St. Louis brokerage purchases Butler Wick

By Don Shilling

The deal will help United Community pay down its debt.

YOUNGSTOWN — Support jobs will be cut, but financial services will be enhanced as Butler Wick & Co. is sold to a St. Louis stock brokerage, an executive said.

Stifel Financial Corp. is paying $12 million to acquire the downtown-based firm from United Community Financial Corp., which also is the parent company of Home Savings and Loan.

Butler Wick will employ fewer support workers, such as those in accounting and information technology, because such work would be handled out of St. Louis once the deal is completed, said Thomas Cavalier, company chairman, chief executive and president.

The number of employees to be cut hasn’t been determined, he said. The downtown headquarters has 45 employees.

The 17 jobs at a related company, Butler Wick Trust Co., will not be affected because it will remain under control of United Community. This company oversees trust accounts.

Cavalier said the stock brokerage side of the business should be able to grow under Stifel’s ownership. It operates Stifel Nicolaus, which is an investment bank and one of the largest stock research firms located off Wall Street.

Under the new ownership, the local firm — which will operate as Stifel’s Butler Wick division — will have more resources to recruit financial advisers and more corporate finance programs to offer clients, said Cavalier, who will remain as division president and managing director of Stifel.

He said he doesn’t expect any changes in the local branch structure. In addition to the downtown office, Butler Wick has offices in Boardman, Canfield and Howland. The local offices have 27 of Butler Wick’s 75 brokers.

Butler Wick has 23 offices in Ohio, Pennsylvania and New York, employing 175.

The sale of Butler Wick will help United Community reduce its debt, said Jim Reske, chief financial officer of the holding company. The deal is expected to close by the end of the year.

United Community owes JP Morgan Chase Bank $14.9 million. Reske said executives will be speaking to officials at JP Morgan Chase but it appears the $12 million payment “will go a long way” to reducing United Community debt.

In August, federal regulators issued orders that placed United Community under strict regulations because of financial difficulties. The main concern of the federal action was that United Community reduce its debt, so selling Butler Wick will be the major step needed to resolve regulators’ concerns for the holding company, Reske said.

The order was issued after United Community was forced to set aside millions of dollars to cover loan losses. It had a large amount of defaults from commercial borrowers and home builders.

Regulators also issued special restrictions on the operations of Home Savings and Loan. Reske said Home Savings officials have taken steps to resolve those concerns and will file their final reports by the end of the year.

United Community acquired Butler Wick in 1999, less than a year after becoming a public company with an initial offering of stock to the public.

It granted 1.7 million shares of stock to shareholders of Butler Wick, which had been a private company. United Community stock was trading at just under $12 a share, making the deal worth more than $20 million at the time.

UCFC stock fell 8 cents Friday to close at $1.16. The stock has traded at between 80 cents and $8.50 in the past year.

shilling@vindy.com