United Community Financial Corp. (United Community or the Company) (Nasdaq: UCFC), the holding Company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings or the Bank), announced today that Home Savings has successfully completed the bulk sale of a substantial amount of the Bank’s troubled loans, along with other assets, to an unrelated party. Assets with a total book balance of $114.8 million were sold in the bulk sale. The Home Savings board of directors approved the transaction agreement on Wednesday, September 19, 2012 and the transaction was completed on Friday, September 21, 2012.
As a result of the transaction, Home Savings has now exceeded the asset quality targets set forth in its recent Consent Order. The Consent Order required the Bank to reduce total adversely classified assets to a level at or below approximately $219.2 million by September 30, 2012 and $146.0 million by March 31, 2013. Immediately following the sale, total classified assets were approximately $85.0 million. 1 Classified assets peaked at $292.2 million in May 2011.
Patrick W. Bevack, President and CEO of United Community and Home Savings said, “This represents an enormous step forward for the Company. We had already reduced classified assets by $57.3 million in the first half of 2012, and this bulk sale will lift another $92.7 million in classified assets off of our books. With the bulk sale we are announcing today, we have achieved a substantial improvement in our asset quality and a dramatic reduction in our risk profile, and have met our regulatory asset quality targets well ahead of schedule.”
In prior years, management had intended to work through these classified assets in the normal course of business. However, favorable conditions and circumstances presented themselves at the current time, permitting the sale. Bevack continued, “By executing the sale, the Bank has accomplished, in one step, a meaningful cleanup of the balance sheet that would have taken months if not years to do in the ordinary course of business.”