10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2004

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                    to

Commission File Number: 0-024399

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Ohio	34-1856319
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

275 Federal Plaza West, Youngstown, Ohio	44503
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number: (330) 742-0500

Securities registered pursuant to Section 12(b) of the Act:

None	None
(Title of Class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

Common shares, no par value per share

(Title of Class)

     Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes þ No o

     Indicate by check mark if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of issuer’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ No o

     The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the last reported sale on June 30, 2004 was approximately $396.3 million. (The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant.)

     As of March 11, 2005, there were 31,220,906 of the Registrant’s Common Shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part II of Form 10-K - Portions of 2004 Annual Report to Shareholders
Part III of Form 10-K - Portions of Proxy Statement for the 2005 Annual Meeting of Shareholders

TABLE OF CONTENTS

Item
Number	Page
PART I
1. Description of Business
General		1
Discussion of Forward-Looking Statements		2
Lending Activities		2
Investment Activities		11
Sources of Funds		13
Competition		15
Employees		16
Regulation		16
2. Description of Property		18
3. Legal Proceedings		20
4. Submission of Matters to a Vote of Security Holders		20
PART II
5. Market for Registrant’s Common Equity and Related Shareholder Matters		20
6. Selected Financial Data		20
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
7A. Quantitative and Qualitative Disclosures About Market Risk		20
8. Financial Statements and Supplemental Data		21
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		21
9A. Controls and Procedures		21
PART III
10. Directors and Executive Officers of the Registrant		21
11. Executive Compensation		21
12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		21
13. Certain Relationships and Related Transactions		22
14. Principal Accountant Fees and Services		22
PART IV
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K		22
Signatures		24
Exhibit Index		25

PART I

Item 1. Description of Business

GENERAL

     United Community Financial Corp. (United Community) was incorporated in the State of Ohio in February 1998 for the purpose of owning all of the outstanding capital stock of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings) issued upon the conversion of Home Savings from a mutual savings association to a permanent capital stock savings association (Conversion). The Conversion was completed on July 8, 1998. On August 12, 1999, Butler Wick Corp. (Butler Wick) became a wholly-owned subsidiary of United Community.

     United Community’s Internet site, http://www.ucfconline.com, contains a hyperlink to the Securities and Exchange Commission (SEC) where United Community’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 Insider Reports and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge as soon as reasonably practicable after United Community has filed the report with the SEC.

     As a savings and loan holding company, United Community is subject to regulation, supervision and examination by the Office of Thrift Supervision (OTS), the Division of Financial Institutions of the Ohio Department of Commerce (Division) and the SEC. United Community’s primary activity is holding the common shares of Home Savings and Butler Wick. Consequently, the following discussion focuses primarily on the business of Home Savings and Butler Wick.

     Home Savings was organized as a mutual savings association under Ohio law in 1889. During 2003, Home Savings changed its charter from a state-chartered savings and loan association to a state-chartered savings bank. Home Savings is subject to supervision and regulation by the Federal Deposit Insurance Corporation (FDIC) and the Division. Home Savings is a member of the Federal Home Loan Bank of Cincinnati (FHLB) and the deposits of Home Savings are insured up to applicable limits by the FDIC in the Savings Association Insurance Fund (SAIF).

     Home Savings conducts business from its main office located in Youngstown, Ohio, 36 full-service branches and five loan production offices located throughout Ohio and western Pennsylvania. The principal business of Home Savings is the origination of mortgage loans on one to four-family residential real estate located in Home Savings’ primary market area, which consists of Ashland, Columbiana, Cuyahoga, Erie, Geauga, Hancock, Huron, Lake, Mahoning, Montgomery, Richland, Sandusky, Seneca, Summit and Trumbull Counties in Ohio and Beaver County in Pennsylvania. Home Savings also originates loans secured by nonresidential real estate. In addition to real estate lending, Home Savings originates commercial loans and various types of consumer loans. For liquidity and interest rate risk management purposes, Home Savings invests in various financial instruments as discussed below under “Investment Activities.” Funds for lending and other investment activities are obtained primarily from savings deposits, which are insured up to applicable limits by the FDIC, principal repayments of loans, borrowings from the FHLB and maturities of securities.

     Interest on loans and other investments is Home Savings’ primary source of income. Home Savings’ principal expense is interest paid on deposit accounts and other borrowings and salaries and benefits paid to our employees. Operating results are dependent to a significant degree on the net interest income of Home Savings, which is the difference between interest earned on loans and other investments and interest paid on deposits and borrowed funds. Like most thrift institutions, Home Savings’ interest income and interest expense are affected significantly by general economic conditions and by the policies of various regulatory authorities.

     Butler Wick is the parent company for two wholly-owned subsidiaries: Butler Wick & Co., Inc. and Butler Wick Trust Company. Butler Wick conducts business from its main office located in Youngstown, Ohio and 14 offices located in northeastern Ohio and western Pennsylvania. The principal business of Butler Wick is to sell common and preferred stocks, an array of government, corporate and municipal bonds, unit trusts, mutual funds, IRAs, money market accounts and certificates of deposit. Butler Wick also offers investments in precious metals and a full line of life insurance and annuity products, personal and corporate financial planning, fiduciary services, estate planning, pension and profit sharing.

     Butler Wick’s primary source of income is commissions earned on trades initiated by customers and its primary expense is salaries and employee benefits. Commissions earned by Butler Wick, which are a component of non-interest income, may be affected by general economic conditions in its market area as well as policy changes by various regulatory agencies.

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DISCUSSION OF FORWARD-LOOKING STATEMENTS

     When used in this Form 10-K the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in United Community’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in Home Savings’ market area, demand for investments in Butler Wick’s market area and competition, that could cause actual results to differ materially from results presently anticipated or projected. United Community cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. United Community advises readers that the factors listed above could affect United Community’s financial performance and could cause United Community’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

     United Community does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

LENDING ACTIVITIES

     General. Home Savings’ principal lending activity is the origination of conventional real estate loans secured by one- to four-family residences located in Home Savings’ primary market area. Home Savings also originates loans secured by multifamily and nonresidential real estate and originates loans for the construction of one- to four-family residences, multifamily properties and nonresidential real estate projects. In addition to real estate lending, Home Savings originates commercial loans and various types of consumer credits, including home equity loans, education loans, loans secured by savings accounts, motor vehicles, boats and recreational vehicles and unsecured loans.

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     Loan Portfolio Composition. The following table presents certain information regarding the composition of United Community’s loan portfolio at the dates indicated:

	At December 31,
	2004					2003					2002					2001					2000
			Percent of					Percent of					Percent of					Percent of					Percent of
	Amount		total loans			Amount		total loans			Amount		total loans			Amount		total loans			Amount		total loans
	(Dollars in thousands)
Real estate loans:
Permanent loans:
One- to four-family residential	$	690,413		37.68	%	$	599,370		37.62	%	$	884,950		59.13	%	$	1,011,701		69.97	%	$	618,112		65.22	%
Multifamily residential		153,011		8.35			148,362		9.31			78,298		5.23			54,321		3.76			24,085		2.54
Nonresidential		289,755		15.81			291,588		18.30			226,399		15.13			132,936		9.19			137,976		14.56
Land		14,701		0.80			14,147		0.89			5,812		0.39			10,368		0.72			5,172		0.55
Total permanent		1,147,880		62.64			1,053,467		66.12			1,195,459		79.88			1,209,326		83.64			785,345		82.87
Construction loans:
One- to four-family residential		301,193		16.44			244,837		15.37			73,047		4.88			71,221		4.93			57,955		6.12
Multifamily and non-residential		47,230		2.58			27,586		1.73			27,625		1.85			23,344		1.61			11,389		1.20
Total construction		348,423		19.01			272,423		17.10			100,672		6.73			94,565		6.54			69,344		7.32
Total real estate loans		1,496,303		81.65			1,325,890		83.22			1,296,131		86.61			1,303,891		90.18			854,689		90.19
Consumer loans:
Home equity		133,441		7.28			134,053		8.41			109,671		7.33			48,671		3.37			20,147		2.13
Auto		58,148		3.17			48,219		3.03			36,052		2.41			21,703		1.50			5,171		0.55
Education		—		—			—		—			—		—			5,280		0.37			3,850		0.41
Other (1)		76,057		4.15			36,490		2.29			10,173		0.68			35,358		2.45			29,177		3.08
Total consumer		267,646		14.61			218,762		13.73			155,896		10.42			111,012		7.68			58,345		6.16
Commercial loans		68,523		3.74			48,570		3.05			44,470		2.97			30,906		2.14			34,657		3.66
Total loans		1,832,472		100.00	%		1,593,222		100.00	%		1,496,497		100.00	%		1,445,809		100.00	%		947,691		100.00	%
Less net items		16,496					16,728					18,284					19,138					71,038
Total loans, net	$	1,815,976				$	1,576,494				$	1,478,213				$	1,426,671				$	876,653

(1) Consists primarily of recreational vehicle loans, marine loans, overdraft protection loans and loans to individuals secured by demand accounts, deposits and other consumer assets.

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     Loan Maturity. The following table sets forth certain information as of December 31, 2004, regarding the dollar amount of loans maturing in Home Savings’ portfolio based on their contractual terms to maturity. Demand loans and other loans having no stated schedule of repayments or no stated maturity are reported as due in one year or less. Mortgage loans originated by Home Savings generally include due-on-sale clauses that provide Home Savings with the contractual right to deem the loan immediately due and payable in the event the borrower transfers the ownership of the property without Home Savings’ consent. The table does not include the effects of possible prepayments or scheduled repayments.

	Principal repayments contractually due in the years ended
	December 31,
					2010 and
	2005		2006-2009		thereafter		Total
	(Dollars in thousands)
Construction loans:
One- to four-family residential	$	140,147	$	86,700	$	74,346	$	301,193
Multifamily and non-residential		12,458		11,893		22,879		47,230
		152,605		98,593		97,225		348,423
Commercial loans		22,392		37,101		9,030		68,523
Total	$	174,997	$	135,694	$	106,255	$	416,946

     The next table sets forth the dollar amount of all loans reported above as due after December 31, 2005, which have fixed or adjustable interest rates:

	Due after December 31, 2005
	(Dollars in thousands)
Fixed rate	$	29,431
Adjustable rate		212,518
	$	241,949

     Loans Secured by One- to Four-Family Real Estate. The principal lending activity of Home Savings is the origination of conventional loans secured by first mortgages on one- to four-family residences, primarily single-family homes, located within Home Savings’ primary market area. At December 31, 2004, Home Savings’ one- to four-family residential real estate loans totaled approximately $690.4 million, or 37.7% of total loans. At December 31, 2004, $7.1 million, or 1.0%, of Home Savings’ one- to four-family loans, were nonperforming.

     FDIC regulations and Ohio law limit the amount that Home Savings may lend in relationship to the appraised value of the real estate and improvements that secure the loan at the time of loan origination. In accordance with such regulations, Home Savings makes loans on one- to four-family residences of up to 97% of the value of the real estate and improvements thereon (LTV), although the majority of such loans have LTVs of 80% or less. Home Savings requires private mortgage insurance on the portion of the principal amount of any loan that exceeds 85% of the appraised value of the property securing the loan.

     Home Savings currently offers fixed-rate mortgage loans and adjustable-rate mortgage loans (ARMs) for terms of up to 30 years. Although Home Savings’ loan portfolio includes a significant amount of 30-year fixed-rate loans, most fixed rate loans are currently originated for sale. The interest rate adjustment periods on ARMs are typically one or three years. The maximum interest rate adjustment on most of the ARMs is 2.0% on any adjustment date and a total of 6.0% over the life of the loan. The interest rate adjustments on one-year and three-year ARMs presently offered by Home Savings are indexed to the weekly average rate on the one-year and three-year U.S. Treasury securities, respectively. Rate adjustments are computed by adding a stated margin to the index.

     Home Savings issues loan origination commitments to qualified borrowers primarily for the purchase of single-family residential real estate. Such commitments are made on specified terms and conditions and are made for periods of up to 60 days, during which time the interest rate is locked in.

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     Loans Secured by Multifamily Residences. Home Savings originates loans secured by multifamily properties that contain more than four units. Multifamily loans are offered with adjustable rates of interest, which adjust according to a specified index, and typically have terms ranging from five to ten years and LTVs of up to 75%.

     Multifamily lending generally is considered to involve a higher degree of risk than one- to four-family residential lending because the borrower typically depends upon income generated by the project to cover operating expenses and debt service. The profitability of a project can be affected by economic conditions, government policies and other factors beyond the control of the borrower. Home Savings attempts to reduce the risk associated with multifamily lending by evaluating the creditworthiness of the borrower and the projected income from the project and by obtaining personal guaranties on loans made to corporations and partnerships. Home Savings requires borrowers to submit financial statements annually to enable Home Savings to monitor the loan and requires an assignment of rents from borrowers.

     At December 31, 2004, loans secured by multifamily properties totaled approximately $153.0 million, or 8.4% of total loans. The largest loan had a principal balance of $12.7 million and was performing according to its terms. There was approximately $598,000 in multifamily loans that were considered nonperforming at December 31, 2004.

     Loans Secured by Nonresidential Real Estate. Home Savings originates loans secured by nonresidential real estate. Home Savings’ nonresidential real estate loans have adjustable rates, terms of up to 25 years and, generally, LTVs of up to 80%. Among the properties securing Home Savings’ nonresidential real estate loans are shopping centers, office buildings, hotels and motels. The majority of such properties are located within Home Savings’ primary lending area.

     Nonresidential real estate lending is generally considered to involve a higher degree of risk than residential lending due to the relatively larger loan amounts and the effects of general economic conditions on the successful operation of income-producing properties. Home Savings has endeavored to reduce such risk by evaluating the credit history of the borrower, the location of the real estate, the financial condition of the borrower, the quality and characteristics of the income stream generated by the property and the appraisals supporting the property’s valuation.

     At December 31, 2004, Home Savings’ largest loan secured by nonresidential real estate had a balance of $11.3 million and was performing according to its terms. At December 31, 2004, approximately $289.8 million, or 15.8%, of Home Savings’ total loans were secured by mortgages on nonresidential real estate, of which $2.7 million was considered nonperforming at December 31, 2004.

     Home Savings also originates a limited number of loans secured by vacant land for the construction of single-family houses. Home Savings’ land loans generally are fixed-rate loans for terms up to five years and require a LTV of 75% or less. At December 31, 2004, approximately $14.7 million, or 0.80%, of Home Savings’ total loans were land loans, a majority of which were loans to individuals intending to construct and occupy single-family residences on the properties. Nonperforming land loans amounted to $130,000 at December 31, 2004.

     Construction Loans. Home Savings makes loans for the construction of one- to four-family residences, multifamily properties and nonresidential real estate projects. Residential construction loans are made to both owner-occupants and to builders on a speculative (unsold) basis. Construction loans to owner-occupants are structured as permanent loans with fixed or adjustable rates of interest and terms of up to 30 years. During the first year, while the residence is being constructed, the borrower is required to pay interest only. Construction loans for one- to four-family residences have LTVs of up to 95%, and construction loans for multifamily and nonresidential properties have LTVs of up to 80%, with the value of the land included as part of the owner’s equity.

     At December 31, 2004, Home Savings had approximately $348.4 million, or 19.0% of its total loans, invested in construction loans, including $301.2 million in one- to four-family residential construction and approximately $47.2 million in multifamily and nonresidential construction loans. Approximately 70% of Home Savings’ construction loans are made to builders for homes for which the builder does not have a contract with a buyer. Home Savings, however, limits the number of outstanding loans to each builder on unsold homes under construction.

     Construction loans generally involve greater underwriting and default risks than do loans secured by mortgages on existing properties because construction loans are more difficult to appraise and to monitor. Loan funds are advanced upon the security of the project under construction. In the event a default on a construction loan occurs and foreclosure follows, Home Savings must take control of the project and attempt either to arrange for completion of construction or dispose of the unfinished project.

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     Nonperforming construction loans at December 31, 2004 amounted to $1.2 million.

     Consumer Loans. Home Savings originates various types of consumer loans, including home equity loans, vehicle loans, education loans, recreational vehicle loans, marine loans, overdraft protection loans, loans to individuals secured by demand accounts, deposits and other consumer assets and unsecured loans. Consumer loans are made at fixed and adjustable rates of interest and for varying terms based on the type of loan. At December 31, 2004, Home Savings had approximately $267.6 million, or 14.6% of its total loans, invested in consumer loans.

     For new automobiles, loans are originated for up to 110% of the MSRP value of the car with terms of up to 72 months, and for used automobiles, loans are made for up to the National Automobile Dealers Association (N.A.D.A) retail value of the car model and a term of up to 66 months. Most automobile loans are originated indirectly by approved auto dealerships. At December 31, 2004, automobile loans amounted to $58.1 million, or 21.7%, of Home Savings’ consumer loan portfolio.

     Home Savings makes closed-end home equity loans in an amount which, when added to the prior indebtedness secured by the real estate, does not exceed 95% of the estimated value of the real estate. Home equity loans typically are secured by a second mortgage on the real estate. Home Savings frequently holds the first mortgage, although Home Savings will make home equity loans in cases where another lender holds the first mortgage. Home Savings also offers home equity loans with a line of credit feature. Home equity loans are made with adjustable and fixed rates of interest. Fixed-rate home equity loans have terms of ten years but can be called after five years. Rate adjustments on adjustable home equity loans are determined by adding a 1.25% margin for loans on one- to four-family residences of up to 80% LTV or by adding a 1.50% margin for loans on one- to four-family residences of up to 90% LTV to the one-year U.S. Treasury index. At December 31, 2004, approximately $133.4 million, or 49.9%, of Home Savings’ consumer loan portfolio consisted of home equity loans. Consumer loans secured by a deposit or savings account are made for up to 100% of the principal balance of the account and generally have adjustable rates, which adjust based on the weekly average yield on U.S. Treasury securities plus a margin.

     Nonperforming consumer loans at December 31, 2004 amounted to $5.4 million.

     Commercial Loans. Home Savings makes commercial loans to businesses in its primary market area, including traditional lines of credit, revolving lines of credit, term loans and acquisition and development loans. The LTV ratios for commercial loans depend upon the nature of the underlying collateral, but generally commercial loans are made with LTVs of 50% to 90% and have adjustable interest rates. Lines of credit and revolving credits generally are priced on a floating rate basis, which is tied to the prime rate or U.S. Treasury bill rate. Term loans usually have adjustable rates, but can have fixed rates of interest, and have terms of one to five years.

     At December 31, 2004, Home Savings had approximately $68.5 million, or 3.7% of total loans, invested in commercial loans. The majority of these loans are secured by a security interest in inventory, accounts receivable, machinery, investment property, vehicles or other assets of the borrower. Home Savings also originates unsecured commercial loans including lines of credit for periods of less than 12 months, short-term loans and, occasionally, term loans for periods of up to 36 months. These loans are underwritten based on the creditworthiness of the borrower and the guarantors, if any. Home Savings had $27.4 million in unsecured commercial loans as of December 31, 2004.

     Commercial loans generally are deemed to entail significantly greater risk than real estate lending. The repayment of commercial loans typically is dependent on the income stream and successful operation of a business, which can be affected by economic conditions. The collateral for commercial loans, if any, often consists of rapidly depreciating assets.

     Nonperforming commercial loans at December 31, 2004 amounted to $5.0 million.

     Loan Solicitation and Processing. The lending activities of Home Savings are subject to the written, non-discriminatory underwriting standards and loan origination procedures approved by Home Savings’ Board of Directors (Board). Loan originations generally are obtained from existing customers and members of the local community and from referrals by real estate brokers, lawyers, accountants and current and former customers. Home Savings also advertises in the local print media, radio and television.

     Each of Home Savings’ 36 offices and five loan production offices have loan personnel who can accept loan applications, which are then forwarded to Home Savings’ Underwriting Department for processing and approval. In

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underwriting real estate loans, Home Savings typically obtains a credit report, verification of employment and other documentation concerning the creditworthiness of the borrower. An appraisal of the fair market value of the real estate that will be given as security for the loan is prepared by one of Home Savings’ in-house licensed appraisers or an approved independent fee appraiser. For certain large nonresidential real estate loans, the appraisal is conducted by an outside fee appraiser whose report is reviewed by Home Savings’ chief appraiser. Upon the completion of the appraisal and the receipt of information on the credit history of the borrower, the loan application is submitted for review to the appropriate persons. Commercial, residential and nonresidential real estate loans up to $1.0 million may be approved by an authorized executive officer. Loan requests of $1.0 million to $15.0 million require the approval of the Loan Committee. All loans of $15.0 million or more require approval by three executive officers and a majority of the Board.

     Borrowers are required to carry satisfactory fire and casualty insurance and flood insurance, if applicable, and to name Home Savings as an insured mortgagee. Home Savings generally obtains a title guarantee or title insurance on real estate loans.

     The procedure for approval of construction loans is the same as for permanent real estate loans, except that an appraiser evaluates the building plans, construction specifications and estimates of construction costs. Home Savings also evaluates the feasibility of the proposed construction project and the experience and record of the builder. Once approved, the construction loan is disbursed in installments based upon periodic inspections of construction progress.

     Consumer loans are underwritten on the basis of the borrower’s credit history and an analysis of the borrower’s income and expenses, ability to repay the loan and the value of the collateral, if any.

     Loan Originations, Purchases and Sales. Home Savings’ residential loans generally are made on terms and conditions and documented to conform to the secondary market guidelines for sale to the Federal Home Loan Mortgage Company (FHLMC) and other institutional investors in the secondary market. Education loans are sold, once the borrower leaves school, to the Student Loan Marketing Association. Home Savings does not originate first mortgage loans insured by the Federal Housing Authority or guaranteed by the Veterans Administration, but it has purchased such loans as well as participation interests in such loans.

     Home Savings generally retains the servicing rights on the sale of loans originated in the geographic area surrounding its full service branches and loan production offices. Home Savings anticipates continued participation in the secondary mortgage loan market to maintain its desired risk profile.

     At December 31, 2004, Home Savings had $76.0 million of outstanding commitments to originate loans, $4.5 million of outstanding commitments to purchase loans and $133.9 million available to borrowers under consumer and commercial lines of credit. At December 31, 2004, Home Savings had $284.6 million in undisbursed funds related to construction loans in process.

     During 2003, Home Savings entered into an agreement to purchase one- to four-family construction loans from another institution. Loans purchased under this agreement earn a floating rate of interest, are guaranteed as to principal and interest by a third party and are for the purpose of constructing either pre-sold or speculative homes. At December 31, 2004, approximately $85.5 million was outstanding under this program. Home Savings anticipates continuing purchases of loans under this program in 2005.

     Loans to One Borrower Limits. Regulations generally limit the aggregate amount that Home Savings may lend to any one borrower to an amount equal to 15.0% of Home Savings’ unimpaired capital and unimpaired surplus (Lending Limit Capital). A savings association may lend to one borrower an additional amount not to exceed 10.0% of Lending Limit Capital if the additional amount is fully secured by certain forms of “readily marketable collateral.” Real estate is not considered “readily marketable collateral.” In applying this limit, the regulations require that loans to certain related or affiliated borrowers be aggregated.

     Based on such limits, Home Savings could lend approximately $29.4 million to one borrower at December 31, 2004. The largest amount Home Savings had outstanding to one borrower at December 31, 2004, was $20.7 million, which consisted of nine loans secured primarily by mortgages on non-residential property. At December 31, 2004, these loans were performing in accordance with their terms.

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     Delinquent Loans, Nonperforming Assets and Classified Assets. Home Savings attempts to maintain a high level of asset quality through sound underwriting policies and aggressive collection practices.

     The Collections Department of Home Savings uses a collection program to monitor and review the status of loans. When a loan payment has not been made by the sixteenth of the month, a past due notice is sent to the customer. Once a loan is 20 days delinquent, the account is turned over to a collector, who will continue to try to bring the loan current through telephone calls, personal visits and letters. If the loan has not been brought current by the 75^th day, the loan will be reviewed for foreclosure consideration. A decision as to whether and when to initiate foreclosure proceedings is based on such factors as the amount of the outstanding balance in relation to the original indebtedness, the extent of the delinquency, the borrower’s ability and willingness to cooperate in curing the delinquency and any environmental issues that may need to be addressed. Once the foreclosure is approved by the Default Servicing Manager, the Vice President of Mortgage Loan Servicing and reviewed by the Executive Committee, it is turned over to legal counsel.

     The following table reflects the amount of loans in a delinquent status as of the dates indicated:

	At December 31,
	2004							2003
					Percent of							Percent of
					net							net
	Number		Amount		loans			Number		Amount		loans
	(Dollars in thousands)
Loans delinquent for:
30-59 days		258	$	9,634		0.53	%		250	$	8,478		0.53	%
60-89 days		73		4,464		0.24			75		2,877		0.18
90 days or over		221		19,225		1.05			211		12,981		0.82
Total delinquent loans		552	$	33,323		1.82	%		536	$	24,336		1.53	%

     Nonperforming assets include nonaccruing loans, restructured loans, real estate acquired by foreclosure or by deed-in-lieu of foreclosure and repossessed assets. Once a loan becomes 90 days delinquent, it generally is placed on non-accrual status.

     Loans are reviewed through monthly reports to the Board and management and are placed on nonaccrual status when collection in full is considered doubtful by management. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is charged against interest income. Subsequent cash payments generally are applied to interest income unless, in the opinion of management, the collection of principal and interest is doubtful. In those cases, subsequent cash payments are applied to principal.

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     The following table sets forth information with respect to Home Savings’ nonperforming loans and other assets at the dates indicated:

	At December 31,
	2004			2003			2002			2001			2000
	(Dollars in thousands)
Nonperforming loans:
Nonaccrual loans
Real estate loans:
One- to four-family residential	$	6,511		$	7,121		$	7,567		$	5,813		$	2,966
Multifamily and non-residential		2,880			1,315			2,049			775			3,019
Construction (net of loans in process) and land		1,350			1,724			3,141			3,398			1,741
Total real estate loans		10,741			10,160			12,757			9,986			7,726
Consumer		5,152			888			715			434			457
Commercial		4,960			1,933			952			469			1,360
Total nonaccrual loans		20,853			12,981			14,424			10,889			9,543
Restructured loans		1,329			1,853			1,271			1,572			208
Total nonperforming loans		22,182			14,834			15,695			12,461			9,751
Real estate acquired through foreclosure and other repossessed assets		1,682			1,299			1,150			477			359
Total nonperforming assets	$	23,864		$	16,133		$	16,845		$	12,938		$	10,110
Nonperforming loans as a percent of loans, net		1.22	%		0.94	%		1.06	%		0.89	%		1.11	%
Nonperforming assets as a percent of total assets		1.04			0.78			0.85			0.67			0.78
Allowance for loan losses as a percent of nonperforming loans		71.57			101.87			96.20			92.13			67.20
Allowance for loan losses as a percent of loans, net		0.87			0.96			1.02			0.82			0.75

     Loans that are ninety days past due and still accruing were $377,000 at December 31, 2004 and $1.3 million at December 31, 2003. There were no loans ninety days past due and still accruing as of December 31, 2002, 2001 or 2000.

     For 2004, approximately $1.5 million in additional interest income would have been recorded had nonaccrual and restructured loans been accruing pursuant to contractual terms. During 2004, interest collected on such loans and included in net income was approximately $761,000.

     Nonperforming assets increased approximately $7.7 million, or 47.9%, to $23.9 million at December 31, 2004, from $16.1 million at December 31, 2003. This increase is a result of management’s decision to place on nonaccrual status loans made to a boat dealer and a number of loans to purchasers of boats from that dealer. See “Provision for Loan Losses” in Management’s Discussion and Analysis in Exhibit 13 for a further discussion of these loans. At December 31, 2004, total nonaccrual and restructured loans accounted for 1.22% of net loans receivable, compared to 0.94% at December 31, 2003. Total nonperforming assets were 1.04% of total assets as of December 31, 2004 from 0.78% as of December 31, 2003.

     Real estate acquired in settlement of loans is classified separately on the balance sheet at the lower of cost or net realizable value as of the date of acquisition. At foreclosure, the loan is written down to the value of the underlying collateral by a charge to the allowance for loan losses, if necessary. Any subsequent write-downs are charged against operating expenses. Operating expenses of such properties, net of related income or loss on disposition, are included in other expenses. At December 31, 2004, the carrying value of real estate and other repossessed assets acquired in settlement of loans was $1.7 million and consisted of $1.3 million in single-family properties and $438,000 in boats and automobiles.

     In addition to the nonperforming loans identified above, other loans may be identified as having potential credit problems that result in those loans being classified by our internal loan review function. These potential problem loans, which have not exhibited the more severe weaknesses generally present in nonperforming loans, amounted to $7.6 million, net of applicable allowances, at December 31, 2004.

     Home Savings classifies its assets in accordance with federal regulations. Problem assets are classified as “special mention,” “substandard,” “doubtful” or “loss.” “Substandard” assets have one or more defined weaknesses and are characterized by the distinct possibility that Home Savings will sustain some loss if the deficiencies are not corrected.

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“Doubtful” assets have the same weaknesses as “substandard” assets, with the additional characteristics that (i) the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, questionable and (ii) there is a high possibility of loss. An asset classified as “loss” is considered uncollectible and of such little value that its continuance as an asset of Home Savings is not warranted. Federal regulations also contain a “special mention” category, consisting of assets that currently do not expose an institution to a sufficient degree of risk to warrant classification but that possess credit deficiencies or potential weaknesses deserving management’s close attention.

     Home Savings classifies its commercial loans on a periodic basis, not less often than annually, according to a nine-level risk rating system that includes, in addition to the “substandard,” “doubtful” and “loss,” categories discussed above, further classifications of “prime,” “good,” “satisfactory,” “fair,” “watch” and “uncertain.”

     Commercial loans that are classified “prime,” “good,” “satisfactory” or “fair” possess levels of risk that generally are acceptable to Home Savings. A loan that is classified as “uncertain” represents a loan for which there is insufficient current information on the borrower to evaluate the primary source of payment. A loan may only be maintained as “uncertain” for 90 days while additional information is obtained, subject to one 90-day extension by the Commercial Loan Manager or a higher level officer.

     Home Savings analyzes each classified asset monthly to determine whether changes in the classifications are appropriate under the circumstances. Such analysis focuses on a variety of factors, including the amount of, and the reasons for, any delinquency, the use of the real estate securing the loan, the financial condition of the borrower, and the appraised value of the real estate. As such factors change, the classification of the asset will change accordingly.

     Allowance for Loan Losses. Management establishes the allowance for loan losses at a level it believes adequate to absorb probable losses incurred in the loan portfolio. Management bases its determination of the adequacy of the allowance upon estimates derived from an analysis of individual credits, prior and current loss experience, loan portfolio delinquency levels, overall growth in the loan portfolio and current economic conditions. Consequently, these estimates are particularly susceptible to changes that could result in a material adjustment to results of operations. The provision for loan losses represents a charge against current earnings in order to maintain the allowance for loan losses at an appropriate level.

     In determining the adequacy of the allowance for loan loss, management reviews and evaluates on a monthly basis the necessity of a reserve for individual loans classified by management. The specifically allocated reserve for a classified loan is determined based on management’s estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flow and legal options available to Home Savings. Once a review is completed, the need for a specific reserve is determined by the Home Savings Asset Review Committee and allocated to the loan. Other loans not reviewed specifically by management are evaluated as a homogeneous group of loans (single-family residential mortgage loans and all consumer credit except marine loans) using the historical charge-off experience ratio calculated by type of loan. The historical charge-off experience ratio factors into account the homogeneous nature of the loans, the geographical lending areas involved, regulatory examination findings, specific grading systems applied and any other known factors that may impact the ratios used. Specific reserves on individual loans and historical ratios are reviewed quarterly and adjusted as necessary based on subsequent collections, loan upgrades or downgrades, nonperforming trends or actual principal charge-offs. When evaluating the adequacy of the allowance for loan losses, consideration is given to geographic concentration and the effect changing economic conditions have on Home Savings.

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     The following table sets forth an analysis of Home Savings’ allowance for loan losses for the periods indicated:

	Year ended December 31,
	2004			2003			2002			2001			2000
	(Dollars in thousands)
Balance at beginning of period	$	15,111		$	15,099		$	11,480		$	6,553		$	6,405
Provision for loan losses		9,370			3,179			3,578			2,495			300
Charge-offs:
Real estate		(1,016	)		(2,111	)		(347	)		(89	)		(83	)
Consumer		(6,177	)		(650	)		(410	)		(283	)		(38	)
Commercial		(1,867	)		(579	)		(1,210	)		(55	)		(80	)
Total charge-offs		(9,060	)		(3,340	)		(1,967	)		(427	)		(201	)
Recoveries:
Real estate		325			94			71			13			17
Consumer		72			41			65			10			9
Commercial		59			38			3			9			23
Total recoveries		456			173			139			32			49
Net charge-offs		(8,604	)		(3,167	)		(1,828	)		(395	)		(152	)
Acquisition of Industrial		—			—			—			2,795			—
Acquisition of Potters		—			—			1,869			—			—
Balance at end of year	$	15,877		$	15,111		$	15,099		$	11,480		$	6,553
Ratio of net charge-offs to average net loans		(0.50	)%		(0.21	)%		(0.12	)%		(0.03	)%		(0.02	)%

     The following table sets forth the allocation of the allowance for loan losses by category. The allocations are based on management’s assessment of the risk characteristics of each of the components of the total loan portfolio and are subject to change as and when the risk factors of each component change. The allocation is not indicative of either the specific amounts or the loan categories in which future charge-offs may be taken, nor should it be taken as an indicator of future loss trends. The allocation of the allowance to each category is not indicative necessarily of future loss in any particular category and does not restrict the use of the allowance to absorb losses in any category.

	At December 31,
	2004					2003					2002					2001					2000
			Percent of					Percent of					Percent of					Percent of					Percent of
			loans in each					loans in each					loans in each					loans in each					loans in each
			category					category					category					category					category
	Amount		to total loans			Amount		to total loans			Amount		to total loans			Amount		to total loans			Amount		to total loans
	(Dollars in thousands)
Real estate loans	$	10,559		81.65	%	$	10,796		83.22	%	$	11,017		86.61	%	$	8,339		90.18	%	$	4,117		90.19	%
Consumer loans		3,615		14.61			2,670		13.73			1,947		10.42			975		7.68			566		6.16
Commercial loans		1,703		3.74			1,645		3.05			2,135		2.97			2,166		2.14			1,870		3.66
Total	$	15,877		100.00	%	$	15,111		100.00	%	$	15,099		100.00	%	$	11,480		100.00	%	$	6,553		100.00	%

INVESTMENT ACTIVITIES

     General. Investment and mortgage-related securities are classified upon acquisition as available for sale, held to maturity or trading. Securities classified as available for sale are carried at estimated fair value with the unrealized holding gain or loss, net of taxes, reflected as a component of retained earnings. Securities classified as held to maturity are carried at amortized cost. Securities classified as trading are carried at estimated fair value with the unrealized holding gain or loss reflected as a component of income. United Community, Home Savings and Butler Wick recognize premiums and discounts in interest income over the period to maturity or call by the level yield method and realized gains or losses on the sale of debt securities based on the amortized cost of the specific securities sold.

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     Home Savings Investment Activities. Federal regulations and Ohio law permit Home Savings to invest in various types of marketable securities, including interest-bearing deposits in other financial institutions, federal funds, U.S. Treasury and agency obligations, mortgage-related securities, and certain other specified investments. The Board has adopted an investment policy that authorizes management to make investments in U.S. Treasury obligations, U.S. Federal agency and federally-sponsored corporation obligations, mortgage-related securities issued or sponsored by Federal National Mortgage Association (FNMA), FHLMC, Government National Mortgage Association (GNMA), as well as private issuers, investment-grade municipal obligations, creditworthy, unrated securities issued by municipalities in which an office of Home Savings is located, investment-grade corporate debt securities, investment-grade asset-backed securities, certificates of deposit that are fully-insured by the FDIC, bankers’ acceptances, federal funds and money market funds. Home Savings’ investment policy is designed primarily to provide and maintain liquidity within regulatory guidelines, to maintain a balance of high quality investments to minimize risk, and to maximize return without sacrificing liquidity and safety. The investment activities of Home Savings are supervised by Home Savings’ Investment Committee.

     Home Savings maintains a significant portfolio of mortgage-backed securities and collateralized mortgage obligations (CMOs) that are rated the highest credit quality by a nationally recognized rating agency. Both types of securities are issued by FNMA, GNMA and FHLMC. Mortgage-backed securities generally entitle Home Savings to receive a portion of the cash flows from an identified pool of mortgages. CMOs are a type of debt security issued by a special-purpose entity that aggregates pools of mortgages and mortgage-backed securities and creates different classes of securities with varying maturities and amortization schedules, as well as a residual interest, with each class possessing different risk characteristics. The cash flows from the underlying collateral generally are divided into tranches or classes that have descending priorities with respect to the distribution of principal and interest repayment of the underlying mortgages, as opposed to pass through mortgage-backed securities where cash flows are distributed pro rata to all security holders. In contrast to mortgage-backed securities from which cash flow is received (and hence, prepayment risk is shared) pro rata by all securities holders, the cash flow from the mortgages or mortgage-related securities underlying CMOs is paid in accordance with predetermined priority to investors holding various tranches of such securities or obligations. A particular tranche of CMOs may therefore carry prepayment risk that differs from that of both the underlying collateral and other tranches. Accordingly, CMOs attempt to moderate risks associated with conventional mortgage-backed securities resulting from unexpected prepayment activity.

     Home Savings is exposed to prepayment risk and reinvestment risk to the extent that actual prepayments will differ from those estimated in pricing the security, which may result in adjustments to the net yield on such securities. Mortgage-related securities enable Home Savings to generate positive interest rate spreads with minimal administrative expense and reduce credit risk due to either guarantees provided by the issuer or the high credit rating of the issuer. Mortgage-related securities classified as available for sale also provide Home Savings with an additional source of liquid funds.

     Butler Wick Investment Activities. Butler Wick holds securities through two subsidiaries, Butler Wick & Co., Inc. and Butler Wick Trust Company. Butler Wick & Co., Inc. invests in municipal securities and government agency securities for sale to clients. Butler Wick & Co., Inc.’s securities are carried at fair value with gains and losses recognized currently. Butler Wick & Co., Inc. does not make markets in equity securities.

     In order to qualify as a fiduciary in the State of Ohio, Butler Wick Trust Company deposited United States Government obligations having a principal value of $100,000 with the Federal Reserve Bank for the state. In addition to these deposits, Butler Wick Trust Company owns U.S. Government obligations.

     United Community Investment Activities. Funds maintained by United Community for general corporate purposes, including possible acquisitions, primarily are invested in an account with Home Savings. United Community also owns a small portfolio of bank equities.

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     The following table presents the amortized cost, fair value and weighted average yield of securities at December 31, 2004 by maturity:

	At December 31, 2004
	No stated										After one year through					Five years through
	maturity					One year or less					five years					ten years
	Amortized		Average			Amortized		Average			Amortized		Average			Amortized		Average
	cost		yield			cost		yield			cost		yield			cost		yield
	(Dollars in thousands)
Securities:
U.S Government agencies and corporations	$	—		—	%	$	21,052		1.96	%	$	67,675		3.08	%	$	—		—	%
States and political subdivisions		—		—			3		12.74			3		13.25			—		—
Mortgage-related securities		—		—			2		9.69			2,595		8.22			2,519		6.45
Other securities (a)		5,709		3.36			—		—			—		—			—		—
Total securities	$	5,709		3.36	%	$	21,057		1.96	%	$	70,273		3.27	%	$	2,519		6.45	%

	At December 31, 2004
	After ten years					Total
	Amortized		Average			Amortized		Average			Fair
	cost		yield			cost		yield			value
	(Dollars in thousands)
Securities:
U.S. Government agencies and corporations	$	—		—	%	$	88,727		2.81	%	$	88,317
States and political subdivisions		—		—			6		13.00			7
Mortgage-related securities		97,291		4.42			102,407		4.57			102,911
Other securities (a)		—		—			5,709		3.36			7,169
Total securities	$	97,291		4.42	%	$	196,849		3.74	%	$	198,404

(a) Yield on equity securities only; mutual funds excluded

SOURCES OF FUNDS

     General. Deposits traditionally have been the primary source of Home Savings’ funds for use in lending and other investment activities. In addition to deposits, Home Savings derives funds from interest payments and principal repayments on loans and income on other earning assets. Loan payments are a relatively stable source of funds, while deposit inflows and outflows fluctuate in response to general interest rates and money market conditions. Home Savings may also borrow from the FHLB, as well as other suitable lenders, as a source of funds.

     Deposits. Deposits are attracted principally from within Home Savings’ primary market area through the offering of a selection of deposit instruments, including regular passbook savings accounts, demand deposits, individual retirement accounts (IRAs), NOW accounts, money market accounts, and certificates of deposit. Interest rates paid, maturity terms, service fees, and withdrawal penalties for the various types of accounts are monitored weekly by management. Home Savings does not use brokers to attract deposits. The amount of deposits from outside Home Savings’ primary market area is not significant.

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The following table sets forth the dollar amount of deposits in the various types of accounts offered by Home Savings at the dates indicated:

	At December 31, 2004								For the Year Ended December 31, 2004
			Percent			Weighted					Percent			Weighted
			of total			average			Average		of average			average
	Amount		deposits			rate			balance		deposits			rate
	(Dollars in thousands)
Noninterest bearing demand	$	84,965		5.58	%		—	%	$	75,157		5.13	%		—	%
NOW and money market accounts		305,515		20.06			0.93			302,936		20.67			0.79
Savings accounts		308,187		20.24			0.41			314,588		21.46			0.43
Certificates of deposit		824,285		54.12			3.35			773,019		52.74			3.18
Total deposits	$	1,522,952		100.00	%		2.08	%	$	1,465,700		100.00	%		1.93	%

	For the Year Ended December 31, 2003								For the Year Ended December 31, 2002
			Percent			Weighted					Percent			Weighted
	Average		of average			average			Average		of average			average
	balance		deposits			rate			balance		deposits			rate
	(Dollars in thousands)
Noninterest bearing demand	$	61,273		4.17	%		—	%	$	45,806		3.10	%		—	%
NOW and money market accounts		308,816		21.01			1.01			279,894		18.98			1.90
Savings accounts		335,843		22.85			0.70			299,048		20.28			1.65
Certificates of deposit		763,704		51.97			3.33			850,054		57.64			4.08
Total deposits	$	1,469,636		100.00	%		2.10	%	$	1,474,802		100.00	%		3.05	%

     The following table shows rate and maturity information for Home Savings’ certificates of deposit at December 31, 2004:

				Over			Over
	Up to			1 year to			2 years to
Rate	one year			2 years			3 years			Thereafter			Total
	(Dollars in thousands)
2.00% or less	$	153,398		$	10,668		$	291		$	556		$	164,913
2.01% to 4.00%		114,195			140,383			50,957			72,523			378,058
4.01% to 6.00%		44,319			15,038			77,341			107,886			244,584
Greater than 6.00%		35,151			1,534			30			15			36,730
Total certificates of deposit	$	347,063		$	167,623		$	128,619		$	180,980		$	824,285
Percent of total certificates of deposit		42.10	%		20.34	%		15.60	%		21.96	%		100.00	%

     At December 31, 2004, approximately $347.1 million of Home Savings’ certificates of deposit mature within one year. Based on past experience and Home Savings’ prevailing pricing strategies, management believes that a substantial percentage of such certificates will be renewed with Home Savings at maturity. If, however, Home Savings is unable to renew the maturing certificates for any reason, borrowings of up to $208.9 million are available from the FHLB.

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     The following table presents the amount of Home Savings’ certificates of deposit of $100,000 or more by the time remaining until maturity at December 31, 2004:

	Amount
Maturity	(Dollars in thousands)
Three months or less	$	14,957
Over 3 months to 6 months		17,954
Over 6 months to 12 months		33,132
Over 12 months		113,339
Total	$	179,382

     Based on past experience, management believes that a substantial percentage of the above certificates will be renewed with Home Savings at maturity.

     The following table sets forth Home Savings’ deposit account balance activity for the periods indicated:

	Year ended December 31,
	2004			2003
	(Dollars in thousands)
Beginning balance	$	1,423,698		$	1,481,901
Net increase (decrease) in deposits		71,060			(90,117	)
Net deposits before interest credited		1,494,758			1,391,784
Interest credited		28,194			31,914
Ending balance	$	1,522,952		$	1,423,698
Net increase (decrease)	$	99,254		$	(58,203	)
Percent increase (decrease)		6.97	%		(3.93	)%

     Borrowings. The FHLB system functions as a central reserve bank providing credit for its member institutions and certain other financial institutions. As a member in good standing of the FHLB, Home Savings is authorized to apply for advances, provided certain standards of creditworthiness have been met. Under current regulations, an association must meet certain qualifications to be eligible for FHLB advances. The extent to which an association is eligible for such advances will depend upon whether it meets the Qualified Thrift Lender (QTL) test. If an association meets the QTL test, the association will be eligible for 100% of the advances it would otherwise be eligible to receive. If an association does not meet the QTL test, the association will be eligible for such advances only to the extent it holds specified QTL test assets. At December 31, 2004, Home Savings was in compliance with the QTL test. Home Savings may borrow up to $632.3 million from the FHLB, and had $423.4 million in outstanding advances at December 31, 2004.

     Butler Wick borrows on a secured basis to fund client receivables. Short-term bank loans bear interest at the federal funds rate plus 1% and are payable on demand. The loans are collateralized fully by marketable securities from both customers’ margin accounts and securities owned by Butler Wick. Short-term borrowings also take the form of securities loaned to other broker/dealers. Short-term borrowings are available to Butler Wick to the extent of the loan value of the marketable securities.

COMPETITION

     Home Savings faces competition for deposits and loans from other savings and loan associations, credit unions, banks and mortgage originators in Home Savings’ primary market area. The primary factors in competition for deposits are customer service, convenience of office location and interest rates. Home Savings competes for loan originations primarily through the interest rates and loan fees it charges and through the efficiency and quality of service it provides to borrowers. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors, which are not readily predictable.

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     Butler Wick offers retail brokerage, asset management, and trust services to clients primarily in northeastern Ohio and western Pennsylvania. In each of these businesses, Butler Wick competes with both regional and national firms. As a full service broker, Butler Wick competes based on personal service rather than price. Butler Wick Trust Company is the only such locally owned and managed financial services provider.

EMPLOYEES

     At December 31, 2004, Home Savings and Butler Wick had 608 and 181 full-time equivalent employees, respectively. Home Savings and Butler Wick believe that relations with their employees are good. Home Savings offers health, life and disability benefits to all employees, a 401(k) plan and an employee stock ownership plan for its eligible employees. Butler Wick offers health, life and disability benefits to all employees, a 401(k) plan, a profit sharing plan and a retention plan for its eligible employees. One Home Savings employee and no Butler Wick employees are represented by a collective bargaining unit.

REGULATION

     United Community is a unitary savings and loan holding company within the meaning of the Home Owners Loan Act, as amended (HOLA), and is subject to regulation, examination, and oversight by the OTS, although there generally are no restrictions on the activities of United Community unless the OTS determines that there is reasonable cause to believe that an activity constitutes a serious risk to the financial safety, soundness, or stability of Home Savings. Home Savings is subject to regulation, examination, and oversight by the Division and the FDIC, and it also is subject to certain provisions of the Federal Reserve Act. Butler Wick is subject to regulation, examination and oversight by the SEC and NASD and the Division. United Community, Home Savings and Butler Wick are also subject to the provisions of the Ohio Revised Code applicable to corporations generally, including laws that restrict takeover bids, tender offers and control-share acquisitions involving public companies which have significant ties to Ohio.

     The OTS, the FDIC, the Division, the SEC and the NASD each have various powers to initiate supervisory measures or formal enforcement actions if United Community or the subsidiary they regulate does not comply with applicable regulations. If the grounds provided by law exist, the FDIC or the Division may place Home Savings in conservatorship or receivership. Home Savings is also subject to regulatory oversight under various consumer protection and fair lending laws which govern, among other things, truth-in-lending disclosures, equal credit opportunity, fair credit reporting and community reinvestment. Failure to abide by federal laws and regulations governing community reinvestment could limit the ability of Home Savings to open a new branch or engage in a merger.

     Federal law prohibits Home Savings from making a capital distribution to anyone or paying management fees to any person having control of Home Savings if, after such distribution or payment, Home Savings would be undercapitalized. In addition, each company controlling an undercapitalized institution will comply with its capital restoration plan until the institution has been adequately capitalized on average during each of the four preceding calendar quarters and must provide adequate assurances of performance.

     Federal Reserve Board regulations currently require savings associations to maintain reserves of 3% of net transaction accounts (primarily NOW accounts) up to $47.6 million (subject to an exemption of up to $7.0 million), and of 10% of net transaction accounts in excess of $47.6 million. At December 31, 2004, Home Savings was in compliance with its reserve requirements.

     Loans by Home Savings to executive officers, directors, and principal shareholders and their related interests must conform to the lending limit on loans to one borrower, and the total of such loans to executive officers, directors, principal shareholders, and their related interests cannot exceed specified limits. Most loans to directors, executive officers, and principal shareholders must be approved in advance by a majority of the “disinterested” members of the Board with any “interested” director not participating. All loans to directors, executive officers, and principal shareholders must be made on terms substantially the same as offered in comparable transactions with the general public or as offered to all employees in a company-wide benefit program, and loans to executive officers are subject to additional limitations. All other transactions between Home Savings and its affiliates must comply with Sections 23A and 23B of the Federal Reserve Act. United Community and Butler Wick are affiliates of Home Savings for this purpose.

     Under federal law and regulations, no person, directly or indirectly, or acting in concert with others, may acquire control of Home Savings or United Community without 60 days’ prior notice to the OTS. “Control” is generally defined as

16

having more than 25% ownership or voting power; however, ownership or voting power of more than 10% may be deemed “control” if certain factors are in place. If the acquisition of control is by a company, the acquirer must obtain approval, rather than give notice, of the acquisition as a savings and loan holding company.

     In addition, a statutory limitation on the acquisition of control of an Ohio savings bank requires the written approval of the Division prior to the acquisition by any person or entity of a controlling interest in an Ohio association. Control exists, for purposes of Ohio law, when any person or entity which, either directly or indirectly, or acting in concert with one or more other persons or entities, owns, controls, holds with power to vote, or holds proxies representing, 15% or more of the voting shares or rights of an association, or controls in any manner the election or appointment of a majority of the directors. Ohio law also requires that certain acquisitions of voting securities that would result in the acquiring shareholder owning 20%, 33 1/3% or 50% of the outstanding voting securities of United Community must be approved in advance by the holders of at least a majority of the outstanding voting shares represented at a meeting at which a quorum is present and a majority of the portion of the outstanding voting shares represented at such a meeting, excluding the voting shares by the acquiring shareholder.

     Federal law generally prohibits a savings and loan holding company, such as United Community, from controlling any other savings association or savings and loan holding company, without prior approval of the OTS, or from acquiring or retaining more than 5% of the voting shares of a savings association or holding company thereof, which is not a subsidiary. Except with the prior approval of the OTS, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such holding company’s stock may also acquire control of any savings institution, other than a subsidiary institution, or any other savings and loan holding company.

17

Item 2. Description of Property

     The following table sets forth certain information at December 31, 2004, regarding the properties on which offices of Home Savings are located:

	Owned or
Location	Leased
275 Federal Plaza West	Owned
Youngstown, Ohio
32 State Street	Owned
Struthers, Ohio
4005 Hillman Way	Owned
Boardman, Ohio
650 East State Street	Owned
Salem, Ohio
6000 Mahoning Avenue (1)	Leased
Austintown, Ohio
7525 Market Street	Owned
Boardman, Ohio
4259 Kirk Road	Owned
Austintown, Ohio
202 South Main Street	Owned
Poland, Ohio
3500 Belmont Avenue	Owned
Youngstown, Ohio
29 North Broad Street	Owned
Canfield, Ohio
980 Great East Plaza	Leased
Niles, Ohio
One University Plaza	Leased
1059-1060 Kilcawley Center
Youngstown, Ohio
127 North Market Street	Owned
East Palestine, Ohio
210 West Lincoln Way	Owned
Lisbon, Ohio
30 East Main Street	Owned
Ashland, Ohio
203 North Sandusky Street	Owned
Bellevue, Ohio
211 North Sandusky Street	Owned
Bellevue, Ohio
225 North Main Street	Owned
Clyde, Ohio
1500 Bright Road	Owned
Findlay, Ohio
321 West State Street	Owned
Fremont, Ohio
40 East Main Street	Owned
Lexington, Ohio
50 West Main Street	Owned
Norwalk, Ohio
51 West Main Street (2)	Owned
Norwalk, Ohio
4112 Milan Road	Owned
Sandusky, Ohio
48 East Market Street	Owned
Tiffin, Ohio
796 West Market Street	Owned
Tiffin, Ohio
301 Myrtle Avenue	Owned
Willard, Ohio
121 Blossom Centre, Suite A	Leased
Willard, Ohio

18

	Owned or
Location	Leased
2996 McCartney Road	Leased
Youngstown, Ohio
14825 South Avenue Ext.	Owned
Columbiana, Ohio
4625 North River Road	Owned
Warren, Ohio
427 Ohio Ave.	Leased
McDonald, Ohio
7075 North Aurora Rd.	Owned
Aurora, Ohio
250 E Wilson Bridge Rd.	Leased
Columbus, Ohio
2211 South Dixie Dr	Leased
Dayton, Ohio
7326 Southern Blvd Unit A	Leased
Boardman, Ohio
530 Broadway Street	Owned
East Liverpool, Ohio
15575 ST RT 170	Leased
Calcutta, Ohio
46635 Y & O Road	Owned
Glenmoor, Ohio
998 Third Street	Owned
Beaver, Pennsylvania
7707 Mentor Ave	Leased
Mentor, Ohio
3690 Orange Place, Suite 250	Leased
Beachwood, Ohio
Pointe View Professional Park	Leased
4831 Darrow Rd. #106
Stow, Ohio

(1)	Office location moved to 6030 Mahoning Ave, Austintown, Ohio in February 2005, and is owned by Home Savings.
(2)	Drive-up facility only.

     The following table sets forth certain information at December 31, 2004, regarding the properties on which the main office and the branch offices of Butler Wick are located:

	Owned or
Location	Leased
City Center One Bldg.	Leased
Suite 700
Youngstown, Ohio
960 W. State Street	Leased
Alliance, Ohio
1 E. State Street	Leased
Sharon, Pennsylvania
3685 Stutz Drive, Suite 201	Leased
Canfield, Ohio
265 West Main Street,	Leased
Suite101
Kent, Ohio
425 Niles-Cortland Road SE	Leased
Bldg. A, Suite 201
Warren, Ohio
1284 Liberty Street	Leased
Franklin, Pennsylvania
25651 Detroit Road	Leased
Westlake, Ohio
4522 Fulton Drive NW	Leased
Canton, Ohio
100 S. Broadway,	Leased
2nd Floor
Salem, Ohio

19

	Owned or
Location	Leased
3637 Medina Road	Leased
Medina, Ohio
175 South Third Street,	Leased
Suite 230
Columbus, Ohio
Two Nationwide Plaza,	Leased
Suite 770
280 N. High Street
Columbus, Ohio
3690 Orange Place, Suite 350	Leased
Beachwood, Ohio
11 W Monument Ave.,	Leased
Suite 100
Dayton, Ohio
8286-1 South Avenue	Leased
Boardman, Ohio

Item 3. Legal Proceedings

     United Community and its subsidiaries are involved in a number of legal proceedings arising out of their businesses and regularly face various claims, including unasserted claims that ultimately may result in litigation. These legal proceedings often include claims in which United Community seeks to enforce or defend its security interest in collateral pledged to secure loans made by Home Savings and incidental to its securities business conducted by Butler Wick. Management believes that the financial position, results of operations, and cash flows would not be materially affected by the outcome of any pending or threatened legal proceedings, commitments, or claims.

Item 4. Submission of Matters to a Vote of Security Holders

     Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

     The information contained in the 2004 Annual Report to Shareholders of United Community (Annual Report) under the caption “Market Price and Dividends” is incorporated herein by reference and attached hereto as part of Exhibit 13.

Item 6. Selected Financial Data

     The information contained in the Annual Report under the caption “Selected Financial and Other Data” is incorporated herein by reference and attached hereto as part of Exhibit 13.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The information contained in the Annual Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is incorporated herein by reference and attached hereto as part of Exhibit 13.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     The information contained in the Annual Report under the caption “Asset and Liability Management and Market Risk” is incorporated herein by reference and attached hereto as part of Exhibit 13.

20

Item 8. Financial Statements and Supplementary Data

     The Consolidated Financial Statements appearing in the Annual Report and the report of Crowe Chizek and Company LLC dated February 17, 2005, are incorporated herein by reference and attached hereto as part of Exhibit 13.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     Not applicable.

Item 9A. Controls and Procedures

     An evaluation was carried out by United Community’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-14(c)/15d-14(c) of the Securities Exchange Act of 1934) as of December 31, 2004. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that United Community’s disclosure controls and procedures are effective. During the last quarter of fiscal 2004, there were no changes in United Community’s internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, these controls as of December 31, 2004.

Item 9B. Other Information

     Pursuant to the SEC’s Exemptive Order in Release No. 34-50154, United Community will file management’s annual report on internal control over financial reporting and the related attestation report of the registered public accounting firm by an amendment to this form 10-K not later than 45 days after the date this form 10-K was due.

PART III

Item 10. Directors and Executive Officers of the Registrant

     The information contained in the Proxy Statement for the 2005 Annual Meeting of Shareholders of United Community (Proxy Statement), to be filed with the Securities and Exchange Commission (Commission) on or about March 30, 2005, under the captions “Election of Directors,” “Incumbent Directors,” “Board Meeting and Compensation,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Audit Committee Report” is incorporated herein by reference.

     United Community has adopted a code of ethics applicable to all officers, directors and employees that complies with SEC requirements. A copy of the code may be obtained upon written request to Patrick A. Kelly, Chief Financial Officer, United Community Financial Corp., 275 Federal Plaza W, Youngstown, Ohio 44503.

Item 11. Executive Compensation

     The information contained in the Proxy Statement under the captions “Board Meetings, Committees and Compensation” and “Compensation of Executive Officers,” is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

     The information contained in the Proxy Statement under the caption “Ownership of UCFC Shares” is incorporated herein by reference.

     United Community maintains the United Community Financial Corp. 1999 Long-Term Incentive Plan (“Incentive Plan”) and the United Community Financial Corp. Recognition and Retention Plan and Trust Agreement (“RRP”) under which it may issue equity securities to its directors, officers and employees in exchange for goods or services. The Incentive Plan and the RRP were approved by United Community’s shareholders at the 1999 Special Meeting of Shareholders.

21

     The following table shows, as of December 31, 2004, the number of common shares issuable upon the exercise of outstanding stock options, the weighted average exercise price of those stock options, and the number of common shares remaining for future issuance under the Incentive Plan and the RRP, excluding shares issuable upon exercise of outstanding stock options.

Equity Compensation Plan Information

	(a)		(b)		(c)
					Number of securities
					remaining available for
	Number of securities				future issuance under
	to be issued upon		Weighted-average		equity compensation plans
	exercise of		exercise price of		(excluding securities
Plan Category	outstanding options		outstanding options		reflected in column (a))
Equity compensation plans approved by security holders		2,309,748	$	9.49	None

Item 13. Certain Relationships and Related Transactions

     The information contained in the Proxy Statement under the caption “Compensation of Executive Officers —Certain Transactions” is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

     The information contained in the Proxy Statement under the caption “Audit Fees” is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(c) Exhibits

3.1	Articles of Incorporation
3.2	Amended Code of Regulations
10	Material Contracts
11	Statement Regarding Computation of Per Share Earnings
13	Portions of the 2004 Annual Report to Shareholders
20	Proxy Statement for 2005 Annual Meeting of Shareholders
21	Subsidiaries of Registrant
23	Crowe Chizek and Company LLC Consent
31.1	Section 302 Certification by Chief Executive Officer

22

31.2	Section 302 Certification by Chief Financial Officer
32	Certification of Financial Statements by Chief Executive Officer and Chief Financial Officer

(a)   Financial Statement Schedules. All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

23

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UNITED COMMUNITY FINANCIAL CORP.
By:	/S/ Douglas M. McKay
	Douglas M. McKay, President
	(Duly Authorized Representative)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.

/S/ Douglas M. McKay	/S/ Richard M. Barrett
Douglas M. McKay, President and Director	Richard M. Barrett, Director
Date: March 15, 2005	Date: March 15, 2005
/S/ Richard J. Schiraldi	/S/ David C. Sweet
Richard J. Schiraldi, Director	David C. Sweet, Director
Date: March 15, 2005	Date: March 15, 2005
/S/ Herbert F. Schuler, Sr.	/S/ Patrick A. Kelly
Herbert F. Schuler, Sr., Director	Patrick A. Kelly, Treasurer (Principal Financial Officer)
Date: March 15, 2005	Date: March 15, 2005
/S/ Thomas J. Cavalier
Thomas J. Cavalier, Director
Date: March 15, 2005

24

INDEX TO EXHIBITS

Exhibit Number

3.1	Articles of Incorporation	Incorporated by reference to the Registration Statement on Form S-1 filed by United Community on March 13, 1998 (S-1) with the Securities and Exchange Commission (SEC), Exhibit 3.1
3.2	Amended Code of Regulations	Incorporated by reference to the 1998 10-K filed by United Community on March 31, 1999 via Edgar, film number 99582343, Exhibit 3.2
10.1	The Home Savings and Loan Company of Youngstown, Ohio Employee Stock Ownership Plan	Incorporated by reference to the 2001 10-K filed by United Community on March 29, 2002 via Edgar, film number 02593161, Exhibit 10.1
10.2	Employment Agreement between The Home Savings and Loan Company of Youngstown, Ohio and Douglas M. McKay, dated December 31, 2003.	Incorporated by reference to the 2003 10-K filed by United Community on March 12, 2004 via Edgar, film number 04666159 (2003 10K), Exhibit 10.2
10.3	Employment Agreement between The Home Savings and Loan Company of Youngstown, Ohio and Patrick W. Bevack, dated December 31, 2003.	Incorporated by reference to the 2003 10-K, Exhibit 10.3
10.4	Employment Agreement between The Home Savings and Loan Company of Youngstown, Ohio and Patrick A. Kelly, dated December 31, 2003.	Incorporated by reference to the 2003 10-K, Exhibit 10.4
10.5	Employment Agreement between Butler Wick Corp. and Thomas J. Cavalier, dated August 12, 1999.	Incorporated by reference to the 1999 10-K filed by United Community on March 29, 2000 via Edgar, film number 582478, Exhibit 10.5
10.6	Employment Agreement between The Home Savings and Loan Company of Youngstown, Ohio and David G. Lodge, dated December 31, 2003.	Incorporated by reference to the 2003 10-K, Exhibit 10.6
10.7	United Community 1999 Long -Term Incentive Plan	Incorporated by reference to the Proxy Statement filed by United Community via Edgar on June 7, 1999, file number 9964170 (1999 Proxy), Exhibit
10.8	United Community Recognition and Retention Plan and Trust Agreement	Incorporated by reference to the 1999 Proxy, Exhibit B
11	Statement Regarding Computation of Per Share Earnings	Incorporated by reference to Note 21 to the Financial Statements included in the Annual Report in Exhibit 13.
13	Portions of the 2004 Annual Report to Shareholders
20	Proxy Statement for 2005 Annual Meeting of Shareholders	Incorporated by reference to the Proxy Statement, to be filed with the Securities and Exchange Commission on or about March 30, 2005.
21	Subsidiaries of Registrant
23	Crowe Chizek and Company, LLC Consent
31.1	Section 302 Certification by Chief Executive Officer
31.2	Section 302 Certification by Chief Financial Officer
32	Certification of Financial Statements by Chief Executive Officer and Chief Financial Officer

25

EX-13

                                                                               .
                                                                               .
                                                                               .
                                   EXHIBIT 13

SELECTED FINANCIAL AND OTHER DATA

Selected financial condition data:



                                                                 At December 31,
                                         --------------------------------------------------------------
                                            2004         2003         2002         2001         2000
                                         ----------   ----------   ----------   ----------   ----------
                                                                 (In thousands)
                                                                              
Total assets                             $2,287,788   $2,073,833   $1,990,131   $1,944,780   $1,300,199
Cash and cash equivalents                    40,281       81,155      110,936      205,883       45,972
Securities:
   Trading, at fair value                    32,316       15,600        5,060        8,352        5,933
   Available for sale, at fair value        198,404      227,525      237,268      118,150      190,176
   Held to maturity, at amortized cost           --           --           --       80,496      108,560
Loans held for sale                          59,099       37,715       45,825       20,192           --
Loans, net                                1,815,976    1,576,494    1,478,213    1,406,479      876,653
Federal Home Loan Bank stock, at cost        22,842       21,924       21,069       18,760       13,793
Cash surrender value of life insurance       21,406       20,496           --           --           --
Deposits                                  1,522,952    1,423,698    1,481,901    1,383,418      900,413
Borrowed funds                              483,503      338,463      210,024      271,631      114,317
Total shareholders' equity                  252,352      279,836      274,569      261,880      261,899
                                         ----------   ----------   ----------   ----------   ----------


Summary of earnings:



                                                    Year ended December 31,
                                      ---------------------------------------------------
                                        2004       2003       2002       2001       2000
                                      --------   --------   --------   --------   -------
                                                         (In thousands)
                                                                   
Interest income                       $113,441   $111,663   $125,960   $113,989   $91,622
Interest expense                        40,378     40,252     54,236     57,047    44,104
                                      --------   --------   --------   --------   -------
Net interest income                     73,063     71,411     71,724     56,942    47,518
Provision for loan losses                9,370      3,179      3,578      2,495       300
                                      --------   --------   --------   --------   -------
Net interest income after provision
   for loan losses                      63,693     68,232     68,146     54,447    47,218
Non-interest income                     36,109     40,845     31,806     28,449    24,754
Non-interest expenses (1)               72,834     73,572     68,359     57,708    54,307
                                      --------   --------   --------   --------   -------
Income before income taxes              26,968     35,505     31,593     25,188    17,665
Income taxes                             9,103     12,565     10,776      9,509     6,051
                                      --------   --------   --------   --------   -------
Net income                            $ 17,865   $ 22,940   $ 20,817   $ 15,679   $11,614
                                      --------   --------   --------   --------   -------


(1)  For the year ended December 31, 2000, non-interest expense included a $2.9
     million gain on postretirement benefits curtailment and a $1.0 million loss
     on pension termination.


                                                                        EX. 13-1



Selected financial ratios and other data:



                                                                  At or for the year ended December 31,
                                                          ----------------------------------------------------
                                                            2004       2003       2002       2001       2000
                                                          --------   --------   --------   --------   --------
                                                                                       
Performance ratios: (1)
   Return on average assets (2)                               0.83%      1.15%      1.04%      0.97%      0.92%
   Return on average shareholders' equity (3)                 7.01       8.27       7.74       6.03       4.47
   Interest rate spread (4)                                   3.34       3.51       3.36       2.95       2.91
   Net interest margin (5)                                    3.60       3.81       3.79       3.66       3.89
   Non-interest expense to average assets                     3.37       3.70       3.74       3.56       4.30
   Efficiency ratio (6)                                      65.87      65.29      64.52      66.34      75.14
   Average interest-earning assets to
      average interest-bearing liabilities                  113.16     114.24     114.98     119.23     127.08
Capital ratios:
   Average equity to average assets                          11.78      13.95      13.48      16.04      20.57
   Shareholders' equity to assets at year end                11.03      13.49      13.80      13.47      20.14
   Tier 1 leverage ratio                                      8.36       8.22       8.05       9.07      14.51
   Tier 1 risk-based capital ratio                            9.92       9.64      11.64      13.88      23.51
   Total risk-based capital ratio                            10.79      10.56      12.61      14.70      24.33
Asset quality ratios:
   Nonperforming loans to loans, net (7)                      1.22       0.94       1.06       0.89       1.11
   Nonperforming assets to total assets at year end (8)       1.04       0.78       0.85       0.67       0.78
   Allowance for loan losses as a percent of loans            0.87       0.96       1.02       0.82       0.75
   Allowance for loan losses as a
      percent of nonperforming loans (7)                     71.57     101.87      96.20      92.13      67.20
Number of:
   Loans                                                    41,690     37,668     37,872     25,636     22,699
   Deposits                                                173,997    169,920    173,528    164,753    115,785
Per share data:
   Basic earnings (9)                                     $   0.61   $   0.73   $   0.65   $   0.49   $   0.35
   Diluted earnings (9)                                       0.60       0.72       0.65       0.48       0.35
   Book value (10)                                            8.09       8.21       7.79       7.34       7.02
   Dividend per share                                         0.30       0.30       0.30       0.30       0.30
   Dividend payout ratio (11)                                50.00%     41.67%     46.15%     62.50%     85.71%


(1)  Performance ratios for 2000 reflect the $2.9 million gain on postretirement
     benefits curtailment and the $1.0 million loss on pension termination.

(2)  Net income divided by average total assets. Excluding the effects of the
     gain on postretirement benefits curtailment and the loss on pension
     termination, the return on average assets would have been 0.80% for the
     year ended December 31, 2000.

(3)  Net income divided by average total equity. Excluding the effects of the
     gain on postretirement benefits curtailment and the loss on pension
     termination, the return on average equity would have been 3.90% for the
     year ended December 31, 2000.

(4)  Difference between weighted average yield on interest-earning assets and
     weighted average cost of interest-bearing liabilities.

(5)  Net interest income as a percentage of average interest-earning assets.

(6)  Non-interest expense, excluding the amortization of core deposit
     intangible, divided by the sum of net interest income and non-interest
     income, excluding gains and losses on securities and other. Excluding the
     effects of the gain on postretirement benefits curtailment and the loss on
     pension termination, the efficiency ratio would have been 78.22% for the
     year ended December 31, 2000.

(7)  Nonperforming loans consist of nonaccrual loans and restructured loans.

(8)  Nonperforming assets consist of nonperforming loans and real estate
     acquired in settlement of loans and other repossessed assets.

(9)  Net income divided by average number of shares outstanding. Excluding the
     effects of the gain on postretirement benefits curtailment and the loss on
     pension termination, basic and diluted earnings per share would have been
     $0.31 for the year ended December 31, 2000.

(10) Shareholders' equity divided by number of shares outstanding.

(11) Historical per share dividends declared and paid for the year divided by
     the diluted earnings per share for the year.


                                                                        EX. 13-2



                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

United Community Financial Corp. (United Community) was incorporated in the
State of Ohio in February 1998 for the purpose of owning all of the outstanding
capital stock of The Home Savings and Loan Company of Youngstown, Ohio (Home
Savings) issued upon the conversion of Home Savings from a mutual savings
association to a permanent capital stock savings association (Conversion). The
Conversion was completed on July 8, 1998. On August 12, 1999, United Community
acquired Butler Wick Corp. (Butler Wick), an investment brokerage/advisory firm.

Home Savings conducts business from its main office located in Youngstown, Ohio,
36 full-service branches and five loan production offices located throughout
Ohio and western Pennsylvania. The principal business of Home Savings is the
origination of mortgage loans on one- to four-family residential real estate
located in Home Savings' primary market area, which consists of Ashland,
Columbiana, Cuyahoga, Erie, Geauga, Hancock, Huron, Lake, Mahoning, Montgomery,
Richland, Sandusky, Seneca, Summit and Trumbull counties in Ohio and Beaver
County in Pennsylvania. Home Savings also originates loans secured by
nonresidential real estate. In addition to real estate lending, Home Savings
originates commercial loans and various types of consumer loans. For liquidity
and interest rate risk management purposes, Home Savings invests in various
financial instruments as discussed below. Funds for lending and other investment
activities are obtained primarily from savings deposits, which are insured up to
applicable limits by the FDIC, principal repayments of loans, borrowings from
the Federal Home Loan Bank and maturities of securities.

Interest on loans and other investments is Home Savings' primary source of
income. Home Savings' principal expenses are interest paid on deposit accounts
and other borrowings and salaries and benefits paid to our employees. Operating
results are dependent to a significant degree on the net interest income of Home
Savings, which is the difference between interest earned on loans and other
investments and interest paid on deposits and borrowed funds. Like most thrift
institutions, Home Savings' interest income and interest expense are
significantly affected by general economic conditions and by the policies of
various regulatory authorities.

Butler Wick is the parent company for two wholly-owned subsidiaries: Butler Wick
& Co., Inc. and Butler Wick Trust Company. Butler Wick conducts business from
its main office located in Youngstown, Ohio and 14 offices located in
northeastern Ohio and western Pennsylvania. Butler Wick primarily sells common
and preferred stocks, but also offers an array of government, corporate and
municipal bonds, unit trusts, mutual funds, IRAs, money market accounts and
certificates of deposit. Butler Wick also offers investments in precious metals
and a full line of life insurance and annuity products, personal and corporate
financial planning, estate planning, pension and profit sharing.

The following discussion and analysis of the financial condition and results of
operations of United Community and its subsidiaries should be read in
conjunction with the consolidated financial statements, and the notes thereto,
included in this Annual Report.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report that are not historical facts are
forward looking statements that are subject to certain risks and uncertainties.
When used herein, the terms "anticipate," "plan," "expect," "believe," and
similar expressions as they relate to United Community or its management are
intended to identify such forward looking statements. United Community's actual
results, performance or achievements may materially differ from those expressed
or implied in the forward-looking statements. Risks and uncertainties that could
cause or contribute to such material differences include, but are not limited
to, general economic conditions, interest rate environment, competitive
conditions in the financial services industry, changes in law, governmental
policies and regulations, and rapidly changing technology affecting financial
services.

CHANGES IN FINANCIAL CONDITION

Total assets increased $214.0 million, or 10.3%, from $2.1 billion at December
31, 2003 to $2.3 billion at December 31, 2004. The net change in assets was a
result of increases of $239.5 million, or 15.2%, in net loans, $21.4 million in
loans held for sale, $16.7 million in trading securities and $3.3 million in
other assets, which were partially offset by decreases of $40.9 million, or
50.4%, in cash and cash equivalents and $29.1 million, or 12.8%, in securities
held for sale. Total liabilities increased $241.4 million, or 13.5%, primarily
as a result of a $116.4 million, or 73.2%, increase in short-term borrowed
funds, a $28.6 million increase in long-term borrowed funds, a $77.7 million
increase in interest bearing deposits and a $21.5 million increase in
non-interest bearing deposits. These increases were offset by a decrease of $4.3
million, or 21.4%, in accrued expenses and other liabilities. We anticipate
continued balance sheet growth resulting from our expansion within our existing
regions, including ongoing benefits from the introduction of new products, as
well as ongoing benefits from new offices opened in 2004 and those planned for
2005.

Net loans increased $239.5 million, or 15.2%, to $1.8 billion at December 31,
2004, compared to $1.6 billion at December 31, 2003. The most significant
increases were in the one- to four-family portfolio with a $91.0 million
increase in one-to-four family real estate loans and a $56.4 million increase in
one- to four-family construction loans. Other increases in the loan portfolio
included a $48.9 million increase in consumer loans, a $20.0 million increase in
commercial loans and a $19.6 million increase in multifamily and non-residential
construction loans. Also contributing to the increase was a decrease in deferred
fees on loans of $998,000 offset by an increase in the allowance for loan


                                                                        EX. 13-3



loss of $766,000. During 2003, Home Savings entered into an agreement to
purchase one- to four-family construction loans from another institution. Loans
purchased under this agreement earn a floating rate of interest, are guaranteed
as to principal and interest by a third party and may be for the purpose of
constructing either pre-sold or speculative homes. Home Savings continued to
purchase loans under this program in 2004 and had approximately $85.5 million
outstanding at December 31, 2004. The establishment of a wholesale loan
department at Home Savings also contributed to the increase in net loans. Home
Savings anticipates continued net growth in all loan categories, which may
increase the risk of loan losses. Non-residential real estate lending is
generally considered to involve a higher degree of risk than residential real
estate lending due to the relatively larger loan amounts and the effects of
general economic conditions on the successful operation of income-producing
properties. Furthermore, consumer lending can also involve a higher degree of
risk than residential real estate lending as collateral for consumer loans can
decline in value more quickly than real estate collateral.

Loans held for sale were $59.1 million at December 31, 2004 compared to $37.7
million at December 31, 2003. The balance of loans held for sale at any point in
time includes loans that have not yet been sold and loans that have been sold
with future delivery dates. The gain or loss on the sale of these loans is not
recognized until the settlement of the transaction and subsequent delivery of
the loan. Home Savings actively manages its pipeline of loans in process
utilizing forward sale contracts to minimize exposure to rising interest rates.
In the third quarter of 2004, Home Savings transferred $39.3 million in fixed
rate, fixed term second mortgage loans originated by the bank from the portfolio
to loans held for sale. Also contributing to the increase in 2004 was the
commencement of originating Small Business Administration loans for sale. The
Company purchases residential mortgage loans from a number of correspondent
lenders in the normal course of business. Looking into 2005, Home Savings
intends to continue to sell fixed rate loans as a part of its strategic plan to
manage interest rate risk. As interest rates rise, loan origination volumes
generally decline, thus resulting in fewer loans available for sale.

Trading securities increased $16.7 million, or 107.2%, from December 31, 2003 to
December 31, 2004. The increase is a result of an increase in Butler Wick's
trading portfolio of $18.8 million. This portfolio consists of U.S. agency
securities of the Federal Home Loan Bank and Federal National Mortgage
Association, with an average maturity of 1.7 years. Partially offsetting the
increase was a decrease in trading securities held by United Community in
relation to the Butler Wick Retention Plan. Approximately 56% of the plan's
assets were distributed in August as all participants fully vested at that time.
Refer to note 17 of the consolidated financial statements for further discussion
of the retention plan.

Other assets increased $3.3 million during 2004. The increase is a result of
increases in customer receivables for returned checks of $866,000 and increased
prepaid service contracts of $251,000 at Home Savings and increases of $455,000
in receivables due from customers and $369,000 in receivables due from
brokers/dealers at Butler Wick. Also contributing to the increase was an
increase in deferred federal income tax at United Community of $365,000 and in
other accounts receivable of $390,000 due to United Community for a security
sale that occurred prior to year end and settled in January 2005.

Funds not currently utilized for general corporate purposes, including loan
originations, enhanced customer services and possible acquisitions, are invested
in overnight funds and securities. Cash and cash equivalents decreased $40.9
million, or 50.4%, to $40.3 million at December 31, 2004 compared to $81.2
million at December 31, 2003. The decrease is primarily as a result of the
completion of the self-tender offer in March 2004 in which United Community
purchased 3,667,227 common shares at $12.50 per share.

Available for sale securities decreased during 2004 as a result of paydowns and
maturities of $76.2 million and sales of $46.5 million in Home Savings'
portfolio. Activity in Butler Wick's portfolio also contributed to the decrease
with sales of $14.2 million and paydowns of $100,000. United Community sold $2.3
million in securities during 2004, further contributing to the decrease. Home
Savings had purchases of available for sale securities of $95.7 million, while
Butler Wick had purchases of $15.9 million and United Community purchased
$105,000 of securities, partially offsetting the paydown, maturity and sale
activity.

During the second quarter of 2003, Home Savings invested $20.0 million in bank
owned life insurance, which is insurance on the lives of certain employees where
Home Savings is the beneficiary. Bank owned life insurance provides a long-term
asset to offset long-term benefit liabilities, while generating competitive
investment yields. Home Savings recognized into other non-interest income a
$496,000 increase in the cash value of the policy in 2003 and $910,000 in 2004.
The increase in the cash value of the policy is tax exempt and any death benefit
proceeds received by Home Savings are tax-free.

Total deposits increased $99.3 million, or 7.0%, from $1.4 billion at December
31, 2003 to $1.5 billion at December 31, 2004, primarily as a result of an
increase in certificates of deposit of $82.1 million and an increase in
non-interest bearing NOW deposits of $21.0 million. This change was offset by a
modest decrease of $4.0 million in savings accounts. Non-interest bearing NOW
deposits account for the majority of Home Savings' non-interest bearing
deposits. During 2004, Home Savings continued emphasizing growth in core deposit
accounts that may be more likely to generate lasting customer relationships.
Also, certificate of deposit pricing was more aggressive in order to attract new
customers. Management continually evaluates many variables when pricing
deposits, including cash requirements, liquidity targets, asset acquisition,
liability mix, and interest rate risk when pricing deposits. The increase in
total deposits was used to partially fund the increase in loan volume during
2004.

Borrowed funds increased $145.0 million, or 42.9%, at December 31, 2004 compared
to December 31, 2003. Home Savings had increases of $94.0 million in short-term
Federal Home Loan Bank advances and $30.7 million in long-term Federal Home Loan
Bank advances during 2004. These increases were used to fund loan growth in
excess of deposit growth. Butler Wick incurred a $19.2 million increase in short
term borrowings in order to fund the purchase of the government agency
securities held in their trading portfolio. The securities were used to
collateralize repurchase agreements. The increase in other borrowed funds was
offset by a modest decrease in repurchase agreement


                                                                        EX. 13-4



deposits at Home Savings of $2.4 million. United Community continually evaluates
funding alternatives and may borrow additional funds in 2005 to satisfy funding
requirements.

Total shareholders' equity decreased $27.5 million, or 9.8%, from December 31,
2003 to December 31, 2004. The decrease was primarily due to treasury stock
purchases, offset by increases in capital stock and retained earnings along with
a decrease in unearned compensation. Treasury stock increased $40.3 million as a
result of United Community's self-tender in which it purchased 3,667,227 shares
at a cost of $46.2 million in March 2004. This purchase was the result of the
self-tender offer discussed above and in the Liquidity and Capital section of
this Management's Discussion and Analysis. Partially offsetting this purchase
was the exercise of stock options. Eligible participants exercised approximately
913,000 stock options at a cost of $6.4 million. Capital stock increased as a
result of the increase in United Community's share price for ESOP shares
released and for stock options exercised during the year. Retained earnings
increased as a result of net income for United Community of $855,000, Home
Savings of $16.2 million and Butler Wick of $801,000 which were reduced by
dividends paid to United Community shareholders during 2004 of $8.5 million.
Unearned compensation decreased $1.8 million as a result of shares released from
the ESOP during 2004. Book value and tangible book value were $8.09 and $6.92,
respectively, as of December 31, 2004.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2004 AND
DECEMBER 31, 2003

NET INCOME--Net income for the year ended December 31, 2004 was $17.9 million,
compared to $22.9 million for the year ended December 31, 2003, primarily due to
an increase of $6.2 million in the provision for loan losses and reduced
non-interest income of $4.7 million, offset by an increase in net interest
income of $1.7 million and reduced provision for income taxes of $3.5 million.

NET INTEREST INCOME--Net interest income increased $1.7 million, or 2.3%, to
$73.1 million in 2004 from $71.4 million for 2003. Total interest income
increased $1.8 million while interest expense increased only slightly. The
increase in total interest income was primarily due to increases in interest
earned on loans at Home Savings of $3.8 million, in interest earned on margin
accounts at Butler Wick of $113,000 and in interest earned on trading securities
of $321,000. The average balance of net loans increased $231.6 million, driving
the increase in interest earned on those assets. The increase in margin account
interest is due to a higher yield earned on those assets of 88 basis points. The
increase in trading securities was a result of an increase in the average
balance of trading securities of $15.3 million in Butler Wick's portfolio. These
increases were partially offset by a decrease in interest earned on available
for sale securities of $1.8 million, due to a decrease in the average balance of
available for sale securities of $62.9 as a result of paydowns, maturities and
sales of securities previously discussed.

Interest expense increased slightly because a decline in interest expense on
deposits at Home Savings of $2.5 million was more than offset by an increase in
interest expense on borrowed funds of $2.7 million. The decrease in interest
expense on deposits was caused by a decrease in the average rate paid as well as
a decrease in the average balance of interest-bearing savings accounts of $21.3
million and a decrease in the average balance of NOW and money market accounts
of $5.9 million. Interest on borrowed funds increased primarily as a
result of a $172.7 million increase in the average balance of borrowings.
Borrowings increased, as noted above, to fund loan growth in excess of deposit
growth at Home Savings as well as to purchase trading securities used to
collateralize repurchase agreements at Butler Wick. It is anticipated that the
average rate paid on interest-bearing liabilities will increase in 2005 as rates
have started to rise. However, management believes the Company is well
positioned in the event of a gradual increase in interest rates as rates offered
on loans will increase as well.

PROVISION FOR LOAN LOSSES--Provisions for loan losses are charged to operations
to bring the total allowance for loan losses to a level considered by management
to be adequate, based on management's evaluation of such factors as the
delinquency status of loans, current economic conditions, the net realizable
value of the underlying collateral, changes in the composition of the loan
portfolio and prior loan loss experience. The provision for loan losses was $9.4
million in 2004 compared to a provision of $3.2 million in 2003. The $6.2
million increase is primarily a result of impairment charges aggregating $8.4
million in the third quarter. These impairment charges relate to two loans made
to a boat dealer and to a number of loans to purchasers of boats from that
dealer. The charge was recorded after the Company learned that insufficient
collateral securing these loans as well as lack of clear title to the collateral
existed. Also, the mix of all loans in the portfolio in recent years has changed
to include more construction, consumer, commercial and commercial real estate
loans which involve a relatively higher level of credit risk. These factors all
required a higher provision for loan losses than if the portfolio remained
primarily comprised of one- to-four family mortgage loans. The allowance for
loan losses totaled $15.9 million at December 31, 2004, which was 0.87% of net
loans and 71.6% of nonperforming loans compared to $15.1 million at December 31,
2003, which was 0.96% of net loans and 101.9% of nonperforming loans.

NON-INTEREST INCOME--Non-interest income decreased $4.7 million, or 11.6%, to
$36.1 million for the year ended December 31, 2004, from $40.8 million for the
year ended December 31, 2003. The decrease was due to decreases of $8.5 million
in net gains recognized on the sale of loans, $831,000 in gains recognized on
available for sale securities, $857,000 in gains recognized on trading
securities and $499,000 in underwriting and investment banking income.

During 2004, Home Savings sold $180.9 million in mortgage loans compared to
sales of $536.6 million in 2003. A decline in one- to four-family residential
loan origination volumes led to the gain on related sales. As interest rates
begin to rise, loan sales are expected to continue slowing into the foreseeable
future.

The decline in gains on available for sale securities was a result of an
other-than-temporary charge of $1.4 million taken by Home Savings to write down
a Fannie Mae security to its approximate market value. Home Savings incurred the
charge because the market value of the stock


                                                                        EX. 13-5



declined significantly in the fourth quarter, following several negative
announcements by Fannie Mae involving regulatory actions, earnings restatements
and management turnover. Home Savings concluded that these events made the
likelihood of future price appreciation less certain in the near term and would
extend the time period for a recovery of the Company's investment cost beyond
previous estimates.

The change in income from trading securities was a result of larger losses
recognized in Butler Wick's trading portfolio in 2004 compared to 2003. In 2004,
Butler Wick sustained losses aggregating $142,000 on a portfolio of $30.3
million compared to $21,000 on a portfolio of $11.5 million in 2003. Also, lower
gains were recognized on the retention plan at Butler Wick during 2004 compared
to 2003. Gains recognized on the retention plan in 2004 were $135,000 compared
to $872,000 in 2003 and are expected to remain low as a result of the
distribution in August 2004 of 56% of the plan assets to plan participants.
Underwriting and investment banking fee income is derived from tax-advantaged
bond offerings for school districts, health care facilities, municipalities and
public agencies. Butler Wick brought fewer of these offerings to the market in
2004 compared to 2003 resulting in a decrease in revenues of $499,000.

A 40.5% increase in service fees and other charges in 2004 partially offset the
aforementioned decreases in non-interest income. Service fees at Home Savings
increased $2.7 million for the year ended December 31, 2004 compared to 2003 as
a result of an increase in OverdraftHonor(TM) fees of $1.4 million, a decrease
in deferred mortgage servicing rights amortization of $916,000 and a $341,000
increase in collection fee income. Service fees at Butler Wick increased
$664,000, mostly due to an increase in trust fee income of $435,000 compared to
2003. Brokerage commissions also increased at Butler Wick for the year ending
December 31, 2004 compared to the same period in 2003. Commissions are generated
from the sale of equities, mutual funds and bonds to retail clients. Commissions
increased $2.3 million over last year as a result of increased activity in 2004
compared to 2003.

NON-INTEREST EXPENSE--Non-interest expense decreased $738,000 to $72.8 million
for 2004, from $73.6 million in 2003. The primary reasons for the decrease are
decreases in salaries and employee benefits of $437,000, a decrease in
amortization expense related to the core deposit intangible of $414,000, a
decrease in advertising expense of $379,000 and a decrease in equipment and data
processing of $373,000. The primary reasons for the decrease in salaries and
employee benefits include a reduction in the accrued expense related to the
postretirement benefit plan of $1.5 million at Home Savings. Additional factors
that contributed to the decrease include decreases in commissions and bonuses
paid at Home Savings and a reduction in RRP expense as participants in that plan
vested in August 2003. Offsetting the change in salary expense at Home Savings
was an increase in salary expense at Butler Wick of $565,000 as a result of
increased brokerage activity. The decrease in the amortization of the core
deposit intangible resulting from the 2001 acquisition of Industrial Bancorp,
Inc. and the 2002 acquisition of Potters' Financial Corporation is a result of
amortization on a lower balance. The amount of amortization taken is greater in
the first years of acquisition and decreases as the asset ages. Advertising
expense declined in 2004 as a result of lower advertising expenses recognized at
Home Savings of $336,000 partially as a result of fewer advertising campaigns
and $40,000 at Butler Wick. Equipment and data processing decreased as a result
of lower depreciation expenses recognized at Home Savings in 2004 as compared to
2003.

FEDERAL INCOME TAXES--Federal income taxes decreased $3.5 million, or 27.6%, in
2004 compared to 2003, primarily due to lower pretax income in 2004. The
effective tax rate was 34% in 2004 and 35% in 2003. Refer to Note 14 to the
consolidated financial statements for a further analysis of the effective tax
rate.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND
DECEMBER 31, 2002

NET INCOME--Net income for the year ended December 31, 2003 was $22.9 million,
compared to $20.8 million for the year ended December 31, 2002, primarily due to
an increase of $9.0 million in non-interest income and a $399,000 decline in the
provision for loan losses. This increase was partially offset by a $313,000
decline in net interest income and a $5.2 million increase in non-interest
expense. Diluted earnings per share for the year ended December 31, 2003 were
$0.72 compared to diluted earnings per share of $0.65 for the year ended
December 31, 2002.

NET INTEREST INCOME--Net interest income decreased $313,000, or 0.4%, to $71.4
million in 2003 from $71.7 million for 2002. Total interest income decreased
$14.3 million and interest expense declined $14.0 million. The decrease in total
interest income was primarily due to decreases in interest earned on loans of
$11.4 million, interest earned on securities of $2.3 million and other interest
earning assets of $1.1 million. The average balance of interest-earning assets
declined $19.9 million for the year ended December 31, 2003 compared to 2002.
The average yield on interest-earning assets decreased to 5.97% in 2003 compared
to 6.66% in 2002. The decrease in interest expense was primarily due to a
decrease in interest expense on deposits of $14.0 million. The average balance
of interest-bearing liabilities decreased $6.8 million and the average rate paid
decreased to 2.46% for 2003 from 3.30% for 2002. The net result of these changes
was a 2 basis point increase in the net interest margin to 3.81% for 2003 from
3.79% for 2002.

PROVISION FOR LOAN LOSSES--Provisions for loan losses are charged to operations
to bring the total allowance for loan losses to a level considered by management
to be adequate to provide for probable estimated losses based on management's
evaluation of such factors as the delinquency status of loans, current economic
conditions, the net realizable value of the underlying collateral, changes in
the composition of the loan portfolio and prior loan loss experience. The
provision for loan losses was $3.2 million in 2003 compared to a provision of
$3.6 million in 2002, primarily as a result of declines in nonperforming loans
and delinquent loans. The decision to diversify the mix of loans in the
portfolio in recent years to include more construction, consumer, commercial and
commercial real estate loans involved the acceptance of a relatively higher
level of credit risk. As a result, this may require a higher provision for loan
losses than if the portfolio remained primarily comprised of one-to-four family
mortgage loans. The allowance for loan losses totaled $15.1 million at December
31, 2003, which was 0.96% of total loans and 100.7% of nonperforming loans.


                                                                        EX. 13-6



NON-INTEREST INCOME--Non-interest income increased $9.0 million, or 28.4%, to
$40.8 million for the year ended December 31, 2003, from $31.8 million for the
year ended December 31, 2002. The increase was primarily due to increases of
$5.8 million in net gains recognized on the sale of loans, $1.5 million in gains
recognized on trading securities, $1.2 million in commissions earned and $1.2
million in underwriting and investment banking income. During 2003, Home Savings
sold a total of $536.6 million in mortgage loans, including $90.4 million in
loans out of the portfolio, compared to total sales of $338.7 million in 2002,
including $107.9 million from the portfolio. As a result of declining
one-to-four family residential loan volumes, the gain on related sales is
expected to decline. The change in trading securities was a result of a $1.5
million increase in the value of securities held for the Butler Wick retention
plan. The changes in commissions and underwriting are predominately related to
an increase in the dollar volume of bond issues underwritten by Butler Wick in
2003. These increases were partially offset by a $1.3 million decline in gains
recognized on the sale of securities as a result of $21.3 million of security
sales during 2003 compared to $46.0 million in 2002. Gains recognized in 2002
include $476,000 from the sale of stock received in the Anthem demutualization,
which Home Savings received since Anthem is Home Savings' health insurance
provider. To recognize the receipt of the stock, other income was increased by
$847,000 in 2002. The $242,000 decrease in other income during 2003 was a result
of the non-recurring receipt of the Anthem stock in 2002, partially offset by
$496,000 income recognized from the investment in bank owned life insurance in
2003.

NON-INTEREST EXPENSE--Non-interest expense increased $5.2 million to $73.6
million for 2003, from $68.4 million in 2002. The primary reasons for the
increase are an increase in salaries and employee benefits of $6.6 million and
an increase in equipment and data processing of $1.2 million. The primary
reasons for the increase in salaries and employee benefits include $2.5 million
in additional expense related to the postretirement benefit plan as a result of
rising health care costs and a $1.5 million increase in the value of the Butler
Wick retention plan. Additional factors that contributed to the increase include
increases in commissions and bonuses paid, as a result of increased loan volumes
and increased dollar volumes of bond underwriting, and a full year of expense
for personnel from the acquisition of Potters as opposed to nine months worth of
expense in 2002. The change in equipment and data processing is a result of
increased depreciation for a new teller system and phone system, computer and
equipment upgrades to run the new system and a full year of depreciation for
Potters in 2003 compared to nine months in 2002. These increases were partially
offset by a $1.7 million decline in other expense mainly as a result of a
$954,000 decline in bank fees as a result of the early extinguishment of debt in
2002. Decreases in supervisory fees, telephone expense and FDIC SAIF premiums
also contributed to the decline.

FEDERAL INCOME TAXES--Federal income taxes increased $1.8 million, or 16.6%, in
2003 compared to 2002, primarily due to higher pretax income in 2003. The
effective tax rate was 35% in 2003 and 34% in 2002. The primary reason for the
increase in the effective tax rate is related to the reversal in 2002 of a
$400,000 valuation allowance that was established in 1999 in relation to the
contribution United Community made to the Home Savings Charitable Foundation.
Based on current levels of taxable income, management believes that the tax
benefit related to the contribution will be completely utilized. Refer to Note
14 to the consolidated financial statements for a further analysis of the
effective tax rate.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The accounting and reporting policies of United Community are in accordance with
accounting principles generally accepted within the United States of America and
conform to general practices within the banking industry. Application of these
principles requires management to make estimates, assumptions and judgments that
affect the amounts reported in the financial statements and accompanying notes.
These estimates, assumptions and judgments are based on information available as
of the date of the financial statements. Accordingly, as this information
changes, the financial statements could reflect different estimates, assumptions
and judgments.

The most significant accounting policies followed by United Community are
presented in Note 1 to the consolidated financial statements. Accounting and
reporting policies for the allowance for loan losses, mortgage servicing rights
and other-than-temporary impairment are deemed critical since they involve the
use of estimates and require significant management judgments. Application of
assumptions different than those used by management could result in material
changes in United Community's financial position or results of operations.

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is an amount that
management believes will be adequate to absorb probable incurred losses in
existing loans taking into consideration such factors as past loss experience,
changes in the nature and volume of the portfolio, overall portfolio quality,
loan concentrations, specific problem loans, and current economic conditions
that affect the borrower's ability to pay. Determination of the allowance is
inherently subjective due to the aforementioned reasons. Loan losses are
charged-off against the allowance when management believes that the full
collectability of the loan is unlikely. Recoveries of amounts previously
charged-off are credited to the allowance. Allowances established to provide for
losses related to recourse provisions under loan sale agreements are classified
with other liabilities.

The allowance is based on management's evaluation of homogeneous groups of loans
(single-family residential mortgage loans and all consumer credit except marine
loans) to which loss factors have been applied, as well as an evaluation of
individual credits (multi-family and non-residential mortgage loans and marine
loans) which are based on internal risk ratings, collateral and other unique
characteristics of each loan.

Management believes that it uses the best information available to determine the
adequacy of the allowance for loan losses. However, future adjustments to the
allowance may be necessary and the results of operations could be significantly
and adversely affected if circumstances differ substantially from the
assumptions used in making the determinations.


                                                                        EX. 13-7



MORTGAGE SERVICING RIGHTS. The cost of mortgage loans sold or securitized is
allocated between the mortgage servicing rights and the mortgage loans based on
the relative fair values of each. The fair value of the mortgage servicing
rights is determined by using a discounted cash flow model, which estimates the
present value of the future net cash flows of the servicing portfolio based on
various factors, such as servicing costs, expected prepayment speeds and
discount rates, about which management must make assumptions based on future
expectations.

Mortgage servicing rights are amortized in proportion to, and over the period
of, estimated net servicing income. Management periodically evaluates mortgage
servicing rights for impairment by stratifying the loans in the servicing
portfolio primarily based on fair value of the rights as compared to amortized
cost. Impairment is measured by estimating the fair value of each pool, taking
into consideration the estimated level of prepayments based upon current
industry expectations. An impairment allowance is recorded for a pool when, and
in an amount which, its fair value is less than its carrying value.

The value of mortgage servicing rights is subject to prepayment risk. Future
expected net cash flows from servicing a loan will not be realized if the loan
pays off earlier than anticipated. Since most of these loans do not contain
prepayment penalties, United Community receives no economic benefit if the loan
pays off earlier than anticipated.

OTHER-THAN-TEMPORARY IMPAIRMENT. Securities are written down to fair value when
a decline in fair value is other than temporary. Declines in the fair value of
securities below their cost that are other than temporary are reflected as
realized losses. In estimating other than temporary losses, management
considers: (1) the length of time and extent that fair value has been less than
cost, (2) the financial condition and near term prospects of the issuer, and (3)
the Company's intent to hold the security for a period sufficient to allow for
any anticipated recovery in fair value. Management must use its judgment based
on information available in assessing the likelihood of recovery in value.


                                                                        EX. 13-8



YIELDS EARNED AND RATES PAID

The following table sets forth certain information relating to United
Community's average balance sheet and reflects the average yield on
interest-earning assets and the average cost of interest-bearing liabilities for
the periods indicated. Such yields and costs are derived by dividing income or
expense by the average balances of interest-earning assets or interest-bearing
liabilities, respectively, for the periods presented. Average balances are
derived from daily balances. Nonaccruing loans have been included in the table
as loans carrying a zero yield. Loan fees are included in interest income. The
average balance for securities available for sale is computed using the carrying
value and the average yield on securities available for sale has been computed
using the historical amortized average balance.



                                                                    Year ended December 31,
                                  -------------------------------------------------------------------------------------------
                                               2004                            2003                           2002
                                  -----------------------------  -----------------------------  -----------------------------
                                    Average    Interest            Average    Interest            Average    Interest
                                  outstanding   earned/  Yield/  outstanding   earned/  Yield/  outstanding   earned/  Yield/
                                    balance      paid     rate     balance      paid     rate     balance      paid     rate
                                  -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
                                                                     (Dollars in thousands)
                                                                                              
Interest-earning assets:
   Net loans (1)                   $1,728,139  $102,453    5.93%  $1,496,518  $ 98,646    6.59%  $1,507,591  $110,013    7.30%
   Loans held for sale                 30,814     1,449    4.70       41,418     1,950    4.71       18,351     1,243    6.77
   Securities:
      Trading                          29,221       736    2.52       13,887       415    2.99       10,179       196    1.93
      Available for sale              200,069     7,022    3.51      262,967     8,851    3.37      174,526     7,602    4.36
      Held to maturity                     --        --      --           --        --      --       56,845     3,762    6.62
   Margin accounts                     14,117       802    5.68       14,349       689    4.80       17,883       830    4.64
   Federal Home Loan Bank stock        22,262       919    4.13       21,388       855    4.00       20,136       932    4.63
   Other interest-earning assets        4,958        60    1.21       21,415       257    1.20       86,318     1,382    1.60
                                   ----------  --------  ------   ----------  --------  ------   ----------  --------  ------
      Total interest-earning
         assets                    $2,029,580   113,441    5.59    1,871,942   111,663    5.97    1,891,829   125,960    6.66
Non-interest-earning assets           132,972                        116,685                        103,504
                                   ----------                     ----------                     ----------
      Total assets                 $2,162,552                     $1,988,627                     $1,995,333
                                   ----------                     ----------                     ----------
Interest-bearing liabilities:
   Deposits:
      Checking accounts            $  302,936  $  2,386    0.79%  $  308,816  $  3,112    1.01%  $  279,894  $  5,319    1.90%
      Savings accounts                314,588     1,361    0.43      335,843     2,347    0.70      299,048     4,946    1.65
      Certificates of deposit         773,019    24,614    3.18      763,704    25,441    3.33      850,054    34,668    4.08
   Other borrowed funds               402,942    12,017    2.98      230,276     9,352    4.06      216,420     9,303    4.30
                                   ----------  --------  ------   ----------  --------  ------   ----------  --------  ------
   Total interest-bearing
      liabilities                   1,793,485    40,378    2.25    1,638,639    40,252    2.46    1,645,416    54,236    3.30
                                   ----------  --------  ------   ----------  --------  ------   ----------  --------  ------
Non-interest-bearing liabilities      114,277                         72,536                         80,969
                                   ----------                     ----------                     ----------
      Total liabilities             1,907,762                      1,711,175                      1,726,385

Shareholders' equity                  254,790                        277,452                        268,948
                                   ----------                     ----------                     ----------
   Total liabilities and equity    $2,162,552                     $1,988,627                     $1,995,333
                                   ----------                     ----------                     ----------
   Net interest income and
      interest rate spread                     $ 73,063    3.34%              $ 71,411    3.51%              $ 71,724    3.36%
                                               --------  ------               --------  ------               --------  ------
Net interest margin                                        3.60%                          3.81%                          3.79%
                                                         ------                         ------                         ------
Average interest-earning assets
   to average interest-bearing
   liabilities                                           113.16%                        114.24%                        114.98%
                                                         ------                         ------                         ------


(1)  Nonaccrual loans are included in the average balance.

The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected United Community's interest income and interest expense during the
periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume


                                                                        EX. 13-9



multiplied by prior period rate), (ii) changes in rate (change in rate
multiplied by prior period volume) and (iii) total changes in rate and volume.
The combined effects of changes in both volume and rate, which cannot be
separately identified, have been allocated in proportion to the changes due to
volume and rate:



                                                                Year ended December 31,
                                           ----------------------------------------------------------------
                                                    2004 vs. 2003                    2003 vs. 2002
                                           ------------------------------   -------------------------------
                                               Increase                          Increase
                                           (decrease) due to      Total      (decrease) due to      Total
                                           -----------------    increase    ------------------    increase
                                             Rate     Volume   (decrease)     Rate      Volume   (decrease)
                                           -------   -------   ----------   --------   -------   ----------
                                                                (Dollars in thousands)
                                                                               
Interest-earning assets:
   Loans                                   $(7,071)  $10,878    $ 3,807     $(10,564)  $  (803)   $(11,367)
   Loans held for sale                          (2)     (499)      (501)        (226)      933         707
   Securities:
      Trading                                  (53)      374        321          132        87         219
      Available for sale                       398    (2,227)    (1,829)      (1,016)    2,265       1,249
      Held to maturity                          --        --         --       (1,881)   (1,881)     (3,762)
   Margin accounts                             124       (11)       113           30      (171)       (141)
   Federal Home Loan Bank stock                 28        36         64         (142)       65         (77)
   Other interest-earning assets                 2      (199)      (197)        (281)     (844)     (1,125)
                                           -------   -------    -------     --------   -------    --------
      Total interest-earning assets        $ 6,574   $ 8,352    $ 1,778     $(13,948)  $  (349)   $(14,297)
                                           -------   -------    -------     --------   -------    --------
Interest-bearing liabilities:
   Checking accounts                          (846)     (140)      (986)      (2,829)      704      (2,125)
   Savings accounts                           (668)      (58)      (726)      (3,303)      622      (2,681)
   Certificates of deposit                  (1,143)      316       (827)      (5,935)   (3,292)     (9,227)
   Other borrowed funds                     (1,462)    4,127      2,665         (307)      356          49
                                           -------   -------    -------     --------   -------    --------
      Total interest-bearing liabilities   $(4,119)  $ 4,245    $   126     $(12,374)  $(1,610)   $(13,984)
                                           -------   -------    -------     --------   -------    --------
Change in net interest income                                   $ 1,652                           $   (313)
                                                                -------                           --------


CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES, AND OFF-BALANCE
SHEET ARRANGEMENTS

The following table presents, as of December 31, 2004, United Community's
significant fixed and determinable contractual obligations by payment date. The
payment amounts represent those amounts contractually due to the recipient and
do not include any unamortized premiums or discounts or other similar carrying
value adjustments. Further detail of the nature of each obligation is included
in the referenced note to the consolidated financial statements.



                                                                 Payments Due In
                                     -----------------------------------------------------------------------
                                       Note      One Year     One to       Three to       Over
                                     Reference    or Less   Three Years   Five Years   Five Years     Total
                                     ---------   --------   -----------   ----------   ----------   --------
                                                              (Dollars in thousands)
                                                                                  
Operating leases                          8      $  1,199     $  1,816     $  1,245      $   425    $  4,685
Deposits without a stated maturity       10       698,667           --           --           --     698,667
Certificates of deposit                  10       347,062      296,242      180,981           --     824,285
Federal Home Loan Bank borrowings        11       215,435      157,300       31,500       18,920     423,355
Other borrowed funds                     11        60,148           --           --           --      60,148
                                        ---      --------     --------     --------      -------    --------


Discussion of loan commitments is included in Note 5 to the consolidated
financial statements. In addition, United Community has commitments under
benefit plans as described in Note 16 to the consolidated financial statements.

In September 2003, an arbitration proceeding was initiated against Butler Wick
seeking compensatory and punitive damages, interest and other costs in
connection with alleged losses experienced in the claimants' brokerage account.
Further discussion of this proceeding and its progress is included in Note 12 to
the consolidated financial statements.

ASSET AND LIABILITY MANAGEMENT AND MARKET RISK

QUALITATIVE ASPECTS OF MARKET RISK. The principal market risk affecting United
Community is interest rate risk. United Community is subject to interest rate
risk to the extent that its interest-earning assets reprice differently than its
interest-bearing liabilities. Interest rate risk is defined as the sensitivity
of a company's earnings and net asset values to changes in interest rates. As
part of its efforts to monitor and manage the interest rate risk, the Board of
Directors of Home Savings, which accounts for most of the assets and liabilities
of United Community, has adopted an interest rate risk policy that requires the
Home Savings Board to review quarterly reports related to interest rate


                                                                       EX. 13-10



risk and annually set exposure limits for Home Savings as a guide to management
in setting and implementing day to day operating strategies.

QUANTITATIVE ASPECTS OF MARKET RISK. As part of its interest rate risk analysis,
Home Savings uses the "net portfolio value" (NPV) methodology. Generally, NPV is
the discounted present value of the difference between incoming cash flows on
interest-earning and other assets and outgoing cash flows on interest-bearing
and other liabilities. The application of the methodology attempts to quantify
interest rate risk as the change in the NPV and net interest income that would
result from various levels of theoretical basis point changes in market interest
rates.

Home Savings uses an NPV and earnings simulation model prepared internally as
its primary method to identify and manage its interest rate risk profile. The
model is based on actual cash flows and repricing characteristics for all
financial instruments and incorporates market-based assumptions regarding the
impact of changing interest rates on future volumes and the prepayment rate of
applicable financial instruments. Assumptions based on the historical behavior
of deposit rates and balances in relation to changes in interest rates also are
incorporated into the model. These assumptions inherently are uncertain and, as
a result, the model cannot measure precisely NPV or net interest income or
precisely predict the impact of fluctuations in interest rates on net interest
rate changes as well as changes in market conditions and management strategies.

Presented below are analyses of Home Savings' interest rate risk as measured by
changes in NPV and net interest income for instantaneous and sustained parallel
shifts of 100 basis point increments in market interest rates. As noted, in a
falling rate environment, Home Savings would experience a decline in net
interest income and, as such, would be out of compliance with internal policy
limitations if rates would fall 100 basis points. Home Savings continues to
monitor its interest rate exposure to declining rates. See the table below for
Board adopted policy limits. Management feels, however, that rising rates are
the most likely scenario in the near term. The Board has been made aware of
management's recommendations and will continue to monitor the risk. All other
percentage changes fall within the policy limits set by the Board of Directors
of Home Savings.



                                       Year Ended December 31, 2004
            ---------------------------------------------------------------------------------
              NPV as % of portfolio value of assets       Next 12 months Net interest income
            -----------------------------------------   -------------------------------------
Change in
  rates
  (Basis                Internal policy                            Internal policy
 points)    NPV Ratio     limitations     Change in %   $ Change     limitations     % Change
- ---------   ---------   ---------------   -----------   --------   ---------------   --------
                                                                   
   +300       13.75%         5.00%          (0.41)%     $ 3,028        (15.00)%        4.22%
   +200       14.09          6.00           (0.06)        2,318        (10.00)         3.23
   +100       14.27          6.00            0.11         1,506         (5.00)         2.10
  Static      14.16          7.00              --            --            --            --
   (100)      13.22          6.00           (0.93)       (3,856)        (5.00)        (5.37)
   (200)        N/A           N/A             N/A           N/A        (15.00)          N/A
   (300)        N/A           N/A             N/A           N/A        (20.00)          N/A
              -----          ----           -----       -------        ------         -----


N/A - Due to a continuing low interest environment, it is not possible to
calculate results for these scenarios.



                                       Year Ended December 31, 2003
            --------------------------------------------------------------------------------
              NPV as % of portfolio value of assets       Next 12 months Net interest income
            -----------------------------------------   -------------------------------------
Change in
  rates
  (Basis                Internal policy                            Internal policy
 points)    NPV Ratio     limitations     Change in %   $ Change     limitations     % Change
- ---------   ---------   ---------------   -----------   --------   ---------------   --------
                                                                   
   +300       13.54%         5.00%          (0.50)%     $   658        (15.00)%        1.00%
   +200       14.14          6.00            0.10         1,057        (10.00)         1.60
   +100       14.32          6.00            0.28         1,097         (5.00)         1.66
  Static      14.04          7.00              --            --            --            --
   (100)      12.29          6.00           (1.75)       (1,703)        (5.00)        (2.58)
   (200)        N/A           N/A             N/A           N/A        (15.00)          N/A
   (300)        N/A           N/A             N/A           N/A        (20.00)          N/A
              -----          ----           -----       -------        ------         -----


Due to changes in the composition of Home Savings' loan portfolio and with the
prolonged period of low interest rates, Home Savings continues to be more
sensitive to falling rates than rising rates. This increased sensitivity has
occurred because a greater proportion of Home Savings' loans can reprice
immediately and the prepayments on fixed-rate loans dramatically increase. In
addition, the value of core deposits is diminished in a falling rate
environment.


                                                                       EX. 13-11



As with any method of measuring interest rate risk, certain shortcomings are
inherent in the NPV approach. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Also, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Further, in the event of a change in interest
rates, expected rates of prepayment on loans and early withdrawal levels from
certificates of deposit may deviate significantly from those assumed in making
risk calculations.

POTENTIAL IMPACT OF CHANGES IN INTEREST RATES. Home Savings' profitability
depends to a large extent on its net interest income, which is the difference
between interest income from loans and securities and interest expense on
deposits and borrowings. Like most financial institutions, Home Savings'
short-term interest income and interest expense are significantly affected by
changes in market interest rates and other economic factors beyond its control.
Accordingly, Home Savings' earnings could be adversely affected during a
continued period of falling interest rates.

LIQUIDITY AND CAPITAL

United Community's liquidity, primarily represented by cash and cash
equivalents, is a result of its operating, investing and financing activities.
These activities are summarized below for the years ended December 31, 2004,
2003 and 2002.



                                                           Years ended December 31,
                                                       --------------------------------
                                                          2004        2003       2002
                                                       ---------   ---------   --------
                                                            (Dollars in thousands)
                                                                      
Net income                                             $  17,865   $  22,940   $ 20,817
Adjustments to reconcile net income to net cash from
   operating activities                                   10,230      20,152    (12,421)
                                                       ---------   ---------   --------
Net cash from operating activities                        28,095      43,092      8,396
Net cash from investing activities                      (264,802)   (127,776)   (13,145)
Net cash from financing activities                       195,833      54,903    (90,198)
                                                       ---------   ---------   --------
Net change in cash and cash equivalents                  (40,874)    (29,781)   (94,947)
Cash and cash equivalents at beginning of year            81,155     110,936    205,883
                                                       ---------   ---------   --------
Cash and cash equivalents at end of year               $  40,281   $  81,155   $110,936
                                                       ---------   ---------   --------


The principal sources of funds for United Community are deposits, loan
repayments, maturities of securities, borrowings from financial institutions and
other funds provided by operations. Home Savings also has the ability to borrow
from the Federal Home Loan Bank. While scheduled loan repayments and maturing
investments are relatively predictable, deposit flows and early loan prepayments
are more influenced by interest rates, general economic conditions and
competition. Investments in liquid assets maintained by United Community, Home
Savings and Butler Wick are based upon management's assessment of (1) need for
funds, (2) expected deposit flows, (3) yields available on short-term liquid
assets and (4) objectives of the asset and liability management program. At
December 31, 2004, approximately $347.1 million of Home Savings' certificates of
deposit are expected to mature within one year. Based on past experience and
Home Savings' prevailing pricing strategies, management believes that a
substantial percentage of such certificates will be renewed with Home Savings at
maturity, although there can be no assurance that this will occur.

The Board of Directors has authorized an ongoing program to purchase United
Community's common shares to fund employee benefit programs, stock options and
award programs and other corporate purposes. These purchases can be made in the
open market or in negotiated transactions from time to time, depending on market
conditions. United Community acquired 3,797,000 common shares for $47.8 million,
1,320,000 common shares for $12.4 million, and 559,000 common shares for $4.7
million during the years ended December 31, 2004, 2003 and 2002. United
Community has remaining authorization to repurchase 856,747 shares as of
December 31, 2004, under the current repurchase program. Management intends to
repurchase shares as authorized.

The shares purchased in 2004 are primarily the result of a self-tender offer
announced on January 26, 2004 and completed March 9, 2004. This offer was made
in order to provide liquidity to the Company's shareholders and to quickly
deploy excess capital in an efficient, cost-effective manner.

Home Savings is required by federal regulations to meet certain minimum capital
requirements. Current capital requirements call for tangible capital of 1.5% of
adjusted tangible assets, leverage, also known as core capital (which for Home
Savings consists solely of tangible capital) of 4.0% of adjusted total assets
and risk-based capital (which for Home Savings consists of leverage capital and
the allowance for loan losses) of 8% of risk-weighted assets (assets are
weighted at percentage levels ranging from 0% to 100% depending on their
relative risk).


                                                                       EX. 13-12



The following table summarizes Home Savings' regulatory capital requirements and
actual capital at December 31, 2004.



                                                Current         Excess of actual capital   Applicable
                       Actual capital     minimum requirement   over current requirement   asset base
                     ------------------   -------------------   ------------------------   ----------
                      Amount    Percent     Amount    Percent       Amount    Percent         Total
                     --------   -------    --------   -------      --------   -------      ----------
                                                  (Dollars in thousands)
                                                                      
Tangible capital     $180,268     8.36%    $ 32,326    1.50%       $147,942    6.86%       $2,155,099
Core capital          180,268     8.36       86,204    4.00          94,064    4.36         2,155,099
Risk-based capital    196,145    10.79      145,408    8.00          50,737    2.79         1,817,606
                     --------    -----     --------    ----        --------    ----        ----------


ACCOUNTING AND REPORTING DEVELOPMENTS

A discussion of recently issued accounting pronouncements and their impact on
United Community's Consolidated Financial Statements is provided in Note 1 of
the Notes to Consolidated Financial Statements.

MARKET PRICE AND DIVIDENDS

There were 37,804,457 common shares of United Community stock issued and
31,224,760 shares outstanding and held by approximately 11,591 record holders as
of February 28, 2005. United Community's common shares are traded on The Nasdaq
Stock Market(R) under the symbol "UCFC". Quarterly stock prices and dividends
declared are shown in the following table.



               First     Second    Third     Fourth
              Quarter   Quarter   Quarter   Quarter
              -------   -------   -------   -------
                                
2004:
High           $13.24    $13.99    $13.10    $11.95
Low             11.15     11.10     10.43     10.57
Close           13.24     13.00     11.37     11.20
Dividends
   declared
   and paid     0.075     0.075     0.075     0.075
               ------    ------    ------    ------




               First     Second    Third     Fourth
              Quarter   Quarter   Quarter   Quarter
              -------   -------   -------   -------
                                
2003:
High           $ 9.07    $ 9.70    $10.00    $12.00
Low              8.60      8.74      9.11      9.75
Close            8.82      9.22      9.90     11.41
Dividends
   declared
   and paid     0.075     0.075     0.075     0.075
- -----------    ------    ------    ------    ------



                                                                       EX. 13-13



                                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



                                                                       December 31,
                                                                 -----------------------
                                                                    2004         2003
                                                                 ----------   ----------
                                                                      (In thousands)
                                                                        
ASSETS
Cash and deposits with banks                                     $   36,886   $   36,334
Federal funds sold                                                    3,395       44,821
                                                                 ----------   ----------
   Total cash and cash equivalents                                   40,281       81,155
                                                                 ----------   ----------
Securities:
   Trading, at fair value                                            32,316       15,600
   Available for sale, at fair value                                198,404      227,525
Loans held for sale                                                  59,099       37,715
Loans, net of allowance for loan losses of $15,877 and $15,111    1,815,976    1,576,494
Margin accounts                                                      14,851       14,388
Federal Home Loan Bank stock, at cost                                22,842       21,924
Premises and equipment, net                                          20,793       20,510
Accrued interest receivable                                           9,445        8,443
Real estate owned and other repossessed assets                        1,682        1,299
Goodwill                                                             33,593       33,593
Core deposit intangible                                               2,887        3,787
Cash surrender value of life insurance                               21,406       20,496
Other assets                                                         14,213       10,904
                                                                 ----------   ----------
      TOTAL ASSETS                                               $2,287,788   $2,073,833
                                                                 ----------   ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
   Non-interest bearing                                          $   84,965   $   63,442
   Interest bearing                                               1,437,987    1,360,256
                                                                 ----------   ----------
      Total deposits                                              1,522,952    1,423,698
Borrowed funds:
   Short-term                                                       275,583      159,135
   Long-term                                                        207,920      179,328
                                                                 ----------   ----------
      Total borrowed funds                                          483,503      338,463
Advance payments by borrowers for taxes and insurance                12,048       10,721
Accrued interest payable                                              1,089          970
Accrued expenses and other liabilities                               15,844       20,145
                                                                 ----------   ----------
      TOTAL LIABILITIES                                           2,035,436    1,793,997
                                                                 ----------   ----------
SHAREHOLDERS' EQUITY
Preferred stock-no par value; 1,000,000 shares
   authorized and unissued                                               --           --
Common stock--no par value; 499,000,000 shares authorized;
   37,804,457 shares issued                                         142,337      139,526
Retained earnings                                                   193,690      185,495
Accumulated other comprehensive income                                1,063        1,124
Unearned compensation                                               (14,930)     (16,752)
Treasury stock, at cost, 2004 - 6,602,477 shares and
   2003 - 3,718,542 shares                                          (69,808)     (29,557)
                                                                 ----------   ----------
      TOTAL SHAREHOLDERS' EQUITY                                    252,352      279,836
                                                                 ----------   ----------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 $2,287,788   $2,073,833
                                                                 ----------   ----------


See Notes to Consolidated Financial Statements.


                                                                       EX. 13-14



                                               CONSOLIDATED STATEMENTS OF INCOME



                                                          Year ended December 31,
                                                      ------------------------------
                                                        2004       2003       2002
                                                      --------   --------   --------
                                                           (In thousands, except
                                                              per share data)
                                                                   
INTEREST INCOME
   Loans                                              $102,453   $ 98,646   $110,013
   Loans held for sale                                   1,449      1,950      1,243
   Securities:
      Trading                                              736        415        196
      Available for sale                                 7,022      8,851      7,602
      Held to maturity                                      --         --      3,762
   Margin accounts                                         802        689        830
   Federal Home Loan Bank stock dividends                  919        855        932
   Other interest-earning assets                            60        257      1,382
                                                      --------   --------   --------
      Total interest income                            113,441    111,663    125,960
                                                      --------   --------   --------
INTEREST EXPENSE
   Deposits                                             28,361     30,900     44,933
   Other borrowed funds                                 12,017      9,352      9,303
                                                      --------   --------   --------
Total interest expense                                  40,378     40,252     54,236
                                                      --------   --------   --------
Net interest income                                     73,063     71,411     71,724
Provision for loan losses                                9,370      3,179      3,578
                                                      --------   --------   --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     63,693     68,232     68,146
                                                      --------   --------   --------
NON-INTEREST INCOME
   Brokerage commissions                                17,189     14,925     13,677
   Service fees and other charges                       11,780      8,382      7,976
   Underwriting and investment banking                   1,029      1,528        312
   Net gains (losses):
      Securities available for sale                          8        839      2,127
      Trading securities                                    (7)       850       (651)
      Loans sold                                         3,192     11,707      5,919
      Other                                                (43)      (105)      (515)
   Other income                                          2,961      2,719      2,961
                                                      --------   --------   --------
      Total non-interest income                         36,109     40,845     31,806
                                                      --------   --------   --------
NON-INTEREST EXPENSE
   Salaries and employee benefits                       46,074     46,511     39,917
   Occupancy                                             3,757      3,658      3,186
   Equipment and data processing                         9,086      9,459      8,309
   Franchise tax                                         1,583      1,562      2,032
   Advertising                                           1,853      2,232      2,167
   Amortization of core deposit intangible                 900      1,314      2,180
   Other expenses                                        9,581      8,836     10,568
                                                      --------   --------   --------
      Total non-interest expense                        72,834     73,572     68,359
                                                      --------   --------   --------
INCOME BEFORE INCOME TAXES                              26,968     35,505     31,593
INCOME TAXES                                             9,103     12,565     10,776
                                                      --------   --------   --------
NET INCOME                                            $ 17,865   $ 22,940   $ 20,817
                                                      --------   --------   --------

EARNINGS PER SHARE
   Basic                                              $   0.61   $   0.73   $   0.65
   Diluted                                            $   0.60   $   0.72   $   0.65
                                                      --------   --------   --------


See Notes to Consolidated Financial Statements.


                                                                       EX. 13-15



                                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



                                                                               Accumulated
                                                                                  Other
                                               Shares      Common   Retained  Comprehensive    Unearned    Treasury
                                            Outstanding    Stock    Earnings  Income (Loss)  Compensation    Stock     Total
                                            -----------  ---------  --------  -------------  ------------  --------  --------
                                                                   (In thousands, except per share data)
                                                                                                
BALANCE DECEMBER 31, 2001                     35,668     $136,903   $160,915     $ 1,402       $(22,988)   $(14,352) $261,880
Comprehensive income:
   Net income                                     --           --     20,817          --             --          --    20,817
   Reclassification of HTM securities             --           --         --       1,704             --          --     1,704
   Change in net unrealized gain on
      securities, net of taxes of $517            --           --         --        (743)            --          --      (743)
                                              ------     --------   --------     -------       --------    --------  --------
Comprehensive income                              --           --     20,817         961             --          --    21,778
Issuance of common shares for RRP                 70          592         --          --           (592)         --        --
Amortization of restricted common stock
   compensation                                   --          215         --          --          1,947          --     2,162
Forfeiture of restricted common stock            (21)        (128)        --          --             87          --       (41)
Shares allocated to ESOP participants             --          625         --          --          1,822          --     2,447
Purchase of treasury stock                      (559)          --         --          --             --      (4,662)   (4,662)
Exercise of stock options                         87           --        (16)         --             --         657       641
Dividends paid, $0.30 per share                   --           --     (9,636)         --             --          --    (9,636)
                                              ------     --------   --------     -------       --------    --------  --------
BALANCE DECEMBER 31, 2002                     35,245      138,207    172,080       2,363        (19,724)    (18,357)  274,569
Comprehensive income:
   Net income                                     --           --     22,940          --             --          --    22,940
   Change in net unrealized gain (loss) on
      securities, net of taxes of $745            --           --         --      (1,239)            --          --    (1,239)
                                              ------     --------   --------     -------       --------    --------  --------
Comprehensive income                              --           --     22,940      (1,239)            --          --    21,701
Issuance of common shares for RRP                  2           23         --          --            (23)         --        --
Amortization of restricted common stock
   compensation                                   --          280         --          --          1,169          --     1,449
Forfeiture of restricted common stock             (1)          (7)        --          --              4          --        (3)
Shares allocated to ESOP participants             --        1,019         --          --          1,822          --     2,841
Purchase of treasury stock                    (1,320)          --         --          --             --     (12,385)  (12,385)
Exercise of stock options                        160            4        (96)         --             --       1,185     1,093
Dividends paid, $0.30 per share                   --           --     (9,429)         --             --          --    (9,429)
                                              ------     --------   --------     -------       --------    --------  --------
BALANCE DECEMBER 31, 2003                     34,086      139,526    185,495       1,124        (16,752)    (29,557)  279,836
Comprehensive income:
   Net income                                     --           --     17,865          --             --          --    17,865
   Change in net unrealized gain (loss) on
      securities, net of taxes of $33             --           --         --         (61)            --          --       (61)
                                              ------     --------   --------     -------       --------    --------  --------
Comprehensive income                              --           --     17,865         (61)            --          --    17,804
Shares allocated to ESOP participants             --        1,682         --          --          1,822          --     3,504
Purchase of treasury stock                    (3,797)          --         --          --             --     (47,814)  (47,814)
Exercise of stock options                        913        1,129     (1,137)         --             --       7,563     7,555
Dividends paid, $0.30 per share                   --           --     (8,533)         --             --          --    (8,533)
                                              ------     --------   --------     -------       --------    --------  --------
BALANCE DECEMBER 31, 2004                     31,202     $142,337   $193,690     $ 1,063       $(14,930)   $(69,808) $252,352
                                              ------     --------   --------     -------       --------    --------  --------


See Notes to Consolidated Financial Statements.


                                                                       EX. 13-16



                                           CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                 Year ended December 31,
                                                            ---------------------------------
                                                               2004        2003        2002
                                                            ---------   ---------   ---------
                                                                      (In thousands)
                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                  $  17,865   $  22,940   $  20,817
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Provision for loan losses                                 9,370       3,179       3,578
      Net gains                                                (3,157)    (12,441)     (7,517)
      Amortization of premiums and accretion of discounts       4,608       6,340       2,119
      Depreciation and amortization                             2,943       3,544       2,948
      Federal Home Loan Bank stock dividends                     (919)       (855)       (932)
      (Increase) decrease in interest receivable               (1,002)      1,115         784
      Increase (decrease) in interest payable                     119        (156)     (1,951)
      (Increase) decrease in prepaid and other assets          (5,869)     (6,010)      3,827
      (Decrease) increase in other liabilities                 (3,133)      4,195      (7,758)
      (Increase) decrease in trading securities               (16,716)    (10,540)      3,292
      Amortization of restricted stock compensation                --       1,446       2,121
      (Increase) decrease in margin accounts                     (463)        421       6,170
      Net principal disbursed on loans held for sale         (155,664)   (427,426)   (253,261)
      Proceeds from sale of loans held for sale               176,609     454,499     231,712
      ESOP compensation                                         3,504       2,841       2,447
                                                            ---------   ---------   ---------
      Net cash from operating activities                       28,095      43,092       8,396
                                                            ---------   ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from principal repayments and maturities of:
      Securities available for sale                            76,282     153,112      82,821
      Securities held to maturity                                  --          --      25,679
   Proceeds from sale of:
      Securities available for sale                            63,021      22,325      45,096
      Securities held to maturity                                  --          --         932
      Loans                                                        --      93,983     108,895
      Commercial loan participations                           43,156       9,443       3,725
      Premises and equipment                                        2          --          27
      Real estate owned                                         1,932       1,820       1,379
    Purchases of:
      Securities available for sale                          (111,667)   (170,458)   (187,144)
      Securities held to maturity                                  --          --        (999)
      Bank owned life insurance                                    --     (20,000)         --
   Net cash paid for acquisition                                   --          --     (13,729)
   Net principal disbursed on loans                          (120,527)     (2,606)    (48,590)
   Loans purchased                                           (213,802)   (211,370)    (27,335)
   Purchases of premises and equipment                         (3,199)     (4,025)     (3,902)
                                                            ---------   ---------   ---------
      Net cash from investing activities                     (264,802)   (127,776)    (13,145)
                                                            ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in NOW, savings and money market accounts      17,174      17,935      50,574
   Net increase (decrease) in certificates of deposit          82,219     (75,475)    (63,816)
   Net increase in advance payments by borrowers
      for taxes and insurance                                   1,327       4,725           1
   Proceeds from Federal Home Loan Bank term advances          50,000      25,500      25,000
   Repayment of Federal Home Loan Bank term advances          (19,257)    (11,144)    (70,028)
   Net change in other borrowed funds                         114,297     114,083     (18,272)
   Dividends paid                                              (8,533)     (9,429)     (9,636)
   Proceeds from exercise of stock options                      6,420         941         365
   Purchase of treasury stock                                 (47,814)    (12,233)     (4,386)
                                                            ---------   ---------   ---------
      Net cash from financing activities                      195,833      54,903     (90,198)
                                                            ---------   ---------   ---------
Decrease in cash and cash equivalents                         (40,874)    (29,781)    (94,947)
Cash and cash equivalents, beginning of year                   81,155     110,936     205,883
                                                            ---------   ---------   ---------
Cash and cash equivalents, end of year                      $  40,281   $  81,155   $ 110,936
                                                            ---------   ---------   ---------


See Notes to Consolidated Financial Statements


                                                                       EX. 13-17



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accounting policies of United Community Financial Corp. (United
Community), a unitary savings and loan holding company, The Home Savings and
Loan Company of Youngstown, Ohio (Home Savings), an Ohio chartered savings bank,
and Butler Wick Corp. (Butler Wick), an investment brokerage firm, conform to
accounting principles generally accepted in the United States of America and
prevailing practices within the banking, thrift and brokerage industries. A
summary of the more significant accounting policies follows.

Nature of Operations

     United Community was incorporated under Ohio law in February 1998 by Home
Savings in connection with the conversion of Home Savings from an Ohio mutual
savings and loan association to an Ohio capital stock savings and loan
association (Conversion). Upon consummation of the Conversion on July 8, 1998,
United Community became the unitary savings and loan holding company for Home
Savings. The business of Home Savings is providing consumer and business banking
service to its market area in Ohio and western Pennsylvania. During 2003, Home
Savings changed its charter to a state chartered savings bank. At the end of
2004, Home Savings was doing business through 36 full-service banking branches
and 5 loan production offices. Loans and deposits are primarily generated from
the areas where banking branches are located. Substantially all loans are
secured by specific items of collateral including business assets, consumer
assets, and commercial and residential real estate. Commercial loans are
expected to be repaid from cash flow from operations of businesses. There are no
significant concentrations of loans to any one industry or customer. However,
the customers' ability to repay their loans is dependent on the real estate and
general economic conditions in our market area. Home Savings derives its income
predominantly from interest on loans, securities, and to a lesser extent,
non-interest income. Home Savings' principal expenses are interest paid on
deposits, Federal Home Loan Bank advances, and normal operating costs.
Consistent with internal reporting, Home Savings' operations are reported in one
operating segment, which is banking services. On August 12, 1999, United
Community acquired Butler Wick, the parent company for two wholly owned
subsidiaries: Butler Wick & Co., Inc. and Butler Wick Trust Company. Butler Wick
has 14 office locations providing a full range of investment alternatives for
individuals, companies and not-for-profit organizations throughout Ohio and
western Pennsylvania. Butler Wick's operations are reported in a separate
operating segment, which is investment services.

Basis of Presentation

     The consolidated financial statements include the accounts of United
Community and its subsidiaries. All material inter-company transactions have
been eliminated. Certain prior period data has been reclassified to conform to
current period presentation.

Use of Estimates in the Preparation of Financial Statements

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions based on available information.
These estimates and assumptions affect the amounts reported in the financial
statements and the disclosures provided, and future results could differ. The
allowance for loan losses, fair values of financial instruments, fair value of
servicing rights, carrying value of goodwill and core deposit intangible assets
and status of contingencies are particularly subject to change.

Securities

     Securities are classified as available for sale or trading upon their
acquisition. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at estimated
fair value with the unrealized holding gain or loss reported in other
comprehensive income. Securities classified as trading are held principally for
resale in the near term and are recorded at fair market value with any changes
in fair value included in income. Quoted market prices are used to determine the
fair value of trading securities. Restricted securities such as Federal Home
Loan Bank stock are carried at cost. Interest income includes amortization of
purchase premium or discount on debt securities. Premiums or discounts are
amortized on the level-yield method without anticipating prepayments. Gains and
losses on sales are recorded on the trade date and are based on the amortized
cost of the individual security sold.

     Securities are written down to fair value when a decline in fair value is
other-than-temporary. Declines in the fair value of securities below their cost
that are other-than-temporary are reflected as realized losses. In estimating
other-than-temporary losses, management considers: (1) the length of time and
extent that fair value has been less than cost, (2) the financial condition and
near term prospects of the issuer, and (3) the Company's intent to hold the
security for a period sufficient to allow for any anticipated recovery in fair
value.

Loans Held for Sale

     Loans held for sale consist of residential mortgage loans originated for
sale and other loans which have been identified for sale. These loans are
carried on the books at the lower of cost or fair market value, determined in
the aggregate.

Loans

     Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at the outstanding
principle balance, net of deferred loan fees and costs, and an allowance for
loan losses. Interest income is accrued on the unpaid principal balance. Loan
origination fees, net of certain direct origination costs, are deferred and
recognized in interest income using the level-yield method without anticipating
prepayments.

     Interest income is reported on the level-yield method and includes
amortization of net deferred loan fees and costs over the loan term. Interest
income on mortgage and commercial loans is discontinued at the time the loan is
180 days delinquent unless the loan is well secured


                                                                       EX. 13-18



and in process of collection. Consumer loans are typically charged off no later
than 180 days past due. Past due status is based on the contractual terms of the
loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier
date if collection of principal or interest is considered doubtful.

     All interest accrued but not received for loans placed on nonaccrual is
reversed against interest income. Nonaccrual loans are comprised principally of
loans 90 days past due as well as certain loans which are less than 90 days past
due, but where serious doubt exists as to the ability of the borrowers to comply
with the repayment terms. Interest received on such loans is accounted for on
the cash-basis or cost-recovery method, until qualifying for return to accrual.
Loans are returned to accrual status when future payments are reasonably
assured.

Allowance for Loan Losses

     The allowance for loan losses is a valuation allowance for probable
incurred credit losses. Loan losses are charged against the allowance when
management believes the uncollectablilty of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance. Management
estimates the allowance balance required based on an analysis using past loan
loss experience, the nature and volume of the portfolio, information about
specific borrower situations, estimated collateral values, general economic
conditions in the market area and other factors. Allocations of the allowance
may be made for specific loans, but the entire allowance is available for any
loan that, in management's judgment, should be charged-off.

     The allowance consists of specific and general components. The specific
component relates to loans that are individually classified as impaired. The
general component covers pools of other loans and is based on historical loss
experience adjusted for current factors.

     A loan is considered impaired when, based on current information and
events, it is probable that the Company will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement. Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that experience
insignificant payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment delays and
payment shortfalls on a case-by-case basis, taking into consideration all of the
facts and circumstances surrounding the loan and the borrower, including the
length of the delay, the reasons for the delay, the borrower's prior payment
record, and the amount of shortfall in relation to the principal and interest
owed. Impairment is measured on a loan by loan basis for commercial and
construction loans by either the present value of expected future cash flows
discounted at the loan's effective interest rate or the fair value of the
collateral if the loan is collateral dependent. Large groups of smaller balance
homogeneous loans are collectively evaluated for impairment. Accordingly, the
Company does not separately identify individual consumer or residential loans
for impairment disclosures.

Servicing Assets

     Servicing assets are recognized as separate assets when rights are acquired
through purchase or sale of financial assets. For sales of mortgage loans, a
portion of the cost of originating the loan is allocated to the servicing right
based on relative fair value. Fair value is based on market prices for
comparable mortgage servicing contracts, when available, or alternatively, is
based on a valuation model that calculates the present value of estimated future
net servicing income. The valuation model incorporates assumptions that market
participants would use in estimating future net servicing income, such as the
cost to service, discount rate, the custodial earnings rate, an inflation rate,
ancillary income, prepayment speeds and default rates and losses. Capitalized
servicing rights are reported in other assets and are amortized into
non-interest income in proportion to, and over the period of, the estimated
future net servicing income of the underlying assets.

     Servicing assets are evaluated for impairment based upon the fair value of
the rights as compared to amortized cost. Impairment is determined by
stratifying rights into tranches based on predominant risk characteristics, such
as original maturity, interest rate and loan type. Impairment is recognized
through a valuation allowance for an individual tranche. If the Company later
determines that all or a portion of the impairment no longer exists for a
particular tranche, a reduction of the allowance may be recorded as an increase
to income.

     Servicing fee income is recorded for fees earned for servicing loans. The
fees are based on a contractual percentage of the outstanding principal, or a
fixed amount per loan, and are recorded as income when earned. The amortization
of mortgage servicing rights is netted against loan servicing fee income.

Premises and Equipment

     Land is carried at cost. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Buildings and related components are
depreciated and amortized using the straight-line method over the useful lives,
ranging from 7 years to 40 years, (or term of the lease, if shorter) of the
related assets. Furniture and fixtures are depreciated using the straight-line
method with useful lives ranging from 3 to 7 years.

Real Estate Owned and Other Repossessed Assets

     Real estate owned, including property acquired in settlement of foreclosed
loans, is carried at the lower of cost or estimated fair value less estimated
cost to sell after foreclosure, establishing a new cost basis. If fair value
declines after acquisition, a valuation allowance is recorded through expense.
Costs relating to the development and improvement of real estate owned are
capitalized, whereas costs relating to holding and maintaining the property are
charged to expense. Other repossessed assets are carried at the lower of cost or
estimated fair value less estimated cost to sell after acquisition.


                                                                       EX. 13-19



Goodwill and Other Intangible Assets

     Goodwill results from business acquisitions and represents the excess of
the purchase price over the fair value of acquired tangible assets and
liabilities and identifiable intangible assets. Goodwill is assessed at least
annually for impairment and any such impairment will be recognized in the period
identified.

     Other intangible assets consist of core deposit intangible assets arising
from whole bank acquisitions. They are initially measured at fair value and then
are amortized on an accelerated method over their estimated useful lives.

Cash Surrender Value of Life Insurance

     Bank owned life insurance represents insurance on the lives of certain
employees where Home Savings is the beneficiary. Bank owned life insurance
provides a long-term asset to offset long-term benefit liabilities, while
generating competitive investment yields. Bank owned life insurance is recorded
at its cash surrender value, or the amount currently realizable. Increases in
the Home Savings' policy cash value are tax exempt and death benefit proceeds
received by Home Savings are tax-free. Income from these policies and changes in
the cash surrender value are recorded in other income.

Long-term Assets

     Premises and equipment and other long-term assets are reviewed for
impairment when events indicate their carrying amounts may not be recoverable
from future undiscounted cash flows. If impaired, the assets are recorded at
fair value.

Securitizations

     Some loans are transferred from time to time to a third party in exchange
for ownership of a security based on those loans. Such transfers are recorded as
a sale when control has been relinquished, with a gain or loss recorded on the
sale. The gain or loss is calculated based on the cash received versus the
carrying value of the assets transferred. If some interests, such as servicing
assets and cash reserve accounts, are retained, the carrying value of all assets
sold and retained is allocated to each asset based on fair value at sale date.
Fair values are based on market quotes or on the present value of future
expected cash flows using estimates of credit losses, prepayment rates, interest
rates, and discount rates.

Loan Fees

     Loan origination fees received for loans, net of direct origination costs,
are deferred and amortized to interest income over the contractual lives of the
loans using the level yield method. Fees received for loan commitments that are
expected to be drawn, based on Home Savings' experience with similar
commitments, are deferred and amortized over the lives of the loans using the
level yield method. Fees for other loan commitments are deferred and amortized
over the loan commitment period on a straight-line basis. Unamortized deferred
loan fees or costs related to loans paid off are included in income. Unamortized
net fees or costs on loans sold are included in the basis of the loans in
calculating gains and losses. Amortization of net deferred fees is discontinued
for loans that are deemed to be nonperforming.

Stock Compensation

     Employee compensation expense under stock option plans is reported if
options are granted below market price at grant date. Pro forma disclosures of
net income and earnings per share are shown using the fair value method of FASB
Statement No. 123, "Accounting for Stock-Based Compensation", to measure expense
for options granted after 1994, using an option pricing model to estimate fair
value.

     Employee compensation expense under stock options is reported using the
intrinsic value method. No stock-based compensation cost is reflected in net
income, as all options granted had an exercise price equal to or greater than
the market price of the underlying common stock at date of grant. The following
table illustrates the effect on net income and earnings per share if expense was
measured using the fair value recognition provisions of FASB Statement No. 123.



                                             2004      2003      2002
                                           -------   -------   -------
                                                  (In thousands)
                                                      
Net income as reported                     $17,865   $22,940   $20,817
Deduct: Stock-based compensation expense
   determined under fair value method        1,855     2,165     1,411
                                           -------   -------   -------
Pro forma net income                        16,010    20,775    19,406
                                           -------   -------   -------
Basic earnings per share as reported          0.61      0.73      0.65
Pro forma basic earnings per share            0.55      0.66      0.61
Diluted earnings per share as reported        0.60      0.72      0.65
Pro forma diluted earnings per share          0.54      0.65      0.61
                                           -------   -------   -------


     The pro forma effects are computed using option pricing models, using the
following weighted-average assumptions as of grant date.



                                   2004    2003    2002
                                  -----   -----   -----
                                         
Dividend yield                     2.27%   3.34%   4.00%
Expected stock price volatility   22.73%  48.31%  38.31%
Risk-free interest rate            3.18%   3.98%   5.01%
Expected option life (in years)       7      10      10
                                  -----   -----   -----



                                                                       EX. 13-20



Income Taxes

     Deferred income taxes, which result from temporary differences in the
recognition of income and expense for financial statement and tax return
purposes, are included in the calculation of income tax expense. The effect on
deferred tax assets and liabilities of a change in income tax rates is
recognized in income in the period that includes the enactment date.

     Deferred income tax assets and liabilities are recorded for differences
between the financial statement and tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted tax
laws and rates applicable to periods in which the differences are expected to
affect taxable income. Valuation allowances are established, based on the weight
of available evidence, when it is more likely than not that some portion or all
of the deferred tax asset will not be realized. Income tax expense is the tax
payable or refundable for the period adjusted for the change during the period
in deferred tax assets and liabilities.

Employee Stock Ownership Plan

     The cost of shares issued to the ESOP, but not yet allocated to
participants, is shown as a reduction of shareholders' equity. Compensation
expense is based on the market price of shares as they are committed to be
released to participant accounts. Dividends on allocated ESOP shares reduce
retained earnings; dividends on unearned ESOP shares reduce debt and accrued
interest.

Earnings Per Share

     Basic earnings per share (EPS) are based on the weighted average number of
common shares outstanding during the year. Diluted EPS are based on the weighted
average number of common shares and common share equivalents outstanding during
the year. Unearned ESOP shares are not considered outstanding for this
calculation. See further discussion at Note 21.

Statements of Cash Flows

     For purposes of the statement of cash flows, United Community considers all
highly liquid investments with a term of three months or less to be cash
equivalents. Net cash flows are reported for loan and deposit transactions,
trading securities, margin accounts, short-term borrowings and advance payments
by borrowers for taxes and insurance.

Loss Contingencies

     Loss contingencies, including claims and legal actions arising in the
ordinary course of business, are recorded as liabilities when the likelihood of
loss is probable and an amount or range of loss can be reasonably estimated. See
further discussion at Note 12.

Fair Value of Financial Instruments

     Fair values of financial instruments are estimated using relevant market
information and other assumptions, as more fully disclosed in Note 17. Fair
value estimates involve uncertainties and matters of significant judgment
regarding interest rates, credit risk, prepayments, and other factors,
especially in the absence of broad markets for particular items. Changes in
assumptions or in market conditions could significantly affect the estimates.

Comprehensive Income

     Comprehensive income consists of net income and unrealized gains and losses
on securities available for sale, which are also recognized as separate
components of equity.

Execution, Settlement and Financing of Securities Transactions

     In the normal course of business, Butler Wick's activities involve the
execution, settlement, and financing of various securities transactions. These
activities may expose Butler Wick to risk in the event the customer is unable to
fulfill its contractual obligations. Butler Wick maintains cash and margin
accounts for its customers.

     Butler Wick's customer securities activities are transacted on either a
cash or margin basis. In margin transactions, Butler Wick extends credit to its
customers, subject to various regulatory and internal margin requirements,
collateralized by cash and securities in customer's accounts. In connection with
these activities, Butler Wick executes and clears customer transactions
involving the sale of securities not yet purchased, all of which are transacted
on a margin basis subject to individual exchange regulations. Such transactions
may expose Butler Wick to significant off-balance-sheet risk in the event margin
requirements are not sufficient to fully cover losses that customers may incur.
In the event the customer fails to satisfy its obligations, Butler Wick may be
required to purchase or sell financial instruments at prevailing market prices
to fulfill the customer's obligations. Butler Wick seeks to control the risks
associated with its customers' activities by requiring customers to maintain
margin collateral in compliance with various regulatory and internal guidelines.
Butler Wick monitors required margin levels daily and, pursuant to such
guidelines, requires the customer to deposit additional collateral or to reduce
security positions when necessary.

     Butler Wick's customer financing and securities settlement activities
require Butler Wick to pledge customer securities as collateral in support of
various secured financing sources such as bank loans and securities loaned. In
the event the counterparty is unable to meet its contractual obligation to
return customer securities pledged as collateral, Butler Wick may be exposed to
the risk of acquiring the securities at prevailing market prices in order to
satisfy its customer obligations. Butler Wick controls this risk by monitoring
the market value of securities pledged on a daily basis and by requiring
adjustments of collateral levels in the event of excess market exposure. In
addition, Butler Wick establishes credit limits for such activities and monitors
compliance on a daily basis.


                                                                       EX. 13-21



     As a securities broker and dealer, all transactions purchased through
margin accounts are collateralized. Butler Wick's exposure to credit risk
associated with nonperformance in fulfilling contractual obligations pursuant to
securities transactions can be directly impacted by volatile trading markets,
which may impair the customer's ability to satisfy its obligations to Butler
Wick.

Off Balance Sheet Financial Instruments

     Financial instruments include off-balance sheet credit instruments, such as
commitments to make loans and commercial letters of credit, issued to meet
customer financing needs. The face amount for these items represents the
exposure to loss, before considering customer collateral or ability to repay.
Such financial instruments are recorded when they are funded.

New Accounting Standards

     Adoption of New Accounting Standards: On March 9, 2004, the Securities and
Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 105,
"Application of Accounting Principles to Loan Commitments" stating that the fair
value of loan commitments accounted for as a derivative instrument under FASB
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities", should not consider expected future cash flows related to servicing
of the future loan. SAB 105 was effective for loan commitments accounted for as
derivatives entered into after March 31, 2004. The Company adopted the
provisions of SAB 105 as of April 1, 2004. The adoption of this standard did not
have a material impact on the Company's financial position or results of
operations.

     In March 2004, the Emerging Issues Task Force (EITF) arrived at a Consensus
regarding EITF 03-1, "The Meaning of Other-Than-Temporary Impairment and
Application to Certain Investments". This Consensus provides additional guidance
on when an investment is considered impaired, whether impairment is
other-than-temporary, and measurement of impairment loss. It also requires
additional disclosure for annual reporting periods ending after June 15, 2004
and for other reporting periods beginning after June 15, 2004. In September
2004, FASB issued Staff Position 03-1-1 which delayed the effective date for
measurement and recognition guidance contained in paragraphs 10 through 20 of
EITF 03-1 due to additional proposed guidance. This delay does not suspend the
requirement to recognize other-than-temporary impairments as required by
existing authoritative literature. The Company currently has investments where
the current market value is less than the amortized cost. See Note 4 for further
discussion and the impact on the Company's financial position and results of
operations.

     In December 2003, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 03-3, "Accounting for Certain Loans
or Debt Securities Acquired in a Transfer." This SOP addresses accounting for
differences between contractual cash flows and cash flows expected to be
collected from an investor's initial investment in loans or debt securities
(loans) acquired in a transfer if those differences are attributable, at least
in part, to credit quality. It includes such loans acquired in purchase business
combinations and applies to all non-governmental entities, including
non-for-profit organizations. This SOP does not apply to loans originated by the
entity. This SOP is effective for loans acquired in fiscal years beginning on or
before December 2004, and within the scope of Practice Bulletin 6, paragraphs 7
and 8 of this SOP, as they apply to decreases in cash flows expected to be
collected, should it be applied prospectively for fiscal years beginning after
December 15, 2004. The Company adopted this SOP as of January 1, 2004 with no
material impact on its financial position or results of operations.

     In December 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46(R), "Consolidation of Variable Interest Entities," (FIN
46-R). FIN 46-R requires that subsidiaries defined as variable interest entities
be consolidated by the enterprise that will absorb the majority of the entities'
expected losses if they occur, receive a majority of the variable interest
entities' residual returns if they occur, or both. The Company has no
subsidiaries that are considered to be variable interest entities, so the
adoption of FIN 46-R had no impact.

     Newly Issued But Not Yet Effective Standards: FASB Statement No. 123(R),
"Share Based Payment" is concerned with an entities expensing of stock options
as an ordinary expense. It becomes effective for the Company beginning July 1,
2005. To the extent the Company makes future grants of stock options,
compensation expense will increase by the estimated fair value of options
granted.

Operating Segments

     Internal financial information is primarily reported and aggregated in two
lines of business, banking services and investment services.

Dividend Restriction

     Banking regulations require maintaining certain capital levels and may
limit the dividends paid by Home Savings to the holding company or by the
holding company to shareholders. These restrictions currently pose no practical
limit on the ability of the bank or holding company to pay dividends at
historical levels. See Note 15 for further discussion.

Reclassifications

     Some items in the prior year financial statements were reclassified to
conform to the current presentation.


                                                                       EX. 13-22



2.   ACQUISITIONS

     On April 1, 2002, United Community acquired all of the capital stock of
Potters Financial Corporation, the holding company for Potters Bank, an
Ohio-chartered state savings bank. Potters Bank was merged into Home Savings.
The assets acquired consisted principally of loans and securities.

     United Community accounted for the acquisition as a purchase and has
included Potters' results of operations from the effective date of the
acquisition in its 2002 financial statements. Based on Potters 991,546
outstanding shares, the acquisition was valued at $23.6 million, which was paid
in cash. The excess of the aggregate purchase price over the fair market value
of net identifiable assets acquired, or goodwill, was approximately $11.7
million. In accordance with SFAS No. 142, goodwill is not amortized, but instead
is evaluated for impairment. The core deposit intangible asset acquired is
subject to amortization on an accelerated basis over an estimated life of 20
years. Because the merger was structured as a tax free exchange, none of the
goodwill is expected to be deductible for tax purposes.

3.   CASH AND CASH EQUIVALENTS

     Federal Reserve Board regulations require depository institutions to
maintain certain minimum reserve balances. These reserves, which consisted of
vault cash and deposits at the Federal Reserve Bank, totaled approximately $10.7
million and $11.4 million at December 31, 2004 and 2003, respectively.

4.   SECURITIES

     The components of securities are as follows:



                                               December 31, 2004                    December 31, 2003
                                      ----------------------------------   ----------------------------------
                                                    Gross        Gross                   Gross        Gross
                                        Fair     Unrealized   Unrealized     Fair     Unrealized   Unrealized
                                       Value        Gains       Losses       Value       Gains       Losses
                                      --------   ----------   ----------   --------   ----------   ----------
                                                                   (In thousands)
                                                                                 
Available for Sale
U.S. Treasury and agency securities   $ 88,317     $    7       $(417)     $ 58,748     $  199      $   (24)
Corporate notes                             --         --          --         5,062         38           --
Tax exempt municipal obligation              7          1          --            10          2           --
Equity securities                        7,169      1,459          --         8,930      1,453         (902)
Mortgage-related securities            102,911        869        (364)      154,775      1,158         (273)
                                      --------     ------       -----      --------     ------      -------
Total                                 $198,404     $2,336       $(781)     $227,525     $2,850      $(1,199)
                                      ========     ======       =====      ========     ======      =======


     Debt securities available for sale by contractual maturity, repricing or
expected call date are shown below:



                                        December 31, 2004
                                           Fair Value
                                        -----------------
                                          (In thousands)
                                     
Due in one year or less                     $ 20,994
Due after one year through five years         67,330
Mortgage-related securities                  102,911
                                            --------
   Total                                    $191,235
                                            ========


Since equity securities do not have a contractual maturity, they are excluded
from the table above.

     Proceeds, gross realized gains, losses and impairment charges of available
for sale securities were as follows:



                       2004      2003      2002
                     -------   -------   -------
                            (In thousands)
                                
Proceeds             $63,021   $22,325   $45,096
Gross gains            1,425       847     2,127
Gross losses              15         8        --
Impairment charges     1,402        --        --
                     -------   -------   -------


     Securities pledged for public funds deposits were approximately $19.0
million and $12.9 million at December 31, 2004 and 2003, respectively. See
further discussion regarding pledged securities in Note 11.


                                                                       EX. 13-23



     United Community's trading securities are carried at fair value and consist
of the following:



                                             2004      2003
                                           -------   -------
                                               
Debt Securities:
   Obligations of U.S. government          $28,587   $ 1,061
   State and municipal obligations           1,657    10,102
   Corporate bonds, debentures and notes        60       366
   Mutual funds                              2,012     4,071
                                           -------   -------
Total trading securities                   $32,316   $15,600
                                           -------   -------


     Investments with a continuous unrealized loss position are as follows at
December 31, 2004:



                                             Less than 12 months        12 months or more               Total
                                           -----------------------   -----------------------   -----------------------
                                                        Unrealized                Unrealized                Unrealized
                                           Fair value      loss      Fair value      loss      Fair value      loss
                                           ----------   ----------   ----------   ----------   ----------   ----------
                                                                          (In thousands)
                                                                                          
Description of securities:
U.S. Treasury obligations and direct
   obligations of US government
   agencies                                  $79,091      $(417)       $   --       $  --       $ 79,091      $(417)
Mortgage-related securities                   18,311       (216)        8,016        (148)        26,327       (364)
                                             -------      -----        ------       -----       --------      -----
   Total temporarily impaired securities     $97,402      $(633)       $8,016       $(148)      $105,418      $(781)
                                             -------      -----        ------       -----       --------      -----


     Investments in an unrealized loss position were as follows at December 31,
2003:



                                          Less than 12 months        12 months or more               Total
                                        -----------------------   -----------------------   -----------------------
                                                     Unrealized                Unrealized                Unrealized
                                        Fair value      loss      Fair value      loss      Fair value      loss
                                        ----------   ----------   ----------   ----------   ----------   ----------
                                                                       (In thousands)
                                                                                       
Description of securities:
U.S. Treasury obligations and direct
   obligations of US government
   agencies                               $ 3,525      $ (24)       $   --        $  --       $ 3,525      $   (24)
Mortgage-related securities                35,678       (263)          223          (10)       35,901         (273)
                                          -------      -----        ------        -----       -------      -------
   Subtotal, debt securities               39,203       (287)          223          (10)       39,426         (297)
Equity securities                              --         --         4,098         (902)        4,098         (902)
                                          -------      -----        ------        -----       -------      -------
Total temporarily impaired securities     $39,203      $(287)       $4,321        $(912)      $43,524      $(1,199)
                                          -------      -----        ------        -----       -------      -------


     The securities that have been impaired less than twelve months include
twenty-six U.S. treasury and agency positions along with three mortgage-related
securities. These securities are currently temporarily impaired due to the
current level of interest rates.

     There are two mortgage-related securities that have been impaired for a
period greater than 12 months. Both of the securities are temporarily impaired
due to the current level of interest rates and are rated AAA. The securities
continue to pay down on schedule and management expects to receive all principal
and interest owed on the securities.

     Home Savings owns $5.0 million par value of Fannie Mae preferred stock.
During the fourth quarter of 2004, Home Savings recorded an other-than-temporary
charge for the impairment of the Fannie Mae preferred stock, held in the
available for sale portfolio, of $1.4 million, pretax. The Company recorded the
charge because the market value of the stock has declined significantly in the
fourth quarter, following several negative announcements by Fannie Mae involving
regulatory actions, earnings restatements and management turnover. The Company
concluded that these events made the likelihood of future price appreciation
less certain in the near term and would extend the time period for a recovery of
the Company's investment cost beyond previous estimates.


                                                                       EX. 13-24



5.   LOANS

     Portfolio loans consist of the following:



                                              December 31,
                                        -----------------------
                                           2004         2003
                                        ----------   ----------
                                             (In thousands)
                                               
Real Estate:
   One- to four-family residential      $  690,413   $  599,370
   Multifamily residential                 153,011      148,362
   Nonresidential                          289,755      291,588
   Land                                     14,701       14,147
Construction:
   One- to four-family residential         301,193      244,837
   Multifamily and non-residential          47,230       27,586
                                        ----------   ----------
      Total real estate                  1,496,303    1,325,890
Consumer                                   267,646      218,762
Commercial                                  68,523       48,570
                                        ----------   ----------
      Total loans                        1,832,472    1,593,222
                                        ----------   ----------
Less:
   Allowance for loan losses                15,877       15,111
   Deferred loan fees (expenses), net          619        1,617
                                        ----------   ----------
      Total                                 16,496       16,728
                                        ----------   ----------
         Loans, net                     $1,815,976   $1,576,494
                                        ----------   ----------


     Loan commitments are agreements to lend to a customer as long as there is
no violation of any condition established in the contract. Commitments extend
over various periods of time with the majority of such commitments disbursed
within a sixty-day period. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Commitments to
extend credit at fixed rates expose Home Savings to some degree of interest rate
risk. Home Savings evaluates each customer's creditworthiness on a case-by-case
basis. The type or amount of collateral obtained varies and is based on
management's credit evaluation of the potential borrower. Home Savings normally
has a number of outstanding commitments to extend credit.



                                                  December 31,
                            -------------------------------------------------------
                                       2004                        2003
                            --------------------------   --------------------------
                            Fixed Rate   Variable Rate   Fixed Rate   Variable Rate
                            ----------   -------------   ----------   -------------
                                                 (In thousands)
                                                          
Commitments to make loans     $60,690       $304,371       $48,202       $230,683
Unused lines of credit         11,721        122,170         6,552        103,408


     Terms of the commitments in both years extend up to six months, but are
generally less than two months. The fixed rate loan commitments have interest
rates ranging from 5.125% to 18% and maturities ranging from six months to 30
years.

     At December 31, 2004 and 2003, there were $11.7 million and $7.6 million,
respectively, of outstanding standby letters of credit. These are issued to
guarantee the performance of a customer to a third party. Standby letters of
credit are generally contingent upon the failure of the customer to perform
according to the terms of an underlying contract with the third party.

     Home Savings' business activity is principally with customers located in
Ohio. Except for residential loans in Home Savings' market area, Home Savings
has no other significant concentrations of credit risk.


                                                                       EX. 13-25



Allowance for Loan Losses

     Changes in the allowance for loan losses are as follows:



                                             Year ended December 31,
                                           ---------------------------
                                             2004      2003      2002
                                           -------   -------   -------
                                                  (In thousands)
                                                      
Balance, beginning of year                 $15,111   $15,099   $11,480
   Acquired from Potters Financial Corp.        --        --     1,869
   Provision for loan losses                 9,370     3,179     3,578
   Amounts charged off                      (9,060)   (3,340)   (1,967)
   Recoveries                                  456       173       139
                                           -------   -------   -------
Balance, end of year                       $15,877   $15,111   $15,099
                                           -------   -------   -------


     Nonaccrual loans were $20.9 million, $13.0 million and $14.4 million at
December 31, 2004, 2003 and 2002. Restructured loans were $1.3 million, $1.9
million and $1.3 million at December 31, 2004, 2003 and 2002. Loans that are
greater than ninety days past due and still accruing were $377,000 at December
31, 2004 and $1.3 million at December 31, 2003.



                                                                         As of or for the year ended
                                                                                December 31,
                                                                         ---------------------------
                                                                           2004     2003     2002
                                                                         -------   ------   ------
                                                                              (In thousands)
                                                                                   
Impaired loans on which no specific valuation allowance was provided     $ 7,898   $4,366   $2,365
Impaired loans on which specific valuation allowance was provided          7,320    1,514    4,032
                                                                         -------   ------   ------
   Total impaired loans at year-end                                      $15,218   $5,880   $6,397
                                                                         -------   ------   ------
Specific valuation allowances on impaired loans at year-end                1,691      277    2,122
Average impaired loans during year                                        10,683    6,628    5,652
Interest income recognized on impaired loans during the year                 134      145      177
Interest income received on impaired loans during the year                   307      288      128
Interest income potential based on original contract terms of impaired
   loans                                                                     685      539      502
                                                                         -------   ------   ------


     Directors and officers of United Community, Home Savings and Butler Wick
are customers of Home Savings in the ordinary course of business. The following
describes loans to officers and/or directors of United Community, Home Savings
and Butler Wick:



                                                         (In thousands)
                                                         --------------
                                                      
Balance as of December 31, 2003                              $1,327
New loans to officers and/or directors                        1,508
Loan payments during 2004                                      (380)
Reductions due to changes in officers and/or directors
                                                               (294)
                                                             ------
Balance as of December 31, 2004                              $2,161
                                                             ------


6.   MORTGAGE BANKING ACTIVITIES

     Mortgage loans serviced for others, which are not reported in United
Community's assets, totaled $667.0 million and $633.2 million at December 31,
2004 and 2003.

     Activity for capitalized mortgage servicing rights, included in other
assets, was as follows:



                               2004      2003      2002
                             -------   -------   -------
                                    (In thousands)
                                        
Balance, beginning of year   $ 5,557   $ 3,603   $ 1,627
   Originations                1,629     4,448     2,979
Amortized to expense          (1,653)   (2,494)   (1,003)
                             -------   -------   -------
Balance, end of year         $ 5,533   $ 5,557   $ 3,603
                             -------   -------   -------


     Activity in the valuation allowance for mortgage servicing rights was as
follows:



                             2004    2003   2002
                             ----   -----   ----
                                (In thousands)
                                   
Balance, beginning of year   $(76)  $  --   $ (22)
   Impairment charges          --    (415)   (100)
   Recoveries                  76     339     122
                             ----   -----   -----
Balance, end of year         $ --   $ (76)  $  --
                             ----   -----   -----



                                                                       EX. 13-26



     Key economic assumptions used in measuring the value of mortgage servicing
rights at December 31, 2004 and 2003 were as follows:



                                    2004        2003
                                   ------      ------
                                          
Weighted average prepayment rate   281.39 PSA  277.99 PSA
Weighted average life (in years)     5.41        6.04
Weighted average discount rate          8%          8%


Amounts held in custodial accounts for investors amounted to $6.1 million and
$5.6 million at December 31, 2004 and 2003, respectively.

7.   SECURITIZATIONS

     Home Savings sold $90.4 million in residential mortgage loans in
securitization transactions in 2003. The securities received in these
transactions were immediately sold. Gains of $4.2 million were recorded on the
sales. Home Savings retained servicing responsibilities for the loans, for which
it receives servicing fees approximating 0.40% of the outstanding balance of the
loans. There were no securitizations during 2004.

     For the loans securitized in 2003, approximately $30.5 million of the loans
had loan to value ratios greater than 80% and did not have sufficient mortgage
insurance coverage on the delivery date. These loans were sold with recourse to
Home Savings. This recourse obligation will terminate for each loan on June 30,
2005, provided that on that date, the applicable loan is not thirty days or more
delinquent. If this criteria is not met, the recourse agreement on that loan
will continue until such time as the loan becomes and remains current for a
period of twelve consecutively scheduled monthly payments from the date of the
last delinquency. Home Savings reduced the recorded gain from the
securitizations by the fair value of the recourse obligation. As of December 31,
2004, approximately $18.2 million of these loans were still covered by the
recourse obligation.

     Home Savings also services loans from securitizations prior to 2003.
Certain of these loans are covered by recourse or indemnification provisions
specific to those sales. At December 31, 2004, approximately $183,000 in loans
are covered by recourse agreements and approximately $12.2 million in loans are
covered by an indemnification agreement.

     Cash flows from all securitizations of mortgage loans were as follows:



                          2004     2003
                          ----   -------
                          (In thousands)
                           
Securitization proceeds   $ --   $93,983
Servicing fees received    331       418



                                                                       EX. 13-27



     An analysis of the activity in securitizations serviced by Home Savings
during 2004 and 2003 follows:



                                                       December 31,
                                                   --------------------
                                                     2004        2003
                                                   --------   ---------
                                                      (In thousands)
                                                        
Balance at beginning of year:
   Principal balance of loans                      $128,761   $ 156,995
   Amortized cost of servicing rights                 1,005       1,350
   Servicing rights as a % of principal                0.78%       0.86%

New securitizations during the year:
   Principal balance of loans                            --      90,413
   Fair value of servicing rights                        --         741
   Servicing rights as a % of principal                 n/a        0.82%

Principal payments received on loans securitized    (41,348)   (118,647)

Balance at end of year:
   Principal balance of loans                        87,413     128,761
   Amortized cost of servicing rights                   626       1,005
   Servicing rights as a % of principal                0.72%       0.78%
                                                   --------   ---------


     In the securitization transactions, Home Savings retained residual
interests in the form of servicing assets. The servicing assets represent the
allocated value of retained servicing rights on the loans securitized.



                                                      December 31,
                                                     --------------
                                                      2004     2003
                                                     -----     ----
                                                         
Other information at end of period:
   Weighted average rate of loans                     6.68%    6.73%
   Weighted average maturity of loans in months        272      284
   Principal balance of loans 30 days or more past
      due (in thousands)                             $ 611     $546
 Fair value assumptions
         Discount rate                                8.00%    8.00%
         Weighted average prepayment assumptions       295PSA   364PSA


     The following table indicates how the fair value of the servicing rights
might decline if the assumptions change unfavorably in two different magnitudes:



                                     December 31,
                                    ---------------
                                     2004     2003
                                    ------   ------
                                    (In thousands)
                                       
Fair value at end of year           $1,078   $1,362
Weighted average life (in months)       58       69

Projected fair value based on:
   Increase in PSA of 50               981    1,251
   Increase in PSA of 100              901    1,157
                                    ------   ------


The effect of adverse changes is hypothetical and should not be extrapolated to
other changes, as the effects are not linear.

8.   PREMISES AND EQUIPMENT

     Premises and equipment consist of the following:



                                                             December 31,
                                                  ----------------------------------
                                                  Estimated life     2004      2003
                                                  --------------   -------   -------
                                                            (In thousands)
                                                                    
Land                                                               $ 6,924   $ 6,188
Buildings                                         up to 39 years    17,215    16,483
Leasehold improvements                               10 years        1,421     1,110
Furniture and equipment                              3-5 years      15,964    15,833
                                                                   -------   -------
                                                                    41,524    39,614
Less: Accumulated depreciation and amortization                     20,731    19,104
                                                                   -------   -------
   Total                                                           $20,793   $20,510
                                                                   -------   -------



                                                                        EX 13-28



     Rent expense was $1.2 million for 2004, $1.0 million for 2003 and $924,000
for 2002. Rent commitments under noncancelable operating leases for offices were
as follows, before considering renewal options that generally are present:



             (In thousands)
             --------------
          
2005             $1,199
2006                993
2007                823
2008                704
2009                541
Thereafter          425
                 ------
   Total         $4,685
                 ======


9.   GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill was $33,593 at December 31, 2004, 2003, and 2002.

Acquired Intangible Assets



                                                  As of December 31,
                                  -------------------------------------------------
                                            2004                      2003
                                  -----------------------   -----------------------
                                   Gross                      Gross
                                  Carrying    Accumulated   Carrying    Accumulated
                                   Amount    Amortization    Amount    Amortization
                                  --------   ------------   --------   ------------
                                                    (In thousands)
                                                           
Amortized intangible assets:
   Core deposit intangibles        $8,952       $6,065       $8,952       $5,165
                                   ------       ------       ------       ------
      Total                        $8,952       $6,065       $8,952       $5,165
                                   ======       ======       ======       ======

Estimated amortization expense:
   For the year ended:

   December 31, 2005               $  666
   December 31, 2006                  512
   December 31, 2007                  400
   December 31, 2008                  313
   December 31, 2009                  246
                                   ------


     Aggregate amortization expense for the years ended December 31, 2004, 2003
and 2002, was $900,000, $1.3 million and $2.2 million, respectively.

10.  DEPOSITS

     Deposits consist of the following:



                                December 31,
                          -----------------------
                             2004         2003
                          ----------   ----------
                               (In thousands)
                                 
Checking accounts:
   Interest bearing       $  158,682   $  115,724
   Non-interest bearing       84,965       63,442
Savings accounts             308,187      312,210
Money market accounts        146,833      190,117
Certificates of deposit      824,285      742,205
                          ----------   ----------
Total deposits            $1,522,952   $1,423,698
                          ----------   ----------



                                                                        EX 13-29



     Interest expense on deposits is summarized as follows:



                                               Year Ended December 31,
                                             ---------------------------
                                               2004      2003      2002
                                             -------   -------   -------
                                                    (In thousands)
                                                        
Interest bearing demand deposits and money
   market accounts                           $ 2,386   $ 3,113   $ 5,319
Savings accounts                               1,361     2,347     4,946
Certificates of deposit                       24,614    25,440    34,668
                                             -------   -------   -------
   Total                                     $28,361   $30,900   $44,933
                                             -------   -------   -------


     A summary of certificates of deposit by maturity follows:



                              December 31, 2004
                              -----------------
                                (In thousands)
                           
Within 12 months                   $347,062
12 months to 24 months              167,623
Over 24 months to 36 months         128,619
Over 36 months to 48 months          82,713
Over 48 months                       98,268
                                   --------
   Total                           $824,285
                                   --------


     A summary of certificates of deposit with balances of $100,000 or more by
maturity is as follows:



                                   December 31, 2004   December 31, 2003
                                   -----------------   -----------------
                                               (In thousands)
                                                 
Three months or less                    $ 14,957           $ 29,027
Over three months to six months           17,954             11,986
Over six months to twelve months          33,132             23,711
Over twelve months                       113,339             83,686
                                        --------           --------
   Total                                $179,382           $148,410
                                        --------           --------


     Deposits in excess of $100,000 are not federally insured. Home Savings did
not have brokered deposits for the years ended December 31, 2004 or 2003.

11.  OTHER BORROWED FUNDS

     The following is a summary of short-term borrowings:



                                                               December 31,
                                            -------------------------------------------------
                                                      2004                      2003
                                            -----------------------   -----------------------
                                                              (In thousands)
                                                         Weighted                  Weighted
                                             Amount    average rate    Amount    average rate
                                            --------   ------------   --------   ------------
                                                                     
Variable rate revolving lines of credit     $ 17,866       1.55%      $ 19,295       0.96%
Securities sold under repurchase
   agreements                                 41,105       1.92         19,394       1.22
Transaction loans; 30 year amortization;
   15 year balloon                             1,177       7.42          1,196       7.42
Federal Home Loan Bank term advances due
   in less than 1 year                        20,151       4.94         18,000       4.83
Overnight Federal Home Loan Bank advances    195,284       2.20        101,250       1.03
                                            --------                  --------
   Total short-term borrowings              $275,583                  $159,135
                                            --------                  --------


     The average balance of short-term borrowings during 2004 was $231.3 million
and the maximum month-end balance during the year was $308.3 million.


                                                                       EX. 13-30



     The following is a summary of term Federal Home Loan Bank borrowings:



                         December 31,              December 31,
                             2004                      2003
                   -----------------------   -----------------------
                                     (In thousands)
                                Weighted                  Weighted
Year of Maturity    Amount    average rate    Amount    average rate
- ----------------   --------   ------------   --------   ------------
                                            
      2005         $     --         --%      $ 19,000       5.01%
      2006          127,000       4.53        122,000       4.60
      2007           30,500       5.01         15,500       3.64
      2008           21,500       3.69          1,500       2.93
      2009           10,000       3.56             --         --
      2010            1,500       3.54          1,500       3.54
   Thereafter        17,420       3.86         19,828       3.85
                   --------                  --------
Total long-term    $207,920                  $179,328
                   --------                  --------
Total borrowings   $483,503                  $338,463
                   --------                  --------


     Home Savings has available credit, subject to collateral requirements, with
the Federal Home Loan Bank of $632.3 million, of which $423.4 million was used
at December 31, 2004. All advances from the Federal Home Loan Bank of Cincinnati
are secured by a blanket mortgage collateral agreement for 125% of outstanding
advances, amounting to $529.3 million at December 31, 2004. Butler Wick has a
revolving line of credit, which is fully collateralized by securities valued at
$11.0 million and $24.0 million at December 31, 2004 and 2003, respectively.
Securities valued at $25.0 million are being held as collateral for a repurchase
agreement as of December 31, 2004. United Community has a revolving line of
credit for $10.0 million at Key Bank. At December 31, 2004, this line had an
outstanding balance of $3.5 million.

     At December 31, 2004, Butler Wick had $24.1 million in repurchase
agreements outstanding with Lehman Brothers, Inc. under which Butler Wick sold
government agency securities classified as available for sale with a fair value
of $24.6 million. The securities underlying the repurchase agreements had a
weighted average maturity of 1.7 years at December 31, 2004 and are callable at
the option of either party. The securities are held at Lehman Brothers, Inc.
There were no repurchase agreements outstanding at December 31, 2003.

     During 2002, United Community incurred approximately $1.3 million in costs
associated with the early extinguishment of debt with the Federal Home Loan
Bank. Management established that it was advantageous to extinguish debt early
and incur the associated fees due to the current economic conditions and cash
inflows from loans sold.

12.  LOSS CONTINGENCY

     In September 2003, an arbitration proceeding was initiated against Butler
Wick and a broker employed by Butler Wick asserting certain claims. In January
2005, all parties and their legal counsel agreed in principle to a settlement of
this matter. Finalization of the settlement is expected to be completed before
the end of March 2005. The settlement amount, which is not material to the
Company's financial condition or results of operations, has been accrued as of
December 31, 2004.

     Home Savings is a party to litigation regarding a group of consumer loans
made to parties who purchased boats from a boat dealer with whom Home Savings
had a prior commercial loan relationship. Home Savings does not expect to incur
any material losses arising in or out of that litigation.

     From time to time, the Company is involved in various lawsuits and claims
which arise in the normal course of business. Some of these proceedings seek
relief or damages that are substantial, and in some instances are filed as class
actions. Nonetheless, based upon the advice of counsel, management is of the
opinion that any liabilities that may result from these lawsuits and claims will
not have a material effect.


                                                                       EX. 13-31



13.  INCOME TAXES

     The provision for income taxes consists of the following components:



             Year ended December 31,
           --------------------------
            2004      2003      2002
           ------   -------   -------
                 (In thousands)
                     
Current    $9,914   $12,926   $11,986
Deferred     (811)     (361)   (1,210)
           ------   -------   -------
   Total   $9,103   $12,565   $10,776
           ======   =======   =======


     A reconciliation from tax at the statutory rate to the income tax provision
is as follows:



                                                Year ended December 31,
                                   ------------------------------------------------
                                        2004             2003             2002
                                   --------------   --------------   --------------
                                   Dollars   Rate   Dollars   Rate   Dollars   Rate
                                   -------   ----   -------   ----   -------   ----
                                                    (In thousands)
                                                             
Tax at statutory rate              $9,439    35.0%  $12,427   35.0%  $11,057   35.0%
Increase (decrease) due to:
   Tax exempt income                  (78)   (0.3)     (137)  (0.4)      (86)  (0.3)
   Change in valuation allowance       --      --        --     --      (400)  (1.3)
   Life insurance                    (308)   (1.1)     (170)  (0.5)       --     --
   State taxes                        (27)   (0.1)      (40)  (0.1)      (11)   (--)
   Other                               77     0.3       485    1.4       216    0.7
                                   ------    ----   -------   ----   -------   ----
Income tax provision               $9,103    33.8%  $12,565   35.4%  $10,776   34.1%
                                   ------    ----   -------   ----   -------   ----


     Significant components of the deferred tax assets and liabilities are as
follows:



                                                         December 31,
                                                      -----------------
                                                        2004      2003
                                                      -------   -------
                                                        (In thousands)
                                                          
Deferred tax assets:
   Loan loss reserves                                 $ 5,557   $ 5,289
   Postretirement benefits                              1,372     1,464
   Deferred loan fees                                     333       563
   ESOP shares released                                 1,257     1,162
   Compensation accruals                                  697     1,347
   Investment valuation                                   491        --
   Interest on non-accrual loans                          508       366
   Other                                                  342       312
                                                      -------   -------
      Deferred tax assets                              10,557    10,503
                                                      -------   -------

Deferred tax liabilities:
   Purchase accounting adjustments                      1,373     2,140
   Original issue discount                                694     1,388
   Federal Home Loan Bank stock dividends               5,448     5,126
   Unrealized gain on securities available for sale       572       606
   Mortgage servicing rights                            1,937     1,919
   Other                                                  704       340
                                                      -------   -------
   Deferred tax liabilities                            10,728    11,519
                                                      -------   -------
      Net deferred tax liability                      $  (171)  $(1,016)
                                                      -------   -------


     Retained earnings at December 31, 2004 include approximately $21.1 million
for which no provision for federal income taxes has been made. This amount
represents the tax bad debt reserve at December 31, 1987, which is the end of
the Company's base year for purposes of calculating the bad debt deduction for
tax purposes. If this portion of retained earnings is used in the future for any
purpose other than to absorb bad debts, the amount used will be added to future
taxable income. The unrecorded deferred tax liability on the above amount at
December 31, 2004 was approximately $7.3 million.

14.  SHAREHOLDERS' EQUITY

Dividends

     United Community's source of funds for dividends to its shareholders are
earnings on its investments and dividends from Home Savings and Butler Wick.
During the year ended December 31, 2004, United Community paid regular dividends
in the amount of $8.5 million. While Home Savings' primary regulator is the
FDIC, the OTS has regulations that impose certain restrictions on payments of
dividends to United Community.


                                                                       EX. 13-32



     Home Savings must file an application with, and obtain approval from, the
OTS (i) if the proposed distribution would cause total distributions for the
calendar year to exceed net income for that year to date plus retained net
income (as defined) for the preceding two years; (ii) if Home Savings would not
be at least adequately capitalized following the capital distribution; (iii) if
the proposed distribution would violate a prohibition contained in any
applicable statute, regulation or agreement between Home Savings and the OTS or
the FDIC, or any condition imposed on Home Savings in an OTS-approved
application or notice. If Home Savings is not required to file an application,
it must file a notice of the proposed capital distribution with the OTS. As of
December 31, 2004, Home Savings had $20.6 million of retained earnings that
could be distributed without requiring the prior approval of the OTS.

Other Comprehensive Income

     Other comprehensive income included in the Consolidated Statements of
Shareholders' Equity consists solely of unrealized gains and losses on available
for sale securities. The change includes reclassification of gains or losses on
sales of securities of $540,000, $837,000 and $1.3 million for the years ended
December 31, 2004, 2003 and 2002.

Liquidation Account

     At the time of the Conversion, Home Savings established a liquidation
account, totaling $141.4 million, which was equal to its regulatory capital as
of the latest practicable date prior to the Conversion. In the event of a
complete liquidation, each eligible depositor will be entitled to receive a
distribution from the liquidation account in an amount proportionate to the
current adjusted qualifying balances for the accounts then held.

15.  REGULATORY CAPITAL REQUIREMENTS

     Home Savings is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on United Community. The regulations require Home Savings to
meet specific capital adequacy guidelines and the regulatory framework for
prompt corrective action that involve quantitative measures of Home Savings'
assets, liabilities, and certain off balance sheet items as calculated under
regulatory accounting practices. Home Savings' capital classification is also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

     Quantitative measures established by regulation to ensure capital adequacy
require Home Savings to maintain minimum amounts and ratios of Leverage (or
Core) and Tangible capital (as defined in the regulations) to adjusted total
assets (as defined) and of total capital (as defined) to risk-weighted assets
(as defined). Actual and required capital amounts and ratios are presented
below.



                                                              As of December 31, 2004
                                           -------------------------------------------------------------
                                                                   Minimum       To Be Well Capitalized
                                                                   Capital       Under Prompt Corrective
                                                Actual          Requirements        Action Provisions
                                           ----------------   ----------------   -----------------------
                                            Amount    Ratio    Amount    Ratio       Amount    Ratio
                                           --------   -----   --------   -----      --------   -----
                                                                   (In thousands)
                                                                             
Total capital (to risk-weighted assets)    $196,145   10.79%  $145,408   8.00%      $181,761   10.00%
Tier 1 capital (to risk-weighted assets)    180,268    9.92          *      *        109,056    6.00
Leverage (Tier 1) capital (to adjusted
   total assets)                            180,268    8.36     86,204   4.00        107,755    5.00
Tangible capital (to adjusted
   total assets)                            180,268    8.36     32,326   1.50              *       *
                                           --------   -----   --------   ----       --------   -----




                                                              As of December 31, 2003
                                           --------------------------------------------------------------
                                                                   Minimum       To Be Well Capitalized
                                                                   Capital       Under Prompt Corrective
                                                 Actual         Requirements        Action Provisions
                                           ----------------   ----------------   ------------------------
                                            Amount    Ratio    Amount    Ratio        Amount    Ratio
                                           --------   -----   --------   -----       --------   -----
                                                                   (In thousands)
                                                                              
Total capital (to risk-weighted assets)    $172,271   10.56%  $130,465   8.00%       $163,081   10.00%
Tier 1 capital (to risk-weighted assets)    157,160    9.64          *      *          97,849    6.00
Leverage (Tier 1) capital (to adjusted
   total assets)                            157,160    8.22     76,465   4.00          95,581    5.00
Tangible capital (to adjusted
   total assets)                            157,160    8.22     28,674   1.50               *       *
                                           --------   -----   --------   -----       --------   -----


*    Ratio is not required under regulations.

     As of December 31, 2004 and 2003, the FDIC and OTS, respectively
categorized Home Savings as well capitalized under the regulatory framework for
Prompt Corrective Action. There are no conditions or events since that
notification that management believes has changed the


                                                                       EX. 13-33



Company or Home Savings' categorization. To be categorized as well capitalized,
Home Savings must maintain minimum Leverage, Tier 1 and total capital ratios as
set forth in the table above.

     Management believes, as of December 31, 2004, that Home Savings meets all
capital requirements to which it is subject. Events beyond management's control,
such as fluctuations in interest rates or a downturn in the economy in areas in
which Home Savings' loans and securities are concentrated, could adversely
affect future earnings, and consequently Home Savings' ability to meet its
future capital requirements.

     Butler Wick is subject to regulatory capital requirements set forth by the
Securities and Exchange Commission's Uniform Net Capital Rule. Butler Wick has
elected to use the alternative method, permitted by rule, which requires Butler
Wick to maintain minimum net capital, as defined, equal to the greater of
$250,000 or 2% of aggregate debit balances arising from customer transactions,
as defined. The Net Capital Rule also provides that equity capital may not be
withdrawn or cash dividends paid if resulting net capital would be less than 5%
of aggregate debits. At December 31, 2004, Butler Wick had net capital of $7.6
million, which was 44% of aggregate debit balances and $7.3 million in excess of
required minimum net capital.

16.  BENEFIT PLANS

Postretirement Benefit Plans

     In addition to Home Savings' retirement plans, Home Savings sponsors a
defined benefit health care plan that was curtailed in 2000 to provide
postretirement medical benefits for employees who worked 20 years and attained a
minimum age of 60 by September 1, 2000, while in service with Home Savings. The
plan is unfunded and, as such, has no assets. Furthermore, the plan is
contributory and contains minor cost-sharing features such as deductibles and
coinsurance. In addition, postretirement life insurance coverage is provided for
employees who were participants prior to December 10, 1976. The life insurance
plan is non-contributory. Home Savings' policy is to pay premiums monthly, with
no pre-funding. The benefit obligation was measured on December 31, 2004 and
2003. Information about changes in obligations of the benefit plan follows:



                                                Year ended December 31,
                                                -----------------------
                                                     2004      2003
                                                   -------   -------
                                                     (In thousands)
                                                       
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year            $ 3,932   $ 3,686
Service cost                                             9         6
Interest cost                                          245       226
Actuarial (gain)/loss                                 (140)      288
Benefits paid                                         (304)     (274)
                                                   -------   -------
Benefit obligation at end of the year              $ 3,742   $ 3,932
                                                   -------   -------
Funded status of the plan                          $(3,742)  $(3,932)
Unrecognized net gain from past experience
   different from that assumed and effects of
   changes in assumptions                             (173)      (34)
Prior service cost not yet recognized in net
   periodic benefit cost                                (6)       (6)
                                                   -------   -------
Accrued benefit cost                               $(3,921)  $(3,972)
                                                   -------   -------



                                                                       EX. 13-34



Components of net periodic benefit cost/(gain) are as follows:



                                                      Year Ended December 31,
                                                      -----------------------
                                                        2004    2003    2002
                                                       -----   -----   -----
                                                           (In thousands)
                                                              
Service cost                                           $   9   $   6   $  19
Interest cost                                            245     226     256
Expected return on plan assets                            --      --      --
Net amortization of prior service cost                    (1)     (1)     (1)
Recognized net actuarial gain                             --     (15)     --
                                                       -----   -----   -----
Net periodic benefit cost/(gain)                       $ 253   $ 216   $ 274
                                                       -----   -----   -----
Assumptions used in the valuations were as follows:
   Weighted average discount rate                       5.75%   6.00%   6.75%
                                                       -----   -----   -----


     The weighted-average annual assumed rate of increase in the per capita cost
of coverage benefits (i.e., health care cost trend rate) used in the 2004
valuation was 12% and was assumed to decrease to 5.5% for the year 2011 and
remain at that level thereafter. The health care cost trend rate assumption has
a significant effect on the amounts reported. A one-percentage point change in
assumed health care cost trend rates would have the following effects as of
December 31, 2004:



                                                           1 Percentage     1 Percentage
                                                          Point Increase   Point Decrease
                                                          --------------   --------------
                                                                  (In thousands)
                                                                     
Effect on total of service and interest cost components        $ 24            $ (22)
Effect on the postretirement benefit obligation                 356             (331)
                                                               ----            -----


The Company anticipates contributions to the plan to fund benefits paid will
aggregate $2.9 million over the next ten years as follows:

         
     2005   $  297,000
     2006      264,000
     2007      279,000
     2008      284,000
     2009      293,000
2010-2014    1,483,000
            ----------
    Total   $2,900,000
            ==========



401(k) Savings Plan

     Home Savings sponsors a defined contribution 401(k) savings plan, which
covers substantially all employees. Under the provisions of the plan, Home
Savings' matching contribution is discretionary and may be changed from year to
year. For 2004, 2003 and 2002, Home Savings' match was 50% of pre-tax
contributions, up to a maximum of 6% of the employees' base pay. Participants
become 100% vested in Home Savings contributions upon completion of three years
of service. For the years ended 2004, 2003 and 2002, the expense related to this
plan was approximately $458,000, $433,000 and $396,000, respectively.

     Butler Wick also sponsors a defined contribution 401(k) savings plan, which
covers substantially all employees. Under the provisions of the plan, Butler
Wick's matching contribution is discretionary and may be changed from year to
year. For 2004, 2003 and 2002, Butler Wick's match was 25% of pre-tax
contributions, up to a maximum of 6% of the employees' base pay. Participants
become 100% vested in Butler Wick contributions upon completion of six years of
service. For the years ended 2004, 2003 and 2002, the expense related to this
plan was approximately $157,000, $133,000 and $132,000, respectively.

Employee Stock Ownership Plan

     In conjunction with the Conversion, United Community established an
Employee Stock Ownership Plan (ESOP) for the benefit of the employees of United
Community and Home Savings. All full-time employees who meet certain age and
years of service criteria are eligible to participate in the ESOP. An ESOP is a
tax-qualified retirement plan designed to invest primarily in the stock of
United Community. The ESOP borrowed $26.8 million from United Community to
purchase 2,677,250 shares in conjunction with the conversion. The term of the
loan is 15 years and is being repaid primarily with contributions from Home
Savings to the ESOP. Additionally, 1,598,810 shares were purchased with the
return of capital distribution in 1999.

     The loan is collateralized by the shares of common stock held by the ESOP.
As the note is repaid, shares are released from collateral based on the
proportion of the payment in relation to total payments required to be made on
the loan. The shares released from collateral are then allocated to participants
on the basis of compensation as described in the plan. Compensation expense is
determined by multiplying the average per share market price of United
Community's stock during the period by the number of shares to be released.
United Community recognized approximately $3.5 million, $2.8 million and $2.4
million in compensation expense for the years ended December 31, 2004, 2003 and
2002, respectively, related to the ESOP. Unallocated shares are considered
neither outstanding shares for computation of basic earnings per share nor
potentially dilutive securities for computation of diluted earnings per share.
Dividends on unallocated ESOP shares are reflected


                                                                       EX. 13-35



as a reduction in the loan (and Home Savings' contribution is reduced
accordingly). Shares released or committed to be released for allocation during
the years ended December 31, 2004, 2003 and 2002 totaled 294,802, 294,802 and
294,802 and had a combined fair market value of $9.9 million. Shares remaining
not released or committed to be released for allocation at December 31, 2004
totaled 2,416,159 million and had a market value of approximately $27.1 million.

Recognition and Retention Plan

     On July 12, 1999, shareholders approved the United Community Financial
Corp. Recognition and Retention Plan (RRP). The purpose of the plan is to reward
and retain directors, officers and employees of United Community and Home
Savings who are in key positions of responsibility by providing them with an
ownership interest in United Community. Under the RRP, recipients are entitled
to receive dividends and have voting rights on their respective shares, but are
restricted from selling or transferring the shares prior to vesting.

    In August 1999, United Community awarded 1,342,334 common shares to eligible
individuals. Approximately one-fifth of the number of shares awarded, or 268,638
shares, vested on the date of grant. The remaining 1,073,696 shares vested
ratably on each of the first four anniversary dates of the plan. In August 2000,
United Community awarded 46,291 common shares to eligible individuals.
Approximately two-fifths of the number of shares awarded, or 18,517 shares,
vested on the date of grant. The remaining 27,774 shares vested ratably on each
of the first three anniversary dates of the plan. In August 2002, United
Community awarded 69,677 common shares to eligible individuals. Approximately
one-half of the shares awarded, or 34,839 shares, vested on the date of grant.
The remaining 34,838 shares vested on the first anniversary date. In August
2003, United Community awarded 2,376 common shares to eligible individuals, all
of which vested immediately upon grant. As of December 31, 2004 and 2003, there
are no shares available for future grants.

     The aggregate fair market value of the unvested RRP shares is considered
unearned compensation at the time of grant and is amortized over the vesting
period. There was no compensation expense recognized in 2004 as all shares
granted had previously vested. Compensation expense recognized in 2003 and 2002
related to the RRP was $1.2 million and $1.9 million.

Retention Plan

     In connection with the Butler Wick acquisition, United Community
established and funded a $3.7 million retention plan into a Rabbi Trust.
Participants in the retention plan became vested in their benefits after five
years of service, subject to acceleration in the event of a change in control of
United Community or Butler Wick. If a participant voluntarily leaves the employ
of Butler Wick or a subsidiary, or is terminated for cause, before the
expiration of the five-year vesting period, the participant will forfeit all
funds in the plan. If a participant dies, becomes disabled or retires at or
after age 65 and prior to the expiration of the five-year vesting period, the
participant, or the participant's estate, will be entitled to receive the funds
allocated to him or her under the plan, increased for any earnings or reduced
for any loss on such funds, at the end of the five-year vesting period.
Retention plan expense, including fair value adjustments related to the assets
in the Rabbi Trust, was $582,000, $1.6 million and $126,000 for 2004, 2003 and
2002.

     Participants in the plan were permitted to select various mutual funds into
which participants could direct their investments. Each participant was able to
select up to four of these mutual funds in order to diversify his or her
allocations, and was permitted to make changes in fund selections periodically.
Participants were permitted to elect a lump sum distribution at vesting, or a
distribution in equal annual installments over a period of time not to exceed
five years. To the extent that the participant elected to be paid in
installments, his or her account will continue to be credited with investment
gains and debited with investment losses until his or her full investment is
distributed from the plan. The Company accrued the deferred compensation
obligation prorata over the vesting period through a charge to compensation
expense. Plan assets are included in trading securities in the Company's
financial statements and are recorded at fair value. Final vesting occurred on
August 12, 2004 and approximately 56% of plan assets were distributed at that
time. Until the final distribution is made, the Company will continue to record
income or expense as the market value of the remaining plan assets and
corresponding liability to participants fluctuates. Plan assets amounted to $2.0
million and $4.1 million at December 31, 2004 and 2003, respectively.

Long-Term Incentive Plan

     On July 12, 1999, shareholders approved the United Community Financial
Corp. Long-Term Incentive Plan (Incentive Plan). The purpose of the Incentive
Plan is to promote and advance the interests of United Community and its
shareholders by enabling United Community to attract, retain and reward
directors, directors emeritus, managerial and other key employees of United
Community, including Home Savings and Butler Wick, by facilitating their
purchase of an ownership interest in United Community.

     The Incentive Plan provides for the grant of options, which may qualify as
either incentive or nonqualified stock options. The incentive plan provides that
option prices will not be less than the fair market value of the stock at the
grant date. The maximum number of common shares that may be issued under the
plan is 3,471,562, all of which have been granted as of December 31, 2004. All
of the options awarded became exercisable on the date of grant. The option
period expires 10 years from the date of grant. A summary of activity in the
plan is as follows:


                                                                       EX. 13-36





                                                                 As of December 31,
                                         ------------------------------------------------------------------
                                                 2004                   2003                   2002
                                         --------------------   --------------------   --------------------
                                                     Weighted               Weighted               Weighted
                                                      average                average                average
                                                     exercise               exercise               exercise
                                           Shares      price      Shares      price      Shares      price
                                         ---------   --------   ---------   --------   ---------   --------
                                                                                 
Outstanding at beginning of year         2,468,622    $ 7.60    1,909,615     $7.01    1,307,496     $6.79
Granted                                    754,403     12.73      742,654      8.97      715,710      7.40
Exercised                                 (913,277)     7.03     (171,873)     7.08      (75,538)     6.84
Forfeited                                       --        --      (11,774)     7.86      (38,053)     6.93
                                         ---------    ------    ---------     -----    ---------     -----
Outstanding at end of year               2,309,748      9.49    2,468,622      7.60    1,909,615      7.01
                                         ---------    ------    ---------     -----    ---------     -----

Options exercisable at year end          2,309,748    $ 9.49    2,468,622     $7.60    1,909,615     $7.01
                                         ---------    ------    ---------     -----    ---------     -----

Weighted-average fair value of options
   granted during year                                $ 3.13                  $3.65                  $2.44
                                                      ------                  -----                  -----


     Outstanding stock options have a weighted average remaining life of 7.79
years and may be exercised on the range of $6.66 to $12.73.

17.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The estimated fair values of financial instruments have been determined by
United Community using available market information and appropriate valuation
methodologies. Considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that United Community could
realize in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated fair
value amounts.

Cash and cash equivalents, margin accounts, accrued interest receivable and
payable and advance payments by borrowers for taxes and insurance--The carrying
amounts as reported in the Statements of Financial Condition are a reasonable
estimate of fair value due to their short-term nature.

Securities--Fair values are based on quoted market prices, dealer quotes and
prices obtained from independent pricing services.

Loans held for sale--The fair value of loans held for sale is based on market
quotes.

Loans--The fair value is estimated by discounting the future cash flows using
the current market rates for loans of similar maturities with adjustments for
market and credit risks.

Federal Home Loan Bank stock--The fair value is estimated to be the carrying
value, which is par. All transactions in the capital stock of the Federal Home
Loan Bank are executed at par.

Deposits--The fair value of demand deposits, savings accounts and money market
deposit accounts is the amount payable on demand at the reporting date. The fair
value of fixed-maturity certificates of deposit is estimated using rates
currently offered for deposits of similar remaining maturities.

Borrowed funds--For short-term borrowings, fair value is estimated to be
carrying value. The fair value of other borrowings is based on current rates for
similar financing.

Off balance sheet commitments-The fair value of commitments is considered to be
nominal.

Limitations--Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time United Community's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of
United Community's financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other
factors. These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.

     Fair value estimates are based on existing on and off balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
financial instruments. For example, a significant asset not considered a
financial asset is premises and equipment. In addition, tax ramifications
related to the realization of the unrealized gains and losses can have a
significant effect on fair value estimates and have not been considered in any
of the estimates.

     The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 2004 and 2003,
respectively. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such


                                                                       EX. 13-37



amounts have not been comprehensively revalued for purposes of these financial
statements since that date and, therefore, current estimates of fair value may
differ significantly from the amounts presented herein.



                                                       December 31, 2004         December 31, 2003
                                                    -----------------------   ----------------------
                                                     Carrying       Fair       Carrying       Fair
                                                       Value        Value        Value       Value
                                                    ----------   ----------   ----------   ---------
                                                                     (In thousands)
                                                                               
ASSETS:
   Cash and cash equivalents                        $   40,281   $   40,281   $   81,155      81,155
   Securities:
      Trading                                           32,316       32,316       15,600      15,600
      Available for sale                               198,404      198,404      227,525     227,525
   Loans held for sale                                  59,099       59,383       37,715      37,824
   Loans, net                                        1,815,976    1,838,983    1,576,494   1,603,241
   Margin accounts                                      14,851       14,851       14,388      14,388
   Federal Home Loan Bank stock                         22,842       22,842       21,924      21,924
   Accrued interest receivable                           9,445        9,445        8,443       8,443
LIABILITIES:
   Deposits:
      Checking, savings and money market accounts     (698,667)    (698,667)    (681,493)   (681,493)
      Certificates of deposit                         (824,285)    (834,086)    (742,205)   (758,894)
   Other borrowed funds                               (483,503)    (485,400)    (338,463)   (344,703)
   Advance payments by borrowers for taxes
      and insurance                                    (12,048)     (12,048)     (10,721)    (10,721)
   Accrued interest payable                             (1,089)      (1,089)        (970)       (970)
                                                    ----------   ----------   ----------   ---------


18.  STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE

     Supplemental disclosures of cash flow information are summarized below:



                                                                          Year Ended December 31,
                                                                        ---------------------------
                                                                          2004      2003      2002
                                                                        -------   -------   -------
                                                                               (In thousands)
                                                                                   
Supplemental disclosures of cash flow information:
   Cash paid during the year for:
      Interest on deposits and borrowings, net of amounts capitalized   $40,259   $40,408   $56,093
      Interest capitalized on borrowings                                     19        21        --
      Income taxes                                                       12,938    14,570    11,878
Supplemental schedule of noncash activities:
      Loans transferred to held for sale                                 39,479    11,341     8,418
      Transfers from loans to real estate owned                           2,356     2,224     2,025
      Securities held to maturity transferred to available for sale          --        --    54,927
                                                                        -------   -------   -------



                                                                       EX. 13-38



19.  PARENT COMPANY FINANCIAL STATEMENTS

CONDENSED STATEMENTS OF FINANCIAL CONDITION



                                                       December 31,
                                                   -------------------
                                                     2004       2003
                                                   --------   --------
                                                      (In thousands)
                                                        
ASSETS
   Cash and deposits with banks                    $    819   $  1,082
   Federal funds sold and other                          14     43,213
                                                   --------   --------
      Total cash and cash equivalents                   833     44,295
   Securities:
      Trading                                         1,990      4,071
      Available for sale                              3,570      4,832
   Note receivable inter-company                     18,523     20,071
   Accrued interest receivable                           --          1
   Investment in subsidiary-Home Savings            216,840    195,222
   Investment in subsidiary-Butler Wick              16,764     15,388
   Other assets                                       1,286        535
                                                   --------   --------
      TOTAL ASSETS                                 $259,806   $284,415
                                                   --------   --------
LIABILITIES AND SHAREHOLDERS' EQUITY
   Other borrowed funds                            $  3,500   $     --
   Accrued interest payable                               3         --
   Accrued expenses and other liabilities             3,951      4,577
                                                   --------   --------
      Total liabilities                               7,454      4,577
                                                   --------   --------
   TOTAL SHAREHOLDERS' EQUITY                       252,352    279,836
                                                   --------   --------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $259,806   $284,415
                                                   --------   --------


CONDENSED STATEMENTS OF INCOME



                                                          Year ended December 31,
                                                        ---------------------------
                                                          2004      2003      2002
                                                        -------   -------   -------
                                                                (In thousands)
                                                                   
INCOME
   Cash dividends from subsidiary                       $    --   $22,000   $30,000
   Interest income                                        1,680     1,871     2,191
   Non-interest income                                    1,086       873      (574)
                                                        -------   -------   -------
      Total income                                        2,766    24,744    31,617
EXPENSES
   Interest expense                                          14        --        --
   Non-interest expenses                                  1,339       984       988
                                                        -------   -------   -------
      Total expenses                                      1,353       984       988
                                                        -------   -------   -------
Income before income taxes                                1,413    23,760    30,629
Income taxes                                                558       692       238
                                                        -------   -------   -------
Income before equity in undistributed net earnings of
   subsidiaries                                             855    23,068    30,391
Equity in undistributed net earnings of subsidiaries     17,010      (128)   (9,574)
                                                        -------   -------   -------
      Net income                                        $17,865   $22,940   $20,817
                                                        -------   -------   -------



                                                                       EX. 13-39



CONDENSED STATEMENTS OF CASH FLOWS



                                                                 Year ended December 31,
                                                             ------------------------------
                                                               2004       2003       2002
                                                             --------   --------   --------
                                                                     (In thousands)
                                                                          
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income                                                $ 17,865   $ 22,940   $ 20,817
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Equity in undistributed earnings of the subsidiaries    (17,010)       128      9,574
      Amortization of premiums and accretion of discounts          --         --         15
      Security gains                                             (948)        --        (76)
      Decrease (increase) in trading securities                 2,081       (916)       614
      Decrease (increase) in interest receivable                    1         10        (10)
      (Increase) decrease in other assets                        (751)      (519)     4,333
      Increase in accrued interest payable                          3         --         --
      (Decrease) increase in other liabilities                 (1,228)    (1,764)     1,774
                                                             --------   --------   --------
         Net cash from operating activities                        13     19,879     37,041
                                                             --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from principal repayments and maturities of:
      Securities available for sale                                --         --      3,708
   Proceeds from sale of:
      Securities available for sale                             2,322         --        162
   Purchases of:
      Securities available for sale                              (105)      (527)    (4,357)
   ESOP loan repayment                                            735        534        335
                                                             --------   --------   --------
         Net cash from investing activities                     2,952          7       (152)
                                                             --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
   Dividends paid                                              (8,533)    (9,429)    (9,636)
   Net increase in borrowed funds                               3,500         --         --
   Purchase of treasury stock                                 (47,814)   (12,233)    (4,386)
   Exercise of stock options                                    6,420        941        365
                                                             --------   --------   --------
         Net cash from financing activities                   (46,427)   (20,721)   (13,657)
                                                             --------   --------   --------
(Decrease) increase in cash and cash equivalents              (43,462)      (835)    23,232
Cash and cash equivalents, beginning of year                   44,295     45,130     21,898
                                                             --------   --------   --------
Cash and cash equivalents, end of year                       $    833   $ 44,295   $ 45,130
                                                             --------   --------   --------


20.  SEGMENT INFORMATION

     United Community has two principal segments, banking and investment
services. Banking provides consumer and corporate banking services. Investment
services provide investment brokerage and a network of integrated financial
services. The accounting policies of the segments are the same as those
described in Note 1. Condensed statements of income and selected financial
information by operating segment for the years ended December 31, 2004, 2003 and
2002 are as follows:


                                                                       EX. 13-40





                                   Banking Services   Investment Services   Eliminations      Total
                                   ----------------   -------------------   ------------   ----------
                                                             (In thousands)
                                                                               
2004
RESULTS OF OPERATIONS
   Total interest income              $  111,822            $ 1,619              --        $  113,441
   Total interest expense                 39,971                407              --            40,378
   Provision for loan losses               9,370                 --              --             9,370
   Net interest income after
      provision for loan losses           62,481              1,212              --            63,693
   Non-interest income                    11,629             24,480              --            36,109
   Non-interest expense                   48,348             24,486              --            72,834
                                      ----------            -------             ---        ----------
   Income before income taxes             25,762              1,206              --            26,968
   Income taxes                            8,698                405              --             9,103
                                      ----------            -------             ---        ----------
   Net income                         $   17,064            $   801              --        $   17,865
                                      ----------            -------             ---        ----------

SELECTED FINANCIAL INFORMATION
   Total assets                       $2,229,705            $58,089             $(6)       $2,287,788
   Capital expenditures                    2,928                271              --             3,199
   Depreciation and amortization           2,579                364              --             2,943
                                      ----------            -------             ---        ----------

2003
RESULTS OF OPERATIONS
   Total interest income              $  110,510            $ 1,153              --        $  111,663
   Total interest expense                 40,031                221              --            40,252
   Provision for loan losses               3,179                 --              --             3,179
   Net interest income after
      provision for loan losses           67,300                932              --            68,232
   Non-interest income                    18,795             22,050              --            40,845
   Non-interest expense                   50,277             23,295              --            73,572
                                      ----------            -------             ---        ----------
   Income before income taxes             35,818               (313)             --            35,505
   Income taxes                           12,675               (110)             --            12,565
                                      ----------            -------             ---        ----------
   Net income                         $   23,143            $  (203)             --        $   22,940
                                      ----------            -------             ---        ----------

SELECTED FINANCIAL INFORMATION
   Total assets                       $2,035,927            $37,958             $(2)       $2,073,883
   Capital expenditures                    3,714                311              --             4,025
   Depreciation and amortization           3,049                495              --             3,544
                                      ----------            -------             ---        ----------

2002
RESULTS OF OPERATIONS
   Total interest income              $  124,887            $ 1,073              --        $  125,960
   Total interest expense                 54,018                218              --            54,236
   Provision for loan losses               3,578                 --              --             3,578
   Net interest income after
      provision for loan losses           67,291                855              --            68,146
   Non-interest income                    12,442             19,364              --            31,806
   Non-interest expense                   48,878             19,481              --            68,359
                                      ----------            -------             ---        ----------
   Income before income taxes             30,855                738              --            31,593
   Income taxes                           10,515                261              --            10,776
                                      ----------            -------             ---        ----------
   Net income                         $   20,340            $   477              --        $   20,817
                                      ----------            -------             ---        ----------

SELECTED FINANCIAL INFORMATION
   Total assets                       $1,963,390            $26,748             $(7)       $1,990,131
   Capital expenditures                    3,656                246              --             3,902
   Depreciation and amortization           2,403                545              --             2,948
                                      ----------            -------             ---        ----------



                                                                       EX. 13-41



21.  EARNINGS PER SHARE

     Earnings per share are computed by dividing net income by the weighted
average number of shares outstanding during the period. Diluted earnings per
share is computed using the weighted average number of common shares determined
for the basic computation plus the dilutive effect of potential common shares
that could be issued under outstanding stock options and the RRP. Stock options
for 754,403 shares were anti-dilutive for the year ended December 31, 2004. No
stock options were anti-dilutive for the years ended December 31, 2003 and 2002.



                                            2004      2003      2002
                                          -------   -------   -------
                                           (In thousands, except per
                                                  share data)
                                                     
BASIC EARNINGS PER SHARE:
Net income applicable to common stock     $17,865   $22,940   $20,817
Weighted average common shares
   outstanding                             29,185    31,353    31,859
                                          -------   -------   -------
Basic earnings per share                  $  0.61   $  0.73   $  0.65
                                          -------   -------   -------

DILUTED EARNINGS PER SHARE:
Net income applicable to common stock     $17,865   $22,940   $20,817
Weighted average common shares
   outstanding                             29,185    31,353    31,859
Dilutive effect of restricted stock            --        --       130
Dilutive effect of stock options              420       431       336
                                          -------   -------   -------
Weighted average common shares
   outstanding for dilutive computation    29,605    31,784    32,325
                                          -------   -------   -------
Diluted earnings per share                $  0.60   $  0.72   $  0.65
                                          -------   -------   -------


22.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     The following table presents summarized quarterly data for each of the
years indicated.



                                               (Unaudited)
                            ------------------------------------------------
                             First     Second    Third     Fourth
                            Quarter   Quarter   Quarter   Quarter     Total
                            -------   -------   -------   -------   --------
                                  (In thousands, except per share data)
                                                     
2004:
Total interest income       $27,075   $27,639   $28,986   $29,741   $113,441
Total interest expense        9,067     9,488    10,497    11,326     40,378
                            -------   -------   -------   -------   --------
Net interest income          18,008    18,151    18,489    18,415     73,063
Provision for loan losses       459     1,369     9,226    (1,684)     9,370
Non-interest income          10,331     8,666     8,678     8,434     36,109
Non-interest expense         19,514    17,770    17,718    17,832     72,834
Income taxes                  2,893     2,676        29     3,505      9,103
                            -------   -------   -------   -------   --------
Net income                  $ 5,473   $ 5,002   $   194   $ 7,196   $ 17,865
                            -------   -------   -------   -------   --------
Earnings per share:
   Basic                    $  0.18   $  0.17   $  0.01   $  0.25   $   0.61
   Diluted                     0.18      0.17      0.01      0.24       0.60
                            -------   -------   -------   -------   --------


     The change in the provision for loan losses between the second and third
quarter was primarily a result of the Company's determination that impairment
charges were necessary in the third quarter on certain consumer loans having
similar characteristics and loans to a commercial customer that relate to the
aforementioned consumer loans. The increase in the provision for loan losses had
a direct effect on pretax income, causing lower pretax income in the third
quarter and, subsequently, lower income tax expense. The change between the
second and third quarters was partially offset in the fourth quarter as
management continued to evaluate the level of collateral securing delinquent
one-to four-family residential mortgage loans. Additionally, specific reserves
assigned to certain commercial loans were deemed to be no longer necessary
because of improved credit quality and adequate collateral coverage. As a
result, the provision for loan losses decreased, pretax income increased and the
provision for income taxes increased. See Management's Discussion and Analysis
as well as Note 5, "Loans" for more details on the provision for loan losses and
Note 13, "Income Taxes" for more detail on the provision for income taxes.


                                                                       EX. 13-42





                             First     Second    Third     Fourth
                            Quarter   Quarter   Quarter   Quarter     Total
                            -------   -------   -------   -------   --------
                                  (In thousands, except per share data)
                                                     
2003:
Total interest income       $29,741   $28,304   $27,045   $26,573   $111,663
Total interest expense       11,232    10,177     9,515     9,328     40,252
                            -------   -------   -------   -------   --------
Net interest income          18,509    18,127    17,530    17,245     71,411
Provision for loan losses       696     1,702       571       210      3,179
Non-interest income           7,975    13,169    10,303     9,398     40,845
Non-interest expense         18,155    18,729    18,369    18,319     73,572
Income taxes                  2,653     3,837     3,110     2,965     12,565
                            -------   -------   -------   -------   --------
Net income                  $ 4,980   $ 7,028   $ 5,783   $ 5,149   $ 22,940
                            -------   -------   -------   -------   --------
Earnings per share:
   Basic                    $  0.16   $  0.22   $  0.18   $  0.17   $   0.73
   Diluted                     0.16      0.22      0.17      0.17       0.72
                            -------   -------   -------   -------   --------



                                                                       EX. 13-43



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENTS

To the Shareholders and Board of Directors
United Community Financial Corp.
Youngstown, Ohio

We have audited the accompanying consolidated statements of financial condition
of United Community Financial Corp. as of December 31, 2004 and 2003 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the years in the three year period ended December 31, 2004. These
financial statements are the responsibility of United Community Financial
Corp.'s management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Community
Financial Corp. as of December 31, 2004 and 2003 and the results of its
operations and its cash flows for each of the years in the three year period
ended December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.


                                        /s/ Crowe Chizek and Company LLC
                                        ----------------------------------------
                                        Crowe Chizek and Company LLC

Columbus, Ohio
February 17, 2005

                                                                       EX. 13-44

EX-21

                                                                               .
                                                                               .
                                                                               .

                                   EXHIBIT 21

                                  SUBSIDIARIES


Name                                                      State of Incorporation
- ----                                                      ----------------------
                                                       
The Home Savings and Loan Company of Youngstown, Ohio              Ohio

Butler Wick Corp.                                                  Ohio


                                                                        EX. 21-1

EX-23

                                   EXHIBIT 23




            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We consent to incorporation by reference in the registration statements (No.
333-38028, No. 333-86015, and 333-100081) on Form S-8 of United Community
Financial Corp. of our report dated February 17, 2005, appearing in this Annual
Report on Form 10-K of United Community Financial Corp. for the year ended
December 31, 2004.



                                                /s/Crowe Chizek and Company LLC
                                                -------------------------------
                                                   Crowe Chizek and Company LLC


Columbus, Ohio
March 15, 2005




                                                                        Ex. 23-1

EX-31.1

                                  EXHIBIT 31.1

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Douglas M. McKay, certify that:

1) I have reviewed this annual report on Form 10-K of United Community Financial
   Corp.

2) Based on my knowledge, this annual report does not contain any untrue
   statement of material fact or omit to state a material fact necessary to make
   the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period by this
   annual report;

3) Based on my knowledge, the financial statements and other financial
   information included in this annual report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in the annual report;

4) The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this annual report is being prepared;

      b) [Reserved]

      c) evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this annual report based on such evaluation;
         and

      d) disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5) The registrant's other certifying officers and I have disclosed, based on our
   most recent evaluation of internal controls over financial reporting, to the
   registrant's auditors and the audit committee of registrant's board of
   directors (or persons performing equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or
         operation of internal controls over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

/s/ Douglas M. McKay
- --------------------
Douglas M. McKay
Chief Executive Officer
March 15, 2005

                                                                      EX. 31.1-1

EX-31.2

                                  EXHIBIT 31.2

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Patrick A. Kelly, certify that:

1) I have reviewed this annual report on Form 10-K of United Community Financial
   Corp.

2) Based on my knowledge, this annual report does not contain any untrue
   statement of material fact or omit to state a material fact necessary to make
   the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period by this
   annual report;

3) Based on my knowledge, the financial statements and other financial
   information included in this annual report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in the annual report;

4) The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this annual report is being prepared;

      b) [Reserved]

      c) evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this annual report based on such evaluation;
         and

      d) disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5) The registrant's other certifying officers and I have disclosed, based on our
   most recent evaluation of internal controls over financial reporting, to the
   registrant's auditors and the audit committee of registrant's board of
   directors (or persons performing equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or
         operation of internal controls over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

/s/ Patrick A. Kelly
- --------------------
Patrick A. Kelly
Chief Financial Officer
March 15, 2005

                                                                      EX. 31.2-1

EX-32

                                   EXHIBIT 32

                        UNITED COMMUNITY FINANCIAL CORP.

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report of United Community Financial Corp.
(the "Company") on Form 10-K for the year ended December 31, 2004 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), we
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

      (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

/s/ Douglas M. McKay                         /s/ Patrick A. Kelly
- --------------------                         --------------------
Douglas M. McKay                             Patrick A. Kelly
Chief Executive Officer                      Chief Financial Officer
March 15, 2005                               March 15, 2005

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.

                                                                        EX. 32-1