United Community Financial Corp. Announces Third Quarter Results

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 $9.9 million, or $(0.32) per diluted share, for the three months ended September 30, 2010. This compares to a net loss of $867,000, or $(0.03) per diluted share, for the three months ended September 30, 2009. The Company also reported a cumulative net loss of $19.9 million, or $(0.66) per diluted share, for the nine months ended September 30, 2010 as compared to a cumulative net loss of $511,000, or $(0.02) per diluted share, for the nine months ended September 30, 2009.

The increased losses in both the third quarter and the nine months ended September 30, 2010 are substantially a result of increases in the provision for loan losses. The increased provision in both time periods is a result of a higher level of chargeoff activity, additional loan downgrades within the commercial real estate portfolio and increased specific reserves assigned to a number of commercial real estate loans.

Selected third quarter results:
  • Nonperforming loans reduced $12.4 million to $142.7 million from last quarter
  • Nonperforming assets reduced $14.2 million to $183.0 million from last quarter
  • Net interest margin improved 12 basis points to 3.42% compared to 3.30% last quarter
  • Tier 1 leverage ratio was 8.23%
  • Total Risk Based Capital was 13.12%
  • Book value per share and tangible book value per share were $6.51 and $6.49, respectively

As previously announced, the Board of Directors of UCFC has approved the appointment of Patrick W. Bevack as the President and Chief Executive Officer of UCFC, in addition to his current role as President and Chief Executive Officer of Home Savings. In accordance with applicable law, UCFC was required to obtain the consent of the Office of Thrift Supervision for this appointment, which the Board is pleased to announce it received on October 19, 2010. Mr. Bevack's appointment will be effective January 1, 2011, following the retirement of Douglas M. McKay on December 31, 2010.

Asset Quality

Nonperforming loans at September 30, 2010 decreased to $142.7 million, compared to $155.1 million at June 30, 2010, a decrease of $12.4 million during the period. Real estate owned and other repossessed assets were $40.3 million at September 30, 2010, as compared to $42.0 million at June 30, 2010. Nonperforming assets decreased $14.2 million, from $197.2 million at June 30, 2010, to $183.0 million at September 30, 2010.

Mr. Bevack commented that he expects to see continued improvement in asset quality in the near term. “While we are pleased to see certain asset quality performance measures improve from the previous quarter, the continued reduction of nonperforming assets is critical to UCFC returning to profitability. We will continue to devote the resources necessary to accelerate the trend in the reduction of nonperforming assets.”

Net Interest Income

The Company’s net interest margin increased to 3.42% for the quarter ended September 30, 2010 from 3.30% for the quarter ended June 30, 2010. Approximately half of the twelve basis point increase was due to the receipt of a large prepayment fee from a borrower during the quarter while the other half of the increase was primarily due to certificates of deposit repricing lower at a faster pace than the Company’s assets.

Capital and Book Value

The Company’s Tier 1 leverage ratio was 8.23% as of September 30, 2010, compared to 8.22% at December 31, 2009. The Company’s total risk-based capital ratio was 13.12% at September 30, 2010, as compared to 12.80% at December 31, 2009. Book value per share and tangible book value per share at September 30, 2010 were $6.51 and $6.49, respectively. “Despite the economic challenges, we are pleased to see that our capital ratios have remained stable in 2010 and our book value remains above $6.50 per share,” noted Mr. Bevack.

Home Savings is a wholly-owned subsidiary of the Company and operates 38 full-service banking offices and six 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” 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)
 
September 30, December 31,
2010 2009
(Dollars in thousands)
Assets:
Cash and deposits with banks $ 21,110 $ 22,330
Federal funds sold and other   19,613     22,744  
Total cash and cash equivalents 40,723 45,074
Securities:
Available for sale, at fair value 390,636 281,348
Loans held for sale

15,376
10,497
Loans, net of allowance for loan losses of $40,884 and $42,287, respectively

 

1,726,381
1,866,018
Federal Home Loan Bank stock, at cost 26,464 26,464
Premises and equipment, net 22,149 23,139
Accrued interest receivable 8,963 9,090
Real estate owned and other repossessed assets 40,297 30,962
Core deposit intangible 525 661
Cash surrender value of life insurance 27,028 26,198
Other assets   19,406     18,976  
Total assets $ 2,317,948   $ 2,338,427  
 
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Interest bearing $ 1,557,113 $ 1,642,722
Non-interest bearing   127,920     126,779  
Total deposits 1,685,033 1,769,501
Borrowed funds:
Federal Home Loan Bank advances 306,606 221,323
Repurchase agreements and other   97,802     96,833  
Total borrowed funds 404,408 318,156
Advance payments by borrowers for taxes and insurance 16,037 19,791
Accrued interest payable 928 1,421
Accrued expenses and other liabilities   10,209     9,775  
Total liabilities   2,116,615     2,118,644  
 
Shareholders' Equity:
Preferred stock-no par value; 1,000,000 shares authorized and unissued - -
Common stock-no par value; 499,000,000 shares authorized; 37,804,457
shares issued and 30,925,384 and 30,897,825 shares, respectively, outstanding 142,899 145,775
Retained earnings 128,476 148,674
Accumulated other comprehensive income 2,622 4,110
Unearned employee stock ownership plan shares - (5,821 )
Treasury stock, at cost, 6,879,073 and 6,906,632 shares, respectively   (72,664 )   (72,955 )
Total shareholders’ equity   201,333     219,783  
Total liabilities and shareholders’ equity $ 2,317,948   $ 2,338,427  
 
               
 
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
(Dollars in thousands, except per share data)
Interest income
Loans $ 24,589 $ 29,389 $ 75,350 $ 90,532
Loans held for sale 109 99 248 578
Securities:
Available for sale 3,235 2,925 8,716 8,491
Federal Home Loan Bank stock dividends 297 330 891 923
Other interest earning assets   10     12     25     50  
Total interest income 28,240 32,755 85,230 100,574
Interest expense
Deposits 7,528 11,037 25,254 35,762
Federal Home Loan Bank advances 984 1,348 2,707 4,775
Repurchase agreements and other   942     965     2,796     3,216  
Total interest expense   9,454     13,350     30,757     43,753  
Net interest income 18,786 19,405 54,473 56,821
Provision for loan losses   17,116     5,579     39,876     26,334  
Net interest income after provision for loan losses   1,670     13,826     14,597     30,487  
Non-interest income
Non-deposit investment income 388 366 1,300 1,074
Service fees and other charges 1,563 2,012 3,738 6,245
Net gains (losses):
Securities available for sale 781 481 7,295 1,863

Other-than-temporary loss on equity securities
Total impairment loss (44 ) (572 ) (44 ) (722 )
Loss recognized in other comprehensive income   -     -     -     -  
Net impairment loss recognized in earnings (44 ) (572 ) (44 ) (722 )
Mortgage banking income 1,419 559 2,456 3,487
Real estate owned and other repossessed assets (1,273 ) (3,964 ) (4,512 ) (6,301 )
Gain on retail branch sale - - 1,388 -
Other income   1,281     1,237     3,799     3,421  
Total non-interest income   4,115     119     15,420     9,067  
Non-interest expense
Salaries and employee benefits 7,568 7,558 24,847 23,345
Occupancy 850 915 2,693 2,798
Equipment and data processing 1,562 1,578 4,949 4,968
Franchise tax 498 537 1,512 1,684
Advertising 205 261 574 677
Amortization of core deposit intangible 43 54 136 172
Deposit insurance premiums 1,391 1,531 4,311 6,254
Professional fees 948 951 2,921 2,574
Real estate owned and other repossessed asset expenses 1,027 527 2,658 2,282
Other expenses   1,608     1,473     5,358     4,232  
Total non-interest expenses   15,700     15,385     49,959     48,986  
Income (loss) before income taxes and discontinued operations (9,915 ) (1,440 ) (19,942 ) (9,432 )
Income taxes expense (benefit)   -     (573 )   -     (3,972 )
Net income (loss) before discontinued operations (9,915 ) (867 ) (19,942 ) (5,460 )
Discontinued operations
Net income of Butler Wick Corp., net of tax   -     -     -     4,949  
Net income (loss) $ (9,915 ) $ (867 ) $ (19,942 ) $ (511 )
 
Earnings (loss) per share
Basic--continuing operations $ (0.32 ) $ (0.03 ) $ (0.66 ) $ (0.19 )
Basic--discontinued operations - - - 0.17
Basic (0.32 ) (0.03 ) (0.66 ) (0.02 )
Diluted--continuing operations (0.32 ) (0.03 ) (0.66 ) (0.19 )
Diluted--discontinued operations - - - 0.17
Diluted (0.32 ) (0.03 ) (0.66 ) (0.02 )
 
                     
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
 
At or for the quarters ended

September 30,2010

June 30,2010

March 31,2010

December 31,2009

September 30,2009
(In thousands, except per share data)
Financial Data
Total assets $ 2,317,948 $ 2,314,109 $ 2,279,719 $ 2,338,427 $ 2,462,185
Total loans, net 1,726,381 1,786,038 1,823,899 1,866,018 1,919,803
Total securities 390,636 307,154 272,239 281,348 296,461
Total deposits 1,685,033 1,696,531 1,728,592 1,769,501 1,755,503
Total shareholders' equity 201,333 212,691 214,482 219,783 235,926
Net interest income 18,786 17,971 17,716 19,093 19,405
Provision for loan losses 17,116 10,310 12,450 22,740 5,579
Noninterest income, excluding other-than-temporary impairment losses 4,159 4,745 6,560 4,907 691
Net impairment losses recognized in earnings 44 - - 56 572
Noninterest expense 15,700 17,291 16,968 14,654 15,385
Income tax expense (benefit) - - - 2,812 (573 )

Net loss
(9,915 ) (4,885 ) (5,142 ) (16,262 ) (867 )
 
Share Data

Basic loss per share
$ (0.32 ) $ (0.16 ) $ (0.17 ) $ (0.54 ) $ (0.03 )

Diluted loss per share
(0.32 ) (0.16 ) (0.17 ) (0.54 ) (0.03 )
Dividends declared per share - - - - -
Book value per share 6.51 6.88 6.94 7.11 7.64
Tangible book value per share 6.49 6.87 6.92 7.09 7.61
Market value per share 1.33 1.68 1.50 1.45 1.74
 
Shares outstanding at end of period 30,925 30,898 30,898 30,898 30,898
Weighted average shares outstanding--basic 30,899 30,039 29,955 29,879 29,803
Weighted average shares outstanding--diluted

30,899
30,039 29,955 29,879 29,803
 
Key Ratios
Return on average assets -1.70 % -0.85 % -0.90 % -2.69 % -0.14 %
Return on average equity -18.41 % -8.91 % -9.18 % -27.18 % -1.45 %
Net interest margin 3.42 % 3.30 % 3.28 % 3.33 % 3.32 %
Efficiency ratio 66.80 % 82.92 % 78.59 % 56.97 % 65.02 %
 
Capital Ratios
Tier 1 leverage ratio 8.23 % 8.71 % 8.47 % 8.22 % 8.68 %
Tier 1 risk-based capital ratio 11.85 % 11.90 % 11.47 % 11.53 % 11.77 %
Total risk-based capital ratio 13.12 % 13.16 % 12.73 % 12.80 % 13.03 %
Equity to assets 8.69 % 9.19 % 9.41 % 9.40 % 9.58 %
Tangible common equity to tangible assets 8.67 % 9.17 % 9.38 % 9.37 % 9.56 %
 
                     
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
 
At or for the quarters ended

September 30,2010

June 30,2010

March 31,2010

December 31,2009

September 30,2009
(Dollars in thousands, except per share data)
Loan Portfolio Composition
Real Estate Loans
One-to four-family residential $ 778,005 $ 779,565 $ 777,380 $ 773,831 $ 771,891
Multi-family residential* 136,681 138,875 143,992 150,480 158,342
Nonresidential* 355,914 383,882 389,407 397,895 407,853
Land* 25,413 26,217 25,122 23,502 23,625
Construction Loans
One-to four-family residential and land development 117,297 133,534 161,625 178,095 190,123
Multi-family and nonresidential*   14,537     14,870     14,682     13,741     13,675  
Total real estate loans 1,427,847 1,476,943 1,512,208 1,537,544 1,565,509
Consumer Loans 289,296 295,007 301,457 309,202 320,106
Commercial Loans   48,902     53,566     56,726     60,217     71,727  
Total Loans 1,766,045 1,825,516 1,870,391 1,906,963 1,957,342
Less:
Allowance for loan losses 40,884 40,728 47,768 42,287 38,845
Deferred loan costs, net   (1,220 )   (1,250 )   (1,276 )   (1,342 )   (1,306 )
Total   39,664     39,478     46,492     40,945     37,539  
Loans, net $ 1,726,381   $ 1,786,038   $ 1,823,899   $ 1,866,018   $ 1,919,803  
* Such categories are considered commercial real estate
 
At or for the quarters ended

September 30,2010

June 30,2010

March 31,2010

December 31,2009

September 30,2009
(Dollars in thousands, except per share data)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts $ 103,204 $ 104,905 $ 101,068 $ 108,513 $ 102,525
Non-interest bearing checking accounts   128,702     126,437     125,741     126,779     115,092  
Total checking accounts 231,906 231,342 226,809 235,292 217,617
Savings accounts 214,197 212,778 210,091 202,900 199,233
Money market accounts   310,884     310,506     300,610     291,320     282,438  
Total non-time deposits 756,987 754,626 737,510 729,512 699,288
Retail certificates of deposit 928,046 939,568 988,747 1,024,961 1,041,196
Brokered certificates of deposit   -     2,337     2,335     15,028     15,019  
Total certificates of deposit   928,046     941,905     991,082     1,039,989     1,056,215  
Total deposits $ 1,685,033   $ 1,696,531   $ 1,728,592   $ 1,769,501   $ 1,755,503  
Certificates of deposit as a percent of total deposits 55.08 % 55.52 % 57.33 % 58.77 % 60.17 %
 
                     
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
 
At or for the quarters ended

September 30,2010

June 30,2010

March 31,2010

December 31,2009

September 30,2009
(Dollars in thousands, except per share data)
 
Allowance For Loan Losses
Beginning balance $ 40,728 $ 47,768 $ 42,287 $ 38,845 $ 39,832
Provision 17,116 10,310 12,450 22,740 5,579
Net chargeoffs   (16,960 )   (17,350 )   (6,969 )   (19,298 )   (6,566 )
Ending balance $ 40,884   $ 40,728   $ 47,768   $ 42,287   $ 38,845  
 
Net Charge-offs
Real Estate Loans
One-to four-family $ 1,834 $ 2,318 $ 998 $ 762 $ 1,634
Multi-family 160 1,067 1,585 208 254
Nonresidential 7,041 25 1,951 1,410 435
Land 11 - 318 - -
Construction Loans
One-to four-family residential and land development 6,595 11,924 1,018 3,860 2,724
Multi-family and nonresidential   -     310     -     118     -  
Total real estate loans 15,641 15,644 5,870 6,358 5,047
Consumer Loans 905 1,330 904 1,312 1,447
Commercial Loans   414     376     195     11,628     72  
Total $ 16,960   $ 17,350   $ 6,969   $ 19,298   $ 6,566  
 
 
At or for the quarters ended

September 30,2010

June 30,2010

March 31,2010

December 31,2009

September 30,2009
(Dollars in thousands, except per share data)
Nonperforming Loans
Real Estate Loans
One-to four family residential $ 27,505 $ 30,279 $ 30,054 $ 26,766 $ 25,808
Multi-family residential 12,443 8,816 7,885 7,863 5,612
Nonresidential 44,561 48,653 36,083 24,091 16,623
Land 5,943 5,943 11,627 5,160 5,168
Construction Loans
One-to four-family residential and land development 40,000 49,146 42,963 42,819 46,623
Multi-family and nonresidential   2,414     2,414     382     392     531  
Total real estate loans 132,866 145,251 128,994 107,091 100,365
Consumer Loans 3,543 3,482 3,898 5,383 5,253
Commercial Loans   6,304     6,407     5,672     3,413     6,174  
Total Loans $ 142,713   $ 155,140   $ 138,564   $ 115,887   $ 111,792  
 
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status $ 126,062 $ 129,534 $ 131,951 $ 103,864 $ 93,806
Past due 90 days and still accruing   4,253     2,628     536     3,669     4,330  
Past due 90 days 130,315 132,162 132,487 107,533 98,136
Past due less than 90 days and on nonaccrual   12,398     22,978     6,077     8,354     13,656  
Total Nonperforming Loans 142,713 155,140 138,564 115,887 111,792
Other Real Estate Owned 39,963 41,470 34,605 30,340 26,905
Repossessed Assets   334     576     813     622     702  
Total Nonperforming Assets $ 183,010   $ 197,186   $ 173,982   $ 146,849   $ 139,399  
 
Total Troubled Debt Restructured Loans
Accruing $ 13,254 $ 18,214 $ 23,153 $ 17,640 $ 1,949
Non-accruing   14,934     10,855     8,764     5,008     1,469  
Total $ 28,188   $ 29,069   $ 31,917   $ 22,648   $ 3,418  
 

Copyright Business Wire 2010

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