EX-99

EX-99 2 d63990dex99.htm EX-99 EX-99

EXHIBIT 99

LOGO

275 West Federal Street

Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE


Media Contact:		Investor Contact:
Colleen Scott		Gary M. Small
Vice President of Marketing		President and Chief Executive Officer
Home Savings		United Community Financial Corp.
(330) 742-0638		(330) 742-0472
cscott@homesavings.com

UCFC ANNOUNCES THIRD QUARTER RESULTS

AND DECLARES DIVIDEND

•

Net income of $4.1 million, or $0.086 per diluted share—Return on average assets 0.85%

•

Robust annualized loan growth of 17.8%, including loans held for sale

•

Maintained improved efficiency ratio of 63.5%

•

Tangible book value increased to $5.12 per share

•

Dividend of $0.025 per common share declared

YOUNGSTOWN, Ohio (October 20, 2015) – United Community Financial Corp. (Company) (Nasdaq: UCFC), parent company of The Home Savings and Loan Company (Home Savings), announced today that net income for the quarter ended September 30, 2015 totaled $4.1 million, or $0.086 per diluted common share. Net income for the nine months ended September 30, 2015 totaled $12.0 million, or $0.245 per diluted common share.

Gary M. Small, President and Chief Executive Officer of the Company and Home Savings, commented that, “We are pleased with the pace of performance improvement and see all aspects of our business improving. Quality loan growth, strong fee income and diligent expense management are creating outstanding momentum.”

Balance Sheet Highlights

Total Loans

Total outstanding loans, including loans held for sale, increased $146.8 million to $1.3 billion, or 15.0% on an annualized basis at September 30, 2015, compared to December 31, 2014. The increase was driven by a 35.5% increase of $89.8 million in commercial loans during the first nine months of 2015. Additionally, during the year, unfunded commercial loan commitments grew by 42.0% to approximately $82.6 million at September 30, 2015. Residential loans, including residential loans held for sale, increased 6.7%, or $50.7 million during the first nine months of 2015.

Total Deposits

Total deposits increased $62.6 million, or 6.2% on an annualized basis, to $1.4 billion at September 30, 2015, compared to $1.3 billion at December 31, 2014. Non-interest bearing accounts increased $20.6 million, or 11.0%, as a result of increasing commercial deposits since year end. During the same time period, interest bearing deposits increased 3.6%, or $42.0 million.

Third Quarter Results

Net Interest Income and Margin

Net interest income on a fully taxable equivalent basis was $14.3 million in the third quarter of 2015, up from the $12.7 million recorded in the third quarter of 2014 and the $13.9 million recorded in the second quarter of 2015. The improvement in net interest income, when comparing the third quarter of 2015 to the third quarter of 2014, was due to an increase in average net loan balances totaling approximately $144.7 million. Additionally, funding costs were reduced due to a modification of an FHLB advance and the prepayment of two repurchase agreements late in 2014. Net interest margin was 3.18% for the third quarter of 2015, an increase from 3.06% for the third quarter of 2014, and an increase from the 3.16% recorded in the previous quarter.

Provision for Loan Losses

The Company recognized a provision for loan losses of $673,000 in the third quarter of 2015 compared to a provision of $116,000 in the third quarter of 2014, and a provision of $753,000 in the previous quarter. Provision expense continues to be driven primarily by strong loan growth as charge-off activity returned to more normal levels.

Non-Interest Income

Non-interest income was $4.9 million in the third quarter of 2015 compared to $4.2 million in the third quarter of 2014, and down from $5.3 million in the previous quarter. The increase in non-interest income in comparing the third quarter of 2015 to the third quarter of 2014 was primarily a result of greater mortgage banking income driven by an increase in the volume of loans sold into the secondary market. The decrease in noninterest income compared to the prior quarter is a result of an unfavorable adjustment in the mortgage servicing rights valuation allowance.

Non-Interest Expense

Non-interest expense was $12.3 million for the third quarter of 2015 compared to $14.3 million for the third quarter of 2014, a decrease of $2.0 million. Significantly impacting this comparison was the recognition of a $1.4 million prepayment penalty on the early termination of a $30.0 million borrowing in 2014. Additionally, all other major expense categories were down. Total non-interest expense remained flat, when comparing the third quarter of 2015 to the prior quarter.

Year to Date Results

Net Interest Income and Margin

Net interest income on a fully taxable equivalent basis was $42.1 million for the first nine months of 2015, an increase of $4.0 million from the same period in 2014. Net interest margin was 3.19% for the first nine months of 2015 compared to 3.07% in the first nine months of 2014. As in the second quarter of 2015, the net interest margin continues to be positively impacted by the modification of an FHLB advance and the prepayment of two repurchase agreements that occurred at the end of 2014.

Provision for Loan Losses

The Company recognized a provision for loan losses of $1.2 million in the first nine months of 2015 compared to a negative provision of $1.5 million in the first nine months of 2014. The increase in provision for loan losses resulted from the growth in outstanding loans during the first nine months of 2015. Also affecting the comparison, a large commercial real estate loan paid off in the second quarter of 2014, releasing approximately $748,000 in reserves.

Non-Interest Income

Non-interest income was $14.3 million for the nine months ended September 30, 2015, compared to $10.8 million for the nine months ended September 30, 2014. This favorable comparison is a result of increased mortgage banking income. During the period, the Company realized a high level of mortgage loan production being sold into the secondary market along with improved pricing on loans sold.

Non-Interest Expense

Total non-interest expense was $37.2 million in the first nine months of 2015, a decrease of $4.8 million over the first nine months of 2014. All major expense categories declined as a result of aggressive process improvements and cost reduction efforts.

Asset Quality

Measures of asset quality continued to improve during the first nine months of 2015 as evidenced by nonperforming assets to total assets decreasing to 0.95%, compared to 1.40% for the first nine months of 2014. The allowance for loan loss as a percentage of total loans was 1.35% at September 30, 2015 compared with 1.52% at December 31, 2014 and 1.59% at September 30, 2014.

Equity

Tangible book value per common share at September 30, 2015 improved to $5.12, as compared to $4.88 at December 31, 2014. During the third quarter, Home Savings reclassified approximately $105.0 million of available for sale securities to held to maturity providing for additional stability of tangible book value. The Company continues its share repurchase program, repurchasing 159,100 shares during the quarter.

Dividend to be Paid

The Board of Directors declared a quarterly cash dividend of $0.025 per common share payable November 13, 2015 to shareholders of record at the close of business November 2, 2015.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, October 21, 2015, at 10:00 a.m. ET., to provide an overview of the Company’s third quarter 2015 results and highlights. The conference call may be accessed by calling 1-877-272-7661 ten minutes prior to the start time. Please ask to be joined into the United Community Financial Corp. (UCFC) call. Additionally, a live webcast may be accessed from the Company’s website www.ucfconline.com. Click on 3rd Quarter 2015 Conference Call on our corporate profile page to join the webcast.

United Community Financial Corp.

Home Savings is a wholly-owned subsidiary of the Company and operates 32 retail banking offices and nine loan production centers in Ohio and western Pennsylvania. Additional information on the Company and Home Savings may be found on the Company’s web site: www.ucfconline.com.

###

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”, “can expect” 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 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.

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


	September 30, 2015			December 31, 2014
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	19,831		$	21,152
Federal funds sold		24,849			11,828

Total cash and cash equivalents		44,680			32,980
Securities:
Available for sale, at fair value		366,765			499,790
Held to maturity (fair value of $113,152 and $0, respectively)		113,052			—
Loans held for sale, at lower of cost or market		14,195			20,730
Loans held for sale, at fair value		24,079			—
Loans, net of allowance for loan losses of $17,482 and $17,687		1,277,330			1,148,093
Federal Home Loan Bank stock, at cost		18,068			18,068
Premises and equipment, net		20,539			21,002
Accrued interest receivable		5,530			5,763
Real estate owned and other repossessed assets		3,316			3,467
Core deposit intangible		43			84
Cash surrender value of life insurance		54,482			46,401
Other assets		28,808			37,172

Total assets	$	1,970,887		$	1,833,550

Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,201,886		$	1,159,871
Non-interest bearing		208,598			187,965

Total deposits		1,410,484			1,347,836
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances		46,780			46,194
Short-term advances		216,000			140,000

Total Federal Home Loan Bank advances		262,780			186,194
Repurchase agreements and other		30,540			30,558

Total borrowed funds		293,320			216,752
Advance payments by borrowers for taxes and insurance		14,360			19,904
Accrued interest payable		233			185
Accrued expenses and other liabilities		8,561			8,738

Total liabilities		1,726,958			1,593,415

Shareholders’ Equity:
Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding		—			—
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 47,613,582 and 49,239,004 shares, respectively, outstanding		174,215			174,385
Retained earnings		137,743			128,512
Accumulated other comprehensive loss		(16,907	)		(19,998	)
Treasury stock, at cost, 6,525,328 and 4,899,906 shares, respectively		(51,122	)		(42,764	)

Total shareholders’ equity		243,929			240,135

Total liabilities and shareholders’ equity	$	1,970,887		$	1,833,550

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2015			2015			2014			2015			2014
	(Dollars in thousands, except per share data)
Interest income
Loans	$	13,426		$	12,890		$	12,436		$	39,007		$	36,919
Loans held for sale		390			341			114			1,025			237
Securities:
Available for sale		2,599			2,679			3,002			8,139			9,368
Held to maturity, nontaxable		33			12			—			45			—
Held to maturity, taxable		17			—			—			17			—
Federal Home Loan Bank stock dividends		181			178			180			541			677
Other interest earning assets		8			11			4			25			51

Total interest income		16,654			16,111			15,736			48,799			47,252
Interest expense
Deposits		1,690			1,639			1,548			4,862			4,852
Federal Home Loan Bank advances		340			302			537			947			1,579
Repurchase agreements and other		323			319			926			958			2,753

Total interest expense		2,353			2,260			3,011			6,767			9,184

Net interest income		14,301			13,851			12,725			42,032			38,068
Taxable equivalent adjustment		19			6			—			25			—

Net interest income (FTE)⁽¹⁾		14,320			13,857			12,725			42,057			38,068
Provision (recovery) for loan losses		673			753			116			1,242			(1,465	)

Net interest income after provision for loan losses (FTE)		13,647			13,104			12,609			40,815			39,533

Non-interest income
Non-deposit investment income		259			248			408			799			1,156
Service fees and other charges:
Mortgage servicing fees		683			681			678			2,038			2,053
Deposit related fees		1,405			1,341			1,321			3,811			3,850
Mortgage servicing rights valuation		(137	)		206			2			(92	)		(4	)
Mortgage servicing rights amortization		(450	)		(462	)		(435	)		(1,355	)		(1,259	)
Other service fees		19			20			3			56			3
Net gains (losses):
Securities available for sale		—			—			328			11			362
Mortgage banking income		1,709			2,041			676			5,303			1,600
Real estate owned and other repossessed assets charges, net		(119	)		(102	)		(203	)		(311	)		(628	)
Card fees		1,036			925			837			2,777			2,461
Other income		468			377			559			1,229			1,242

Total non-interest income		4,873			5,275			4,174			14,266			10,836

Non-interest expense
Salaries and employee benefits		6,894			6,898			7,001			20,968			22,863
Occupancy		819			768			874			2,505			2,622
Equipment and data processing		1,714			1,719			1,791			5,105			5,552
Financial institutions tax		272			326			198			924			594
Advertising		183			221			181			546			617
Amortization of core deposit intangible		14			13			17			41			52
Prepayment penalty		—			—			1,396			—			1,396
FDIC insurance premiums		313			307			295			946			875
Other insurance premiums		84			85			138			253			410
Professional fees:
Legal and consulting fees		361			311			184			889			522
Other professional fees		469			386			555			1,231			1,564
Real estate owned and other repossessed asset expenses		134			18			189			293			539
Other expenses		1,028			1,156			1,433			3,473			4,415

Total non-interest expenses		12,285			12,208			14,252			37,174			42,021

Income before income taxes		6,235			6,171			2,531			17,907			8,348
Taxable equivalent adjustment		19			6			—			25			—
Income tax expense (benefit)		2,073			2,040			(369	)		5,928			(39,050	)

Net income	$	4,143		$	4,125		$	2,900		$	11,954		$	47,398

Earnings per common share:
Basic	$	0.087		$	0.085		$	0.058		$	0.246		$	0.942
Diluted		0.086			0.084			0.058			0.245			0.937

⁽¹⁾	Net interest income is also presented on a fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item.

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands, except per share data)
Financial Data
Total assets	$	1,970,887		$	1,922,789		$	1,860,620		$	1,833,550		$	1,801,540
Total loans, net		1,277,330			1,224,468			1,168,434			1,148,093			1,119,955
Total securities		479,817			477,747			492,412			499,790			507,125
Total deposits		1,410,484			1,439,247			1,406,744			1,347,836			1,346,377
Total shareholders’ equity		243,929			236,462			247,104			240,135			233,706
Net interest income		14,301			13,851			13,880			13,351			12,725
Net interest income (FTE)⁽¹⁾		14,320			13,857			13,880			13,351			12,725
Provision (recovery) for loan losses		673			753			(184	)		194			116
Noninterest income		4,873			5,275			4,118			2,905			4,174
Noninterest expense		12,285			12,208			12,681			13,939			14,252
Income tax expense (benefit)		2,073			2,040			1,815			(685	)		(369	)
Net income		4,143			4,125			3,686			2,808			2,900

Share Data
Basic earnings per common share	$	0.087		$	0.085		$	0.075		$	0.057		$	0.058
Diluted earnings per common share		0.086			0.084			0.074			0.056			0.058
Book value per common share		5.12			4.95			5.01			4.88			4.70
Tangible book value per common share		5.12			4.95			5.01			4.88			4.70
Market value per common share		5.00			5.35			5.46			5.37			4.68
Common shares outstanding at end of period		47,614			47,763			49,309			49,239			49,682
Weighted average shares outstanding—basic		47,480			48,359			49,022			49,244			49,698
Weighted average shares outstanding—diluted		47,744			48,634			49,295			49,531			49,958

Key Ratios
Return on average assets ⁽²⁾		0.85	%		0.88	%		0.80	%		0.62	%		0.66	%
Return on average equity ⁽³⁾		6.87	%		6.73	%		5.99	%		4.70	%		4.99	%
Net interest margin		3.18	%		3.16	%		3.24	%		3.16	%		3.06	%
Efficiency ratio		63.53	%		63.40	%		70.07	%		72.85	%⁽⁴⁾		76.55	%
Nonperforming loans to net loans, end of period		1.20	%		1.55	%		1.72	%		1.78	%		1.85	%
Nonperforming assets to total assets, end of period		0.95	%		1.16	%		1.25	%		1.30	%		1.40	%
Allowance for loan loss as a percent of loans, end of period		1.35	%		1.36	%		1.45	%		1.52	%		1.59	%
Delinquent loans to total net loans, end of period		1.65	%		1.45	%		1.66	%		1.82	%		2.10	%

⁽¹⁾	Net interest income is also presented on a fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item

⁽²⁾	Net income divided by average total assets

⁽³⁾	Net income divided by average total equity

⁽⁴⁾	Excludes penalty on the prepayment of repurchase agreements

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family	$	74,042		$	69,485		$	63,597		$	60,546		$	56,445
Owner/nonowner occupied commercial real estate		167,366			148,025			132,305			121,595			123,260
Land		9,709			10,231			9,437			9,484			9,487
Construction		26,545			16,265			11,030			16,064			4,667
Commercial and industrial		65,004			69,269			54,036			45,222			39,853

Total		342,666			313,275			270,405			252,911			233,712
Residential mortgage loans
Real estate		723,619			709,342			696,387			694,105			669,270
Construction		40,723			34,074			37,293			37,113			52,735

Total		764,342			743,416			733,680			731,218			722,005
Consumer loans
Consumer		186,661			183,696			180,735			180,754			181,474

Total		186,661			183,696			180,735			180,754			181,474

Total loans		1,293,669			1,240,387			1,184,820			1,164,883			1,137,191
Less:
Allowance for loan losses		17,482			16,881			17,221			17,687			18,132
Deferred loan costs, net		(1,143	)		(962	)		(835	)		(897	)		(896	)

Total		16,339			15,919			16,386			16,790			17,236

Total loans, net		1,277,330			1,224,468			1,168,434			1,148,093			1,119,955
Loans held for sale, net		38,274			35,102			31,243			20,730			10,567

Total loans	$	1,315,604		$	1,259,570		$	1,199,677		$	1,168,823		$	1,130,522


	At or for the quarters ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	168,025		$	179,969		$	184,029		$	137,511		$	131,266
Non-interest bearing checking accounts		208,598			206,228			199,512			187,965			181,632

Total checking accounts		376,623			386,197			383,541			325,476			312,898
Savings accounts		277,313			282,737			282,643			274,149			273,192
Money market accounts		309,004			313,602			310,983			312,911			313,513

Total non-time deposits		962,940			982,536			977,167			912,536			899,603
Retail certificates of deposit		447,544			456,711			429,577			435,300			446,774

Total certificates of deposit		447,544			456,711			429,577			435,300			446,774

Total deposits	$	1,410,484		$	1,439,247		$	1,406,744		$	1,347,836		$	1,346,377

Certificates of deposit as a percent of total deposits		31.73	%		31.73	%		30.54	%		32.30	%		33.18	%

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	16,881		$	17,221		$	17,687		$	18,132		$	18,264
Provision (recovery)		673			753			(184	)		194			116
Net chargeoffs		(72	)		(1,093	)		(282	)		(639	)		(248	)

Ending balance	$	17,482		$	16,881		$	17,221		$	17,687		$	18,132


	At or for the quarters ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands)
Net (Charge-offs) Recoveries
Commercial loans
Multi-family	$	9		$	(64	)	$	13		$	—		$	—
Owner/nonowner occupied commercial real estate		(109	)		(31	)		9			(25	)		(9	)
Land		(12	)		—			—			—			—
Construction		(88	)		(603	)		—			—			—
Commercial and industrial		137			127			75			199			158

Total		(63	)		(571	)		97			174			149
Residential mortgage loans
Real estate		(16	)		(306	)		20			(141	)		(278	)
Construction		—			—			—			(488	)		(90	)

Total		(16	)		(306	)		20			(629	)		(368	)
Consumer loans
Consumer		7			(216	)		(399	)		(184	)		(29	)

Total		7			(216	)		(399	)		(184	)		(29	)

Total net chargeoffs	$	(72	)	$	(1,093	)	$	(282	)	$	(639	)	$	(248	)


	At or for the quarters ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family	$	—		$	85		$	85		$	93		$	114
Owner/nonowner occupied commercial real estate		3,694			5,637			5,700			5,781			6,804
Land		484			496			531			531			531
Construction		415			415			1,051			1,051			2,453
Commercial and industrial		4,016			4,016			4,016			4,016			4,144

Total		8,609			10,649			11,383			11,472			14,046
Residential mortgage loans
Real estate		4,845			6,475			6,652			6,816			4,700
Construction		—			—			—			—			—

Total		4,845			6,475			6,652			6,816			4,700
Consumer loans
Consumer		1,887			1,887			2,061			2,163			1,960

Total		1,887			1,887			2,061			2,163			1,960

Total nonperforming loans	$	15,341		$	19,011		$	20,096		$	20,451		$	20,706

Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	14,891		$	14,246		$	15,357		$	16,018		$	18,114
Past due 90 days and still accruing		—			—			—			—			—

Past due 90 days		14,891			14,246			15,357			16,018			18,114
Past due less than 90 days and on nonaccrual		450			4,765			4,739			4,433			2,592

Total nonperforming loans		15,341			19,011			20,096			20,451			20,706
Other real estate owned		3,262			3,127			2,908			3,345			4,445
Repossessed assets		54			234			211			122			42

Total nonperforming assets	$	18,657		$	22,372		$	23,215		$	23,918		$	25,193