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 17, 2008     

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 West Federal Street, Youngstown, Ohio 44503-1203

(Address of principal executive offices) (Zip Code)

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

Not Applicable

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

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

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))

1

Section 2 — Financial Information

Item 2.02. Results of Operation and Financial Condition

     (a) On April 17, 2008, United Community Financial Corp. issued a press release announcing its results of operations for the first quarter of 2008. A copy of the press release is attached as Exhibit 99.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits.

Exhibit
Number	Description
99	Press Release of United Community dated April 17, 2008.	Included herewith.

2

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 18, 2008

3

EX-99

EXHIBIT 99

UNITED COMMUNITY FINANCIAL CORP.
275 West Federal Street
Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE

Contact:
Patrick A. Kelly
Chief Financial Officer
(330) 742-0592

United Community Financial Corp. Announces Positive Earnings for the
First Quarter of 2008

YOUNGSTOWN, Ohio (April 17, 2008) — United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company (Home Savings) and Butler Wick Corp. (Butler Wick), today reported net income of $4.0 million, or $.14 per diluted share, for the three months ended March 31, 2008, compared to net income of $4.7 million, or $0.16 per diluted share, for the three months ended March 31, 2007, and a net loss of $7.1 million, or ($0.25) per diluted share, for the fourth quarter of 2007. Return on average equity for the three months ended March 31, 2008 was 5.72% compared to 6.49% for the same period in 2007. Return on average assets was 0.59% for the three months ended March 31, 2008, compared to 0.69% for the three months ended March 31, 2007.

Chairman and Chief Executive Officer Douglas M. McKay commented, “We are focused completely on managing our credit quality issues, and we consider this to be our highest strategic priority. We are pleased with the result of our efforts thus far and expect to continue this focus throughout the remainder of this year. In addition, we are examining a number of organizational changes designed to mitigate the impact that a slowing economy and a weak housing market may have on our earnings and balance sheet.”

Net Interest Income and Margin

Net interest income was $17.1 million for the first quarter of 2008, compared to $18.1 million for the fourth quarter of 2007, and $19.4 million for the first quarter a year ago. Average earning assets were $2.6 billion at the end of the first quarter of 2008, down $7.0 million compared to the proceeding quarter and up $34.4 million from March 31, 2007. Net interest margin for the first quarter of 2008 was 2.63% compared to 2.77% in the preceding quarter and 3.03% for the first quarter of 2007. The sale of $76.5 million of one-to-four-family residential mortgages at the end of February contributed to the lower margin for the first quarter of 2008 compared to the preceding quarter. The decrease in net interest margin from the first quarter of 2007 to the first

4

quarter of 2008 is due to the residential mortgage loan sale and an increase in non-performing loans.

Loans and Deposits

Average total loans for the first quarter of 2008 decreased $33.0 million, or 1.4%, compared to the fourth quarter of 2007. The average balance of mortgage loans, including construction loans, decreased $37.6 million, and the average balance of installment loans, including lines of credit decreased $3.0 million. These decreases partially offset an increase in commercial loans of $6.5 million. Average loans for the first quarter of 2008 increased $20.4 million, compared to the first quarter of 2007. The average balance of mortgage loans increased $20.5 million and the average balance of installment loans, including lines of credit, increased $2.1 million. These increases partially offset a decrease in the average balance of commercial loans of $2.4 million.

Average total deposits in the first quarter of 2008 were $1.8 billion, an increase of $49.1 million, or 2.8%, when compared to the fourth quarter of 2007, and an increase of $54.9 million, or 3.2%, when compared to the first quarter a year ago. Growth in certificates of deposit and other time deposits, along with growth in demand deposits and money market accounts, contributed to the overall increase. This growth was partially offset by a decrease in savings deposits. The average balance of certificates and other time deposits increased $26.9 million, or 2.4%, when compared with the fourth quarter of 2007, and $18.6 million when compared to the first quarter of 2007. Demand and money market accounts increased $22.3 million when compared to the fourth quarter of 2007 and $55.0 million when compared to the first quarter of 2007. A reduction in savings deposits partially offset the aforementioned increases when compared with the fourth quarter of 2007 and the first quarter of 2007.

Asset Quality

The provision for loan losses was $2.5 million in the first quarter of 2008, compared to $18.3 million in the fourth quarter of 2007 and $2.3 million in the first quarter of 2007. During 2007, the Company experienced increased delinquencies, charge-offs and foreclosures, particularly within the construction loan portfolio. Because of these trends, the Company re-evaluated its estimate of probable losses and determined that a larger provision for loan losses was required in the fourth quarter. The allowance for loan losses was $33.2 million, or 1.48% of portfolio loans as of March 31, 2008, compared to $32.0 million or 1.41% of portfolio loans, as of December 31, 2007. Although the rate of new delinquencies, charge-offs and foreclosures returned to more normalized levels in the first quarter of 2008, no assurance can be given that these levels will prevail throughout 2008.

Net loan charge-offs were $1.3 million in the first quarter of 2008, compared to $10.1 million in the preceding quarter and $718,000 in the first quarter a year ago.

Nonperforming assets were $114.4 million at March 31, 2008, compared to $111.6 million at December 31, 2007. Total nonperforming loans at March 31, 2008, were $104.4 million compared to $101.1 million at December 31, 2007. The rise in nonperforming loans was

5

composed of an increase of $4.9 million in residential real estate loans, which was offset partially by decreases in the construction portfolio of $1.3 million, a decrease in the commercial portfolio of $210,000 and a nominal decrease in the consumer loan portfolio.

Noninterest Income

Noninterest income was $14.1 million in the first quarter of 2008, compared to $11.2 million in the preceding quarter and $11.4 million in the first quarter of 2007. Greater gains were recognized on the sale of loans in the first quarter of 2008 compared to the prior quarter and the first quarter of 2007. Loans that were designated for sale in the fourth quarter of 2007 were sold in February 2008, with a gain of $1.5 million compared to gains on loan sales of $545,000 in the fourth quarter of 2007 and $663,000 in the first quarter of 2007. The Company also incurred losses on the disposition of repossessed assets secured in the settlement of loans in the first quarter of 2008.

Noninterest Expense

Noninterest expense was $22.5 million in the first quarter of 2008, compared to $21.9 million in the preceding quarter and $21.2 million in the first quarter a year ago. The change for the quarter is attributable primarily to increased salaries and employee benefits incurred because of incentive accruals, merit increases and the issuance of stock options to certain employees.

Financial Condition

Total assets decreased $33.3 million to $2.7 billion at March 31, 2008, compared to December 31, 2007. During the first quarter of 2008, net loans decreased $21.1 million and loans held for sale decreased $74.0 million. These decreases were offset partially by an increase in securities available for sale.

Total liabilities decreased by $37.5 million during the three months ended March 31, 2008. Funds from the loan sale mentioned above were used to purchase available for sale securities and to pay down advances from the Federal Home Loan Bank.

Shareholders’ equity increased $4.2 million during the three months ended March 31, 2008. The increase was attributable primarily to changes in the value of available for sale securities and net income for the period. Book value per share and tangible book value per share as of March 31, 2008, were $9.12 and $7.96, respectively. At December 31, 2007, book value per share and tangible book value per share were $8.97 and $7.81, respectively.

Home Savings and Butler Wick are wholly owned subsidiaries of the Company. Home Savings operates 39 full service banking offices and six loan production offices located throughout Ohio and western Pennsylvania. Butler Wick conducts business from its main office located in Youngstown, Ohio and 22 offices located in northeastern Ohio, western Pennsylvania, and western New York. Additional information on the Company, Home Savings and Butler Wick may be found on the Company’s web site: www.ucfconline.com.

6

###

When used in this press release the words or phrases “believes,” “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 the Company’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. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company 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.

7

UNITED COMMUNITY FINANCIAL CORP.

	As of			As of
	March 31, 2008			December 31, 2007
	(Dollars in thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
ASSETS
Cash and cash equivalents	$	36,135		$	37,363
Securities		313,527			249,817
Federal Home Loan Bank stock, at cost		25,764			25,432
Loans held for sale		13,268			87,236
Loans:
Real estate		1,427,001			1,433,995
Construction		378,954			382,344
Consumer		345,805			349,447
Commercial		97,359			103,208
Allowance for loan losses		(33,202	)		(32,006	)
Net loans		2,215,917			2,236,988
Real estate owned and other repossessed assets		9,989			10,510
Goodwill		33,713			33,713
Core deposit intangible		1,091			1,169
Cash surrender value of life insurance		24,287			24,053
Other assets		53,027			53,758
Total assets	$	2,726,718		$	2,760,039
LIABILITIES
Deposits:
Interest-bearing	$	1,766,280		$	1,768,757
Noninterest-bearing		109,690			106,449
Deposits		1,875,970			1,875,206
Federal Home Loan Bank advances		381,381			437,253
Repurchase agreements and other		168,857			149,533
Other liabilities		26,574			28,333
Total liabilities		2,452,782			2,490,325
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 issued		146,962			146,683
Retained earnings		215,079			213,727
Accumulated other comprehensive income (loss)		2,796			661
Unearned employee stock ownership plan shares		(9,009	)		(9,465	)
Treasury stock, at cost; 7,752,684 shares		(81,892	)		(81,892	)
Total shareholders’ equity		273,936			269,714
Total liabilities and shareholders’ equity	$	2,726,718		$	2,760,039
Book value per share	$	9.12		$	8.97
Tangible book value per share	$	7.96		$	7.81

UNITED COMMUNITY FINANCIAL CORP.

	Three Months Ended
	March 31,			December 31,			March 31,
	2008			2007			2007
	(Dollars in thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income	$	39,856		$	42,731		$	42,825
Interest expense		22,754			24,660			23,424
Net interest income		17,102			18,071			19,401
Provision for loan losses		2,466			18,318			2,325
Noninterest income:
Brokerage commissions		6,578			6,628			6,240
Service fees and other charges		3,455			3,009			3,573
Underwriting and investment banking		29			406			33
Net gains (losses):
Securities		904			(29	)		5
Loans sold		2,184			545			663
Other		(140	)		(515	)		(24	)
Other income:		1,107			1,113			927
Total noninterest income		14,117			11,157			11,417
Noninterest expense:
Salaries and employee benefits		14,729			13,595			14,282
Occupancy		1,336			1,258			1,148
Equipment and data processing		2,339			2,240			2,315
Amortization of core deposit intangible		78			84			100
Other noninterest expense		4,033			4,677			3,397
Total noninterest expense		22,515			21,854			21,242
Income (loss) before taxes		6,238			(10,944	)		7,251
Income tax expense (benefit)		2,195			(3,894	)		2,581
Net income (loss)	$	4,043		$	(7,050	)	$	4,670
Basic earnings (loss) per share	$	0.14		$	(0.25	)	$	0.16
Diluted earnings (loss) per share	$	0.14		$	(0.25	)	$	0.16
Dividends paid per share	$	0.095		$	0.095		$	0.095

UNITED COMMUNITY FINANCIAL CORP.

	Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		December 31,		March 31,
	2008		2007		2007
	(Dollars and share data in thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses of $33,202, $32,006 and $23,807, respectively)	$	2,231,395	$	2,308,157	$	2,254,767
Loans held for sale		58,752		16,327		23,182
Securities		274,895		245,250		254,048
Other interest-earning assets		33,475		35,809		32,099
Total interest-earning assets		2,598,517		2,605,543		2,564,096
Total assets		2,749,271		2,759,181		2,703,439
Certificates of deposit		1,169,251		1,142,379		1,150,602
Interest-bearing checking, demand and savings accounts		608,335		586,075		572,133
Other interest-bearing liabilities		548,741		598,339		552,062
Total interest-bearing liabilities		2,326,327		2,326,793		2,274,797
Noninterest-bearing deposits		107,044		105,548		101,836
Total noninterest-bearing liabilities		140,192		143,705		140,720
Total liabilities		2,466,519		2,470,498		2,415,517
Shareholders’ equity		282,752		288,683		287,922
Common shares outstanding for basic EPS calculation		28,545		28,339		29,126
Common shares outstanding for diluted EPS calculation		28,545		28,339		29,457
SUPPLEMENTAL LOAN DATA:
Loans originated	$	197,490	$	247,607	$	197,203
Loans purchased		44,437		59,777		51,026
Loans sold		137,974		49,002		61,505
Loan charge-offs		1,598		10,243		854
Recoveries on loans		327		124		136

	As of			As of			As of
	March 31,			December 31,			March 31,
	2008			2007			2007
	(Dollars in thousands)
SUPPLEMENTAL DATA:
Nonaccrual loans	$	99,836		$	97,499		$	53,537
Restructured loans		2,869			2,342			2,833
Real estate owned and other repossessed assets		9,989			10,510			6,370
Total nonperforming assets		114,423			111,565			62,902
Mortgage loans serviced for others		945,939			876,147			870,222
Securities trading, at fair value		5,930			5,064			4,451
Securities available for sale, at fair value		307,597			244,753			259,620
Federal Home Loan Bank stock, at cost		25,764			25,432			25,432
Number of full time equivalent employees		809			807			809
REGULATORY CAPITAL DATA:
Tier 1 leverage ratio		7.67	%		7.47	%		7.80	%
Tier 1 risk-based capital ratio		9.83	%		9.26	%		9.68	%
Total risk-based capital ratio		12.51	%		11.88	%		11.95	%