UCFC United Community Financial Corporation

United Community Financial Corp. (Company) (NASDAQ: UCFC), parent company of Home Savings Bank (Home Savings), today announced net income of $7.6 million, or $0.151 per diluted common share, a 37.3% improvement over the $0.110 per diluted common share reported for the quarter ended September 30, 2016.

Third quarter 2017 highlights:

• Strong organic loan growth, including loans held for sale, at 15.8% annualized
• Net interest margin increased to 3.45%
• Return on average assets of 1.17%
• Return on average tangible equity of 11.35%
• Efficiency ratio improved to 57.13%
• Dividend of $0.04 declared per common share

Gary M. Small, President and Chief Executive Officer of the Company commented, “We are very pleased to report strong performance for the quarter. The team delivered excellent loan growth, stable margins, and each business division and market is experiencing growth. Within our markets, the economic conditions remain supportive of steady growth and improvement in both the business and consumer sectors. We continue to see great opportunities in the market.”

Strong Organic Loan Growth

Loan growth for the third quarter, including loans held for sale, totaled $77.0 million, or 15.8% on an annualized basis. Total loans, including loans held for sale, were $2.03 billion at September 30, 2017 compared to $1.96 billion at June 30, 2017.

Commercial loan growth was $48.8 million for the quarter ended September 30, 2017, or 26.3% on an annualized basis. Consistent with strategic objectives, the Company continues to focus on attracting and building commercial relationships. Residential mortgage loans, including loans held for sale, increased $16.0 million, or 6.6% annualized during the quarter. Consumer loans increased $12.5 million, or 20.0%, annualized.

Net Interest Margin Expands

Net interest income was $20.5 million for the three months ended September 30, 2017. Net interest income on a fully-taxable equivalent basis increased slightly to $20.7 million for the quarter ended September 30, 2017, compared to the quarter ended June 30, 2017, and increased 30.0% from $15.9 million for the three months ended September 30, 2016. The increase in net interest income was primarily due to a higher yield of 4.33% earned on loans, or 3 basis points higher than the prior quarter and 22 basis points higher than the same quarter last year. Cost of deposits increased 5 basis points to 0.47% from the quarter ended June 30, 2017 and 9 basis points from the quarter ended September 30, 2016.

The net interest margin was 3.45% for the three months ended September 30, 2017, a 1 basis point decrease from the 3.46% reported in the quarter ended June 30, 2017. For the quarter ended September 30, 2016, the net interest margin was 3.25%. The increased margin from the same quarter last year was primarily due to continued growth in the yield on earning assets along with the recognition of purchase accounting adjustments. Yield on interest earning assets was 4.04%, an increase of 7 basis points from the prior quarter and 38 basis points from the same quarter last year. Cost of funds for the quarter ended September 30, 2017 was 0.63%, an increase of 9 basis points from the quarter ended June 30, 2017 and 18 basis points from the quarter ended September 30, 2016. Net interest margin was 3.40% for the nine months ended September 30, 2017, compared to 3.23% for the same period last year.

Excluding the impact of the amortization of premiums on time deposits and the accretion of the loan portfolio discount of $670,000, the net interest margin would have been 11 basis points lower, or 3.34%, for the three months ended September 30, 2017. Excluding the impact of the amortization of premiums on time deposits and the accretion of the loan portfolio discount of $1.9 million, the net interest margin would have been 11 basis points lower, or 3.29%, for the nine months ended September 30, 2017.

Nonperforming Loans to Net Loans Ratio Decreases

The ratio of nonperforming loans to net loans continues to improve. The ratio was 0.62% at September 30, 2017, which is down from 1.32% reported at September 30, 2016. During the quarter ended September 30, 2017, the Company recognized a net recovery of $174,000, or 3.7 basis points as a percentage of average loans for the three months ended September 30, 2017.

The Company’s provision for loan losses totaled $721,000 for the third quarter of 2017, which was down in comparison to the prior quarter and from the third quarter of 2016. As of September 30, 2017, the Company’s allowance for loan losses to total loans was 1.04%, versus 1.25% at December 31, 2016 and 1.22% at September 30, 2016.

Loans acquired during the first quarter were recorded at fair value. When combining the remaining fair value adjustment of $4.4 million and the Company’s allowance, the Company’s allowance as a percentage of total loans increases to 1.26%.

Non-Interest Income

Non-interest income was $6.3 million in the third quarter of 2017, compared to $7.1 million in the second quarter of 2017 and increased $6.0 million from the third quarter last year. Insurance agency income was 7.8% higher than the previous quarter and 12.9% higher compared to the same quarter last year. Debit/credit card fee income was up 6.1% compared to the third quarter of 2016, but down $355,000 from the prior quarter primarily due to a one-time fee received in the second quarter. Deposit related fee income rose 6.2% in the third quarter of 2017, compared to the second quarter of 2017 and 5.7% compared to the third quarter of 2016.

Non-Interest Expense

Non-interest expense increased 1.9% to $15.5 million during the third quarter of 2017 compared to $15.2 million during the second quarter of 2017 and increased 19.2% compared to $13.0 million recognized in the third quarter of 2016. The Company’s efficiency ratio remained on target at 57.13% for the quarter ended September 30, 2017. Small continued, “Home Savings is focused on providing the best possible service and solutions for our clients and we continue to attract experienced and respected financial professionals to the Home Savings team. Solid performance in 2017 has enabled the organization to accelerate the expansion efforts of our Wealth and Commercial teams across markets.”

Tangible Book Value

Tangible book value per common share at September 30, 2017 was $5.39 compared to $5.32 at December 31, 2016. The increase was primarily due to net income for the year, offset partially by the acquisition in the first quarter.

Dividend to be Paid

On October 17, 2017, the Board of Directors declared a quarterly cash dividend of $0.04 per common share payable November 17, 2017 to shareholders of record at the close of business November 3, 2017.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, October 18, 2017, at 10:00 a.m. ET., to provide an overview of the Company's third quarter 2017 results and highlights. The conference call may be accessed by calling 1-877-272-7661 ten minutes prior to the start time. Please ask to be joined into the United Community Financial Corp. (UCFC) call. Additionally, a live webcast may be accessed from the Company’s website ir.ucfconline.com. Click on 3rd Quarter 2017 Conference Call on our corporate profile page to join the webcast.

United Community Financial Corp.

Home Savings is a wholly owned subsidiary of the Company and operates retail banking offices, loan production centers and wealth management offices throughout 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, June 30, December 31, 2017 2017 F/(U) 2016 F/(U) (Dollars in thousands) Assets: Cash and deposits with banks $ 29,600 $ 42,654 -30.6 % $ 27,690 6.9 % Federal funds sold   8,410     9,360   -10.1 %   18,197   -53.8 % Total cash and cash equivalents 38,010 52,014 -26.9 % 45,887 -17.2 % Securities: Available for sale, at fair value 274,822 287,179 -4.3 % 343,284 -19.9 % Held to maturity (fair value of $85,024, $87,775 and $96,150, respectively) 85,549 88,559 -3.4 % 97,519 -12.3 % Loans held for sale, at lower of cost or market 194 199 -2.5 % 165 17.6 % Loans held for sale, at fair value 84,351 85,954 -1.9 % 62,593 34.8 % Loans, net of allowance for loan losses of $20,555, $19,660 and $19,087 1,947,695 1,869,095 4.2 % 1,503,577 29.5 % Federal Home Loan Bank stock, at cost 19,324 19,324 0.0 % 18,068 7.0 % Premises and equipment, net 22,132 22,424 -1.3 % 20,963 5.6 % Accrued interest receivable 7,253 7,420 -2.3 % 6,900 5.1 % Real estate owned and other repossessed assets 1,143 1,197 -4.5 % 1,777 -35.7 % Goodwill 19,488 19,467 0.1 % 208 9269.2 % Core deposit intangible 2,017 2,099 -3.9 % 5 40240.0 % Customer list intangible 2,090 2,060 1.5 % 1,356 54.1 % Cash surrender value of life insurance 62,050 56,628 9.6 % 55,861 11.1 % Other assets   36,247     39,946   -9.3 %   33,182   9.2 % Total assets $ 2,602,365   $ 2,553,565   1.9 % $ 2,191,345   18.8 %   Liabilities and Shareholders' Equity Liabilities: Deposits: Non-interest bearing $ 343,146 $ 339,067 1.2 % $ 256,918 33.6 % Interest bearing   1,595,553     1,554,926   2.6 %   1,258,073   26.8 % Total deposits 1,938,699 1,893,993 2.4 % 1,514,991 28.0 % Borrowed funds: Federal Home Loan Bank advances Long-term advances 48,341 48,146 0.4 % 47,756 1.2 % Short-term advances   280,000     280,000   0.0 %   343,000   -18.4 % Total Federal Home Loan Bank advances 328,341 328,146 0.1 % 390,756 -16.0 % Repurchase agreements and other   10,191     8,045   26.7 %   512   1890.4 % Total borrowed funds 338,532 336,191 0.7 % 391,268 -13.5 % Advance payments by borrowers for taxes and insurance 16,048 21,989 -27.0 % 23,812 -32.6 % Accrued interest payable 722 392 84.2 % 145 397.9 % Accrued expenses and other liabilities   16,513     15,520   6.4 %   11,323   45.8 % Total liabilities   2,310,514     2,268,085   1.9 %   1,941,539   19.0 %   Shareholders' Equity: Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding — — 0.0 % — 0.0 %

Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 49,758,487, 49,715,021 and 46,581,370 shares, respectively, outstanding

177,507 177,478 0.0 % 174,360 1.8 % Retained earnings 164,941 159,422 3.5 % 152,675 8.0 % Accumulated other comprehensive loss (17,929 ) (18,448 ) -2.8 % (21,040 ) -14.8 % Treasury stock, at cost, 4,380,423, 4,423,889 and 7,557,540 shares, respectively   (32,668 )   (32,972 ) -0.9 %   (56,189 ) -41.9 % Total shareholders’ equity   291,851     285,480   2.2 %   249,806   16.8 % Total liabilities and shareholders’ equity $ 2,602,365   $ 2,553,565   1.9 % $ 2,191,345   18.8 %               UNITED COMMUNITY FINANCIAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)         For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2017 2017 F/(U) 2016 F/(U) 2017 2016 F/(U) (Dollars in thousands, except per share data) Interest income Loans $ 20,697 $ 20,011 3.4 % $ 14,633 41.4 % $ 58,266 $ 42,618 36.7 % Loans held for sale 882 872 1.1 % 482 83.0 % 2,415 1,177 105.2 % Securities: Available for sale, nontaxable 416 418 -0.5 % 339 22.7 % 1,252 752 66.5 % Available for sale, taxable 1,276 1,479 -13.7 % 1,630 -21.7 % 4,357 5,346 -18.5 % Held to maturity, nontaxable 49 52 -5.8 % 66 -25.8 % 163 183 -10.9 % Held to maturity, taxable 424 454 -6.6 % 466 -9.0 % 1,343 1,567 -14.3 % Federal Home Loan Bank stock dividends 253 227 11.5 % 180 40.6 % 694 542 28.0 % Other interest earning assets   51     40   27.5 %   19   168.4 %   171     49   249.0 % Total interest income 24,048 23,553 2.1 % 17,815 35.0 % 68,661 52,234 31.4 % Interest expense Deposits 2,226 1,987 -12.0 % 1,389 -60.3 % 5,834 4,497 -29.7 % Federal Home Loan Bank advances 1,315 1,064 -23.6 % 661 -98.9 % 3,334 1,754 -90.1 % Repurchase agreements and other   4     8   50.0 %   5   20.0 %   20     16   -25.0 % Total interest expense   3,545     3,059   -15.9 %   2,055   -72.5 %   9,188     6,267   -46.6 % Net interest income 20,503 20,494 0.0 % 15,760 30.1 % 59,473 45,967 29.4 % Taxable equivalent adjustment   224     229   -2.2 %   185   21.1 %   690     466   48.1 % Net interest income (FTE) (1) 20,727 20,723 0.0 % 15,945 30.0 % 60,163 46,433 29.6 % Provision for loan losses   721     842   14.4 %   1,344   46.4 %   3,038     3,894   22.0 % Net interest income after provision for loan losses (FTE)   20,006     19,881   0.6 %   14,601   37.0 %   57,125     42,539   34.3 % Non-interest income Insurance agency income 509 472 7.8 % 451 12.9 % 1,454 1,269 14.6 % Brokerage income 271 301 -10.0 % 337 -19.6 % 894 1,033 -13.5 % Service fees and other charges: Deposit related fees 1,499 1,411 6.2 % 1,418 5.7 % 4,200 4,106 2.3 % Mortgage servicing fees 761 729 4.4 % 715 6.4 % 2,225 2,114 5.3 % Mortgage servicing rights valuation (10 ) (2 ) 400.0 % 25 -140.0 % (15 ) (702 ) 97.9 % Mortgage servicing rights amortization (492 ) (486 ) 1.2 % (525 ) -6.3 % (1,426 ) (1,560 ) 8.6 % Other service fees 21 33 -36.4 % 43 -51.2 % 83 108 -23.1 % Net gains (losses): Securities available for sale 236 301 -21.6 % 218 8.3 % 566 604 -6.3 % Mortgage banking income 1,688 2,117 -20.3 % 1,957 -13.7 % 5,128 5,208 -1.5 % Real estate owned and other repossessed assets charges, net (73 ) (18 ) 305.6 % — -100.0 % (143 ) (76 ) -88.2 % Debit/credit card fees 971 1,326 -26.8 % 915 6.1 % 3,220 2,916 10.4 % Trust fee income 449 420 6.9 % — 100.0 % 1,151 — 100.0 % Other income   475     486   -2.3 %   449   5.8 %   1,442     1,421   1.5 % Total non-interest income   6,305     7,090   -11.1 %   6,003   5.0 %   18,779     16,441   14.2 % Non-interest expense Salaries and employee benefits 8,736 8,749 0.1 % 6,950 -25.7 % 26,460 21,224 -24.7 % Occupancy 1,013 943 -7.4 % 847 -19.6 % 2,920 2,564 -13.9 % Equipment and data processing 2,303 2,306 0.1 % 1,926 -19.6 % 6,688 5,648 -18.4 % Financial institutions tax 348 510 31.8 % 411 15.3 % 1,348 1,284 -5.0 % Advertising 285 265 -7.5 % 290 1.7 % 674 638 -5.6 % Amortization of intangible assets 113 113 0.0 % 72 -56.9 % 309 95 -225.3 % FDIC insurance premiums 301 340 11.5 % 155 -94.2 % 829 768 -7.9 % Other insurance premiums 115 109 -5.5 % 89 -29.2 % 336 251 -33.9 % Professional fees: Legal and consulting fees 156 184 15.2 % 266 41.4 % 569 459 -24.0 % Other professional fees 666 420 -58.6 % 286 -132.9 % 1,606 925 -73.6 % Real estate owned and other repossessed asset expenses 33 23 -43.5 % 41 19.5 % 118 190 37.9 % Acquisition related expenses — — 0.0 % — 0.0 % 4,962 — -100.0 % Other expenses   1,395     1,214   -14.9 %   1,645   15.2 %   4,111     4,256   3.4 % Total non-interest expenses   15,464     15,176   -1.9 %   12,978   -19.2 %   50,930     38,302   -33.0 % Income before income taxes 10,847 11,795 -8.0 % 7,626 42.2 % 24,974 20,678 20.8 % Taxable equivalent adjustment 224 229 2.2 % 185 -21.1 % 690 466 -48.1 % Income tax expense   3,067     3,377   9.2 %   2,288   -34.0 %   7,001     6,409   -9.2 % Net income $ 7,556   $ 8,189   -7.7 % $ 5,153   46.6 % $ 17,283   $ 13,803   25.2 %   Earnings per common share: Basic $ 0.152 $ 0.165 -7.9 % $ 0.111 37.2 % $ 0.350 $ 0.293 19.5 % Diluted 0.151 0.163 -7.4 % 0.110 37.3 % 0.347 0.292 18.8 % (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 AVERAGE BALANCES (Unaudited)     For the three months ended September 30, 2017 June 30, 2017 September 30, 2016 Average Interest Average Interest Average Interest outstanding earned/ Yield/ outstanding earned/ Yield/ outstanding earned/ Yield/ balance paid rate balance paid rate balance paid rate (Dollars in thousands) Interest earning assets: Net loans (1) $ 1,906,786 $ 20,699 4.34 % $ 1,863,525 $ 20,012 4.30 % $ 1,422,294 $ 14,634 4.12 % Loans held for sale   88,854   882 3.97 %   80,205   872 4.35 %   49,095   482 3.93 % Total loans, net 1,995,640 21,581 4.33 % 1,943,730 20,884 4.30 % 1,471,389 15,116 4.11 % Securities: Available for sale-taxable 224,927 1,276 2.27 % 258,217 1,479 2.29 % 300,522 1,630 2.17 % Available for sale-nontaxable (2) 59,057 611 4.14 % 59,209 619 4.18 % 49,489 489 3.95 % Held to maturity-taxable 77,947 424 2.18 % 80,817 454 2.25 % 92,077 466 2.02 % Held to maturity-nontaxable (2)   9,239   76 3.29 %   9,843   79 3.21 %   13,563   100 2.95 % Total securities 371,170 2,387 2.57 % 408,086 2,631 2.58 % 455,651 2,685 2.36 % Federal Home Loan Bank stock 19,324 253 5.24 % 19,324 227 4.70 % 18,068 180 3.98 % Other interest earning assets   18,881   51 1.08 %   22,129   40 0.72 %   20,028   19 0.38 % Total interest earning assets 2,405,015 24,272 4.04 % 2,393,269 23,782 3.97 % 1,965,136 18,000 3.66 % Non-interest earning assets   185,773   180,524   132,922 Total assets $ 2,590,788 $ 2,573,793 $ 2,098,058 Interest bearing liabilities: Deposits: Checking accounts $ 591,982 468 0.32 % $ 633,276 480 0.30 % $ 491,553 238 0.19 % Savings accounts 308,829 28 0.04 % 308,683 27 0.03 % 290,998 24 0.03 % Certificates of deposit Customer certificates of deposit 526,697 1,333 1.01 % 504,397 1,166 0.92 % 425,307 1,127 1.06 % Brokered certificates of deposit   135,956   397 1.17 %   133,082   314 0.94 %   —   — — % Total certificates of deposit   662,653   1,730 1.04 %   637,479   1,480 0.93 %   425,307   1,127 1.06 % Total interest bearing deposits 1,563,464 2,226 0.57 % 1,579,438 1,987 0.50 % 1,207,858 1,389 0.46 % Federal Home Loan Bank advances Long-term advances 48,212 388 3.22 % 48,019 370 3.08 % 47,432 319 2.69 % Short-term advances   310,152   927 1.20 %   286,604   694 0.97 %   326,250   342 0.42 % Total Federal Home Loan Bank advances 358,364 1,315 1.47 % 334,623 1,064 1.27 % 373,682 661 0.71 % Repurchase agreements and other   6,483   4 0.25 %   4,844   8 0.66 %   520   5 3.85 % Total borrowed funds   364,847   1,319 1.45 %   339,467   1,072 1.26 %   374,202   666 0.71 % Total interest bearing liabilities $ 1,928,311   3,545 0.74 % $ 1,918,905   3,059 0.64 % $ 1,582,060   2,055 0.52 % Non-interest bearing liabilities Total noninterest bearing deposits 337,067 333,784 242,310 Other noninterest bearing liabilities   35,576   38,771   27,769 Total noninterest bearing liabilities   372,643   372,555   270,079 Total liabilities $ 2,300,954 $ 2,291,460 $ 1,852,139 Shareholders’ equity   289,834   282,333   245,919 Total liabilities and equity $ 2,590,788 $ 2,573,793 $ 2,098,058 Net interest income and interest rate spread $ 20,727 3.30 % $ 20,723 3.33 % $ 15,945 3.14 % Net interest margin 3.45 % 3.46 % 3.25 % Average interest earning assets to average interest bearing liabilities 124.72 % 124.72 % 124.21 %     Interest bearing deposits Checking accounts $ 591,982 $ 468 0.32 % $ 633,276 $ 480 0.30 % $ 491,553 $ 238 0.19 % Savings accounts 308,829 28 0.04 % 308,683 27 0.03 % 290,998 24 0.03 % Customer certificates of deposit   526,697   1,333 1.01 %   504,397   1,166 0.92 %   425,307   1,127 1.06 % Total customer deposits 1,427,508 1,829 0.51 % 1,446,356 1,673 0.46 % 1,207,858 1,389 0.46 % Brokered certificates of deposit   135,956   397 1.17 %   133,082   314 0.94 %   —   — — % Total interest bearing deposits 1,563,464 2,226 0.57 % 1,579,438 1,987 0.50 % 1,207,858 1,389 0.46 % Noninterest bearing deposits   337,067   — 0.00 %   333,784   — 0.00 %   242,310   — 0.00 % Total average deposits and cost of deposits $ 1,900,531 $ 2,226 0.47 % $ 1,913,222 $ 1,987 0.42 % $ 1,450,168 $ 1,389 0.38 % Other interest bearing liabilities Federal Home Loan Bank advances Long term advances $ 48,212 $ 388 3.22 % $ 48,019 $ 370 3.08 % $ 47,432 $ 319 2.69 % Short term advances   310,152   927 1.20 %   286,604   694 0.97 %   326,250   342 0.42 % Total Federal Home Loan Bank advances 358,364 1,315 1.47 % 334,623 1,064 1.27 % 373,682 661 0.71 % Repurchase agreements and other   6,483   4 0.25 %   4,844   8 0.66 %   520   5 3.85 % Total borrowed funds   364,847   1,319 1.45 %   339,467   1,072 1.26 %   374,202   666 0.71 % Total average deposits and other interest bearing liabilities and total cost of funds $ 2,265,378 $ 3,545 0.63 % $ 2,252,689 $ 3,059 0.54 % $ 1,824,370 $ 2,055 0.45 %

(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, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands, except per share data) Financial Data Total assets $ 2,602,365 $ 2,553,565 $ 2,557,010 $ 2,191,345 $ 2,160,234 Total loans, net 1,947,695 1,869,095 1,835,000 1,503,577 1,473,949 Total securities 360,371 375,738 430,357 440,803 457,671 Total deposits 1,938,699 1,893,993 1,905,205 1,514,991 1,473,043 Average interest-bearing deposits 1,563,464 1,579,438 1,434,644 1,236,496 1,207,858 Average noninterest-bearing deposits 337,067 333,784 306,402 257,412 242,310 Total shareholders' equity 291,851 285,480 277,102 249,806 256,403 Net interest income 20,503 20,494 18,476 16,334 15,760 Net interest income (FTE) (1) 20,727 20,723 18,713 16,553 15,945 Provision for loan losses 721 842 1,475 1,493 1,344 Noninterest income 6,305 7,090 5,384 5,635 6,003 Noninterest expense 15,464 15,176 20,290 13,717 12,978 Income tax expense 3,067 3,377 557 1,734 2,288 Net income 7,556 8,189 1,538 5,025 5,153   Share Data Basic earnings per common share $ 0.152 $ 0.165 $ 0.032 $ 0.108 $ 0.111 Diluted earnings per common share 0.151 0.163 0.032 0.107 0.110 Book value per common share 5.87 5.74 5.58 5.36 5.51 Tangible book value per common share 5.39 5.27 5.10 5.32 5.48 Market value per common share 9.60 8.31 8.34 8.94 7.11   Common shares outstanding at end of period 49,758 49,715 49,695 46,581 46,542 Weighted average shares outstanding--basic 49,460 49,392 48,289 46,216 46,167 Weighted average shares outstanding--diluted 49,851 49,795 48,646 46,415 46,392   Key Ratios Return on average assets (2) 1.17 % 1.27 % 0.25 % 0.93 % 0.98 % Return on average equity (3) 10.43 % 11.60 % 2.24 % 8.00 % 8.38 % Return on tangible equity (4) 11.35 % 12.66 % 2.39 % 8.05 % 8.43 % Net interest margin 3.45 % 3.46 % 3.28 % 3.26 % 3.25 % Efficiency ratio 57.13 % 54.71 % 83.78 % 61.89 % 59.40 % Nonperforming loans to net loans, end of period 0.62 % 0.58 % 0.58 % 0.83 % 1.32 % Nonperforming assets to total assets, end of period 0.75 % 0.72 % 0.74 % 0.94 % 0.98 % Allowance for loan loss as a percent of loans, end of period 1.04 % 1.04 % 1.02 % 1.25 % 1.22 % Delinquent loans to total net loans, end of period 0.89 % 0.77 % 0.81 % 1.26 % 1.48 %

(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, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands) Loan Portfolio Composition Commercial loans Multi-family $ 126,977 $ 121,565 $ 108,330 $ 93,597 $ 107,066 Owner/nonowner occupied commercial real estate 366,747 342,300 325,633 231,401 225,699 Land 13,666 10,867 9,276 8,373 9,401 Construction 108,106 96,765 94,727 68,158 45,137 Commercial and industrial   175,580     170,758     170,398     102,729     106,880   Total 791,076 742,255 708,364 504,258 494,183 Residential mortgage loans Real estate 851,863 834,349 839,413 762,926 755,893 Construction   57,081     56,946     51,372     35,695     35,875   Total 908,944 891,295 890,785 798,621 791,768 Consumer loans Consumer   263,692     251,151     251,215     216,598     203,851   Total   263,692     251,151     251,215     216,598     203,851   Total loans 1,963,712 1,884,701 1,850,364 1,519,477 1,489,802 Less: Allowance for loan losses 20,555 19,660 18,970 19,087 18,234 Deferred loan costs, net   (4,538 )   (4,054 )   (3,606 )   (3,187 )   (2,381 ) Total  

16,017

    15,606     15,364     15,900     15,853   Total loans, net 1,947,695 1,869,095 1,835,000 1,503,577 1,473,949 Loans held for sale, net   84,545     86,153     75,698     62,758     60,345   Total loans $ 2,032,240   $ 1,955,248   $ 1,910,698   $ 1,566,335   $ 1,534,294       At or for the quarters ended September 30, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands) Deposit Portfolio Composition Checking accounts Interest bearing checking accounts $ 173,170 $ 175,800 $ 211,875 $ 158,271 $ 170,348 Non-interest bearing checking accounts   343,146     339,067     333,940     256,918     252,923   Total checking accounts 516,316 514,867 545,815 415,189 423,271 Savings accounts 307,169 310,012 308,533 294,563 290,325 Money market accounts   418,294     427,348     418,449     316,813     312,124   Total non-time deposits 1,241,779 1,252,227 1,272,797 1,026,565 1,025,720 Certificates of deposit less than $250,000 617,839 557,300 547,823 425,893 381,605 Certificates of deposit greater than $250,000   79,080     84,466     84,585     62,533     65,718   Total certificates of deposit   696,919     641,766     632,408     488,426     447,323   Total deposits $ 1,938,698   $ 1,893,993   $ 1,905,205   $ 1,514,991   $ 1,473,043             UNITED COMMUNITY FINANCIAL CORP. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)   At or for the quarters ended September 30, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands)   Allowance For Loan Losses Beginning balance $ 19,660 $ 18,970 $ 19,087 $ 18,234 $ 17,172 Provision 721 842 1,475 1,493 1,344 Net recoveries (chargeoffs)   174     (152 )   (1,592 )   (640 )   (282 ) Ending balance $ 20,555   $ 19,660   $ 18,970   $ 19,087   $ 18,234     At or for the quarters ended September 30, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands) Net (Charge-offs) Recoveries Commercial loans Multi-family $ (4 ) $ 4 $ 1 $ 5 $ 35 Owner/nonowner occupied commercial real estate 39 24 (1,141 ) (570 ) 17 Land — — (25 ) (100 ) (250 ) Construction — — — — — Commercial and industrial   314     108     1     139     192   Total 349 136 (1,164 ) (526 ) (6 ) Residential mortgage loans Real estate (291 ) (239 ) (196 ) (123 ) (146 ) Construction   —     —     —     —     —   Total (291 ) (239 ) (196 ) (123 ) (146 ) Consumer loans Consumer   116     (49 )   (232 )   9     (130 ) Total   116     (49 )   (232 )   9     (130 ) Total net chargeoffs $ 174   $ (152 ) $ (1,592 ) $ (640 ) $ (282 )     At or for the quarters ended September 30, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands) Nonperforming Loans Commercial loans Multi-family $ 402 $ 413 $ 419 $ — $ — Owner/nonowner occupied commercial real estate 1,234 1,331 1,398 3,546 6,879 Land 9 9 9 34 134 Construction — — — — — Commercial and industrial   234     190     354     361     4,242   Total 1,879 1,943 2,180 3,941 11,255 Residential mortgage loans Real estate 6,627 6,701 5,868 6,084 5,835 Construction   —     —     —     —     —   Total 6,627 6,701 5,868 6,084 5,835 Consumer loans Consumer   2,340     2,139     2,513     2,414     2,358   Total   2,340     2,139     2,513     2,414     2,358   Total nonperforming loans $ 10,846   $ 10,783   $ 10,561   $ 12,439   $ 19,448       Total Nonperforming Loans and Nonperforming Assets Past due 90 days and on nonaccrual status $ 7,642 $ 7,708 $ 7,581 $ 7,859 $ 15,350 Past due 90 days and still accruing   8     2     —     —     —   Past due 90 days 7,650 7,710 7,581 7,859 15,350 Past due less than 90 days and on nonaccrual   3,196     3,073     2,980     4,580     4,098   Total nonperforming loans 10,846 10,783 10,561 12,439 19,448 Other real estate owned 1,133 1,197 1,137 1,726 1,790 Other classified assets 6,384 6,384 6,384 6,384 — Repossessed assets   10     —     —     51     3   Total nonperforming assets $ 18,373   $ 18,364   $ 18,082   $ 20,600   $ 21,241             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, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands, except per share data) Average shareholders equity $ 289,834 $ 282,335 $ 274,277 $ 251,230 $ 245,919 Average intangible assets   23,642     23,699     26,935     1,543     1,556   Average tangible equity $ 266,192   $ 258,636   $ 247,342   $ 249,687   $ 244,363     Net income $ 7,556 $ 8,189 $ 1,538 $ 5,025 $ 5,153   Return on tangible equity 11.35 % 12.66 % 2.49 % 8.05 % 8.43 %   Reconciliation of Fully Taxable Equivalent Net Interest Income to Net Interest Income:   For the quarters ended September 30, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands)   Interest income $ 24,048 $ 23,553 $ 21,060 $ 18,495 $ 17,815 Fully taxable equivalent adjustment   224     229     237     219     185   Fully taxable equivalent interest income 24,272 23,782 21,297 18,714 18,000 Interest expense   3,545     3,059     2,584     2,161     2,055   Fully taxable net interest income $ 20,727   $ 20,723   $ 18,713   $ 16,553   $ 15,945     For the nine months ended September 30, September 30, 2017 2016 (Dollars in thousands)   Interest income $ 68,661 $ 52,234 Fully taxable equivalent adjustment   690     466   Fully taxable equivalent interest income 69,351 52,700 Interest expense   9,188     6,267   Fully taxable net interest income $ 60,163   $ 46,433     Reconciliation of Net Interest Margin without Accretion/Amortization of Purchase Accounting Adjustments: For the three For the nine months ended months ended September 30, September 30, 2017 2017 (Dollars in (Dollars in thousands) thousands) Fully taxable net interest income $ 20,727 $ 60,163

Accretion/amortization of purchase accounting adjustments

  670     1,855   Fully taxable net interest income, without purchase accounting adjustments $ 20,057   $ 58,308     Average interest earning assets $ 2,405,015 $ 2,359,579

Net interest margin excluding accretion amortization of purchase accounting adjustments

3.34 % 3.29 %   Reconciliation of Coverage Ratio to Coverage Ratio with Fair Value Adjustments Included with Allowance for Loan Losses:   September 30, 2017 (Dollars in thousands) Allowance for loan losses $ 20,555 Fair value adjustments   4,383     24,938     Loans, net $ 1,947,695

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

1.26 %     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, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 (Dollars in thousands, except per share data) Total shareholders' equity $ 291,851 $ 285,480 $ 277,102 $ 249,806 $ 256,403 Goodwill 19,488 19,467 19,460 208 - Customer list intangible 2,090 2,060 2,090 1,356 1,538 Core deposit intangible 2,017 2,099 2,182 5 6 Total common shares outstanding 49,758,487 49,715,021 49,695,487 46,581,370 46,542,388 Tangible book value, as reported $ 5.39 $ 5.27 $ 5.10 $ 5.32 $ 5.48

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Media Contact:Home SavingsKathy Bushway, 330-742-0638Senior Vice President, Marketingkbushway@homesavings.comorInvestor Contact:United Community Financial Corp.Gary M. Small, 330-742-0472President and Chief Executive Officer