UNITED COMMUNITY FINANCIAL CORP. Shareholders have until Monday to decide on offer

Deciding whether to sell stock in the local company is tough, a broker says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Shareholders of United Community Financial Corp. must decide by Monday if an offer of $12.50 a share is enough for them to part with their stock.
UCFC, the Youngstown-based parent of Home Savings and Loan and Butler Wick Corp., is offering to buy back up to 4 million of its shares, or nearly 12 percent of outstanding shares.
Deciding whether to take the offer depends on an investor's situation, area stockbrokers say.
A shareholder who likes the company shouldn't feel pressured to sell just because of this offer, said Howard Vari, manager of the Canfield branch of Wachovia Securities.
But for a shareholder who has been considering selling some shares, this may be a good time because the offer doesn't include the normal transaction costs associated with a stock sale, Vari said.
Michael Paterchak, senior vice president at Butler Wick, said investors looking for long-term growth who believe the company is positioning itself for the future should consider keeping their stock. The same is true for people who use UCFC dividends for income, he said.
Factors
On the other hand, some investors may decide this is a good time to take profits from the stock. People who bought the stock at $6, for example, can double their money and feel good about that, he added.
Those who were part of UCFC's initial stock sale can do even better. Those with deposits in Home Savings were able to buy shares at $10 each in 1998, but UCFC later returned $6 a share to shareholders, reducing the original cost to $4 a share.
"The sale decision is a hard thing for everyone, especially with local companies that they believe in," Paterchak said.
Butler Wick is required to inform investors that it is owned by UCFC but also must make an independent analysis for shareholders, he said.
The stock was trading at less than $9 a share a year ago but has risen steadily since. The stock was trading at about $11.50 when the stock offer was announced a month ago, but it quickly rose to more than $12 a share after the announcement.
Patrick Kelly, UCFC chief financial officer, said $12.50 was selected in order to give all shareholders a premium over the price they paid for their stock.
Normally, financial institutions buy back stock on the open market over a year or so and pay the going rate.
Reason for price
Kelly said UCFC opted for a pre-set price because of the sale's potential size. Buying back nearly 12 percent of shares would have artificially increased the price of UCFC stock because trading volumes normally aren't high, he said.
UCFC officials want to buy back stock because the company has too much capital invested in short-term investments that aren't attractive because of low interest rates, he added.
The number of shares sold in 1998 was determined by an independent appraiser but produced more capital than UCFC needed, Kelly said. Since then, it has bought back stock, issued the $6-a-share payment, paid dividends and acquired Butler Wick and two banking companies. Kelly said the latest stock offer will not hinder UCFC's ability to grow internally or through mergers and acquisitions.
Home Savings now has offices as far west as Findlay, Ohio, and Butler Wick has added offices in the Dayton, Cleveland and Columbus areas.
shilling@vindy.com