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United Community Financial Corp. And Home Savings And Loan Announce Intention To Raise Capital And The Termination Of Home Savings’ Order To Cease And Desist

United Community Financial Corp. (United Community) (Nasdaq: UCFC), the holding company of The Home Savings and Loan Company (Home Savings), announced today that the Federal Deposit Insurance Corporation and the Ohio Division of Financial Institutions (Home Savings’ Regulators) terminated Home Savings’ Order to Cease and Desist, which was issued by Home Savings’ Regulators in August 2008. However, the Board of Directors of Home Savings has entered into a Consent Order with Home Savings’ Regulators, which lays the foundation for a stronger bank.

Patrick W. Bevack, President and CEO of United Community and Home Savings said, “We are very pleased that Home Savings’ Regulators have acknowledged the progress and significant efforts we’ve made over the last several years. The dedicated Directors and employees of Home Savings have worked, and continue to work, tirelessly to strengthen Home Savings and restore United Community back to profitability. In fact, we believe the Consent Order confirms the positive changes in management made by the Board by providing that Home Savings ‘shall continue to retain qualified management.’ However, we know there is more work to be done, and we have plans in place to achieve our goals.”

The terminated Cease and Desist Order included 22 provisions, while the Consent Order includes 13 provisions. Those 13 provisions contain few new requirements. One new requirement is the submission of a formal capital plan to Home Savings’ Regulators. It is important to note that for the past two years, United Community filed a capital plan with its Regulators as part of its strategic planning process.

In working with our Regulators, Home Savings will prepare a revised capital plan that achieves compliance with the new capital requirements of the Consent Order, continues to strengthen Home Savings and positions Home Savings to meet the challenges, and take advantage of the opportunities, that the future holds. The Consent Order requires a 9.00% Tier 1 Leverage ratio (up from 8.00% in the terminated order) and a 12.00% Total Risk Based Capital ratio (unchanged). Many institutions are being directed by the various federal and state regulators to increase capital so as to continue to ensure the safety and soundness of these institutions. The Board and management likewise agree that Home Savings’ capital ratios should be increased given Home Savings’ current risk profile. Bevack added, “When we succeed in our capital plan, the Consent Order allows Home Savings to petition its Regulators to ease the capital requirements of the Consent Order to match the level of risk at Home Savings.”

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