initial public offering have enjoyed a 411% compounded return on their investment, including a 35% rate of return in 2003, its treasurer and chief financial officer, Patrick A. Kelly, said yesterday.Since its birth nearly six years ago, UCFC, based in Youngstown, has returned to shareholders more than $81 million in dividends and stock appreciation, Douglas M. McKay, president, chairman and chief executive officer, told shareholders at its annual meeting.An annual meeting is a time for a corporation's leaders to review their company's performance and, within narrow legal boundaries, offer prospects on where they see it heading. Over 53 minutes this morning, McKay and Kelly exuded the quiet confidence of the leadership of a company for which everything is going right. And in reviewing where UCFC stood at its birth and where it is today, it would seem everything has gone UCFC's way."We have a good story today," McKay began, "and I hope you appreciate it."In 1999, UCFC was the holding company for one entity, Home Savings and Loan Co., Youngstown, with $1.328 billion in assets and 14 offices in Mahoning, Trumbull and Columbiana counties. Today, having acquired two other thrifts and a stock brokerage house, Home Savings has 35 full-service banking offices and five loan production offices in 10 Ohio counties and one in Beaver County, Pa. with $2.074 billion in assets.Butler Wick has 13 offices in two states and has greatly increased the scope of its trust department, McKay said, praising James Sisek, president of Butler Wick Trust Co., for his stewardship. For Butler Wick as a whole, McKay offered, "2003 was a good year and 2004 should be even better [as] the market is getting more active. Butler Wick should get stronger as the economy recovers and investors return to the market."The number of households UCFC serves has grown from 48,505 in 1998 to 86,186 today, McKay reported.Where Home Savings was the 73rd largest thrift in the United States and fifth largest in Ohio in 1998, today it is the 46th largest in the nation and ranks first in the state, he continued.It has diversified its assets, going from predominance of government securities and mortgages on one-to-four family residences in its portfolio to commercial loans, commercial real estate and consumer loans in its portfolio. Where single-family mortgages at $533 million made up well more than half its portfolio in 1998, that has increased to $610 million today but accounts for only 40% of Home Savings' portfolio, McKay said.And UCFC has focused on expense control with telling results, the CEO said. Where the company had an efficiency ratio of 77.9% in 1998 (that is, UCFC incurred 77.9 cents in expenses to generate $1 of revenue), that figure has fallen to 65.3%. The average for Ohio thrifts is 68% and for U.S. thrifts 67%, McKay noted.Other measures that say UCFC is on track: return on assets rose to 1.15% last year from 0.79% in 1998. Return on equity 8.27% last year from 2.46% in 1998. UCFC's goal, McKay said, is "10% or higher."In the category "Strategic capital management," UCFC was way overcapitalized at 32.25% in 1998 and at 13.95% remains above the industry norm. "That's still a little on the high side," McKay allowed. However, "we have the capital to continue a pattern of growth and pursue future acquisitions." Asserting UCFC has always been "picky" in its acquisitions, McKay said the corporation finds itself in a position where it can afford to be "even pickier."He did not volunteer, not did any shareholder ask, where future acquisitions may lie.McKay did say that Home Savings and Butler Wick will build new offices, in both existing and potential markets, in its strategy of growth as UCFC studies acquisitions, pointing to a new office Home Savings will build near the Austintown Plaza. Home Savings recently announced it will build a brand-new office in McDonald.In the business requiring shareholders' action, they reelected McKay, Richard M. Barrett and Thomas J. Cavalier as directors. All will serve three-year terms. Barrett is the retired president of Barrett Cadillac, Cavalier the president, chairman and CEO of Butler Wick Corp.Crowe Chizek and Co. LLC was retained as outside auditor. The proxy statement reports the public accounting firm, based in Cleveland, received $138,400 in audit fees last years and $12,840 in audit-related fees. It staff was paid $35,000 in other fees. The total is just over $7,100 less than UCFC paid for similar services in 2003.FULL DISCLOSURE: The reporter who covered the annual meeting owns stock in UCFC. Visit United Community Financial Corp. at www.ucfconline.com"