UNITED COMMUNITY FINANCIAL CORP - FORM 8-K - EX-99

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8-K - FORM 8-K - UNITED COMMUNITY FINANCIAL CORP	d427557d8k.htm

EXHIBIT 99

LOGO

275 West Federal Street

Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE


Media Contact:		Investor Contact:
Kathy Bushway		Gary M. Small
Senior Vice President, Marketing		President and Chief Executive Officer
Home Savings		United Community Financial Corp.
(330) 742-0638		(330) 742-0472
kbushway@homesavings.com

UCFC ANNOUNCES RECORD SECOND QUARTER EARNINGS AND

INCREASES DIVIDEND

YOUNGSTOWN, Ohio (July 18, 2017) – United Community Financial Corp. (Company) (NASDAQ: UCFC), parent company of Home Savings Bank (Home Savings), today announced net income of $8.2 million, or $0.163 per diluted common share, a 45.5% improvement over the $0.112 per diluted common share reported for the quarter ended June 30, 2016.

Second quarter 2017 highlights:

•

Organic loan growth, including loans held for sale, strong at 9.4% annualized

•

Revenue growth of 31%, compared to the second quarter of 2016

•

Net interest margin increased to 3.46%

•

Return on average assets of 1.27%

•

Return on average equity of 11.60%, return on average tangible equity of 12.66%

•

Efficiency ratio improved to 54.71%

•

Dividend of $0.04 declared per common share, up 33%

Gary M. Small, President and Chief Executive Officer of the Company commented, “The results for the quarter reflect the successful efforts of the entire Home Savings team. Outstanding earnings were driven by strong revenue growth combined with a disciplined approach to managing the business. We continue to see very good opportunities across all our markets and business lines and believe the quarterly performance to be reflective of the organization’s capabilities going forward.”

Strong Organic Loan Growth

Loan growth for the second quarter, including loans held for sale, totaled $45.2 million, or 9.4%. Total loans, including loans held for sale, were $1.97 billion at June 30, 2017 compared to $1.93 billion at March 31, 2017.

Commercial loan growth was $33.9 million for the quarter ended June 30, 2017, a 19.1% annualized organic growth rate. The Company continues to focus on attracting and building commercial relationships. Residential mortgage loans increased modestly during the quarter. The Company sold $27.9 million of residential mortgage loans that were reclassified from the portfolio to held for sale at the

end of the second quarter, consistent with our strategic objectives.

Net Interest Margin Expands

Net interest income increased 10.9% to $20.5 million for the quarter ended June 30, 2017, compared to $18.5 million for the quarter ended March 31, 2017 and increased 33.7% from $15.3 million for the three months ended June 30, 2016. The increase in net interest income was primarily due to yield earned on loans was 4.30%, or 19 basis points higher than the prior quarter and 16 basis points higher than the same quarter last year while cost of deposits only increased 5 basis points to 0.42% from the quarter ended March 31, 2017 and 1 basis point from the quarter ended June 30, 2016.

The net interest margin was 3.46% for the three months ended June 30, 2017, an 18 basis point increase from the 3.28% reported in the quarter ended March 31, 2017. For the quarter ended June 30, 2016, the net interest margin was 3.25%. The increased margin for both time periods was primarily due to continued growth in yield on earning assets along with the recognition of purchase accounting adjustments. Yield on interest earning assets was 3.97%, an increase of 23 basis points from the prior quarter and 29 basis points from the same quarter last year. Cost of funds for the quarter ended June 30, 2017 was 0.64%, an increase of 6 basis points from the quarter ended March 31, 2017 and 7 basis points from the quarter ended June 30, 2016. Net interest margin was 3.38% for the six months ended June 30, 2017, compared to 3.23% for the same period last year.

Excluding the impact of the amortization of premiums on time deposits and the accretion of the loan portfolio discount of $1.2 million, the net interest margin would have been 11 basis points lower, or 3.27%, for the six months ended June 30, 2017.

Nonperforming Loans to Total Loans Ratio Decreases

The ratio of nonperforming loans to total loans continues to improve. The ratio was 0.58% at June 30, 2017, which is down from 1.45% reported at June 30, 2016. Net charge-offs as a percentage of average loans were only 3 basis points, or $152,000 for the three months ended June 30, 2017.

The Company’s provision for loan losses totaled $842,000 for the second quarter of 2017, which was down in comparison to the prior quarter, and up $447,000 from the second quarter of 2016. As of June 30, 2017, the Company’s allowance for loan losses to total loans was 1.04%, versus 1.25% at December 31, 2016 and 1.21% at June 30, 2016.

Loans acquired were recorded at fair value at the time of acquisition; therefore, there was no allowance associated with these loans at June 30, 2017. When combining the remaining fair value adjustment of $4.9 million and the Company’s allowance, the Company’s allowance as a percentage of total loans increases to 1.30%.

Non-Interest Income

Non-interest income increased 22.7% to $7.1 million in the second quarter of 2017, compared to the $5.8 million recognized in the second quarter last year. Mortgage banking income was 13.3% higher compared to the same quarter last year. Debit/credit card fee income was up 18.4% compared to the second quarter of 2016. Deposit related fee income rose 3.6% in the second quarter of 2017, compared to the second quarter of 2016. Also affecting the comparison was the Company’s recognition of higher gains on the sale of securities and a full quarter of trust fee income.

Non-Interest Expense

Non-interest expense decreased 25.2% to $15.2 million during the second quarter of 2017 compared to $20.3 million during the first quarter of 2017 and increased 18.0% compared to $12.9 million recognized in the second quarter of 2016. Excluding the $5.0 million of acquisition related expense, non-interest

expense was down $152,000 compared to the first quarter of 2017. As a result of the cost savings realized during the quarter along with the expansion of revenues from the acquisition, the Company’s efficiency ratio improved to 54.7% for the quarter ended June 30, 2017.

Tangible Book Value

Tangible book value per common share at June 30, 2017 was $5.27 compared to $5.32 at December 31, 2016. The decline was primarily due to the acquisition of Premier.

Dividend to be Paid

On July 18, 2017, the Board of Directors declared a quarterly cash dividend of $0.04 per common share payable August 11, 2017 to shareholders of record at the close of business July 28, 2017.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, July 19, 2017, at 10:00 a.m. ET., to provide an overview of the Company’s second quarter 2017 results and highlights. The conference call may be accessed by calling 1-877-272-7661 ten minutes prior to the start time. Please ask to be joined into the United Community Financial Corp. (UCFC) call. Additionally, a live webcast may be accessed from the Company’s website ir.ucfconline.com. Click on 2nd Quarter 2017 Conference Call on our corporate profile page to join the webcast.

United Community Financial Corp.

Home Savings is a wholly owned subsidiary of the Company and operates retail banking offices and loan production centers in Ohio, western Pennsylvania and West Virginia. Additional information on the Company, Home Savings and James & Sons Insurance may be found on the Company’s web site: ir.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”, “will have”, “can expect” 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, 2017			March 31, 2017			F/(U)			December 31, 2016			F/(U)
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	42,654		$	32,904			29.6	%	$	27,690			54.0	%
Federal funds sold		9,360			16,868			-44.5	%		18,197			-48.6	%

Total cash and cash equivalents		52,014			49,772			4.5	%		45,887			13.4	%
Securities:
Available for sale, at fair value		287,179			335,834			-14.5	%		343,284			-16.3	%
Held to maturity (fair value of $87,775, $93,297 and $96,150, respectively)		88,559			94,523			-6.3	%		97,519			-9.2	%
Loans held for sale, at lower of cost or market		199			197			1.0	%		165			20.6	%
Loans held for sale, at fair value		85,954			75,501			13.8	%		62,593			37.3	%
Loans, net of allowance for loan losses of $19,660, $18,970 and $19,087		1,869,095			1,835,000			1.9	%		1,503,577			24.3	%
Federal Home Loan Bank stock, at cost		19,324			19,324			0.0	%		18,068			7.0	%
Premises and equipment, net		22,424			23,919			-6.3	%		20,963			7.0	%
Accrued interest receivable		7,420			7,032			5.5	%		6,900			7.5	%
Real estate owned and other repossessed assets		1,197			1,137			5.3	%		1,777			-32.6	%
Goodwill		19,467			19,460			0.0	%		208			9259.1	%
Core deposit intangible		2,099			2,182			-3.8	%		5			41880.0	%
Customer list intangible		2,060			2,090			-1.4	%		1,356			51.9	%
Cash surrender value of life insurance		56,628			56,238			0.7	%		55,861			1.4	%
Other assets		39,946			34,801			14.8	%		33,182			20.4	%

Total assets	$	2,553,565		$	2,557,010			-0.1	%	$	2,191,345			16.5	%

Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	339,067		$	333,940			1.5	%	$	256,918			32.0	%
Interest bearing
Customer deposits		1,423,327			1,439,266			-1.1	%		1,181,557			20.5	%
Brokered deposits		131,599			131,999			-0.3	%		76,516			72.0	%

Total interest bearing deposits		1,554,926			1,571,265			-1.0	%		1,258,073			23.6	%

Total deposits		1,893,993			1,905,205			-0.6	%		1,514,991			25.0	%
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances		48,146			47,951			0.4	%		47,756			0.8	%
Short-term advances		280,000			291,000			-3.8	%		343,000			-18.4	%

Total Federal Home Loan Bank advances		328,146			338,951			-3.2	%		390,756			-16.0	%
Repurchase agreements and other		8,045			6,839			17.6	%		512			1471.3	%

Total borrowed funds		336,191			345,790			-2.8	%		391,268			-14.1	%
Advance payments by borrowers for taxes and insurance		21,989			17,084			28.7	%		23,812			-7.7	%
Accrued interest payable		392			304			28.9	%		145			170.3	%
Accrued expenses and other liabilities		15,520			11,525			34.7	%		11,323			37.1	%

Total liabilities		2,268,085			2,279,908			-0.5	%		1,941,539			16.8	%

Shareholders’ Equity:
Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding		—			—			0.0	%		—			0.0	%
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 49,715,021, 49,695,487 and 46,581,370 shares, respectively, outstanding		174,184			177,523			-1.9	%		174,360			-0.1	%
Retained earnings		162,716			152,721			6.5	%		152,675			6.6	%
Accumulated other comprehensive loss		(18,448	)		(20,042	)		-8.0	%		(21,040	)		-12.3	%
Treasury stock, at cost, 4,444,307, 4,443,423 and 7,557,540 shares, respectively		(32,972	)		(33,100	)		-0.4	%		(56,189	)		-41.3	%

Total shareholders’ equity		285,480			277,102			3.0	%		249,806			14.3	%

Total liabilities and shareholders’ equity	$	2,553,565		$	2,557,010			-0.1	%	$	2,191,345			16.5	%

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended															For the Six Months Ended
	June 30,			March 31,						June 30,						June 30,			June 30,
	2017			2017			F/(U)			2016			F/(U)			2017			2016			F/(U)
	(Dollars in thousands, except per share data)
Interest income
Loans	$	20,011		$	17,558			14.0	%	$	14,184			41.1	%	$	37,569		$	27,985			34.2	%
Loans held for sale		872			661			31.9	%		363			140.2	%		1,533			695			120.6	%
Securities:
Available for sale, nontaxable		418			418			0.0	%		290			44.1	%		836			413			102.4	%
Available for sale, taxable		1,479			1,602			-7.7	%		1,781			-17.0	%		3,081			3,716			-17.1	%
Held to maturity, nontaxable		52			62			-16.1	%		62			-16.1	%		114			117			-2.6	%
Held to maturity, taxable		454			465			-2.4	%		524			-13.4	%		919			1,101			-16.5	%
Federal Home Loan Bank stock dividends		227			214			6.1	%		180			26.1	%		441			362			21.8	%
Other interest earning assets		40			80			-50.0	%		15			166.7	%		120			30			300.0	%

Total interest income		23,553			21,060			11.8	%		17,399			35.4	%		44,613			34,419			29.6	%
Interest expense
Deposits		1,987			1,621			-22.6	%		1,496			-32.8	%		3,608			3,108			-16.1	%
Federal Home Loan Bank advances		1,064			955			-11.4	%		563			-89.0	%		2,019			1,093			-84.7	%
Repurchase agreements and other		8			8			0.0	%		6			-33.3	%		16			11			-45.5	%

Total interest expense		3,059			2,584			-18.4	%		2,065			-48.1	%		5,643			4,212			-34.0	%

Net interest income		20,494			18,476			10.9	%		15,334			33.7	%		38,970			30,207			29.0	%
Taxable equivalent adjustment		229			237			-3.4	%		187			22.5	%		466			282			65.2	%

Net interest income (FTE)⁽¹⁾		20,723			18,713			10.7	%		15,521			33.5	%		39,436			30,489			29.3	%
Provision for loan losses		842			1,475			42.9	%		395			-113.2	%		2,317			2,550			9.1	%

Net interest income after provision for loan losses (FTE)		19,881			17,238			15.3	%		15,126			31.4	%		37,119			27,939			32.9	%

Non-interest income
Insurance agency income		472			473			-0.2	%		516			-8.5	%		945			818			15.5	%
Brokerage income		301			322			-6.5	%		396			-24.0	%		623			696			-10.5	%
Service fees and other charges:
Deposit related fees		1,411			1,290			9.4	%		1,362			3.6	%		2,701			2,688			0.5	%
Mortgage servicing fees		729			735			-0.8	%		701			4.0	%		1,464			1,399			4.6	%
Mortgage servicing rights valuation		(2	)		(3	)		-33.3	%		(292	)		-99.3	%		(5	)		(727	)		99.3	%
Mortgage servicing rights amortization		(486	)		(448	)		8.5	%		(567	)		-14.3	%		(934	)		(1,035	)		9.8	%
Other service fees		33			29			13.8	%		47			-29.8	%		62			65			-4.6	%
Net gains (losses):
Securities available for sale		301			29			937.9	%		233			29.2	%		330			386			-14.5	%
Mortgage banking income		2,117			1,323			60.0	%		1,869			13.3	%		3,440			3,251			5.8	%
Real estate owned and other repossessed assets charges, net		(18	)		(52	)		-65.4	%		(63	)		-71.4	%		(70	)		(76	)		7.9	%
Debit/credit card fees		1,326			923			43.7	%		1,120			18.4	%		2,249			2,001			12.4	%
Trust fee income		420			282			48.9	%		—			100.0	%		702			—			100.0	%
Other income		486			481			1.0	%		458			6.1	%		967			972			-0.5	%

Total non-interest income		7,090			5,384			31.7	%		5,780			22.7	%		12,474			10,438			19.5	%

Non-interest expense
Salaries and employee benefits		8,749			8,975			2.5	%		7,186			-21.8	%		17,724			14,274			-24.2	%
Occupancy		943			964			2.2	%		855			-10.3	%		1,907			1,717			-11.1	%
Equipment and data processing		2,306			2,079			-10.9	%		1,887			-22.2	%		4,385			3,722			-17.8	%
Financial institutions tax		510			490			-4.1	%		431			-18.3	%		1,000			873			-14.5	%
Advertising		265			124			-113.7	%		221			-19.9	%		389			348			-11.8	%
Amortization of intangible assets		113			83			-36.1	%		10			-1030.0	%		196			23			-752.2	%
FDIC insurance premiums		340			188			-80.9	%		287			-18.5	%		528			613			13.9	%
Other insurance premiums		109			112			2.7	%		73			-49.3	%		221			162			-36.4	%
Professional fees:
Legal and consulting fees		184			229			19.7	%		193			4.7	%		413			273			-51.3	%
Other professional fees		420			520			19.2	%		372			-12.9	%		940			559			-68.2	%
Real estate owned and other repossessed asset expenses		23			62			62.9	%		77			70.1	%		85			149			43.0	%
Acquisition related expenses		—			4,962			100.0	%		—			0.0	%		4,962			—			-100.0	%
Other expenses		1,214			1,502			19.2	%		1,268			4.3	%		2,716			2,611			-4.0	%

Total non-interest expenses		15,176			20,290			25.2	%		12,860			-18.0	%		35,466			25,324			-40.0	%

Income before income taxes		11,795			2,332			405.8	%		8,046			46.6	%		14,127			13,053			8.2	%
Taxable equivalent adjustment		229			237			3.4	%		187			-22.5	%		466			282			-65.2	%
Income tax expense		3,377			557			-506.3	%		2,529			-33.5	%		3,934			4,121			4.5	%

Net income	$	8,189		$	1,538			432.4	%	$	5,330			53.6	%	$	9,727		$	8,650			12.5	%

Earnings per common share:
Basic	$	0.165		$	0.032			415.6	%	$	0.113			46.0	%	$	0.198		$	0.182			8.8	%
Diluted		0.163			0.032			409.4	%		0.112			45.5	%		0.196			0.182			7.7	%

⁽¹⁾

Net interest income is also presented on a fully taxable equivalent (FTE) basis, the Company believes this non-GAAP measure is the preferred industry measurement for this item.

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED AVERAGE BALANCES

(Unaudited)


	For the three months ended
	June 30, 2017							March 31, 2017							June 30, 2016
	Average		Interest					Average		Interest					Average		Interest
	outstanding		earned/		Yield/			outstanding		earned/		Yield/			outstanding		earned/		Yield/
	balance		paid		rate			balance		paid		rate			balance		paid		rate
	(Dollars in thousands)
Interest earning assets:
Net loans ⁽¹⁾	$	1,863,525	$	20,012		4.30	%	$	1,706,009	$	17,560		4.12	%	$	1,369,683	$	14,186		4.14	%
Loans held for sale		80,205		872		4.35	%		67,860		661		3.90	%		37,521		363		3.87	%

Total loans, net		1,943,730		20,884		4.30	%		1,773,869		18,221		4.11	%		1,407,204		14,549		4.14	%
Securities:
Available for sale-taxable		258,217		1,479		2.29	%		287,775		1,602		2.23	%		315,583		1,781		2.26	%
Available for sale-nontaxable ⁽²⁾		59,209		619		4.18	%		59,361		621		4.18	%		42,394		440		4.15	%
Held to maturity-taxable		80,817		454		2.25	%		83,655		465		2.22	%		95,933		524		2.18	%
Held to maturity-nontaxable ⁽²⁾		9,843		79		3.21	%		12,451		94		3.02	%		12,971		96		2.96	%

Total securities		408,086		2,631		2.58	%		443,242		2,782		2.51	%		466,881		2,841		2.43	%
Federal Home Loan Bank stock		19,324		227		4.70	%		18,905		214		4.53	%		18,068		180		3.98	%
Other interest earning assets		22,129		40		0.72	%		43,059		80		0.74	%		18,978		15		0.33	%

Total interest earning assets		2,393,269		23,782		3.97	%		2,279,075		21,297		3.74	%		1,911,131		17,585		3.68	%
Non-interest earning assets		180,524							166,070							132,780

Total assets	$	2,573,793						$	2,445,145						$	2,043,911

Interest bearing liabilities:
Deposits:
Checking accounts	$	633,276		480		0.30	%	$	564,903		337		0.24	%	$	505,284		261		0.21	%
Savings accounts		308,683		27		0.03	%		301,675		30		0.04	%		291,820		34		0.05	%
Certificates of deposit
Customer certificates of deposit		504,397		1,166		0.92	%		468,686		1,073		0.92	%		434,053		1,201		1.11	%
Brokered certificates of deposit		133,082		314		0.94	%		99,380		181		0.73	%		—		—		—	%

Total certificates of deposit		637,479		1,480		0.93	%		568,066		1,254		0.88	%		434,053		1,201		1.11	%

Total interest bearing deposits		1,579,438		1,987		0.50	%		1,434,644		1,621		0.45	%		1,231,157		1,496		0.49	%
Federal Home Loan Bank advances
Long-term advances		48,019		370		3.08	%		47,823		349		2.92	%		47,237		307		2.60	%
Short-term advances		286,604		694		0.97	%		347,050		606		0.70	%		246,967		256		0.41	%

Total Federal Home Loan Bank advances		334,623		1,064		1.27	%		394,873		955		0.97	%		294,204		563		0.77	%
Repurchase agreements and other		4,844		8		0.66	%		1,051		8		3.04	%		527		6		4.55	%

Total borrowed funds		339,467		1,072		1.26	%		395,924		963		0.97	%		294,731		569		0.77	%

Total interest bearing liabilities	$	1,918,905		3,059		0.64	%	$	1,830,568		2,584		0.56	%	$	1,525,888		2,065		0.54	%

Non-interest bearing liabilities
Total noninterest bearing deposits		333,784							306,402							241,098
Other noninterest bearing liabilities		38,769							33,898							29,751

Total noninterest bearing liabilities		372,553							340,300							270,849

Total liabilities	$	2,291,458						$	2,170,868						$	1,796,737
Shareholders’ equity		282,335							274,277							247,174

Total liabilities and equity	$	2,573,793						$	2,445,145						$	2,043,911

Net interest income and interest rate spread			$	20,723		3.33	%			$	18,713		3.18	%			$	15,520		3.14	%

Net interest margin						3.46	%						3.28	%						3.25	%
Average interest earning assets to average interest bearing liabilities						124.72	%						124.50	%						125.24	%

Interest bearing deposits
Checking accounts	$	633,276	$	480		0.30	%	$	564,903	$	337		0.24	%	$	505,284	$	261		0.21	%
Savings accounts		308,683		27		0.03	%		301,675		30		0.04	%		291,820		34		0.05	%
Customer certificates of deposit		504,397		1,166		0.92	%		468,686		1,073		0.92	%		434,053		1,201		1.11	%

Total customer deposits		1,446,356		1,673		0.46	%		1,335,264		1,440		0.43	%		1,231,157		1,496		0.49	%
Brokered certificates of deposit		133,082		314		0.94	%		99,380		181		0.73	%		—		—		—	%

Total interest bearing deposits		1,579,438		1,987		0.50	%		1,434,644		1,621		0.45	%		1,231,157		1,496		0.49	%
Noninterest bearing deposits		333,784		—		0.00	%		306,402		—		0.00	%		241,098		—		0.00	%

Total average deposits and cost of deposits	$	1,913,222	$	1,987		0.42	%	$	1,741,046	$	1,621		0.37	%	$	1,472,255	$	1,496		0.41	%
Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances	$	48,019	$	370		3.08	%	$	47,823	$	349		2.92	%	$	47,237	$	307		2.60	%
Short term advances		286,604		694		0.97	%		347,050		606		0.70	%		246,967		256		0.41	%

Total Federal Home Loan Bank advances		334,623		1,064		1.27	%		394,873		955		0.97	%		294,204		563		0.77	%
Repurchase agreements and other		4,844		8		0.66	%		1,051		8		3.04	%		527		6		4.55	%

Total borrowed funds		339,467		1,072		1.26	%		395,924		963		0.97	%		294,731		569		0.77	%

Total average deposits and other interest bearing liabilities and total cost of funds	$	2,252,689	$	3,059		0.54	%	$	2,136,970	$	2,584		0.48	%	$	1,766,986	$	2,065		0.47	%

⁽¹⁾	Nonaccrual loans are included in the average balance at a yield of 0%.

⁽²⁾	Yields are on a fully taxable equivalent basis.

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands, except per share data)
Financial Data
Total assets	$	2,553,565		$	2,557,010		$	2,191,345		$	2,160,234		$	2,080,542
Total loans, net		1,869,095			1,835,000			1,503,577			1,473,949			1,398,106
Total securities		375,738			430,357			440,803			457,671			474,707
Total deposits		1,893,993			1,905,205			1,514,991			1,473,043			1,455,746
Average interest-bearing deposits		1,579,438			1,434,644			1,236,496			1,207,858			1,231,157
Average noninterest-bearing deposits		333,784			306,402			257,412			242,310			241,098
Total shareholders’ equity		285,480			277,102			249,806			256,403			254,075
Net interest income		20,494			18,476			16,334			15,760			15,334
Net interest income (FTE)⁽¹⁾		20,723			18,713			16,553			15,945			15,520
Provision for loan losses		842			1,475			1,493			1,344			395
Noninterest income		7,090			5,384			5,635			6,003			5,780
Noninterest expense		15,176			20,290			13,717			12,978			12,860
Income tax expense		3,377			557			1,734			2,288			2,529
Net income		8,189			1,538			5,025			5,153			5,330

Share Data
Basic earnings per common share	$	0.165		$	0.032		$	0.108		$	0.111		$	0.113
Diluted earnings per common share		0.163			0.032			0.107			0.110			0.112
Book value per common share		5.74			5.58			5.36			5.51			5.46
Tangible book value per common share		5.27			5.10			5.33			5.48			5.43
Market value per common share		8.31			8.34			8.94			7.11			6.08

Common shares outstanding at end of period		49,715			49,695			46,581			46,542			46,493
Weighted average shares outstanding—basic		49,392			48,289			46,216			46,167			46,869
Weighted average shares outstanding—diluted		49,795			48,646			46,415			46,392			47,117

Key Ratios
Return on average assets ⁽²⁾		1.27	%		0.25	%		0.93	%		0.98	%		1.04	%
Return on average equity ⁽³⁾		11.60	%		2.24	%		8.00	%		8.38	%		8.63	%
Return on tangible equity ⁽⁴⁾		12.66	%		2.39	%		8.05	%		8.43	%		8.68	%
Net interest margin		3.46	%		3.28	%		3.26	%		3.25	%		3.25	%
Efficiency ratio		54.71	%		83.78	%		61.89	%		59.40	%		60.81	%
Nonperforming loans to net loans, end of period		0.58	%		0.58	%		0.83	%		1.32	%		1.45	%
Nonperforming assets to total assets, end of period		0.72	%		0.74	%		0.94	%		0.98	%		1.06	%
Allowance for loan loss as a percent of loans, end of period		1.04	%		1.02	%		1.25	%		1.22	%		1.21	%
Delinquent loans to total net loans, end of period		0.77	%		0.81	%		1.26	%		1.48	%		1.49	%

⁽¹⁾	Net interest income is presented on a fully taxable equivalent (FTE) basis, the Company believes this non-GAAP measure is the preferred industry measurement for this item

⁽²⁾	Net income divided by average total assets

⁽³⁾	Net income divided by average total equity

⁽⁴⁾	Net income divided by average total equity, minus average intangible assets

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family	$	121,565		$	108,330		$	93,597		$	107,066		$	81,022
Owner/nonowner occupied commercial real estate		342,300			325,633			231,401			225,699			196,110
Land		10,867			9,276			8,373			9,401			9,748
Construction		96,765			94,727			68,158			45,137			61,744
Commercial and industrial		170,758			170,398			102,729			106,880			88,804

Total		742,255			708,364			504,258			494,183			437,428
Residential mortgage loans
Real estate		834,349			839,413			762,926			755,893			747,530
Construction		56,946			51,372			35,695			35,875			35,275

Total		891,295			890,785			798,621			791,768			782,805
Consumer loans
Consumer		251,151			251,215			216,598			203,851			193,272

Total		251,151			251,215			216,598			203,851			193,272

Total loans		1,884,701			1,850,364			1,519,477			1,489,802			1,413,505
Less:
Allowance for loan losses		19,660			18,970			19,087			18,234			17,172
Deferred loan costs, net		(4,054	)		(3,606	)		(3,187	)		(2,381	)		(1,773	)

Total		15,606			15,364			15,900			15,853			15,399

Total loans, net		1,869,095			1,835,000			1,503,577			1,473,949			1,398,106
Loans held for sale, net		86,153			75,698			62,758			60,345			43,847

Total loans	$	1,955,248		$	1,910,698		$	1,566,335		$	1,534,294		$	1,441,953


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	175,800		$	211,875		$	158,271		$	170,348		$	182,713
Non-interest bearing checking accounts		339,067			333,940			256,918			252,923			236,173

Total checking accounts		514,867			545,815			415,189			423,271			418,886
Savings accounts		310,012			308,533			294,563			290,325			292,232
Money market accounts		427,348			418,449			316,813			312,124			314,081

Total non-time deposits		1,252,227			1,272,797			1,026,565			1,025,720			1,025,199
Certificates of deposit less than $250,000		557,300			547,823			425,893			381,605			366,410
Certificates of deposit greater than $250,000		84,466			84,585			62,533			65,718			64,137

Total certificates of deposit		641,766			632,408			488,426			447,323			430,547

Total deposits	$	1,893,993		$	1,905,205		$	1,514,991		$	1,473,043		$	1,455,746

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	18,970		$	19,087		$	18,234		$	17,172		$	16,903
Provision		842			1,475			1,493			1,344			395
Net chargeoffs		(152	)		(1,592	)		(640	)		(282	)		(126	)

Ending balance	$	19,660		$	18,970		$	19,087		$	18,234		$	17,172


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands)
Net (Charge-offs) Recoveries
Commercial loans
Multi-family	$	4		$	1		$	5		$	35		$	3
Owner/nonowner occupied commercial real estate		24			(1,141	)		(570	)		17			(117	)
Land		—			(25	)		(100	)		(250	)		—
Construction		—			—			—			—			—
Commercial and industrial		108			1			139			192			62

Total		136			(1,164	)		(526	)		(6	)		(52	)
Residential mortgage loans
Real estate		(239	)		(196	)		(123	)		(146	)		(59	)
Construction		—			—			—			—			—

Total		(239	)		(196	)		(123	)		(146	)		(59	)
Consumer loans
Consumer		(49	)		(232	)		9			(130	)		(15	)

Total		(49	)		(232	)		9			(130	)		(15	)

Total net chargeoffs	$	(152	)	$	(1,592	)	$	(640	)	$	(282	)	$	(126	)


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family	$	413		$	419		$	—		$	—		$	—
Owner/nonowner occupied commercial real estate		1,331			1,398			3,546			6,879			7,362
Land		9			9			34			134			384
Construction		—			—			—			—			—
Commercial and industrial		190			354			361			4,242			4,633

Total		1,943			2,180			3,941			11,255			12,379
Residential mortgage loans
Real estate		6,701			5,868			6,084			5,835			5,713
Construction		—			—			—			—			—

Total		6,701			5,868			6,084			5,835			5,713
Consumer loans
Consumer		2,139			2,513			2,414			2,358			2,249

Total		2,139			2,513			2,414			2,358			2,249

Total nonperforming loans	$	10,783		$	10,561		$	12,439		$	19,448		$	20,341

Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	7,708		$	7,581		$	7,859		$	15,350		$	15,819
Past due 90 days and still accruing		2			—			—			—			—

Past due 90 days		7,710			7,581			7,859			15,350			15,819
Past due less than 90 days and on nonaccrual		3,073			2,980			4,580			4,098			4,522

Total nonperforming loans		10,783			10,561			12,439			19,448			20,341
Other real estate owned		1,197			1,137			1,726			1,790			1,613
Other classified assets		6,384			6,384			6,384			—			—
Repossessed assets		—			—			51			3			3

Total nonperforming assets	$	18,364		$	18,082		$	20,600		$	21,241		$	21,957

UNITED COMMUNITY FINANCIAL CORP.

NON-GAAP DISCLOSURE RECONCILIATION

(Unaudited)

Reconciliation of Average Shareholders’ Equity to Average Tangible Equity:


	At or for the quarters ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(Dollars in thousands, except per share data)
Average shareholders equity	$	282,335		$	274,277		$	251,230		$	245,919		$	247,174
Average intangible assets		23,699			26,935			1,543			1,556			1,611

Average tangible equity	$	258,636		$	247,342		$	249,687		$	244,363		$	245,563

Net income	$	8,189		$	1,538		$	5,025		$	5,153		$	5,330

Return on tangible equity		12.66	%		2.49	%		8.05	%		8.43	%		8.68	%

Reconciliation of Fully Taxable Equivalent Net Interest Income to Net Interest Income:


	For the quarters ended
	June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
	(Dollars in thousands)
Interest income	$	23,553	$	21,060	$	18,495	$	17,815	$	17,399
Fully taxable equivalent adjustment		229		237		219		185		187

Fully taxable equivalent interest income		23,782		21,297		18,714		18,000		17,586
Interest expense		3,059		2,584		2,161		2,055		2,065

Fully taxable net interest income	$	20,723	$	18,713	$	16,553	$	15,945	$	15,521


	For the six months ended
	June 30, 2017		June 30, 2016
	(Dollars in thousands)
Interest income	$	44,613	$	34,419
Fully taxable equivalent adjustment		466		282

Fully taxable equivalent interest income		45,079		34,701
Interest expense		5,643		4,212

Fully taxable net interest income	$	39,436	$	30,489

Reconciliation of Net Interest Margin without Accretion/Amortization of Purchase Accounting Adjustments:


	Six months ended
	June 30, 2017
	(Dollars in thousands)
Fully taxable net interest income	$	39,436
Accretion/amortization of purchase accounting adjustments		1,185

Fully taxable net interest income, without purchase accounting adjustments	$	38,251

Average interest earning assets	$	2,336,489
Net interest margin excluding accretion amortization of purchase accounting adjustments		3.27	%

Reconciliation of Coverage Ratio to Coverage Ratio with Fair Value Adjustments Included with Allowance for Loan Losses:


	June 30, 2017
	(Dollars in thousands)
Allowance for loan losses	$	19,660
Fair value adjustments		4,917

		24,577

Loans, net	$	1,869,095
Coverage ratio with the Fair Value adjustments included in Allowance for loan losses		1.30	%

Tangible Book Value Per Share:

Tangible book value, per share is defined at shareholders equity minus intangible assets divided by the number of shares outstanding.


	At the quarters ended
	June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
	(Dollars in thousands, except per share data)
Total shareholders’ equity	$	285,480	$	277,102	$	249,806	$	256,403	$	254,075
Goodwill		19,467		19,460		208		—		—
Customer list intangible		2,060		2,090		1,356		1,538		1,554
Core deposit intangible		2,099		2,182		5		6		7
Total common shares outstanding		49,715,021		49,695,487		46,581,370		46,542,388		46,492,527
Tangible book value, as reported	$	5.27	$	5.10	$	5.33	$	5.48	$	5.43

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UNITED COMMUNITY FINANCIAL CORP Reports