United Community Financial Corp. Announces Second Quarter Results

United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), today reported a consolidated net loss of $1.8 million, or $(0.06) per diluted share, for the three months ended June 30, 2011. This compares to a net loss of $4.9 million, or $(0.16) per diluted share, for the three months ended June 30, 2010. The Company also reported cumulative net income of $1.2 million, or $0.04 per diluted share, for the six months ended June 30, 2011, as compared to a cumulative net loss of $10.0 million, or $(0.33) per diluted share, for the six months ended June 30, 2010.

Selected second quarter results:
  • Delinquent loans declined $16.5 million to $141.8 million from the prior quarter
  • Nonperforming loans declined $6.8 million to $139.1 million from the prior quarter
  • Nonperforming assets declined $6.0 million to $182.8 million from the prior quarter
  • Home Savings’ Tier 1 leverage ratio decreased 4 basis points from the prior quarter to 8.40%, still exceeding its required regulatory threshold of 8.00%. Total Risk Based Capital increased 45 basis points from the prior quarter to 13.47%
  • Tangible book value per share at June 30, 2011 was $5.90, up from $5.72 at March 31, 2011

Net Interest Income and Margin

Net interest income for the three months ended June 30, 2011 was $17.1 million compared to $18.0 million for the three months ended June 30, 2010. Total interest income decreased $3.3 million in the second quarter of 2011 compared to the second quarter of 2010, primarily as a result of a decrease of $204.1 million in the average balance of outstanding loans. The Company also experienced a decrease in the yield on net loans of 17 basis points. Total interest expense, however, decreased $2.4 million for the quarter ended June 30, 2011, as compared to the same quarter last year. The change was due primarily to reductions of $2.3 million in interest paid on deposits. The overall decrease in interest expense was attributable to a shift in deposit balances from certificates of deposit to relatively less expensive non-time deposits.

Net interest margin was 3.39% for the second quarter of 2011 compared with 3.30% for the second quarter of 2010.

Net interest income for the six months ended June 30, 2011, was $34.7 million compared to $35.7 million for the six months ended June 30, 2010. Total interest income decreased $6.4 million in the first six months of 2011 compared to the first six months of 2010, primarily as a result of a decrease of $209.6 million in the average balance of outstanding loans during the six month period ended June 30, 2011. The Company also experienced a decrease in the yield on net loans of 13 basis points. Total interest expense decreased $5.4 million for the six months ended June 30, 2011, as compared to the same period last year. The change was due primarily to reductions of $5.3 million in interest paid on deposits.

Net interest margin was 3.45% for the first six months of 2011 compared with 3.29% for the first six months of 2010.

Asset Quality

Nonperforming loans at June 30, 2011 decreased to $139.1 million, compared to $145.9 million at March 31, 2011, a decrease of $6.8 million during the period. Additional declines were seen in both delinquent loans and nonaccrual loans during the same time period. Delinquent loans declined to $141.8 million at June 30, 2011 from $158.3 at March 31, 2011. During the same time period nonperforming assets decreased $6.0 million to $182.8 million.

Patrick W. Bevack, President and Chief Executive Officer of UCFC and Home Savings, commented that, “We are encouraged by the positive trend of decreasing past-due loans. Nonperforming loans and nonperforming assets were also down quarter over quarter. Continuing these trends and the resolution of problem assets remains our top priority.”

Noninterest Income

Noninterest income increased in the second quarter of 2011 to $5.3 million, as compared to $4.7 million in the second quarter of 2010. Affecting this comparison was the recognition of increased service fees during 2011. Service fees in the second quarter of 2010 were $424,000, but were negatively affected by a valuation allowance of $1.3 million for mortgage servicing rights; in the second quarter of 2011, the valuation allowance for such mortgage servicing rights were partially recovered, resulting in an $84,000 contribution to service fees. The second quarter of 2011 also reflected securities gains of $229,000, compared with $3.6 million that were recognized in the second quarter of 2010. Finally, the second quarter of 2011 included a gain of $2.7 million from a bulk mortgage loan sale.

Noninterest income decreased in the first half of 2011 to $9.3 million, as compared to the first half of 2010 of $11.3 million. Driving the decrease in noninterest income was the recognition of lower gains on the sale of securities and the gain recognized on the sale of Home Savings’ Findlay, Ohio branch in the prior year.

Noninterest Expense

Noninterest expense was $15.9 million in the second quarter of 2011, compared to $17.3 million in the second quarter of 2010. The decrease in noninterest expense was triggered by lower salaries and employee benefits paid to employees. This decrease was caused primarily as a result of the Employee Stock Ownership Plan’s repayment in 2010 of the loan made by the Company to the ESOP.

Noninterest expense was $32.4 million in the first six months of 2011, compared to $34.3 million in the first six months of 2010. The decrease in noninterest expense for the period was affected by lower salaries and employee benefits paid to employees.

Capital and Book Value

Home Savings’ Tier 1 leverage ratio was 8.40% as of June 30, 2011, compared to 8.44% at March 31, 2011. The Company’s total risk-based capital ratio was 13.47% at June 30, 2011, as compared to 13.02% at March 31, 2011. Tangible book value per share at June 30, 2011 was $5.90, up from $5.72 at March 31, 2011.

Home Savings is a wholly-owned subsidiary of the Company and operates 38 full-service banking offices and seven 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)
   
June 30, December 31,
2011 2010
(Dollars in thousands)
Assets:
Cash and deposits with banks $ 25,085 $ 18,627
Federal funds sold and other   30,413     18,480  
Total cash and cash equivalents 55,498 37,107
Securities:
Available for sale, at fair value 392,749 362,042
Loans held for sale 4,824 10,870
Loans, net of allowance for loan losses of $46,223 and $50,883, respectively 1,509,399 1,649,486
Federal Home Loan Bank stock, at cost 26,464 26,464
Premises and equipment, net 21,489 22,076
Accrued interest receivable 7,201 7,720
Real estate owned and other repossessed assets 43,685 40,336
Core deposit intangible 412 485
Cash surrender value of life insurance 27,822 27,303
Other assets   12,876     13,409  
Total assets $ 2,102,419   $ 2,197,298  
 
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Interest bearing $ 1,559,045 $ 1,551,210
Non-interest bearing   138,752     138,571  
Total deposits 1,697,797 1,689,781
Borrowed funds:
Federal Home Loan Bank advances 96,365 202,818
Repurchase agreements and other   98,962     97,797  
Total borrowed funds 195,327 300,615
Advance payments by borrowers for taxes and insurance 15,963 20,668
Accrued interest payable 838 809
Accrued expenses and other liabilities   9,352     9,370  
Total liabilities   1,919,277     2,021,243  
 
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 30,968,960 and 30,937,704 shares, respectively, outstanding
142,513 142,318
Retained earnings 111,910 111,049
Accumulated other comprehensive income (loss) 923 (4,778 )
Treasury stock, at cost, 6,835,497 and 6,866,753 shares, respectively   (72,204 )   (72,534 )
Total shareholders’ equity   183,142     176,055  
Total liabilities and shareholders’ equity $ 2,102,419   $ 2,197,298  
 
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
             
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2011 2010 2011 2010
(Dollars in thousands, except per share data)
Interest income
Loans $ 21,421 $ 24,918 $ 43,931 $ 50,761
Loans held for sale 41 69 107 139
Securities:
Available for sale 3,094 2,896 5,941 5,481
Federal Home Loan Bank stock dividends 294 294 594 594
Other interest earning assets   13     8     22     15  
Total interest income 24,863 28,185 50,595 56,990
Interest expense
Deposits 6,081 8,408 12,412 17,726
Federal Home Loan Bank advances 796 875 1,621 1,723
Repurchase agreements and other   928     931     1,850     1,854  
Total interest expense   7,805     10,214     15,883     21,303  
Net interest income 17,058 17,971 34,712 35,687
Provision for loan losses   8,244     10,310     10,436     22,760  
Net interest income after provision for loan losses   8,814     7,661     24,276     12,927  
Non-interest income
Non-deposit investment income 308 484 662 912
Service fees and other charges 1,588 424 3,041 2,175
Net gains (losses):
Securities available for sale 229 3,671 1,542 6,514
Other -than-temporary loss on equity securities
Total impairment loss (28 ) - (38 ) -
Loss recognized in other comprehensive income   -     -     -     -  
Net impairment loss recognized in earnings (28 ) - (38 ) -
Mortgage banking income 3,128 651 3,750 1,037
Real estate owned and other repossessed assets (1,362 ) (1,755 ) (2,354 ) (3,239 )
Gain on retail branch sale - - - 1,387
Other income   1,437     1,270     2,685     2,519  
Total non-interest income   5,300     4,745     9,288     11,305  
Non-interest expense
Salaries and employee benefits 7,686 9,105 15,370 17,279
Occupancy 856 839 1,761 1,843
Equipment and data processing 1,624 1,720 3,318 3,387
Franchise tax 402 503 871 1,014
Advertising 141 147 262 369
Amortization of core deposit intangible 36 45 73 93
Deposit insurance premiums 1,057 1,459 2,462 2,920
Professional fees 293 940 1,255 1,973
Real estate owned and other repossessed asset expenses 891 1,024 1,764 1,631
Other expenses   2,924     1,509     5,262     3,750  
Total non-interest expenses   15,910     17,291     32,398     34,259  
Income (loss) before income taxes (1,796 ) (4,885 ) 1,166 (10,027 )
Income tax expense (benefit)   -     -     -     -  
Net income (loss) $ (1,796 ) $ (4,885 ) $ 1,166   $ (10,027 )
 
Earnings (loss) per share
Basic $ (0.06 ) $ (0.16 ) 0.04 (0.33 )
Diluted (0.06 ) (0.16 ) 0.04 (0.33 )
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
         
At or for the quarters ended

June 30,2011

March 31,2011

December 31,2010

September 30,2010

June 30,2010
(In thousands, except per share data)
Financial Data
Total assets $ 2,102,419 $ 2,115,080 $ 2,197,298 $ 2,317,948 $ 2,314,109
Total loans, net 1,509,399 1,620,094 1,649,486 1,726,381 1,786,038
Total securities 392,749 289,388 362,042 390,636 307,154
Total deposits 1,697,797 1,712,523 1,689,781 1,685,033 1,696,531
Total shareholders' equity 183,142 177,371 176,055 201,333 212,691
Net interest income 17,058 17,654 16,888 18,786 17,971
Provision for loan losses 8,244 2,192 22,551 17,116 10,310
Noninterest income, excluding other-than-temporary impairment losses 5,328 3,998 6,487 4,159 4,745
Net impairment losses recognized in earnings 28 10 14 44 -
Noninterest expense 15,910 16,488 18,372 15,700 17,291
Income tax expense (benefit) - - (231 ) - -
Net income (loss) (1,796 ) 2,962 (17,331 ) (9,915 ) (4,885 )
 
Share Data
Basic earnings (loss) per share $ (0.06 ) $ 0.10 $ (0.56 ) $ (0.32 ) $ (0.16 )
Diluted earnings (loss) per share (0.06 ) 0.10 (0.56 ) (0.32 ) (0.16 )
Book value per share 5.91 5.73 5.69 6.51 6.88
Tangible book value per share 5.90 5.72 5.67 6.49 6.87
Market value per share 1.27 1.33 1.34 1.33 1.68
 
Shares outstanding at end of period 30,969 30,951 30,938 30,925 30,898
Weighted average shares outstanding--basic 30,932 30,917 30,906 30,899 30,039
Weighted average shares outstanding--diluted 30,932 30,919 30,906 30,899 30,039
 
Key Ratios
Return on average assets -0.34 % 0.55 % -3.06 % -1.70 % -0.85 %
Return on average equity -3.95 % 6.56 % -33.91 % -18.41 % -8.91 %
Net interest margin 3.39 % 3.49 % 3.17 % 3.42 % 3.30 %
Efficiency ratio 67.49 % 77.12 % 78.08 % 66.80 % 82.92 %
 
Capital Ratios
Tier 1 leverage ratio 8.40 % 8.44 % 7.84 % 8.23 % 8.71 %
Tier 1 risk-based capital ratio 12.20 % 11.74 % 11.26 % 11.85 % 11.90 %
Total risk-based capital ratio 13.47 % 13.02 % 12.54 % 13.12 % 13.16 %
Equity to assets 8.71 % 8.39 % 8.01 % 8.69 % 9.19 %
Tangible common equity to tangible assets 8.69 % 8.37 % 7.99 % 8.67 % 9.17 %
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
           
At or for the quarters ended

June 30,2011

March 31,2011

December 31,2010

September 30,2010

June 30,2010
(Dollars in thousands)
Loan Portfolio Composition
Real Estate Loans
One-to four-family residential $ 693,435 $ 762,065 $ 757,426 $ 778,005 $ 779,565
Multi-family residential* 129,767 131,246 135,771 136,681 138,875
Nonresidential* 307,702 328,772 331,390 355,914 383,882
Land* 25,515 25,624 25,138 25,413 26,217
Construction Loans
One-to four-family residential and land development 87,827 88,075 108,583 117,297 133,534
Multi-family and nonresidential*   5,524     11,201     15,077     14,537     14,870  
Total real estate loans 1,249,770 1,346,983 1,373,385 1,427,847 1,476,943
Consumer Loans 266,075 272,478 279,453 289,296 295,007
Commercial Loans   38,354     45,772     46,304     48,902     53,566  
Total Loans 1,554,199 1,665,233 1,699,142 1,766,045 1,825,516
Less:
Allowance for loan losses 46,223 46,415 50,883 40,884 40,728
Deferred loan costs, net   (1,423 )   (1,276 )   (1,227 )   (1,220 )   (1,250 )
Total   44,800     45,139     49,656     39,664     39,478  
Loans, net $ 1,509,399   $ 1,620,094   $ 1,649,486   $ 1,726,381   $ 1,786,038  
* Such categories are considered commercial real estate
 
At or for the quarters ended

June 30,2011

March 31,2011

December 31,2010

September 30,2010

June 30,2010
(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts $ 112,412 $ 110,711 $ 110,092 $ 103,204 $ 104,905
Non-interest bearing checking accounts   138,752     144,362     138,571     128,702     126,437  
Total checking accounts 251,164 255,073 248,663 231,906 231,342
Savings accounts 245,838 234,295 218,946 214,197 212,778
Money market accounts   322,955     318,395     311,692     310,884     310,506  
Total non-time deposits 819,957 807,763 779,301 756,987 754,626
Retail certificates of deposit 877,840 904,760 910,480 928,046 939,568
Brokered certificates of deposit   -     -     -     -     2,337  
Total certificates of deposit   877,840     904,760     910,480     928,046     941,905  
Total deposits $ 1,697,797   $ 1,712,523   $ 1,689,781   $ 1,685,033   $ 1,696,531  
Certificates of deposit as a percent of total deposits 51.70 % 52.83 % 53.88 % 55.08 % 55.52 %
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
           
At or for the quarters ended

June 30,2011

March 31,2011

December 31,2010

September 30,2010

June 30,2010
(Dollars in thousands)
 
Allowance For Loan Losses
Beginning balance $ 46,415 $ 50,883 $ 40,884 $ 40,728 $ 47,768
Provision 8,244 2,192 22,551 17,116 10,310
Net chargeoffs   (8,436 )   (6,660 )   (12,552 )   (16,960 )   (17,350 )
Ending balance $ 46,223   $ 46,415   $ 50,883   $ 40,884   $ 40,728  
 
Net Charge-offs
Real Estate Loans
One-to four-family $ 501 $ 924 $ 1,483 $ 1,834 $ 2,318
Multi-family 1,451 163 1,819 160 1,067
Nonresidential 1,873 1,038 6,923 7,041 25
Land 233 504 284 11 -
Construction Loans
One-to four-family residential and land development 1,159 2,295 669 6,595 11,924
Multi-family and nonresidential   101     -     (1 )   -     310  
Total real estate loans 5,318 4,924 11,177 15,641 15,644
Consumer Loans 642 856 639 905 1,330
Commercial Loans   2,476     880     736     414     376  
Total $ 8,436   $ 6,660   $ 12,552   $ 16,960   $ 17,350  
 
 
At or for the quarters ended

June 30,2011

March 31,2011

December 31,2010

September 30,2010

June 30,2010
(Dollars in thousands)
Nonperforming Loans
Real Estate Loans
One-to four family residential $ 28,776 $ 29,062 $ 27,417 $ 27,505 $ 30,279
Multi-family residential 6,414 8,239 10,983 12,443 8,816
Nonresidential 36,382 37,353 39,838 44,561 48,653
Land 8,316 6,722 5,188 5,943 5,943
Construction Loans
One-to four-family residential and land development 43,389 46,139 44,021 40,000 49,146
Multi-family and nonresidential   382     382     2,414     2,414     2,414  
Total real estate loans 123,659 127,897 129,861 132,866 145,251
Consumer Loans 5,781 4,224 3,725 3,543 3,482
Commercial Loans   9,650     13,735     5,945     6,304     6,407  
Total Loans $ 139,090   $ 145,856   $ 139,531   $ 142,713   $ 155,140  
 
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status $ 122,856 $ 112,705 $ 117,499 $ 126,062 $ 129,534
Past due 90 days and still accruing   1,121     2,868     6,330     4,253     2,628  
Past due 90 days 123,977 115,573 123,829 130,315 132,162
Past due less than 90 days and on nonaccrual   15,112     30,283     15,702     12,398     22,978  
Total Nonperforming Loans 139,089 145,856 139,531 142,713 155,140
Other Real Estate Owned 43,009 42,386 39,914 39,963 41,470
Repossessed Assets   676     487     422     334     576  
Total Nonperforming Assets $ 182,774   $ 188,729   $ 179,867   $ 183,010   $ 197,186  
 
Total Troubled Debt Restructured Loans
Accruing $ 30,546 $ 30,129 $ 33,331 $ 13,254 $ 18,214
Non-accruing   28,066     24,420     11,240     14,934     10,855  
Total $ 58,612   $ 54,549   $ 44,571   $ 28,188   $ 29,069  

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX