United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company (Home Savings), today reported a consolidated net loss of $3.0 million, or $(0.10) per diluted share, for the three months ended March 31, 2010. This compares to net income of $3.3 million, or $0.11 per diluted share, for the three months ended March 31, 2009.
Selected first quarter results:
Chairman, President and Chief Executive Officer Douglas M. McKay commented, “While we are disappointed in the lack of positive earnings for the first quarter, we recognize that the primary causes are the insufficient cash flows and reduced collateral valuations affecting the loans of our customers. In taking the difficult, but necessary, steps to provide for loan portfolio weaknesses, we are working together with our customers to take advantage of the opportunities that will present themselves once the effects of the slowly recovering economy are felt.”
Net Interest IncomeNet interest income was $17.7 million in the first quarter of 2010, a decrease from $18.7 million for the first quarter of 2009. The change in net interest income for the quarter ended March 31, 2010 as compared to the quarter ended March 31, 2009 is primarily due to a planned decline in average interest earning assets. Deposit expenses declined in the first quarter of 2010 to $9.3 million compared to $12.7 million in the first quarter of 2009. Interest expense on Federal Home Loan Bank advances declined $1.0 million from $1.9 million for the three months ended March 31, 2009 to $848,000 for the three months ended March 31, 2010. Interest expense on deposits declined primarily because of a decrease in the average balance of certificates of deposit of $154.2 million along with a 59 basis point reduction in interest paid on those deposits. Interest expense on Federal Home Loan Bank advances declined because of the decline in average balance of those liabilities of $168.8 million and a 25 basis point reduction in interest paid on those advances. This decline is driven by reduced funding needs.