UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 23, 2014
UNITED COMMUNITY FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
| OHIO | 0-024399 | 34-1856319 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
275 West Federal Street, Youngstown, Ohio 44503-1203
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (330) 742-0500
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 5 – Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(d) On September 23, 2014, the Boards of Directors of United Community Financial Corp. (“UCFC”) and its wholly-owned subsidiary, The Home Savings and Loan Company of Youngstown, Ohio (“Home Savings”), elected Ellen J. Tressel to serve as a director of UCFC and Home Savings, which appointments will be effective on October 1, 2014. Mrs. Tressel has been appointed to fill the vacancy created by the retirement of David C. Sweet for the term expiring in 2017. The UCFC and Home Savings Boards will consider Mrs. Tressel’s Board Committee appointments at its October meetings. Mrs. Tressel’s compensation as a director shall be subject to UCFC’s customary terms of directors’ retainer fees and awards, as described in UCFC’s proxy statement under the section, “Director Compensation.”
A copy of the press release issued to announce the appointment of Mrs. Tressel to the Board of UCFC is attached hereto as Exhibit 99.
(e) On September 23, 2014, the Compensation Committee and the Board of Directors of United Community Financial Corp. approved an Amended and Restated Executive Incentive Plan previously adopted on January 21, 2014. The Plan provides incentive compensation awards to Messrs. Small, Esson, Garrity and Nohra.
As originally adopted, the Plan named certain officers who no longer hold those respective positions, and the Plan was to make awards based upon UCFC’s actual performance for the 12 months ended September 30 compared to the actual performance of the peer group during the same 12 month period, looking at six performance measures. However, the Compensation Committee determined that, since the Company’s strategic plans and budget are based upon a calendar year and peer incentive plans measure performance on a calendar year, it was appropriate to make this change. It continues to be true that in order for any awards to be made under the Plan for 12 months of performance, UCFC must report positive net income for the calendar year ended December 31.
A copy of the Amended and Restated Executive Incentive Plan is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
|
Exhibit Number |
Description |
|
| 10.1 | Executive Incentive Plan | |
| 99 | Press Release dated September 29, 2014 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UNITED COMMUNITY FINANCIAL CORP. | ||
| By: |
/s/ Jude J. Nohra |
|
| Jude J. Nohra, General Counsel & Secretary | ||
Date: September 29, 2014
Exhibit 10.1
UNITED COMMUNITY FINANCIAL CORP. &
THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO
AMENDED AND RESTATED EXECUTIVE INCENTIVE PLAN
Adopted September 23, 2014
The United Community Financial Corp.’s (the “Company”) Executive Incentive Plan (“EIP”) provides an annual incentive compensation opportunity to certain executive officers, which at the time of adoption of the EIP included Gary M. Small, President and CEO of the Company and the Company’s wholly-owned subsidiary, The Home Savings and Loan Company of Youngstown, Ohio (“Home Savings”), Jude J. Nohra, General Counsel and Secretary of the Company and Executive Vice President, Corporate Governance, General Counsel, and Secretary of Home Savings, Matthew T. Garrity, Executive Vice President, Credit Administration and Commercial Lending of Home Savings and Timothy W. Esson, Principal Accounting Officer and Treasurer of the Company and Senior Vice President, Chief Financial Officer and Treasurer of Home Savings. This EIP shall be deemed amended in the event any such officers are changed or in the event the Company adds an executive officer to the EIP. Executive incentive award payouts are based upon the actual performance of the Company for a given year by comparing the 12 months ended December 31 to the actual performance of the peer group (see below) during the same 12 month period, or by comparing actual performance results for the fiscal year to annual budget goals See the “Weightings” table below.
Target Award Opportunities and Form of Payout :
Each participant has a target EIP opportunity, defined as a percentage of base salary as follows: 50% of base salary for Mr. Small, and 40% for Messrs. Esson, Garrity and Nohra. Following the end of the calendar year, the Compensation Committee will certify performance results relative to goals and determine the earned EIP award. Eighty percent (80%) of the earned EIP award will be paid in cash as soon as practicable, and the remaining twenty percent (20%) will be paid in restricted shares. The restricted stock awards will be awarded under the Amended and Restated United Community Financial Corp. 2007 Long-Term Incentive Plan and vest equally over three years, beginning on the first anniversary of the award.
Peer Group :
The Compensation Committee and the Board of Directors previously developed a peer group, which it periodically reviews and revises as necessary. The peer group currently includes the following eighteen (18) organizations:
| BankFinancial Corp (BFIN) | Horizon Bancorp. (HBNC) | |
| ESB Financial Corporation (ESBF) | Lakeland Financial Corporation (LKFN) | |
| Farmers National Banc Corp (FMNB) | LCNB Bancorp Inc. (LCNB) | |
| Farmers & Merchants Bancorp (FMAO) | LNB Bancorp Inc. (LNBB) | |
| First Busey (BUSE) | MainSource Financial Group, Inc. (MSFG) | |
| First Defiance Financial Corp. (FDEF) | Mutualfirst Financial Inc. (MFSF) | |
| First Financial Corporation (THFF) | Peoples Bancorp Inc. (PEBO) | |
| First Mid-Illinois Bancshares (FMBH) | QCR Holdings, Inc. (QCRH) | |
| German American Bancorp Inc. (GABC) | TriState Capital Holdings Inc. (TSC) |
Net Income Trigger :
In order for any awards to be made under the EIP for a calendar year’s performance, the Company must report positive net income for the fiscal year, calculated in accordance with GAAP, but adjusted to exclude the effect of extraordinary items. If this trigger is met, incentive awards will be calculated as described below.
Performance Measures, Weightings, Goals, and Payout Calibration :
The Compensation Committee has identified six financial performance measures that are aligned with the Company’s goals. Each of the six performance measures has a weighting ranging from 10% to 30%. The Company’s results on four of the six measures will be evaluated relative to the peer group. The other measures (Net Income and Net Loan Growth) will be evaluated relative to the Board-approved annual budget.
The Performance-Payout Table below describes the six performance measures, their respective weighting, how performance on each measure will be evaluated (relative to peers or relative to budget) and the goals for threshold performance, target performance and superior performance. Achievement of the target performance goal will result in 100% of target payout for the respective measure, while achievement of the superior performance goal will result in 200% of the target payout for the measure. Performance in between threshold and target, or between target and superior, will be interpolated.
Performance-Payout Table:
| Evaluated |
Performance Goals |
|||||||||||
|
Performance Measure |
Weight | Vs. |
Threshold |
Target |
Superior |
|||||||
|
Core ROAA |
30 | % | Peers | 25th %ile | 50th %ile | 75th %ile | ||||||
|
Net Income ($MM) |
30 | % | Budget | 75% of Budget | 100% of Budget | 125% of Budget | ||||||
|
Net Loan Growth ($MM) |
10 | % | Budget | 75% of Budget | 100% of Budget | 125% of Budget | ||||||
|
Core Deposit Growth |
10 | % | Peers | 25th %ile | 50th %ile | 75th %ile | ||||||
|
Efficiency Ratio |
10 | % | Peers | 25th %ile | 50th %ile | 75th %ile | ||||||
|
Non-Performing Assets |
10 | % | Peers | 25th %ile | 50th %ile | 75th %ile | ||||||
|
Payout for Performance Level (% of Target Opportunity) 1 : |
0% | 100% | 200% | |||||||||
| 1 | Note that payouts will be interpolated for performance between discrete points. For example, performance at the 65 th percentile of the Peer Group will result in a payout of 160% of target; performance at the 30 th percentile of peers will result in a payout of 20% of target. |
Definitions :
| • | %ile: Percentile Rank within defined Peer Group |
| • | “Core” ROAA: GAAP performance excluding extraordinary items |
| • | Net Income: GAAP Net Income excluding extraordinary items |
| • | Net Loan Growth: Net loan growth projected in the budget compared to actual net loan growth from January 1 – December 31 |
| • | Core Deposit Growth: Total Deposits less time deposits |
| • | Efficiency Ratio: Operating Expense divided by Operating Revenue |
| • | Non-Performing Assets: Total NPAs divided by Average Total Assets |
The Committee maintains flexibility and discretion to adjust measure definitions, if such adjustments ensure a better comparison relative to the peer group and most appropriately reflect the goals of the EIP and the Company’s compensation philosophy.
Example EIP calculation :
For example, assume a participant has a base salary of $225,000 and a target EIP opportunity of 40% of salary, or $90,000. Further assume the performance results in the table below. The calculated earned EIP award for this participant would be $95,400.
| Assumed | Implied | Weighted | ||||||||||||||
|
Performance Measure |
Weight | Performance | Payout | Payout | ||||||||||||
|
Core ROAA |
30 | % | 40th | 60 | % | 18.0 | % | |||||||||
|
Net Income ($MM) |
30 | % | 90 | % | 60 | % | 18.0 | % | ||||||||
|
Net Loan Growth ($MM) |
10 | % | 110 | % | 140 | % | 14.0 | % | ||||||||
|
Core Deposit Growth |
10 | % | 70th | 180 | % | 18.0 | % | |||||||||
|
Efficiency Ratio |
10 | % | 70th | 180 | % | 18.0 | % | |||||||||
|
Non-Performing Assets |
10 | % | 80th | 200 | % | 20.0 | % | |||||||||
| Total Payout = | 106.0 | % | ||||||||||||||
| Target EIP = | $ | 90,000 | ||||||||||||||
|
|
|
|||||||||||||||
| Earned EIP = | $ | 95,400 | ||||||||||||||
|
|
|
|||||||||||||||
| 80% paid in cash = | $ | 76,320 | ||||||||||||||
| 20% paid in stock = | $ | 19,080 | ||||||||||||||
Other Administrative Guidelines:
The Plan provides that a participant in the Plan must be employed with the Company on the date the award is made (and when the equity portion of the Award vests); otherwise, the participant is not entitled to any award or the unvested equity award.
The Board maintains discretion to amend, modify, terminate or otherwise adjust the Plan as necessary.
Exhibit 99
Press Release
United Community Financial Corp. and Home Savings
Announce Ellen J. Tressel as a New Board Member
September 29, 2014 — YOUNGSTOWN, Ohio — United Community Financial Corp. (NASDAQ: UCFC), holding company of The Home Savings Loan Company, is pleased to welcome Ellen J. Tressel as the newest member of both the UCFC and Home Savings Board of Directors. Her appointment is effective October 1, 2014.
Born and raised in the Youngstown area, Mrs. Tressel brings her long tradition of community involvement to the Home Savings and UCFC Board. As an active board member for many charitable organizations over the years, she possesses the critical leadership capabilities needed for this appointment. Mrs. Tressel also adds 14 years of experience in the financial services industry to the Board of Home Savings and UCFC.
“Ellen’s lifelong ties to the Mahoning Valley, combined with her new role as the First Lady of Youngstown State University, make her a dynamic force in the resurgence of Home Savings and the Mahoning Valley,” said Gary Small, President and CEO of Home Savings and UCFC. “Her recent return to Youngstown provides an opportunity for her to apply her talents as an active member of our Board. Ellen looks forward to helping Home Savings and UCFC continue to grow and become even more engaged in the communities we serve,” Small concluded.
Mrs. Tressel is a graduate of Youngstown State University with a Bachelor of Science in Business Education. She also is a Leadership Mahoning Valley alumnae.
A wholly-owned subsidiary of United Community Financial Corp., Home Savings operates 33 full-service banking offices and 9 loan production offices located throughout Ohio and western Pennsylvania. Additional information on UCFC and Home Savings may be found at www.ucfconline.com .
###