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

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8-K - FORM 8-K - UNITED COMMUNITY FINANCIAL CORP	d467169d8k.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 Bank				United Community Financial Corp.
(330) 742-0638				(330) 742-0472
kbushway@homesavings.com

UCFC ANNOUNCES RECORD EARNINGS FOR THE SECOND QUARTER AND

A DIVIDEND INCREASE OF 17%

YOUNGSTOWN, Ohio (July 17, 2018) – United Community Financial Corp. (Company) (NASDAQ: UCFC), parent company of Home Savings Bank (Home Savings), announced today net income of $9.5 million and diluted earnings per share (“EPS”) of $0.190, a 16.6% improvement over the $0.163 per common share reported for the quarter ended June 30, 2017.

Second quarter 2018 highlights:

•

Total loan growth of 12.9% over the last twelve months, and 3.1% on a linked quarter basis

•

Monthly average customer deposit growth of 10.1% over the last twelve months, and 2.2% over the last three months

•

ROA of 1.40%, ROE of 12.56%, ROTE of 13.65% for the quarter

•

Dividend increase of 17% to $0.07 per common share declared

Gary M. Small President and Chief Executive Officer of the Company commented, “We are pleased with the quarterly performance results and the ongoing progress on our strategic initiatives focused on loan, deposit and revenue growth. Each market and business unit is showing improvement and our client base is expanding. Loan growth, outstanding credit performance, and a well-managed expense base continue to be strong points for the organization. Deposit growth over the past year has been outstanding and remains a central focus for the team.”

Strong Loan and Deposit Growth

Total loans grew $252.2 million, or 12.9%, during the previous twelve months ended June 30, 2018, and $66.7 million, or 3.1% compared to the previous quarter. At June 30, 2018, total net loans and loans held for sale aggregated $2.21 billion.

Home Savings has produced excellent results over all lending categories. The increase in total loans for the period was driven by an increase in commercial loans, which grew $158.6 million, or 21.4%, over the last twelve months and $27.7 million, or 3.2%, versus March 31, 2018. Mortgage loans (including loans held for sale) increased $59.5 million, or 6.1%, over the previous twelve months and increased $32.3 million, or 3.2%, during the past three months. Consumer loans increased $33.8 million, or 13.4%, since June 30, 2017 and $5.8 million, or 2.1%, since the previous quarter.

Monthly average customer deposits (which exclude brokered certificates of deposit) increased 10.1% from June 30, 2017 and 2.2% from March 31, 2018. The growth in average customer deposits was driven by increases in average non-interest bearing accounts of 12.7% over the past twelve months and an increase of 0.60% over the past three months. Average business deposits continue to rise, increasing 16.6% over the past twelve months and 2.8% over the past three months. The Company continues to experience deposit gains from all lines of business including treasury management, private banking, consumer and public funds.

Net Interest Margin

The net interest margin was 3.36% for the three months ended June 30, 2018 compared to 3.47% for the previous quarter. This eleven basis point decrease is the result of three separate items. First, a one time prepayment penalty on a commercial loan in the first quarter 2018 increased the margin five basis points in that quarter. Secondly, purchase accounting adjustments were two basis points less favorable to the margin than the first quarter of 2018. Lastly, the remaining four basis point difference is the result of a 38 basis point increase in cost of Federal Home Loan Bank advances.

Excluding the impact of purchase accounting yield adjustments, the net interest margin would have been 3.29%, or seven basis points lower than the 3.36% reported, for the quarter ended June 30, 2018.

Small continued, “The flattening yield curve presents challenges for all in the banking industry and adds more volatility to Home Savings’ net interest margin management. We are operating within our expected margin range and are funded well for additional growth.”

Nonperforming Loans to Total Loans Ratio Decreases during the Second Quarter

Asset quality remained very strong during the second quarter. The Company’s level of nonperforming loans, delinquencies and classified assets all improved during the quarter. Net chargeoffs for the quarter were 1.3 basis points of average loans. Additionally, over the past three months, the ratio of the allowance for loan losses as a percent of loans has increased from 177.5% to 198.4% at June 30, 2018. Nonperforming loans to total loans at June 30, 2018 declined to 0.51%. Delinquent loans to total loans are down to 0.67% at June 30, 2018.

The Company recognized a negative provision for loan losses of $138,000 for the second quarter of 2018, which was down $545,000 in comparison to the previous quarter. Continued asset quality improvements, and an improved credit environment, combined with a favorable change in loan portfolio mix resulted in the need for a lower required provision. As of June 30, 2018, the Company’s allowance for loan losses to total loans was 1.01%, versus 1.04% at March 31, 2018.

Loans acquired through the acquisition during the first quarter of 2017 were recorded at fair value. When combining the remaining fair value adjustment of $3.0 million and the Company’s allowance, the Company’s allowance as a percentage of total loans increases to 1.15%.

Non-Interest Income

Non-interest income decreased $1.2 million to $5.9 million for the second quarter of 2018 compared to $7.1 million for the same quarter last year. Significantly affecting this comparison is mortgage banking income being lower by $912,000, or 43.1%. The volume of mortgage loan production increased 17% and is very favorable to the prior year, however, as experienced industry-wide, market competitiveness continues to impact the margin on saleable loans.

On a year to date basis, mortgage banking income was down 25.5% compared to the same period last year.

Also affecting non-interest income, security gains were down $207,000 when compared to the second quarter of 2017. Lastly, debit/credit card fee income was down $149,000, when compared to the second quarter of 2017 due primarily to a one-time VISA credit as a result of the implementation of a more secure chip debit card, which did not reoccur in 2018.

Small added, “Home Savings’ residential mortgage team has delivered double-digit production growth over the past year, well in excess of the industry benchmark. The landscape is more competitive than ever and pricing has gotten very aggressive. While narrowed pricing is having an adverse impact on gain on sale income, we also see our portfolio yields increasing and our related operating costs decreasing. On balance, the business unit performance remains strong, and we remain very committed to our residential mortgage clients.”

Non-Interest Expense

Non-interest expense was $15.5 million for the second quarter of 2018 compared to $15.2 million during the second quarter of 2017, an increase of $354,000, or 2.3%. This increase is reflective of higher salary and employee benefits costs associated with the hiring of additional revenue generating staff in the latter half of 2017. The Company’s efficiency ratio remains consistent at 57.8%.

Effective Tax Rate

The Company’s effective tax rate on an FTE basis at June 30, 2018 was 19.5% compared to 30.6% at June 30, 2017. The decline was due to the enactment of tax legislation at the end of the year.

Dividend to be Paid

On July 17, 2018, the Board of Directors declared a 17% increase to the quarterly cash dividend to $0.07 per common share payable August 10, 2018 to shareholders of record July 27, 2018.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, July 18, 2018, at 10:00 a.m. ET, to provide an overview of the Company’s second quarter 2018 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 2018 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, 2018			December 31, 2017			F/(U)
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	32,584		$	34,365			-5.2	%
Federal funds sold		34,393			12,515			174.8	%

Total cash and cash equivalents		66,977			46,880			42.9	%
Securities:
Available for sale, at fair value		247,630			270,561			-8.5	%
Held to maturity (fair value of $78,194 and $82,126, respectively)		81,294			82,911			-2.0	%
Loans held for sale, at lower of cost or market		—			211			-100.0	%
Loans held for sale, at fair value		107,701			83,541			28.9	%
Loans, net of allowance for loan losses of $21,405 and $21,202		2,099,781			1,999,877			5.0	%
Federal Home Loan Bank stock, at cost		19,324			19,324			0.0	%
Premises and equipment, net		21,645			22,094			-2.0	%
Accrued interest receivable		8,454			8,190			3.2	%
Real estate owned and other repossessed assets		877			1,253			-30.0	%
Goodwill		20,221			20,221			0.0	%
Core deposit intangible		1,769			1,934			-8.5	%
Customer list intangible		1,980			2,060			-3.9	%
Cash surrender value of life insurance		63,354			62,488			1.4	%
Other assets		29,551			28,360			4.2	%

Total assets	$	2,770,558		$	2,649,905			4.6	%

Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,563,043		$	1,445,293			8.1	%
Noninterest bearing		383,082			354,970			7.9	%

Customer deposits		1,946,125			1,800,263			8.1	%
Brokered deposits		189,220			156,476			20.9	%

Total deposits		2,135,345			1,956,739			9.1	%
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances		48,927			48,536			0.8	%
Short-term advances		248,000			308,000			-19.5	%

Total Federal Home Loan Bank advances		296,927			356,536			-16.7	%
Repurchase agreements and other		191			197			-3.0	%

Total borrowed funds		297,118			356,733			-16.7	%
Advance payments by borrowers for taxes and insurance		19,253			25,038			-23.1	%
Accrued interest payable		964			1,097			-12.1	%
Accrued expenses and other liabilities		16,394			16,033			2.3	%

Total liabilities		2,469,074			2,355,640			4.8	%

Shareholders’ Equity:
Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding		—			—			0.0	%
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 49,904,074 and 49,800,126 shares, respectively, outstanding		177,311			177,458			-0.1	%
Retained earnings		179,965			167,852			7.2	%
Accumulated other comprehensive loss		(24,077	)		(18,685	)		28.9	%
Treasury stock, at cost, 4,234,836 and 4,338,784 shares, respectively		(31,715	)		(32,360	)		-2.0	%

Total shareholders’ equity		301,484			294,265			2.5	%

Total liabilities and shareholders’ equity	$	2,770,558		$	2,649,905			4.6	%

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,
	2018			2018			F/(U)			2017			F/(U)			2018			2017			F/(U)
	(Dollars in thousands, except per share data)
Interest income
Loans	$	23,275		$	22,759			2.3	%	$	20,011			16.3	%	$	46,034		$	37,569			22.5	%
Loans held for sale		1,012			858			17.9	%		872			16.1	%		1,870			1,533			22.0	%
Securities:
Available for sale, nontaxable		356			388			-8.2	%		418			-14.8	%		744			836			-11.0	%
Available for sale, taxable		1,193			1,215			-1.8	%		1,479			-19.3	%		2,408			3,081			-21.8	%
Held to maturity, nontaxable		61			51			19.6	%		52			17.3	%		112			114			-1.8	%
Held to maturity, taxable		398			422			-5.7	%		454			-12.3	%		820			919			-10.8	%
Federal Home Loan Bank stock dividends		274			280			-2.1	%		227			20.7	%		554			441			25.6	%
Other interest earning assets		92			77			19.5	%		40			130.0	%		169			120			40.8	%

Total interest income		26,661			26,050			2.3	%		23,553			13.2	%		52,711			44,613			18.2	%
Interest expense
Deposits		3,790			3,097			-22.4	%		1,987			-90.7	%		6,887			3,608			-90.9	%
Federal Home Loan Bank advances		1,576			1,420			-11.0	%		1,064			-48.1	%		2,996			2,019			-48.4	%
Repurchase agreements and other		—			—			0.0	%		8			100.0	%		—			16			100.0	%

Total interest expense		5,366			4,517			-18.8	%		3,059			-75.4	%		9,883			5,643			-75.1	%

Net interest income		21,295			21,533			-1.1	%		20,494			3.9	%		42,828			38,970			9.9	%
Taxable equivalent adjustment		90			97			-7.2	%		229			-60.7	%		187			466			-59.9	%

Net interest income (FTE)⁽¹⁾		21,385			21,630			-1.1	%		20,723			3.2	%		43,015			39,436			9.1	%
Provision for loan losses		(138	)		407			133.9	%		842			116.4	%		269			2,317			88.4	%

Net interest income after provision for loan losses (FTE)		21,523			21,223			1.4	%		19,881			8.3	%		42,746			37,119			15.2	%

Non-interest income
Insurance agency income		513			577			-11.1	%		472			8.7	%		1,090			945			15.3	%
Brokerage income		300			272			10.3	%		301			-0.3	%		572			623			-8.2	%
Service fees and other charges:
Deposit related fees		1,392			1,300			7.1	%		1,411			-1.3	%		2,692			2,701			-0.3	%
Mortgage servicing fees		813			812			0.1	%		729			11.5	%		1,625			1,465			10.9	%
Mortgage servicing rights valuation		(20	)		9			-322.2	%		(2	)		900.0	%		(11	)		(5	)		-120.0	%
Mortgage servicing rights amortization		(542	)		(500	)		8.4	%		(486	)		11.5	%		(1,042	)		(935	)		-11.4	%
Other service fees		61			38			60.5	%		33			84.8	%		99			62			59.7	%
Net gains (losses):
Securities available for sale		94			139			-32.4	%		301			-68.8	%		233			330			-29.4	%
Mortgage banking income		1,205			1,358			-11.3	%		2,117			-43.1	%		2,563			3,440			-25.5	%
Real estate owned and other repossessed assets charges, net		(113	)		(78	)		44.9	%		(18	)		527.8	%		(191	)		(70	)		-172.9	%
Debit/credit card fees		1,177			949			24.0	%		1,326			-11.2	%		2,126			2,249			-5.5	%
Trust fee income		473			469			0.9	%		420			12.6	%		942			702			34.2	%
Other income		499			474			5.3	%		486			2.7	%		973			967			0.6	%

Total non-interest income		5,852			5,819			0.6	%		7,090			-17.5	%		11,671			12,474			-6.4	%

Non-interest expense
Salaries and employee benefits		8,937			9,998			10.6	%		8,749			-2.1	%		18,935			17,724			-6.8	%
Occupancy		950			1,100			13.6	%		943			-0.7	%		2,050			1,907			-7.5	%
Equipment and data processing		2,372			2,154			-10.1	%		2,306			-2.9	%		4,526			4,385			-3.2	%
Financial institutions tax		495			496			0.2	%		510			2.9	%		991			1,000			0.9	%
Advertising		290			235			-23.4	%		265			-9.4	%		525			389			-35.0	%
Amortization of intangible assets		132			113			-16.8	%		113			-16.8	%		245			196			-25.0	%
FDIC insurance premiums		288			290			0.7	%		340			15.3	%		578			528			-9.5	%
Other insurance premiums		109			109			0.0	%		109			0.0	%		218			221			1.4	%
Professional fees:
Legal fees		147			299			50.8	%		184			20.1	%		446			413			-8.0	%
Other professional fees		499			391			-27.6	%		420			-18.8	%		890			940			5.3	%
Supervisory fees		42			42			0.0	%		—			0.0	%		84			—			-100.0	%
Real estate owned and other repossessed asset expenses		34			36			5.6	%		23			-47.8	%		70			85			17.6	%
Acquisition related expenses		—			—			0.0	%		—			0.0	%		—			4,962			100.0	%
Other expenses		1,235			1,337			7.6	%		1,214			-1.7	%		2,572			2,716			5.3	%

Total non-interest expenses		15,530			16,600			6.4	%		15,176			-2.3	%		32,130			35,466			9.4	%

Income before income taxes		11,845			10,442			13.4	%		11,795			0.4	%		22,287			14,127			57.8	%
Taxable equivalent adjustment		90			97			7.2	%		229			60.7	%		187			466			59.9	%
Income tax expense		2,214			1,789			-23.8	%		3,377			34.4	%		4,003			3,934			-1.8	%

Net income	$	9,541		$	8,556			11.5	%	$	8,189			16.5	%	$	18,097		$	9,727			86.0	%

Earnings per common share:
Basic	$	0.191		$	0.172			11.0	%	$	0.165			15.8	%	$	0.363		$	0.198			83.3	%
Diluted		0.190			0.171			11.1	%		0.163			16.6	%		0.361			0.196			84.2	%

⁽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, 2018							March 31, 2018							June 30, 2017
	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⁾	$	2,075,307	$	23,275		4.49	%	$	2,026,266	$	22,760		4.49	%	$	1,863,525	$	20,012		4.30	%
Loans held for sale		91,836		1,012		4.42	%		80,681		858		4.31	%		80,205		872		4.35	%

Total loans, net		2,167,143		24,287		4.48	%		2,106,947		23,618		4.49	%		1,943,730		20,884		4.30	%
Securities:
Available for sale-taxable		207,908		1,193		2.30	%		211,332		1,215		2.30	%		258,217		1,479		2.29	%
Available for sale-nontaxable ⁽²⁾		50,710		429		3.38	%		54,737		472		3.45	%		59,209		619		4.18	%
Held to maturity-taxable		70,406		398		2.26	%		72,627		422		2.32	%		80,817		454		2.25	%
Held to maturity-nontaxable ⁽²⁾		11,265		78		2.77	%		9,227		63		2.73	%		9,843		79		3.21	%

Total securities		340,289		2,098		2.47	%		347,923		2,172		2.50	%		408,086		2,631		2.58	%
Federal Home Loan Bank stock		19,324		274		5.67	%		19,324		280		5.80	%		19,324		227		4.70	%
Other interest earning assets		23,831		92		1.55	%		22,479		77		1.39	%		22,129		40		0.72	%

Total interest earning assets		2,550,587		26,751		4.20	%		2,496,673		26,147		4.19	%		2,393,269		23,782		3.97	%
Non-interest earning assets		174,270							176,785							180,524

Total assets	$	2,724,857						$	2,673,458						$	2,573,793

Interest bearing liabilities:
Deposits:
Checking accounts	$	638,910		948		0.60	%	$	593,499		687		0.47	%	$	633,276		480		0.30	%
Savings accounts		307,250		26		0.03	%		303,639		27		0.04	%		308,683		27		0.03	%
Certificates of deposit
Customer certificates of deposit		608,079		2,143		1.41	%		581,858		1,817		1.27	%		504,397		1,166		0.92	%
Brokered certificates of deposit		164,400		673		1.64	%		165,169		566		1.39	%		133,082		314		0.94	%

Total certificates of deposit		772,479		2,816		1.46	%		747,027		2,383		1.29	%		637,479		1,480		0.93	%

Total interest bearing deposits		1,718,639		3,790		0.88	%		1,644,165		3,097		0.76	%		1,579,438		1,987		0.50	%
Federal Home Loan Bank advances
Long-term advances		48,799		493		4.05	%		48,603		431		3.60	%		48,019		370		3.08	%
Short-term advances		236,747		1,083		1.83	%		265,322		989		1.51	%		286,604		694		0.97	%

Total Federal Home Loan Bank advances		285,546		1,576		2.21	%		313,925		1,420		1.83	%		334,623		1,064		1.27	%
Repurchase agreements and other		195		—		0.00	%		213		—		0.00	%		4,844		8		0.66	%

Total borrowed funds		285,741		1,576		2.21	%		314,138		1,420		1.83	%		339,467		1,072		1.26	%

Total interest bearing liabilities	$	2,004,380		5,366		1.07	%	$	1,958,303		4,517		0.94	%	$	1,918,905		3,059		0.64	%

Non-interest bearing liabilities
Total noninterest bearing deposits		376,905							375,142							333,784
Other noninterest bearing liabilities		39,839							40,729							38,771

Total noninterest bearing liabilities		416,744							415,871							372,555

Total liabilities	$	2,421,124						$	2,374,174						$	2,291,460
Shareholders’ equity		303,733							299,284							282,333

Total liabilities and equity	$	2,724,857						$	2,673,458						$	2,573,793

Net interest income and interest rate spread			$	21,385		3.13	%			$	21,630		3.25	%			$	20,723		3.33	%

Net interest margin						3.36	%						3.47	%						3.46	%
Average interest earning assets to average interest bearing liabilities						127.25	%						127.49	%						124.72	%

Interest bearing deposits
Checking accounts	$	638,910	$	948		0.60	%	$	593,499	$	687		0.47	%	$	633,276	$	480		0.30	%
Savings accounts		307,250		26		0.03	%		303,639		27		0.04	%		308,683		27		0.03	%
Customer certificates of deposit		608,079		2,143		1.41	%		581,858		1,817		1.27	%		504,397		1,166		0.92	%

Total customer deposits		1,554,239		3,117		0.80	%		1,478,996		2,531		0.68	%		1,446,356		1,673		0.46	%
Brokered certificates of deposit		164,400		673		1.64	%		165,169		566		1.39	%		133,082		314		0.94	%

Total interest bearing deposits		1,718,639		3,790		0.88	%		1,644,165		3,097		0.76	%		1,579,438		1,987		0.50	%
Noninterest bearing deposits		376,905		—		0.00	%		375,142		—		0.00	%		333,784		—		0.00	%

Total average deposits and cost of deposits	$	2,095,544	$	3,790		0.72	%	$	2,019,307	$	3,097		0.62	%	$	1,913,222	$	1,987		0.42	%
Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances	$	48,799	$	493		4.05	%	$	48,603	$	431		3.60	%	$	48,019	$	370		3.08	%
Short term advances		236,747		1,083		1.83	%		265,322		989		1.51	%		286,604		694		0.97	%

Total Federal Home Loan Bank advances		285,546		1,576		2.21	%		313,925		1,420		1.83	%		334,623		1,064		1.27	%
Repurchase agreements and other		195		—		0.00	%		213		—		0.00	%		4,844		8		0.66	%

Total borrowed funds		285,741		1,576		2.21	%		314,138		1,420		1.83	%		339,467		1,072		1.26	%

Total average deposits and other interest bearing liabilities and total cost of funds	$	2,381,285	$	5,366		0.90	%	$	2,333,445	$	4,517		0.79	%	$	2,252,689	$	3,059		0.54	%

Customer deposits interest bearing and noninterest bearing	$	1,931,144	$	3,117		0.65	%	$	1,854,138	$	2,531		0.55	%	$	1,780,140	$	1,673		0.38	%
Brokered deposits		164,400		673		1.64	%		165,169		566		1.39	%		133,082		314		0.94	%
Total borrowings		285,741		1,576		2.21	%		314,138		1,420		1.83	%		339,467		1,072		1.26	%
Cost of funds		2,381,285		5,366		0.90	%		2,333,445		4,517		0.79	%		2,252,689		3,059		0.54	%

⁽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, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands, except per share data)
Financial Data
Total assets	$	2,770,558		$	2,690,707		$	2,649,905		$	2,602,365		$	2,553,565
Total loans, net		2,099,781			2,061,443			1,999,877			1,947,695			1,869,095
Total securities		328,924			338,593			353,472			360,371			375,738
Total deposits		2,135,345			2,066,978			1,956,739			1,938,699			1,893,993
Average interest-bearing deposits		1,718,639			1,644,165			1,598,922			1,563,464			1,579,438
Average noninterest-bearing deposits		376,905			375,142			355,225			337,067			333,784
Total shareholders’ equity		301,484			296,195			294,265			291,851			285,480
Net interest income		21,295			21,533			20,880			20,503			20,494
Net interest income (FTE)⁽¹⁾		21,385			21,630			21,101			20,727			20,723
(Recovery) provision for loan losses		(138	)		407			1,215			721			842
Noninterest income		5,852			5,819			6,460			6,305			7,090
Noninterest expense		15,530			16,600			17,329			15,464			15,176
Income tax expense		2,214			1,789			4,294			3,067			3,377
Net income		9,541			8,556			4,502			7,556			8,189

Share Data
Basic earnings per common share	$	0.191		$	0.172		$	0.090		$	0.152		$	0.165
Diluted earnings per common share		0.190			0.171			0.090			0.151			0.163
Book value per common share		6.04			5.94			5.90			5.87			5.74
Tangible book value per common share		5.56			5.45			5.41			5.38			5.27
Market value per common share		10.99			9.86			9.13			9.60			8.31

Common shares outstanding at end of period		49,904			49,882			49,800			49,758			49,715
Weighted average shares outstanding—basic		49,694			49,611			49,497			49,460			49,392
Weighted average shares outstanding—diluted		50,006			49,885			49,827			49,851			49,795

Key Ratios
Return on average assets (ROA)⁽²⁾		1.40	%		1.28	%		0.68	%		1.17	%		1.27	%
Return on average equity (ROE)⁽³⁾		12.56	%		11.44	%		6.09	%		10.43	%		11.60	%
Return on tangible equity (ROTE)⁽⁴⁾		13.65	%		12.44	%		6.62	%		11.35	%		12.66	%
Net interest margin		3.36	%		3.47	%		3.43	%		3.45	%		3.46	%
Efficiency ratio		57.75	%		60.20	%		63.73	%		57.13	%		54.71	%
Nonperforming loans to net loans, end of period		0.51	%		0.59	%		0.59	%		0.62	%		0.58	%
Nonperforming assets to total assets, end of period		0.57	%		0.65	%		0.64	%		0.75	%		0.72	%
Allowance for loan loss as a percent of loans, end of period		1.01	%		1.04	%		1.05	%		1.04	%		1.04	%
Delinquent loans to total net loans, end of period		0.67	%		0.81	%		0.86	%		0.89	%		0.77	%

⁽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, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family	$	141,004		$	137,836		$	120,480		$	126,977		$	121,565
Owner/nonowner occupied commercial real estate		396,624			384,533			381,611			366,747			342,300
Land		16,887			15,452			15,162			13,666			10,867
Construction		127,691			134,181			116,863			108,105			96,765
Commercial and industrial		218,611			201,132			188,500			175,581			170,758

Total		900,817			873,134			822,616			791,076			742,255
Residential mortgage loans
Real estate		888,583			882,873			870,939			851,863			834,349
Construction		40,623			42,453			49,092			57,081			56,946

Total		929,206			925,326			920,031			908,944			891,295
Consumer loans
Consumer		284,909			279,110			273,494			263,692			251,151

Total		284,909			279,110			273,494			263,692			251,151

Total loans		2,114,932			2,077,570			2,016,141			1,963,712			1,884,701
Less:
Allowance for loan losses		21,405			21,610			21,202			20,555			19,660
Deferred loan costs, net		(6,254	)		(5,483	)		(4,938	)		(4,538	)		(4,054	)

Total		15,151			16,127			16,264			16,017			15,606

Total loans, net		2,099,781			2,061,443			1,999,877			1,947,695			1,869,095
Loans held for sale, net		107,701			79,292			83,752			84,545			86,153

Total loans	$	2,207,482		$	2,140,735		$	2,083,629		$	2,032,240		$	1,955,248


	At or for the quarters ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	138,812		$	140,740		$	170,478		$	173,171		$	175,800
Non-interest bearing checking accounts		383,082			376,904			354,970			343,146			339,067

Total checking accounts		521,894			517,644			525,448			516,317			514,867
Savings accounts		306,283			308,025			301,716			307,169			310,012
Money market accounts		502,560			483,840			424,234			418,294			427,348

Total non-time deposits		1,330,737			1,309,509			1,251,398			1,241,780			1,252,227
Certificates of deposit less than or equal to $250,000		744,770			704,147			651,255			617,839			557,300
Certificates of deposit greater than $250,000		59,838			53,322			54,086			79,080			84,466

Total certificates of deposit		804,608			757,469			705,341			696,919			641,766

Total deposits	$	2,135,345		$	2,066,978		$	1,956,739		$	1,938,699		$	1,893,993

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	21,610		$	21,202		$	20,555		$	19,660		$	18,970
Provision		(138	)		407			1,215			721			842
Net (chargeoffs) recoveries		(67	)		1			(568	)		174			(152	)

Ending balance	$	21,405		$	21,610		$	21,202		$	20,555		$	19,660


	At or for the quarters ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands)
Net Recoveries (Charge-offs)
Commercial loans
Multi-family	$	9		$	6		$	(126	)	$	(4	)	$	4
Owner/nonowner occupied commercial real estate		29			40			23			39			24
Land		—			—			—			—			—
Construction		10			7			—			—			—
Commercial and industrial		(72	)		104			(90	)		314			108

Total		(24	)		157			(193	)		349			136
Residential mortgage loans
Real estate		(14	)		(66	)		(257	)		(291	)		(239	)
Construction		—			—			—			—			—

Total		(14	)		(66	)		(257	)		(291	)		(239	)
Consumer loans
Consumer		(29	)		(90	)		(118	)		116			(49	)

Total		(29	)		(90	)		(118	)		116			(49	)

Total net chargeoffs	$	(67	)	$	1		$	(568	)	$	174		$	(152	)


	At or for the quarters ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family	$	275		$	275		$	275		$	402		$	413
Owner/nonowner occupied commercial real estate		1,111			1,206			1,218			1,234			1,331
Land		—			9			9			9			9
Construction		—			—			—			—			—
Commercial and industrial		1,475			1,459			1,505			234			190

Total		2,861			2,949			3,007			1,879			1,943
Residential mortgage loans
Real estate		6,146			7,045			6,076			6,627			6,701
Construction		—			—			—			—			—

Total		6,146			7,045			6,076			6,627			6,701
Consumer loans
Consumer		1,783			2,180			2,620			2,332			2,137

Total		1,783			2,180			2,620			2,332			2,137

Total nonperforming loans	$	10,790		$	12,174		$	11,703		$	10,838		$	10,781

Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	8,395		$	8,326		$	8,620		$	7,634		$	7,706
Past due 90 days and still accruing		—			—			—			8			2

Past due 90 days		8,395			8,326			8,620			7,642			7,708
Past due less than 90 days and on nonaccrual		2,395			3,848			3,083			3,196			3,073

Total nonperforming loans		10,790			12,174			11,703			10,838			10,781
Other real estate owned		802			1,030			1,047			1,133			1,197
Other classified assets		4,050			4,050			4,050			6,384			6,384
Repossessed assets		75			263			206			10			—

Total nonperforming assets	$	15,717		$	17,517		$	17,006		$	18,365		$	18,362

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, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
	(Dollars in thousands, except per share data)
Average shareholders equity	$	303,733		$	299,284		$	295,506		$	295,506		$	282,335
Average intangible assets		24,063			24,175			23,563			23,642			23,699

Average tangible equity	$	279,670		$	275,109		$	271,943		$	271,864		$	258,636

Net income	$	9,541		$	8,556		$	4,502		$	7,556		$	8,189

Return on tangible equity		13.65	%		12.44	%		6.62	%		11.12	%		12.66	%

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


	For the quarters ended
	June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017
	(Dollars in thousands)
Interest income	$	26,661	$	26,050	$	24,849	$	24,048	$	23,553
Fully taxable equivalent adjustment		90		97		221		224		229

Fully taxable equivalent interest income		26,751		26,147		25,070		24,272		23,782
Interest expense		5,366		4,517		3,969		3,545		3,059

Fully taxable net interest income	$	21,385	$	21,630	$	21,101	$	20,727	$	20,723

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


	June 30, 2018
	(Dollars in thousands)
Allowance for loan losses	$	21,405
Fair value adjustments		2,961

		24,366

Loans, net	$	2,099,781
Add: Allowance for loan losses and fair value adjustment		24,366

Gross loans	$	2,124,147

Coverage ratio with the Fair Value adjustments included in Allowance for loan losses		1.15	%

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, 2018		March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017
	(Dollars in thousands, except per share data)
Total shareholders’ equity	$	301,484	$	296,195	$	294,265	$	291,851	$	285,480
Goodwill		20,221		20,221		20,221		19,488		19,467
Customer list intangible		1,980		2,030		2,060		2,090		2,060
Core deposit intangible		1,769		1,851		1,934		2,017		2,099
Total common shares outstanding		49,904,074		49,882,491		49,800,126		49,758,487		49,715,021
Tangible book value, as reported	$	5.56	$	5.45	$	5.41	$	5.38	$	5.27

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UNITED COMMUNITY FINANCIAL CORP Reports