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

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8-K - FORM 8-K - UNITED COMMUNITY FINANCIAL CORP	d632220d8k.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 STRONG EARNINGS FOR THE THIRD QUARTER AND

A DIVIDEND OF $0.07 PER COMMON SHARE

YOUNGSTOWN, Ohio (October 16, 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 25.8% improvement over the $0.151 per common share reported for the quarter ended September 30, 2017.

Third quarter 2018 highlights:

•

Total loans, net growth of 10.3% over the last twelve months, and 2.3% on a linked quarter basis

•

Monthly average customer deposit growth of 9.6% over the last twelve months

•

Total revenue up by 2.3% on a linked quarter basis

•

Efficiency Ratio of 57.3%

•

ROA of 1.37%, ROE of 12.25% and ROTE of 13.28%

•

Dividend of $0.07 per common share declared

Gary M. Small President and Chief Executive Officer of the Company commented, “Home Savings’ strong quarterly performance reflected the continued favorable economic and business environment experienced in each of the markets we serve. We delivered excellent loan and solid revenue growth creating positive operating leverage for the organization…a winning formula. While the interest rate environment and trade/tariff issues create uncertainty, I believe our balanced business approach and the strength of our client base will serve us very well in the future.”

Strong Loan and Deposit Growth

Total loans, net grew $201.2 million, or 10.3%, during the previous twelve months ended September 30, 2018, and $49.2 million, or 2.3% compared to the previous quarter. At September 30, 2018, total net loans aggregated $2.15 billion.

Home Savings has produced excellent results within all lending categories. The increase in total loans for the period was driven by an increase in commercial loans, which grew $140.7 million, or 17.8%, over the last twelve months and $31.0 million, or 3.4%, versus June 30, 2018. Mortgage loans increased $40.1 million, or 4.4%, over the previous twelve months and increased $19.8 million, or 2.1%, during the past three months. Consumer loans increased $19.4 million, or 7.4%, since September 30, 2017 and remained consistent with the prior quarter.

Monthly average customer deposits (which exclude brokered certificates of deposit) increased 9.6% from September 30, 2017 and remained consistent on a linked quarter basis. Average customer deposit growth in the third quarter was muted by seasonality associated with one large, public fund deposit. This relationship historically experiences a high point in the deposit level during the second quarter with decreasing balances through the end of the calendar year. The growth in average customer deposits was driven by increases in non-interest bearing accounts of 13.6% over the past twelve months and an increase of 2.4% over the past three months. Average business deposits continue to rise, increasing 21.9% over the past twelve months and 6.2% over the past three months.

Net Interest Margin

The net interest margin was 3.33% for the three months ended September 30, 2018 compared to 3.36% for the previous quarter. This change is the result of several factors. First, the slowing of the recognition of loan and deposit marks from the 2017 acquisition accounted for one basis point of the decline. Also, the continued flattening of the yield curve during the third quarter put pressure on spreads. Finally, short-term LIBOR rates did not move in advance of the Federal Reserve Bank increasing rates at the end of September, as has occured previously, resulting in lower loan yields than expected. The Company expects the delayed increase seen in LIBOR to favorably impact net interest margin during the fourth quarter. Adjustments made during the quarter resulted in a positive margin trend within the period.

Excluding the impact of purchase accounting yield adjustments, the net interest margin would have been 3.27%, or six basis points lower than the 3.33% reported, for the quarter ended September 30, 2018.

Nonperforming Loans to Total Loans Ratio Continued to Decrease during the Third Quarter

Asset quality remained very strong during the third quarter. The Company’s level of nonperforming loans and classified assets all improved during the quarter. Net chargeoffs for the quarter were 6.1 basis points of average loans. Additionally, over the past three months, the ratio of the allowance for loan losses as a percent of nonperforming loans has increased from 198.4% to 235.43% at September 30, 2018. Nonperforming loans to total loans, net at September 30, 2018 declined to 0.42%. Nonperforming assets declined $5.7 million to 0.36% of total assets.

The Company recognized a provision for loan losses of $251,000 for the third quarter of 2018, which was up $389,000 in comparison to the previous quarter. Loan growth offset by continued asset quality improvements and an improved credit environment has impacted the provision level. As of September 30, 2018, the Company’s allowance for loan losses to total loans was 0.98%, versus 1.01% at June 30, 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 $2.6 million and the Company’s allowance, the combined coverage as a percentage of total loans is 1.10%.

Non-Interest Income

Non-interest income increased 5.0% or $294,000 to $6.1 million on a linked quarter basis. During this same time period, the Company did see an increase of 16.9% in mortgage banking income. Additionally a 6.2% increase in agency income, a 13.0% increase in brokerage income, a 7.3% increase in deposit related fees and finally, a 2.1% increase in trust fees offset a 15% seasonal decrease in card fees. As experienced industry-wide, market conditions continue to impact the margin on salable loans. Also impacting the comparison negatively was the fact no security gains were recognized in the third quarter 2018.

At the end of the third quarter, trust assets under management and advisory totaled $775 million.

Non-Interest Expense

Non-interest expense was $15.8 million for the third quarter of 2018 compared to $15.5 million for the same quarter last year, an increase of $308,000, or 2.0%. This increase is reflective of digital banking expansion and additional incentive compensation resulting from increased loan production. The Company’s efficiency ratio remains consistent at 57.3%, compared to the prior quarter.

Effective Tax Rate

The Company’s effective tax rate on an FTE basis for the three months ended September 30, 2018 was 19.5% compared to 30.3% for the three months ended September 30, 2017. The decline was due to the enactment of tax legislation at the end of the year.

Dividend to be Paid

On October 16, 2018, the Board of Directors declared a quarterly cash dividend of $0.07 per common share payable November 9, 2018 to shareholders of record October 26, 2018.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, October 17, 2018, at 10:00 a.m. ET, to provide an overview of the Company’s third 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 3rd 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)


	September 30,			December 31,
	2018			2017			F/(U)
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	31,042		$	34,365			-9.7	%
Federal funds sold		23,223			12,515			85.6	%

Total cash and cash equivalents		54,265			46,880			15.8	%
Securities:
Available for sale, at fair value		242,106			270,561			-10.5	%
Held to maturity (fair value of $74,812 and $82,126, respectively)		78,700			82,911			-5.1	%
Loans held for sale, at lower of cost or market		—			211			-100.0	%
Loans held for sale, at fair value		95,235			83,541			14.0	%
Loans, net of allowance for loan losses of $21,332 and $21,202		2,148,942			1,999,877			7.5	%
Federal Home Loan Bank stock, at cost		19,144			19,324			-0.9	%
Premises and equipment, net		21,449			22,094			-2.9	%
Accrued interest receivable		8,551			8,190			4.4	%
Real estate owned and other repossessed assets		907			1,253			-27.6	%
Goodwill		20,221			20,221			0.0	%
Core deposit intangible		1,686			1,934			-12.8	%
Customer list intangible		2,259			2,060			9.7	%
Cash surrender value of life insurance		63,789			62,488			2.1	%
Other assets		31,929			28,360			12.6	%

Total assets	$	2,789,183		$	2,649,905			5.3	%

Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,553,204		$	1,445,293			7.5	%
Noninterest bearing		383,535			354,970			8.0	%

Customer deposits		1,936,739			1,800,263			7.6	%
Brokered deposits		415,737			156,476			165.7	%

Total deposits		2,352,476			1,956,739			20.2	%
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances		49,025			48,536			1.0	%
Short-term advances		46,000			308,000			-85.1	%

Total Federal Home Loan Bank advances		95,025			356,536			-73.3	%
Repurchase agreements and other		238			197			20.8	%

Total borrowed funds		95,263			356,733			-73.3	%
Advance payments by borrowers for taxes and insurance		16,494			25,038			-34.1	%
Accrued interest payable		1,177			1,097			7.3	%
Accrued expenses and other liabilities		17,730			16,033			10.6	%

Total liabilities		2,483,140			2,355,640			5.4	%

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 49,922,514 and 49,800,126 shares, respectively, outstanding		177,412			177,458			0.0	%
Retained earnings		186,000			167,852			10.8	%
Accumulated other comprehensive loss		(25,783	)		(18,685	)		38.0	%
Treasury stock, at cost, 4,216,396 and 4,338,784 shares, respectively		(31,586	)		(32,360	)		-2.4	%

Total shareholders’ equity		306,043			294,265			4.0	%

Total liabilities and shareholders’ equity	$	2,789,183		$	2,649,905			5.3	%

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended												For the Nine Months Ended
	September 30,			September 30,									September 30,			September 30,
	2018			2017			Variance			F/(U)			2018			2017			Variance			F/(U)
	(Dollars in thousands, except per share data)
Interest income
Loans	$	24,031		$	20,697		$	3,334			16.1	%	$	70,065		$	58,266		$	11,799			20.3	%
Loans held for sale		1,264			882			382			43.3	%		3,134			2,415			719			29.8	%
Securities:
Available for sale, nontaxable		333			416			(83	)		-20.0	%		1,077			1,252			(175	)		-14.0	%
Available for sale, taxable		1,176			1,276			(100	)		-7.8	%		3,584			4,357			(773	)		-17.7	%
Held to maturity, nontaxable		69			49			20			40.8	%		181			163			18			11.0	%
Held to maturity, taxable		374			424			(50	)		-11.8	%		1,194			1,343			(149	)		-11.1	%
Federal Home Loan Bank stock dividends		289			253			36			14.2	%		843			694			149			21.5	%
Other interest earning assets		154			51			103			202.0	%		323			171			152			88.9	%

Total interest income		27,690			24,048			3,642			15.1	%		80,401			68,661			11,740			17.1	%
Interest expense
Deposits		5,044			2,226			(2,818	)		-126.6	%		11,931			5,834			(6,097	)		-104.5	%
Federal Home Loan Bank advances		1,023			1,315			292			22.2	%		4,019			3,334			(685	)		-20.5	%
Repurchase agreements and other		—			4			4			100.0	%		—			20			20			100.0	%

Total interest expense		6,067			3,545			(2,522	)		-71.1	%		15,950			9,188			(6,762	)		-73.6	%

Net interest income		21,623			20,503			1,120			5.5	%		64,451			59,473			4,978			8.4	%
Taxable equivalent adjustment		84			224			(140	)		-62.5	%		271			690			(419	)		-60.7	%

Net interest income (FTE)⁽¹⁾		21,707			20,727			980			4.7	%		64,722			60,163			4,559			7.6	%
Provision for loan losses		251			721			470			65.2	%		520			3,038			2,518			82.9	%

Net interest income after provision for loan losses (FTE)		21,456			20,006			1,450			7.2	%		64,202			57,125			7,077			12.4	%

Non-interest income
Insurance agency income		545			509			36			7.1	%		1,635			1,454			181			12.4	%
Brokerage income		339			271			68			25.1	%		911			894			17			1.9	%
Service fees and other charges:
Deposit related fees		1,494			1,499			(5	)		-0.3	%		4,186			4,200			(14	)		-0.3	%
Mortgage servicing fees		821			760			61			8.0	%		2,446			2,225			221			9.9	%
Mortgage servicing rights valuation		(6	)		(10	)		4			-40.0	%		(17	)		(15	)		2			-13.3	%
Mortgage servicing rights amortization		(477	)		(491	)		14			-2.9	%		(1,519	)		(1,426	)		93			-6.5	%
Other service fees		26			21			5			23.8	%		125			83			42			50.6	%
Net gains (losses):
Securities available for sale		—			236			(236	)		-100.0	%		233			566			(333	)		-58.8	%
Mortgage banking income		1,409			1,688			(279	)		-16.5	%		3,972			5,128			(1,156	)		-22.5	%
Real estate owned and other repossessed assets charges, net		(45	)		(73	)		28			-38.4	%		(236	)		(143	)		93			-65.0	%
Debit/credit card fees		1,000			971			29			3.0	%		3,126			3,220			(94	)		-2.9	%
Trust fee income		483			449			34			7.6	%		1,425			1,151			274			23.8	%
Other income		557			475			82			17.3	%		1,530			1,442			88			6.1	%

Total non-interest income		6,146			6,305			(159	)		-2.5	%		17,817			18,779			(962	)		-5.1	%

Non-interest expense
Salaries and employee benefits		9,107			8,736			(371	)		-4.2	%		28,042			26,460			(1,582	)		-6.0	%
Occupancy		1,094			1,013			(81	)		-8.0	%		3,144			2,920			(224	)		-7.7	%
Equipment and data processing		2,032			2,303			271			11.8	%		6,558			6,688			130			1.9	%
Financial institutions tax		495			348			(147	)		-42.2	%		1,486			1,348			(138	)		-10.2	%
Advertising		340			285			(55	)		-19.3	%		865			674			(191	)		-28.3	%
Amortization of intangible assets		128			113			(15	)		-13.3	%		373			308			(65	)		-21.1	%
FDIC insurance premiums		294			301			7			2.3	%		872			829			(43	)		-5.2	%
Other insurance premiums		85			115			30			26.1	%		303			336			33			9.8	%
Professional fees:
Legal fees		356			156			(200	)		-128.2	%		802			569			(233	)		-40.9	%
Other professional fees		651			666			15			2.3	%		1,541			1,606			65			4.0	%
Supervisory fees		34			—			(34	)		0.0	%		118			—			(118	)		-100.0	%
Real estate owned and other repossessed asset expenses		25			33			8			24.2	%		95			118			23			19.5	%
Acquisition related expenses		—			—			—			0.0	%		—			4,962			4,962			100.0	%
Other expenses		1,131			1,395			264			18.9	%		3,703			4,112			409			9.9	%

Total non-interest expenses		15,772			15,464			(308	)		-2.0	%		47,902			50,930			3,028			5.9	%

Income before income taxes		11,830			10,847			983			9.1	%		34,117			24,974			9,143			36.6	%
Taxable equivalent adjustment		84			224			140			62.5	%		271			690			419			60.7	%
Income tax expense		2,217			3,067			850			27.7	%		6,220			7,001			781			11.2	%

Net income	$	9,529		$	7,556		$	1,973			26.1	%	$	27,626		$	17,283		$	10,343			59.8	%

Earnings per common share:
Basic	$	0.191		$	0.152		$	0.039			25.7	%	$	0.554		$	0.350		$	0.204			58.3	%
Diluted		0.190			0.151			0.039			25.8	%		0.551			0.347			0.204			58.8	%

⁽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 STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended
	September 30,			June 30,
	2018			2018			Variance			F/(U)
	(Dollars in thousands, except per share data)
Interest income
Loans	$	24,031		$	23,275		$	756			3.2	%
Loans held for sale		1,264			1,012			252			24.9	%
Securities:
Available for sale, nontaxable		333			356			(23	)		-6.5	%
Available for sale, taxable		1,176			1,193			(17	)		-1.4	%
Held to maturity, nontaxable		69			61			8			13.1	%
Held to maturity, taxable		374			398			(24	)		-6.0	%
Federal Home Loan Bank stock dividends		289			274			15			5.5	%
Other interest earning assets		154			92			62			67.4	%

Total interest income		27,690			26,661			1,029			3.9	%
Interest expense
Deposits		5,044			3,790			(1,254	)		-33.1	%
Federal Home Loan Bank advances		1,023			1,576			553			35.1	%
Repurchase agreements and other		—			—			—			0.0	%

Total interest expense		6,067			5,366			(701	)		-13.1	%

Net interest income		21,623			21,295			328			1.5	%
Taxable equivalent adjustment		84			90			(6	)		-6.7	%

Net interest income (FTE)⁽¹⁾		21,707			21,385			322			1.5	%
Provision for loan losses		251			(138	)		(389	)		281.9	%

Net interest income after provision for loan losses (FTE)		21,456			21,523			(67	)		-0.3	%

Non-interest income
Insurance agency income		545			513			32			6.2	%
Brokerage income		339			300			39			13.0	%
Service fees and other charges:
Deposit related fees		1,494			1,392			102			7.3	%
Mortgage servicing fees		821			813			8			1.0	%
Mortgage servicing rights valuation		(6	)		(20	)		14			-70.0	%
Mortgage servicing rights amortization		(477	)		(542	)		65			-12.0	%
Other service fees		26			61			(35	)		-57.4	%
Net gains (losses):
Securities available for sale		—			94			(94	)		-100.0	%
Mortgage banking income		1,409			1,205			204			16.9	%
Real estate owned and other repossessed assets charges, net		(45	)		(113	)		68			-60.2	%
Debit/credit card fees		1,000			1,177			(177	)		-15.0	%
Trust fee income		483			473			10			2.1	%
Other income		557			499			58			11.6	%

Total non-interest income		6,146			5,852			294			5.0	%

Non-interest expense
Salaries and employee benefits		9,107			8,937			(170	)		-1.9	%
Occupancy		1,094			950			(144	)		-15.2	%
Equipment and data processing		2,032			2,372			340			14.3	%
Financial institutions tax		495			495			—			0.0	%
Advertising		340			290			(50	)		-17.2	%
Amortization of intangible assets		128			132			4			3.0	%
FDIC insurance premiums		294			288			(6	)		-2.1	%
Other insurance premiums		85			109			24			22.0	%
Professional fees:
Legal fees		356			147			(209	)		-142.2	%
Other professional fees		651			499			(152	)		-30.5	%
Supervisory fees		34			42			8			0.0	%
Real estate owned and other repossessed asset expenses		25			34			9			26.5	%
Acquisition related expenses		—			—			—			0.0	%
Other expenses		1,131			1,235			104			8.4	%

Total non-interest expenses		15,772			15,530			(242	)		-1.6	%

Income before income taxes		11,830			11,845			(15	)		-0.1	%
Taxable equivalent adjustment		84			90			6			6.7	%
Income tax expense		2,217			2,214			(3	)		-0.1	%

Net income	$	9,529		$	9,541		$	(12	)		-0.1	%

Earnings per common share:
Basic	$	0.191		$	0.191		$	—			0.0	%
Diluted		0.190			0.190			—			0.0	%

⁽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
	September 30, 2018							June 30, 2018							September 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⁾	$	2,115,227	$	24,031		4.54	%	$	2,075,307	$	23,275		4.49	%	$	1,906,786	$	20,699		4.34	%
Loans held for sale		111,295		1,264		4.51	%		91,836		1,012		4.42	%		88,854		882		3.97	%

Total loans, net		2,226,522		25,295		4.54	%		2,167,143		24,287		4.48	%		1,995,640		21,581		4.33	%
Securities:
Available for sale-taxable		204,924		1,176		2.30	%		207,908		1,193		2.30	%		224,927		1,276		2.27	%
Available for sale-nontaxable ⁽²⁾		48,370		400		3.31	%		50,710		429		3.38	%		59,057		611		4.14	%
Held to maturity-taxable		67,979		374		2.20	%		70,406		398		2.26	%		77,947		424		2.18	%
Held to maturity-nontaxable ⁽²⁾		12,215		86		2.82	%		11,265		78		2.77	%		9,239		76		3.29	%

Total securities		333,488		2,036		2.44	%		340,289		2,098		2.47	%		371,170		2,387		2.57	%
Federal Home Loan Bank stock		19,160		289		6.03	%		19,324		274		5.67	%		19,324		253		5.24	%
Other interest earning assets		30,140		154		2.03	%		23,831		92		1.55	%		18,881		51		1.08	%

Total interest earning assets		2,609,310		27,774		4.26	%		2,550,587		26,751		4.20	%		2,405,015		24,272		4.04	%
Non-interest earning assets		177,553							174,270							185,773

Total assets	$	2,786,863						$	2,724,857						$	2,590,788

Interest bearing liabilities:
Deposits:
Checking accounts	$	635,705		1,026		0.64	%	$	638,910		948		0.60	%	$	591,982		468		0.32	%
Savings accounts		303,247		27		0.04	%		307,250		26		0.03	%		308,829		28		0.04	%
Certificates of deposit
Customer certificates of deposit		618,545		2,457		1.58	%		608,079		2,143		1.41	%		526,697		1,333		1.01	%
Brokered certificates of deposit		327,120		1,534		1.86	%		164,400		673		1.64	%		135,956		397		1.17	%

Total certificates of deposit		945,665		3,991		1.67	%		772,479		2,816		1.46	%		662,653		1,730		1.04	%

Total interest bearing deposits		1,884,617		5,044		1.06	%		1,718,639		3,790		0.88	%		1,563,464		2,226		0.57	%
Federal Home Loan Bank advances
Long-term advances		48,976		413		3.35	%		48,799		493		4.05	%		48,212		388		3.22	%
Short-term advances		120,880		610		2.00	%		236,747		1,083		1.83	%		310,152		927		1.20	%

Total Federal Home Loan Bank advances		169,856		1,023		2.39	%		285,546		1,576		2.21	%		358,364		1,315		1.47	%
Repurchase agreements and other		213		—		0.00	%		195		—		0.00	%		6,483		4		0.25	%

Total borrowed funds		170,069		1,023		2.39	%		285,741		1,576		2.21	%		364,847		1,319		1.45	%

Total interest bearing liabilities	$	2,054,686		6,067		1.17	%	$	2,004,380		5,366		1.07	%	$	1,928,311		3,545		0.74	%

Non-interest bearing liabilities
Total noninterest bearing deposits		382,044							376,905							337,067
Other noninterest bearing liabilities		39,075							39,839							35,576

Total noninterest bearing liabilities		421,119							416,744							372,643

Total liabilities	$	2,475,805						$	2,421,124						$	2,300,954
Shareholders’ equity		311,058							303,733							289,834

Total liabilities and equity	$	2,786,863						$	2,724,857						$	2,590,788

Net interest income and interest rate spread			$	21,707		3.09	%			$	21,385		3.12	%			$	20,727		3.30	%

Net interest margin						3.33	%						3.36	%						3.45	%
Average interest earning assets to average interest bearing liabilities						126.99	%						127.25	%						124.72	%

Interest bearing deposits
Checking accounts	$	635,705	$	1,026		0.64	%	$	638,910	$	948		0.60	%	$	591,982	$	468		0.32	%
Savings accounts		303,247		27		0.04	%		307,250		26		0.03	%		308,829		28		0.04	%
Customer certificates of deposit		618,545		2,457		1.58	%		608,079		2,143		1.41	%		526,697		1,333		1.01	%

Total interest bearing customer deposits		1,557,497		3,510		0.90	%		1,554,239		3,117		0.80	%		1,427,508		1,829		0.51	%
Brokered certificates of deposit		327,120		1,534		1.86	%		164,400		673		1.64	%		135,956		397		1.17	%

Total interest bearing deposits		1,884,617		5,044		1.06	%		1,718,639		3,790		0.88	%		1,563,464		2,226		0.57	%
Noninterest bearing deposits		382,044		—		0.00	%		376,905		—		0.00	%		337,067		—		0.00	%

Total average deposits and cost of deposits	$	2,266,661	$	5,044		0.89	%	$	2,095,544	$	3,790		0.72	%	$	1,900,531	$	2,226		0.47	%
Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances	$	48,976	$	413		3.35	%	$	48,799	$	493		4.05	%	$	48,212	$	388		3.22	%
Short term advances		120,880		610		2.00	%		236,747		1,083		1.83	%		310,152		927		1.20	%

Total Federal Home Loan Bank advances		169,856		1,023		2.39	%		285,546		1,576		2.21	%		358,364		1,315		1.47	%
Repurchase agreements and other		213		—		0.00	%		195		—		0.00	%		6,483		4		0.25	%

Total borrowed funds		170,069		1,023		2.39	%		285,741		1,576		2.21	%		364,847		1,319		1.45	%

Total average deposits and other interest bearing liabilities and total cost of funds	$	2,436,730	$	6,067		1.00	%	$	2,381,285	$	5,366		0.90	%	$	2,265,378	$	3,545		0.63	%

Customer deposits interest bearing and noninterest bearing	$	1,939,541	$	3,510		0.72	%	$	1,931,144	$	3,117		0.65	%	$	1,764,575	$	1,829		0.41	%
Brokered deposits		327,120		1,534		1.86	%		164,400		673		1.64	%		135,956		397		1.17	%
Total borrowings		170,069		1,023		2.39	%		285,741		1,576		2.21	%		364,847		1,319		1.45	%
Cost of funds		2,436,730		6,067		1.00	%		2,381,285		5,366		0.90	%		2,265,378		3,545		0.63	%

⁽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
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands, except per share data)
Financial Data
Total assets	$	2,789,183		$	2,770,558		$	2,690,707		$	2,649,905		$	2,602,365
Total loans, net		2,148,942			2,099,781			2,061,443			1,999,877			1,947,695
Total securities		320,806			328,924			338,593			353,472			360,371
Total deposits		2,352,476			2,135,345			2,066,978			1,956,739			1,938,699
Average interest-bearing deposits		1,884,617			1,718,639			1,644,165			1,598,922			1,563,464
Average noninterest-bearing deposits		382,044			376,905			375,142			355,225			337,067
Total shareholders’ equity		306,043			301,484			296,195			294,265			291,851
Net interest income		21,623			21,295			21,533			20,880			20,503
Net interest income (FTE)⁽¹⁾		21,707			21,385			21,630			21,101			20,727
Provision (recovery) for loan losses		251			(138	)		407			1,215			721
Noninterest income		6,146			5,852			5,819			6,460			6,305
Noninterest expense		15,772			15,530			16,600			17,329			15,464
Income tax expense		2,217			2,214			1,789			4,294			3,067
Net income		9,529			9,541			8,556			4,502			7,556

Share Data
Basic earnings per common share	$	0.191		$	0.191		$	0.172		$	0.090		$	0.152
Diluted earnings per common share		0.190			0.190			0.171			0.090			0.151
Book value per common share		6.13			6.04			5.94			5.90			5.87
Tangible book value per common share		5.65			5.56			5.45			5.41			5.38
Market value per common share		9.67			10.99			9.86			9.13			9.60

Common shares outstanding at end of period		49,923			49,904			49,882			49,800			49,758
Weighted average shares outstanding—basic		49,683			49,694			49,611			49,497			49,460
Weighted average shares outstanding—diluted		49,947			49,944			49,885			49,827			49,851

Key Ratios
Return on average assets (ROA) ⁽²⁾		1.37	%		1.40	%		1.28	%		0.68	%		1.17	%
Return on average equity (ROE)⁽³⁾		12.25	%		12.56	%		11.44	%		6.09	%		10.43	%
Return on tangible equity (ROTE)⁽⁴⁾		13.28	%		13.65	%		12.44	%		6.62	%		11.35	%
Net interest margin		3.33	%		3.36	%		3.47	%		3.43	%		3.45	%
Efficiency ratio		57.30	%		57.75	%		60.20	%		63.73	%		57.13	%
Nonperforming loans to net loans, end of period		0.42	%		0.51	%		0.59	%		0.59	%		0.62	%
Nonperforming assets to total assets, end of period		0.36	%		0.57	%		0.65	%		0.64	%		0.75	%
Allowance for loan loss as a percent of loans, end of period		0.98	%		1.01	%		1.04	%		1.05	%		1.04	%
Delinquent loans to total net loans, end of period		0.69	%		0.67	%		0.81	%		0.86	%		0.89	%

⁽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
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family	$	139,938		$	141,004		$	137,836		$	120,480		$	126,977
Owner/nonowner occupied commercial real estate		408,938			396,624			384,533			381,611			366,747
Land		16,129			16,887			15,452			15,162			13,666
Construction		132,961			127,691			134,181			116,863			108,105
Commercial and industrial		233,801			218,611			201,132			188,500			175,581

Total		931,767			900,817			873,134			822,616			791,076
Residential mortgage loans
Real estate		909,626			888,583			882,873			870,939			851,863
Construction		39,396			40,623			42,453			49,092			57,081

Total		949,022			929,206			925,326			920,031			908,944
Consumer loans
Consumer		283,108			284,909			279,110			273,494			263,692

Total		283,108			284,909			279,110			273,494			263,692

Total loans		2,163,897			2,114,932			2,077,570			2,016,141			1,963,712
Less:
Allowance for loan losses		21,332			21,405			21,610			21,202			20,555
Deferred loan costs, net		(6,377	)		(6,254	)		(5,483	)		(4,938	)		(4,538	)

Total		14,955			15,151			16,127			16,264			16,017

Total loans, net		2,148,942			2,099,781			2,061,443			1,999,877			1,947,695
Loans held for sale, net		95,235			107,701			79,292			83,752			84,545

Total loans	$	2,244,177		$	2,207,482		$	2,140,735		$	2,083,629		$	2,032,240


	At or for the quarters ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	140,722		$	138,812		$	140,740		$	170,478		$	173,171
Non-interest bearing checking accounts		383,535			383,082			376,904			354,970			343,146

Total checking accounts		524,257			521,894			517,644			525,448			516,317
Savings accounts		300,007			306,283			308,025			301,716			307,169
Money market accounts		489,668			502,560			483,840			424,234			418,294

Total non-time deposits		1,313,932			1,330,737			1,309,509			1,251,398			1,241,780
Certificates of deposit less than or equal to $250,000		977,588			744,770			704,147			651,255			617,839
Certificates of deposit greater than $250,000		60,956			59,838			53,322			54,086			79,080

Total certificates of deposit		1,038,544			804,608			757,469			705,341			696,919

Total deposits	$	2,352,476		$	2,135,345		$	2,066,978		$	1,956,739		$	1,938,699

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)


	At or for the quarters ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	21,405		$	21,610		$	21,202		$	20,555		$	19,660
Provision		251			(138	)		407			1,215			721
Net (chargeoffs) recoveries		(324	)		(67	)		1			(568	)		174

Ending balance	$	21,332		$	21,405		$	21,610		$	21,202		$	20,555


	At or for the quarters ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands)
Net Recoveries (Charge-offs)
Commercial loans
Multi-family	$	4		$	9		$	6		$	(126	)	$	(4	)
Owner/nonowner occupied commercial real estate		12			29			40			23			39
Land		150			—			—			—			—
Construction		11			10			7			—			—
Commercial and industrial		(275	)		(72	)		104			(90	)		314

Total		(98	)		(24	)		157			(193	)		349
Residential mortgage loans
Real estate		(141	)		(14	)		(66	)		(257	)		(291	)
Construction		—			—			—			—			—

Total		(141	)		(14	)		(66	)		(257	)		(291	)
Consumer loans
Consumer		(85	)		(29	)		(90	)		(118	)		116

Total		(85	)		(29	)		(90	)		(118	)		116

Total net chargeoffs	$	(324	)	$	(67	)	$	1		$	(568	)	$	174


	At or for the quarters ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family	$	275		$	275		$	275		$	275		$	402
Owner/nonowner occupied commercial real estate		1,101			1,111			1,206			1,218			1,234
Land		—			—			9			9			9
Construction		—			—			—			—			—
Commercial and industrial		1,489			1,475			1,459			1,505			234

Total		2,865			2,861			2,949			3,007			1,879
Residential mortgage loans
Real estate		4,426			6,146			7,045			6,076			6,627
Construction		—			—			—			—			—

Total		4,426			6,146			7,045			6,076			6,627
Consumer loans
Consumer		1,770			1,783			2,180			2,620			2,332

Total		1,770			1,783			2,180			2,620			2,332

Total nonperforming loans	$	9,061		$	10,790		$	12,174		$	11,703		$	10,838

Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	8,200		$	8,395		$	8,326		$	8,620		$	7,634
Past due 90 days and still accruing		—			—			—			—			8

Past due 90 days		8,200			8,395			8,326			8,620			7,642
Past due less than 90 days and on nonaccrual		861			2,395			3,848			3,083			3,196

Total nonperforming loans		9,061			10,790			12,174			11,703			10,838
Other real estate owned		907			802			1,030			1,047			1,133
Other classified assets		—			4,050			4,050			4,050			6,384
Repossessed assets		—			75			263			206			10

Total nonperforming assets	$	9,968		$	15,717		$	17,517		$	17,006		$	18,365

UNITED COMMUNITY FINANCIAL CORP.

NON-GAAP DISCLOSURE RECONCILIATION

(Unaudited)

Reconciliation of Average Shareholders’ Equity to Average Tangible Equity:


	At or for the quarters ended
	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
	(Dollars in thousands, except per share data)
Average shareholders equity	$	311,058		$	303,733		$	299,284		$	295,506		$	295,506
Average intangible assets		24,144			24,063			24,175			23,563			23,642

Average tangible equity	$	286,914		$	279,670		$	275,109		$	271,943		$	271,864

Net income	$	9,529		$	9,541		$	8,556		$	4,502		$	7,556

Return on tangible equity		13.28	%		13.65	%		12.44	%		6.62	%		11.12	%

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


	For the quarters ended
	September 30, 2018		June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017
	(Dollars in thousands)
Interest income	$	27,690	$	26,661	$	26,050	$	24,849	$	24,048
Fully taxable equivalent adjustment		84		90		97		221		224

Fully taxable equivalent interest income		27,774		26,751		26,147		25,070		24,272
Interest expense		6,067		5,366		4,517		3,969		3,545

Fully taxable net interest income	$	21,707	$	21,385	$	21,630	$	21,101	$	20,727

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


	September 30, 2018
	(Dollars in thousands)
Allowance for loan losses	$	21,332
Fair value adjustments		2,644

		23,976

Loans, net	$	2,148,942
Add: Allowance for loan losses and fair value adjustment		23,976

Gross loans	$	2,172,918

Coverage ratio with the Fair Value adjustments included in Allowance for loan losses		1.10	%

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
	September 30, 2018		June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017
	(Dollars in thousands, except per share data)
Total shareholders’ equity	$	306,043	$	301,484	$	296,195	$	294,265	$	291,851
Goodwill		20,221		20,221		20,221		20,221		19,488
Customer list intangible		2,259		1,980		2,030		2,060		2,090
Core deposit intangible		1,686		1,769		1,851		1,934		2,017
Total common shares outstanding		49,922,514		49,904,074		49,882,491		49,800,126		49,758,487
Tangible book value, as reported	$	5.65	$	5.56	$	5.45	$	5.41	$	5.38

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UNITED COMMUNITY FINANCIAL CORP Reports