UCFC Announces Net Income of $3.7 Million

• Return on average assets was 0.80% and return on average equity was 5.99% for the quarter
• Annualized net loan growth, including loans held for sale, was 10.6% for the first quarter
• Annualized deposit growth was 17.5% for the first quarter
• Net interest margin increased to 3.24% for the first quarter of 2015 from 3.16% from the previous quarter
• Non-interest income increased 41.8%, or $1.2 million
• Efficiency ratio improved to 70.1%
• UCFC declares a dividend of $0.01 per common share

YOUNGSTOWN, Ohio--(BUSINESS WIRE)-- United Community Financial Corp. (Company) (Nasdaq: UCFC), parent company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), announced today that net income for the quarter ended March 31, 2015 totaled $3.7 million, or $.074 per diluted common share, compared to $2.1 million or $0.041 per common share for the quarter ended March 31, 2014.

Gary M. Small, President and Chief Executive Officer of United Community and Home Savings, commented that, “Performance for the first quarter was in line with our expectations and we were very pleased with the continued improvement in pre-tax earnings, topping $5.5 million for the quarter. The results were driven by a powerful combination of strong loan and deposit growth, meaningful improvement in fee income, and a continuous focus on expense management. I expect these themes to be sustained going forward as the entire Home Savings team is very focused on delivering a very strong 2015.”

Total Loans

Total loans, including loans held for sale, increased $30.9 million to $1.2 billion at March 31, 2015 compared to December 31, 2014. The increase was driven by a 7.8% increase, or $19.6 million, in commercial loans during the first quarter of 2015. Unfunded commercial loan commitments remain strong at approximately $60.0 million at the end of the first quarter of 2015. Residential loans, including residential loans held for sale, increased 1.4%, or $10.9 million.

Total Deposits

Total deposits increased $58.9 million to $1.4 billion at March 31, 2015 compared to $1.3 billion at December 31, 2014. Total non-time deposits increased 7.1% which can be substantially attributed to Home Savings’ planned expansion efforts in attracting public funds.

First Quarter Results

Net Interest Income and Margin

Net interest income was $13.9 million in the first quarter of 2015 up from the $12.6 million recorded in the first quarter of 2014 and $13.4 million recorded in the previous quarter. Net interest margin was 3.24% for the first quarter of 2015 compared to 3.07% in the first quarter of 2014, and increased from the 3.16% net interest margin recorded in the previous quarter. The net interest margin is being positively impacted by the 2014 modification of a FHLB advance and the prepayment of two repurchase agreements.

Provision for Loan Losses

The Company recognized a negative provision for loan losses of $184,000 in the first quarter of 2015 compared to $33,000 of provision expense in first quarter of 2014, and $194,000 of provision expense in the previous quarter. Home Savings continues to experience positive trends in the loan portfolio’s asset quality metrics. This, combined with positive economic conditions has led to the negative loan loss provision in the first quarter of 2015. The volume of net chargeoffs declined during the quarter as compared to the same quarter last year and the previous quarter. At the end of the first quarter, net chargeoffs to average outstanding loans was 10 basis points on an annualized basis. This compares favorably to an average of 20 basis points over the previous four quarters.

Non-Interest Income

Non-interest income was $4.1 million in the first quarter of 2015 compared to $3.2 million in the first quarter of 2014 and up from $2.9 million in the previous quarter. This change was primarily attributable to an increase in the volume of loans sold into the secondary market. Additionally, Home Savings was able to realize benefit from increased pricing related to 2015 production.

Non-Interest Expense

Total non-interest expense was $12.7 million in the first quarter of 2015, an increase of $755,000 over the fourth quarter of 2014 when adjusted for a $2.0 million prepayment penalty that occurred at that time. The $755,000 increase is primarily reflective of the cost of funding revenue-producing initiatives. Total non-interest expense also decreased $862,000 from the $13.5 million reported in the first quarter of 2014. All major expense categories declined as a result of the successful efforts in monitoring and managing expenses.

Asset Quality

For the first quarter of 2015, the allowance for loan loss as a percentage of total loans was 1.45% at March 31, 2015 compared with 1.52% at December 31, 2014 and 1.90% at March 31, 2014. Measures of asset quality continued to improve during the first quarter of 2015. Delinquencies continue to decline along with nonperforming assets and nonperforming loans.

Dividend to be Paid

The Board of Directors declared a quarterly cash dividend of $0.01 per common share payable May 15, 2015 to shareholders of record at the close of business May 1, 2015.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, April 22, 2015, at 10:00 a.m. ET., to provide an overview of the Company's first 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 1st 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 full-service banking offices and nine loan production offices located throughout 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)
			March 31,					December 31,
			2015					2014
			(Dollars in thousands)
Assets:
Cash and deposits with banks			$	22,197				$	21,152
Federal funds sold				19,468					11,828
Total cash and cash equivalents				41,665					32,980
Securities:
Available for sale, at fair value				492,412					499,790
Loans held for sale				31,243					20,730
Loans, net of allowance for loan losses of $17,221 and $17,687				1,168,434					1,148,093
Federal Home Loan Bank stock, at cost				18,068					18,068
Premises and equipment, net				20,790					21,002
Accrued interest receivable				5,208					5,763
Real estate owned and other repossessed assets				3,119					3,467
Core deposit intangible				70					84
Cash surrender value of life insurance				46,733					46,401
Other assets				32,878					37,172
Total assets			$	1,860,620				$	1,833,550
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Interest bearing			$	1,207,232				$	1,159,871
Non-interest bearing				199,512					187,965
Total deposits				1,406,744					1,347,836
Borrowed funds:
Federal Home Loan Bank advances				152,389					186,194
Repurchase agreements and other				30,552					30,558
Total borrowed funds				182,941					216,752
Advance payments by borrowers for taxes and insurance				14,529					19,904
Accrued interest payable				219					185
Accrued expenses and other liabilities				9,083					8,738
Total liabilities				1,613,516					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 49,309,412 and 49,239,004 shares, respectively, outstanding				173,923					174,385
Retained earnings				131,238					128,512
Accumulated other comprehensive loss				(16,108	)				(19,998	)
Treasury stock, at cost, 4,829,498 and 4,899,906 shares, respectively				(41,949	)				(42,764	)
Total shareholders’ equity				247,104					240,135
Total liabilities and shareholders’ equity			$	1,860,620				$	1,833,550

UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
					For the Three Months Ended
					March 31,				December 31,				March 31,
					2015				2014				2014
					(Dollars in thousands, except per share data)
Interest income
	Loans				$	12,691			$	12,640			$	12,122
	Loans held for sale					294				217				49
	Securities:
		Available for sale				2,861				2,946				3,241
	Federal Home Loan Bank stock dividends					182				182				267
	Other interest earning assets					6				7				26
			Total interest income			16,034				15,992				15,705
Interest expense
	Deposits					1,533				1,583				1,677
	Federal Home Loan Bank advances					305				443				518
	Repurchase agreements and other					316				615				908
			Total interest expense			2,154				2,641				3,103
Net interest income						13,880				13,351				12,602
Provision for loan losses						(184	)			194				33
Net interest income after provision for loan losses						14,064				13,157				12,569
Non-interest income
	Non-deposit investment income					292				259				341
	Service fees and other charges
		Mortgage servicing fees				674				684				689
		Deposit related fees				1,065				1,051				1,198
		Mortgage servicing rights valuation				(161	)			(54	)			(1	)
		Mortgage servicing rights amortization				(443	)			(428	)			(392	)
		Other service fees				17				17				-
	Net gains (losses):
		Securities available for sale				11				82				3
		Mortgage banking income				1,553				(30	)			612
		Real estate owned and other repossessed assets charges, net				(90	)			(172	)			(383	)
	Card fees					816				893				772
	Other income					384				603				385
			Total non-interest income			4,118				2,905				3,224
Non-interest expense
	Salaries and employee benefits					7,176				6,683				7,580
	Occupancy					918				847				933
	Equipment and data processing					1,672				1,918				1,798
	Financial institutions tax					326				201				198
	Advertising					142				221				189
	Amortization of core deposit intangible					14				16				19
	Prepayment penalty					-				2,013				-
	FDIC assessment					326				341				253
	Other insurance premiums					84				85				137
	Professional fees
		Legal and consulting fees				217				85				161
		Other professional fees				376				381				392
	Real estate owned and other repossessed asset expenses					141				92				213
	Other expenses					1,289				1,056				1,670
			Total non-interest expenses			12,681				13,939				13,543
Income before income taxes						5,501				2,123				2,250
Income tax expense (benefit)						1,815				(685	)			156
Net income					$	3,686			$	2,808			$	2,094
Earnings per common share
	Basic				$	0.075			$	0.057			$	0.042
	Diluted					0.074				0.056				0.041

UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
		At or for the quarters ended
		March 31,				December 31,					September 30,					June 30,				March 31,
		2015				2014					2014					2014				2014
		(Dollars in thousands, except per share data)
Financial Data
Total assets		$	1,860,620			$	1,833,550				$	1,801,540				$	1,789,939			$	1,749,144
Total loans, net			1,168,434				1,148,093					1,119,955					1,086,771				1,060,901
Total securities			492,412				499,790					507,125					516,637				517,388
Total deposits			1,406,744				1,347,836					1,346,377					1,375,474				1,398,067
Total shareholders' equity			247,104				240,135					233,706					235,049				189,829
Net interest income			13,880				13,351					12,725					12,741				12,602
(Recovery) provision for loan losses			(184	)			194					116					(1,614	)			33
Noninterest income			4,118				2,905					4,174					3,438				3,224
Noninterest expense			12,681				13,939					14,252					14,226				13,543
Income tax expense (benefit)			1,815				(685	)				(369	)				(38,837	)			156
Net income			3,686				2,808					2,900					42,404				2,094
Share Data
Basic earnings per common share		$	0.075			$	0.057				$	0.058				$	0.839			$	0.042
Diluted earnings per common share			0.074				0.056					0.058					0.835				0.041
Book value per common share			5.01				4.88					4.70					4.66				3.76
Tangible book value per common share			5.01				4.88					4.70					4.66				3.76
Market value per common share			5.46				5.37					4.68					4.13				3.92
Common shares outstanding at end of period			49,309				49,239					49,682					50,452				50,422
Weighted average shares outstanding--basic			49,022				49,244					49,698					50,274				50,196
Weighted average shares outstanding--diluted			49,295				49,531					49,958					50,495				50,451
Key Ratios
Return on average assets (1)			0.80	%			0.62	%				0.66	%				9.67	%			0.48	%
Return on average equity (2)			5.99	%			4.70	%				4.99	%				84.84	%			4.52	%
Net interest margin			3.24	%			3.16	%				3.06	%				3.09	%			3.07	%
Efficiency ratio			70.07	%			72.85	%	(3)			76.55	%	(3)			87.77	%			83.45	%
Nonperforming loans to total loans, end of period			1.72	%			1.78	%				1.85	%				1.87	%			2.17	%
Nonperforming assets to total assets, end of period			1.25	%			1.30	%				1.40	%				1.39	%			1.58	%
Allowance for loan loss as a percent of loans, end of period			1.45	%			1.52	%				1.59	%				1.65	%			1.90	%
Delinquent loans to total loans, end of period			1.66	%			1.82	%				2.10	%				1.86	%			2.07	%

(1) Net income divided by average total assets

(2) Net income divided by average total equity

(3) Excludes penalty on the prepayment of repurchase agreements

UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
			At or for the quarters ended
			March 31,				December 31,				September 30,				June 30,				March 31,
			2015				2014				2014				2014				2014
			(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family			$	63,597			$	60,546			$	56,445			$	52,938			$	54,233
Owner/nonowner occupied commercial real estate				132,305				121,595				123,260				122,066				125,796
Land				9,437				9,484				9,487				9,635				9,829
Construction				11,030				16,064				4,667				1,010				207
Commercial and industrial				54,036				45,222				39,853				39,127				40,013
Total				270,405				252,911				233,712				224,776				230,078
Residential mortgage loans
Real estate				696,387				694,105				669,270				645,211				610,879
Construction				37,293				37,113				52,735				51,974				55,082
Total				733,680				731,218				722,005				697,185				665,961
Consumer loans
Consumer				180,735				180,754				181,474				182,027				184,409
Total				180,735				180,754				181,474				182,027				184,409
Total loans				1,184,820				1,164,883				1,137,191				1,103,988				1,080,448
Less:
Allowance for loan losses				17,221				17,687				18,132				18,264				20,554
Deferred loan costs, net				(835	)			(897	)			(896	)			(1,047	)			(1,007	)
Total				16,386				16,790				17,236				17,217				19,547
Total loans, net				1,168,434				1,148,093				1,119,955				1,086,771				1,060,901
Loans held for sale, net				31,243				20,730				10,567				9,290				4,230
Total loans			$	1,199,677			$	1,168,823			$	1,130,522			$	1,096,061			$	1,065,131
			At or for the quarters ended
			March 31,				December 31,				September 30,				June 30,				March 31,
			2015				2014				2014				2014				2014
			(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts			$	184,029			$	137,511			$	131,266			$	133,999			$	136,031
Non-interest bearing checking accounts				199,512				187,965				181,631				185,411				185,620
Total checking accounts				383,541				325,476				312,897				319,410				321,651
Savings accounts				282,643				274,149				273,192				277,404				278,906
Money market accounts				310,983				312,911				313,513				326,738				329,163
Total non-time deposits				977,167				912,536				899,602				923,552				929,720
Retail certificates of deposit				429,576				435,300				446,774				451,922				468,347
Total certificates of deposit				429,576				435,300				446,774				451,922				468,347
Total deposits			$	1,406,743			$	1,347,836			$	1,346,376			$	1,375,474			$	1,398,067
Certificates of deposit as a percent of total deposits				30.54	%			32.30	%			33.18	%			32.86	%			33.50	%

UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
		At or for the quarters ended
		March 31,				December 31,				September 30,				June 30,				March 31,
		2015				2014				2014				2014				2014
		(Dollars in thousands)
Allowance For Loan Losses
Beginning balance		$	17,687			$	18,132			$	18,264			$	20,554			$	21,116
(Recovery) provision			(184	)			194				116				(1,614	)			33
Net (chargeoffs) recoveries			(282	)			(639	)			(248	)			(676	)			(595	)
Ending balance		$	17,221			$	17,687			$	18,132			$	18,264			$	20,554
		At or for the quarters ended
		March 31,				December 31,				September 30,				June 30,				March 31,
		2015				2014				2014				2014				2014
		(Dollars in thousands)
Net (Charge-offs) Recoveries
Commercial loans
Multi-family		$	13			$	-			$	-			$	(135	)		$	(5	)
Owner/nonowner occupied commercial real estate			9				(25	)			(9	)			56				(252	)
Land			-				-				-				-				-
Construction			-				-				-				-				-
Commercial and industrial			75				199				158				218				137
Total			97				174				149				139				(120	)
Residential mortgage loans
Real estate			20				(141	)			(278	)			(181	)			(163	)
Construction			-				(488	)			(90	)			(330	)			(79	)
Total			20				(629	)			(368	)			(511	)			(242	)
Consumer loans
Consumer			(399	)			(184	)			(29	)			(304	)			(233	)
Total			(399	)			(184	)			(29	)			(304	)			(233	)
Total net (chargeoffs) recoveries		$	(282	)		$	(639	)		$	(248	)		$	(676	)		$	(595	)
		At or for the quarters ended
		March 31,				December 31,				September 30,				June 30,				March 31,
		2015				2014				2014				2014				2014
		(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family		$	85			$	93			$	114			$	133			$	1,158
Owner/nonowner occupied commercial real estate			5,701				5,781				6,804				4,902				5,033
Land			531				531				531				532				532
Construction			1,050				1,051				2,453				2,553				2,884
Commercial and industrial			4,016				4,016				4,144				4,151				4,155
Total			11,383				11,472				14,046				12,271				13,762
Residential mortgage loans
Real estate			6,652				6,816				4,700				5,380				6,133
Construction			-				-				-				-				-
Total			6,652				6,816				4,700				5,380				6,133
Consumer loans
Consumer			2,061				2,163				1,960				2,663				3,089
Total			2,061				2,163				1,960				2,663				3,089
Total nonperforming loans		$	20,096			$	20,451			$	20,706			$	20,314			$	22,984
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status		$	15,357			$	16,017			$	18,114			$	16,636			$	18,708
Past due 90 days and still accruing			-				-				-				-				-
Past due 90 days			15,357				16,017				18,114				16,636				18,708
Past due less than 90 days and on nonaccrual			4,739				4,434				2,592				3,678				4,276
Total nonperforming loans			20,096				20,451				20,706				20,314				22,984
Other real estate owned			2,908				3,345				4,445				4,546				4,700
Repossessed assets			211				122				42				2				-
Total nonperforming assets		$	23,215			$	23,918			$	25,193			$	24,862			$	27,684

Media Contact:
Home Savings
Colleen Scott, Vice President of Marketing, 330-742-0638
[email protected]
or
Investor Contact:
United Community Financial Corp.
Gary M. Small, President and Chief Executive Officer, 330-742-0472

Source: United Community Financial Corp.

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