8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 22, 2013

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

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

275 West Federal Street, Youngstown, Ohio 44503-1203

(Address of principal executive offices) (Zip Code)

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

Not Applicable

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

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

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

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

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

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

Section 3 – Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

On March 22, 2013, pursuant to the securities purchase agreements (the “Purchase Agreements”) entered into on January 11, 2013 between United Community Financial Corp. (“UCFC”) and each of 28 accredited investors (as that term is defined in Regulation D under the Securities Act of 1933, as amended) (each an “Investor,” and collectively, the “Investors”), the Investors invested an aggregate of $39,919,748 in UCFC for 6,574,272 newly issued common shares of UCFC (the “Common Shares”), at a purchase price of $2.75 per share, and 7,942 newly created and issued perpetual mandatorily convertible non-cumulative preferred shares of UCFC (the “Preferred Shares”), at a purchase price of $2,750 per share (the “Offering”). Upon UCFC shareholder approval, each of the Preferred Shares will automatically convert into 1,000 UCFC Common Shares. The Preferred Shares will initially not pay any dividends, but if they are not converted into Common Shares prior to June 30, 2013, semi-annual non-cumulative cash dividends will take effect at an annual rate of 12.00%, payment of which is subject to regulatory approval. The Preferred Shares are redeemable by UCFC at any time upon prior receipt of applicable regulatory approvals.

None of the Investors own more than 4.9% of UCFC, in each case as calculated under the applicable regulations of the Board of Governors of the Federal Reserve System. The Common Shares and Preferred Shares issued and sold under the Purchase Agreements were offered and sold by UCFC in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The placement agent with respect to the Offering has received compensation of $1,968,013 for services performed.

On March 26, 2013, UCFC used a portion of the proceeds from the Offering to make a capital contribution of $16.0 million to its wholly-owned subsidiary, The Home Savings and Loan Company of Youngstown, Ohio (“Home Savings”). This contribution was made to improve Home Savings’ capital position, and UCFC believes Home Savings’ Tier 1 leverage ratio will exceed 9.0% as of March 31, 2013, in accordance with Home Savings’ prior commitment to its regulators. UCFC is retaining the remaining proceeds from the Offering for general corporate purposes, to grow its business and serve as a continuing source of strength to Home Savings as required by applicable laws and regulations.

Section 5 – Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On March 26, 2013, the Compensation Committee and the Board of Directors of UCFC approved the United Community Financial Corp. & The Home Savings and Loan Company of Youngstown, Ohio Executive Incentive Plan (the “EIP”). The EIP provides incentive compensation awards to certain named executive officers of UCFC and Home Savings. Executive incentive awards for each year are generally based upon the actual performance of

UCFC for the 12 months ending September 30 compared to the actual performance of a peer group during the same 12 month period. The following description of the EIP is qualified in its entirety by reference to the complete terms of the EIP, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein.

The target and maximum incentive awards, respectively, for each year are measured as a percentage of the base salary of the Named Executive Officers, as follows: Patrick W. Bevack—50%, 100%; and James R. Reske and Gregory G. Krontiris—40%, 80%. Once the awards under the EIP are calculated, they are paid 60% in cash and 40% in restricted stock or stock options. The restricted stock or stock option awards will be granted under the Amended and Restated United Community Financial Corp. 2007 Long-Term Incentive Plan and vest equally over three years, beginning on the first anniversary of the award.

Each year, the calculation of the incentive awards under the EIP is determined by where UCFC’s actual performance falls in comparison to the peer group for five of six weighted performance measures. The comparison is based upon percentiles that correspond to a threshold level for each performance measure. The sixth performance measure, performance against budgeted net income, is intrinsic to UCFC. The threshold levels achieved are used to determine the bonus percentage for that performance measure based upon the executive officer’s position. The bonus percentage is multiplied by the performance measure’s assigned weighting and by the executive’s annual base salary to determine what amount, if any, is awarded for UCFC’s actual performance for that performance measure for that year. The amount earned for each performance measure is added together to determine the total incentive award under the EIP for that year.

The EIP further provides that a participant in the EIP must be employed with UCFC on the date the award is made; otherwise, the participant is not entitled to any award. The Board maintains discretion to amend, modify, terminate or otherwise adjust the EIP as necessary.

Section 7 – Regulation FD

Item 7.01 Regulation FD Disclosure.

A press release announcing the closing of the Purchase Agreements and transactions described above, under Item 3.02, among other things, is furnished with this Form 8-K as Exhibit 99.1.

Additional Information

This document does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

This document (including the exhibits filed herewith) may contain statements regarding future events, performance or results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) and are made pursuant to the safe harbors of the PSLRA. Actual results could differ materially from those expressed or implied by the forward-looking statements. Readers are cautioned not to unduly rely on forward-looking statements, which reflect only UCFC’s current expectations regarding future events and are not guarantees. Forward-looking statements speak only as of the date they are made, and UCFC does not undertake any obligation to update them to reflect changes that occur after that date, whether as a result of new information, future events or otherwise. A number of factors could cause results to differ significantly from UCFC’s expectations, including, among others, any factors identified in our Annual Report on Form 10-K for the year ended December 31, 2012, including under the headings “Discussion of Forward-Looking Statements” and “Risk Factors.”

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
10.1	Executive Incentive Plan
99.1	Press Release, dated March 22, 2013, for Closing of Private Offering

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 hereunto duly authorized.

UNITED COMMUNITY FINANCIAL CORP.
By:	/s/ Jude J. Nohra
	Jude J. Nohra, General Counsel & Secretary

Date: March 28, 2013

EX-10.1

Exhibit 10.1

UNITED COMMUNITY FINANCIAL CORP. &

THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO

EXECUTIVE INCENTIVE PLAN

ADOPTED: March 26, 2013

The United Community Financial Corp.’s (the “Company”) Executive Incentive Plan (“EIP”) provides incentive compensation awards to certain executive officers, which at the time of adoption of the EIP included Patrick W. Bevack, President and CEO of the Company and the Company’s wholly-owned subsidiary, The Home Savings and Loan Company of Youngstown, Ohio (“Home Savings”), James R. Reske, Treasurer and Chief Financial Officer of the Company and Executive Vice President of Home Savings, Jude J. Nohra, General Counsel and Secretary of the Company and Senior Vice President, General Counsel and Secretary of Home Savings, Gregory G. Krontiris, Senior Vice President and Chief Lending Officer of Home Savings, Matthew T. Garrity, Senior Vice President and Chief Credit Officer of Home Savings and Timothy W. Esson, Senior Vice President, Chief Financial Officer and Treasurer of Home Savings. Executive incentive awards are based upon the actual performance of the Company for a given year by comparing the 12 months ended September 30 to the actual performance of the peer group (see below) during the same 12 month period. See the “Weightings” table below.

The Compensation Committee and the Board of Directors previously developed a peer group, which it periodically reviews and revises as necessary. The peer group currently includes the following eighteen (18) organizations:

Peer Group:

Community Trust Bancorp, Inc. (CTBI)	Macatawa Bank Corporation (MCBC)
BankFinancial Corp (BFIN)	MainSource Financial Group, Inc. (MSFG)
CFS Bancorp (CITZ)	Mercantile Bank Corporation (MBWM)
ESB Financial Corporation (ESBF)	Metro Bancorp, Inc. (METR)
Farmers Capital Bank Corporation (FFKT)	Old Second Bancorp, Inc. (OSBC)
First Defiance Financial Corp. (FDEF)	Peoples Bancorp Inc. (PEBO)
First Financial Corporation (THFF)	Porter Bancorp, Inc. (PBIB)
Independent Bank Corporation (IBCP)	S. Y. Bancorp, Inc. (SYBT)
Lakeland Financial Corporation (LKFN)	Univest Corporation of Pennsylvania (UVSP)

In order for any awards to be made under the EIP for a calendar year’s performance, the Company must report positive net income for that calendar year ended December 31, calculated in accordance with GAAP, but adjusted to exclude the effect of extraordinary items. If this threshold is met, incentive awards will be calculated based upon the Company’s performance against its peers in five of the six weighted performance measures. Performance against the peer group is only measured against five of the six weighted performance measures because performance against budgeted net income is intrinsic to UCFC. See the “Weightings” table below.

The target and maximum incentive awards, respectively, measured as a percentage of base salary are as follows: Mr. Bevack—50%, 100%; and Messrs. Esson, Garrity, Krontiris, Nohra and Reske—40%, 80%. Once the award under the EIP is calculated, it is paid 60% in cash and 40% in restricted stock or stock options. The restricted stock or stock option awards will be awarded under the Amended and Restated United Community Financial Corp. 2007 Long-Term Incentive Plan and vest equally over three years, beginning on the first anniversary of the award.

The calculation of the incentive awards under the EIP is as follows. First, it must be determined where the Company’s actual performance falls in comparison to the peer group for each of the six performance measures. The comparison is based upon percentiles that correspond to a threshold level for that performance measure. See the “Threshold Levels” table below.

Threshold Levels:

	Overall Profitability			Growth Rate	Asset Quality
Level	Core ROAE	Core ROAA	Net Income Budget	Core Deposit Growth	Texas Ratio	NCOs/ Average Loans
1	<25th Pct	<25th Pct	70% of Budget	<25th Pct	<25th Pct	<25th Pct
2	25th	25th	75%	25th	25th	25th
3	30th	30th	80%	30th	30th	30th
4	35th	35th	85%	35th	35th	35th
5	40th	40th	95%	40th	40th	40th
6	Median	Median	100%	Median	Median	Median
7	55th	55th	105%	55th	55th	55th
8	60th	60th	115%	60th	60th	60th
9	65th	65th	120%	65th	65th	65th
10	70th	70th	125%	70th	70th	70th
11	>75th Pct	>75th Pct	130%	>75th Pct	>75th Pct	>75th Pct

Definitions:

• Pct: Percentile Rank within defined Peer Group

• “Core” ROAE and ROAA: GAAP performance excluding extraordinary items;

• Core Deposit Growth: Total Deposits less time deposits;

• Texas Ratio: Nonperforming Assets divided by sum of Tangible Common Equity plus Loan Loss Reserve; and

• “NCOs”: means Net charge offs.

The Committee maintains flexibility and discretion to conduct the evaluation and measurement of “Core” ROAE and ROAA on either a pre- or post-tax basis, depending upon the Committee’s determination as to which method provides the best comparison of the peer group and most appropriately reflects the goals of the EIP and the Board’s compensation philosophy.

Then, the threshold level achieved is used to determine the bonus percentage for that performance measure based upon the executive officer’s position. See the “Bonus Percentages” table below.

Bonus Percentages as Percent of Base Compensation:

Threshold Level	Pres/CEO Group 1			EVP/SVP’s Group 2			Actual Performance versus Peers
1		0.0	%		0.0	%	Below 25th Percentile
2		10.0	%		8.0	%	Above 25th percentile
3		20.0	%		16.0	%	Above 30th percentile
4		30.0	%		24.0	%	Above 35th Percentile
5		40.0	%		32.0	%	Above 40th Percentile
6		50.0	%		40.0	%	At or Above Median
7		60.0	%		48.0	%	Above 55th Percentile
8		70.0	%		56.0	%	Above 60th Percentile
9		80.0	%		64.0	%	Above 65th Percentile
10		90.0	%		72.0	%	Above 70th Percentile
11		100.0	%		80.0	%	At or Above 75th Percentile

The bonus percentage is multiplied by the performance measure’s assigned weighting and by the executive’s base salary to determine what amount, if any, is awarded for the Company’s actual performance for that

performance measure. The amount earned for each performance measure is added together to determine the total incentive award under the EIP.

Weightings for Performance Measures:

Profitability	Weight
		40.0	%
ROAE		5.0	%
ROAA		25.0	%
Budget Net Income		10.0	%
Growth		10.0	%
Core Deposit Growth		10.0	%
Asset Quality		50.0	%
Texas Ratio		40.0	%
NCOs/Average Loans		10.0	%
Total Weighting		100.0	%

For example, if the Company’s Core ROAE for a given year falls into the 40^th percentile when compared to its peers, Mr. Bevack’s incentive award for that performance measure would be as follows:

Incentive Plan		Bonus Percentage (based)
Weighting		on Threshold Level achieved		Base Salaryi
5.0%	X	40%	X	$386,250	= $7,725.00

The Plan further provides that a participant in the Plan must be employed with the Company on the date the award is made; otherwise, the participant is not entitled to any award.

The Board maintains discretion to amend, modify, terminate or otherwise adjust the Plan as necessary.

ⁱ  Based upon Mr. Bevack’s salary for the 2013 calendar year.

EX-99.1

Exhibit 99.1

275 West Federal Street

Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE

Media Contact:	Investor Contact:
Colleen Scott	James R. Reske
Vice President of Marketing	Chief Financial Officer
Home Savings	United Community Financial Corp.
(330) 742-0638	(330) 742-0592
cscott@homesavings.com	jreske@ucfconline.com

United Community Financial Corp. Announces Successful Completion of $39.9 Million Private Offering

YOUNGSTOWN, Ohio (March 22, 2013) – United Community Financial Corp. (United Community or the Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), today reported the successful completion of its previously disclosed $39.9 million private offering. The offering, which was initially announced on January 15, 2013, was comprised of approximately $18.1 million of common shares and approximately $21.8 million of preferred shares. In total, investors purchased 6,574,272 newly issued United Community common shares at a purchase price of $2.75 per share and 7,942 Series A Preferred Shares at a purchase price of $2,750 per share.

Patrick W. Bevack, President and CEO of United Community and Home Savings, commented, “The successful completion of the private offering is yet another major step forward for our Company. This capital raise provides United Community and Home Savings with the capital we need to grow our Company, raise our capital levels to levels that are commensurate with our risk profile and execute on our business plan.”

The private offering was the first part of a series of transactions in which the Company intends to raise a total of $47.0 million. As previously announced, the Company has entered into Subscription Agreements to issue approximately $2.1 million in common shares to the Company’s directors, officers and affiliates, and the Company also intends to commence a rights offering of approximately $5.0 million to existing shareholders. Both offerings will be at the same common share purchase price of $2.75 as paid by the investors in the private offerings.

The Company intends to conduct a Special Meeting of shareholders, at which time we will seek shareholder approval of both the conversion of the convertible preferred shares into common

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shares and the purchase of common shares by the directors, officers and their affiliates. This meeting is separate and distinct from the Company’s Annual Meeting, which will be scheduled at a later date.

Shareholders of record as of March 21, 2013, are considered to be rights holders, and will be eligible to participate in the rights offering. The Company had previously announced on March 11, 2013 that under the terms of the rights offering, all record holders of the Company’s common shares as of March 21, 2013 will receive, at no charge, the right to acquire 0.055 United Community common shares for each common share held as of the record date; however, that ratio has been increased slightly from 0.055 shares to 0.06 shares. Rights holders will also have the opportunity to purchase shares in excess of their basic subscription rights, subject to availability. Final terms will be announced and the rights offering will commence as soon as practicable after the review by the SEC of the registration statement relating to the offering, which was filed with the SEC today. Rights holders will receive instructions on how to participate in the mail in the same way they receive all other shareholder materials.

A wholly-owned subsidiary of United Community Financial Corp., Home Savings operates 33 full-service banking offices and 8 loan production offices located throughout Ohio and western Pennsylvania. Additional information on United Community and Home Savings may be found at www.ucfconline.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of the securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification of the securities under the securities laws of any such state or jurisdiction. The rights offering will be made only by means of a prospectus, copies of which will be mailed to all record date shareholders. No offer to buy the securities can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to notice of its acceptance given after the effective date. You may also request a copy of the prospectus by contacting the subscription agent for the rights offering, Registrar and Transfer Company at 10 Commerce Drive, Cranford, New Jersey 07016 or by writing to the Company at 275 West Federal Street, Youngstown, Ohio 44503-1203, Attention: James R. Reske, Chief Financial Officer and Treasurer.

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When used in this press release, the words or phrases “believes,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project”, “will have” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future

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periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

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

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