UBMT United Financial

United Financial Corp. Announces Fourth Quarter and Record 2003 Earnings HIGHLIGHTS: 60% Increase in EPS in 2003 over 2002; Net interest income up 13% in 2003 over 2002; Real estate origination tops $300 million; Q4 EPS up 21% in 2003 over Q4 2002. GREAT FALLS, Mont., Feb. 20 /PRNewswire-FirstCall/ -- United Financial Corp. ("United") today reported net income for the year ended December 31, 2003 of $4,720,001, or basic earnings per share of $1.93, compared to $2,955,255, or basic earnings per share of $1.21 for the same period in 2002. Fully diluted earnings per share were $1.88 and $1.20 for 2003 and 2002, respectively. For the quarter ended December 31, 2003, net income was $860,194, or basic and diluted earnings per share of $.35 and $.34, respectively, compared with $710,489, or basic and diluted earnings per share of $.29 and $.28, respectively, for the same quarter in 2002. Included in 2003 earnings is a gain on the sale of United's 62% interest in Valley Bancorp, a bank holding company in Phoenix Arizona. The income from discontinued operations, relating to Valley Bancorp, amounted to $.36 basic and $.35 fully diluted earnings per share in 2003, and $.16 basic and fully diluted earnings per share in 2002. United's assets at December 31, 2003 were $305 million compared to $304 million at December 31, 2002, excluding Valley Bancorp, which was sold in July 2003. Net loans increased to $227 million at December 31, 2003 from $211 million a year ago and deposits increased to $228 million at December 31, 2003 compared to $225 million a year ago, excluding the effects of the Valley sale. Net interest income rose to $11.4 million for the year ended December 31, 2003 compared to $10.0 million for the same period one year ago. United's shareholders' equity was $32.4 million at December 31, 2003, and book value per share was $13.29. The weighted average number of shares outstanding for 2003 were 2,440,144 compared to 2,439,093 for 2002. President and CEO Kurt Weise said, "2003 was a record year for United. Our asset quality is good and our reserve for loan losses is strong. We enter 2004 with strong capital ratios and are excited about our new office in Billings, Montana which opened February 17, 2004. We believe 2004 earnings will be impacted by a substantial drop in fees from mortgage refinancing and startup costs associated with our Billings office." United's net interest margin increased to 3.87% in 2003 compared to 3.47% in 2002. United also originated over $300 million in real estate loans in 2003, a record for the company. Non-performing loans totaled $.8 million at December 31, 2003 compared to $.6 million in 2002, excluding Valley. Forward-Looking Statements When used in this press release, the words or phrases 'will likely result in', 'are expected to', 'will continue', 'is anticipated', 'estimate', 'could', or 'project' or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected including general economic conditions, business conditions in the banking industry, the regulatory environment, new legislation, vendor quality and efficiency, employee retention factors, rapidly changing technology and evolving banking industry standards, competitive standards, competitive factors including increased competition among financial institutions and fluctuating interest rate environments. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Readers shouldalso carefully review the risk factors described in the company's most recent quarterly report on Form 10-Q for the period ending September 30, 2003, its Annual Report on Form 10-K for the period ending December 31, 2002 and other documents the companyfiles from time to time with the Securities and Exchange Commission. United Financial Corp. is a bank holding company based in Great Falls, Montana, and is the parent of Heritage Bank, with fifteen locations in Montana. United Financial Corp. Financial Highlights (Unaudited) (Dollars in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 Income statement amounts Net interest income $2,924 $2,299 $11,371 10,035 Provision for losses on loans 76 270 778 1,115 Noninterest income Investment securities gains - - 18 1 Gain on the sale of loans 862 1,336 5,287 3,792 Other 332 276 1,361 1,151 Noninterest expense 2,865 2,666 11,492 9,747 Earnings from continuing operations before income taxes 1,177 975 5,767 4,117 Income taxes 317 378 1,938 1,562 Discontinuedoperations - 113 891 400 Net earnings 860 710 4,720 2,955 Per common share data Net earnings - continuing operations - basic $0.35 0.24 1.57 1.05 - diluted 0.34 0.23 1.53 1.04 Net earnings - discontinued operations - basic - 0.05 0.36 0.16 - diluted - 0.05 0.35 0.16 Cash dividends 0.27 0.17 0.89 0.66 Book value 13.29 12.49 Balances at end of period (excluding Valley) Loans, gross 230,934 214,463 Allowance for losses on loans 3,755 3,113 Nonperforming assets Nonperforming loans 822 638 Foreclosed properties 530 567 Available for sale investment securities 43,279 43,526 Total assets 304,724 377,980 Goodwill and Identifiable Intangible Assets 1,422 3,429 Total deposits 227,514 225,230 Total stockholders' equity 32,381 30,476 Other supplemental information Net earnings Return on average assets 1.51% 0.95% Return on average common equity 14.96% 10.06% Allowance for loan losses to loans 1.63% 1.45% Common shares outstanding (end of period, in thousands) 2,437 2,439 Net interest margin 3.87% 3.47% Shareholders' equity to total assets (excluding trust preferred stock) 10.63% 8.06% Dividend payout ratio 46.23% 54.30% DATASOURCE: United Financial Corp. CONTACT: Kurt R. Weise, Chairman & CEO of United Financial Corp., +1-763-512-5299

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