United Community Financial Corp. Announces First Quarter Income Of $3.8 Million; Asset Quality Continues To Improve

United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), today reported consolidated net income of $3.8 million, or $0.12 per diluted share, for the three months ended March 31, 2012. This represents the second consecutive quarter of profitability for the Company.

Selected first quarter results:
  • Delinquent loans declined $21.2 million from the prior quarter
  • Nonperforming loans declined $13.2 million from the prior quarter
  • Nonperforming assets declined $17.6 million from the prior quarter
  • Home Savings’ Tier 1 leverage ratio of 8.96% and the total risk based capital ratio of 15.21% both reflected increases from the prior quarter

Patrick W. Bevack, President and Chief Executive Officer of UCFC and Home Savings, commented that, “The Company has started 2012 with positive news. Net income of $3.8 million and continued improvement in asset quality reflects the progress the Company has made over the past few years. The results of the first quarter further emphasize that the hard work and dedication of management, employees and directors is truly paying off.” Bevack continued, “We recognize there is still more work to be done. We continue to move forward with our capital raising plan and achieving compliance with the recently agreed-to Consent Order.”

Asset Quality

Delinquent loans declined to $105.7 million at March 31, 2012, down $89.5 million, or 45.9%, from their high point of $195.2 million at March 31, 2010. Nonperforming loans at March 31, 2012 fell to $110.0 million, down $45.2 million, or 29.1%, from their high point of $155.1 million at June 30, 2010. Nonperforming assets dropped to $139.0 million at March 31, 2012, down $58.2 million, or 29.5%, from their high point of $197.2 million at June 30, 2010.

The provision for loan losses was $680,000 for the first quarter of 2012, as compared to $2.4 million for the fourth quarter in 2011. This $1.7 million decrease in the provision for loan losses was caused in part by a decrease in the volume of outstanding loans.

Net Interest Income and Margin

Net interest income for the three months ended March 31, 2012 was $15.9 million compared to $14.8 million for the three months ended December 31, 2011.

Total interest income decreased $909,000 in the first quarter of 2012 compared to the fourth quarter of 2011. The change is the result of a decrease of $56.4 million in the average balance of outstanding loans.

Total interest expense decreased $2.0 million for the quarter ended March 31, 2012, as compared to the quarter ended December 31, 2011. The change was attributable to a shift in deposit balances from certificates of deposit to relatively less expensive non-time deposits. The overall shift was the result of the maturity of the Company’s higher rate Step CDs. Primarily in the third quarter of 2008, Home Savings offered a 42-month time deposit product (Step CDs) to its customers in order to maintain adequate levels of liquidity as Home Savings entered into the Cease and Desist Order with regulators. While the Step CDs offered a blended rate over the 42-month term consistent with other 42-month certificates of deposit being offered in Home Savings’ market at that time, the interest rate paid on Step CDs increased in regular intervals over the life of the deposit, such that in the final six months of the deposit prior to maturity, the rate paid was 6.50%. In the first quarter of 2012, substantially all of the approximately $140.0 million Step CD’s matured.

As a result of the activity discussed above, the average net interest margin was 3.30% for the first quarter of 2012 compared with 3.04% for the fourth quarter of 2011.

Noninterest Income

Noninterest income decreased in the first quarter of 2012 to $5.1 million, as compared to $12.0 million in the fourth quarter of 2011. The decrease in noninterest income was largely driven by two gains that were reflected in the fourth quarter of 2011: a gain of $5.1 million recognized on the sale of available for sale securities, and a gain of $4.2 million recognized on the sale of four branches. These decreases were offset by an increase in service fees and other charges, which reflected the benefit of a reduction in the valuation allowance on deferred mortgage servicing rights of $948,000.

Noninterest Expense

Noninterest expense was $16.5 million in both the first quarter of 2012 and the fourth quarter of 2011. The first quarter of 2012 experienced an increase in salaries and benefits that was offset by savings in advertising and professional fees. All other noninterest expense categories remained essentially flat quarter over quarter.

Capital and Book Value

Home Savings’ Tier 1 leverage ratio was 8.96% as of March 31, 2012, as compared to 8.61% at December 31, 2011. The Bank’s total risk-based capital ratio was 15.21% at March 31, 2012, as compared to 14.57% at December 31, 2011. Tangible book value per share at March 31, 2012 was $5.77, as compared to $5.78 at December 31, 2011.

Home Savings is a wholly-owned subsidiary of the Company and operates 34 full-service banking offices and eight 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)
   
March 31, December 31,
2012 2011
(Dollars in thousands)
Assets:
Cash and deposits with banks $ 24,557 $ 26,573
Federal funds sold and other   20,361     27,563  
Total cash and cash equivalents 44,918 54,136
Securities:
Available for sale, at fair value 530,283 459,598
Loans held for sale 17,504 12,727
Loans, net of allowance for loan losses of $34,523 and $42,271, respectively 1,325,101 1,379,276
Federal Home Loan Bank stock, at cost 26,464 26,464
Premises and equipment, net 20,845 19,175
Accrued interest receivable 6,622 6,741
Real estate owned and other repossessed assets 29,057 33,486
Core deposit intangible 317 346
Cash surrender value of life insurance 28,603 28,354
Other assets   12,250     10,384  
Total assets $ 2,041,964   $ 2,030,687  
 
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Interest bearing $ 1,407,704 $ 1,440,448
Noninterest bearing   164,155     148,049  
Total deposits 1,571,859 1,588,497
Borrowed funds:
Federal Home Loan Bank advances 164,116 128,155
Repurchase agreements and other   90,613     90,618  
Total borrowed funds 254,729 218,773
Advance payments by borrowers for taxes and insurance 14,767 23,282
Accrued interest payable 688 610
Accrued expenses and other liabilities   9,907     10,780  
Total liabilities   1,851,950     1,841,942  
 
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 32,876,453 and 32,597,762 shares, respectively, outstanding
128,026 128,031
Retained earnings 111,727 110,681
Accumulated other comprehensive income (loss) 2,149 5,032
Treasury stock, at cost, 4,928,004 and 5,206,695 shares, respectively   (51,888 )   (54,999 )
Total shareholders’ equity   190,014     188,745  
Total liabilities and shareholders’ equity $ 2,041,964   $ 2,030,687  
 
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
           
For the Three Months Ended
March 31, December 31, March 31,
2012 2011 2011
(Dollars in thousands, except per share data)
Interest income
Loans $ 17,656 $ 18,801 $ 22,510
Loans held for sale 100 272 66
Securities:
Available for sale 3,494 3,102 2,847
Federal Home Loan Bank stock dividends 300 267 300
Other interest earning assets   12     29     9  
Total interest income 21,562 22,471 25,732
Interest expense
Deposits 4,032 5,957 6,331
Federal Home Loan Bank advances 732 748 825
Repurchase agreements and other   919     928     922  
Total interest expense   5,683     7,633     8,078  
Net interest income 15,879 14,838 17,654
Provision for loan losses   680     2,386     2,192  
Net interest income after provision for loan losses   15,199     12,452     15,462  
Non-interest income
Non-deposit investment income 541 348 354
Service fees and other charges 2,317 1,172 1,453
Net gains (losses):
Securities available for sale 414 5,133 1,313
Other -than-temporary loss on equity securities
Total impairment loss - (16 ) (10 )
Loss recognized in other comprehensive income   -     -     -  
Net impairment loss recognized in earnings - (16 ) (10 )
Mortgage banking income 1,471 1,243 622
Real estate owned and other repossessed assets (729 ) (1,184 ) (992 )
Gain on retail branch sale - 4,154 -
Other income   1,077     1,171     1,248  
Total non-interest income   5,091     12,021     3,988  
Non-interest expense
Salaries and employee benefits 8,333 7,863 7,684
Occupancy 799 794 905
Equipment and data processing 1,689 1,680 1,694
Franchise tax 438 254 469
Advertising 141 354 121
Amortization of core deposit intangible 29 33 37
Deposit insurance premiums 1,109 1,282 1,405
Professional fees 880 1,132 962
Real estate owned and other repossessed asset expenses 702 766 873
Other expenses   2,374     2,387     2,338  
Total non-interest expenses   16,494     16,545     16,488  
Income before income taxes 3,796 7,928 2,962
Income tax expense   -     -     -  
Net income $ 3,796   $ 7,928   $ 2,962  
 
Earnings per share
Basic $ 0.12 $ 0.25 $ 0.10
Diluted 0.12 0.25 0.10
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
         
At or for the quarters ended

March 31,2012

December 31,2011

September 30,2011

June 30,2011

March 31,2011
(In thousands, except per share data)
Financial Data
Total assets $ 2,041,964 $ 2,030,687 $ 2,071,001 $ 2,102,419 $ 2,115,080
Total loans, net 1,325,101 1,379,276 1,437,575 1,509,399 1,620,094
Total securities 530,283 459,598 416,460 392,749 289,388
Total deposits 1,571,859 1,588,497 1,687,941 1,697,797 1,712,523
Total shareholders' equity 190,014 188,745 182,697 183,142 177,371
Net interest income 15,879 14,838 15,625 17,058 17,654
Provision for loan losses 680 2,386 11,836 8,244 2,192
Noninterest income, excluding other-than-temporary impairment losses 5,091 12,037 1,951 5,328 3,998
Net impairment losses recognized in earnings - 16 35 28 10
Noninterest expense 16,494 16,545 14,569 15,910 16,488
Income tax expense (benefit) - - - - -
Net income (loss) 3,796 7,928 (8,864 ) (1,796 ) 2,962
 
Share Data
Basic earnings (loss) per share $ 0.12 $ 0.25 $ (0.29 ) $ (0.06 ) $ 0.10
Diluted earnings (loss) per share 0.12 0.25 (0.29 ) (0.06 ) 0.10
Book value per share 5.78 5.79 5.90 5.91 5.73
Tangible book value per share 5.77 5.78 5.88 5.90 5.72
Market value per share 2.44 1.27 1.35 1.27 1.33
 
Shares outstanding at end of period 32,876 32,598 30,984 30,969 30,951
Weighted average shares outstanding--basic 32,693 31,295 30,953 30,932 30,890
Weighted average shares outstanding--diluted 23,697 31,295 30,953 30,932 30,892
 
Key Ratios
Return on average assets 0.74 % 1.53 % -1.69 % -0.34 % 0.55 %
Return on average equity 7.89 % 16.97 % -18.98 % -3.95 % 6.56 %
Net interest margin 3.30 % 3.04 % 3.18 % 3.39 % 3.50 %
Efficiency ratio 77.35 % 87.96 % 79.67 % 67.49 % 77.12 %
 
Capital Ratios
Tier 1 leverage ratio 8.96 % 8.61 % 8.13 % 8.40 % 8.44 %
Tier 1 risk-based capital ratio 13.94 % 13.30 % 11.98 % 12.20 % 11.75 %
Total risk-based capital ratio 15.21 % 14.57 % 13.25 % 13.47 % 13.02 %
Equity to assets 9.31 % 9.29 % 8.82 % 8.71 % 8.39 %
Tangible common equity to tangible assets 9.29 % 9.28 % 8.80 % 8.69 % 8.37 %
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
         
At or for the quarters ended

March 31,2012

December 31,2011

September 30,2011

June 30,2011

March 31,2011
(Dollars in thousands)
Loan Portfolio Composition
Real Estate Loans
One-to four-family residential $ 649,000 $ 667,375 $ 677,708 $ 693,435 $ 762,065
Multi-family residential* 114,493 120,991 125,370 129,767 131,246
Nonresidential* 263,891 276,198 303,165 307,702 328,772
Land* 19,735 23,222 22,172 25,515 25,624
Construction Loans
One-to four-family residential and land development 49,311 59,339 66,761 87,827 88,075
Multi-family and nonresidential*   4,527     4,528     4,528     5,524     11,201  
Total real estate loans 1,100,957 1,151,653 1,199,704 1,249,770 1,346,983
Consumer Loans 231,008 238,397 245,367 266,075 272,478
Commercial Loans   26,434     30,146     35,277     38,354     45,772  
Total Loans 1,358,399 1,420,196 1,480,348 1,554,199 1,665,233
Less:
Allowance for loan losses 34,523 42,271 44,162 46,223 46,415
Deferred loan costs, net   (1,225 )   (1,351 )   (1,389 )   (1,423 )   (1,276 )
Total   33,298     40,920     42,773     44,800     45,139  
Loans, net $ 1,325,101   $ 1,379,276   $ 1,437,575   $ 1,509,399   $ 1,620,094  
* Categories are considered commercial real estate
 
At or for the quarters ended

March 31,2012

December 31,2011

September 30,2011

June 30,2011

March 31,2011
(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts $ 129,795 $ 119,298 $ 120,115 $ 112,412 $ 110,711
Non-interest bearing checking accounts   164,155     148,049     152,577     138,752     144,362  
Total checking accounts 293,950 267,347 272,692 251,164 255,073
Savings accounts 256,628 234,828 249,426 245,838 234,295
Money market accounts   339,824     314,907     327,751     322,955     318,395  
Total non-time deposits 890,402 817,082 849,869 819,957 807,763
Retail certificates of deposit   681,457     771,415     838,073     877,840     904,760  
Total certificates of deposit   681,457     771,415     838,073     877,840     904,760  
Total deposits $ 1,571,859   $ 1,588,497   $ 1,687,942   $ 1,697,797   $ 1,712,523  
Certificates of deposit as a percent of total deposits 43.35 % 48.56 % 49.65 % 51.70 % 52.83 %
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
         
At or for the quarters ended

March 31,2012

December 31,2011

September 30,2011

June 30,2011

March 31,2011
(Dollars in thousands)
 
Allowance For Loan Losses
Beginning balance $ 42,271 $ 44,162 $ 46,223 $ 46,415 $ 50,883
Provision 680 2,386 11,836 8,244 2,192
Net chargeoffs   (8,428 )   (4,277 )   (13,897 )   (8,436 )   (6,660 )
Ending balance $ 34,523   $ 42,271   $ 44,162   $ 46,223   $ 46,415  
 
Net Charge-offs
Real Estate Loans
One-to four-family $ 762 $ 366 $ 1,380 $ 501 $ 924
Multi-family 68 203 14 1,451 163
Nonresidential 2,579 975 3,693 1,873 1,038
Land 1,776 217 281 233 504
Construction Loans
One-to four-family residential and land development 2,098 1,874 6,737 1,159 2,295
Multi-family and nonresidential   -     -     -     101     -  
Total real estate loans 7,283 3,635 12,105 5,318 4,924
Consumer Loans 745 493 864 642 856
Commercial Loans   400     149     928     2,476     880  
Total $ 8,428   $ 4,277   $ 13,897   $ 8,436   $ 6,660  
 
 
At or for the quarters ended

March 31,2012

December 31,2011

September 30,2011

June 30,2011

March 31,2011
(Dollars in thousands)
Nonperforming Loans
Real Estate Loans
One-to four family residential $ 23,721 $ 26,637 $ 27,250 $ 28,776 $ 29,062
Multi-family residential 5,411 5,860 6,517 6,414 8,239
Nonresidential 41,871 42,902 44,243 36,382 37,353
Land 8,472 11,142 11,655 8,316 6,722
Construction Loans
One-to four-family residential and land development 22,455 27,104 31,166 43,389 46,139
Multi-family and nonresidential   -     -     -     382     382  
Total real estate loans 101,930 113,645 120,831 123,659 127,897
Consumer Loans 6,165 6,620 5,890 5,781 4,224
Commercial Loans   1,813     2,830     7,361     9,650     13,735  
Total Loans $ 109,908   $ 123,095   $ 134,082   $ 139,090   $ 145,856  
 
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status $ 91,153 $ 104,812 $ 102,890 $ 122,856 $ 112,705
Past due 90 days and still accruing   303     39     3     1,121     2,868  
Past due 90 days 91,456 104,851 102,893 123,977 115,573
Past due less than 90 days and on nonaccrual   18,452     18,244     31,189     15,112     30,283  
Total Nonperforming Loans 109,908 123,095 134,082 139,089 145,856
Other Real Estate Owned 28,517 32,946 37,697 43,009 42,386
Repossessed Assets   540     540     619     676     487  
Total Nonperforming Assets $ 138,965   $ 156,581   $ 172,398   $ 182,774   $ 188,729  
 
Total Troubled Debt Restructured Loans
Accruing $ 35,657 $ 33,146 $ 30,784 $ 30,546 $ 30,129
Non-accruing   15,161     17,752     16,932     28,066     24,420  
Total $ 50,818   $ 50,898   $ 47,716   $ 58,612   $ 54,549  
 

Copyright Business Wire 2010

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