10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of the 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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ      No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o
(Do not check if a smaller reporting company) Small reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o      No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 30,897,826 common shares as of April 30, 2009.

TABLE OF CONTENTS

	PAGE
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of March 31, 2009 (Unaudited) and December 31, 2008		1
Consolidated Statements of Income for the Three Months Ended March 31, 2009 and 2008 (Unaudited)		2
Consolidated Statement of Shareholders’ Equity for the Three Months ended March 31, 2009 (Unaudited)		4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008 (Unaudited)		5
Notes to Consolidated Financial Statements		6 - 18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19-27
Item 3. Quantitative and Qualitative Disclosures about Market Risk		28
Item 4. Controls and Procedures		29
Part II. OTHER INFORMATION
Item 1. Legal Proceedings		30
Item 1A. Risk Factors		30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3. Defaults Upon Senior Securities (None)
Item 4. Submission of Matters to a Vote of Security Holders		30
Item 5. Other Information (None)
Item 6. Exhibits		30
Signatures		31
Exhibits		32-54
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	20,059		$	21,745
Federal funds sold and other		26,724			21,672
Total cash and cash equivalents		46,783			43,417
Securities:
Available for sale, at fair value		248,981			215,731
Loans held for sale		14,170			16,032
Loans, net of allowance for loan losses of $37,856 and $35,962, respectively		2,114,855			2,203,453
Federal Home Loan Bank stock, at cost		26,464			26,464
Premises and equipment, net		24,649			25,015
Accrued interest receivable		9,237			10,082
Real estate owned and other repossessed assets		30,430			29,258
Core deposit intangible		824			884
Cash surrender value of life insurance		25,337			25,090
Assets of discontinued operations—Butler Wick Corp.		—			5,562
Other assets		20,858			17,085
Total assets	$	2,562,588		$	2,618,073
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,722,746		$	1,779,676
Non-interest bearing		112,769			106,255
Total deposits		1,835,515			1,885,931
Borrowed funds:
Federal Home Loan Bank advances		334,828			337,603
Repurchase agreements and other borrowings		119,401			125,269
Total borrowings		454,229			462,872
Advance payments by borrowers for taxes and insurance		14,067			19,806
Accrued interest payable		3,039			3,077
Liabilities of discontinued operations—Butler Wick Corp.		—			2,388
Accrued expenses and other liabilities		16,441			9,076
Total liabilities		2,323,291			2,383,150
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 and 30,897,825 shares outstanding		146,178			146,439
Retained earnings		168,717			165,447
Accumulated other comprehensive income		4,545			3,635
Unearned employee stock ownership plan shares		(7,188	)		(7,643	)
Treasury stock, at cost, 6,906,632 shares		(72,955	)		(72,955	)
Total shareholders’ equity		239,297			234,923
Total liabilities and shareholders’ equity	$	2,562,588		$	2,618,073

See Notes to Consolidated Financial Statements.

1

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	For the Three Months Ended
	March 31,
	2009			2008
	(Dollars in thousands, except per share data)
Interest income
Loans	$	31,067		$	35,808
Loans held for sale		263			188
Securities:
Available for sale		2,770			3,241
Federal Home Loan Bank stock dividends		299			332
Other interest earning assets		29			58
Total interest income		34,428			39,627
Interest expense
Deposits		12,651			17,036
Federal Home Loan Bank advances		1,858			3,692
Repurchase agreements and other		1,190			1,957
Total interest expense		15,699			22,685
Net interest income		18,729			16,942
Provision for loan losses		8,444			2,466
Net interest income after provision for loan losses		10,285			14,476
Non-interest income
Non-deposit investment income		304			477
Service fees and other charges		1,512			1,765
Net gains (losses):
Securities available for sale		—			931
Other than temporary impairment charges on securities available for sale		(150	)		—
Loans sold		1,140			2,184
Real estate owned and other repossessed assets sold		(1,138	)		(140	)
Other income		1,075			1,053
Total non-interest income		2,743			6,270
Non-interest expense
Salaries and employee benefits		8,023			9,050
Occupancy		984			947
Equipment and data processing		1,730			1,721
Franchise tax		592			580
Advertising		229			265
Amortization of core deposit intangible		60			78
Deposit insurance premiums		1,783			51
Professional fees		716			586
Real estate owned and other repossessed asset expenses		951			388
Other expenses		1,331			1,298
Total non-interest expenses		16,399			14,964
Income (loss) before income taxes and discontinued operations		(3,371	)		5,782
Income taxes expense (benefit)		(1,692	)		2,018
Net income (loss) before discontinued operations		(1,679	)		3,764
Discontinued operations
Net income of Butler Wick Corp., net of tax		4,949			279
Net income	$	3,270		$	4,043

(Continued)

2

UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued)

Comprehensive income (loss)	$	4,180		$	6,178
Earnings (loss) per share
Basic—continuing operations	$	(0.06	)	$	0.13
Basic—discontinued operations		0.17			0.01
Basic		0.11			0.14
Diluted—continuing operations		(0.06	)		0.13
Diluted—discontinued operations		0.17			0.01
Diluted		0.11			0.14

See Notes to Consolidated Financial Statements.

3

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)

										Unearned
										Employee
								Accumulated		Stock
								Other		Ownership
	Shares		Common			Retained		Comprehensive		Plan			Treasury
	Outstanding		Stock			Earnings		Income (Loss)		Shares			Stock			Total
	(Dollars thousands, except per share data)
Balance December 31, 2008		30,898	$	146,439		$	165,447	$	3,635	$	(7,643	)	$	(72,955	)	$	234,923
Comprehensive income:
Net income		—		—			3,270		—		—			—			3,270
Change in net unrealized gain/(loss) on securities, net of taxes of $490		—		—			—		910		—			—			910
Comprehensive income		—		—			—		—		—			—			4,180
Shares allocated to ESOP participants		—		(261	)		—		—		455			—			194
Balance March 31, 2009		30,898	$	146,178		$	168,717	$	4,545	$	(7,188	)	$	(72,955	)	$	239,297

See Notes to Consolidated Financial Statements.

4

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended March 31,
	2009			2008
	(Dollars in thousands)
Cash Flows from Operating Activities
Net income	$	3,270		$	4,043
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses		8,444			2,466
Net gains on loans		(1,140	)		(2,184	)
Net losses on real estate owned and other repossessed assets		1,138			140
Net gains on other assets		(21	)		(905	)
Other than temporary impairment of securities available for sale		150			—
Amortization of premiums and accretion of discounts		1,061			583
Depreciation and amortization		586			653
Federal Home Loan Bank stock dividends		—			(332	)
Decrease in interest receivable		845			1,392
(Decrease) increase in interest payable		(38	)		165
(Increase) decrease in prepaid and other assets		(4,150	)		9,890
Increase (decrease) in other liabilities		2,436			(9,524	)
Decrease in trading securities		—			(27	)
Stock based compensation		—			306
Net principal disbursed on loans originated for sale		(134,445	)		(64,005	)
Proceeds from sale of loans originated for sale		137,447			140,158
ESOP Compensation		194			428
Operating cash flows from discontinued operations		(4,949	)		(279	)
Net cash from operating activities		10,828			82,968
Cash Flows from Investing Activities
Proceeds from principal repayments and maturities of:
Securities available for sale		10,011			18,268
Proceeds from sale of:
Securities available for sale		—			38,299
Real estate owned and other repossessed assets		3,085			3,654
Purchases of:
Securities available for sale		(42,050	)		(115,672	)
Net change in loans		76,035			39,381
Loans purchased		(1,476	)		(24,066	)
Purchases of premises and equipment		(190	)		(220	)
Investing cash flows from discontinued operations		11,921			(16	)
Net cash from investing activities		57,336			(40,372	)
Cash Flows from Financing Activities
Net increase in checking, savings and money market accounts		19,872			47,845
Net decrease in certificates of deposit		(70,288	)		(47,082	)
Net decrease in advance payments by borrowers for taxes and insurance		(5,739	)		(4,962	)
Proceeds from Federal Home Loan Bank advances		172,000			217,100
Repayment of Federal Home Loan Bank advances		(174,775	)		(272,971	)
Net change in repurchase agreements and other borrowed funds		(5,868	)		19,324
Cash dividends paid		—			(2,709	)
Net cash from financing activities		(64,798	)		(43,455	)
Change in cash and cash equivalents		3,366			(859	)
Cash and cash equivalents, beginning of period		43,417			33,502
Cash and cash equivalents, end of period	$	46,783		$	32,643

See Notes to Consolidated Financial Statements.

5

UNITED COMMUNITY FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     1. BASIS OF PRESENTATION

United Community Financial Corp. (United Community) was incorporated under Ohio law in February 1998 by The Home Savings and Loan Company of Youngstown, Ohio (Home Savings) in connection with the conversion of Home Savings from an Ohio mutual savings and loan association to an Ohio capital stock savings association (Conversion). Upon consummation of the Conversion on July 8, 1998, United Community became the unitary thrift holding company for Home Savings. Home Savings, a state-chartered savings bank, conducts business from its main office located in Youngstown, Ohio, 39 full-service branches and six loan production offices located throughout Ohio and western Pennsylvania.

The accompanying consolidated financial statements of United Community have been prepared in accordance with instructions relating to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The results of operations for the three months ended March 31, 2009, are not necessarily indicative of the results to be expected for the year ending December 31, 2009. The consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2008, contained in United Community’s Form 10-K for the year ended December 31, 2008.

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

     2. REGULATORY ENFORCEMENT ACTION

On August 8, 2008, the board of directors of United Community approved a Stipulation and Consent to Issuance of Order to Cease and Desist (OTS Order) with the OTS. Simultaneously, the board of directors of Home Savings approved a Stipulation and Consent to the Issuance of an Order to Cease and Desist (Bank Order) with the FDIC and the Ohio Division. Although United Community and Home Savings have agreed to the issuance of the OTS Order and the Bank Order, respectively, neither has admitted or denied any allegations of unsafe or unsound banking practices, or any legal or regulatory violations. No monetary penalties were assessed by the OTS, the FDIC, or the Ohio Division.

The OTS Order requires UCFC to obtain OTS approval prior to: (i) incurring or increasing its debt position; (ii) repurchasing any UCFC stock; or (iii) paying any dividends. The OTS Order also requires UCFC to develop a debt reduction plan and submit the plan to the OTS for approval.

The Bank Order requires Home Savings, within specified timeframes, to take or refrain from certain actions, including: (i) retaining a bank consultant to assess Home Savings management needs and submitting a management plan that identifies officer positions needed, identifies and establishes board and internal operating committees, evaluates Home Savings’ senior officers, and provides for the hiring of any additional personnel; (ii) seeking regulatory approval prior to adding any individuals to the board of directors or employing any individual as a senior executive officer of Home Savings; (iii) not extending additional credit to classified borrowers; (iv) establishing a compliant Allowance for Loan and Lease Loss methodology; (v) enhancing its risk management policies and procedures; (vi) adopting and implementing plans to reduce its classified assets and delinquent loans, and to reduce loan concentrations in nonowner-occupied commercial real estate and construction, land development, and land loans; (vii) establishing board of directors committees to evaluate and approve certain loans and oversee Home Savings’ compliance with the Bank Order; (viii) revising its loan policy and enhancing its underwriting and credit administration functions; (ix) developing a strategic plan and budget and profit plan; (x) correcting all violations of laws, rules, and regulations and implementing procedures to ensure future compliance; (xi) increasing its Tier 1 capital to 8% and its total risk based capital to 12% by December 31, 2008; and (xii) seeking regulatory approval prior to declaring or paying any cash dividend. At March 31, 2009, Home Savings’ Tier 1 capital was 8.33% and its total risk based capital was 12.48%. Because of the consent to the Bank Order, Home Savings is deemed ‘adequately capitalized’ for regulatory capital purposes.

United Community and Home Savings are moving toward compliance with the OTS Order and Bank Order. As part of its plan to improve capital, the Company may sell securities or other assets and restrict lending activities and invest the capital in Home Savings.

6

     3. DISCONTINUED OPERATIONS

On August 12, 1999, United Community acquired Butler Wick Corp. (Butler Wick), the parent company for two wholly owned subsidiaries: Butler Wick & Co., Inc. and Butler Wick Trust Company. On December 31, 2008, the Company completed the sale of Butler Wick & Co., Inc., to Stifel Financial Corp. for $12.0 million. On March 31, 2009, the Company completed the sale of Butler Wick Trust to Farmers National Banc Corp. for $12.1 million. As a result, Butler Wick has been reported as a discontinued operation and consolidated financial statement information for all periods presented has been reclassified to reflect this presentation. Butler Wick’s results of operations summarized are as follows:

	For the Three Months
	Ended March 31,
	2009		2008
	(Dollars in thousands)
Income
Interest income	$	32	$	229
Brokerage commissions		—		6,101
Service fees and other charges		1,287		1,690
Underwriting and investment banking		—		29
Gain on the sale of Butler Wick Trust		7,904		—
Other income		—		27
Total income		9,223		8,076
Expenses
Interest expense on borrowings		—		69
Salaries and employee benefits		1,198		5,679
Occupancy expenses		68		388
Equipment and data processing		84		619
Other expenses		258		865
Total expenses		1,608		7,620
Income before taxes		7,615		456
Income tax		2,666		177
Net income	$	4,949	$	279

     4. RECENT ACCOUNTING DEVELOPMENTS

In December 2007, the FASB issued SFAS No. 141(R) (revised version of SFAS No. 141), Business Combinations. SFAS No. 141(R) requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, to be measured at their fair values as of that date. SFAS No. 141(R) replaces SFAS No. 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS No. 141(R) applies to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 31, 2008. The adoption of this standard had no impact on United Community’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51. SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. The adoption of this standard had no impact on United Community’s consolidated financial statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of this standard had no impact on United Community’s consolidated financial statements.

7

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The Hierarchy of Generally Accepted Accounting Principles. This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. This statement will be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411. The adoption of SFAS No. 162 is not expected to impact United Community’s consolidated financial statements.

On February 20, 2008, the FASB issued Staff Position FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions, to resolve questions about the accounting for repurchase financings. This FSP is effective for repurchase financings in which the initial transfer is entered into in fiscal years beginning after November 15, 2008. Management is currently evaluating the impact, if any, of FSP 140-3 on United Community’s consolidated financial statements.

On April 25, 2008, the FASB issued Staff Position FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the list of factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. FSP FAS 140-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP FAS 140-3 did not have a material impact to United Community’s consolidated financial statements.

On May 9, 2008, the FASB issued Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP APB 14-1 did not materially affect United Community’s consolidated financial statements.

On June 16, 2008, the FASB issued Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. The FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings Per Share. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP EITF 03-6-1 did not materially affect United Community’s consolidated financial statements.

In October 2008, the FASB issued Staff Position 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is not Active. The provisions of FSP 157-3 are effective on issuance, or October 10, 2008. FSP 157-3 clarifies the application of SFAS No. 157, in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. Application issues addressed by the FSP include (a) how management’s internal assumptions should be considered when measuring fair value when relevant observable data do not exist, (b) how observable market information in a market that is not active should be considered when measuring fair value and (c) how the use of market quotes should be considered when assessing the relevance of observable and unobservable data available to measure fair value. The adoption of FSP 157-3 did not materially affect United Community’s consolidated financial statements.

Recently issued and not yet effective Accounting Standards:

In April 2009, the FASB issued Staff Position No. 115-2 and No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which amends existing guidance for determining whether impairment is other-than-temporary for debt securities. The FSP requires an entity to assess whether it intends to sell, or it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized in earnings. For securities that do not meet the aforementioned criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income. Additionally, the FSP expands and increases the frequency of existing disclosures about other-than-temporary impairments for debt and equity securities. This FSP is effective for interim periods ending after March 15, 2009. The Company plans to adopt this FSP in the second quarter, however does not expect the adoption to have a material effect on the results of operations or financial position.

In April 2009, the FASB issued Staff Position No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset and Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This FSP emphasizes that even if there has been a significant decrease in the volume and level of activity, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants. The FSP provides a number of factors to consider when evaluating whether there has been a significant decrease in the volume and level of activity for an asset or liability in relation to normal market activity. In addition, when transactions or quoted prices are not considered orderly, adjustments to those prices based on the weight of available information may be needed to determine the appropriate fair value. The FSP also requires increased disclosures. This FSP is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is

8

permitted for periods ending after March 15, 2009. The Company plans to adopt this FSP in the second quarter, however, does not expect the adoption to have a material effect on the results of operations or financial position.

In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies that were previously only required in annual financial statements. This FSP is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company plans to adopt this FSP in the second quarter.

     5. STOCK COMPENSATION

On July 12, 1999, shareholders approved the United Community Financial Corp. 1999 Long-Term Incentive Plan (1999 Plan). The purpose of the 1999 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, by facilitating their purchase of an ownership interest in United Community.

The 1999 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 share at the grant date. The maximum number of common shares that may be issued under the plan is 3,569,766. There are currently 451,793 shares remaining in the plan that could be granted. All of the options awarded became exercisable on the date of grant. The option period expires 10 years from the date of grant.

On April 26, 2007, shareholders approved the United Community Financial Corp. 2007 Long-Term Incentive Plan (2007 Plan). The purpose of the 2007 Plan is the same as that of the 1999 Plan. The 2007 Plan provides for the issuance of up to 2,000,000 shares that are to be used for awards of restricted stock shares, stock options, performance awards, stock appreciation rights (SARs), or other forms of stock-based incentive awards. There were no stock-based incentive awards granted in the first quarter of 2009 and there were 243,721 stock options granted in 2008 under the 2007 Plan. 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 plans is as follows:

	For the three months ended March 31, 2009
						Aggregate
				Weighted		intrinsic
				average		value (in
	Shares			exercise price		thousands)
Outstanding at beginning of year		2,092,128		$	9.08
Granted		—			—
Exercised		—			—
Forfeited		(178,113	)		9.10
Outstanding at end of period		1,914,015		$	9.08	$	—
Options exercisable at end of period		1,914,015		$	9.08	$	—

Information related to the stock option plan during the year follows (dollars in thousands, except per share amount):

	March 31,
	2009
Intrinsic value of options exercised	$	—
Cash received from option exercises		—
Tax benefit realized from option exercises		—
Weighted average fair value of options granted, per share		—

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions noted in the table below. Expected volatilities are based on historical volatilities of United Community’s common shares. United Community uses historical data to estimate option exercises and post-vesting termination behavior. The expected term

9

of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the US Treasury yield curve in effect at the time of the grant.

Outstanding stock options have a weighted average remaining life of 4.47 years and may be exercised in the range of $5.89 to $12.38.

         6. SECURITIES

United Community categorizes securities as available for sale and trading. Components of the available for sale portfolio are as follows:

	March 31, 2009							December 31, 2008
	(Dollars in thousands)
			Gross		Gross					Gross		Gross
	Fair		Unrealized		Unrealized			Fair		Unrealized		Unrealized
	Value		Gains		Losses			Value		Gains		Losses
U.S. Treasury and government sponsored entities’ securities	$	37,295	$	897	$	(15	)	$	27,170	$	865	$	—
Equity securities		719		73		(455	)		910		70		(411	)
Mortgage-related securities		210,967		6,091		(119	)		187,651		4,527		(107	)
Total	$	248,981	$	7,061	$	(589	)	$	215,731	$	5,462	$	(518	)

Home Savings holds in its available-for-sale securities portfolio a Fannie Mae auction rate pass through trust security with an original cost basis of $5.0 million. This security represents an interest in a trust that is collateralized with Fannie Mae non-cumulative preferred stock. The market value of the security held by the Company declined following the September 7, 2008 announcement of the appointment of a conservator for Fannie Mae. Because the effects of the conservatorship may trigger the redemption provisions of the trust, UCFC management determined it was necessary for the Company to recognize a write-down of $4.9 million in 2008 and an additional write-down of $26,000 in the first quarter of 2009. Also, a write-down of the Company’s equity investment in the common shares of three financial institutions of $1.2 million was recognized in 2008. The Company determined that in the first quarter of 2009, further deterioration of the investment in one of those financial institutions caused the need to recognize an additional loss of $124,000. The cause of the deterioration was a result of recent regulatory enforcement actions imposed on that institution by its regulatory authorities.

Securities pledged for public funds deposits were approximately $2.1 million at March 31, 2009, and $2.1 million at December 31, 2008. Securities sold under an agreement to repurchase are secured primarily by mortgage-backed securities with a fair value of approximately $136.3 million at March 31, 2009, and $131.5 million at December 31, 2008.

United Community had no securities classified as trading as of March 31, 2009 and December 31, 2008.

10

        7. LOANS

Portfolio loans consist of the following:

	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Real Estate:
One- to four-family residential	$	888,948		$	909,567
Multifamily residential		168,432			187,711
Nonresidential		381,263			375,463
Land		22,968			23,517
Construction:
One- to four-family residential		233,708			255,355
Multifamily and non-residential		33,992			35,797
Total real estate		1,729,311			1,787,410
Consumer		331,853			348,834
Commercial		90,089			101,489
Total loans		2,151,253			2,237,733
Less:
Allowance for loan losses		37,856			35,962
Deferred loan fees, net		(1,458	)		(1,682	)
Total		36,398			34,280
Loans, net	$	2,114,855		$	2,203,453

Changes in the allowance for loan loss are as follows:

	As of or for the
	Three Months			As of or for the
	Ended			Year Ended
	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Balance, beginning of year	$	35,962		$	32,006
Provision for loan losses		8,444			25,329
Amounts charged off		(6,691	)		(22,088	)
Recoveries		141			715
Balance, end of period	$	37,856		$	35,962

Non-accrual loans were $101.6 million and $98.3 million at March 31, 2009, and December 31, 2008, respectively. Restructured loans were $2.7 million at March 31, 2009 and $1.8 million at December 31, 2008. Loans greater than 90 days past due and still accruing interest were $607,000 and $6.6 million at March 31, 2009 and December 31, 2008, respectively.

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Impaired loans consist of the following:

	As of or for the		As of or for
	Three		the Year
	Months Ended		Ended
	March 31,		December 31,
	2009		2008
	(Dollars in thousands)
Impaired loans on which no specific valuation allowance was provided	$	48,407	$	43,256
Impaired loans on which a specific valuation allowance was provided		46,433		43,992
Total impaired loans at period-end	$	94,840	$	87,248
Specific valuation allowances on impaired loans at period-end	$	10,999	$	10,968
Average impaired loans during the period		90,326		85,812
Interest income recognized on impaired loans during the period		135		513
Interest income received on impaired loans during the period		135		513

     8. MORTGAGE BANKING ACTIVITIES

Mortgage loans serviced for others, which are not reported in United Community’s assets, totaled $942.4 million at March 31, 2009, and $921.0 million at December 31, 2008.

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

	As of or for the
	Three Months			As of or for the
	Ended			Year Ended
	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Balance, beginning of year	$	5,562		$	6,184
Originations		831			1,337
Amortized to expense		(710	)		(1,959	)
Balance, end of period		5,683			5,562
Less valuation allowance		(2,165	)		(2,233	)
Net balance	$	3,518		$	3,329

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

	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Balance, beginning of year	$	(2,233	)	$	(562	)
Impairment charges		—			(2,233	)
Recoveries		68			562
Balance, end of period	$	(2,165	)	$	(2,233	)

Fair value of mortgage servicing rights as of March 31, 2009 was approximately $4.4 million and at December 31, 2008 was $3.9 million.

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Key economic assumptions in measuring the value of mortgage servicing rights at March 31, 2009 and December 31, 2008 were as follows:

	March 31,			December 31,
	2009			2008
Weighted average prepayment rate	621		PSA	644		PSA
Weighted average life (in years)		3.40			3.34
Weighted average discount rate		8	%		8	%

     9. OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS

Real estate owned and other repossessed assets at March 31, 2009 and December 31, 2008 were as follows:

	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Real estate owned and other repossessed assets	$	33,319		$	32,012
Valuation allowance		(2,889	)		(2,754	)
End of year	$	30,430		$	29,258

Activity in the valuation allowance was as follows:

	March 31,			December 31,
	2009			2008
	(Dollars in thousands)
Beginning of year	$	2,754		$	—
Additions charged to expense		713			3,753
Direct write-downs		(578	)		(999	)
End of year	$	2,889		$	2,754

Expenses related to foreclosed and repossessed assets include:

	For the three months ended
	March 31,
	2009		2008
	(Dollars in thousands)
Net loss on sales	$	425	$	95
Provision for unrealized losses		713		45
Operating expenses, net of rental income		951		388
Total expenses	$	2,089	$	528

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     10. OTHER POSTRETIREMENT BENEFIT PLANS

Home Savings sponsors a defined benefit health care plan. The plan was curtailed in 2000, but continues to provide postretirement medical benefits for employees who had worked 20 years and attained a minimum age of 60 by September 1, 2000, while in service with Home Savings. 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.

Components of net periodic benefit cost are as follows:

	Three Months Ended March 31,
	2009			2008
	(Dollars in thousands)
Service cost	$	—		$	—
Interest cost		47			48
Expected return on plan assets		—			—
Net amortization of prior service cost		—			—
Net amortization of actuarial gain		(4	)		(3	)
Net periodic benefit cost	$	43		$	45
Assumptions used in the valuations were as follows:
Weighted average discount rate		6.00	%		6.00	%

     11. FAIR VALUE MEASUREMENT

Statement 157 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

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Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at March 31, 2009 Using:
			Quoted Prices in
			Active Markets				Significant
			for Identical		Significant Other		Unobservable
	March 31,		Assets		Observable		Inputs
	2009		(Level 1)		Inputs (Level 2)		(Level 3)
Assets:
Available for sale securities	$	248,981	$	644	$	248,337	$	—

			Fair Value Measurements at December 31, 2008 Using:
			Quoted Prices in
			Active Markets				Significant
			for Identical		Significant Other		Unobservable
	December 31,		Assets		Observable		Inputs
	2008		(Level 1)		Inputs (Level 2)		(Level 3)
Assets:
Available for sale securities	$	215,731	$	809	$	214,922	$	—

Assets and liabilities measured at fair value on a nonrecurring basis are summarized below:

			Fair Value Measurements at March 31, 2009 Using:
			Quoted Prices in
			Active Markets				Significant
			for Identical		Significant Other		Unobservable
	March 31,		Assets		Observable		Inputs
	2009		(Level 1)		Inputs (Level 2)		(Level 3)
Assets:
Impaired loans	$	35,434		—		—	$	35,434
Mortgage servicing assets		3,518		—		3,518		—
Foreclosed assets		11,353		—		—		11,353

			Fair Value Measurements at December 31, 2008 Using:
			Quoted Prices in
			Active Markets				Significant
			for Identical		Significant Other		Unobservable
	December 31,		Assets		Observable		Inputs
	2008		(Level 1)		Inputs (Level 2)		(Level 3)
Assets:
Impaired loans	$	33,024		—		—	$	33,024
Mortgage servicing rights		2,421		—		2,421		—

Impaired loans, carried at fair value, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $46.4 million at March 31, 2009, with a valuation allowance of $11.0 million, resulting in additional provision for loan losses of $31,000 during the period.

Mortgage servicing rights had a carrying amount of $4.6 million with a valuation allowance of $2.2 million, and are valued by an independent third party that is active in purchasing and selling these instruments. The value reflects the characteristics of the underlying loans discounted at a market multiple.

Foreclosed assets, carried at fair value, which is measured for impairment using the fair value of the property less estimated selling costs, had a carrying amount of $14.8 million, with a valuation allowance of $2.9 million.

15

     12. STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE

Supplemental disclosures of cash flow information are summarized below.

	March 31, 2009		March 31, 2008
	(Dollars in thousands)
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest on deposits and borrowings	$	15,738	$	22,589
Interest capitalized on borrowings		—		—
Income taxes		—		—
Supplemental schedule of noncash activities:
Transfers from loans to real estate owned and other repossessed assets		5,395		3,274

     13. SEGMENT INFORMATION

United Community’s chief decision-makers monitor the revenue streams of the various Company products and services. The identifiable segments are not material, operations are managed, and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s financial service operations are considered by management to be aggregated in one reportable operating segment, which is banking services.

Discontinued operations are essentially the results of operations from Butler Wick Corp which were previously reported as a separate segment, investment services. Refer to Note 3 for a discussion on discontinued operations and its impact on segment reporting.

     14. 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. Stock options for 1,687,388 shares were anti-dilutive for the three months ended March 31, 2009. Stock options for 2,344,914 shares were anti-dilutive for the three months ended March 31, 2008. Earnings per share for 2008 have been adjusted to reflect a stock dividend declared in November 2008.

	Three Months Ended
	March 31,
	2009			2008
Numerator:
Income (loss) from continuing operations	$	(1,679	)	$	3,764
Income from discontinued operations		4,949			279
Net income	$	3,270		$	4,043
Denominator:
Weighted average common shares outstanding—basic		29,632			29,349
Dilutive effect of stock options		—			—
Weighted average common shares outstanding—dilutive		29,632			29,349
Basic earnings (loss) per share:
Basic earnings (loss) per common share—continuing operations	$	(0.06	)	$	0.13
Basic earnings per common share—discontinued operations		0.17			0.01
Basic earnings (loss) per common share		0.11			0.14
Dilutive earnings (loss) per share:
Dilutive earnings (loss) per common share—continuing operations		(0.06	)		0.13
Dilutive earnings per common share—discontinued operations		0.17			0.01
Dilutive earnings (loss) per common share		0.11			0.14

16

     15. BROKERED CERTIFICATES OF DEPOSIT

Brokered deposits represent funds which Home Savings obtained, directly or indirectly, through a deposit broker. A deposit broker places deposits from third parties with insured depository institutions or places deposits with an institution for the purpose of selling interest in those deposits to third parties. Under the terms of the Bank Order, Home Savings cannot obtain additional brokered certificates of deposit without prior consent of the FDIC and Ohio Division. Home Savings had brokered deposits of $92.1 million with a weighted average rate of 4.07% at March 31, 2009. Home Savings had brokered deposits of $145.2 million with a weighted average rate of 3.77% at December 31, 2008.

     16. OTHER COMPREHENSIVE INCOME

Other comprehensive income (loss) included in the Consolidated Statements of Shareholders’ Equity consists of unrealized gains and losses on available for sale securities and changes in unrealized gains and losses on postretirement liability. The change includes reclassification of losses on sales of securities and impairment charges $150,000 at March 31, 2009, and $4.2 million at December 31, 2008.

Other comprehensive income (loss) components and related tax effects are as follows:

	March 31,		March 31,
	2009		2008
	(Dollars in thousands)
Unrealized holding gain on securities available for sale	$	1,250	$	4,216
Changes in net gains on postretirement benefit plan		—		—
Reclassification adjustment for losses (gains) realized in income		150		(931	)
Net unrealized gains		1,400		3,285
Tax effect (35%)		490		1,150
Net of tax amount	$	910	$	2,135

The following is a summary of accumulated other comprehensive income (loss) balances, net of tax:

	Balance at		Current		Balance at
	December 31,		Period		March 31,
	2008		Change		2009
Unrealized gains on securities available for sale	$	3,297	$	910	$	4,207
Unrealized gains on post-retirement benefits		338		—		338
Total	$	3,635	$	910	$	4,545

     17. 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 Home Savings and 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 for capital adequacy require Home Savings to maintain minimum amounts and ratios of Tier 1 (or Core) and Tangible capital (as defined in the regulations) to average total assets (as defined) and of total risk-based capital (as defined) to risk-weighted assets (as defined). Actual and statutory required capital amounts and ratios for Home Savings are presented below.

17

	As of March 31, 2009
						Minimum					To Be Well Capitalized
						Capital					Under Prompt Corrective
	Actual					Requirements					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total risk-based capital to risk-weighted assets	$	240,930		12.48	%	$	154,498		8.00	%	$	193,122		10.00	%
Tier 1 capital to risk-weighted assets		216,620		11.22			*		*			115,873		6.00
Tier 1 capital to average total assets		216,620		8.33			104,030		4.00			130,038		5.00
Tangible capital to adjusted total assets		216,620		8.33			39,011		1.50			*		*

	As of December 31, 2008
						Minimum					To Be Well Capitalized
						Capital					Under Prompt Corrective
	Actual					Requirements					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(Dollars in thousands)
Total risk-based capital to risk-weighted assets	$	242,944		12.06	%	$	161,163		8.00	%	$	201,454		10.00	%
Tier 1 capital to risk-weighted assets		217,630		10.80			*		*			120,872		6.00
Tier 1 capital to average total assets		217,630		8.20			106,180		4.00			132,724		5.00
Tangible capital to adjusted total assets		217,630		8.20			39,817		1.50			*		*

*Ratio is not required under regulations.

As of March 31, 2009 and December 31, 2008, the FDIC and OTS, respectively, categorized Home Savings as adequately capitalized pursuant to the Bank Order and OTS Order discussed in Note 2. The Bank Order provided for Home Savings to increase its Tier 1 leverage ratio to 8.0% and total risk-based capital ratio to 12.0% by December 31, 2008 and to maintain those minimums going forward. As depicted in the table above, Home Savings continues to exceed this requirement.

Management believes, as of March 31, 2009, that Home Savings meets all capital requirements to which it is subject, inclusive of the Bank Order. 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. Refer to Note 2 of the Consolidated Financial Statements for a complete discussion of the limitations of the regulatory enforcement actions.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

UNITED COMMUNITY FINANCIAL CORP.

	At or For the Three
	Months Ended
	March 31,
	2009			2008
Selected financial ratios and other data: (1)
Performance ratios:
Return on average assets (2)		0.50	%		0.59	%
Return on average equity (3)		5.30	%		5.72	%
Interest rate spread (4)		2.74	%		2.21	%
Net interest margin (5)		3.04	%		2.61	%
Non-interest expense to average assets		2.51	%		2.17	%
Efficiency ratio (6)		71.85	%		66.39	%
Average interest-earning assets to average interest-bearing liabilities		111.51	%		111.59	%
Capital ratios:
Average equity to average assets		9.45	%		10.25	%
Equity to assets, end of period		9.34	%		10.01	%
Tier 1 leverage ratio		8.33	%		7.67	%
Tier 1 risk-based capital ratio		11.22	%		9.83	%
Total risk-based capital ratio		12.48	%		12.51	%
Asset quality ratios:
Non-performing loans to total loans at end of period (7)		4.96	%		4.71	%
Non-performing assets to average assets (8)		5.19	%		4.15	%
Allowance for loan losses as a percent of loans		1.76	%		1.48	%
Allowance for loan losses as a percent of nonperforming loans (7)		36.09	%		31.79	%
Office data:
Number of full service banking offices		39			39
Number of loan production offices		6			6
Per share data:
Basic earnings (loss) from continuing operations (9)	$	(0.06	)	$	0.13
Basic earnings from discontinued operations (9)		0.17			0.01
Basic earnings (loss) (9)		0.11			0.14
Diluted earnings (loss) from continuing operations (9)		(0.06	)		0.13
Diluted earnings from discontinued operations (9)		0.17			0.01
Diluted earnings (loss) (9)		0.11			0.14
Book value (10)		7.74			7.96
Tangible book value (11)		7.72			9.12

(1)	Ratios for the three month periods are annualized where appropriate. Ratios for the period ending March 31, 2008 have been revised to reflect the impact of discontinued operations.
(2)	Net income divided by average total assets.
(3)	Net income divided by average total equity.
(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)	Noninterest expense, excluding the amortization of core deposit intangible, divided by the sum of net interest income and noninterest income, excluding gains and losses on securities, other than temporary impairment charges and other.
(7)	Nonperforming loans consist of nonaccrual loans, loans past due ninety days and still accruing, and restructured loans.
(8)	Nonperforming assets consist of nonperforming loans, real estate acquired in the settlement of loans and other repossessed assets.
(9)	Net income divided by average number of basic or diluted shares outstanding.
(10)	Shareholders’ equity divided by number of shares outstanding.
(11)	Historical per share dividends declared and paid for the period divided by the diluted earnings per share for the period
(12)	Market value divided by book value.

19

Forward Looking Statements

When used in this Form 10-Q 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, 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.

Comparison of Financial Condition at March 31, 2009 and December 31, 2008

Total assets decreased $55.5 million to $2.6 billion at March 31, 2009, compared to December 31, 2008. Contributing to the change were decreases in net loans of $88.6 million, loans held for sale of $1.9 million, and assets of discontinued operations of $5.1 million. These decreases were offset partially by increases in cash and cash equivalents of $3.4 million, securities available for sale of $33.3 million, real estate owned and other repossessed assets of $1.2 million and other assets of $3.3 million.

Cash and cash equivalents increased $3.4 million to $46.8 million at March 31, 2009, compared to $43.4 million at December 31, 2008. This change is primarily the result of an increase in checks awaiting deposit at the Federal Reserve and cash maintained in Home Savings’ account at the Federal Reserve due to the sale of Butler Wick Trust. These increases were partially offset by a decrease in cash maintained by Home Savings’ branch locations.

Available for sale securities increased $33.3 million, or 15.4%, from December 31, 2008, to March 31, 2009. Home Savings purchased $42.0 million in securities during the first three months of 2009. These purchases were made primarily to replace the paydowns and maturities that occurred within the portfolio. These purchases were partially offset by paydowns and maturities of $10.0 million at Home Savings and other than temporary impairment charges of $150,000 at United Community. The remaining difference is a result of changes in the market valuation of the portfolio, net of any amortization or accretion.

Net loans decreased $88.6 million from December 31, 2008, to March 31, 2009. Real estate loans decreased $58.1 million, consumer loans decreased $17.0 million, and commercial loans decreased $11.4 million. The overall decrease in loans is attributable primarily to the strategic objective of reducing exposure to commercial real estate and construction lending. Furthermore, due to a much lower interest rate environment, refinance activity has accelerated. The result of this acceleration was a decline in the portfolio of one-to four-family loans as existing loans in the portfolio are refinanced and a majority of the newly originated loans are sold into the secondary market.

The allowance for loan losses increased to $37.9 million, or 1.76% of the net loan portfolio and 36.1% of nonperforming loans as of March 31, 2009, from $36.0 million or 1.61% of the net loan portfolio and 33.71% of nonperforming loans as of December 31, 2008. Provision totaling $8.4 million during the three months ended March 31, 2009 were partially offset by charge-offs totaling $6.7 million. The allowance for loan losses is a valuation allowance for probable credit losses. Loan losses are charged against the allowance when management believes the uncollectability 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. 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 loans and is based on historical loss experience adjusted for current factors, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

The general component of the allowance covers pools of loans not reviewed specifically by management that are evaluated as a homogeneous group of loans (e.g., performing single-family residential mortgage loans and all consumer credit except marine loans) using a historical charge-off experience ratio applied to each pool of loans. The historical charge-off experience ratio considers historical loss rates adjusted for certain environmental factors.

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	Allowance For Loan Losses
	(Dollars in thousands)
	December 31,										March 31,
	2008		Provision			Recovery		Chargeoff			2009
Real Estate Loans
Permanent
One-to four-family residential	$	4,986	$	957		$	2	$	(1,098	)	$	4,847
Multifamily residential		2,344		578			3		(1,384	)		1,541
Nonresidential		4,870		1,333			1		(653	)		5,551
Land		585		50			—		—			635
Total		12,785		2,918			6		(3,135	)		12,574
Construction Loans
One-to four-family residential		10,620		3,814			4		(1,554	)		12,884
Multifamily and nonresidential		722		(15	)		—		—			707
Total		11,342		3,799			4		(1,554	)		13,591
Consumer Loans
Home Equity		1,386		503			—		(362	)		1,527
Auto		242		30			5		(64	)		213
Marine		1,504		125			4		(6	)		1,627
Recreational vehicle		1,425		548			22		(559	)		1,436
Other		313		88			100		(218	)		283
Total		4,870		1,294			131		(1,209	)		5,086
Commercial Loans
Secured		3,355		(340	)		—		(212	)		2,803
Unsecured		3,610		773			—		(581	)		3,802
Total		6,965		433			—		(793	)		6,605
Total	$	35,962	$	8,444		$	141	$	(6,691	)	$	37,856

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Nonperforming loans consist of loans past due 90 days or more, loans past due less than 90 days that are on nonaccrual status, and restructured loans. Nonperforming loans were $104.9 million, or 4.96% of net loans, at March 31, 2009, compared to $106.7 million, or 4.84% of net loans, at December 31, 2008. The schedule below summarizes the change in nonperforming loans for the first three months of 2009.

Nonperforming Loans
(Dollars in thousands)
	March 31,		December 31,
	2009		2008		Change
Real Estate Loans
Permanent
One-to four-family residential	$	24,409	$	21,669	$	2,740
Multifamily residential		5,747		8,724		(2,977	)
Nonresidential		13,191		15,246		(2,055	)
Land		5,179		4,840		339
Total		48,526		50,479		(1,953	)
Construction Loans
One-to four-family residential		42,232		43,167		(935	)
Multifamily and nonresidential		789		816		(27	)
Total		43,021		43,983		(962	)
Consumer Loans
Home Equity		2,654		2,312		342
Auto		138		154		(16	)
Marine		2,612		2,614		(2	)
Recreational vehicle		939		756		183
Other		32		33		(1	)
Total		6,375		5,869		506
Commercial Loans
Secured		3,331		3,496		(165	)
Unsecured		924		1,057		(133	)
Total		4,255		4,553		(298	)
Restructured Loans		2,726		1,797		929
Total Nonperforming Loans	$	104,903	$	106,681	$	(1,778	)

The $2.7 million increase in nonperforming loans secured by one-to four-family properties was primarily a result of the overall increase in the number of loans becoming 90 or more days past due. The decrease in nonperforming multifamily residential, nonresidential real estate and construction loans was primarily the result of Home Savings taking into possession property in Michigan and Northeast Ohio in the first quarter of 2009.

A loan is considered impaired when, based on current information and events, it is probable that Home Savings will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement and the loan is non-homogeneous in nature. 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 loans 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 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

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is collateral dependent. As shown in the following table, the largest component of $7.6 million increase in impaired loans is a result of one-to four-family loans increasing $6.1 million.

Impaired Loans
(Dollars in thousands
	March 31,		December 31,
	2009		2008		Change
Real Estate Loans
Permanent
One-to four-family residential	$	18,784	$	12,675	$	6,109
Multifamily residential		5,747		8,724		(2,977	)
Nonresidential		13,047		14,855		(1,808	)
Land		5,180		4,757		423
Total		42,758		41,011		1,747
Construction Loans
One-to four-family residential		42,232		36,903		5,329
Multifamily and nonresidential		789		816		(27	)
Total		43,021		37,719		5,302
Consumer Loans
Home Equity		1,819		1,657		162
Auto		14		—		14
Boat		2,612		2,614		(2	)
Recreational vehicle		361		—		361
Other		—		—		—
Total		4,806		4,271		535
Commercial Loans
Secured		3,416		3,496		(80	)
Unsecured		839		751		88
Total		4,255		4,247		8
Total Impaired Loans	$	94,840	$	87,248	$	7,592

Other nonperforming assets, consisting of real estate and other consumer property acquired in the settlement of loans, totaled $30.4 million at March 31, 2009, compared to $29.3 million at December 31, 2008. The $1.2 million increase is primarily attributable to the acquisition of properties having an estimated market value of $1.8 million that collateralized commercial construction loans primarily in the central Ohio market area, one property with an estimated market value of $1.7 million that secured a commercial real estate loan in Michigan and four properties with an estimated value of $386,000 that secured four commercial real estate loans in northern Ohio. Home Savings disposed of property with a value of $2.8 million in the first quarter of 2009, partially offsetting the increase. Other consumer property, such as boats, recreational vehicles, and automobiles that were received by Home Savings in the satisfaction of loans, makes up the remainder of the change.

Loans held for sale decreased $1.9 million, or 11.6%, to $14.2 million at March 31, 2009, compared to $16.0 million at December 31, 2008. The change in loans held for sale was due largely to the increase in volume of loan originations during the period because of the lower interest rate environment. Home Savings sells newly originated loans into the secondary market as part of its risk management strategy and anticipates continuing to do so in the future.

Federal Home Loan Bank stock remained at $26.4 million at March 31, 2009, compared to December 31, 2008. During the first quarter of 2009, the Federal Home Loan Bank paid a cash dividend in lieu of a stock dividend to its member banks.

Home Savings maintains a contra account for uncollected interest for loans on non-accrual status that represents the reduction in interest income from the time the borrower stopped making payments until the loan is repaid, charged off or the default is cured and performance resumes. The increases in these reserves, from $14.8 million at December 31, 2008, to $15.6 million at March 31, 2009,

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and the impact of the reduction in loan balances mentioned above, were the primary reasons that accrued interest receivable decreased $845,000 to $9.2 million at March 31, 2009, compared to $10.1 million at December 31, 2008.

Other assets increased $3.8 million to $20.9 million at March 31, 2009, compared to $17.1 million at December 31, 2008. Home Savings had increases in deferred federal income taxes of $296,000 related to the market valuation of available for sale securities, prepaid Ohio franchise tax of $959,000, and current federal income tax benefit of $1.7 million. These increases were offset by cash due on payments of mortgage-backed securities of $1.4 million and $190,000 in deferred mortgage servicing rights.

Total deposits decreased $50.4 million to $1.8 billion at March 31, 2009, compared to $1.9 billion at December 31, 2008. This change was due primarily to a decrease of $52.9 million in brokered certificates of deposit and a $17.4 million decrease in retail certificates of deposit offset by a $17.0 million increase in savings accounts and a $2.8 million increase in money market accounts and other demand deposit accounts. To supplement its funding needs, United Community began obtaining brokered certificates of deposit in 2007. Such deposits have maturities ranging from six months to two years. The total balance of brokered certificates of deposit was $92.1 million at March 31, 2009 and $145.0 million at December 31, 2008. Home Savings cannot obtain additional brokered certificates of deposit without the approval of the FDIC.

Federal Home Loan Bank advances decreased $2.8 million during the first three months of 2009, reflecting an increase in overnight advances of $17.4 million and a decrease in term advances of $20.2 million. Home Savings had approximately $230.8 million in unused borrowing capacity at the FHLB at March 31, 2009. Repurchase agreements and other borrowed funds, including United Community’s line of credit with JP Morgan Chase Bank, N.A. (JP Morgan Chase), decreased $5.9 million to $119.4 million at March 31, 2009 from $125.3 million at December 31, 2008. United Community’s line of credit with JP Morgan Chase was paid in full with proceeds from the sale of Butler Wick Trust on March 31, 2009.

Advance payments by borrowers for taxes and insurance decreased $5.7 million during the first three months of 2009. Payments for real estate taxes and property insurance made on behalf of customers of Home Savings account for $3.5 million of the decrease. In addition, funds held for payments received on loans sold where servicing was retained by Home Savings decreased $2.2 million.

Accrued expenses and other liabilities increased $7.3 million, to $16.4 million at March 31, 2009 from $9.1 million at December 31, 2008. United Community had an increase in accrued liabilities for taxes related to the net income and sale of Butler Wick Trust in the first quarter of 2009 aggregating $4.3 million. Home Savings had an increase in deferred income taxes related to the valuation of the securities available for sale portfolio of $550,000 along with an increase in accrued payroll and related expenses of $731,000.

Shareholders’ equity increased $4.4 million to $239.3 million at March 31, 2009, from $234.9 million at December 31, 2008. An after-tax gain of $4.7 million from the sale of Butler Wick Trust and net operating income of $238,000 for the first three months of 2008 from Butler Wick were partially offset by a $1.2 million net loss recognized by Home Savings. An increase in other comprehensive income resulting from changes in available for sale securities, net of tax, of $910,000 also contributed to the increase.

Comparison of Operating Results for the Three Months Ended
March 31, 2009 and March 31, 2008

Net Income. United Community recognized net income for the three months ended March 31, 2009, of $3.3 million, or $0.11 per diluted share, compared to net income of $4.0 million, or $0.14 per share, for the three months ended March 31, 2008. Compared with the first quarter of 2008, net interest income increased $1.8 million, the provision for loan losses increased $6.0 million, non-interest income decreased $3.5 million, and non-interest expense increased $1.4 million. United Community’s annualized return on average assets and return on average equity were 0.50% and 5.30%, respectively, for the three months ended March 31, 2009. The annualized return on average assets and return on average equity for the comparable period in 2008 were 0.59% and 5.72%, respectively.

Net Interest Income. Net interest income for the three months ended March 31, 2009, was $18.7 million compared to $16.9 million for the same period last year. Both interest income and interest expense decreased with a smaller decline in interest income. Interest income decreased $5.2 million in the first quarter of 2009 compared to the first quarter of 2008. The change in interest income was due primarily to decreases in interest earned on net loans. Home Savings had a decrease in the average balance of net loans of $116.2 million and a reduction of 54 basis points in the rate earned on those loans during the first quarter of 2009 as compared to the same quarter in 2008. Also contributing to the change in interest income was a decrease in interest earned on available for sale securities, as the average balance of those assets declined by $23.8 million and the yield earned on those securities decreased 30 basis points.

Total interest expense decreased $7.0 million for the quarter ended March 31, 2009, as compared to the same quarter last year. The change was due primarily to a reduction of $4.4 million in interest paid on deposits, $1.8 million in interest paid on Federal Home

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Loan Bank advances and interest paid on repurchase agreements and other borrowings of $767,000. The overall decrease in interest expense is attributable to a decline in the average balances of interest bearing checking accounts of $57.8 million as well as a reduction of 155 basis points on those liabilities. Furthermore, Home Savings experienced a decline in the cost of certificates of deposit of 91 basis points despite an increase in the average balance of those deposits of $6.8 million. These declines were offset partially by an increase in the average balance of savings accounts of $12.1 million along with an increase in the cost of those deposits of 10 basis points.

The primary cause of the decrease in interest expense on Federal Home Loan Bank advances was a decrease in the average balance of those funds of $39.2 million, as well as a rate decrease on those borrowings of 167 basis points in the first quarter compared to the same quarter in 2008. The rate on short term advances from the Federal Home Loan Bank has decreased due to the Federal Reserve’s action to drop the Federal Funds rate over the past year. The decrease in interest expense on repurchase agreements and other borrowings was due primarily to a decrease in the average balances of $34.9 million and a decline in the rate paid on these alternative borrowings of 109 basis points.

The following table shows the impact of interest rate and outstanding balance (volume) changes compared to the first quarter of last year. The interest rate spread for the three months ended March 31, 2009, grew to 2.74% compared to 2.21% for the quarter ended March 31, 2008. The net interest margin increased 43 basis points to 3.04% for the three months ended March 31, 2009 compared to 2.61% for the same quarter in 2008.

	For the Three Months Ended March 31,
	2009 vs. 2008
	Increase						Total
	(decrease) due to						increase
	Rate			Volume			(decrease)
	(Dollars in thousands)
Interest-earning assets:
Loans	$	(2,971	)	$	(1,770	)	$	(4,741	)
Loans held for sale		(21	)		96			75
Investment securities:
Available for sale		(188	)		(283	)		(471	)
Federal Home Loan Bank stock		(47	)		14			(33	)
Other interest earning assets		(38	)		9			(29	)
Total interest earning assets	$	(3,265	)	$	(1,934	)	$	(5,199	)
Interest bearing liabilities:
Savings accounts		49			13			62
Checking accounts		(1,492	)		(364	)		(1,856	)
Certificates of deposit		(2,671	)		80			(2,591	)
Federal Home Loan Bank advances		(1,493	)		(341	)		(1,834	)
Repurchase agreements and other		(386	)		(381	)		(767	)
Total interest bearing liabilities	$	(5,993	)	$	(993	)		(6,986	)
Change in net interest income							$	1,787

Provision for Loan Losses. A provision for loan losses is charged to income 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 increased by $6.0 million, to $8.4 million for the three months ended March 31, 2009, compared to $2.5 million for the same period in 2008. The $8.4 million provision was primarily the result of the recurring assessments of the portfolio.

Non-interest Income. Non-interest income decreased $3.5 million to $2.7 million for the three months ended March 31, 2009, from $6.3 million for the three months ended March 31, 2008, primarily as a result of fewer gains recognized on the sale of loans, no sales or gains recognized on available for sale securities, higher losses attributable to real estate owned and other repossessed assets acquired in the settlement of loans and the additional write down of $26,000 for the Company’s Fannie Mae auction rate pass through trust security and the write down of $124,000 on equity securities owned by United Community.

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Non-interest Expense. Total non-interest expense increased $1.4 million for the three months ended March 31, 2009, compared to the three months ended March 31, 2008. The increase is due primarily to increased Federal Deposit Insurance premiums of $1.8 million, due largely to the enforcement actions of the OTS, the FDIC, and the Ohio Division. Contributing to the increase in non-interest expenses were expenses required to maintain real estate owned and other repossessed assets during the first quarter of 2009 as compared to the first quarter of 2008. Federal Deposit Insurance premiums are expected to aggregate $9.3 million throughout the remainder of 2009, based in part of the enforcement actions and recent legislation. Expenses to maintain other real estate owned are expected to remain high through the rest of 2009 due to the increase in the number of properties acquired by Home Savings in resolving nonperforming loans, as well as legal expenses and other collection expenses associated with Home Savings’ nonperforming loans.

Discontinued Operations. Net income recognized on the discontinued operations of Butler Wick increased $4.7 million from $279,000 at March 31, 2008 to $4.9 million at March 31, 2009. The primary cause of the change is the gain recognized on the sale of Butler Wick Trust in the first quarter of 2009. Butler Wick also earned fewer commissions and service fees and incurred lower salary and employee benefit expenses due to the sale of Butler Wick and Co., Inc. Refer to Note 3 for a further discussion of discontinued operations.

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UNITED COMMUNITY FINANCIAL CORP.

AVERAGE BALANCE SHEETS

The following table presents the total dollar amounts of interest income and interest expense on the indicated amounts of average interest-earning assets or interest-bearing liabilities together with the weighted average interest rates for the three month periods ended March 31, 2009 and 2008. Average balance calculations were based on daily balances.

	Three Months Ended March 31,
	2009							2008
	Average		Interest					Average		Interest
	Outstanding		Earned/		Yield/			Outstanding		Earned/		Yield/
	Balance		Paid		Cost			Balance		Paid		Cost
	(Dollars In thousands)
Interest-earning assets:
Net loans (1)	$	2,158,931	$	31,067		5.76	%	$	2,275,133	$	35,808		6.30	%
Net loans held for sale		24,172		263		4.35	%		15,014		188		5.01	%
Investment securities:
Trading		—		—		—	%		312		—		—	%
Available for sale		239,656		2,770		4.62	%		263,500		3,241		4.92	%
Federal Home Loan Bank stock		26,464		299		4.52	%		25,436		332		5.22	%
Other interest-earning assets		18,927		29		0.61	%		16,659		58		1.37	%
Total interest-earning assets		2,468,150		34,428		5.58	%		2,596,054		39,627		6.11	%
Noninterest-earning assets		137,183							143,220
Assets of discontinued operations		4,468							20,540
Total assets	$	2,609,801						$	2,759,814
Interest-bearing liabilities:
Checking accounts	$	375,113	$	1,202		1.28	%	$	432,893	$	3,058		2.83	%
Savings accounts		187,566		245		0.52	%		175,442		183		0.42	%
Certificates of deposit		1,176,028		11,204		3.81	%		1,169,251		13,795		4.72	%
Federal Home Loan Bank advances		350,427		1,858		2.12	%		389,582		3,692		3.79	%
Repurchase agreements and other		124,306		1,190		3.83	%		159,159		1,957		4.92	%
Total interest-bearing liabilities		2,213,440		15,699		2.84	%		2,326,327		22,685		3.90	%
Noninterest-bearing liabilities		147,172							146,241
Liabilities of discontinued operations		2,449							4,494
Total liabilities		2,363,061							2,477,062
Equity		246,740							282,752
Total liabilities and equity	$	2,609,801						$	2,759,814
Net interest income and interest rate spread			$	18,729		2.74	%			$	16,942		2.21	%
Net interest margin						3.04	%						2.61	%
Average interest-earning assets to average interest-bearing liabilities						111.51	%						111.59	%

(1) Nonaccrual loans are included in the average balance at a yield of 0%.

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ITEM 3. Quantitative and Qualitative Disclosures about 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, 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 risk and to 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 a 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. Due to the current low level of treasury rates, values for a decline in rates of 100, 200 and 300 basis points are not calculated for the quarter ended March 31, 2009. As noted, for the quarter ended March 31, 2009, the percentage changes fall within the policy limits set by the Board of Directors of Home Savings as the minimum NPV ratio and the maximum change in interest income the Home Savings Board deems advisable in the event of various changes in interest rates. See the table below for Board adopted policy limits.

Quarter ended March 31, 2009
NPV as % of portfolio value of assets										Next 12 months net interest income
										(Dollars in thousands)
Change													Internal policy
in rates				Internal policy									limitations on
(Basis				limitations as to									maximum
points)	NPV Ratio			minimum %			Change in %			$ Change			change			% Change
+300		7.59	%		5.00	%		(1.48	)%	$	(2,366	)		(15.00	)%		(2.98	)%
+200		8.65			6.00			(0.42	)		(953	)		(10.00	)		(1.20	)
+100		9.30			6.00			023			65			(5.00	)		0.08
Static		9.07			7.00			—			—			—			—

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Year Ended December 31, 2008
NPV as % of portfolio value of assets										Next 12 months net interest income
										(Dollars in thousands)
Change
in rates
(Basis				Internal policy									Internal policy
points)	NPV Ratio			limitations			Change in %			$ Change			limitations			% Change
+300		7.37	%		5.00	%		(1.38	)%	$	(1,879	)		(15.00	)%		(2.48	)%
+200		8.35			6.00			(0.40	)		(734	)		(10.00	)		(0.97	)
+100		8.99			6.00			0.24			60			(5.00	)		0.08
Static		8.75			7.00			—			—			—			—

Due to a low interest rate environment, it was not possible to calculate results for a drop in interest rates.

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. In addition, 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 affected significantly by changes in market interest rates and other economic factors beyond its control.

In the last nine months, Home Savings has begun to see the positive impact of a steeper yield curve. The net interest margin continues to improve, despite a high level of nonperforming assets, as certificates of deposit reprice at much lower levels supported by loan yields that have stabilized.

ITEM 4. 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 United Community’s disclosure controls and procedures (as defined in Rules 13a-15(e)/15d-15(e) of the Securities Exchange Act of 1934) as of March 31, 2009. 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 quarter ended March 31, 2009, there were no changes in United Community’s internal controls over financial reporting that have materially affected or are reasonably likely to affect materially United Community’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

UNITED COMMUNITY FINANCIAL CORP.

ITEM 1 — Legal Proceedings

United Community and its subsidiaries are parties to litigation arising in the normal course of business. While it is impossible to determine the ultimate resolution of these contingent matters, management believes any resulting liability would not have a material effect upon United Community’s financial statements.

ITEM 1A — Risk Factors

There have been no significant changes in United Community’s risk factors as outlined in United Community’s Form 10-K for the period ended December 31, 2008.

ITEM 2 — Unregistered Sales of Equity Securities and Use of Proceeds

There have been no purchases of treasury shares during the quarter ended March 31, 2009.

ITEM 4 — Submission of Matters to a Vote of Security Holders

On April 23, 2009, United Community held its Annual Meeting of Shareholders. At the Annual Meeting, two matters were submitted to shareholders for a vote. First, shareholders elected two directors with terms expiring in 2012 by the following votes:

Director	For		Withheld
Douglas M. McKay		21,053,777		2,146,632
Donald J. Varner		18,894,268		4,306,141

The following directors’ terms continued after the Annual Meeting: Eugenia C. Atkinson, Richard J. Buoncore, Richard J. Schiraldi, Clarence R. Smith, Jr., and David C. Sweet.

The shareholders also ratified the selection of Crowe Horwath LLP as auditors for the 2009 fiscal year by the following vote:

For	Against		Abstain
21,860,718		844,897		494,794

ITEM 6 — Exhibits

Exhibits

Exhibit Number	Description
3.1	Articles of Incorporation
3.2	Amended Code of Regulations
10	Material Contracts
31.1	Section 302 Certification by Chief Executive Officer
31.2	Section 302 Certification by Chief Financial Officer
32	Certification of Statements by Chief Executive Officer and Chief Financial Officer

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UNITED COMMUNITY FINANCIAL CORP.

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.

Date: May 11, 2009	/S/ Douglas M. McKay Douglas M. McKay
	Chief Executive Officer
Date: May 11, 2009	/S/ James R. Reske
	James R. Reske, CFA
	Chief Financial Officer

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UNITED COMMUNITY FINANCIAL CORP.

Exhibit 3.1

Incorporated by reference to the Registration Statement on Form S-1 filed by United Community on March 13, 1998 with the Securities and Exchange Commission (SEC), Exhibit 3.1.

Exhibit 3.2

Incorporated by reference to the 1998 Form 10-K filed by United Community on March 31, 1999 with the SEC, film number 99582343, Exhibit 3.2.

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EX-10.1

Exhibit 10.1

CONFIDENTIAL SEPARATION AND GENERAL RELEASE AGREEMENT

     THIS CONFIDENTIAL SEPARATION AND GENERAL RELEASE AGREEMENT (“Agreement”) is made and entered into as of this 4th day of February, 2009, by and among DAVID G. LODGE, an individual, whose address is 970 Cascades Drive, Aurora, Ohio 44202 (“Employee”), UNITED COMMUNITY FINANCIAL CORP., an Ohio corporation (“UCFC”) and UCFC’s wholly-owned subsidiary, THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO, an Ohio chartered stock savings bank (the “Home Savings,” and together with UCFC, the “Company”), principal place of business is located at 275 West Federal Street, Youngstown, Ohio 44503.

     WHEREAS, Employee has been employed at UCFC as the President and Chief Operating Officer of UCFC and at Home Savings as the Director of Strategic Planning; and

     WHEREAS, the terms and conditions of the Employee’s employment with Home Savings are set forth in that certain Employment Agreement, dated December 31, 2004, by and between Home Savings and Employee, as extended by the Board of Directors of Home Savings, and as amended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and the regulations thereunder (“Section 409A”) (the “Employment Agreement”); and

     WHEREAS, Home Saving engaged an outside consultant to perform a management assessment of its management team, which assessment recommended that Employee’s compensation be materially reduced and that Employee retire from service; and

     WHEREAS, the Company decided, as a result of the management assessment and certain business dispositions by the Company that have significantly reduced Employee’s responsibilities, to involuntarily terminate Employee; and

     WHEREAS, in response to such involuntary termination decision, the Company and Employee have agreed to amicably resolve any difference between them and that Employee will retire from employment with the Company as of February 28, 2009, which retirement constitutes a “separation from service” within the meaning of Section 409A (the “Separation Date”), and Employee will simultaneously retire as a member of the Board of Directors of UCFC; and

     WHEREAS, Employee is a “specified employee” for purposes of Section 409A; and

     WHEREAS, the Company and Employee intend that any amounts and benefits paid and/or provided hereunder qualify for exemption under Treasury Regulation Section 1.409A-1(b)(9)(iii); and

     WHEREAS, except as otherwise provided herein, the Company and Employee wish to resolve all matters that exist between them arising from Employee’s employment and termination thereof, including those that have been or could have been asserted by either party against the other, and define all rights and obligations of the parties relating to such separation; and

     WHEREAS, this Agreement is subject to the determination of the Federal Deposit Insurance Corporation (the “FDIC”) and the Office of Thrift Supervision (the “OTS”, and collectively, the “Regulators”) that the payments under this Agreement are permissible, pursuant to 12 CFR Section 359 et seq. (“Federal Regulators’ Consent”); and

     WHEREAS, Employee’s time and compensation is allocated ninety percent (90%) to UCFC and ten percent (10%) to Home Savings; and

     WHEREAS, the Company and Employee have agreed to the amount of the Separation Pay set forth below, which will be allocated in the same proportions described above to UCFC and Home Savings, and the Company has agreed to seek the Federal Regulators’ Consent to pay Employee the Separation Pay.

     NOW THEREFORE, in consideration of the mutual promises, covenants and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties agree as follows:

     1. Payment by the Company.

          (a) Subject to the requirements of Section 1(b), the Company agrees to pay Employee the equivalent of sixteen months’ salary, which amounts to Three Hundred Fifty Thousand, Seven Hundred Eighty-Four Dollars and 70/100 ($350,784.70), or

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Ten Thousand Twenty-Two Dollars and 42/100 ($10,022.42) per pay period (for which there are 35 pay periods) (the “Separation Pay”).

          (b) The Company acknowledges that Employee is a “specified employee” for purposes of Section 409A and that Employee will have an involuntary “separation from service” within the meaning of Section 409A. Subject to the Company’s prior receipt of the Federal Regulators’ Consent, the Company agrees to pay the Employee the Separation Pay in the equivalent of thirty-five (35) consecutive installments paid every two (2) weeks (each installment calculated by the Company as one-thirty fifth (1/35) of the Separation Pay), less all customary payroll deductions, as applicable, which (as a result of Employee’s involuntary separation from service) would begin as of March 6, 2009, but for the requirement to obtain the Federal Regulators’ Consent. Thus, payment of the Separation Pay shall begin on the first payroll date following the Company’s receipt of the Federal Regulators’ Consent; provided, however, that if the Federal Regulators’ Consent is not obtained, the Employee shall forfeit the Separation Pay, and the Company shall be under no obligation to pay Employee any amounts hereunder or under the Employment Agreement, except as provided in Section 1(c). In the event the Federal Regulator’s Consent is obtained, but in an amount less than the agreed Separation Pay, Employee acknowledges and agrees that the amount actually approved by the OTS and the FDIC shall constitute the Separation Pay, and Employee’s payments made hereunder shall be appropriately adjusted (all other terms and conditions of this Agreement shall remain in full force and effect).

          (c) Notwithstanding Section 1(b), the Company agrees to make available to the Employee the benefits set forth in Exhibit A, which Exhibit A is attached to this Agreement, incorporated herein, and made a part hereof.

          (d) The Company hereby agrees to keep Employee and his legal counsel informed of the status of the filing, including any and all replies and responses from and to the Regulators. Except as specifically set forth in this Agreement or Exhibit A, no additional severance or compensation, wages, pay or employment/employee benefits of any type or nature will accrue as a result of the Separation Pay described herein or as a result of the Employment Agreement.

     2. Status as Terminated Employee. Employee agrees that Employee’s employment with the Company ended, and that he has incurred a “separation from service” within the meaning of Section 409A, as of the close of business on the Separation Date. In response to any request for separation from service information, including from the Ohio Department of Job and Family Services (the “ODJFS”), the Company agrees to respond that Employee retired from the Company as a result of an involuntary termination and the negotiation thereof. Additionally, the Company shall inform the ODJFS that Employee is entitled to receive certain Separation Pay as set forth in this Agreement, unless such pay is forfeited as provided in Section 1(b).

     3. Health Insurance; Employee’s Benefits. After the Separation Date, Employee shall have the right to elect and pay for continued coverage for Employee and Employee’s dependents under the plans listed on Exhibit A, until the earlier of December 31, 2010, or the date Employee is included in another employer’s benefit plans as a full time employee. Except as otherwise indicated in this Agreement and Exhibit A, all of Employee’s other benefits of employment with the Company, including but not limited to any bonus, profit sharing, incentive or other compensation enhancement, shall terminate as of the Separation Date; provided, however, that Employee shall be entitled to receive an allocation under the United Community Financial Corp. Employee Stock Ownership Plan (Plan No. 003) , in accordance with the terms of such plan, for service rendered through the Separation Date.

     4. Employee and Company Property. Employee agrees that prior to and upon the separation from employment, Employee will only remove personal items from Employee’s office; and Employee will return to the Company all records, files, equipment (including but not limited to all computer equipment, or electronic devices of any type or nature), office, loge, desk or file keys, credit cards, computer programs or disks, or other Company property that are in Employee’s possession, without further request from the Company. By signing this Agreement, Employee represents that on or before the Separation Date, Employee shall return all property, electronic or otherwise, of the Company, including all Confidential Information, in Employee’s possession and Employee agrees that Employee will not copy any property of the Company, including Confidential Information, directly or indirectly, in any fashion (e.g. by computer copy, CD, disk, cassette or any other electronic method), except that Employee has retained his cellular telephone, with the consent of the Company. Employee shall be solely responsible for all fees and charges incurred after the Separation Date for any calling/data or other service plans utilized by the cellular telephone. Employee further agrees that any violation of this section will cause irreparable harm to the Company, and if Employee violates this section, the Company is entitled to pursue all remedies available, including a temporary or permanent restraining order. Upon payment to the Company of $15,120.00, which amount shall be paid to the Company by Employee with a check made payable to Home Savings, and the Company shall provide to the Employee the title to that certain 2006 Acura RL. Employee shall obtain insurance at Employee’s sole cost and expense beginning immediately after the Separation Date.

     5. Confidential Information. The parties acknowledge and agree that Section 9 of the Employment Agreement shall survive execution of this Agreement and the termination of the Employment Agreement.

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     6. General Release of Claims.

          (a) The Company and Employee expressly covenant and agree that in consideration for the payment of Separation Pay and other consideration set forth herein, Employee does hereby voluntarily and fully release, acquit, and forever discharge the Company, its subsidiaries, affiliates, predecessors, successors and assigns and their officers, directors, employees, agents, attorneys and other representatives (hereinafter collectively referred to as the “Releasees”) from any and all actions, claims, damages, liabilities, promises, costs (including reasonable attorneys’ fees), rights or demands, of whatsoever kind or nature, in law or in equity, Employee now has, may have had in the past or will have at any time hereafter, by reason of any acts, causes, matters or things arising prior to this date and arising out of or in connection with Employee’s employment and/or separation from employment with the Company, including any and all wages, benefits or other employment related matters. Employee understands that this is a general and complete release of claims Employee could have against the Company as an employee or former employee of the Company and includes but is not limited to any claims under the Age Discrimination in Employment Act, Family Medical Leave Act; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Americans with Disabilities Act of 1990, as amended; any other federal, state or local civil rights law or any other local, state or federal law, regulation or ordinance; any public policy, contract, tort or common law theory; or any statutory or common law principle allowing for the recovery of fees or other expenses, including attorneys’ fees, relating to any claim or claims Employee is releasing in this Agreement.

          Notwithstanding the foregoing in this Section 7(a), nothing in this Section 7(a) shall be deemed to release any of the Releasees from any of the Releasees’ obligations under this Agreement.

          Nothing in this Agreement precludes the filing of a charge with any appropriate federal, state or local government agency and/or responding to a request for information from any such agency. In no event, however, will Employee seek or accept any monetary relief in connection with any complaint or charge brought against the Company, without regard as to who brought that complaint or charge, and Employee agrees not to file against Releasees any action or proceeding in federal, state or other court under any statute, law, ordinance or regulation relating to or arising out of Employee’s employment with and/or separation of employment from the Company. Employee further agrees to waive and not to seek or accept from Releasees any further benefit or consideration, including reinstatement, back pay, attorneys’ fees, or any additional monies with respect to employment or separation of employment from the Company.

          (b) The Company does voluntarily and fully release, acquit, and forever discharge Employee, his successors, assigns, heirs, executor, attorneys and other representatives from any and all actions, claims, damages, liabilities, promises, costs (including reasonable attorneys’ fees), rights or demands, of whatsoever kind or nature, in law or in equity, the Company now has, may have had in the past or will have at any time hereafter, by reason of any acts, causes, matters or things arising prior to this date and arising out of or in connection with Employee’s employment and/or separation from employment with the Company, except those arising out of fraud perpetrated by, or the intentional or willful misconduct of, Employee.

7. Release of Age Discrimination Claims.

          (a) Exclusively as this Agreement pertains to Employee’s release of claims under the Age Discrimination in Employment Act, Employee, pursuant to and in compliance with rights afforded them under the Older Workers Benefit Protection Act:

     (i) Is advised that Employee does not waive rights or claims that arise after the date on which this Agreement is signed by Employee and the Company;

     (ii) Is advised to consult with an attorney prior to executing this Agreement;

     (iii) Is given twenty-one (21) days from the receipt of this Agreement in which to consider it; provided that any signed Agreement shall be delivered to Home Savings no later than sixty (60) days following February 28, 2009; and

     (iv) Is given a period of seven (7) days following the signing of this Agreement in which to revoke it. A revocation of this Agreement shall be effective only on the delivery of a written revocation to The Home Savings and Loan Company of Youngstown, Ohio, 275 West Federal Street, Youngstown, Ohio 44503, Attention: Vice President—Human Resources. This Agreement shall not become effective or enforceable until this seven-day revocation period has expired.

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          (b) Employee’s knowing and voluntary execution of this Agreement is an express acknowledgment and agreement that:

     (i) This Agreement is written in a manner that enables Employee to fully understand its content and meaning;

     (ii) This Agreement specifically refers to the waiver and release of all claims under the Age Discrimination in Employment Act;

     (iii) This Agreement does not waive or release any rights or claims that may arise after the date on which it is executed;

     (iv) Employee has received consideration under this Agreement in addition to anything of value to which Employee was otherwise already entitled;

     (v) Employee has had the opportunity to review this Agreement with Employee’s attorney and to consult with Employee’s attorney concerning the signing of this Agreement;

     (vi) Employee was afforded a twenty-one (21) day period of time to consider it before executing it;

     (vii) Employee was given a seven-day period of time in which to revoke this Agreement after it was signed; and

     (viii) Employee’s execution of this Agreement is knowing and voluntary.

     8. Agreement to not Seek or Accept Future Employment; Mitigation. Employee agrees that, because of circumstances unique to Employee (including Employee’s retirement from the Company and the Board of Directors of UCFC), Employee will not apply for or accept future employment with the Company or seek appointment to the Board of Directors of UCFC or Home Savings. The Company agrees that Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by Employee offset in any manner the obligations of the Company under this Agreement.

     9. Confidentiality. Employee and Company mutually agree not to disclose any information regarding the existence or substance of this Agreement, except (i) for purposes of enforcement of this Agreement, (ii) to the OTS and/or FDIC for purposes of requesting the Federal Regulators’ Consent, (iii) as otherwise required by law or regulation, (iv) to Employee’s spouse, and (v) to any financial advisor, tax advisor, and any attorneys with whom Employee or the Company chooses to consult regarding its respective consideration of this Agreement, provided that they agree to keep that information strictly confidential and disclose it to no other person. Employee and Company understand that the confidentiality of this Agreement is an important part of the consideration under this Agreement. Employee and Company further agree that any violation of this section will cause irreparable harm to Employee and Company, as the case may be, and if either Employee or Company violates this section, the other party is entitled to pursue all remedies available, including a temporary or permanent restraining order.

     10. Governing Law and Interpretation. This Agreement shall be governed by and interpreted under the laws of Ohio and, except as set forth in Section 16 of this Agreement, any legal matters will be brought in any Federal court sitting within the Northern District of Ohio or any State court sitting in Mahoning County, Ohio. Should any court of competent jurisdiction declare any provision of this Agreement unenforceable, the provision shall be void but the remainder of this Agreement shall remain in effect.

     11. Nonadmission of Wrongdoing. The parties have entered into this Agreement in exchange for the releases granted herein and to avoid potential litigation. Accordingly, neither this Agreement nor any of the promises made by the Company or Employee in it may be construed by any person or entity as an admission of any liability or wrongdoing of any kind.

     12. Amendment. This Agreement may not be modified except through a written document in which the parties expressly agree to modify it, and that is signed by both parties.

     13. Entire Agreement. This Agreement and Exhibit A attached hereto set forth the entire agreement between the parties and supersede any prior agreements or understandings between them regarding its subject matter, including, but not limited to, the Employment Agreement, except as otherwise specifically provided in this Agreement. Employee acknowledges that Employee has

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not relied on any representations, promises, or agreements of any kind made to Employee in connection with Employee’s decision to make this Agreement, except for those set forth in this Agreement.

     14. Headings. The headings and numbering of sections and paragraphs in this Agreement are solely for convenience of reference and shall not be construed to define or limit any of the terms herein contained or to affect the meaning or interpretation of this Agreement. Unless the context clearly indicates otherwise, words used in the singular include the plural, words used in the plural include the singular and the word “including” means “including but not limited to.”

     15. Dispute Resolution. The Employee agrees that if the Employee asserts a claim against the Company regarding the interpretation or enforcement of this Agreement, such claim shall be resolved by binding arbitration before a single arbitrator, and the Employee shall not have the right to pursue any claim in court or to have a jury trial on the claim. The Company and Employee shall share equally all costs and expenses of the impartial arbitrator. Unless inconsistent with applicable law, each party shall bear the expenses of their respective attorneys, experts and witness fees, regardless of which party prevails in the arbitration. Any arbitration hearing will take place in Youngstown, Ohio, and will be conducted by a mutually-chosen arbitrator who is a well-recognized and respected arbitrator. An arbitration can only decide Employee’s claim and may not consolidate or join the claims of any other person who may have similar claims unless specifically agreed to by the Company. If any portion of this arbitration provision is deemed invalid or unenforceable, it shall not invalidate the remaining portion of this arbitration provision. Indemnification. The parties acknowledge and agree that Section 6(a) of the Employment Agreement shall survive the execution of this Agreement and the termination of the Employment Agreement.

     16. Taxes. The Company and Employee acknowledge and agree that the Company is authorized to report income, and to withhold from any pay and/or benefits due the amount of withholding taxes due, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the reporting and payment of such taxes. The Company shall not be responsible for any taxes (including, without limitation, any taxes under Section 409A), penalties, interest, or other monetary amounts owed by Employee or any other person with respect to amounts payable, or benefits provided, pursuant to this Agreement or otherwise.

     ONCE YOU SIGN BELOW, THIS DOCUMENT WILL BECOME A LEGALLY ENFORCEABLE AGREEMENT UNDER WHICH YOU WILL BE GIVING UP RIGHTS AND CLAIMS YOU MAY HAVE, ON THE TERMS STATED IN THIS AGREEMENT.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

By:	/S/ David G. Lodge
Name:	David G. Lodge
UNITED COMMUNITY FINANCIAL CORP.
By:	/S/ Douglas M. McKay
Name:	Douglas M. McKay
Title:	Chairman of the Board and Chief Executive Officer
THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN OHIO
By:	/S/ Douglas M. McKay
Name:	Douglas M. McKay
Title:	Chairman of the Board and Chief Executive Officer

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EX-10.2

EXHIBIT 10.2

CHANGE OF CONTROL AGREEMENT

     This CHANGE OF CONTROL AGREEMENT (hereinafter referred to as this “Agreement”), is made and entered into as of this 30th day of March, 2009 (“Effective Date”) by and between THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO, a savings bank incorporated under Ohio Law (hereinafter referred to as the “Company”, a wholly owned subsidiary of United Community Financial Corp., the “Holding Company”), and GREGORY G. KRONTIRIS, an individual (herein after referred to as the “Executive”).

RECITALS

     WHEREAS, the Executive is or shall be employed as the Senior Vice President and Chief Lending Officer of the Company; and

     WHEREAS, the Executive and the Company desire to enter into this Agreement to set forth certain terms and conditions of the employment relationship between the Company and the Executive resulting from a Change of Control (defined below).

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Executive, each party intending to be legally bound, hereby agree as follows:

AGREEMENTS

     1. Term. This Agreement shall be effective as of the Effective Date set forth above and shall terminate on or before the first anniversary of the Effective Date in accordance with the terms and conditions set forth in this Agreement.

     2. Termination of Employment in connection with Change of Control. In the event that the employment of the Executive is terminated (as defined below) by the Company within one (1) year after a Change of Control (defined below) for any reason other than Cause (defined below), death or disability, or within one (1) year after a Change of Control the Executive’s employment is terminated at the Executive’s option as provided in Section 3 below, then the following shall occur:

          (a) The Company shall promptly pay to the Executive an amount equal to the product of one (1) multiplied by the Executive’s “base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (hereinafter collectively referred to as “Section 280G”).

          (b) For purposes of the Agreement, a “Change of Control” shall mean any one of the following events:

(i)	the acquisition by any person or entity of the ability to control the election of a majority of the directors of the Holding Company;
(ii)	the acquisition by any person or entity of “control” of the Holding Company within the meaning of 12 C.F.R. Section 303.81(c) (even if the Company and/or the Holding Company does not satisfy the definition of ‘insured bank’ at such time); and
(iii)	the sale by the Holding Company of all, or substantially all, of the assets of the Holding Company; provided; however, that the sale of

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the Company to, or a merger of the Company with and into, an entity directly or indirectly acquired by the Holding Company in or part of a transaction in which the Company is not the surviving entity shall not constitute a change of control so long as the present capacity or circumstances in which the Executive is employed by the Company does not constitute a Material Adverse Change (defined below).

          For purposes of this paragraph, the term “person” refers to an individual or corporation, partnership, trust, association or other organization, but does not include the Executive or any person or persons with whom the Executive is “acting in concert” within the meaning of 12 C.F.R. Section 303.81(b).

          (c) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement in any way, nor shall any amounts or benefits received from other employment or otherwise by the Executive offset in any manner the obligations of the Company hereunder.

          (d) In the event that any payments pursuant to this Agreement or pursuant to any other plan, agreement or arrangement would result in or contribute to the imposition of a penalty tax pursuant to Section 280G and Internal Revenue Code Section 4999, such payments shall be reduced to the maximum amount that may be paid under Section 280G without exceeding such limits. Any such reduction shall be made consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder (“Section 409A”). Any payments made to the Executive pursuant to this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.

          (e) As used in this Section 2, “Cause” shall mean the termination of the Executive by the Company because of the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure or refusal to perform the duties and responsibilities of the Executive in connection with his employment with the Company, willful violation of any law, rule or regulation (other than traffic violations or other minor offenses), final cease-and-desist order or material breach of any provision of this Agreement. In the event of Executive’s termination for Cause, the Executive shall not receive, and shall have no right to receive, any compensation or other benefits under this Agreement for any period after such termination.

          (f) For purposes of this Agreement, any reference to the Executive’s termination of employment (or any form thereof) shall mean the Executive’s “separation from service”, within the meaning of Section 409A, from the Company and all entities with whom the Company would be treated as a single employer for purposes of Sections 414(b) and (c) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

     3. Termination of Employment at the Option of the Executive in connection with a Change of Control. The employment of the Executive may be terminated at the option of Executive within one (1) year after a Change of Control, upon delivery by the Executive of written notice of termination to the Company if the present capacity or circumstances in which the Executive is employed are materially adversely changed (including, but not limited to, a material reduction in responsibilities or authority or the assignment of duties or responsibilities substantially inconsistent with those normally associated with the Executive’s position immediately prior to the Change of Control, change of title or the requirement that the Executive

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regularly perform his principal functions more than thirty-five (35) miles from his primary office as it existed immediately prior to the Change of Control (the foregoing collectively referred to in this Agreement as a “Material Adverse Change”). Should this event occur, the Company shall pay the Executive the amount set forth above in Section 2(a).

     4. Non-Compete. If the Executive terminates his employment without the written consent of the Company, other than pursuant to Section 3 of this Agreement, then, during the 12 months immediately following the effective date of such termination by Executive, the Executive shall not engage in the financial institutions business as a director, officer, executive or consultant for any business or enterprise that competes with the principal business of the Company or the Holding Company or any of their subsidiaries within Mahoning, Trumbull or Columbiana counties or any other geographic area in which the Company or the Holding Company is doing business at the time of Executive’s termination.

     5. Withholding. All payments required to be made by the Company hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to Federal, State and local tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation.

     6. Consolidation; Merger. Nothing in this Agreement shall preclude the Company or the Holding Company from consolidating with, merging into, or transferring all, or substantially all, of their assets to another corporation that assumes all their obligations and undertakings hereunder. Upon such a consolidation, merger or transfer of assets, the term “Company” as used herein, shall mean such other corporation or entity, and this Agreement shall continue in full force and effect.

     7. Governing Law. This Agreement has been executed and delivered in the State of Ohio and its validity, interpretation, performance and enforcement shall be governed by the laws of the State of Ohio, except to the extent that federal law is governing.

     8. Arbitration. Any dispute concerning the interpretation or application of this Agreement that cannot be resolved by mutual agreement of the Company and Executive must be submitted for determination by an impartial arbitrator selected in accordance with the American Arbitration Association’s Employment Dispute Resolution Rules.

     9. Notices. Any notice or other communication required or permitted pursuant to this Agreement shall be deemed delivered if such notice or communication is in writing and is delivered personally or by facsimile transmission or is deposited in the United States mail, postage prepaid, addressed as follows:

If to the Company:

President and Chief Operating Officer
The Home Savings and Loan Company of Youngstown, Ohio
275 West Federal Street
Youngstown, Ohio 44503

With a copy to:

General Counsel
The Home Savings and Loan Company of Youngstown, Ohio
275 West Federal Street
Youngstown, Ohio 44503

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If to the Executive:

Gregory G. Krontiris

or such other address as the recipient party shall have specified by prior written notice to the sending party.

     10. Binding Agreement. This Agreement shall be binding upon, and inure to the benefit of, the Executive and the Company and its successors and assigns.

     11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

     12. Amendment. No alteration, modification, amendment or addition to this Agreement, or any waiver of any of the terms hereof, shall be valid unless made in writing and signed by the duly authorized representative of the Company and by the Executive.

     13. Severability. If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect the other provisions of this Agreement not held to be invalid, and each such other provision shall, to the fullest extent consistent with applicable law, continue in full force and effect.

     14. Section 409A. This Agreement is intended to comply with or be exempt from the requirements of Section 409A, as applicable, and, to the maximum extent permitted by laws, shall be interpreted, operated and administered consistent with this intent. Nothing herein shall be construed as a guarantee of any particular tax treatment to the Executive and none of the Company, the Holding Company or any other person shall have any liability to the Executive in the event this Agreement fails to comply with the requirements of Section 409A. Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A and as determined under the Holding Company’s policy for determining specified employees) on the date of the Executive’s termination and the Executive is entitled to a payment under this Agreement that is required to be delayed pursuant to Section 409A, then such payment shall not be paid until the first business day of the seventh month following the date of the Executive’s termination (or, if earlier, the date of the Employee’s death).

[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has signed this Agreement, each as of the day and year first above written.

THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO
By:
Name:	Patrick W. Bevack
Title:	President and Chief Executive Officer
By:
Name:	Gregory G. Krontiris

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EX-10.3

EXHIBIT 10.3

UNITED COMMUNITY FINANCIAL CORP.
1999 LONG-TERM INCENTIVE PLAN
AWARD AGREEMENT

     THIS AWARD AGREEMENT (“Agreement”) is made to be effective as of the ___ day of                                         , 20___, by and between United Community Financial Corp. (the “Company”) and «Name» (the “Grantee”). Capitalized terms used in this Agreement and otherwise not defined herein shall have the meanings given them in the United Community Financial Corp. 1999 Long-Term Incentive Plan (the “Plan”), as it may be amended from time to time.

RECITALS:

     WHEREAS, pursuant to the provisions of the Plan, the Board of Directors of the Company has appointed a Committee (the “Committee”) to administer the Plan; and

     WHEREAS, the Committee has determined that an Award should be granted to the Grantee upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the above premises and intending to be legally bound by this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to the following:

1. Grant of Award. The Company hereby grants to the Grantee the award (the “Award”) described in the Statement of Award attached as Exhibit A and incorporated into this Agreement by reference (the “Statement of Award”).

2. Terms and Conditions of the Award.

     a. General. The Statement of Award sets forth the exercise price, if any (the “Exercise Price”), to be paid by the Grantee to the Company upon the exercise of the Award and the vesting schedule of the Award. The Award cannot be exercised after the Expiration Date set forth in the Statement of Award. As described in the Plan, the Award may expire earlier upon the termination of Grantee’s employment with the Company or its Subsidiaries. Except as set forth in the Plan, the Award may not be sold, pledged, assigned, transferred or encumbered other than by will or by the laws of descent and distribution.

     b. Certain Provisions if the Award is an Option.

     (i) The Award may be exercised in whole or in part only by providing written notice delivered in person or by mail to the Secretary of the Company at the Company’s principal office, specifying the number of Options to be exercised.

     (ii) Upon the exercise of the Award, the Grantee may pay the Exercise Price in cash, Common Shares or any combination thereof. For purposes of determining the amount of the purchase price satisfied by payment in Common Shares, each Common Share shall be valued at its Fair Market Value on the date of exercise. Upon receipt of the Exercise Price, the Company or its designated representative shall issue or cause to be issued to the Grantee a number of Common Shares equal to the number of Common Shares exercised.

     (iii) Neither Grantee, nor Grantee’s estate or heirs, will have any rights as a shareholder of the Company with respect to the Common Shares underlying the Award until the Award has been exercised and a certificate for the Common Shares being acquired has been issued. No adjustments will be made for

43

dividends or other rights if the applicable record date occurs before the certificate for the Common Shares is issued, except as described in the Plan.

     c. Certain Provisions for Incentive Stock Options. If this Award is intended to be an incentive stock option (“ISO”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), the Grantee acknowledges that, in order for the Award to qualify as an ISO, the Grantee must comply with the following additional conditions:

     (i) The Grantee must remain employed by the Company or a Subsidiary at least until three months before the Option is exercised (or one year in the case of a Grantee who is disabled within the meaning of Section 22(e)(3) of the Code);

     (ii) The Grantee may not dispose of the Common Shares acquired upon the exercise of the Option (i) within two years of the Date of Grant of the Award (as set forth on the Statement of Award), and (ii) within one year after the date of the exercise of the Option; and

     (iii) The aggregate Fair Market Value (determined as of the Date of Grant of the Award) of the Common Shares with respect to which ISOs are exercisable under all plans of the Company or a Subsidiary for the first time by the Grantee during any calendar year shall not exceed $100,000, or such other limit as may be required by the Code.

          To the extent that the Grantee does not comply with the foregoing conditions, such portion of the Option will not be deemed to be an ISO under the Code with respect to the number of Common Shares that fail to satisfy each of these conditions.

     d. Certain Provisions if the Award is a Stock Appreciation Right. The Award may be exercised in whole or in part only by providing written notice delivered in person or by mail to the Secretary of the Company at the Company’s principal office, specifying the number of Options to be exercised.

     e. Certain Provisions if the Award is Restricted Stock. Grantee may exercise full voting rights associated with the Restricted Stock and will be entitled to receive all dividends and other distributions paid with respect to the Restricted Stock; provided, however, that if any dividends or other distributions are paid in Common Shares, those Common Shares will be subject to the same restrictions on transferability and forfeitability as the Common Shares with respect to which they were issued.

3. Satisfaction of Taxes and Tax Withholding. The Company or a subsidiary shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment from the Grantee in lieu of withholding) the amount necessary to satisfy any withholding or employment-related tax obligation attributable to the exercise of the Award or otherwise incurred with respect to the Plan or the Award, and the Company may defer delivery of any Common Shares pursuant to the exercise of the Award unless indemnified to its satisfaction. The Committee may, in its discretion and subject to such rules as the Committee may adopt, permit the Grantee to satisfy, in whole or in part, any withholding or employment-related tax obligation that may arise in connection with the grant, exercise or disposition of the Award by electing to have the Company withhold Common Shares to be issued, or by electing to deliver to the Company Common Shares already owned by the Grantee having a Fair Market Value equal to the amount of such tax obligation.

4. Governing Law. The rights and obligations of the Grantee and the Company under this Agreement shall be governed by and construed in accordance with the laws of the State of Ohio (without giving effect to the conflict of laws principles thereof). All disputes and matters arising under, in connection with or incident to this Agreement shall be litigated, if at all, in and before any Federal court sitting within the Northern District of Ohio or any State court sitting in Mahoning County, Ohio, to the exclusion of the courts of any other state or county.

5. WAIVER OF JURY TRIAL. THE PARTIES, EACH AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY

44

LITIGATION ARISING OUT OF, OR RELATED TO, THIS AGREEMENT. NO PARTY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

6. Rights and Remedies Cumulative. All rights and remedies of the Company and of the Grantee enumerated in this Agreement shall be cumulative and, except as expressly provided otherwise in this Agreement, none shall exclude any other rights or remedies allowed by law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.

7. Captions. The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.

8. Severability. If any provision of this Agreement or the application of any provision hereof to any person or any circumstance shall be determined to be invalid or unenforceable, then such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions shall remain in full force and effect. It is the intention of each party to this Agreement that if any provision of this Agreement is susceptible of two or more constructions, one of which would render the provision enforceable and the other or others of which would render the provision unenforceable, then the provision shall have the meaning that renders it enforceable.

9. Plan as Controlling. All terms and conditions of the Plan applicable to the Awards that are not set forth in this Agreement shall be deemed incorporated into this Agreement by reference. In the event that any provision in this Agreement conflicts with any term in the Plan, the term in the Plan shall be deemed controlling.

10. Entire Agreement. This Agreement and all exhibits attached hereto constitute the entire agreement between the Company and the Grantee in respect of the subject matter of this Agreement, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement. All representations of any type relied upon by the Grantee and the Company in making this Agreement are specifically set forth herein, and the Grantee and the Company acknowledge that each of them has relied on no other representation in entering into this Agreement. No change, termination or attempted waiver of any of the provisions of this Agreement shall be binding upon any party hereto unless contained in a writing signed by the party to be charged.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed to be effective as of the date first written above.

UNITED COMMUNITY FINANCIAL CORP.

By:

Name:

Title:

Grantee

«Name»

45

EXHIBIT A
STATEMENT OF AWARD

Grantee’s Name and Address:

Award:

     You have been granted the following Award, subject to the terms and conditions of the Plan and this Agreement as follows:

Type of Award:
Incentive Stock Option	o	Stock Appreciation Right	o
Nonqualified Stock Option	o	Stock Appreciation Right and Tandem Option	o
Restricted Stock	o

Date of Grant:
If Option or SAR, Exercise Price per Common Share:	$
Number of Common Shares Covered by Award:
Expiration Date:

Vesting Schedule:

     The Award shall vest in accordance with the following schedule:

	Number of Shares Covered by Award
Date	Which Become Exercisable	Cumulative Percentage Vested

     You may exercise immediately any Award identified in the Vesting Schedule as “fully exercisable” subject to the terms and conditions set forth in this Agreement and the Plan.

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EX-10.4

EXHIBIT 10.4

UNITED COMMUNITY FINANCIAL CORP.
2007 LONG-TERM INCENTIVE PLAN
AWARD AGREEMENT

     THIS AWARD AGREEMENT (“Agreement”) is made to be effective as of the                      day of                                         , 20     , by and between United Community Financial Corp. (the “Company”) and «Name» (the “Grantee”). Capitalized terms used in this Agreement and otherwise not defined herein shall have the meanings given them in the United Community Financial Corp. 2007 Long-Term Incentive Plan (the “Plan”), as it may be amended from time to time.

RECITALS:

     WHEREAS, pursuant to the provisions of the Plan, the Board of Directors of the Company has appointed a Committee (the “Committee”) to administer the Plan; and

     WHEREAS, the Committee has determined that an Award should be granted to the Grantee upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the above premises and intending to be legally bound by this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to the following:

1. Grant of Award. The Company hereby grants to the Grantee the award (the “Award”) described in the Statement of Award attached as Exhibit A and incorporated into this Agreement by reference (the “Statement of Award”).

2. Terms and Conditions of the Award.

     a. General. The Statement of Award sets forth the exercise price, if any (the “Exercise Price”), to be paid by the Grantee to the Company upon the exercise of the Award and the vesting schedule of the Award. The Award cannot be exercised after the Expiration Date set forth in the Statement of Award. As described in the Plan, the Award may expire earlier upon the termination of Grantee’s employment with the Company or its Subsidiaries. Except as set forth in the Plan, the Award may not be sold, pledged, assigned, transferred or encumbered other than by will or by the laws of descent and distribution.

     b. Certain Provisions if the Award is an Option.

     (i) The Award may be exercised in whole or in part only by providing written notice delivered in person or by mail to the Secretary of the Company at the Company’s principal office, specifying the number of Options to be exercised.

     (ii) Upon the exercise of the Award, the Grantee may pay the Exercise Price in cash, Common Shares or any combination thereof. For purposes of determining the amount of the purchase price satisfied by payment in Common Shares, each Common Share shall be valued at its Fair Market Value on the date of exercise. Upon receipt of the Exercise Price, the Company or its designated representative shall issue or cause to be issued to the Grantee a number of Common Shares equal to the number of Common Shares exercised.

     (iii) Neither Grantee, nor Grantee’s estate or heirs, will have any rights as a shareholder of the Company with respect to the Common Shares underlying the Award until the Award has been exercised and a certificate for the Common Shares being acquired has been issued. No adjustments will be made for

47

dividends or other rights if the applicable record date occurs before the certificate for the Common Shares is issued, except as described in the Plan.

     c. Certain Provisions for Incentive Stock Options. If this Award is intended to be an incentive stock option (“ISO”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), the Grantee acknowledges that, in order for the Award to qualify as an ISO, the Grantee must comply with the following additional conditions:

     (i) The Grantee must remain employed by the Company or a Subsidiary at least until three months before the Option is exercised (or one year in the case of a Grantee who is disabled within the meaning of Section 22(e)(3) of the Code);

     (ii) The Grantee may not dispose of the Common Shares acquired upon the exercise of the Option (i) within two years of the Date of Grant of the Award (as set forth on the Statement of Award), and (ii) within one year after the date of the exercise of the Option; and

     (iii) The aggregate Fair Market Value (determined as of the Date of Grant of the Award) of the Common Shares with respect to which ISOs are exercisable under all plans of the Company or a Subsidiary for the first time by the Grantee during any calendar year shall not exceed $100,000, or such other limit as may be required by the Code.

          To the extent that the Grantee does not comply with the foregoing conditions, such portion of the Option will not be deemed to be an ISO under the Code with respect to the number of Common Shares that fail to satisfy each of these conditions.

     d. Certain Provisions if the Award is a Stock Appreciation Right.

     (i) The Award may be exercised in whole or in part only by providing written notice delivered in person or by mail to the Secretary of the Company at the Company’s principal office, specifying the number of Options to be exercised.

     (ii) Neither Grantee, nor Grantee’s estate or heirs, will have any rights as a shareholder of the Company with respect to the Common Shares underlying the Award until the Award has been exercised and a certificate for the Common Shares being acquired has been issued. No adjustments will be made for dividends or other rights if the applicable record date occurs before the certificate for the Common Shares is issued, except as described in the Plan.

     e. Certain Provisions if the Award is Restricted Stock. Grantee may exercise full voting rights associated with the Restricted Stock and will be entitled to receive all dividends and other distributions paid with respect to the Restricted Stock; provided, however, that if any dividends or other distributions are paid in Common Shares, those Common Shares will be subject to the same restrictions on transferability and forfeitability as the Common Shares with respect to which they were issued.

3. Satisfaction of Taxes and Tax Withholding. The Company or a subsidiary shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment from the Grantee in lieu of withholding) the amount necessary to satisfy any withholding or employment-related tax obligation attributable to the exercise of the Award or otherwise incurred with respect to the Plan or the Award, and the Company may defer delivery of any Common Shares pursuant to the exercise of the Award unless indemnified to its satisfaction. The Committee may, in its discretion and subject to such rules as the Committee may adopt, permit the Grantee to satisfy, in whole or in part, any withholding or employment-related tax obligation that may arise in connection with the grant, exercise or disposition of the Award by electing to have the Company withhold Common Shares to be issued, or by electing to deliver to the Company Common Shares already owned by the Grantee having a Fair Market Value equal to the amount of such tax obligation.

48

4. Governing Law. The rights and obligations of the Grantee and the Company under this Agreement shall be governed by and construed in accordance with the laws of the State of Ohio (without giving effect to the conflict of laws principles thereof). All disputes and matters arising under, in connection with or incident to this Agreement shall be litigated, if at all, in and before any Federal court sitting within the Northern District of Ohio or any State court sitting in Mahoning County, Ohio, to the exclusion of the courts of any other state or county.

5. WAIVER OF JURY TRIAL. THE PARTIES, EACH AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF, OR RELATED TO, THIS AGREEMENT. NO PARTY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

6. Rights and Remedies Cumulative. All rights and remedies of the Company and of the Grantee enumerated in this Agreement shall be cumulative and, except as expressly provided otherwise in this Agreement, none shall exclude any other rights or remedies allowed by law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.

7. Captions. The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.

8. Severability. If any provision of this Agreement or the application of any provision hereof to any person or any circumstance shall be determined to be invalid or unenforceable, then such determination shall not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions shall remain in full force and effect. It is the intention of each party to this Agreement that if any provision of this Agreement is susceptible of two or more constructions, one of which would render the provision enforceable and the other or others of which would render the provision unenforceable, then the provision shall have the meaning that renders it enforceable.

9. Plan as Controlling. All terms and conditions of the Plan applicable to the Awards that are not set forth in this Agreement shall be deemed incorporated into this Agreement by reference. In the event that any provision in this Agreement conflicts with any term in the Plan, the term in the Plan shall be deemed controlling.

10. Entire Agreement. This Agreement and all exhibits attached hereto constitute the entire agreement between the Company and the Grantee in respect of the subject matter of this Agreement, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement. All representations of any type relied upon by the Grantee and the Company in making this Agreement are specifically set forth herein, and the Grantee and the Company acknowledge that each of them has relied on no other representation in entering into this Agreement. No change, termination or attempted waiver of any of the provisions of this Agreement shall be binding upon any party hereto unless contained in a writing signed by the party to be charged.

49

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed to be effective as of the date first written above.

UNITED COMMUNITY FINANCIAL CORP.

By:
Name:

Title:

Grantee

«Name»

50

EXHIBIT A
STATEMENT OF AWARD

Grantee’s Name and Address:

Award:

     You have been granted the following Award, subject to the terms and conditions of the Plan and this Agreement as follows:

Type of Award:
Incentive Stock Option	o	Stock Appreciation Right	o
Nonqualified Stock Option	o	Stock Appreciation Right and Tandem Option	o
Restricted Stock	o
Date of Grant:
If Option or SAR, Exercise Price per Common Share:		$
Number of Common Shares Covered by Award:
Expiration Date:

Vesting Schedule:

     The Award shall vest in accordance with the following schedule:

	Number of Shares Covered by Award
Date	Which Become Exercisable	Cumulative Percentage Vested

     You may exercise immediately any Award identified in the Vesting Schedule as “fully exercisable” subject to the terms and conditions set forth in this Agreement and the Plan.

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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 quarterly report on Form 10-Q of United Community Financial Corp.
2)	Based on my knowledge, this quarterly 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 covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 this 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 quarterly report is being prepared;
b)	designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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 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 affect materially, the registrant’s internal control over financial reporting.

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

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

May 11, 2009

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EX-31.2

EXHIBIT 31.2

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

I, James R. Reske, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of United Community Financial Corp.
2)	Based on my knowledge, this quarterly 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 covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 this 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 quarterly report is being prepared;
b)	designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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 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 affect materially, the registrant’s internal control over financial reporting.

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

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/ James R. Reske James R. Reske, CFA

Chief Financial Officer

May 11, 2009

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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 Quarterly Report of United Community Financial Corp. (the “Company”) on Form 10-Q for the period ending March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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 results of operations of the Company.

/S/ Douglas M. McKay Douglas M. McKay	/S/ James R. Reske James R. Reske, CFA
Chief Executive Officer	Chief Financial Officer
May 11, 2009	May 11, 2009

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.

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