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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 17, 2018

 

 

UNITED COMMUNITY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

 

 

OHIO   000-024399   34-1856319

(State or other jurisdiction

of incorporation)

 

(Commission

File No.)

 

(IRS Employer

I.D. No.)

275 West Federal Street, Youngstown, Ohio 44503-1203

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (330) 742-0500

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Section 2 – Financial Information

 

Item 2.02 Results of Operation and Financial Condition

 

  (a) On July 17, 2018, United Community Financial Corp. issued a press release announcing its results of operations for the second quarter of 2018. A copy of the press release is attached as Exhibit 99.

Section 9 – Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits.

 

  (d)    Exhibits.

 

Exhibit

Number

  

Description

    
99    Press Release of United Community dated July 17, 2018.    Included herewith.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  UNITED COMMUNITY FINANCIAL CORP.
          By:   

/s/ Jude J. Nohra

    

Jude J. Nohra

General Counsel & Secretary

Date: July 17, 2018

 

3

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Section 2: EX-99 (EX-99)

EX-99

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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