UNITED COMMUNITY FINANCIAL CORP (Form: 8-K, Received: 04/17/2019 08:03:03)

UNITED COMMUNITY FINANCIAL CORP.

/s/ Jude J. Nohra

Jude J. Nohra

General Counsel & Secretary

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): April 16, 2019

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


OHIO	000-024399	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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Section 2 – Financial Information


Item 2.02		Results of Operation and Financial Condition

(a)		On April 16, 2019, United Community Financial Corp. issued a press release announcing its results of operations for the first quarter of 2019. A copy of the press release is attached as Exhibit 99.

Section 9 – Financial Statements and Exhibits


Item 9.01		Financial Statements and Exhibits.

(d)		Exhibits.


Exhibit Number	Description

99	Press Release of United Community dated April 16, 2019.	Included herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: April 16, 2019

EXHIBIT 99

LOGO

275 West Federal Street

Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE


Media Contact:				Investor Contact:
Kathy Bushway				Gary M. Small
Senior Vice President, Marketing				President and Chief Executive Officer
Home Savings				United Community Financial Corp.
(330) 742-0638				(330) 742-0472
kbushway@homesavings.com

UCFC ANNOUNCES STRONG EARNINGS FOR THE FIRST QUARTER AND A

DIVIDEND OF $0.07 PER COMMON SHARE

YOUNGSTOWN, Ohio (April 16, 2019) – United Community Financial Corp. (Company) (NASDAQ: UCFC), parent company of Home Savings Bank (Home Savings), today announced net income of $8.7 million, or $0.176 per diluted common share (“EPS”) for the three months ended March 31, 2019, compared to $0.171 EPS, or $8.6 million for the three months ended March 31, 2018.

First quarter 2019 highlights:

●

ROA of 1.22%, ROE of 10.99% and ROTE of 11.90%

●

Net loan growth of 7.1%, annualized on a linked quarter basis

●

Average customer deposit growth of 6.1% comparing first quarter 2019 to first quarter 2018

●

Net interest margin of 3.38%

●

Noninterest income growth of 4.4% comparing first quarter 2019 to first quarter 2018, 13.1% when adjusted for a change in mortgage servicing rights valuation

●

Repurchase of 328,000 shares, or approximately 0.7% of outstanding shares

Gary M. Small, President and Chief Executive Officer of the Company commented, “We are pleased with Q1 performance as our loan and deposit growth came in right on target, margin met expectations during an unpredictable interest rate environment, and our residential mortgage, wealth and insurance business units experienced strong revenue growth.”

Small further commented, “The year began a bit softer than normal as clients seemed to strike a cautious stance while evaluating the impact of Q4 market uncertainty. Activity levels picked up over the course of the quarter, the residential mortgage business began to benefit from the lower rate environment, and we enter Q2 in a good position.”

Solid Loan Growth

Total net loans grew $38.7 million on a linked quarter basis, or 7.1% annualized, in the first quarter of 2019. Commercial loan growth was $31.7 million for the quarter ended March 31, 2019, an annualized growth rate of 13.5% on a linked quarter basis. Residential mortgage loans increased $9.0 million when comparing the linked quarters, or 3.7% annualized.

Strong Business Deposit and Noninterest Bearing Deposit Growth

Average customer deposit growth was 6.1% when comparing the first quarter of 2019 to the first quarter of 2018. Average noninterest bearing deposits grew $31.3 million, or 8.4%, from March of 2018 to March of 2019 while average business deposits grew $58.8 million, or 24.0%, and average public funds grew $29.2 million, or 27.5%, over this same time frame.

Net Interest Income and Margin

Net interest income totaled $22.3 million on a fully taxable equivalent (FTE) basis for the quarter ended March 31, 2019, compared to $21.6 million for the quarter ended March 31, 2018, an increase of 3.0%. First quarter 2018 net interest income includes a onetime fee recognition from the early payoff of a single loan and a higher level of purchase accounting accretion income versus 2019. Adjusting for these two items, the increase in first quarter net interest income would be 7.0%.

The net interest margin on an FTE basis was 3.38% for the first quarter of 2019 compared to 3.47% for the similar period last year. The net interest margin during the first quarter of 2018 was positively impacted by the payoff of a single loan that added approximately 8 basis points to the reported margin. Also included in the margin for both years are purchase accounting yield adjustments aggregating 6 and 9 basis points respectively for 2019 and 2018. Absent of both the early payoff and the purchase accounting adjustments the net interest margin for the first quarter of 2019 would be 3.32% compared to 3.30% for the same time period last year.

Non-Interest Income

Non-interest income increased to $6.1 million in the first quarter of 2019, compared to $5.8 million in the first quarter of 2018, an increase of 4.4%. Excluding the unfavorable mortgage servicing rights valuation adjustment in the first quarter of 2019, non-interest income would have increased by 13.1%. Mortgage banking income was up 23.4%. Insurance agency income was up 21.5% along with wealth fees being up 12.6%. These increases helped offset the impact of the negative mortgage servicing rights valuation adjustment.

Non-Interest Expense

Non-interest expense was $17.7 million for the quarter ended March 31, 2019 compared to $16.6 million for the quarter ended March 31, 2018, or a 6.5% increase. Non-interest expense for the first quarter of 2019 also included charges of $650,000 for organizational restructuring of the retail and wealth business units. Absent of the organizational restructure charges the increase in non-interest expense is 2.6% for the same period. The Company’s efficiency ratio was 62.29%.

Credit Quality

Credit quality metrics continue to show very favorably during the first quarter of 2019. The ratio of nonperforming loans to net loans was 0.32% at March 31, 2019, which is down from 0.59% reported at March 31, 2018. Total nonperforming commercial loans remain low at $2.0 million as of March 31, 2019 or 0.20% of total commercial loans. Total nonperforming assets to assets was 0.34% at March 31, 2019, while total delinquent loans to net loans was 0.41% for the same period. These ratios were 0.65% and 0.81%, respectively, at March 31, 2018.

During the quarter ended March 31, 2019, the Company recognized total net charge offs of $58,000 or one basis point as a percentage of average loans.

The Company’s provision for loan losses totaled $61,000 for the first quarter of 2019, which was down from the $407,000 reported in the first quarter of 2018. As of March 31, 2019, the Company’s allowance for loan losses to total loans was 0.91%, versus 1.04% at March 31, 2018. Also at March 31, 2019 the allowance for loan loss as a percent of nonperforming loans totaled 287.7%.

Loans acquired through acquisition during the first quarter of 2017 were recorded at fair value. When combining the remaining fair value adjustment of $1.7 million and the Company’s allowance, the Company’s allowance as a percentage total loans increases to .99%.

Capital Management and Tangible Book Value per Share

During the first quarter of 2019, the Company repurchased 328,000 shares. The Company had remaining 1,545,000 shares authorized for repurchase as of March 31, 2019. Tangible book value per common share at March 31, 2019 was $5.95 compared to $5.45 at March 31, 2018.

Dividend Declaration

On April 16, 2019, the Board of Directors declared a quarterly cash dividend of $0.07 per common share. The dividend is payable May 10, 2019 to shareholders of record at the close of business April 29, 2019.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, April 17, 2019, at 10:00 a.m. ET., to provide an overview of the Company’s first quarter 2019 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 ir.ucfconline.com . Click on 1st Quarter 2019 Conference Call on the corporate profile page to join the webcast.

United Community Financial Corp.

Home Savings is a wholly owned subsidiary of the Company, offering a full line of commercial, wealth management and consumer banking products and services with 33 retail banking offices (32 in Ohio and one in Pennsylvania). Home Savings also has residential mortgage loan centers servicing Ohio, West Virginia, western Pennsylvania, northern Kentucky, and eastern Indiana. Additional information on the Company, Home Savings and James & Sons Insurance is available at ir.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,			March 31,
	2019			2018			F/(U)
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	41,920		$	27,683			51.4	%
Federal funds sold		35,277			19,058			85.1	%

Total cash and cash equivalents		77,197			46,741			65.2	%
Securities:
Trading, at fair value		666			—			0.0	%
Available for sale, at fair value		237,421			257,908			-7.9	%
Held to maturity (fair value of $74,748 and $78,033, respectively)		75,760			80,685			-6.1	%
Loans held for sale, at fair value		77,676			79,292			-2.0	%
Gross loans		2,235,995			2,083,053			7.3	%
Allowance for loan losses		(20,446	)		(21,610	)		-5.4	%

Net loans		2,215,549			2,061,443			7.5	%
Federal Home Loan Bank stock, at cost		16,702			19,324			-13.6	%
Premises and equipment, net		22,012			21,795			1.0	%
Accrued interest receivable		8,873			7,615			16.5	%
Real estate owned and other repossessed assets		1,180			1,293			-8.7	%
Goodwill		20,221			20,221			0.0	%
Core deposit intangible		1,521			1,851			-17.8	%
Customer list intangible		2,169			2,030			6.8	%
Cash surrender value of life insurance		64,606			62,922			2.7	%
Other assets		30,488			27,587			10.5	%

Total assets	$	2,852,041		$	2,690,707			6.0	%


Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,623,653		$	1,528,262			6.2	%
Noninterest bearing		404,644			376,904			7.4	%

Customer deposits		2,028,297			1,905,166			6.5	%
Brokered deposits		261,506			161,812			61.6	%

Total deposits		2,289,803			2,066,978			10.8	%
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances		—			48,731			-100.0	%
Short-term advances		204,000			245,000			-16.7	%

Total Federal Home Loan Bank advances		204,000			293,731			-30.5	%
Repurchase agreements and other		254			233			9.0	%

Total borrowed funds		204,254			293,964			-30.5	%
Advance payments by borrowers for taxes and insurance		19,542			18,444			6.0	%
Accrued interest payable		1,492			1,363			9.5	%
Accrued expenses and other liabilities		22,241			13,763			61.6	%

Total liabilities		2,537,332			2,394,512			6.0	%


Shareholders’ Equity:
Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding		—			—			0.0	%
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 48,852,688 and 49,882,491 shares, respectively, outstanding		177,410			177,297			0.1	%
Retained earnings		197,286			173,419			13.8	%
Accumulated other comprehensive loss		(18,416	)		(22,675	)		-18.8	%
Treasury stock, at cost, 5,286,222 and 4,256,419 shares, respectively		(41,571	)		(31,846	)		30.5	%

Total shareholders’ equity		314,709			296,195			6.3	%

Total liabilities and shareholders’ equity	$	2,852,041		$	2,690,707			6.0	%

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended
	March 31,			December 31,								March 31,
	2019			2018			Variance			F/(U)		2018			Variance			F/(U)
	(Dollars in thousands, except per share data)
Interest income
Loans	$	25,856		$	26,587		$	(731	)		-2.7%	$	22,759		$	3,097			13.6%
Loans held for sale		1,007			1,184			(177	)		-14.9%		858			149			17.4%
Securities:
Available for sale, nontaxable		307			334			(27	)		-8.1%		388			(81	)		-20.9%
Available for sale, taxable		1,263			1,148			115			10.0%		1,215			48			4.0%
Held to maturity, nontaxable		75			69			6			8.7%		51			24			47.1%
Held to maturity, taxable		379			380			(1	)		-0.3%		422			(43	)		-10.2%
Federal Home Loan Bank stock dividends		290			290			—			0.0%		280			10			3.6%
Other interest earning assets		224			178			46			25.8%		77			147			190.9%

Total interest income		29,401			30,170			(769	)		-2.5%		26,050			3,351			12.9%
Interest expense
Deposits		6,574			5,866			(708	)		-12.1%		3,097			(3,477	)		-112.3%
Federal Home Loan Bank advances		641			810			169			20.9%		1,420			779			54.9%

Total interest expense		7,215			6,676			(539	)		-8.1%		4,517			(2,698	)		-59.7%

Net interest income		22,186			23,494			(1,308	)		-5.6%		21,533			653			3.0%
Taxable equivalent adjustment		84			111			(27	)		-24.3%		97			(13	)		-13.4%

Net interest income (FTE) ⁽¹⁾		22,270			23,605			(1,335	)		-5.7%		21,630			640			3.0%
Provision for loan losses		61			178			117			65.7%		407			346			85.0%

Net interest income after provision for loan losses (FTE)		22,209			23,427			(1,218	)		-5.2%		21,223			986			4.6%

Non-interest income
Insurance agency income		701			562			139			24.7%		577			124			21.5%
Brokerage income		370			305			65			21.3%		272			98			36.0%
Service fees and other charges:
Deposit related fees		1,341			1,521			(180	)		-11.8%		1,300			41			3.2%
Mortgage servicing fees		873			858			15			1.7%		812			61			7.5%
Mortgage servicing rights valuation		(499	)		(44	)		(455	)		1034.1%		9			(508	)		-5644.4%
Mortgage servicing rights amortization		(446	)		(430	)		(16	)		3.7%		(500	)		54			-10.8%
Other service fees		38			36			2			5.6%		38			—			0.0%
Net gains (losses):
Trading securities		64			669			(605	)		-90.4%		—			64			0.0%
Securities available for sale		144			(861	)		1,005			-116.7%		139			5			3.6%
Mortgage banking income		1,676			1,118			558			49.9%		1,358			318			23.4%
Real estate owned and other repossessed assets charges, net		(31	)		(24	)		(7	)		29.2%		(78	)		47			-60.3%
Debit/credit card fees		934			1,033			(99	)		-9.6%		949			(15	)		-1.6%
Trust fee income		465			480			(15	)		-3.1%		469			(4	)		-0.9%
Bank owned life insurance		385			431			(46	)		-10.7%		433			(48	)		-11.1%
Other income		58			(69	)		127			-184.1%		41			17			41.5%

Total non-interest income		6,073			5,585			488			8.7%		5,819			254			4.4%

Non-interest expense
Salaries and employee benefits		10,575			9,029			(1,546	)		-17.1%		9,998			(577	)		-5.8%
Occupancy		1,046			1,023			(23	)		-2.2%		1,100			54			4.9%
Equipment and data processing		2,292			2,122			(170	)		-8.0%		2,154			(138	)		-6.4%
Financial institutions tax		509			464			(45	)		-9.7%		496			(13	)		-2.6%
Advertising		390			414			24			5.8%		235			(155	)		-66.0%
Amortization of intangible assets		127			128			1			0.8%		113			(14	)		-12.4%
FDIC insurance premiums		331			398			67			16.8%		290			(41	)		-14.1%
Other insurance premiums		76			70			(6	)		-8.6%		109			33			30.3%
Professional fees:
Legal fees		60			292			232			79.5%		299			239			79.9%
Other professional fees		587			721			134			18.6%		391			(196	)		-50.1%
Supervisory fees		34			34			—			0.0%		42			8			19.0%
Real estate owned and other repossessed asset expenses		39			34			(5	)		-14.7%		36			(3	)		-8.3%
Other expenses		1,608			2,449			841			34.3%		1,337			(271	)		-20.3%

Total non-interest expenses		17,674			17,178			(496	)		-2.9%		16,600			(1,074	)		-6.5%

Income before income taxes		10,608			11,834			(1,226	)		-10.4%		10,442			166			1.6%
Taxable equivalent adjustment		84			111			27			24.3%		97			13			13.4%
Income tax expense		1,868			2,172			304			14.0%		1,789			(79	)		-4.4%

Net income	$	8,656		$	9,551		$	(895	)		-9.4%	$	8,556		$	100			1.2%


Earnings per common share:
Basic	$	0.177		$	0.192		$	(0.015	)		-7.8%	$	0.172		$	0.005			2.9%
Diluted		0.176			0.191			(0.015	)		-7.9%		0.171			0.005			2.9%

⁽¹⁾

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

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED AVERAGE BALANCES

(Unaudited)


	For the three months ended
	March 31, 2019						December 31, 2018						March 31, 2018
	Average		Interest				Average		Interest				Average		Interest
	outstanding		earned/		Yield/		outstanding		earned/		Yield/		outstanding		earned/		Yield/
	balance		paid		rate		balance		paid		rate		balance		paid		rate
	(Dollars in thousands)
Interest earning assets:
Net loans ⁽¹⁾	$	2,191,746	$	25,864		4.75%	$	2,161,414	$	26,616		4.93%	$	2,026,266	$	22,760		4.49%
Loans held for sale		84,932		1,007		4.74%		100,348		1,184		4.68%		80,681		858		4.31%

Total loans, net		2,276,678		26,871		4.75%		2,261,762		27,800		4.91%		2,106,947		23,618		4.49%
Securities:
Available for sale-taxable		200,088		1,263		2.52%		196,910		1,148		2.33%		211,332		1,215		2.30%
Available for sale-nontaxable ⁽²⁾		43,468		365		3.36%		48,370		399		3.30%		54,737		472		3.45%
Held to maturity-taxable		63,674		379		2.38%		65,605		380		2.32%		72,627		422		2.32%
Held to maturity-nontaxable ⁽²⁾		13,047		93		2.85%		12,215		86		2.82%		9,227		63		2.73%

Total securities		320,277		2,100		2.62%		323,100		2,013		2.49%		347,923		2,172		2.50%
Federal Home Loan Bank stock		18,010		290		6.43%		19,144		290		6.06%		19,324		280		5.80%
Other interest earning assets		34,986		224		2.59%		34,779		178		2.03%		22,479		77		1.39%

Total interest earning assets		2,649,951		29,485		4.48%		2,638,785		30,281		4.59%		2,496,673		26,147		4.19%
Non-interest earning assets		176,913						176,579						176,785

Total assets	$	2,826,864					$	2,815,364					$	2,673,458

Interest bearing liabilities:
Deposits:
Checking accounts	$	650,268		1,440		0.89%	$	620,306		1,114		0.71%	$	593,499		687		0.47%
Savings accounts		297,410		29		0.04%		303,247		28		0.04%		303,639		27		0.04%
Certificates of deposit
Customer certificates of deposit		618,752		2,824		1.83%		619,208		2,652		1.70%		581,858		1,817		1.27%
Brokered certificates of deposit		397,137		2,281		2.30%		393,778		2,072		2.09%		165,169		566		1.39%

Total certificates of deposit		1,015,889		5,105		2.01%		1,012,986		4,724		1.85%		747,027		2,383		1.28%

Total interest bearing deposits		1,963,567		6,574		1.34%		1,936,539		5,866		1.20%		1,644,165		3,097		0.76%
Federal Home Loan Bank advances
Long-term advances		—		—		0.00%		46,879		357		3.02%		48,603		431		3.60%
Short-term advances		103,333		641		2.48%		75,033		453		2.40%		265,322		989		1.51%

Total Federal Home Loan Bank advances		103,333		641		2.48%		121,912		810		2.64%		313,925		1,420		1.83%
Repurchase agreements and other		233		—		0.00%		245		—		0.00%		213		—		0.00%

Total borrowed funds		103,566		641		2.48%		122,157		810		2.63%		314,138		1,420		1.83%

Total interest bearing liabilities	$	2,067,133		7,215		1.40%	$	2,058,696		6,676		1.29%	$	1,958,303		4,517		0.94%

Non-interest bearing liabilities
Total noninterest bearing deposits		400,874						395,649						375,142
Other noninterest bearing liabilities		43,851						46,559						40,729

Total noninterest bearing liabilities		444,725						442,208						415,871

Total liabilities	$	2,511,858					$	2,500,904					$	2,374,174
Shareholders’ equity		315,006						314,464						299,284

Total liabilities and equity	$	2,826,864					$	2,815,368					$	2,673,458

Net interest income and interest rate spread			$	22,270		3.08%			$	23,605		3.30%			$	21,630		3.25%

Net interest margin						3.38%						3.58%						3.47%
Average interest earning assets to average interest bearing liabilities						128.19%						128.18%						127.49%
Interest bearing deposits
Checking accounts	$	650,268	$	1,440		0.89%	$	620,306	$	1,114		0.71%	$	593,499	$	687		0.47%
Savings accounts		297,410		29		0.04%		303,247		28		0.04%		303,639		27		0.04%
Customer certificates of deposit		618,752		2,824		1.83%		619,208		2,652		1.70%		581,858		1,817		1.27%

Total customer deposits		1,566,430		4,293		1.10%		1,542,761		3,794		0.98%		1,478,996		2,531		0.68%
Brokered certificates of deposit		397,137		2,281		2.30%		393,778		2,072		2.09%		165,169		566		1.39%

Total interest bearing deposits		1,963,567		6,574		1.34%		1,936,539		5,866		1.20%		1,644,165		3,097		0.76%
Noninterest bearing deposits		400,874		—		0.00%		395,649		—		0.00%		375,142		—		0.00%

Total average deposits and cost of deposits	$	2,364,441	$	6,574		1.11%	$	2,332,188	$	5,866		1.01%	$	2,019,307	$	3,097		0.61%
Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances	$	—	$	—		0.00%	$	46,879	$	357		3.02%	$	48,603	$	431		3.60%
Short term advances		103,333		641		2.48%		75,033		453		2.40%		265,322		989		1.51%

Total Federal Home Loan Bank advances		103,333		641		2.48%		121,912		810		2.64%		313,925		1,420		1.83%
Repurchase agreements and other		233		—		0.00%		245		—		0.00%		213		—		0.00%

Total borrowed funds		103,566		641		2.48%		122,157		810		2.63%		314,138		1,420		1.83%

Total average deposits and other interest bearing liabilities and total cost of funds	$	2,468,007	$	7,215		1.17%	$	2,454,345	$	6,676		1.09%	$	2,333,445	$	4,517		0.79%


Customer deposits interest bearing and noninterest bearing	$	1,967,304	$	4,293		0.87%	$	1,938,410	$	3,794		0.78%	$	1,854,138	$	2,531		0.55%
Brokered deposits		397,137		2,281		2.30%		393,778		2,072		2.09%		165,169		566		1.39%
Total borrowings		103,566		641		2.48%		122,157		810		2.63%		314,138		1,420		1.83%
Cost of funds		2,468,007		7,215		1.17%		2,454,345		6,676		1.09%		2,333,445		4,517		0.79%

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

⁽²⁾ Yields are on a fully taxable equivalent basis.

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands, except per share data)
Financial Data
Total assets	$	2,852,041	$	2,811,357	$	2,789,183	$	2,770,558	$	2,690,707
Total loans, net		2,215,549		2,176,842		2,148,942		2,099,781		2,061,443
Total securities		313,847		319,498		320,806		328,924		338,593
Total deposits		2,289,803		2,213,220		2,352,476		2,135,345		2,066,978
Average interest-bearing deposits		1,963,567		1,936,539		1,884,617		1,718,639		1,644,165
Average noninterest-bearing deposits		400,874		395,649		382,044		376,905		375,142
Total shareholders’ equity		314,709		309,334		306,043		301,484		296,195
Net interest income		22,186		23,494		21,623		21,295		21,533
Net interest income (FTE) ⁽¹⁾		22,270		23,605		21,707		21,385		21,630
Provision for loan losses		61		178		251		(138)		407
Noninterest income		6,073		5,585		6,146		5,852		5,819
Noninterest expense		17,674		17,178		15,772		15,530		16,600
Income tax expense		1,868		2,172		2,217		2,214		1,789
Net income		8,656		9,551		9,529		9,541		8,556

Share Data
Basic earnings per common share	$	0.177	$	0.192	$	0.191	$	0.191	$	0.172
Diluted earnings per common share		0.176		0.191		0.190		0.190		0.171
Book value per common share		6.44		6.30		6.13		6.04		5.94
Tangible book value per common share		5.95		5.81		5.65		5.56		5.45
Market value per common share		9.35		8.85		9.67		10.99		9.86
Common shares outstanding at end of period		48,853		49,129		49,923		49,904		49,882
Weighted average shares outstanding--basic		48,854		49,445		49,683		49,694		49,611
Weighted average shares outstanding--diluted		49,113		49,695		49,947		49,944		49,885

Key Ratios
Return on average assets ⁽²⁾		1.22%		1.36%		1.37%		1.40%		1.28%
Return on average equity ⁽³⁾		10.99%		12.15%		12.25%		12.56%		11.44%
Return on tangible equity ⁽⁴⁾		11.90%		13.16%		13.28%		13.65%		12.44%
Net interest margin		3.38%		3.58%		3.33%		3.36%		3.47%
Efficiency ratio		62.29%		54.79%		57.30%		57.75%		60.20%
Nonperforming loans to net loans, end of period		0.32%		0.30%		0.42%		0.51%		0.59%
Nonperforming assets to total assets, end of period		0.34%		0.27%		0.36%		0.57%		0.65%
Allowance for loan loss as a percent of loans, end of period		0.91%		0.93%		0.98%		1.01%		1.04%
Delinquent loans to total net loans, end of period		0.41%		0.50%		0.69%		0.67%		0.81%

⁽¹⁾	Net interest income is presented on a fully taxable equivalent (FTE) basis, 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⁾	Net income divided by average total equity, minus average intangible assets

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family	$	163,243	$	134,143	$	139,938	$	141,004	$	137,836
Owner/nonowner occupied commercial real estate		412,550		409,979		408,938		396,624		384,533
Land		17,090		16,831		16,129		16,887		15,452
Construction		135,048		141,685		132,961		127,691		134,181
Commercial and industrial		246,740		240,293		233,801		218,611		201,132

Total		974,671		942,931		931,767		900,817		873,134
Residential mortgage loans
Real estate		934,586		927,255		909,626		888,583		882,873
Construction		45,102		43,435		39,396		40,623		42,453

Total		979,688		970,690		949,022		929,206		925,326
Consumer loans
Consumer		274,998		277,041		283,108		284,909		279,110

Total		274,998		277,041		283,108		284,909		279,110

Total loans		2,229,357		2,190,662		2,163,897		2,114,932		2,077,570
Less:
Allowance for loan losses		20,446		20,443		21,332		21,405		21,610
Deferred loan costs, net		(6,638)		(6,623)		(6,377)		(6,254)		(5,483)

Total		13,808		13,820		14,955		15,151		16,127

Total loans, net		2,215,549		2,176,842		2,148,942		2,099,781		2,061,443
Loans held for sale, net		77,676		91,472		95,235		107,701		79,292

Total loans	$	2,293,225	$	2,268,314	$	2,244,177	$	2,207,482	$	2,140,735


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	146,244	$	146,977	$	140,722	$	138,812	$	140,740
Non-interest bearing checking accounts		404,644		394,208		383,535		383,082		376,904

Total checking accounts		550,888		541,185		524,257		521,894		517,644
Savings accounts		297,186		298,087		300,007		306,283		308,025
Money market accounts		550,049		466,167		489,668		502,560		483,840

Total non-time deposits		1,398,123		1,305,439		1,313,932		1,330,737		1,309,509
Certificates of deposit		630,174		616,826		622,807		615,388		595,657

Total customer deposits		2,028,297		1,922,265		1,936,739		1,946,125		1,905,166
Brokered deposits		261,506		290,955		415,737		189,220		161,812

Total certificates of deposit		891,680		907,781		1,038,544		804,608		757,469

Total deposits	$	2,289,803	$	2,213,220	$	2,352,476	$	2,135,345	$	2,066,978

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	20,443	$	21,332	$	21,405	$	21,610	$	21,202
Provision		61		178		251		(138)		407
Net recoveries (chargeoffs)		(58)		(1,067)		(324)		(67)		1

Ending balance	$	20,446	$	20,443	$	21,332	$	21,405	$	21,610


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands)
Net Recoveries (Charge-offs)
Commercial loans
Multi-family	$	113	$	(99)	$	4	$	9	$	6
Owner/nonowner occupied commercial real estate		28		38		12		29		40
Land		—		—		150		—		—
Construction		1		—		11		10		7
Commercial and industrial		(84)		(765)		(275)		(72)		104

Total		58		(826)		(98)		(24)		157
Residential mortgage loans
Real estate		78		(131)		(141)		(14)		(66)
Construction		—		—		—		—		—

Total		78		(131)		(141)		(14)		(66)
Consumer loans
Consumer		(194)		(110)		(85)		(29)		(90)

Total		(194)		(110)		(85)		(29)		(90)

Total net chargeoffs	$	(58)	$	(1,067)	$	(324)	$	(67)	$	1


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family	$	—	$	171	$	275	$	275	$	275
Owner/nonowner occupied commercial real estate		1,565		13		1,101		1,111		1,206
Land		—		—		—		—		9
Construction		—		—		—		—		—
Commercial and industrial		456		531		1,489		1,475		1,459

Total		2,021		715		2,865		2,861		2,949
Residential mortgage loans
Real estate		3,883		4,170		4,426		6,146		7,045
Construction		—		—		—		—		—

Total		3,883		4,170		4,426		6,146		7,045
Consumer loans
Consumer		1,203		1,654		1,770		1,783		2,180

Total		1,203		1,654		1,770		1,783		2,180

Total nonperforming loans	$	7,107	$	6,539	$	9,061	$	10,790	$	12,174

Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	4,351	$	5,732	$	8,200	$	8,395	$	8,326
Past due 90 days and still accruing		—		18		—		—		—

Past due 90 days		4,351		5,750		8,200		8,395		8,326
Past due less than 90 days and on nonaccrual		2,756		789		861		2,395		3,848

Total nonperforming loans		7,107		6,539		9,061		10,790		12,174
Other real estate owned		1,143		1,049		907		802		1,030
Other classified assets		1,479		—		—		4,050		4,050
Repossessed assets		37		39		—		75		263

Total nonperforming assets	$	9,766	$	7,627	$	9,968	$	15,717	$	17,517

UNITED COMMUNITY FINANCIAL CORP.

NON-GAAP DISCLOSURE RECONCILIATION

(Unaudited)

Reconciliation of Average Shareholders’ Equity to Average Tangible Equity:


	At or for the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands, except per share data)
Average shareholders equity	$	315,006	$	314,464	$	311,058	$	303,733	$	299,284
Average intangible assets		23,994		24,123		24,144		24,063		24,175

Average tangible equity	$	291,012	$	290,341	$	286,914	$	279,670	$	275,109

Net income	$	8,656	$	9,551	$	9,529	$	9,541	$	8,556
Return on tangible equity		11.90%		13.16%		13.28%		13.65%		12.44%
Reconciliation of Fully Taxable Equivalent Net Interest Income to Net Interest Income:

	For the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands)

Interest income	$	29,401	$	30,170	$	27,690	$	26,661	$	26,050
Fully taxable equivalent adjustment		84		111		84		90		97

Fully taxable equivalent interest income		29,485		30,281		27,774		26,751		26,147
Interest expense		7,215		6,676		6,067		5,366		4,517

Fully taxable net interest income	$	22,270	$	23,605	$	21,707	$	21,385	$	21,630

Reconciliation of Coverage Ratio to Coverage Ratio with Fair Value Adjustments Included with Allowance for Loan Losses:



	March 31, 2019
	(Dollars in thousands)
Allowance for loan losses	$	20,446
Fair value adjustments		1,738

		22,184


Loans, net	$	2,215,548
Add: Allowance for loan losses and fair value adjustment		22,184

Gross loans	$	2,237,732


Coverage ratio with the Fair Value adjustments included in Allowance for loan losses		0.99%

Tangible Book Value Per Share:

Tangible book value, per share is defined at shareholders equity minus intangible assets divided by the number of shares outstanding.



	At the quarters ended
	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
	(Dollars in thousands, except per share data)
Total shareholders’ equity	$	314,709	$	309,334	$	306,043	$	301,484	$	296,195
Goodwill		20,221		20,221		20,221		20,221		20,221
Customer list intangible		2,169		2,214		2,259		1,980		2,030
Core deposit intangible		1,521		1,603		1,686		1,769		1,851
Total common shares outstanding		48,852,688		49,128,875		49,922,514		49,904,074		49,882,491
Tangible book value, as reported	$	5.95	$	5.81	$	5.65	$	5.56	$	5.45


Reconciliation of Net Interest Margin, Non-Interest Income and Non-Interest Expense:

	At the quarters ended
	March 31, 2019		March 31, 2018
Net interest income (FTE)	$	22,270	$	21,630
less: impact of loan payoff		-		(588)
less: purchase accounting		(360)		(545)

Ajdusted net interest income		21,910		20,497
Average earning assets		2,649,951		2,496,673
Net interest margin exc. loan payoff and purch. accounting		3.32%		3.30%

Non-interest income	$	6,073	$	5,819
less: mortgage servicing valuation adjustment		499		(9)

Non-interest income, adjusted		6,572		5,810
Non-interest income % increase		13.1%

Non-interest expense	$	17,674	$	16,600
less: organizational restructure charge		(650)		-

Non-interest expense, adjusted		17,024		16,600
Non-interest expense % increase		2.6%