8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 20, 2005

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

OHIO	0-024399	34-1856319
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer I.D. No.)

275 Federal Plaza West, Youngstown, Ohio 44503-1203

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (330) 742-0500

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Section 2 — Financial Information

Item 2.02. Results of Operation and Financial Condition

      (a) On April 20, 2005, United Community Financial Corp. issued a press release discussing its earnings for the first quarter of 2005. The press release is attached as Exhibit 99.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

      (c) Exhibits.

Exhibit
Number	Description
99	Press Release of United Community dated April 20, 2005.	Included herewith.

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SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITED COMMUNITY FINANCIAL CORP.
By:	/s/ Patrick A. Kelly
	Patrick A. Kelly
	Chief Financial Officer

Date: April 20, 2005

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EX-99

EXHIBIT 99

UNITED COMMUNITY FINANCIAL CORP.

275 Federal Plaza West

Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE

Patrick A. Kelly
Chief Financial Officer
(330) 742-0500, Ext. 2592

United Community Financial Corp. Announces
Earnings for First Quarter 2005

YOUNGSTOWN, Ohio (April 20, 2005) — United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Co. (Home Savings) and Butler Wick Corp. (Butler Wick), today reported net income of $4.9 million, or $0.17 per diluted share, for the quarter ended March 31, 2005, compared to $5.5 million, or $0.18 per diluted share, for the quarter ended March 31, 2004. Annualized return on average equity for the first quarter of 2005 was 7.62% versus 8.02% for the same period in 2004.

Chairman and Chief Executive Officer Douglas M. McKay said the company was pleased with the quarter. “Our focus on growth in our core products resulted in continued increases in net loans and deposits during the first quarter of 2005, and we believe there is ample opportunity for this momentum to continue through 2005,” McKay said. “Our priorities remain to grow our core banking products and our Butler Wick financial services business, maintain credit quality and provide value for our shareholders. Our recent increase in cash dividends paid represents a dividend payout ratio of 49% of our first quarter earnings.”

First Quarter Results

Net interest income for the first quarter was $18.8 million, up from $18.0 million in the first quarter of last year as a result of average interest earning assets increasing 13.1%. Growth in average loans continued into 2005 as the average balance of net loans increased $234.5 million or 14.5% over the first three months of 2004.

The net interest margin for the first quarter of 2005 was 3.46% compared to 3.76% for the same period a year ago. The 30 basis point compression in the Company’s margin was a result of funding costs increasing at a faster rate than the yield on average interest earning assets.

The provision for loan losses increased $174,000 for the three months ended March 31, 2005, compared to the same period in 2004. The increase was a result of management’s review of the

allowance for loan losses after consideration was given to levels and trends of delinquencies, reserve coverage ratio and other factors in relation to the portfolio.

Total non-interest income decreased $1.5 million to $8.9 million for the three months ended March 31, 2005, compared to $10.3 million for the same period in 2004. During the first quarter of 2005, Home Savings realized lower gains on the sale of securities compared to the first quarter of 2004. Home Savings also sold fewer loans, resulting in lower gains than were realized in the first quarter of 2004.

Financial Condition

United Community’s return on average assets and return on average equity were 0.85% and 7.62%, respectively, for the three months ended March 31, 2005. The returns on average assets and average equity were 1.07% and 8.02%, respectively, for the three months ended March 31, 2004.

Total assets increased by $57.4 million, or 2.5%, to $2.3 billion at March 31, 2005, compared to December 31, 2004. The net change in assets was a result of increases of $103.0 million in net loans, $5.1 million in trading securities, $1.3 million in real estate and other repossessed assets and $574,000 in other assets, offset by decreases of $38.7 million in loans held for sale and $14.1 million in available for sale securities. Total liabilities increased $56.8 million primarily as a result of a $34.1 million increase in borrowed funds and a $24.0 million increase in deposits.

Net loans increased $102.9 million, or 5.7%, from December 31, 2004 to March 31, 2005. Home Savings had increases of $49.3 million in real estate loans, $24.1 million in construction loans, $27.9 million in consumer loans and $1.4 million in commercial loans. The allowance for loan losses decreased $104,000 at March 31, 2005 to $15.8 million from $15.9 million at December 31, 2004. The allowance for loan losses is monitored closely and may be increased or decreased depending on a variety of factors such as levels and trends of delinquencies, chargeoffs and recoveries, and potential risk in the portfolios. The allowance for loan losses as a percentage of total loans was 0.82% at March 31, 2005, compared to 0.87% at December 31, 2004.

The increase in borrowed funds was due primarily to an increase in short-term borrowings of $34.2 million from December 31, 2004 to March 31, 2005. These funds were used to fund loan growth in excess of deposit growth.

Total shareholders’ equity increased $560,000 from December 31, 2004 to March 31, 2005, largely due to earnings for the quarter, partially offset by an increase in unrealized losses in the available for sale portfolio and dividends paid to shareholders. Tangible book value and book value as of March 31, 2005, were $6.95 and $8.12 per share, respectively. For the period ending December 31, 2004, tangible book value and book value were $6.92 and $8.09 per share, respectively.

Home Savings and Butler Wick are wholly owned subsidiaries of United Community Financial Corp. Home Savings operates 36 full service banking offices and 5 loan production offices located throughout Ohio and Western Pennsylvania. Butler Wick has 12 office locations providing full service retail brokerage, capital markets and trust services throughout Northern Ohio and Western Pennsylvania. Additional information on United Community, Home Savings and Butler Wick may be found on United Community’s web site: www.ucfconline.com.

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      When used in this press release 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 historical earnings and those 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.

UNITED COMMUNITY FINANCIAL CORP.

	As of			As of
	March 31, 2005			December 31, 2004
	(Dollars in thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
ASSETS
Cash and cash equivalents	$	40,310		$	40,281
Securities		221,702			230,720
Federal Home Loan Bank stock, at cost		23,096			22,842
Loans held for sale		20,438			59,099
Loans:
Real estate		1,196,560			1,147,261
Construction		372,558			348,423
Consumer		295,594			267,646
Commercial		69,925			68,523
Allowance for loan losses		(15,773	)		(15,877	)
Real estate owned and other repossessed assets		2,980			1,682
Goodwill		33,593			33,593
Core deposit intangible		2,701			2,887
Cash surrender value of life insurance		21,616			21,406
Other assets		59,876			59,302
Total assets	$	2,345,176		$	2,287,788
LIABILITIES
Deposits
Interest-bearing	$	1,462,421		$	1,437,987
Noninterest-bearing		84,559			84,965
Other borrowed funds
Short-term		309,826			275,583
Long-term		207,755			207,920
Other liabilities		27,703			28,981
Total liabilities		2,092,264			2,035,436
SHAREHOLDERS’ EQUITY
Preferred stock-no par value; 1,000,000 shares authorized and unissued at March 31, 2004		—			—
Common stock-no par value; 499,000,000 shares authorized; 37,804,457 and 37,804,457 issued, respectively		142,675			142,337
Retained earnings		196,064			193,690
Other comprehensive income		(963	)		1,063
Unearned compensation		(14,475	)		(14,930	)
Treasury stock, at cost; 6,654,951 and 6,602,477 shares, respectively		(70,389	)		(69,808	)
Total shareholders’ equity		252,912			252,352
Total liabilities and shareholders’ equity	$	2,345,176		$	2,287,788
Book value per share	$	8.12		$	8.09
Tangible book value per share	$	6.95		$	6.92

	Three Months Ended
	March 31,
	2005		2004
	(Dollars in thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income	$	30,763	$	27,075
Interest expense		12,011		9,067
Net interest income		18,752		18,008
Provision for loan losses		633		459
Noninterest income:
Brokerage commissions		4,624		4,652
Service fees and other charges		3,118		2,890
Underwriting and investment banking		121		372
Net gains (losses):
Loans sold		248		901
Securities		21		837
Other		5		(9	)
Other income:		731		688
Total noninterest income		8,868		10,331
Noninterest expense:
Salaries and employee benefits		12,612		12,665
Occupancy		1,048		914
Equipment and data processing		2,329		2,335
Amortization of core deposit intangible		186		257
Other noninterest expense		3,482		3,343
Total noninterest expense		19,657		19,514
Income before taxes		7,330		8,366
Income taxes		2,449		2,893
Net income	$	4,881	$	5,473
Basic earnings per share	$	0.17	$	0.18
Diluted earnings per share	$	0.17	$	0.18
Dividends paid per share	$	0.0825	$	0.0750

	Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		December 31,		September 30,
	2005		2004		2004
	(Dollars and share data in thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses of $15,773, $15,877 and $25,128, respectively)	$	1,853,715	$	1,788,141	$	1,794,576
Loans held for sale		47,709		65,910		17,852
Securities		223,623		226,122		229,524
Margin accounts		15,324		14,308		14,427
Other interest-earning assets		26,526		26,447		26,368
Total interest-earning assets		2,166,897		2,120,928		2,082,747
Total assets		2,305,007		2,257,697		2,216,353
Certificates of deposit		845,650		820,739		791,591
Interest-bearing checking, demand and savings accounts		599,008		619,847		610,603
Other interest-bearing liabilities		485,558		447,762		451,931
Total interest-bearing liabilities		1,930,216		1,888,348		1,854,125
Noninterest-bearing deposits		85,411		82,719		76,297
Total noninterest-bearing liabilities		118,594		118,727		112,791
Total liabilities		2,048,810		2,007,075		1,966,898
Shareholders’ equity		256,197		250,620		249,455
Common shares outstanding for basic EPS calculation		28,815		28,724		28,629
Common shares outstanding for diluted EPS calculation		29,140		29,114		29,031
SUPPLEMENTAL LOAN DATA:
Loans originated	$	289,680	$	270,835	$	300,806
Loans purchased		71,240		74,947		48,910
Loans sold		44,765		49,750		49,151
Loan chargeoffs		762		7,885		404
Recoveries on loans		25		317		36

	As of			As of			As of
	March 31,			December 31,			September 30,
	2005			2004			2004
	(Dollars in thousands)
SUPPLEMENTAL DATA:
Nonaccrual loans	$	27,233		$	19,225		$	14,432
Restructured loans		1,697			1,366			1,183
Real estate owned and other repossessed assets		2,980			1,682			699
Total nonperforming assets		32,134			23,864			16,314
Mortgage loans serviced for others		677,833			666,997			646,670
Securities trading, at fair value		37,419			32,316			28,827
Securities available for sale, at fair value		184,283			198,404			189,864
Federal Home Loan Bank stock, at cost		23,096			22,842			22,601
Number of full time equivalent employees		799			789			804
REGULATORY CAPITAL DATA:
Tier 1 leverage ratio		8.43	%		8.36	%		8.05	%
Tier 1 risk-based capital ratio		10.02	%		9.88	%		9.41	%
Total risk-based capital ratio		10.87	%		10.75	%		10.66	%