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): July 16, 2008

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

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

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))

Section 2 – Financial Information

Item 2.02. Results of Operation and Financial Condition

     (a) On July 16, 2008, United Community Financial Corp. issued a press release announcing its results of operations for the second 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 July 16, 2008.	Included herewith.

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/ James R. Reske
	James R. Reske, Chief Financial Officer

Date: July 17, 2008

EX-99

EXHIBIT 99

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

FOR IMMEDIATE RELEASE

Contact:
James R. Reske
Chief Financial Officer
(330) 742-0592

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

YOUNGSTOWN, Ohio (July 16, 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 $2.7 million, or $0.10 per diluted share, for the three months ended June 30, 2008, compared to net income of $3.9 million, or $0.13 per diluted share, for the three months ended June 30, 2007, and net income of $4.0 million, or $0.14 per diluted share, for the three months ended March 31, 2008. Return on average equity for the three months ended June 30, 2008 was 3.82%, compared to 5.49% for the same period in 2007, and 5.72% for the first quarter of 2008. Return on average assets was 0.40% for the three months ended June 30, 2008, compared to 0.58% for the three months ended June 30, 2007 and 0.59% for the three months ended March 31, 2008.

Net income for the six months ended June 30, 2008, was $6.8 million, or $0.24 per diluted share, compared to net income of $8.6 million, or $0.29 per diluted share, for the six months ended June 30, 2007. The Company’s annualized return on average assets and return on average equity were 0.49% and 4.77%, respectively, for the six months ended June 30, 2008. The annualized return on average assets and return on average equity for the comparable period in 2007 were 0.64% and 5.99%, respectively.

Chairman and Chief Executive Officer Douglas M. McKay commented, “Clearly, we have experienced a difficult operating environment throughout the first half of this year. Fortunately, loan delinquency rates have declined since the end of last year and we plan to actively manage asset quality in order to continue this trend. The resolution of these issues and the Company’s need to remain well capitalized in today’s volatile environment remains our highest strategic priority.”

4

Net Interest Income and Margin

Net interest income increased to $19.1 million for the second quarter of 2008, compared to $17.1 million for the first quarter of 2008, and $18.2 million for the second quarter a year ago. Average earning assets were level at $2.6 billion at the end of the second quarter of 2008, the preceding quarter and the second quarter of 2007. Net interest margin for the second quarter of 2008 improved to 2.96% compared to 2.63% in the preceding quarter and 2.83% for the second quarter of 2007. Lower rates paid for certificates of deposit, advances from the Federal Home Loan Bank, repurchase agreements and other borrowings offset a decline in the yield earned on loans and securities in the second quarter of 2008, both compared to the preceding quarter and the second quarter of 2007.

Net interest income for the six months ended June 30, 2008, was $36.2 million compared to $37.6 million for the six months ended June 30, 2007. This $1.4 million change was attributable primarily to the sale of $76.5 million of one-to four-family residential mortgages at the end of February 2008 and the increase in nonperforming loans from June 30, 2007 to June 30, 2008. A decrease in interest expense on deposits, advances from the Federal Home Loan Bank, repurchase agreements and other borrowings partially offset the decline in interest income. Net interest margin for the six months ended June 30, 2008 was 2.79% compared to 2.93% for the six months ended June 30, 2007.

Loans and Deposits

Average outstanding net loan balances for the second quarter of 2008 decreased $63.3 million, or 2.9%, compared to the first quarter of 2008. The average balance of mortgage loans, including construction loans, decreased $68.4 million. This decrease was offset slightly by increases in the average balances of installment loans, including increases in both lines of credit of $803,000, and commercial loans of $4.3 million.

Average outstanding net loan balances for the second quarter of 2008 decreased $37.0 million, compared to the second quarter of 2007. The average balance of mortgage loans decreased $60.7 million and the average balance of installment loans, including lines of credit, decreased $2.5 million. These decreases were offset partially by an increase in the average balance of commercial loans of $26.2 million.

Average outstanding net loan balances for the six months ended June 30, 2008, were $2.2 billion, a reduction of $8.5 million over the same period in 2007. This change was due largely to the loan sale in February 2008.

Average total deposits in the second quarter of 2008 were $1.7 billion, a decrease of $37.9 million, or 2.2%, when compared to the first quarter of 2008. This change was driven by the $89.9 million reduction in the average balance of certificates of deposit commensurate with the decrease in earning assets as a result of the mortgage loan sale in February 2008. The decrease in the average balance of certificates of deposit was partially offset by an increase in NOW, savings and other demand deposit accounts.

5

Average total deposits in the second quarter of 2008 increased by $37.8 million, or 2.2%, when compared to the second quarter of 2007, resulting from the overall increase in the average balance of NOW and money market accounts. The change in the average balances of NOW and money market accounts were partially offset by decreases in the average balances of certificates of deposit and, to a lesser extent, savings accounts.

Average total deposits for the first six months of 2008 were $1.8 billion, an increase of $46.4 million when compared to the first six months of 2007. This change was driven by the overall increase in the average balance of NOW and money market accounts. The change in the average balances of NOW and money market accounts were offset by decreases in the average balances of savings accounts and, to a lesser extent, certificates of deposit.

Asset Quality

The provision for loan losses was $3.2 million in the second quarter of 2008, compared to $2.5 million in the first quarter of 2008 and $2.7 million in the second quarter of 2007. The allowance for loan losses was $28.9 million, or 1.29% of portfolio loans as of June 30, 2008, compared to $32.0 million or 1.41% of portfolio loans, as of December 31, 2007.

Net loan charge-offs were $7.6 million in the second quarter of 2008, compared to $1.3 million in the preceding quarter and $1.9 million in the second quarter a year ago.

Nonperforming assets were $119.6 million at June 30, 2008, compared to $111.6 million at December 31, 2007. Total nonperforming loans at June 30, 2008, were $98.1 million compared to $101.1 million at December 31, 2007. The decline in nonperforming loans was a result of certain residential construction loans that were nonperforming at December 31, 2007, and were either paid in full prior to June 30, 2008, or the Company took possession of the property in satisfaction of the loans before June 30, 2008. The properties owned by the Company are being actively marketed for sale to reduce the level of nonperforming assets.

Noninterest Income

Noninterest income was $11.4 million in the second quarter of 2008, compared to $14.1 million in the preceding quarter and $12.2 million in the second quarter of 2007. Fewer gains were recognized on the sale of loans in the second quarter of 2008 compared to the prior quarter and the first quarter of 2007. Gains recognized on the sale of loans were $395,000, compared to $2.2 million in the preceding quarter and $524,000 in the second quarter of 2007. The Company also incurred higher losses of $1.4 million on the disposition of repossessed assets secured in the settlement of loans in the second quarter of 2008.

Noninterest income was $25.5 million for the six months ended June 30, 2008, compared to $23.6 million for the six months ended June 30, 2007. The $1.9 million increase was attributable primarily to higher gains recognized on the sale of loans in the first half of 2008 compared to 2007. Increases in brokerage commissions, service fees and gains on the sale of securities also contributed to the increase.

6

Noninterest Expense

Noninterest expense was $23.1 million in the second quarter of 2008, compared to $22.5 million in the preceding quarter and $21.5 million in the second quarter a year ago. The change for the quarter is primarily attributable to increased expenses required to maintain other real estate owned prior to its sale. Expenses to maintain other real estate owned are expected to remain higher than normal throughout the second half of 2008 due to the increase in the number of properties acquired by the Company in resolving nonperforming loans. Also contributing to the increase for the quarter were increases in salaries and benefits related to one-time severance costs, benefit expenses related to hospitalization for Home Savings employees, and commissions and signing bonus expenses at Butler Wick.

Noninterest expense was $45.6 million for the first six months of 2008, compared to $42.7 million for the first six months of 2007. Similar to the comparison above, the increase is largely attributable to an increase in expenses required to maintain other real estate owned prior to its sale. An increase in salaries and employee benefits related to one-time severance costs and hospitalization related expenses at Home Savings also contributed to the change. Butler Wick also paid higher commissions and recognized additional expenses related to signing bonuses paid to new brokers in 2008.

Financial Condition

Total assets decreased $12.9 million to $2.7 billion at June 30, 2008, compared to December 31, 2007. During the first six months of 2008, net loans decreased $27.1 million and loans held for sale decreased $76.0 million due to the mortgage loan sale in February. These decreases were offset partially by an increase in securities available for sale.

Total liabilities decreased by $12.3 million during the six months ended June 30, 2008. Home Savings planned for the run off of higher priced certificates of deposit after the loan sale in February in an effort to manage the effect of the mortgage loan sale on the Company’s margin. The certificates of deposit decrease was offset partially by an increase in advances from the Federal Home Loan Bank, repurchase agreements and other borrowings.

Shareholders’ equity decreased $534,000 during the six months ended June 30, 2008. The decrease was attributable primarily to changes in the value of available for sale securities from market fluctuations and dividends paid to shareholders, which were partially offset by net income for the period. Book value per share and tangible book value per share as of June 30, 2008, were $8.96 and $7.81, 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.

7

###
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.

8

UNITED COMMUNITY FINANCIAL CORP.

	As of			As of
	June 30, 2008			December 31, 2007
	(Dollars in thousands, except per share data)
SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
ASSETS
Cash and cash equivalents	$	43,920		$	37,363
Securities		318,104			249,817
Federal Home Loan Bank stock, at cost		26,112			25,432
Loans held for sale		11,237			87,236
Loans:
Real estate		1,461,565			1,433,995
Construction		333,106			382,344
Consumer		349,706			349,447
Commercial		94,447			103,208
Allowance for loan losses		(28,900	)		(32,006	)
Net loans		2,209,924			2,236,988
Real estate owned and other repossessed assets		21,517			10,510
Goodwill		33,593			33,593
Core deposit intangible		1,018			1,169
Cash surrender value of life insurance		24,524			24,053
Other assets		57,212			53,878
Total assets	$	2,747,161		$	2,760,039
LIABILITIES
Deposits:
Interest-bearing	$	1,739,503		$	1,768,757
Noninterest-bearing		114,889			106,449
Deposits		1,854,392			1,875,206
Federal Home Loan Bank advances		444,209			437,253
Repurchase agreements and other		154,544			149,533
Other liabilities		24,836			28,333
Total liabilities		2,477,981			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 and 30,051,773 shares outstanding		146,855			146,683
Retained earnings		216,435			213,727
Accumulated other comprehensive (loss) income		(3,664	)		661
Unearned employee stock ownership plan shares		(8,554	)		(9,465	)
Treasury stock, at cost; 7,752,684 shares		(81,892	)		(81,892	)
Total shareholders’ equity		269,180			269,714
Total liabilities and shareholders’ equity	$	2,747,161		$	2,760,039
Book value per share	$	8.96		$	8.97
Tangible book value per share	$	7.81		$	7.81

UNITED COMMUNITY FINANCIAL CORP.

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,
	2008			2008			2007			2008			2007
	(Dollars in thousands, except per share data)
SELECTED EARNINGS DATA (UNAUDITED):
Interest income	$	38,389		$	39,856		$	42,004		$	78,245		$	84,829
Interest expense		19,339			22,754			23,852			42,093			47,276
Net interest income		19,050			17,102			18,152			36,152			37,553
Provision for loan losses		3,248			2,466			2,744			5,714			5,069
Noninterest income:
Brokerage commissions		7,062			6,578			7,049			13,640			13,289
Service fees and other charges		4,005			3,455			3,770			7,460			7,343
Underwriting and investment banking		206			29			212			235			245
Net gains (losses):
Securities		35			904			43			939			48
Loans sold		395			2,184			524			2,579			1,187
Other		(1,533	)		(140	)		(379	)		(1,673	)		(403	)
Other income:		1,194			1,107			998			2,301			1,925
Total noninterest income		11,364			14,117			12,217			25,481			23,634
Noninterest expense:
Salaries and employee benefits		14,902			14,729			14,359			29,631			28,641
Occupancy		1,285			1,336			1,208			2,621			2,356
Equipment and data processing		2,135			2,339			2,306			4,474			4,621
Amortization of core deposit intangible		73			78			93			151			193
Other noninterest expense		4,703			4,033			3,534			8,736			6,931
Total noninterest expense		23,098			22,515			21,500			45,613			42,742
Income before taxes		4,068			6,238			6,125			10,306			13,376
Income tax expense		1,339			2,195			2,195			3,534			4,776
Net income	$	2,729		$	4,043		$	3,930		$	6,772		$	8,600
Basic earnings per share	$	0.10		$	0.14		$	0.14		$	0.24		$	0.30
Diluted earnings per share	$	0.10		$	0.14		$	0.13		$	0.24		$	0.29
Dividends paid per share	$	0.0475		$	0.0950		$	0.0950		$	0.1425		$	0.1900

UNITED COMMUNITY FINANCIAL CORP.

	Three Months Ended		Three Months Ended		Three Months Ended
	June 30,		March 31,		June 30,
	2008		2008		2007
	(Dollars and share data in thousands)
AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED):
Net loans (including allowance for loan losses of $28,900, $33,202 and $19,395, respectively)	$	2,211,825	$	2,231,395	$	2,248,849
Loans held for sale		9,867		58,752		17,163
Securities		323,579		274,895		262,962
Other interest-earning assets		32,168		33,475		33,115
Total interest-earning assets		2,577,439		2,598,517		2,562,089
Total assets		2,742,040		2,749,271		2,706,623
Certificates of deposit		1,079,399		1,169,251		1,111,291
Interest-bearing checking, demand and savings accounts		660,306		608,335		590,642
Other interest-bearing liabilities		570,575		548,741		575,730
Total interest-bearing liabilities		2,310,280		2,326,327		2,277,663
Noninterest-bearing deposits		112,938		107,044		102,500
Total noninterest-bearing liabilities		146,117		140,192		142,647
Total liabilities		2,456,397		2,466,519		2,420,310
Shareholders’ equity		285,643		282,752		286,313
Common shares outstanding for basic EPS calculation		28,618		28,545		28,769
Common shares outstanding for diluted EPS calculation		28,639		28,545		29,024
SUPPLEMENTAL LOAN DATA:
Loans originated	$	229,394	$	197,490	$	277,548
Loans purchased		47,744		44,437		61,663
Loans sold		44,360		137,974		58,764
Loan charge-offs		7,680		1,598		2,021
Recoveries on loans		130		327		110

	As of			As of			As of
	June 30,			March 31,			June 30,
	2008			2008			2007
SUPPLEMENTAL DATA:	(Dollars in thousands)
Nonaccrual loans	$	94,564		$	99,836		$	69,795
Restructured loans		3,132			2,869			2,515
Real estate owned and other repossessed assets		21,517			9,989			9,841
Total nonperforming assets		119,634			114,423			83,965
Mortgage loans serviced for others		938,522			945,939			871,281
Securities trading, at fair value		8,691			5,930			7,361
Securities available for sale, at fair value		309,413			307,597			249,636
Federal Home Loan Bank stock, at cost		26,112			25,764			25,432
Number of full time equivalent employees		788			809			790
REGULATORY CAPITAL DATA:
Tier 1 leverage ratio		7.77	%		7.67	%		7.95	%
Tier 1 risk-based capital ratio		9.86	%		9.83	%		9.96	%
Total risk-based capital ratio		11.77	%		12.51	%		12.29	%