Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. ~~49,738,735~~49,770,126 common shares as of ~~July~~October 31, 2017.

	June 30,			December 31,			September 30,			December 31,
	2017			2016			2017			2016
	(Dollars in thousands)						(Dollars in thousands)
Assets:
Cash and deposits with banks	$	42,654		$	27,690		$	29,600		$	27,690
Federal funds sold		9,360			18,197			8,410			18,197
Total cash and cash equivalents		52,014			45,887			38,010			45,887
Securities:
Available for sale, at fair value		287,179			343,284			274,822			343,284
Held to maturity, (fair value of $87,775 and $96,150, respectively)		88,559			97,519
Held to maturity, (fair value of $85,024 and $96,150, respectively)								85,549			97,519
Loans held for sale, at lower of cost or market		199			165			196			165
Loans held for sale, at fair value		85,954			62,593			84,349			62,593
Loans, net of allowance for loan losses of $19,660 and $19,087		1,869,095			1,503,577
Loans, net of allowance for loan losses of $20,555 and $19,087								1,947,695			1,503,577
Federal Home Loan Bank stock, at cost		19,324			18,068			19,324			18,068
Premises and equipment, net		22,424			20,963			22,132			20,963
Accrued interest receivable		7,420			6,900			7,253			6,900
Real estate owned and other repossessed assets, net		1,197			1,777			1,143			1,777
Goodwill		19,467			208			19,488			208
Customer list intangible		2,060			1,356			2,090			1,356
Core deposit intangible		2,099			5			2,017			5
Cash surrender value of life insurance		56,628			55,861			62,050			55,861
Other assets		39,946			33,182			36,247			33,182
Total assets	$	2,553,565		$	2,191,345		$	2,602,365		$	2,191,345
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Non-interest bearing	$	339,067		$	256,918		$	343,146		$	256,918
Interest bearing
Customer deposits		1,423,327			1,181,557			1,438,944			1,181,557
Brokered deposits		131,599			76,516			156,609			76,516
Total interest bearing deposits		1,554,926			1,258,073			1,595,553			1,258,073
Total deposits		1,893,993			1,514,991			1,938,699			1,514,991
Borrowed funds:
Federal Home Loan Bank advances
Long-term Federal Home Loan Bank advances		48,146			47,756			48,341			47,756
Short-term Federal Home Loan Bank advances		280,000			343,000			280,000			343,000
Total Federal Home Loan Bank advances		328,146			390,756			328,341			390,756
Repurchase agreements and other		8,045			512			10,191			512
Total borrowed funds		336,191			391,268			338,532			391,268
Advance payments by borrowers for taxes and insurance		21,989			23,812			16,048			23,812
Accrued interest payable		392			145			722			145
Accrued expenses and other liabilities		15,520			11,323			16,513			11,323
Total liabilities		2,268,085			1,941,539			2,310,514			1,941,539
Shareholders' Equity:
Preferred stock-no par value; 1,000,000 shares authorized and no shares issued and outstanding		—			—			—			—
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 49,715,021 and 46,581,370 shares, respectively, outstanding		177,478			174,360
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 49,758,487 and 46,581,370 shares, respectively, outstanding								177,460			174,360
Retained earnings		159,422			152,675			164,988			152,675
Accumulated other comprehensive income (loss)		(18,448	)		(21,040	)		(17,929	)		(21,040	)
Treasury stock, at cost, 4,423,889 and 7,557,540 shares, respectively		(32,972	)		(56,189	)
Treasury stock, at cost, 4,380,423 and 7,557,540 shares, respectively								(32,668	)		(56,189	)
Total shareholders’ equity		285,480			249,806			291,851			249,806
Total liabilities and shareholders’ equity	$	2,553,565		$	2,191,345		$	2,602,365		$	2,191,345

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2017			2016			2017			2016
	(Dollars in thousands, except per share data)												(Dollars in thousands, except per share data)
Interest income
Loans	$	20,011		$	14,184		$	37,569		$	27,985		$	20,697		$	14,633		$	58,266		$	42,618
Loans held for sale		872			363			1,533			695			882			482			2,415			1,177
Securities available for sale, nontaxable		418			290			836			413			416			339			1,252			752
Securities available for sale, taxable		1,479			1,781			3,081			3,716			1,276			1,630			4,357			5,346
Securities held to maturity, nontaxable		52			62			114			117			49			66			163			183
Securities held to maturity, taxable		454			524			919			1,101			424			466			1,343			1,567
Federal Home Loan Bank stock dividends		227			180			441			362			253			180			694			542
Other interest earning assets		40			15			120			30			51			19			171			49
Total interest income		23,553			17,399			44,613			34,419			24,048			17,815			68,661			52,234
Interest expense
Deposits		1,987			1,496			3,608			3,108			2,226			1,389			5,834			4,497
Federal Home Loan Bank advances		1,064			563			2,019			1,093			1,315			661			3,334			1,754
Repurchase agreements and other		8			6			16			11			4			5			20			16
Total interest expense		3,059			2,065			5,643			4,212			3,545			2,055			9,188			6,267
Net interest income		20,494			15,334			38,970			30,207			20,503			15,760			59,473			45,967
Provision for loan losses		842			395			2,317			2,550			721			1,344			3,038			3,894
Net interest income after provision for loan losses		19,652			14,939			36,653			27,657			19,782			14,416			56,435			42,073
Non-interest income
Insurance agency income		472			516			945			818			509			451			1,454			1,269
Brokerage income		301			396			623			696			271			337			894			1,033
Deposit related fees		1,411			1,362			2,701			2,688			1,499			1,418			4,200			4,106
Mortgage servicing fees		729			701			1,465			1,399			760			715			2,225			2,114
Mortgage servicing rights valuation		(2	)		(292	)		(5	)		(727	)		(10	)		25			(15	)		(702	)
Mortgage servicing rights amortization		(486	)		(567	)		(935	)		(1,035	)		(491	)		(525	)		(1,426	)		(1,560	)
Other service fees		33			47			62			65			21			43			83			108
Net gains:
Securities available for sale (includes $301, $233, $330 and $386, respectively, accumulated other comprehensive income reclassifications for unrealized net gains on available for sale securities)		301			233			330			386
Securities available for sale (includes $236, $218, $566 and $604, respectively, accumulated other comprehensive income reclassifications for unrealized net gains on available for sale securities)														236			218			566			604
Mortgage banking income		2,117			1,869			3,440			3,251			1,688			1,957			5,128			5,208
Real estate owned and other repossessed assets, net		(18	)		(63	)		(70	)		(76	)		(73	)		—			(143	)		(76	)
Debit/credit card fees		1,326			1,120			2,249			2,001			971			915			3,220			2,916
Trust fees		420			—			702			—			449			—			1,151			—
Other income		486			458			967			972			475			449			1,442			1,421
Total non-interest income		7,090			5,780			12,474			10,438			6,305			6,003			18,779			16,441
Non-interest expense
Salaries and employee benefits (includes $0, $(278), $0 and $(556), respectively, accumulated other comprehensive income reclassifications from prior service credit on postretirement plan).		8,749			7,186			17,724			14,274
Salaries and employee benefits (includes $0, $(445), $0 and $(1,001), respectively, accumulated other comprehensive income reclassifications from prior service credit on postretirement plan).														8,736			6,950			26,460			21,224
Occupancy		943			855			1,907			1,717			1,013			847			2,920			2,564
Equipment and data processing		2,306			1,887			4,385			3,722			2,303			1,926			6,688			5,648
Financial institutions tax		510			431			1,000			873			348			411			1,348			1,284
Advertising		265			221			389			348			285			290			674			638
Amortization of intangible assets		113			10			196			23			113			72			308			95
FDIC insurance premiums		340			287			528			613			301			155			829			768
Other insurance premiums		109			73			221			162			115			89			336			251
Legal and consulting fees		184			214			413			411			156			211			569			622
Other professional fees		420			351			940			421			666			341			1,606			762
Real estate owned and other repossessed asset expenses		23			77			85			149			33			41			118			190
Acquisition costs		—			—			4,962			—			—			—			4,962			—
Other expenses		1,214			1,268			2,716			2,611			1,395			1,645			4,112			4,256
Total non-interest expenses		15,176			12,860			35,466			25,324			15,464			12,978			50,930			38,302
Income before income taxes		11,566			7,859			13,661			12,771			10,623			7,441			24,284			20,212
Income tax expense (includes $105, $178, $115 and $329 income tax expense from reclassification items)		3,377			2,529			3,934			4,121
Income tax expense (includes $83, $232, $198 and $561 income tax expense from reclassification items)														3,067			2,288			7,001			6,409
Net income	$	8,189		$	5,330		$	9,727		$	8,650		$	7,556		$	5,153		$	17,283		$	13,803

	For the Three Months Ended June 30,					For the Six Months Ended June 30,					For the Three Months Ended September 30,					For the Nine Months Ended September 30,
		2017		2016			2017		2016			2017		2016			2017		2016
	(Dollars in thousands, except per share data)										(Dollars in thousands, except per share data)
Net income	$	8,189	$	5,330		$	9,727	$	8,650		$	7,556	$	5,153		$	17,283	$	13,803
Other comprehensive income
Unrealized gain on securities, available for sale, net of reclassifications and tax of $842, $2,392, $1,362 and $5,852, respectively		1,562		4,442			2,527		10,871
Accretion of unrealized losses on securities transferred from available for sale to held to maturity, net of tax of $17, $20, $35 and $38, respectively		32		37			65		71
Accretion of unrecognized actuarial gains and amortization of prior service credit on postretirement plan, net of tax of $0, $(97), $0 and $(194), respectively recognized in net income		—		(181	)		—		(362	)
Total other comprehensive income		1,594		4,298			2,592		10,580
Unrealized gain (loss) on securities, available for sale, net of reclassifications and tax of $262, $(737), $1,624 and $5,117, respectively												486		(1,369	)		3,013		9,502
Accretion of unrealized losses on securities transferred from available for sale to held to maturity, net of tax of $18, $25, $53 and $63, respectively												33		47			98		118
Accretion of unrecognized actuarial gains and amortization of prior service credit on postretirement plan, net of tax of $0, $(156), $0 and $(350), respectively recognized in net income												—		(289	)		—		(651	)
Total other comprehensive income (loss)												519		(1,611	)		3,111		8,969
Comprehensive income	$	9,783	$	9,628		$	12,319	$	19,230		$	8,075	$	3,542		$	20,394	$	22,772
Earnings per share
Basic	$	0.16	$	0.11		$	0.20	$	0.18		$	0.15	$	0.11		$	0.35	$	0.29
Diluted		0.16		0.11			0.20		0.18			0.15		0.11			0.35		0.29

	Common Shares Outstanding			Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total			Common Shares Outstanding			Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	(Dollars in thousands, except per share data)																		(Dollars in thousands, except per share data)
Balance January 1, 2017		46,581,370		$	174,360		$	152,675		$	(21,040	)	$	(56,189	)	$	249,806			46,581,370		$	174,360		$	152,675		$	(21,040	)	$	(56,189	)	$	249,806
Net income								9,727									9,727									17,283									17,283
Other comprehensive income											2,592						2,592												3,111						3,111
Stock option exercises		33,418			(176	)								250			74			80,085			(381	)								597			216
Stock option expense					1												1						1												1
Restricted stock grants		68,761			(511	)								511			—			75,875			(564	)								564			—
Restricted stock expense					456												456						696												696
Vesting of Long-term Incentive Plan		68,783			87									510			597			68,783			87									510			597
Purchase of Ohio Legacy Corp.		3,033,604			3,261									22,555			25,816			3,033,604			3,261									22,555			25,816
Cash dividend payments ($0.06 per share)								(2,980	)								(2,980	)
Cash dividend payments ($0.10 per share)																										(4,970	)								(4,970	)
Treasury stock purchases		(70,915	)											(609	)		(609	)		(81,230	)											(705	)		(705	)
Balance June 30, 2017		49,715,021		$	177,478		$	159,422		$	(18,448	)	$	(32,972	)	$	285,480
Balance September 30, 2017																				49,758,487		$	177,460		$	164,988		$	(17,929	)	$	(32,668	)	$	291,851

	Common Shares Outstanding			Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total			Common Shares Outstanding			Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	(Dollars in thousands, except per share data)																		(Dollars in thousands, except per share data)
Balance January 1, 2016		47,517,644		$	174,304		$	140,819		$	(19,220	)	$	(51,658	)	$	244,245			47,517,644		$	174,304		$	140,819		$	(19,220	)	$	(51,658	)	$	244,245
Net income								8,650									8,650									13,803									13,803
Other comprehensive income											10,580						10,580												8,969						8,969
Stock option exercises		69,000						(397	)					527			130			165,405						(782	)					1,244			462
Stock option expense					6												6						8												8
Restricted stock grants		173,904			(1,031	)		(313	)					1,344			—			192,874			(1,157	)		(328	)					1,485			—
Restricted stock forfeitures		(1,014	)		3			7						(10	)		—			(2,928	)		13			14						(27	)		—
Restricted stock expense					462												462						716												716
Purchase of James & Sons Insurance		262,705						(541	)					2,049			1,508			262,705						(501	)					2,048			1,547
Cash dividend payments ($0.05 per share)								(2,381	)								(2,381	)
Cash dividend payments ($0.08 per share)																										(3,776	)								(3,776	)
Treasury stock purchases		(1,529,712	)											(9,125	)		(9,125	)		(1,593,312	)											(9,571	)		(9,571	)
Balance June 30, 2016		46,492,527		$	173,744		$	145,844		$	(8,640	)	$	(56,873	)	$	254,075
Balance September 30, 2016																				46,542,388		$	173,884		$	149,249		$	(10,251	)	$	(56,479	)	$	256,403

	For the Six Months Ended June 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
	(Dollars in thousands)						(Dollars in thousands)
Cash Flows from Operating Activities
Net income	$	9,727		$	8,650		$	17,283		$	13,803
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses		2,317			2,550			3,038			3,894
Mortgage banking income		(540	)		(1,602	)		(1,140	)		(3,003	)
Changes in fair value on loans held for sale		(2,900	)		(1,649	)		(3,988	)		(2,205	)
Net losses on real estate owned and other repossessed assets sold		70			76			143			76
Net gain on available for sale securities sold		(330	)		(386	)		(566	)		(604	)
Net gain on other assets sold		—			(2	)		—			(2	)
Amortization of premiums and accretion of discounts		1,911			4,234			3,169			5,320
Depreciation and amortization		1,321			1,139			2,018			1,729
Net change in interest receivable		159			(456	)		326			(88	)
Net change in interest payable		176			46			506			64
Net change in prepaid and other assets		2,466			(75	)		2,107			(3,040	)
Net change in other liabilities		2,924			(130	)		3,956			2,570
Stock based compensation		457			468			697			724
Net principal disbursed on loans originated for sale		(114,733	)		(125,930	)		(194,232	)		(214,201	)
Proceeds from sale of loans held for sale		121,673			119,974			203,676			192,994
Net change in deferred tax assets		(2,043	)		3,595			2,047			5,707
Cash surrender value of life insurance		(767	)		(730	)		(1,189	)		(1,108	)
Tax benefit recognized on stock based compensation		(198	)		—			(300	)		—
Net change in interest rate caps		—			3			—			3
Net cash from operating activities		21,690			9,775			37,551			2,633
Cash Flows from Investing Activities
Proceeds from the principal repayments and maturities of securities available for sale		16,063			16,845			19,164			21,896
Proceeds from the principal repayments and maturities of securities held to maturity		8,732			6,126			11,625			10,270
Proceeds from the sale of securities available for sale		53,171			28,530			62,906			33,702
Proceeds from the sale of real estate owned and other repossessed assets		881			1,570			1,231			1,671
Proceeds from the sale of loans held for investment		2,250			1			2,250			1
Proceeds from the sale of premises and equipment		3			2			3			2
Purchases of premises and equipment		(1,547	)		(1,024	)		(1,943	)		(1,591	)
Principal disbursed on loans, net of repayments		(111,004	)		(69,959	)		(172,222	)		(129,388	)
Loans purchased		(27,039	)		(15,693	)		(45,350	)		(33,203	)
Purchase of bank owned life insurance								(5,000	)		—
Purchase of securities available for sale		—			(38,843	)		—			(38,843	)
Purchase of securities held to maturity		—			(3,200	)		—			(3,200	)
Net cash paid in acquisition of Eich Brothers Insurance		(107	)		—
Net cash (paid) received in acquisition of insurance agencies								(144	)		107
Net cash received in acquisition of OLCB		25,779			107			25,779			—
Net cash from investing activities		(32,818	)		(75,538	)		(101,701	)		(138,576	)
Cash Flows from Financing Activities
Net increase in checking, savings and money market accounts		47,573			44,415			37,125			44,937
Net (decrease) increase in certificates of deposit		65,291			(24,412	)
Net increase (decrease) in certificates of deposit								120,496			(7,637	)
Net decrease in advance payments by borrowers for taxes and insurance		(2,356	)		(1,575	)		(8,297	)		(6,416	)
Net change in short-term FHLB advances		(86,500	)		64,000			(86,500	)		126,000
Net change in repurchase agreements and other borrowed funds		(3,238	)		(12	)		(1,092	)		(18	)
Proceeds from the exercise of stock options		74			130			216			462
Dividends paid		(2,980	)		(2,381	)		(4,970	)		(3,776	)
Purchase of treasury stock		(609	)		(9,125	)		(705	)		(9,571	)
Net cash from financing activities		17,255			71,040			56,273			143,981
Change in cash and cash equivalents		6,127			5,277			(7,877	)		8,038
Cash and cash equivalents, beginning of period		45,887			35,910			45,887			35,910
Cash and cash equivalents, end of period	$	52,014		$	41,187		$	38,010		$	43,948

United Community Financial Corp. (United Community or the Company) was incorporated in the State of Ohio in February 1998 for the purpose of owning all of the outstanding capital stock of Home Savings and Loan Company of Youngstown, Ohio (Home Savings or the Bank) issued upon the conversion of Home Savings from a mutual savings association to a permanent capital stock savings association (Conversion). Upon consummation of the Conversion on July 8, 1998, United Community became the unitary thrift holding company for Home Savings. Home Savings conducts its business from its main office located in Youngstown, Ohio, 35 retail banking offices, ~~and 12~~13 loan production centers and three wealth management offices located throughout Ohio, western Pennsylvania and West Virginia.

On January 29, 2016, United Community acquired James & Sons Insurance. James & Sons Insurance was merged into HSB Insurance, ~~LLC.~~LLC, a wholly-owned subsidiary of United Community. HSB Insurance, LLC d/b/a James & Sons Insurance is an insurance agency that offers a wide variety of insurance products for business and residential customers, which include auto, homeowners, life-health, commercial, surety bonds and aviation. On February 28, 2017, James & Sons Insurance acquired Eich Brothers Insurance. Eich Brothers Insurance is an insurance agency that offers insurance products for business and residential customers, which include auto, commercial, ~~home owners~~homeowners and life-health. On July 1, 2017, James & Sons Insurance acquired Stevens Insurance Agency, that offers insurance products for business and residential customers, which include auto, commercial, homeowners and life-health.

HSB Capital, LLC, a wholly-owned subsidiary of United Community, was formed by United Community during 2016 for the purpose of providing mezzanine funding for customers. Mezzanine loans are offered to customers in United Community’s market area and are expected to repaid from the cash flow from the operations of the business.

On January 31, 2017, United Community completed its acquisition of Ohio Legacy Corp. (OLCB). Immediately following the acquisition of OLCB, Home Savings was merged into Premier Bank & Trust, OLCB’s wholly-owned subsidiary state chartered bank (PB&T), and PB&T changed its name to Home Savings Bank. As a result of the acquisition, United Community issued 3,033,604 United Community common shares and paid $20.4 million to OLCB shareholders. Also, in connection with the acquisition, United Community became a financial holding company, and its wholly owned subsidiary is now an Ohio bank.

HSB Insurance, Inc., a wholly-owned subsidiary of the Company which was formed and began operations on June 1, 2017, is a Delaware-based captive insurance company which insures against certain risks unique to the operations of the Company and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. HSB Insurance, Inc. pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. HSB Insurance, Inc. is subject to regulations of the State of Delaware and undergoes periodic examinations by the Delaware Division of Insurance.

The accompanying consolidated financial statements of United Community have been prepared in accordance with instructions relating to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (U.S. GAAP) for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2017, are not necessarily indicative of the results to be expected for the year ending December 31, 2017. The consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes contained in United Community’s Form 10-K for the year ended December 31, 2016.

The consolidated financial statements include the accounts of United Community and its subsidiaries, Home Savings, HSB Insurance, LLC, HSB Capital, LLC and HSB Insurance, Inc. All material inter-company transactions have been eliminated. Some items in the prior year financial statements were reclassified to conform to the current presentation. These reclassifications had no effect on prior year consolidated statements of operations or shareholders’ equity.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 was originally going to be effective on January 1, 2017; however, the FASB recently issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date which deferred the effective date of ASU 2014-09 by one year to January 1, 2018. United Community’s revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. We expect that ASU 2014-09 will require us to change how we recognize certain insurance commissions and fees; however,

we do not expect these changes to have a significant impact on our financial statements. Additional disclosures will be required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ~~We continue to evaluate the impact of ASU 2014-09 on other components of non-interest income.~~

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. The new guidance is effective for annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2017. Management is currently evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements and expects revisions to disclosures included in the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 - Leases (Topic 842). The ASU will require all organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additional qualitative and quantitative disclosures will be required so that users can understand more about the nature of an entity’s leasing activities. The new guidance is effective for annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements and expects to recognize an increase in other assets and other liabilities for the rights and obligations created by leasing of branch offices. Management also expects minimal impact in the income statement with respect to occupancy expense related to leases.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation - Stock Compensation. The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Key provisions include the elimination of “windfall pools” and removes the requirement to delay recognition of a windfall tax benefit until it reduces current taxes payable. Additionally, the simplification permits entities to withhold an amount up to the employees’ maximum individual tax rate in the relevant jurisdiction without resulting in a liability classification of the award. Entities are now permitted to make accounting policy elections for the impact of forfeitures on the recognition of expense for share-based payment awards. This ASU was adopted on January 1, 2017. The Company recognized a tax benefit of ~~$198,000~~$300,000 in income tax expense during the ~~six~~nine months ended ~~June~~September 30, 2017 as a result of adoption related to vesting of restricted stock awards and exercised stock options.

In June 2016, FASB Issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale

debt securities and beneficial interests in securitized financial assets. The guidance in ASU 2016-13 is effective for “public business entities,” as defined, that are SEC filers for fiscal years, and for interim periods with those fiscal years, beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements. Management is aggregating the necessary data requirements and addressing any data-archiving improvements necessary for the implementation of this ASU.

In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments, which amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the ASU is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The ASU’s amendments add or clarify guidance on eight cash flow issues:

For public business entities, the guidance in the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted for all entities. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. Management is currently evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. Instead, under the new guidance, an entity is to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This ASU amends the amortization period for certain purchased callable debt securities held at a premium. It shortens the amortization period for the premium to the earliest call date. Under current U.S. GAAP, premiums on callable debt securities generally are amortized to the maturity date. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting . ASU 2017-09 applies to entities that change the terms or conditions of a share-based payment award. The FASB adopted ASU 2017-09 to provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation , to the modification of the terms and conditions of a share-based payment award.

The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718.

These amendments require the entity to account for the effects of a modification unless all of the following conditions are met:

The amendments are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for. The amendments should be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In July 2017, the FASB ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815 ): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 simplifies the accounting for certain financial instruments with down round features, a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings.

The new ASU will require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) and will also recognize the effect of the trigger within equity.

The provisions of the new ASU related to down rounds are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

On April 30, 2015, shareholders approved the United Community Financial Corp. 2015 Long-Term Incentive Compensation Plan (the 2015 Plan). The purpose of the 2015 Plan is to provide a means through which United Community may attract and retain employees and non-employee directors, to provide incentives that align their interest with those of United Community’s shareholders and promote the success of United Community’s business. All employees and non-employee directors are eligible to participate in the 2015 Plan. The 2015 Plan provides for the issuance of up to 1,200,000 shares that are to be used for awards of stock options, stock awards, stock units, stock appreciation rights, annual bonus awards and long-term incentive awards.

On April 26, 2007, shareholders approved the United Community Financial Corp. 2007 Long-Term Incentive Plan (as amended, the 2007 Plan). The purpose of the 2007 Plan was to promote and advance the interests of United Community and its shareholders by enabling United Community to attract, retain and reward directors, directors emeritus, managerial and other key employees of United Community, including Home Savings, by facilitating their purchase of an ownership interest in United Community. The 2007 Plan was terminated on April 30, 2015 upon the adoption of the 2015 Plan, although the 2007 Plan survives with respect to awards issued under the 2007 Plan that remain outstanding and exercisable. The 2007 Plan provided for the issuance of up to 2,000,000 shares that were to be used for awards of restricted stock, stock options, performance awards, stock appreciation rights (SARs), or other forms of stock-based incentive awards. Because the 2007 Plan terminated, no additional awards may be made under it.

On July 12, 1999, shareholders approved the United Community Financial Corp. 1999 Long-Term Incentive Plan (as amended, the 1999 Plan). The purpose of the 1999 Plan was the same as the 2007 Plan. The 1999 Plan terminated on May 20, 2009, although the 1999 Plan survives with respect to options issued under the 1999 Plan remain outstanding and exercisable. The 1999 Plan provided for the grant of either incentive or nonqualified stock options. Options were awarded at exercise prices that were not less than the fair

market value of the share at the grant date. The maximum number of common shares that could be issued under the 1999 Plan was 3,569,766. Because the 1999 Plan terminated, no additional options may be issued under it.

There were no stock options granted in the ~~six~~three and nine months ended ~~June~~September 30, 2017 and 2016. Any options granted must be exercised within 10 years from the date of grant. Expenses related to prior stock option grants are included with salaries and employee benefits. The Company recognized $0 and $1,000 in stock option expense for the three and ~~six~~nine months ended ~~June~~September 30, ~~2017.~~2017, respectively. The Company recognized ~~$3,000~~$2,000 and ~~$6,000~~$8,000 in stock option expense for the three and ~~six~~nine months ended ~~June~~September 30, ~~2016.~~2016, respectively. The Company ~~expects~~does not expect to recognize ~~additional~~any stock option expense ~~of $0~~ for the remainder of 2017.

	For the six months ended							For the nine months ended
	June 30, 2017							September 30, 2017
				Weighted		Aggregate					Weighted		Aggregate
				average		intrinsic value					average		intrinsic value
	Shares			exercise price		(in thousands)		Shares			exercise price		(in thousands)
Outstanding at beginning of year		371,218		$	2.55				371,218		$	2.55
Granted		—							—			—
Exercised		(33,418	)		2.18				(80,085	)		2.69
Forfeited and expired		(600	)		2.10				(600	)		2.10
Outstanding at end of period		337,200			2.55	$	1,931		290,533			2.51	$	2,061
Shares subject to options exercisable at end of period		337,200			2.55	$	1,931		290,533			2.51	$	2,061

Information related to stock options for the ~~three~~nine months ended ~~June~~September 30, 2017 and 2016 follows:

	June 30, 2017		June 30, 2016		September 30, 2017		September 30, 2016
Intrinsic value of options exercised	$	208,633	$	283,310	$	487,000	$	631,000
Cash received from option exercises		72,818		129,940		216,000		462,000
Tax benefit realized from option exercises		73,022		—		170,523		—
Weighted average fair value of options granted, per share	$	—	$	—	$	—	$	—

As of ~~June~~September 30, 2017, ~~the cost of nonvested~~there were no unvested stock options ~~is expected to be recognized over a weighted-average period of 3 months.~~remaining.

Outstanding stock options at ~~June~~September 30, 2017 have a weighted average remaining life of ~~2.91~~2.79 years and may be exercised in the range of $1.20 to $5.89 per share.

The 2007 Plan permitted and the 2015 Plan permits the issuance of restricted stock awards to employees and nonemployee directors. Nonvested shares at ~~June~~September 30, 2017 aggregated ~~277,168,~~275,438, of which ~~16,553~~7,709 are expected to vest during the remainder of 2017, ~~122,375~~129,044 in 2018, ~~105,567~~106,012 in 2019 and 32,673 in 2020. Expense related to restricted stock awards is charged to salaries and employee benefits and is recognized over the vesting period of the awards based on the fair value of the shares at the grant date. The Company recognized approximately ~~$185,000~~$240,000 and ~~$456,000~~$696,000 in restricted stock award expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2017. The Company recognized approximately ~~$247,000~~$254,000 and ~~$462,000~~$716,000 in restricted stock award expense for the three and ~~six~~nine months ended ~~June~~September 30, 2016. The Company expects to recognize additional expenses of approximately ~~$365,000~~$203,000 in 2017, ~~$503,000~~$581,000 in 2018, ~~$210,000~~$259,000 in 2019 and ~~$11,000~~$60,000 in 2020. The total average per share fair value of shares vested during the ~~six~~nine months ended ~~June~~September 30, 2017 was ~~$8.63.~~$8.52.

A summary of changes in the Company’s nonvested restricted shares for the ~~six~~nine months ended ~~June~~September 30, 2017 is as follows:

	For the six months ended					For the nine months ended
	June 30, 2017					September 30, 2017
				Weighted					Weighted
				average					average
				grant date					grant date
	Shares			fair value		Shares			fair value
Nonvested at beginning of year		341,184		$	5.50		341,184		$	5.50
Granted		68,761		$	8.62		75,875		$	8.60
Vested		(132,777	)	$	4.91		(141,621	)	$	4.98
Forfeited		—		$	—		—		$	—
Nonvested shares at end of period		277,168		$	6.56		275,438		$	6.63

The Annual Incentive Plan (AIP) provides incentive compensation awards to certain officers of the Company. Annual incentive awards are generally based upon the actual performance of the Company and individual participant performance for the twelve months ending December 31, compared to the actual performance of a peer group during the same twelve-month period. The target incentive awards for each year are measured as a percentage of the base salary of participating officers. Once the awards under the AIP are calculated, they are paid in cash and/or restricted stock. The restricted stock vests equally over three years, beginning on the first anniversary of the date the restricted stock is issued. The Company incurred ~~$46,000~~$100,000 and ~~$122,000~~$222,000 in expense for the restricted stock portion of the AIP for the three and ~~six~~nine months ended ~~June~~September 30, 2017, respectively and ~~$434,000~~$431,000 and ~~$930,000for~~$1.3 million for the cash portion of the AIP for the three and ~~six~~nine months ended ~~June~~September 30, 2017, respectively. The Company incurred ~~$93,000~~$96,000 and ~~$170,000~~$265,000 in expense for the restricted stock portion of the AIP for the three and ~~six~~nine months ended ~~June~~September 30, 2016, respectively and ~~$293,000~~$306,000 and ~~$618,000~~$924,000 for the cash portion of the AIP for the three and ~~six~~nine months ended ~~June~~September 30, 2016, respectively.

The Long-term Incentive Plan (LTIP) provides a long-term incentive compensation opportunity to certain executive officers, whose participation and target award opportunities will be approved by the Compensation Committee of the Board of Directors. Each participant in the LTIP will be granted a target number of Performance Share Units (PSUs). Target PSUs will be determined as a percentage of base salary and translated into share units based on the Company’s average stock price at the appropriate measurement date. The performance period for the annual grant for a given year will be from January 1, year 1 through December 31, year 3. The Company incurred ~~$(4,000)~~$146,000 and ~~$149,000~~$295,000 for the LTIP for the three and ~~six~~nine months ended ~~June~~September 30, 2017, respectively. The Company incurred ~~$97,000~~$96,000 and ~~$193,000~~$289,000 in expense for the LTIP for the three and ~~six~~nine months ended ~~June~~September 30, 2016, respectively.

On January 31, 2017, United Community completed its acquisition of OLCB pursuant to the terms and conditions of the Agreement and Plan of Merger, dated as of September 8, 2016 by and among United Community, the Bank, OLCB and Premier Bank & Trust (Merger Agreement). Pursuant to the terms of the Merger Agreement, OLCB was merged with and into United Community. Immediately following the merger, Home Savings was merged with and into Premier Bank & Trust, a subsidiary of OLCB, and changed its name to Home Savings Bank.

As a result of the acquisiton and in accordance with the terms of the Merger Agreement, each preferred share of OLCB was deemed to have been converted into OLCB common shares. Each OLCB common share was converted into the right to receive either $18.00 in cash or 2.736 United Community common shares, subject to certain allocation procedures set forth in the Merger Agreement that ensured that 50% of OLCB’s common shares outstanding were converted into United Community common shares and 50% of OLCB’s common shares outstanding were exchanged for the cash consideration. The Company issued cash in lieu of issuing fractional shares.

After the allocation procedures were applied, the Company issued 3,033,604 United Community common shares and paid $20.4 million to OLCB shareholders as a result of the acquisition. Acquisition related costs aggregating $5.0 million were included in United Community’s Consolidated Statements of Operations for the ~~six~~nine months ended ~~June~~September 30, 2017. The fair value of the common shares issued as part of the consideration paid for OLCB was determined in the basis of the closing price of United Community’s commons shares on the acquisition date.

At the acquisition date, United Community added the following to the Company’s consolidated statements of financial position:

The fair value of net assets acquired included fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. ~~Receivables acquired~~The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that ~~were~~all contractually required payments would not ~~subject to these requirements include impaired loans and customer receivables~~be collected with a fair value and gross contractual amounts receivable of $2.5 million and $2.6 million, respectively, on the date of acquisition.

Upon adoption of ASU 2016-16, Business Combinations (Topic 805), adjustments to provisional amounts booked in previous years are to be adjusted through current year goodwill with the full effect of changes to depreciation, amortization, or other income recorded in current year earnings as if the change had been completed as of the acquisition date.

The following table presents proforma information as if the OLCB acquisition had occurred at the beginning of 2016. The proforma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired, and the related income tax effects. The proforma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed dates. Net income includes the recognition of $4.1 million in ~~acquisiton~~acquisition related expenses incurred by United Community and $368,000 in ~~acquisiton~~acquisition related expenses for OLCB during the ~~six~~nine months ended ~~June~~September 30, 2017. The impact of the acquired insurance agencies is considered immaterial and not included in the table below.

	For the Six Months Ended June 30,				For the Nine Months Ended September 30,
	2017		2016		2017		2016
	(In thousands, except per share data)				(In thousands, except per share data)
Net interest income	$	39,992	$	36,251	$	61,185	$	55,595
Net income		9,371		10,270		16,928		16,118
Basic earnings per share	$	0.19	$	0.20	$	0.34	$	0.32
Diluted earnings per share	$	0.19	$	0.20	$	0.34	$	0.32

Goodwill is recorded arising from the acquisition, which consisted largely of synergies and the cost savings resulting from combining the operations of the companies. No goodwill is expected to be deductible for income tax purposes.

At the time of the closing, Home ~~Savings~~Savings’ charter changed to a state chartered commercial bank and United Community became a financial holding company.

The acquisition benefits the Company and its shareholders by enabling the Company to further expand into the markets currently served by OLCB and strengthening the competitive position of the combined organization. Furthermore, the Company believes its increased asset size after the acquisition will create additional economies of scale and provide opportunities for asset and earnings growth in an extremely competitive banking environment. OLCB results of operations were included in the Company’s results beginning January 31, 2017.

The fair value of $2.2 million of intangible assets related to core deposits is subject to change pending ~~final~~ receipt of the final valuation.

On February 28, 2017, HSB Insurance, LLC completed the purchase of an insurance agency engaged in the business of selling insurance including auto, commercial, homeowners and life-health insurance. Under the purchase agreement, the Company paid ~~$535,000.~~$535,000, of which $107,000 was paid in cash at closing and the remaining $428,000 will be paid in four equal installments in connection with this acquisition. Total assets purchased were ~~$535,000,~~$722,000, which isincludes the customer list ~~intangible.~~intangible and goodwill.

On July 1, 2017, HSB Insurance, LLC completed the purchase of an insurance agency engaged in the business of selling insurance including auto, commercial, homeowners and life-health insurance. Under the purchase agreement, the Company paid $60,000, of which $23,000 was paid in cash at closing and the remaining $37,000 will be paid in two equal installments in connection with this acquisition. Total assets purchased were $81,000, which includes the customer list intangible and goodwill

	June 30, 2017									September 30, 2017
			Gross		Gross							Gross		Gross
	Amortized		unrealized		unrealized			Fair		Amortized		unrealized		unrealized				Fair
	cost		gains		losses			value		cost		gains		losses				value
	(Dollars in thousands)									(Dollars in thousands)
Available for Sale
U.S. Treasury and government sponsored entities' securities	$	134,820	$	273	$	(490	)	$	134,603	$	125,153	$	237	$	(330	)		$	125,060
States of the U.S. and political subdivisions		59,112		387		(675	)		58,824		58,959		699		(466	)			59,192
Mortgage-backed GSE securities: residential		94,173		91		(512	)		93,752		90,888		106		(424	)			90,570
Total	$	288,105	$	751	$	(1,677	)	$	287,179	$	275,000	$	1,042	$	(1,220	)	��	$	274,822

	June 30, 2017									September 30, 2017
			Gross		Gross							Gross		Gross
	Amortized		unrecognized		unrecognized			Fair		Amortized		unrecognized		unrecognized			Fair
	cost		gains		losses			value		cost		gains		losses			value
	(Dollars in thousands)									(Dollars in thousands)
Held to maturity
Mortgage-backed GSE securities: residential	$	79,318	$	—	$	(892	)	$	78,426	$	76,314	$	—	$	(615	)	$	75,699
States of the U.S. and political subdivisions		9,241		109		(1	)		9,349		9,235		94		(4	)		9,325
Total	$	88,559	$	109	$	(893	)	$	87,775	$	85,549	$	94	$	(619	)	$	85,024

Debt securities available for sale by contractual maturity, repricing or expected call date are shown below:

	June 30, 2017				September 30, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(Dollars in thousands)				(Dollars in thousands)
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		4,594		4,579		14,556		14,570
Due after five years through ten years		130,641		130,447		111,011		110,912
Due after ten years		58,697		58,401		58,545		58,770
Mortgage-backed GSE securities: residential		94,173		93,752		90,888		90,570
Total	$	288,105	$	287,179	$	275,000	$	274,822

Debt securities held to maturity by contractual maturity, repricing or expected call date are shown below:

	June 30, 2017				September 30, 2017
	Amortized cost		Fair value		Amortized cost		Fair value
	(Dollars in thousands)				(Dollars in thousands)
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		—		—		—		—
Due after five years through ten years		7,290		7,375		7,285		7,357
Due after ten years		1,951		1,974		1,950		1,968
Mortgage-backed GSE securities: residential		79,318		78,426		76,314		75,699
Total	$	88,559	$	87,775	$	85,549	$	85,024

Securities pledged for public funds were approximately ~~$136.8~~$133.3 million at ~~June~~September 30, 2017 and approximately $146.5 million at December 31, 2016.

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more at ~~June~~September 30, 2017 are as follows:

	June 30, 2017														September 30, 2017
	Less than 12 months					12 months or more				Total					Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized		Fair		Unrealized			Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value		Loss			value		Loss		value		Loss			value		Loss			value		Loss			value		Loss
	(Dollars in thousands)														(Dollars in thousands)
Description of securities:
U.S. Treasury and government sponsored entities	$	74,259	$	(490	)	$	—	$	—	$	74,259	$	(490	)	$	59,316	$	(330	)	$	—	$	—		$	59,316	$	(330	)
States of the U.S. and political subdivisions		37,694		(675	)		—		—		37,694		(675	)		21,789		(283	)		6,350		(183	)		28,139		(466	)
Mortgage-backed GSE securities: residential		71,176		(512	)		—		—		71,176		(512	)		68,648		(424	)		—		—			68,648		(424	)
Total temporarily impaired securities	$	183,129	$	(1,677	)	$	—	$	—	$	183,129	$	(1,677	)	$	149,753	$	(1,037	)	$	6,350	$	(183	)	$	156,103	$	(1,220	)

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more at December 31, 2016 are as follows:

All of the U.S. treasury and government sponsored entities and mortgage-backed securities available for sale that were temporarily impaired at ~~June~~September 30, 2017 and December 31, 2016, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income during the ~~six~~nine months ended ~~June~~September 30, 2017 or 2016 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. There is risk that longer term rates could rise further resulting in greater unrealized losses. The Company expects to realize all interest and principal on these securities and has no intent to sell, and more than likely will not be required to sell, these securities before their anticipated recovery.

All of the obligations of U.S. states and political subdivisions held for sale that were temporarily impaired at ~~June~~September 30, 2017 and December 31, 2016, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income for the ~~six~~nine months ended ~~June~~September 30, 2017 or 2016 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell, and has no intent to sell, the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.

Securities held to maturity that have been in an unrecognized loss position for less than twelve months or twelve months or more are as follows:

	June 30, 2017																September 30, 2017
	Less than 12 months						12 months or more					Total					Less than 12 months					12 months or more					Total
	Fair			Unrealized loss			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value			Loss			value		Loss			value		Loss			value		Loss			value		Loss			value		Loss
	(Dollars in thousands)																(Dollars in thousands)
Description of securities:			��
Mortgage-backed GSE securities: residential	$	53,519		$	(934	)	$	24,907	$	(1,089	)	$	78,426	$	(2,023	)	$	48,309	$	(668	)	$	27,390	$	(1,027	)	$	75,699	$	(1,695	)
States of the U.S. and political subdivisions		962			(1	)		—		—			962		(1	)		1,543		(4	)		—		—			1,543		(4	)
Total temporarily impaired securities	$	54,481		$	(935	)	$	24,907	$	(1,089	)	$	79,388	$	(2,024	)	$	49,852	$	(672	)	$	27,390	$	(1,027	)	$	77,242	$	(1,699	)

	December 31, 2016																December 31, 2016
	Less than 12 months						12 months or more					Total					Less than 12 months					12 months or more					Total
	Fair			Unrealized loss			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value			Loss			value		Loss			value		Loss			value		Loss			value		Loss			value		Loss
	(Dollars in thousands)																(Dollars in thousands)
Description of securities:
Mortgage-backed GSE securities: residential	$	57,340		$	(1,243	)	$	26,426	$	(1,287	)	$	83,766	$	(2,530	)	$	57,340	$	(1,243	)	$	26,426	$	(1,287	)	$	83,766	$	(2,530	)
States of the U.S. and political subdivisions		7,416			(86	)							7,416		(86	)		7,416		(86	)		—		—			7,416		(86	)
Total temporarily impaired securities	$	64,756		$	(1,329	)	$	26,426	$	(1,287	)	$	91,182	$	(2,616	)	$	64,756	$	(1,329	)	$	26,426	$	(1,287	)	$	91,182	$	(2,616	)

During the third quarter of 2015, Home Savings transferred securities with a total amortized cost of $105.3 million with a corresponding fair value of $103.8 million from available for sale to held to maturity. The net unrealizable loss, net of taxes, on these securities at the date of transfer was $999,000. The fair value at the date of transfer becomes the securities’ new cost basis. The unrealized holding loss at the time of transfer continues to be reported in accumulated other comprehensive income, net of tax and is amortized over the remaining lives of the securities as an adjustment of the yield. The amortization of the unamortized holding loss reported in accumulated other comprehensive income will directly offset the effect on interest income from the accretion of the reduced amortized cost for the transferred securities. Because of this transfer, the total losses less than 12 months and greater than 12 months reported in the table above will not agree to the unrealized losses reported in the inventory of held to maturity securities. The inventory table reports unrealized gains and losses based upon the transferred securities adjusted cost basis and current fair value. The reporting of losses less than 12 months and greater than 12 months represents that actual period of time that these securities have been in an unrealized loss position and the securities amortized cost basis as if the transfer did not occur.

All of the mortgage-backed securities held to maturity that were temporarily impaired at ~~June~~September 30, 2017 and December 31, 2016, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income for the ~~six~~nine months ended ~~June~~September 30, 2017 or 2016 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. There is risk that longer term rates could rise further resulting in greater unrealized losses. The Company expects to realize all interest and principal on these securities and has no intent to sell and more than likely will not be required to sell these securities before their anticipated recovery.

All of the obligations of U.S. states and political subdivisions held to maturity that were temporarily impaired at ~~June~~September 30, 2017, and December 31, 2016, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income for the ~~six~~nine months ended ~~June~~September 30, 2017 or 2016 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell and has no intent to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.

Proceeds from the sale of available for sale securities were ~~$48.1~~$9.7 million and ~~$10.4~~$5.2 million, for the three months ended ~~June~~September 30, 2017 and 2016, respectively. Gross gains of ~~$345,000~~$236,000 and ~~$233,000~~$218,000 were realized on these sales during the three months ended ~~June~~September 30, 2017 and 2016, respectively. No gross losses were realized on these sales during the three months ended September 30, 2017 or 2016. Income tax expense related to net realized gains and losses was $83,000 and $76,000 for the three months ended September 30, 2017 and 2016, respectively.

Proceeds from the sale of available for sale securities were $62.9 million and $33.7 million, for the nine months ended September 30, 2017 and 2016, respectively. Gross gains of $610,000 and $609,000 were realized on these sales during the nine months ended September 30, 2017 and 2016, respectively. Gross losses of $44,000 and $0 were realized on these sales during the ~~three~~nine months ended ~~June~~September 30, 2017 and 2016, respectively. Income tax expense related to net realized gains and losses was ~~$105,000~~$198,000 and ~~$81,000~~$211,000 for the ~~three~~nine months ended ~~June~~September 30, 2017 and 2016, respectively.

Proceeds from the sale of available for sale securities were $53.2 million and $28.5 million, for the six months ended June 30, 2017 and 2016, respectively. Gross gains of $374,000 and $386,000 were realized on these sales during the six months ended June 30 2017 and 2016, respectively. Gross losses of $44,000 and $0 were realized on these sales during the six months ended June 30, 2017 and 2016, respectively. Income tax expense related to net realized gains and losses was $115,000 and $135,000 for the six months ended June 30, 2017 and 2016, respectively.

	June 30,			December 31,			September 30,			December 31,
	2017			2016			2017			2016
	(Dollars in thousands)						(Dollars in thousands)
Commercial loans
Multifamily	$	121,565		$	93,597		$	126,977		$	93,597
Nonresidential		342,300			231,401			366,747			231,401
Land		10,867			8,373			13,666			8,373
Construction		96,765			68,158			108,105			68,158
Secured		162,109			95,343			167,433			95,343
Unsecured		8,649			7,386			8,148			7,386
Total commercial loans		742,255			504,258			791,076			504,258
Residential mortgage loans
One-to four-family		834,349			762,926			851,863			762,926
Construction		56,946			35,695			57,081			35,695
Total residential mortgage loans		891,295			798,621			908,944			798,621
Consumer loans
Home equity		187,762			165,054			193,402			165,054
Auto		50,389			39,609			56,883			39,609
Marine		1,601			1,796			1,564			1,796
Recreational vehicle		6,401			7,602			6,249			7,602
Other		4,998			2,537			5,594			2,537
Total consumer loans		251,151			216,598			263,692			216,598
Total loans		1,884,701			1,519,477			1,963,712			1,519,477
Less:
Allowance for loan losses		19,660			19,087			20,555			19,087
Deferred loan costs, net		(4,054	)		(3,187	)		(4,538	)		(3,187	)
Total		15,606			15,900			16,017			15,900
Loans, net	$	1,869,095		$	1,503,577		$	1,947,695		$	1,503,577

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and are based on impairment method as of ~~June~~September 30, 2017 and December 31, 2016 and activity for the three and ~~six~~nine months ended ~~June~~September 30, 2017 and 2016.

	Commercial Loans			Residential Loans			Consumer Loans			Total				Commercial Loans			Residential Loans			Consumer Loans			Total
	(Dollars in thousands)													(Dollars in thousands)
For the three months ended June 30, 2017
For the three months ended September 30, 2017													For the three months ended September 30, 2017
Beginning balance														$	10,821		$	5,968		$	2,871		$	19,660
Provision (recovery)															512			369			(160	)		721
Charge-offs															(12	)		(427	)		(147	)		(586	)
Recoveries															361			136			263			760
Ending balance														$	11,682		$	6,046		$	2,827		$	20,555
For the nine months ended September 30, 2017													For the nine months ended September 30, 2017
Beginning balance	$	10,182		$	5,912		$	2,876		$	18,970			$	10,824		$	5,538		$	2,725		$	19,087
Provision		503			295			44			842				1,537			1,234			267			3,038
Charge-offs		(12	)		(273	)		(150	)		(435	)			(1,335	)		(930	)		(626	)		(2,891	)
Recoveries		148			34			101			283				656			204			461			1,321
Ending balance	$	10,821		$	5,968		$	2,871		$	19,660			$	11,682		$	6,046		$	2,827		$	20,555
For the six months ended June 30, 2017
Beginning balance	$	10,824		$	5,538		$	2,725		$	19,087
Provision (recovery)		1,025			865			427			2,317
Charge-offs		(1,323	)		(503	)		(479	)		(2,305	)
Recoveries		295			68			198			561
Ending balance	$	10,821		$	5,968		$	2,871		$	19,660
June 30, 2017
As of September 30, 2017
Period-end amount allocated to:
Loans individually evaluated for impairment	$	5		$	1,171		$	440			1,616			$	16		$	1,169		$	411			1,596
Loans collectively evaluated for impairment		10,816			4,797			2,431			18,044				11,612			4,877			2,416			18,905
Loans acquired with deteriorated credit quality		—			—			—			—				54			—			—			54
Ending balance	$	10,821		$	5,968		$	2,871		$	19,660			$	11,682		$	6,046		$	2,827		$	20,555
Period-end balances:
Loans individually evaluated for impairment		2,532			16,190			7,588			26,310				2,322			16,718			7,314			26,354
Loans collectively evaluated for impairment		738,502			875,105			243,563			1,857,170				787,550			892,226			256,378			1,936,154
Loans acquired with deteriorated credit quality		1,221			—			—			1,221				1,204			—			—			1,204
Ending balance	$	742,255		$	891,295		$	251,151		$	1,884,701			$	791,076		$	908,944		$	263,692		$	1,963,712

	Commercial Loans			Residential Loans			Consumer Loans			Total				Commercial Loans			Residential Loans			Consumer Loans			Total
For the three months ended June 30, 2016
For the three months ended September 30, 2016													For the three months ended September 30, 2016
Beginning balance														$	8,958		$	5,644		$	2,570		$	17,172
Provision															842			268			234			1,344
Charge-offs															(533	)		(166	)		(222	)		(921	)
Recoveries															527			20			92			639
Ending balance														$	9,794		$	5,766		$	2,674		$	18,234
For the nine months ended September 30, 2016													For the nine months ended September 30, 2016
Beginning balance	$	8,521		$	5,736		$	2,646		$	16,903			$	8,077		$	6,630		$	3,005		$	17,712
Provision (recovery)		489			(33	)		(61	)		395				4,055			(359	)		198			3,894
Charge-offs		(147	)		(84	)		(276	)		(507	)			(3,026	)		(612	)		(977	)		(4,615	)
Recoveries		95			25			261			381				688			107			448			1,243
Ending balance	$	8,958		$	5,644		$	2,570		$	17,172			$	9,794		$	5,766		$	2,674		$	18,234
For the six months ended June 30, 2016
Beginning balance	$	8,077		$	6,630		$	3,005		$	17,712
Provision (recovery)		3,213			(627	)		(36	)		2,550
Charge-offs		(2,493	)		(446	)		(755	)		(3,694	)
Recoveries		161			87			356			604
Ending balance	$	8,958		$	5,644		$	2,570		$	17,172
December 31, 2016
As of December 31, 2016
Period-end amount allocated to:
Loans individually evaluated for impairment	$	1,271		$	1,245		$	500		$	3,016			$	1,271		$	1,245		$	500		$	3,016
Loans collectively evaluated for impairment		9,553			4,293			2,225			16,071				9,553			4,293			2,225			16,071
Ending balance	$	10,824		$	5,538		$	2,725		$	19,087			$	10,824		$	5,538		$	2,725		$	19,087
Period-end balances:
Loans individually evaluated for impairment	$	6,018		$	17,485		$	8,045		$	31,548			$	6,018		$	17,485		$	8,045		$	31,548
Loans collectively evaluated for impairment		498,240			781,136			208,553			1,487,929				498,240			781,136			208,553			1,487,929
Ending balance	$	504,258		$	798,621		$	216,598		$	1,519,477			$	504,258		$	798,621		$	216,598		$	1,519,477

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required based on an analysis using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, general economic conditions in the market area and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

Other loans not reviewed specifically by management are evaluated as a homogenous group of loans (generally single-family residential mortgage loans and all consumer credits except marine loans) using a loss factor applied to the outstanding loan balance to determine the level of reserve required. This loss factor consists of two components, a quantitative and a qualitative component. The quantitative component is based on a historical analysis of all charged-off loans, net of recoveries. In determining the qualitative factors, consideration is given to such attributes as lending policies, economic conditions, nature and volume of the portfolio, management, loan quality trend, loan review, collateral value, concentrations, economic cycles and other external factors. As of ~~June~~September 30, 2017, the Company evaluated 2021 quarters of net charge-off history and applied this information to the current period. This component is combined with the qualitative component to arrive at the loss factor, which is applied to the outstanding balance of homogenous loans.

The following table presents loans individually evaluated for impairment by class of loans as of and for ~~six~~nine months ended ~~June~~September 30, 2017:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no specific allowance recorded
Commercial loans
Multifamily	$	470	$	413	$	—	$	277	$	3	$	3	$	466	$	402	$	—	$	309	$	3	$	3
Nonresidential		2,030		1,464		—		1,040		50		49		673		153		—		818		6		6
Land		3,922		9		—		17		—		—		715		9		—		15		—		—
Construction		3,593		—		—		—		—		—		2,467		—		—		—		—		—
Secured		242		190		—		190		—		—		263		210		—		195		1		1
Unsecured		500		—		—		—		—		—		194		—		—		—		—		—
Total commercial loans		10,757		2,076		—		1,524		53		52		4,778		774		—		1,337		10		10
Residential mortgage loans
One-to four-family		7,704		5,762		—		6,095		50		41		6,793		5,814		—		6,025		81		73
Construction		—		—		—		—		—		—		—		—		—		—		—		—
Total residential mortgage loans		7,704		5,762		—		6,095		50		41		6,793		5,814		—		6,025		81		73
Consumer loans
Home equity		1,965		1,535		—		1,577		8		7		1,556		1,177		—		1,477		11		11
Auto		34		18		—		11		—		—		8		1		—		9		—		—
Marine		540		169		—		210		—		—		540		169		—		200		—		—
Recreational vehicle		560		152		—		164		5		5		809		389		—		220		12		12
Other		—		—		—		—		—		—		1		1		—		—		—		—
Total consumer loans		3,099		1,874		—		1,962		13		12		2,914		1,737		—		1,906		23		23
Total	$	21,560	$	9,712	$	—	$	9,581	$	116	$	105	$	14,485	$	8,325	$	—	$	9,268	$	114	$	106
With a specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Nonresidential		501		456		5		2,164		12		11		1,582		1,548		16		2,010		86		85
Land		—		—		—		—		—		—		—		—		—		—		—		—
Construction		—		—		—		—		—		—		—		—		—		—		—		—
Secured		—		—		—		57		—		—		—		—		—		43		—		—
Unsecured		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial loans		501		456		5		2,221		12		11		1,582		1,548		16		2,053		86		85
Residential mortgage loans
One-to four-family		10,526		10,428		1,171		10,764		273		229		11,042		10,904		1,169		10,799		385		343
Construction		—		—		—		—		—		—		—		—		—		—		—		—
Total residential mortgage loans		10,526		10,428		1,171		10,764		273		229		11,042		10,904		1,169		10,799		385		343
Consumer loans
Home equity		4,973		4,919		377		5,212		151		134		5,132		5,055		387		5,173		214		199
Auto		—		—		—		—		—		—		—		—		—		—		—		—
Marine		104		104		1		106		3		3		102		102		1		105		4		4
Recreational vehicle		702		691		62		681		14		13		432		420		23		616		14		14
Other		—		—		—		—		—		—		—		—		—		—		—		—
Total consumer loans		5,779		5,714		440		5,999		168		150		5,666		5,577		411		5,894		232		217
Total		16,806		16,598		1,616		18,984		453		390		18,290		18,029		1,596		18,746		703		645
Total impaired loans	$	38,366	$	26,310	$	1,616	$	28,565	$	569	$	495	$	32,775	$	26,354	$	1,596	$	28,014	$	817	$	751

The following table presents loans individually evaluated for impairment by class of loans as of and for ~~six~~nine months ended ~~June~~September 30, 2016:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no specific allowance recorded
Commercial loans
Multifamily	$	95	$	—	$	—	$	—	$	—	$	—	$	59	$	—	$	—	$	—	$	—	$	—
Nonresidential		1,382		326		—		281		3		3		952		149		—		248		4		4
Land		3,922		384		—		384		—		—		3,922		134		—		322		—		—
Construction		3,594		—		—		—		—		—		3,594		—		—		—		—		—
Secured		3,745		3,700		—		3,700		—		—		3,743		3,700		—		3,700		—		—
Unsecured		1,118		—		—		—		—		—		821		—		—		—		7		7
Total commercial loans		13,856		4,410		—		4,365		3		3		13,091		3,983		—		4,270		11		11
Residential mortgage loans
One-to four-family		8,102		6,522		—		6,156		52		42		7,401		5,727		—		6,049		55		49
Construction		—		—		—		—		—		—		—		—		—		—		—		—
Total residential mortgage loans		8,102		6,522		—		6,156		52		42		7,401		5,727		—		6,049		55		49
Consumer loans
Home equity		1,858		1,339		—		1,463		4		4		1,728		1,272		—		1,415		14		14
Auto		16		9		—		11		—		—		13		8		—		10		—		—
Marine		544		302		—		292		—		—		543		301		—		294		—		—
Recreational vehicle		518		273		—		213		2		2		637		322		—		241		4		4
Other		4		4		—		3		—		—		—		—		—		3		—		—
Total consumer loans		2,940		1,927		—		1,982		6		6		2,921		1,903		—		1,963		18		18
Total	$	24,898	$	12,859	$	—	$	12,503	$	61	$	51	$	23,413	$	11,613	$	—	$	12,282	$	84	$	78
With a specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Nonresidential		10,854		8,571		922		7,493		124		122		11,660		9,164		935		7,911		208		206
Land		—		—		—		—		—		—		—		—		—		—		—		—
Construction		—		—		—		—		—		—		—		—		—		—		—		—
Secured		1,027		933		93		739		—		—		616		550		81		692		—		—
Unsecured		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial loans		11,881		9,504		1,015		8,232		124		122		12,276		9,714		1,016		8,603		208		206
Residential mortgage loans
One-to four-family		12,033		12,033		1,333		12,742		297		251		12,123		12,121		1,342		12,587		423		373
Construction		—		—		—		—		—		—		—		—		—		—		—		—
Total residential mortgage loans		12,033		12,033		1,333		12,742		297		251		12,123		12,121		1,342		12,587		423		373
Consumer loans
Home equity		6,279		6,279		447		6,791		188		167		5,997		5,997		435		6,592		257		238
Auto		—		—		—		—		—		—		—		—		—		—		—		—
Marine		156		156		4		159		4		4		153		153		4		158		6		4
Recreational vehicle		793		793		85		868		15		14		655		655		77		815		20		19
Other		—		—		—		3		—		—		—		—		—		2		—		—
Total consumer loans		7,228		7,228		536		7,821		207		185		6,805		6,805		516		7,567		283		261
Total		31,142		28,765		2,884		28,795		628		558		31,204		28,640		2,874		28,757		914		840
Total impaired loans	$	56,040	$	41,624	$	2,884	$	41,298	$	689	$	609	$	54,617	$	40,253	$	2,874	$	41,039	$	998	$	918

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2016:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no specific allowance recorded
Commercial loans
Multifamily	$	55	$	—	$	—
Nonresidential		2,278		1,489		—
Land		3,922		34		—
Construction		3,594		—		—
Secured		242		190		—
Unsecured		713		—		—
Total commercial loans		10,804		1,713		—
Residential mortgage loans
One-to four-family		8,736		6,758		—
Construction		—		—		—
Total residential mortgage loans		8,736		6,758		—
Consumer loans
Home equity		2,159		1,583		—
Auto		11		3		—
Marine		585		267		—
Recreational vehicle		433		120		—
Other		—		—		—
Total consumer loans		3,188		1,973		—
Total	$	22,728	$	10,444	$	—
With a specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—
Nonresidential		6,930		4,133		1,193
Land		—		—		—
Construction		—		—		—
Secured		237		172		78
Unsecured		—		—		—
Total commercial loans		7,167		4,305		1,271
Residential mortgage loans
One-to four-family		10,810		10,727		1,245
Construction		—		—		—
Total residential mortgage loans		10,810		10,727		1,245
Consumer loans
Home equity		5,390		5,335		426
Auto		—		—		—
Marine		108		108		1
Recreational vehicle		639		629		73
Other		—		—		—
Total consumer loans		6,137		6,072		500
Total		24,114		21,104		3,016
Total impaired loans	$	46,842	$	31,548	$	3,016

The unpaid principal balance is the total amount of the loan that is due to Home Savings. The recorded investment includes the unpaid principal balance less any charge-offs or partial charge-offs applied to specific loans. The unpaid principal balance and the recorded investment both exclude accrued interest receivable and deferred loan costs, both of which are immaterial.

The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended ~~June~~September 30, 2017:

	Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no specific allowance recorded
Commercial loans
Multifamily	$	416	$	—	$	—	$	408	$	—	$	—
Nonresidential		815		25		25		809		3		3
Land		9		—		—		9		—		—
Construction		—		—		—		—		—		—
Secured		190		—		—		200		1		1
Unsecured		—		—		—		—		—		—
Total commercial loans		1,430		25		25		1,426		4		4
Residential mortgage loans
One-to four-family		5,763		20		20		5,788		35		33
Construction		—		—		—		—		—		—
Total residential mortgage loans		5,763		20		20		5,788		35		33
Consumer loans
Home equity		1,574		3		3		1,356		4		4
Auto		16		—		—		10		—		—
Marine		182		—		—		169		—		—
Recreational vehicle		186		2		2		271		3		3
Other				—		—		1		—		—
Total consumer loans		1,958		5		5		1,807		7		7
Total	$	9,151	$	50	$	50	$	9,021	$	46	$	44
With a specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	—	$	—
Nonresidential		1,179		5		5		1,002		26		26
Land		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Secured				—		—		—		—		—
Unsecured		—		—		—		—		—		—
Total commercial loans		1,179		5		5		1,002		26		26
Residential mortgage loans
One-to four-family		10,783		114		111		10,666		112		112
Construction		—		—		—		—		—		—
Total residential mortgage loans		10,783		114		111		10,666		112		112
Consumer loans
Home equity		5,151		66		66		4,987		65		65
Auto		—		—		—		—		—		—
Marine		105		1		1		103		1		1
Recreational vehicle		708		7		6		556		5		5
Other		—		—		—		—		—		—
Total consumer loans		5,964		74		73		5,646		71		71
Total		17,926		193		189		17,314		209		209
Total impaired loans	$	27,077	$	243	$	239	$	26,335	$	255	$	253

The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended ~~June~~September 30, 2016:

	Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	—	$	—
Nonresidential		269		1		1		238		1		1
Land		384		—				259		—
Construction		—		—		—		—		—		—
Secured		3,700		—		—		3,700		—		—
Unsecured		—		—		—		—		—		—
Total commercial loans		4,353		1		1		4,197		1		1
Residential mortgage loans
One-to four-family		6,302		17		17		6,125		19		19
Construction		—		—		—		—		—		—
Total residential mortgage loans		6,302		17		17		6,125		19		19
Consumer loans
Home equity		1,336		1		1		1,306		9		9
Auto		9		—		—		9		—		—
Marine		303		—		—		302		—		—
Recreational vehicle		281		1		1		298		1		1
Other		4		—		—		2		—		—
Total consumer loans		1,933		2		2		1,917		10		10
Total	$	12,588	$	20	$	20	$	12,239	$	30	$	30
With a specific allowance recorded
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	—	$	—
Nonresidential		8,748		15		15		8,868		84		84
Land		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Secured		947		—		—		742		—		—
Unsecured		—		—		—		—		—		—
Total commercial loans		9,695		15		15		9,610		84		84
Residential mortgage loans
One-to four-family		12,372		124		122		12,077		132		127
Construction		—		—		—		—		—		—
Total residential mortgage loans		12,372		124		122		12,077		132		127
Consumer loans
Home equity		6,568		84		82		6,138		77		76
Auto		—		—		—		—		—		—
Marine		158		2		2		155		2		2
Recreational vehicle		741		8		8		724		6		6
Other		—		—		—		—		—		—
Total consumer loans		7,467		94		92		7,017		85		84
Total		29,534		233		229		28,704		301		295
Total impaired loans	$	42,122	$	253	$	249	$	40,943	$	331	$	325

Home Savings reclassifies a collateralized mortgage loan and a consumer loan secured by real estate to real estate owned and other repossessed assets once it has either obtained legal title to the real estate collateral or the borrower voluntarily conveys all interest in the real property to the Bank to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The table below presents loans that are in the process of foreclosure at ~~June~~September 30, 2017 and December 31, 2016, but legal title, deed in lieu of foreclosure or similar legal agreement to the property has not yet been obtained:

	June 30, 2017				December 31, 2016				September 30, 2017				December 31, 2016
	Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Recorded Investment
	(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)
Mortgage loans in process of foreclosure	$	3,188	$	2,816	$	3,025	$	2,576	$	2,975	$	2,805	$	3,025	$	2,576
Consumer loans in process of foreclosure		931		751		1,069		795		955		798		1,069		795

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days and still on accrual by class of loans as of ~~June~~September 30, 2017:

	Nonaccrual		Loans past due over 90 days and still accruing		Nonaccrual		Loans past due over 90 days and still accruing
	(Dollars in thousands)				(Dollars in thousands)
Commercial loans
Multifamily	$	413	$	—	$	402	$	—
Nonresidential		1,331		—		1,234		—
Land		9		—		9		—
Construction		—		—		—		—
Secured		190		—		234		—
Unsecured		—		—		—		—
Total commercial loans		1,943		—		1,879		—
Residential mortgage loans
One-to four-family		6,701		—		6,627		—
Construction		—		—		—		—
Total residential mortgage loans		6,701		—		6,627		—
Consumer Loans
Home equity		1,707		—		1,714		—
Auto		94		—		38		—
Marine		169		—		169		—
Recreational vehicle		166		—		409		6
Other		1		2		2		2
Total consumer loans		2,137		2		2,332		8
Total nonaccrual loans and loans past due over 90 days and still accruing	$	10,781	$	2	$	10,838	$	8

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days and still on accrual by class of loans as of December 31, 2016:

The following table presents an age analysis of past-due loans, segregated by class of loans as of ~~June~~September 30, 2017:

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current Loans		Total Loans		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current Loans		Total Loans
Commercial loans
Multifamily	$	—	$	187	$	—	$	187	$	121,378	$	121,565	$	—			$	402	$	402	$	126,575	$	126,977
Nonresidential		199		—		153		352		341,948		342,300		206		1,204		7		1,417		365,330		366,747
Land		—		—		9		9		10,858		10,867		—		—		9		9		13,657		13,666
Construction		—		—		—		—		96,765		96,765		—		—		—		—		108,105		108,105
Secured		135		22		189		346		161,763		162,109		157		16		212		385		167,048		167,433
Unsecured		—		—		—		—		8,649		8,649		—		—		—		—		8,148		8,148
Total commercial loans		334		209		351		894		741,361		742,255		363		1,220		630		2,213		788,863		791,076
Residential mortgage loans
One-to four-family		2,643		1,584		5,646		9,873		824,476		834,349		3,588		1,305		5,066		9,959		841,904		851,863
Construction		—		—		—		—		56,946		56,946		—		—		—		—		57,081		57,081
Total residential mortgage loans		2,643		1,584		5,646		9,873		881,422		891,295		3,588		1,305		5,066		9,959		898,985		908,944
Consumer Loans:
Home equity		1,141		113		1,429		2,683		185,079		187,762		1,026		192		1,467		2,685		190,717		193,402
Automobile		123		119		17		259		50,130		50,389		137		76		17		230		56,653		56,883
Marine		—		—		169		169		1,432		1,601		13		—		169		182		1,382		1,564
Recreational vehicle		199		149		95		443		5,958		6,401		357		164		298		819		5,430		6,249
Other		2		4		3		9		4,989		4,998		2		13		3		18		5,576		5,594
Total consumer loans		1,465		385		1,713		3,563		247,588		251,151		1,535		445		1,954		3,934		259,758		263,692
Total loans	$	4,442	$	2,178	$	7,710	$	14,330	$	1,870,371	$	1,884,701	$	5,486	$	2,970	$	7,650	$	16,106	$	1,947,606	$	1,963,712

The following table presents an age analysis of past-due loans, segregated by class of loans as of December 31, 2016:

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current Loans		Total Loans
Commercial loans
Multifamily	$	—	$	—	$	—	$	—	$	93,597	$	93,597
Nonresidential		3,511		—		61		3,572		227,829		231,401
Land		—		—		34		34		8,339		8,373
Construction		—		—		—		—		68,158		68,158
Secured		—		—		361		361		94,982		95,343
Unsecured		—		—		—		—		7,386		7,386
Total commercial loans		3,511		—		456		3,967		500,291		504,258
Residential mortgage loans
One-to four-family		3,774		1,717		5,461		10,952		751,974		762,926
Construction		—		—		—		—		35,695		35,695
Total residential mortgage loans		3,774		1,717		5,461		10,952		787,669		798,621
Consumer Loans:
Home equity		941		458		1,669		3,068		161,986		165,054
Automobile		130		—		3		133		39,476		39,609
Marine		—		—		267		267		1,529		1,796
Recreational vehicle		131		347		—		478		7,124		7,602
Other		1		3		2		6		2,531		2,537
Total consumer loans		1,203		808		1,941		3,952		212,646		216,598
Total loans	$	8,488	$	2,525	$	7,858	$	18,871	$	1,500,606	$	1,519,477

As of ~~June~~September 30, 2017 and December 31, 2016, the Company has a recorded investment in troubled debt restructurings of ~~$22.2~~$21.3 million and $26.6 million, respectively. The Company allocated $1.6 million of specific allowance for those loans at ~~June~~September 30, 2017 and $3.0 million at December 31, 2016. The Company has committed to lend additional amounts totaling up to ~~$35,000~~$37,000 and $31,000 at ~~June~~September 30, 2017 and December 31, 2016, respectively.

~~There were no~~The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended ~~June~~September 30, ~~2017.~~2017:

The troubled debt restructurings described above had no effect on the allowance for loan losses and resulted in no charge-offs during the three months ended ~~June~~September 30, 2017.

The following table presents loans by class modified as troubled debt restructurings that occurred during the ~~six~~nine months ended ~~June~~September 30, 2017:

	Number of Loans		Pre-Modification Outstanding Recorded Investment			Post-Modification Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
			(In thousands)							(In thousands)
Commercial loans
Multifamily		—	$	—		$	—		—	$	—	$	—
Nonresidential									—		—		—
Land		—		—			—		—		—		—
Construction		—		—			—		—		—		—
Secured		—		—			—		—		—		—
Unsecured		—		—			—		—		—		—
Total commercial loans		—		—			—		—		—		—
Residential mortgage loans					��
One-to four-family		1		75			84		2		222		253
Construction		—		—			—		—		—		—
Total residential mortgage loans		1		75			84		2		222		253
Consumer loans
Home equity		—		—			—		—		—		—
Auto		—		—			—		—		—		—
Marine		—		—			—		—		—		—
Recreational vehicle		1		115			115		1		115		115
Other		—		—			—		—		—		—
Total consumer loans		1		115			115		1		115		115
Total restructured loans		2	$	190		$	199		3	$	337	$	368

The troubled debt restructurings described above increased the allowance for loan losses by $6,000 and resulted in no charge-offs during the ~~six~~nine months ended ~~June~~September 30, 2017.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended ~~June~~September 30, 2016:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
			(Dollars in thousands)						(Dollars in thousands)
Commercial loans
Multifamily		—	$	—	$	—		—	$	—	$	—
Nonresidential		1		4,000		4,000		1		1,371		1,377
Land		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Secured		—		—		—		—		—		—
Unsecured		—		—		—		—		—		—
Total commercial loans		1		4,000		4,000		1		1,371		1,377
Residential mortgage loans
One-to four-family		1		97		98		1		113		114
Construction		—		—		—		—		—		—
Total residential mortgage loans		1		97		98		1		113		114
Consumer loans
Home equity		2		110		114		—		—		—
Auto		—		—		—		—		—		—
Marine		—		—		—		—		—		—
Recreational vehicle		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total consumer loans		2		110		114		—		—		—
Total restructured loans		4	$	4,207	$	4,212		2	$	1,484	$	1,491

The troubled debt restructurings described above increased the allowance for loan losses by ~~$6,000,~~$20,000, and resulted in no charge-offs during the three months ended ~~June~~September 30, 2016.

The following table presents loans by class modified as troubled debt restructurings that occurred during the ~~six~~nine months ended ~~June~~September 30, 2016:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Recorded Investment
			(Dollars in thousands)						(Dollars in thousands)
Commercial loans
Multifamily		—	$	—	$	—		—	$	—	$	—
Nonresidential		2		4,088		4,088		3		5,459		5,465
Land		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Secured		—		—		—		—		—		—
Unsecured		—		—		—		—		—		—
Total commercial loans		2		4,088		4,088		3		5,459		5,465
Residential mortgage loans
One-to four-family		3		316		335		4		429		449
Construction		—		—		—		—		—		—
Total residential mortgage loans		3		316		335		4		429		449
Consumer loans
Home equity		3		130		134		3		130		134
Auto		—		—		—		—		—		—
Marine		—		—		—		—		—		—
Recreational vehicle		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total consumer loans		3		130		134		3		130		134
Total restructured loans		8	$	4,534	$	4,557		10	$	6,018	$	6,048

The troubled debt restructurings described above increased the allowance for loan losses by ~~$11,000~~$31,000 and resulted in no charge-offs during the ~~six~~nine months ended ~~June~~September 30, 2017.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within a twelve-month cycle following the modification during the period ended ~~June~~September 30, 2017.

	Number of loans		Recorded Investment		Number of loans		Recorded Investment
			(Dollars in thousands)				(Dollars in thousands)
Commercial loans
Multifamily		—	$	—		—	$	—
Nonresidential		—		—		—		—
Land		—		—		—		—
Construction		—		—		—		—
Secured		—		—		—		—
Unsecured		—		—		—		—
Total commercial loans		—		—		—		—
Residential mortgage loans
One-to four-family		1		164		1		162
Construction		—		—		—		—
Total residential mortgage loans		1		164		1		162
Consumer loans
Home equity		1		47		1		47
Auto		—		—		—		—
Marine		—		—		—		—
Recreational vehicle		—		—		—		—
Other		—		—		—		—
Total consumer loans		1		47		1		47
Total restructured loans		2	$	211		2	$	209

The troubled debt restructurings that subsequently defaulted described above resulted in no charge-offs during the three and ~~six~~nine months ended ~~June~~September 30, 2017, and had no effect on the provision for loan losses.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within a twelve month cycle following the modification during the period ended ~~June~~September 30, 2016:

The troubled debt restructurings that subsequently defaulted described above resulted in no of charge-offs during the three and ~~six~~nine months ended ~~June~~September 30, 2016, and had no effect on the provision for loan losses.

A troubled debt restructuring is considered to be in payment default once it is 30 days contractually past due under the modified terms.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Company’s internal underwriting policy.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes homogeneous loans past due 90 cumulative days, and all non-homogeneous loans, including commercial loans and commercial real estate loans. Smaller balance homogeneous loans are primarily monitored by payment status.

Asset quality ratings are divided into two groups: Pass (unclassified) and Classified. Within the unclassified group, certain loans that display potential weakness are risk rated as special mention. In addition, there are three classified risk ratings: substandard, doubtful and loss. These specific credit risk categories are defined as follows:

Special Mention. Loans classified as special mention have potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loss. Loans classified as loss are considered uncollectible and of such little value, that continuance as assets is not warranted. Although there may be a chance of recovery on these assets, it is not practical or desirable to defer writing off the asset.

The Company monitors loans on a monthly basis to determine if they should be included in one of the categories listed above. All impaired non-homogeneous credits classified as substandard, doubtful or loss are analyzed on an individual basis for a specific reserve requirement. This analysis is performed on each individual credit at least annually or more frequently if warranted.

As of ~~June~~September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	Unclassified				Classified										Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans		Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans
Commercial Loans
Multifamily	$	117,375	$	3,482	$	708	$	—	$	—	$	708	$	121,565	$	124,441	$	1,975	$	561	$	—	$	—	$	561	$	126,977
Nonresidential		333,010		3,208		6,082		—		—		6,082		342,300		355,846		3,171		7,730		—		—		7,730		366,747
Land		10,858		—		9		—		—		9		10,867		13,657		—		9		—		—		9		13,666
Construction		96,362		403		—		—		—		—		96,765		107,702		403		—		—		—		—		108,105
Secured		134,433		10,839		16,837		—		—		16,837		162,109		137,977		1,421		28,035		—		—		28,035		167,433
Unsecured		8,555		—		94		—		—		94		8,649		8,054		—		94		—		—		94		8,148
Total commercial loans		700,593		17,932		23,730		—		—		23,730		742,255		747,677		6,970		36,429		—		—		36,429		791,076
Residential mortgage loans
One-to four-family		825,270		779		8,300		—		—		8,300		834,349		842,928		769		8,166		—		—		8,166		851,863
Construction		56,946		—		—		—		—		—		56,946		57,081		—		—		—		—		—		57,081
Total residential mortgage loans		882,216		779		8,300		—		—		8,300		891,295		900,009		769		8,166		—		—		8,166		908,944
Consumer Loans
Home equity		186,055		—		1,707		—		—		1,707		187,762		191,689		—		1,713		—		—		1,713		193,402
Auto		50,258		—		131		—		—		131		50,389		56,845		—		38		—		—		38		56,883
Marine		1,432		—		169		—		—		169		1,601		1,395		—		169		—		—		169		1,564
Recreational vehicle		6,234		—		167		—		—		167		6,401		5,840		—		409		—		—		409		6,249
Other		4,997		—		1		—		—		1		4,998		5,592		—		2		—		—		2		5,594
Total consumer loans		248,976		—		2,175		—		—		2,175		251,151		261,361		—		2,331		—		—		2,331		263,692
Total loans	$	1,831,785	$	18,711	$	34,205	$	—	$	—	$	34,205	$	1,884,701	$	1,909,047	$	7,739	$	46,926	$	—	$	—	$	46,926	$	1,963,712

	Unclassified				Classified
	Unclassified		Special Mention		Substandard		Doubtful		Loss		Total Classified		Total Loans
Commercial Loans
Multifamily	$	89,468	$	3,564	$	565	$	—	$	—	$	565	$	93,597
Nonresidential		217,204		6,037		8,160		—		—		8,160		231,401
Land		8,339		—		34		—		—		34		8,373
Construction		68,158		—		—		—		—		—		68,158
Secured		89,756		3,420		2,167		—		—		2,167		95,343
Unsecured		7,291		—		95		—		—		95		7,386
Total commercial loans		480,216		13,021		11,021		—		—		11,021		504,258
Residential mortgage loans
One-to four-family		754,996		104		7,826		—		—		7,826		762,926
Construction		35,695		—		—		—		—		—		35,695
Total residential mortgage loans		790,691		104		7,826		—		—		7,826		798,621
Consumer Loans
Home equity		163,101		—		1,953		—		—		1,953		165,054
Auto		39,577		1		31		—		—		31		39,609
Marine		1,530		—		266		—		—		266		1,796
Recreational vehicle		7,424		—		178		—		—		178		7,602
Other		2,535		—		2		—		—		2		2,537
Total consumer loans		214,167		1		2,430		—		—		2,430		216,598
Total loans	$	1,485,074	$	13,126	$	21,277	$	—	$	—	$	21,277	$	1,519,477

The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows:

	June 30, 2017		September 30, 2017
	(Dollars in thousands)		(Dollars in thousands)
Commercial loans	$	1,221	$	1,204
Residential mortgage loans		—		—
Consumer loans		—		—
Outstanding balance	$	1,221	$	1,204

Carrying amount, net of allowance of $0	$	1,221
Carrying amount, net of allowance of $54,000			$	1,150

	Three Months Ended		Six Months Ended		Three Months Ended		Nine Months Ended
	June 30, 2017		June 30, 2017		September 30, 2017		September 30, 2017
			(Dollars in thousands)				(Dollars in thousands)
Beginning of period	$	128	$	—	$	116	$	—
New loans purchased		—		158		—		158
Accretion of income		12		42		12		54
Balance at June 30	$	116	$	116
Balance at September 30					$	104	$	104

For the purchased credit impaired loans disclosed above, there was ~~no change~~an increase of $54,000 in the allowance for loan losses for the three and ~~six~~nine months ended ~~June~~September 30, 2017.

Purchased credit impaired loans ~~purchased~~acquired during the ~~six~~nine months ended ~~June~~September 30, 2017 for which it was probable at acquisition that all contractually required payments would not be collected are as follows:

	June 30, 2017		September 30, 2017
	(Dollars in thousands)		(Dollars in thousands)
Contractually required payments receivable of loans purchased during the year:
Commercial loans	$	4,499	$	4,499
Residential mortgage loans		—		—
Consumer loans		—		—
	$	4,499	$	4,499

Cash flow expected to be collected at acquisition	$	1,955	$	1,955
Fair value of acquired loans at acquisition		1,797		1,797

Income is not recognized on purchased credit impaired loans if the Company cannot reasonably estimate cash flows expected to be collected. The carrying amounts of such loans are as follows:

Mortgage loans serviced for others, which are not reported in United Community’s assets, totaled $1.2 billion as of ~~June~~September 30, 2017 and $1.2 billion as of December 31, 2016. Mortgage banking income is comprised of gains recognized on the sale of loans and changes in fair value of mortgage banking derivatives.

	June 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
	(Dollars in thousands)				(Dollars in thousands)
Mortgage loan portfolios serviced for:
FHLMC	$	963,748	$	956,278	$	979,546	$	956,278
FNMA		213,848		208,114		235,246		208,114
Private investor		27,917		—		26,350		—

During the second quarter of 2017, the Company sold $27.9 million of adjustable rate 1-4 family mortgages to a private investor in a bulk mortgage loan sale. The Company recognized 45 basis points of mortgage service release premium as part of the gain recognized on this sale. Customer escrow balances with loans serviced for FHLMC, FNMA and the private investor totaled ~~$12.1~~$9.2 million and $14.3 million at ~~June~~September 30, 2017 and December 31, 2016, respectively.

Activity for capitalized mortgage servicing rights, included in other assets, was as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Balance, beginning of period	$	5,977		$	5,727		$	6,070		$	5,686		$	6,161		$	5,813		$	6,070		$	5,686
Originations		670			653			1,026			1,162			793			708			1,819			1,870
Amortized to expense		(486	)		(567	)		(935	)		(1,035	)		(491	)		(525	)		(1,426	)		(1,560	)
Balance, end of period		6,161			5,813			6,161			5,813			6,463			5,996			6,463			5,996
Less valuation allowance		(5	)		(766	)		(5	)		(766	)		(15	)		(741	)		(15	)		(741	)
Net balance	$	6,156		$	5,047		$	6,156		$	5,047		$	6,448		$	5,255		$	6,448		$	5,255

Activity in the valuation allowance for mortgage servicing rights was as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Balance, beginning of period	$	(3	)	$	(474	)	$	—		$	(39	)	$	(5	)	$	(766	)	$	—		$	(39	)
Impairment charges		(2	)		(292	)		(5	)		(727	)		(10	)		—			(15	)		(727	)
Recoveries		—			—			—			—			—			25			—			25
Balance, end of period	$	(5	)	$	(766	)	$	(5	)	$	(766	)	$	(15	)	$	(741	)	$	(15	)	$	(741	)

The fair value of mortgage servicing rights as of ~~June~~September 30, 2017, was approximately ~~$10.3~~$10.5 million and at December 31, 2016, the fair value was approximately $10.2 million.

Key economic assumptions in measuring the value of mortgage servicing rights at ~~June~~September 30, 2017, and December 31, 2016, were as follows:

	June 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Weighted average prepayment rate	178 PSA		165 PSA		187 PSA		165 PSA
Weighted average life (in years)	6.38		6.64		6.22		6.64
Weighted average discount rate		9.06%		9.00%		9.00%		9.00%

Real estate owned and other repossessed assets at ~~June~~September 30, 2017 and December 31, 2016 were as follows:

	June 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016
	(Dollars in thousands)						(Dollars in thousands)
Real estate owned and other repossessed assets	$	1,586		$	2,789		$	1,566		$	2,789
Valuation allowance		(389	)		(1,012	)		(423	)		(1,012	)
End of period	$	1,197		$	1,777		$	1,143		$	1,777

	Three Months Ended						Six Months Ended						Three Months Ended					Nine Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016			September 30, 2017			September 30, 2016		September 30, 2017			September 30, 2016
	(Dollars in thousands)												(Dollars in thousands)
Beginning of period	$	549		$	1,124		$	1,012		$	1,229		$	389		$	1,001	$	1,012		$	1,229
Recovery of expense		—			(27	)		(38	)		(26	)
Amounts charged to (recovery of) expense														53			1		15			(25	)
Reductions due to sales		(160	)		(96	)		(585	)		(202	)		(19	)		1		(604	)		(201	)
End of period	$	389		$	1,001		$	389		$	1,001		$	423		$	1,003	$	423		$	1,003

	Three Months Ended					Six Months Ended						Three Months Ended					Nine Months Ended
	June 30, 2017		June 30, 2016			June 30, 2017			June 30, 2016			September 30, 2017		September 30, 2016			September 30, 2017		September 30, 2016
	(Dollars in thousands)											(Dollars in thousands)
Net loss on sales	$	18	$	90		$	108		$	102
Net loss (gains) on sales												$	20	$	(1	)	$	128	$	101
Provision for unrealized (gains) losses , net		—		(27	)		(38	)		(26	)		53		1			15		(25	)
Operating expenses, net of rental income		23		77			85			149			33		41			118		190
Total expenses	$	41	$	140		$	155		$	225		$	106	$	41		$	261	$	266

Fair value is the exchange price that would be received for an asset if paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own beliefs about the assumptions that market participants would use in pricing an asset or liability.

United Community uses the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Available for sale securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Impaired loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other real estate owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are individually evaluated at least annually for additional impairment and adjusted accordingly.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Home Savings. Once received, a member of the Special Assets Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with the independent data sources such as recent market data or industry-wide statistics. In addition to the Special Assets Department review, a third party independent review is also performed. On an annual basis, Home Savings compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value. At the time a property is acquired and classified as real estate owned, the fair value is determined utilizing the most appropriate method. A fair value in excess of $250,000 will be supported by an appraisal. After determination of fair value, each property will be recorded at the lower of cost (i.e., recorded investment in the loan) or the estimated net realizable value on the date of transfer to real estate owned. In determining net realizable value, reductions to fair market value may be taken for estimated costs of sale, conditions that must be remedied immediately upon acquisition, and other factors that negatively impact the marketability and prompt sale of the property.

Mortgage servicing rights: On a quarterly basis, loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value. Fair value is determined at a tranche level, based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data (Level 2).

Loans held for sale: Loans held for sale are carried at the lower of cost or fair value, which is evaluated on a pool-level basis. The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 2).

Loans held for sale, at fair value: The Company elected the fair value option for all conventional residential one-to four-family loans held for sale originated after January 1, 2016 and all permanent construction loans held for sale originated on or after January 1, 2015. The fair value of conventional loans held for sale is determined using the current 15 day forward contract price for either 15 or 30 year conventional mortgages (Level 2).

The fair value of the Company’s permanent construction loans held for sale is determined using the current 60 day forward contract price for 30 year conventional loans which is then adjusted by extrapolating this rate to the estimated time period remaining until construction is complete. The fair value is also adjusted for unobservable market data such as estimated fall out rates and the estimated time from origination to completion of construction (Level 3).

Interest rate caps: Home Savings uses an independent third party that performs a market valuation analysis for interest rate caps. The methodology used consists of a discounted cash flow model, all future floating cash flows are projected and both floating and fixed cash flows are discounted to the valuation date. The yield curve utilized for discounting and projecting is built by obtaining publicly available third party market quotes from Reuters, which handle up to 30-year swap maturities (Level 3). Assumptions used in the valuation of interest rate caps are back-tested for reasonableness on a quarterly basis using an independent source along with a third party service.

Purchased and written certificate of deposit option: Home Savings periodically enters into written and purchased option derivative instruments to facilitate the Power CD. The written and purchased options are mirror derivative instruments which are carried at fair value on the consolidated balance sheets. Home Savings uses an independent third party that performs a market valuation analysis for purchased and written certificate of deposit options. (Level 2).

Assets and Liabilities Measured on a Recurring Basis: Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at June 30, 2017 Using:								Fair Value Measurements at September 30, 2017 Using:
			Quoted								Quoted
			Prices in								Prices in
			Active		Significant						Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs		September 30,		Assets		Inputs		Inputs
	2017		(Level 1)		(Level 2)		(Level 3)		2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities' securities	$	134,603	$	—	$	134,603	$	—	$	125,060	$	—	$	125,060	$	—
States of the U.S. and political subdivisions		58,824		—		58,824				59,192		—		59,192
Mortgage-backed GSE securities: residential		93,752		—		93,752		—		90,570		—		90,570		—
Loans held for sale, at fair value		85,954		—		15,959		69,995		84,349		—		14,111		70,238
Purchased certificate of deposit option		746		—		746		—		823		—		823		—
Liabilities
Written certificate of deposit option		746		—		746		—		823		—		823		—

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and ~~six~~nine months ended ~~June~~September 30, 2017 and 2016.

	Loans Held for Sale, At Fair Value						Loans Held for Sale, At Fair Value						Loans Held for Sale, At Fair Value						Loans Held for Sale, At Fair Value
	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Balance of recurring Level 3 assets at beginning of period	$	67,439		$	26,760		$	53,761		$	26,716		$	69,995		$	33,605		$	53,761		$	26,716
Total gains (losses) for the period
Included in change in fair value of loans held for sale		1,822			622			2,412			1,291			1,145			414			3,557			1,705
Included in other comprehensive income					—						—			—			—			—			—
Originations/Draws on construction perm loans		25,945			19,132			51,245			35,819			28,864			25,464			80,109			60,925
Amortization					—						—			—			—			—			—
Sales		(25,211	)		(12,909	)		(37,423	)		(30,221	)		(29,766	)		(12,347	)		(67,189	)		(42,210	)
Balance of recurring Level 3 assets at end of period	$	69,995		$	33,605		$	69,995		$	33,605		$	70,238		$	47,136		$	70,238		$	47,136

The following table presents quantitative information about recurring Level 3 fair value measurements at ~~June~~September 30, 2017:

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2016:

The fair value of loans held for sale, at fair value was determined using pricing from a quoted market, discounted for the length of time to the completion of the construction project.

Assets and Liabilities Measured on a Non-Recurring Basis: Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements at June 30, 2017 Using:								Fair Value Measurements at September 30, 2017 Using:
			Quoted								Quoted
			Prices in								Prices in
			Active		Significant						Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
	June 30,		Assets		Inputs		Inputs		September 30,		Assets		Inputs		Inputs
	2017		(Level 1)		(Level 2)		(Level 3)		2017		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Impaired loans:
Commercial loans
Multifamily	$	418	$	—	$	—	$	418	$	443	$	—	$	—	$	443
Residential loans
One-to four-family residential		756		—		—		756		536		—		—		536
Consumer loans
Home Equity		28		—		—		28		92		—		—		92
Auto		17		—		—		17
Marine		169		—		—		169		169		—		—		169
Recreational vehicle		55		—		—		55
Mortgage servicing rights		82		—		82		—		125		—		125		—
Other real estate owned, net
Commercial loans
Construction loans		448		—		—		448		443		—		—		443
Residential loans
One-to four-family residential		35		—		—		35		136		—		—		136

Impaired loans with specific allocations of the allowance for loan losses, carried at fair value, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a net carrying amount of ~~$1.4~~$1.2 million at ~~June~~September 30, 2017, that includes a specific valuation allowance of ~~$5,000.~~$42,000. This resulted in an increase of the provision for loan losses of ~~$252,000~~$92,000 and ~~$479,000~~$571,000 during the three and ~~six~~nine months ended ~~June~~September 30, 2017, respectively. Impaired loans with specific allocations of the allowance for loan losses, carried at fair value, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a net carrying amount of ~~$8.2~~$7.7 million at ~~June~~September 30, 2016, which includes a specific valuation allowance of ~~$1.0 million.~~$989,000. This resulted in an increase in the provision for loan losses of ~~$592,000~~$134,000 and ~~$3.6~~$3.7 million for the three and ~~six~~nine months ended ~~June~~September 30, 2016. Impaired loans with specific allocations of the allowance for loan losses, carried at fair value, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a net carrying amount of $4.0 million at December 31, 2016, that includes a specific valuation allowance of $1.3 million.

The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral dependent impaired loans included in the above table primarily relate to the adjustment between carrying values versus appraised value. During the reported periods, discounts applied to appraisals for estimated selling costs were 10%.

At ~~June~~September 30, 2017, mortgage servicing rights carried at fair value were ~~$87,000,~~$125,000, with a net valuation allowance of ~~$5,000.~~$15,000. At ~~June~~September 30, 2016, mortgage servicing rights, carried at fair value totaled ~~$2.8~~$3.3 million, resulting in a net valuation allowance of ~~$766,000.~~$741,000. Mortgage servicing rights are valued by an independent third party that is active in purchasing and selling these instruments. Net impairment reflected in other income totaled ~~$2,000~~$10,000 and ~~$5,000~~$15,000 for the three and ~~six~~nine months ended ~~June~~September 30, ~~2017.~~2017, respectively. Net (recovery) impairment reflected in other income totaled ~~$292,000~~$(25,000) and ~~$727,000~~$702,000 for the three and ~~six~~nine months ended ~~June~~September 30, 2016. The value reflects the characteristics of the underlying loans.

At ~~June~~September 30, 2017, other real estate owned, carried at fair value, which is measured for impairment using the fair value of the property less estimated selling costs, and had a net carrying amount of ~~$483,000,~~$580,000, with a valuation allowance of ~~$389,000.~~$423,000. This resulted in ~~a recovery of~~ expense of $0$53,000 and ~~$(38,000)~~$15,000 during the three and ~~six~~nine months ended ~~June~~September 30, 2017. At ~~June~~September 30, 2016, other real estate owned, carried at fair value, which is measured for impairment using the fair value of the property less estimated selling costs, and had a net carrying amount of $1.0 million with a valuation allowance of $1.0 million. This resulted in ~~a recovery~~an expense (recovery) of ~~$(27,000)~~$1,000 and ~~$(26,000)~~$(25,000) during the three and ~~six~~nine months ended ~~June~~September 30, ~~2016.~~2016, respectively. At December 31, 2016, other real estate owned had a net carrying amount of $1.0 million, with a valuation allowance of $1.0 million.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at ~~June~~September 30, 2017:

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Range (Weighted Average)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Range (Weighted Average)

Impaired loans:

Commercial loans

Multi Family

418

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-35.00% (15.00%)

443

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-35.00% (15.00%)

Residential loans

One-to four-family residential

756

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-10.77% (4.27%)

536

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-10.77% (4.27%)

Consumer loans

Home Equity

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-17.85% (8.93%)

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-17.85% (8.93%)

Marine

169

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-37.00% (37.00%)

169

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-37.00% (37.00%)

Other real estate owned, net

Commercial loans

Construction loans

448

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-80.00% (24.03%)

443

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-80.00% (24.03%)

Residential loans

One-to four-family residential

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-3.77% (3.77%)

136

Sales comparison approach

Adjustment for differences

between comparable sales

0.00%-0.00% (0.00%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at December 31, 2016:

Auto and recreational vehicle loans were excluded from the table above as their value is considered immaterial.

The Company has elected the fair value option for newly originated residential mortgage and permanent construction loans held for sale. These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans are 90 or more days past due nor on nonaccrual status as of ~~June~~September 30, 2017 and December 31, 2016.

	June 30, 2017		December 31, 2016			September 30, 2017		December 31, 2016
	(Dollars in thousands)					(Dollars in thousands)
Aggregate fair value	$	85,954	$	62,593		$	84,349	$	62,593
Contractual balance		83,304		62,843			80,611		62,843
Gain (loss)		2,650		(250	)		3,738		(250	)

The total amount of gains and losses from changes in fair value included in earnings for the three and ~~six~~nine months ended ~~June~~September 30, 2017 and 2016 for loans held for sale, at fair value were:

	For the Three Months Ended				For the Six Months Ended				For the Three Months Ended				For the Nine Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
	(Dollars in thousands)								(Dollars in thousands)
Interest income	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest expense		—		—		—		—		—		—		—		—
Change in fair value		2,149		845		2,900		1,649		1,088		556		3,988		2,205
Total change in fair value	$	2,149	$	845	$	2,900	$	1,649	$	1,088	$	556	$	3,988	$	2,205

In accordance with U.S. GAAP, the carrying value and estimated fair values of financial instruments at ~~June~~September 30, 2017 and December 31, 2016, were as follows:

				Fair Value Measurements at June 30, 2017 Using:											Fair Value Measurements at September 30, 2017 Using:
	June 30,											September 30,
	2017											2017
	Carrying Value			(Level 1)			(Level 2)			(Level 3)		Carrying Value			(Level 1)			(Level 2)			(Level 3)
	(Dollars in thousands)											(Dollars in thousands)
Assets:
Cash and cash equivalents	$	52,014		$	52,014		$	—		$	—	$	38,010		$	38,010		$	—		$	—
Available for sale securities		287,179			—			287,179			—		274,822			—			274,822			—
Held to maturity securities		88,559			—			87,775			—		85,549			—			85,024			—
Loans held for sale		199			—			205			—		196			—			203			—
Loans held for sale, at fair value		85,954			—			15,959			69,995		84,349			—			14,111			70,238
Loans, net		1,869,095			—			—			1,864,169		1,947,695			—			—			1,942,267
FHLB stock		19,324		n/a			n/a			n/a			19,324		n/a			n/a			n/a
Accrued interest receivable		7,420			—			2,225			5,195		7,253			—			1,733			5,520
Purchased certificate of deposit option		746			—			746			—		823			—			823			—
Liabilities:
Deposits:
Checking, savings and money market accounts		(1,252,227	)		(1,252,227	)		—			—		(1,241,779	)		(1,241,779	)		—			—
Certificates of deposit		(641,766	)		—			(642,416	)		—		(696,920	)		—			(698,045	)		—
FHLB advances		(328,146	)		—			(328,151	)		—		(328,341	)		—			(328,342	)		—
Repurchase agreements and other		(8,045	)		—			(7,837	)		—		(10,191	)		—			(9,911	)		—
Advance payments by borrowers for taxes and insurance		(21,989	)		(21,989	)		—			—		(16,048	)		(16,048	)		—			—
Accrued interest payable		(392	)		—			(392	)		—		(722	)		—			(722	)		—
Written certificate of deposit option		(746	)		—			(746	)		—		(823	)		—			(823	)		—

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

Fair values for held to maturity securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows.

Fair values of loans, excluding loans held for sale, are estimated as follows: for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification; fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification; and impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed and variable rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates of deposit to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Short-term borrowings, generally maturing within 90 days, approximate their fair values resulting in a Level 2 classification. The fair values of Home Savings long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification, depending on the classification of the underlying asset or liability.

Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

	For the Six Months Ended June 30,				For the Nine Months Ended September 30,
	2017		2016		2017		2016
	(Dollars in thousands)				(Dollars in thousands)
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest on deposits and borrowings	$	5,396	$	4,166	$	8,611	$	6,203
Income taxes		250		150		425		275
Supplemental schedule of noncash activities:
Transfers from loans to real estate owned and other repossessed assets		282		534		651		813
Transfers from loans to loans held for sale		27,921		—		27,921		—
Transfers from premises and equipment to other assets, held for sale		1,720		—		1,720		—
Accretion of securities held to maturity		100		109		151		181
Issuance of common stock - James & Sons acquisition		—		1,508		—		1,547
Issuance of common stock - Ohio Legacy Corp. acquisition		25,816		—		25,816		—
Net assets acquired from Ohio Legacy Corp., excluding cash and cash equivalents		36		—		36		—

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. As such, earnings per share is computed using the two-class method as required by ASC 206-10-45. Basic earnings per common share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period which excludes the participating securities. Diluted earnings per common share includes the dilutive effect of additional potential common shares from stock compensation awards, but also excludes awards considered participating securities. No stock options were anti-dilutive for the three and ~~six~~nine months ended ~~June~~September 30, 2017. No stock options were anti-dilutive for the three months ~~ended June 30, 2016~~ and ~~stock options for 71,391 shares were anti-dilutive for the six~~nine months ended ~~June~~September 30, 2016.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016			2017			2016			2017			2016
	(Dollars in thousands, except per share data)												(Dollars in thousands, except per share data)
Net income per consolidated statements of income	$	8,189		$	5,330		$	9,727		$	8,650		$	7,556		$	5,153		$	17,283		$	13,803
Net income allocated to participating securities		(49	)		(40	)		(61	)		(55	)		(42	)		(38	)		(108	)		(88	)
Net income allocated to common stock	$	8,140		$	5,290		$	9,666		$	8,595		$	7,514		$	5,115		$	17,175		$	13,715

Basic earnings per common share computation:
Distributed earnings allocated to common stock	$	1,483		$	1,180		$	2,962		$	2,368		$	1,979		$	1,385		$	4,941		$	3,753
Undistributed earnings allocated to common stock		6,657			4,110			6,704			6,227			5,535			3,730			12,234			9,962
Net income allocated to common stock	$	8,140		$	5,290		$	9,666		$	8,595		$	7,514		$	5,115		$	17,175		$	13,715
Weighted average common shares outstanding, including shares considered participating securities		49,691			47,223			49,158			47,405			49,736			46,508			49,353			47,104
Less: Average participating securities		(299	)		(354	)		(309	)		(299	)		(276	)		(341	)		(308	)		(302	)
Weighted average shares		49,392			46,869			48,849			47,106			49,460			46,167			49,045			46,802
Basic earnings per common share	$	0.16		$	0.11		$	0.20		$	0.18		$	0.15		$	0.11		$	0.35		$	0.29

Diluted earnings per common share computation:
Net income allocated to common stock	$	8,140		$	5,290		$	9,666		$	8,595		$	7,514		$	5,115		$	17,175		$	13,715
Weighted average common shares outstanding for basic earnings per common share		49,392			46,869			48,849			47,106			49,460			46,167			49,045			46,802
Add: Dilutive effects of assumed exercises of stock options and LTIP awards		403			248			398			247			391			225			396			214
Weighted average shares and dilutive potential common shares		49,795			47,117			49,247			47,353			49,851			46,392			49,441			47,016
Diluted earnings per common share	$	0.16		$	0.11		$	0.20		$	0.18		$	0.15		$	0.11		$	0.35		$	0.29

Other comprehensive income (loss) included in the consolidated statements of shareholders’ equity consists of unrealized gains and losses on available for sale securities, disproportional tax effects and changes in unrealized gains and losses on the postretirement liability. The change includes reclassification of net gains or (losses) on sales of securities of ~~$301,000~~$236,000 and ~~$233,000~~$218,000 for the three months ended ~~June~~September 30, 2017 and 2016, respectively and ~~$330,000~~$566,000 and ~~$386,000~~$604,000 for the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, respectively. Reclassifications also include amortization of unrealized gains on postretirement plan and accretion of unrealized loss on held to maturity securities.

Other comprehensive income (loss) components and related tax effects for the three-month periods are as follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total			Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total
June 30, 2017	(Dollars in thousands)
September 30, 2017													(Dollars in thousands)
Balances at beginning of period, net of tax	$	(2,165	)	$	(17,110	)	$	(767	)	$	(20,042	)	$	(603	)	$	(17,110	)	$	(735	)	$	(18,448	)
Other comprehensive income before reclassifications		1,758			—			—			1,758			639			—			—			639
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			32			32			—			—			33			33
Reclassification adjustment for gains realized in income		(196	)		—			—			(196	)		(153	)		—			—			(153	)
Net current period other comprehensive income		1,562			—			32			1,594			486			—			33			519
Balances at end of period, net of tax	$	(603	)	$	(17,110	)	$	(735	)	$	(18,448	)	$	(117	)	$	(17,110	)	$	(702	)	$	(17,929	)

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total			Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total
June 30, 2016	(Dollars in thousands)
September 30, 2016																		(Dollars in thousands)
Balances at beginning of period, net of tax	$	3,937		$	(17,110	)	$	(926	)	$	650		$	511	$	(12,938	)	$	8,379		$	(17,110	)	$	(889	)	$	469		$	511	$	(8,640	)
Other comprehensive income before reclassifications		4,594			—			—			—			—		4,594			(1,227	)		—			—			—			—		(1,227	)
Amortization of unrealized gains of postretirement plan recognized in other comprehensive income		—			—			—			(181	)		—		(181	)		—			—			—			(289	)		—		(289	)
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			37			—			—		37			—			—			47			—			—		47
Reclassification adjustment for gains realized in income		(152	)		—			—			—			—		(152	)		(142	)		—			—			—			—		(142	)
Net current period other comprehensive income		4,442			—			37			(181	)		—		4,298			(1,369	)		—			47			(289	)		—		(1,611	)
Balances at end of period, net of tax	$	8,379		$	(17,110	)	$	(889	)	$	469		$	511	$	(8,640	)	$	7,010		$	(17,110	)	$	(842	)	$	180		$	511	$	(10,251	)

Other comprehensive income (loss) components and related tax effects for the ~~six-month~~nine-month periods are as follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total			Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total
June 30, 2017	(Dollars in thousands)
September 30, 2017													(Dollars in thousands)
Balances at beginning of period, net of tax	$	(3,130	)	$	(17,110	)	$	(800	)	$	(21,040	)	$	(3,130	)	$	(17,110	)	$	(800	)	$	(21,040	)
Other comprehensive income before reclassifications		2,742			—			—			2,742			3,381			—			—			3,381
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			65			65			—			—			98			98
Reclassification adjustment for gains realized in income		(215	)		—			—			(215	)		(368	)		—			—			(368	)
Net current period other comprehensive income		2,527			—			65			2,592			3,013			—			98			3,111
Balances at end of period, net of tax	$	(603	)	$	(17,110	)	$	(735	)	$	(18,448	)	$	(117	)	$	(17,110	)	$	(702	)	$	(17,929	)

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total			Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total
June 30, 2016	(Dollars in thousands)
September 30, 2016																		(Dollars in thousands)
Balances at beginning of period, net of tax	$	(2,492	)	$	(17,110	)	$	(960	)	$	831		$	511	$	(19,220	)	$	(2,492	)	$	(17,110	)	$	(960	)	$	831		$	511	$	(19,220	)
Other comprehensive income before reclassifications		11,122			—						—			—		11,122			9,895			—						—			—		9,895
Amortization of unrealized gains of postretirement plan recognized in other comprehensive income		—			—			—			(362	)		—		(362	)		—			—			—			(651	)		—		(651	)
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			71			—			—		71			—			—			118			—			—		118
Reclassification adjustment for gains realized in income		(251	)		—			—			—			—		(251	)		(393	)		—			—			—			—		(393	)
Net current period other comprehensive income		10,871			—			71			(362	)		—		10,580			9,502			—			118			(651	)		—		8,969
Balances at end of period, net of tax	$	8,379		$	(17,110	)	$	(889	)	$	469		$	511	$	(8,640	)	$	7,010		$	(17,110	)	$	(842	)	$	180		$	511	$	(10,251	)

As of June 30, 2014, management concluded it was more likely than not that the Company’s net deferred tax asset (DTA) would be realized and accordingly determined a full deferred tax valuation allowance was no longer required. Upon reversal of the former full deferred tax valuation allowance as of June 30, 2014, certain disproportionate tax effects are retained in accumulated other comprehensive income (loss) totaling approximately a ($16.6) million loss. Almost the entire disproportionate tax effect is attributable to valuation allowance expense recorded through other comprehensive income (loss) on the tax benefit of losses sustained on the available for sale securities portfolio while the Company was in a full deferred tax valuation allowance. This valuation allowance was appropriately reversed through continuing operations at June 30, 2014, leaving the original expense in accumulated other comprehensive income (loss), where it will remain in accordance with the Company’s election of the “portfolio approach”, until such time as the Company would cease to have an available for sale security portfolio.

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the three months ended ~~June~~September 30, 2017:

Amount Reclassified

Affected Line Item on

Amount Reclassified

Affected Line Item on

From Accumulated

the Statement Where

From Accumulated

the Statement Where

Details About Accumulated Other Comprehensive

Other Comprehensive

Net Income is

Other Comprehensive

Net Income is

Income Components

Income

Presented

Income

Presented

(Dollars in thousands)

Realized net gains on the sale of available for sale securities

(301

)

Net gains on securities available for sale

236

Net gains on securities available for sale

105

Tax expense

(83

)

Tax expense

Total reclassification during the period

(196

)

Net of tax, increase to net income

153

Net of tax, increase to net income

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the three months ended ~~June~~September 30, 2016:

	Amount Reclassified			Affected Line Item on	Amount Reclassified			Affected Line Item on
	From Accumulated			the Statement Where	From Accumulated			the Statement Where
Details About Accumulated Other Comprehensive	Other Comprehensive			Net Income is	Other Comprehensive			Net Income is
Income Components	Income			Presented	Income			Presented
	(Dollars in thousands)				(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(233	)	Net gains on securities available for sale	$	218		Net gains on securities available for sale
		81		Tax expense		(76	)	Tax expense
		(152	)	Net of tax		142		Net of tax
Amortization of postretirement benefits prior service costs		(278	)	Reduction in salaries and employee benefits		445		Reduction in salaries and employee benefits
		97		Tax expense		(156	)	Tax expense
		(181	)	Net of tax		289		Net of tax
Total reclassification during the period	$	(333	)	Increase to net income	$	431		Increase to net income

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the ~~six~~nine months ended ~~June~~September 30, 2017:

Amount Reclassified

Affected Line Item on

Amount Reclassified

Affected Line Item on

From Accumulated

the Statement Where

From Accumulated

the Statement Where

Details About Accumulated Other Comprehensive

Other Comprehensive

Net Income is

Other Comprehensive

Net Income is

Income Components

Income

Presented

Income

Presented

(Dollars in thousands)

Realized net gains on the sale of available for sale securities

(330

)

Net gains on securities available for sale

566

Net gains on securities available for sale

115

Tax expense

(198

)

Tax expense

Total reclassification during the period

(215

)

Net of tax, increase to net income

368

Net of tax, increase to net income

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the ~~six~~nine months ended ~~June~~September 30, 2016:

	Amount Reclassified			Affected Line Item on	Amount Reclassified			Affected Line Item on
	From Accumulated			the Statement Where	From Accumulated			the Statement Where
Details About Accumulated Other Comprehensive	Other Comprehensive			Net Income is	Other Comprehensive			Net Income is
Income Components	Income			Presented	Income			Presented
	(Dollars in thousands)				(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(386	)	Net gains on securities available for sale	$	604		Net gains on securities available for sale
		135		Tax expense		(211	)	Tax expense
		(251	)	Net of tax		393		Net of tax
Amortization of postretirement benefits prior service costs		(556	)	Reduction in salaries and employee benefits		1,001		Reduction in salaries and employee benefits
		194		Tax expense		(350	)	Tax expense
		(362	)	Net of tax		651		Net of tax
Total reclassification during the period	$	(613	)	Increase to net income	$	1,044		Increase to net income

Home Savings and United Community are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Home Savings and United Community. The regulations require Home Savings to meet specific capital adequacy guidelines in keeping with the regulatory framework for prompt corrective action that involve quantitative measures of Home Savings’ assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. Home Savings’ capital classification is also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.

The Basel III Capital Rules establish a common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), a minimum Tier 1 capital to risk-based assets requirement (6% of risk-weighted assets) and assigns a risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rules also require unrealized gains and losses on certain available-for-sale securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. In connection with the adoption of the Basel III Capital Rules, United Community and Home Savings elected to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital risk-based weighted assets in addition to the amount necessary to meeting its minimum risk-based capital requirements.

The capital conservation buffer requirement will be phased in through January 1, 2019, when the full capital conservation buffer requirement will be effective. The capital conservation buffer for 2017 is 1.25%. The capital conservation buffer for 2016 was 0.625%. The final rule also implemented consolidated capital requirements.

Quantitative measures established by regulation for capital adequacy require Home Savings to maintain minimum ratios of Tier 1 (or Core) capital (as defined in the regulations) to average total assets (as defined) and of total risk-based capital (as defined) to risk-weighted assets (as defined). United Community and Home Savings’ Common Equity Tier 1 capital consists of common stock and related paid-in capital, net of treasury stock, and retained earnings. Common Equity Tier 1 for both United Community and Home Savings is reduced by intangible assets, net of associated deferred tax liabilities and subject to transition provisions. Actual and regulatory required capital ratios for Home Savings, along with the dollar amount of capital implied by such ratios, are presented below.

	June 30, 2017															September 30, 2017
											To Be Well Capitalized															To Be Well Capitalized
						Minimum Capital					Under Prompt										Minimum Capital					Under Prompt
						Requirements For Capital					Corrective Action										Requirements For Capital					Corrective Action
	Actual					Adequacy Purposes***					Provisions					Actual					Adequacy Purposes***					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)															(Dollars in thousands)
Total capital (to risk-weighted assets)	$	277,583		14.83	%	$	173,129		9.25	%	$	187,166		10.00	%	$	287,665		14.74	%	$	180,469		9.25	%	$	195,101		10.00	%
Tier 1 capital (to risk-weighted assets)		257,947		13.78	%		135,695		7.25	%		149,733		8.00	%		267,141		13.69	%		141,448		7.25	%		156,081		8.00	%
Common equity Tier 1 capital (to risk-weighted assets)		257,947		13.78	%		107,621		5.75	%		121,658		6.50	%		267,141		13.69	%		112,183		5.75	%		126,816		6.50	%
Tier 1 capital (to average assets)**		257,947		10.14	%		101,794		4.00	%		127,242		5.00	%		267,141		10.46	%		102,142		4.00	%		127,677		5.00	%

Management believes that as of ~~June~~September 30, 2017 and December 31, 2016, Home Savings met all capital adequacy requirements to which it was subject. As of ~~June~~September 30, 2017 and December 31, 2016, Home Savings met the capital requirements to be deemed well capitalized. There are no known conditions that would change this classification subsequent to ~~June~~September 30, 2017.

	June 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016
Total shareholders' equity	$	264,512		$	216,475		$	272,589		$	216,475
Add (deduct)
Accumulated other comprehensive income		18,463			21,056			17,944			21,056
Intangible assets		(20,313	)		(3	)		(20,241	)		(3	)
Disallowed deferred tax assets		(4,715	)		(7,590	)		(3,151	)		(7,590	)
Disallowed capitalized mortgage loan servicing rights		—			—			—			—
Tier 1 Capital		257,947			229,938			267,141			229,938
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		19,636			18,923			20,524			18,923
Total risk-based capital	$	277,583		$	248,861		$	287,665		$	248,861

Actual and regulatory required consolidated capital ratios for United Community, along with the dollar amount of capital implied by such ratios, are presented below.

											September 30, 2017
	June 30, 2017
						Minimum Capital										Minimum Capital
						Requirements										Requirements
	Actual					Per Regulation***					Actual					Per Regulation***
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)										(Dollars in thousands)
Total capital (to risk-weighted assets)	$	293,814		15.66	%	$	173,548		9.25	%	$	300,578		15.38	%	$	180,758		9.25	%
Tier 1 capital (to risk-weighted assets)		274,154		14.61	%		136,024		7.25	%		280,023		14.33	%		141,675		7.25	%
Common equity Tier 1 capital (to risk-weighted assets)		274,154		14.61	%		107,881		5.75	%		280,023		14.33	%		112,363		5.75	%
Tier 1 capital (to average assets)**		274,154		10.76	%		101,870		4.00	%		280,023		10.95	%		102,306		4.00	%

	December 31, 2016										December 31, 2016

						Minimum Capital										Minimum Capital
						Requirements										Requirements
	Actual					Per Regulation***					Actual					Per Regulation***
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)										(Dollars in thousands)
Total capital (to risk-weighted assets)	$	277,817		18.38	%	$	130,369		8.625	%	$	277,817		18.38	%	$	130,369		8.625	%
Tier 1 capital (to risk-weighted assets)		258,869		17.13	%		100,139		6.625	%		258,869		17.13	%		100,139		6.625	%
Common equity Tier 1 capital (to risk-weighted assets)		258,869		17.13	%		77,466		5.125	%		258,869		17.13	%		77,466		5.125	%
Tier 1 capital (to average assets)**		258,869		11.98	%		86,425		4.000	%		258,869		11.98	%		86,425		4.000	%

~~As of June 30, 2017 and December 31, 2016, United Community’s capital exceeded the requirements to be deemed well capitalized.~~

The components of United Community’s consolidated regulatory capital are as follows:

	June 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016
Total shareholders' equity	$	285,480		$	249,806		$	291,851		$	249,806
Add (deduct)
Accumulated other comprehensive income		18,463			21,040			17,929			21,040
Intangible assets		(21,352	)		(1,567	)		(22,773	)		(1,567	)
Disallowed deferred tax assets		(8,437	)		(10,410	)		(6,984	)		(10,410	)
Disallowed capitalized mortgage loan servicing rights		—			—			—			—
Tier 1 Capital		274,154			258,869			280,023			258,869
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		19,660			18,948			20,555			18,948
Total risk-based capital	$	293,814		$	277,817		$	300,578		$	277,817

Significant components of the deferred tax assets and liabilities are as follows:

	June 30,		December 31,		September 30,		December 31,
	2017		2016		2017		2016
	(Dollars in thousands)				(Dollars in thousands)
Deferred tax assets:
Loan loss reserves	$	6,881	$	6,680	$	7,194	$	6,680
Depreciation		886		748		940		748
Other real estate owned valuation		136		354		148		354
Tax credits carryforward		1,845		1,471		2,816		1,471
Unrealized loss on securities available for sale		324		1,685		62		1,685
Unrealized loss on securities held to maturity		396		431		378		431
Interest on nonaccrual loans		952		1,039		887		1,039
Net operating loss carryforward		6,593		8,574		4,613		8,574
Purchase accounting adjustment		1,000		—		781		—
Accrued bonuses		756		812		991		812
Other		79		221		80		221
Deferred tax assets		19,848		22,015		18,890		22,015
Deferred tax liabilities:
Deferred loan fees		1,622		1,275		1,772		1,275
Federal Home Loan Bank stock dividends		4,645		4,585		4,645		4,585
Mortgage servicing rights		2,155		2,124		2,257		2,124
FHLB prepayment penalty		649		786		649		786
Purchase accounting adjustment		—		371		—		371
Prepaid expenses		671		139		555		139
Deferred tax liabilities		9,742		9,280		9,878		9,280
Net deferred tax asset	$	10,106	$	12,735	$	9,012	$	12,735

As of ~~June~~September 30, 2017, the net deferred tax asset was ~~$10.1~~$9.0 million, and as of December 31, 2016, the net deferred tax asset was $12.7 million.

The Company’s ultimate realization of the net deferred tax asset is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the nature and amount of historical and projected future taxable income, the scheduled reversal of deferred tax assets and liabilities, and available tax planning strategies in making this assessment. The amount of deferred taxes recognized could be impacted by changes to any of these variables.

United Community’s net operating loss of ~~$18.8~~$13.2 million at ~~June~~September 30, 2017 will be carried forward to use against future taxable income. The net operating loss carryforwards begin to expire in the year ending December 31, 2030. In addition, United Community is carrying forward ~~$1.8~~$2.8 million of alternative minimum tax credits. The alternative minimum tax credits are carried forward indefinitely.

Effective tax rates ~~differr~~differ from the statutory federal income tax rate of 35% due to the following:

	For the Three Months Ended June 30,												For the Three Months Ended September 30,
	2017						2016						2017						2016
	Dollars			Rate			Dollars			Rate			Dollars			Rate			Dollars			Rate
	(Dollars in thousands)												(Dollars in thousands)
Tax at statutory rate:	$	4,048			35.00	%	$	2,751			35.00	%	$	3,718			35.00	%	$	2,604			35.00	%
Increase (decrease) due to:
Tax exempt income		(166	)		(1.44	)%		(124	)		(1.57	)%		(164	)		(1.54	)%		(142	)		(1.91	)%
Life insurance		(137	)		(1.18	)%		(128	)		(1.63	)%		(148	)		(1.39	)%		(132	)		(1.78	)%
Stock compensation		(138	)		(1.19	)%		—			—	%		(102	)		(0.96	)%		—			—	%
Other		(230	)		(1.99	)%		30			0.38	%		(237	)		(2.23	)%		(42	)		(0.56	)%
Income tax provision	$	3,377			29.20	%	$	2,529			32.18	%	$	3,067			28.88	%	$	2,288			30.75	%

	For the Six Months Ended June 30,												For the Nine Months Ended September 30,
	2017						2016						2017						2016
	Dollars			Rate			Dollars			Rate			Dollars			Rate			Dollars			Rate
	(Dollars in thousands)												(Dollars in thousands)
Tax at statutory rate:	$	4,781			35.00	%	$	4,470			35.00	%	$	8,499			35.00	%	$	7,074			35.00	%
Increase (decrease) due to:
Tax exempt income		(337	)		(2.47	)%		(187	)		(1.47	)%		(499	)		(2.05	)%		(327	)		(1.62	)%
Life insurance		(269	)		(1.97	)%		(256	)		(2.00	)%		(416	)		(1.71	)%		(388	)		(1.92	)%
Stock compensation		(198	)		(1.45	)%		—			—	%		(300	)		(1.24	)%		—			—	%
Other		(43	)		(0.31	)%		94			0.74	%		(283	)		(1.17	)%		50			0.25	%
Income tax provision	$	3,934			28.80	%	$	4,121			32.27	%	$	7,001			28.83	%	$	6,409			31.71	%

	June 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
	(In thousands)				(In thousands)
Beginning of the year	$	208	$	—	$	208	$	—
Effect of adjustments-James & Sons Insurance		636		—		636		—
Acquired goodwill-OLCB		18,420		—		18,420		—
Effect of adjustments-OLCB		15		—		15		—
Acquired goodwill-Eich Brothers Insurance		188		—		188		—
Acquired goodwill-Stevens Insurance						21		—
Acquired goodwill-James & Sons Insurance		—		208		—		208
Impairment	—		—		—		—
End of the year	$	19,467	$	208	$	19,488	$	208

The changes to goodwill during the ~~six~~nine months ended ~~June~~September 30, 2017 are primarily due to changes in the final market value for the customer list intangible asset, as well as the related tax effect from those adjustments related to the James & Sons acquisition in January 2016.

Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value. If the carrying amount of a reporting unit is zero or less than zero, a qualitative analysis of whether it is more likely than not that the reporting unit goodwill is impaired will be performed. The qualitative assessment indicated that it was more likely than not that the fair value of the reporting unit exceeded its carrying value, resulting in no impairment. The Company did not have any reporting units with a carrying amount of zero or less than zero at ~~June~~September 30, 2017 or December 31, 2016.

	June 30, 2017				December 31, 2016				September 30, 2017				December 31, 2016
	Gross				Gross				Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization		Amount		Amortization		Amount		Amortization
	(In thousands)								(In thousands)
Amortized intangible assets:
Core deposit intangibles	$	11,184	$	9,085	$	8,952	$	8,947	$	11,184	$	9,167	$	8,952	$	8,947
Customer list intangible		2,162		102		1,400		44		2,222		132		1,400		44
Total	$	13,346	$	9,187	$	10,352	$	8,991	$	13,406	$	9,299	$	10,352	$	8,991

	For the six months ended June 30, 2017			For the year ended December 31, 2016			For the nine months ended September 30, 2017			For the year ended December 31, 2016
	(In thousands)						(In thousands)
Beginning of the year	$	5		$	30		$	5		$	30
Acquired core deposit intangible-OLCB		2,232			—			2,232			—
Amortization		(138	)		(25	)		(220	)		(25	)
End of the period	$	2,099		$	5		$	2,017		$	5

	For the six months ended June 30, 2017			For the year ended December 31, 2016			For the nine months ended September 30, 2017			For the year ended December 31, 2016
	(In thousands)						(In thousands)
Beginning of the year	$	1,356		$	—		$	1,356		$	—
Effect of adjustments-James & Sons Insurance		(41	)		—			(41	)		—
Acquired customer list intangible-OLCB		268			—			268			—
Acquired customer list intangible-Eich Brothers Insurance		535			—			535			—
Acquired customer list intangible-Stevens Insurance								60			—
Acquired customer list intangible-James & Sons Insurance		—			1,400			—			1,400
Amortization		(58	)		(44	)		(88	)		(44	)
End of the period	$	2,060		$	1,356		$	2,090		$	1,356

Aggregate amortization expense for the three months ended ~~June~~September 30, 2017 and 2016 was $113,000 and ~~$10,000,~~$72,000, respectively. Aggregate amortization expense for the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016 was ~~$196,000~~$308,000 and ~~$23,000,~~$95,000, respectively. Estimated amortization expense for the remainder of 2017 and the next five years is as follows:

Remainder of 2017	$	224,000	$	112,000
2018		448,000		448,000
2019		448,000		448,000
2020		448,000		448,000
2021		448,000		448,000
2022		448,000		448,000

The Company invests in qualified affordable housing projects. At ~~June~~September 30, 2017 and December 31, 2016, the balance of the investment for qualified affordable housing projects was ~~$6.0~~$5.8 million and $3.0 million, respectively. These balances are reflected in other assets on the consolidated balance sheet. Total unfunded commitments related to the investments in qualified affordable housing projects totaled ~~$5.9~~$5.7 million and $2.9 million at ~~June~~September 30, 2017 and December 31, 2016, respectively. The Company expects to fulfill these commitments over the next eight to ten years.

During the three months ended ~~June~~September 30, 2017 and 2016, the Company recognized amortization expense of ~~$36,000~~$44,000 and ~~$0,~~$5,000, respectively, which was included within income tax expense on the consolidated statements of income. During the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, the Company recognized amortization expense of ~~$90,000~~$134,000 and ~~$0,~~$5,000, respectively.

Additionally, during the three months ended ~~June~~September 30, 2017 and 2016, the Company recognized tax credits and other benefits from its investment in affordable housing tax credits of ~~$44,000~~$55,000 and ~~$0,~~$6,000, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, the Company recognized tax credits and other benefits from its investment in affordable housing tax credits of ~~$110,000~~$165,000 and ~~$0,~~$6,000, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2017 and 2016, the Company incurred no impairment losses.

		For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Selected financial ratios and other data: (1)		2017			2016			2017			2016			2017			2016			2017			2016
Performance ratios:
Return on average assets (2)			1.27	%		1.04	%		0.78	%		0.86	%		1.17	%		0.98	%		0.91	%		0.90	%
Return on average equity (3)			11.60	%		8.63	%		6.99	%		6.98	%		10.43	%		8.38	%		8.17	%		7.44	%
Interest rate spread (4)			3.34	%		3.14	%		3.26	%		3.11	%		3.30	%		3.14	%		3.27	%		3.13	%
Net interest margin (5)			3.46	%		3.25	%		3.38	%		3.23	%		3.45	%		3.25	%		3.40	%		3.23	%
Noninterest expense to average assets			2.36	%		2.52	%		2.83	%		2.50	%		2.39	%		2.47	%		2.68	%		2.49	%
Efficiency ratio (6)			54.71	%		60.81	%		68.29	%		62.34	%		57.13	%		59.40	%		64.47	%		61.28	%
Average interest-earning assets to average interest-bearing liabilities			124.72	%		125.25	%		124.62	%		125.00	%		124.72	%		124.21	%		124.66	%		124.74	%
Capital ratios:
Average equity to average assets			10.97	%		12.09	%		11.09	%		12.25	%		11.19	%		11.72	%		11.12	%		12.08	%
Equity to assets, end of period			11.18	%		12.21	%		11.18	%		12.21	%		11.21	%		11.87	%		11.21	%		11.87	%
Tier 1 leverage ratio (Bank only)			10.14	%		11.69	%		10.14	%		11.69	%		10.46	%		11.28	%		10.46	%		11.28	%
Common equity Tier 1 capital (Bank only)			13.78	%		17.31	%		13.78	%		17.31	%		13.69	%		15.97	%		13.69	%		15.97	%
Tier 1 risk-based capital ratio (Bank only)			13.78	%		17.31	%		13.78	%		17.31	%		13.69	%		15.97	%		13.69	%		15.97	%
Total risk-based capital ratio (Bank only)			14.83	%		18.56	%		14.83	%		18.56	%		14.74	%		17.21	%		14.74	%		17.21	%
Asset quality ratios:
Nonperforming loans to net loans at end of period (7)			0.58	%		1.45	%		0.58	%		1.45	%		0.62	%		1.32	%		0.62	%		1.32	%
Nonperforming assets to average assets (8)			0.71	%		1.07	%		0.73	%		1.09	%		0.76	%		1.01	%		0.77	%		1.04	%
Nonperforming assets to total assets at end of period			0.72	%		1.06	%		0.72	%		1.06	%		0.75	%		0.98	%		0.75	%		0.98	%
Allowance for loan losses as a percent of loans	��		1.04	%		1.21	%		1.04	%		1.21	%		1.04	%		1.22	%		1.04	%		1.22	%
Allowance for loan losses as a percent of nonperforming loans (7)			182.32	%		84.42	%		182.32	%		84.42	%		169.64	%		93.76	%		169.64	%		93.76	%
Total classified assets as a percent of Tier 1 Capital (Bank only)			16.92	%		17.38	%		16.92	%		17.38	%		21.05	%		14.83	%		21.05	%		14.83	%
Total classified loans as a percent of Tier 1 Capital and ALLL (Bank only)			12.99	%		15.57	%		12.99	%		15.57	%		16.93	%		13.06	%		16.93	%		13.06	%
Total classified assets as a percent of Tier 1 Capital and ALLL (Bank only)			15.72	%		16.21	%		15.72	%		16.21	%		19.55	%		13.76	%		19.55	%		13.76	%
Net chargeoffs as a percent of average loans			0.03	%		0.04	%		0.20	%		0.46	%
Net (recoveries) chargeoffs as a percent of average loans															(0.04	)%		0.08	%		0.11	%		0.33	%
Total 90+ days past due as a percent of net loans			0.41	%		1.13	%		0.41	%		1.13	%		0.40	%		1.04	%		0.40	%		1.04	%
Per share data:
Basic earnings per common share (9)		$	0.16		$	0.11		$	0.20		$	0.18		$	0.15		$	0.11		$	0.35		$	0.29
Diluted earnings per common share (9)			0.16			0.11			0.20			0.18			0.15			0.11			0.35			0.29
Book value per common share (10)			5.74			5.46			5.74			5.46			5.87			5.51			5.87			5.51
Tangible book value per common share (11)			5.27			5.43			5.27			5.43			5.38			5.48			5.38			5.48
Cash dividend per common share			0.030			0.025			0.060			0.050			0.040			0.030			0.100			0.080
Dividend payout ratio (12)			18.77	%		22.32	%		30.57	%		27.47	%		26.54	%		27.27	%		28.79	%		27.59	%

When used in this Form 10-Q, the words or phrases “will likely result,” “are expected to,” “plan to,” “will continue,” “is anticipated,” “estimate,” “project” 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 United Community’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in Home Savings’ market area and competition that could cause actual results to differ materially from results presently anticipated or projected. United Community cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. United Community advises readers that the factors listed above could affect United Community’s financial performance and could cause United Community’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. United Community undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.

Material Changes in Financial Condition at ~~June~~September 30, 2017 and December 31, 2016

On January 31, 2017, United Community completed its acquisition of OLCB. Pursuant to the terms of the Merger Agreement, OLCB was merged with and into United Community (the merger). Immediately following the merger, Home Savings was merged with and into Premier Bank & Trust, a subsidiary of OLCB, and changed its name to Home Savings Bank.

As a result of the merger and in accordance with the terms of the Merger Agreement, each preferred share of OLCB was deemed to have been converted into OLCB common shares. Each OLCB common share was converted into the right to receive either $18.00 in cash or 2.736 United Community common shares, subject to certain allocation procedures set forth in the Merger Agreement that ensured that 50% of OLCB’s common shares outstanding were converted into United Community common shares, and 50% of OLCB’s common shares outstanding were converted into the right to receive the cash consideration. The Company paid cash in lieu of issuing fractional shares. This transaction resulted in the addition of approximately ~~$349.0~~$349.3 million in assets and the addition of 4 branches in Summit, Stark and Belmont counties. See Note 4 to the consolidated financial statements for additional information regarding this transaction.

HSB Insurance, Inc., a wholly-owned subsidiary of the Company which was formed and began operations on June 1, 2017, is a Delaware-based captive insurance company which insures against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. HSB Insurance, Inc. pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. HSB Insurance, Inc. is subject to regulations of the State of Delaware and undergoes periodic examinations by the Delaware Division of Insurance.

Cash and cash equivalents ~~increased $6.1~~decreased $7.9 million during the first ~~six~~nine months of 2017. ~~The addition~~Cash levels can fluctuate period to period based on expectations of OLCB added cash and cash equivalents of $46.2 million to the combined company. This cash was used to pay for the cash portion of the merger and to support lending activities of the combined companies. Cash levelsfunding needs but are expected to remain stable during the remainder of 2017.

Available for sale securities decreased ~~$56.1~~$68.5 million during the first ~~six~~nine months of 2017. The acquisition of OLCB added $10.0 million dollars in securities to the available for sale portfolio, but the securities matured prior to the end of the first quarter. The decrease in the available for sale securities balance since December 31, 2016 was the result of ~~paydowns~~pay downs and the amortization of premiums/discounts on the securities along with sales totaling ~~$53.2~~$62.3 million. The sales were completed to provide additional liquidity for lending activity. The shrinkage of the securities portfolio to fund loan growth has been part of the Company’s strategic plan. Partially offsetting this activity was a decrease in the unrealized loss on securities. The unrealized loss in the available for sale portfolio was ~~$926,000 million~~$178,000 at ~~June~~September 30, 2017, compared to an unrealized loss of $4.8 million at December 31, 2016.

Held to maturity securities declined ~~$9.0~~$12.0 million at ~~June~~September 30, 2017 compared to December 31, 2016. This change was the result of ~~maturities, paydowns~~pay downs and the amortization of premiums/discounts on the securities.

Net loans increased ~~$365.5~~$444.1 million during the first ~~six~~nine months of 2017 primarily as a result of the acquisition of OLCB, which added $259.4 million in balances, but also due to ~~$150.6~~$184.7 million of organic loan growth. The organic loan growth increase was substantially attributed to the commercial portfolio during the period. Offsetting this growth was a mortgage loan sale of $27.7 million during the second quarter of 2017. See Note 6 to the consolidated financial statements for additional information regarding the composition of loans.

The allowance for loan losses is a valuation allowance for probable incurred credit losses established through a provision for loan losses charged to expense. The allowance for loan losses was ~~$19.6~~$20.6 million at ~~June~~September 30, 2017, up from the $19.1 million reported at December 31, 2016. The allowance for loan losses as a percentage of loans was 1.04% at ~~June~~September 30, 2017, compared to 1.25% at December 31, 2016. The decrease is the result of the acquired loan portfolio being recorded at fair value without an allowance for loan losses.

The allowance for loan losses as a percentage of nonperforming loans was ~~182.3%~~169.6% at ~~June~~September 30, 2017, compared to ~~153.4%~~153.5% at December 31, 2016. Loan losses are charged against the allowance when the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are added back to the allowance. Home Savings’ allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, “Receivables,” and allowance allocations calculated in accordance with ASC Topic 450, “Contingencies”. As of ~~June~~September 30, 2017, the Company evaluated 2021 quarters of net charge-off history and applied this information to the current period. This component is combined with the qualitative component to arrive at the loss factor, which is applied to the outstanding balance of homogenous loans.

A loan is considered impaired when there is a deterioration of the credit worthiness of the borrower to the extent that the collection of the full amount of principal and interest is no longer probable. The total outstanding balance of all impaired loans was ~~$26.2~~$26.4 million at ~~June~~September 30, 2017 as compared to $31.5 million at December 31, 2016.

Included in impaired loans above are certain loans Home Savings considers to be troubled debt restructurings (TDR). A loan is considered a TDR if Home Savings grants a concession to a debtor experiencing financial difficulty that it would otherwise not consider. The concession either stems from an agreement between the creditor and the debtor or is imposed by law or a court. If the debtor is not currently experiencing financial difficulties, but would probably be in payment default in the future without the modification, then this type of restructure also could be considered a TDR.

TDR loans aggregated ~~$22.2~~$21.3 million at ~~June~~September 30, 2017 compared to $26.6 million at December 31, 2016. Of the ~~$22.2~~$21.3 million at ~~June~~September 30, 2017, ~~$19.3~~$18.5 million were performing loans according to their modified terms. The remaining balance of TDR loans of ~~$2.9~~$2.8 million were considered nonperforming.

Nonperforming loans consist of nonaccrual loans and loans past due 90 days and still accruing. Nonperforming loans were $10.8 million, or ~~0.58%~~0.56% of loans, at ~~June~~September 30, 2017, compared to $12.4 million, or 0.83% of loans, at December 31, 2016.

Loans held for sale, carried at lower of cost or market, were ~~$199,000~~$196,000 at ~~June~~September 30, 2017, compared to $165,000 at December 31, 2016. Loans held for sale, carried at fair value, were ~~$86.0~~$84.3 million at ~~June~~September 30, 2017, compared to $62.6 million at December 31, 2016. OLCB had no loans held for sale at the time of acquisition. The change was primarily attributable to the origination of permanent construction loans during the period. These loans are not sold until construction of the residence is complete, which is usually within nine to ten months of origination. Home Savings continues to sell a majority of its newly originated fixed rate mortgage loans into the secondary market as part of its risk management strategy and anticipates continuing to do so in the future.

Real estate owned and other repossessed assets decreased ~~$580,000~~$634,000 to ~~$1.2~~$1.1 million during the ~~six~~nine months ended ~~June~~September 30, 2017. Real estate owned and other repossessed assets are recorded at the fair market value of the property less costs to sell. Appraisals are obtained at least annually on real estate properties that exceed $1.0 million in value. A valuation allowance may be established on any property to properly reflect the asset at fair value.

Goodwill and other intangible assets increased ~~$22.1~~$22.0 million during the first ~~six~~nine months of 2017, which was primarily due to the acquisition of OLCB.

Bank Owned Life Insurance (BOLI) is maintained on select officers and employees of Home Savings whereby Home Savings is the beneficiary. BOLI is recorded at its cash surrender value, or the amount currently realizable. Increases in the Home Savings’ policy cash surrender value are tax exempt and death benefit proceeds received by Home Savings are tax-free. Income from these policies and changes in the cash surrender value are recorded in other income. There is no post-termination coverage, split dollar or other benefits provided to participants covered by the BOLI. Home Savings recognized ~~$767,000~~$1.2 million as other non-interest income based on the change in cash value of the policies in the ~~six~~nine months ended ~~June~~September 30, 2017 compared to ~~$730,000~~$1.1 million for the ~~six~~nine months ended ~~June~~September 30, 2016.

Total deposits increased ~~$379.0~~$423.7 million from $1.5 billion at December 31, 2016, to $1.9 billion at ~~June~~September 30, 2017. The increase in deposits is primarily the result of the $266.3 in deposits acquired in the OLCB transaction. In addition, brokered certificates of deposit increased ~~$55.1~~$80.1 million during the first ~~half~~nine months of 2017 from $76.5 million at December 31, 2016 to ~~$131.6~~$156.6 million at ~~June~~September 30, 2017. The remaining ~~$57.2~~$77.3 million in balance change was attributable to organic growth. All deposit types have shown increases as a result of the acquisition. As of ~~June~~September 30, 2017, the Company had ~~$120.9~~$113.5 million in public funds compared to $106.3 million in public funds at December 31, 2016. No public funds were acquired in the merger.

FHLB advances decreased from $390.8 million at December 31, 2016 to ~~$328.1~~$328.3 million at ~~June~~September 30, 2017. The change was primarily due to an increase in brokered certificates of deposit that were used to pay down FHLB advances.

Shareholders’ equity increased ~~$35.7~~$42.0 million to ~~$285.5~~$291.8 million at ~~June~~September 30, 2017 from $249.8 million at December 31, 2016. The increase is primarily due to the $25.8 million of stock that was issued as part of the purchase of OLCB. In addition, the Company has earned ~~$9.7~~$17.3 million during the first ~~six~~nine months of 2017 while paying out ~~$3.0~~$5.0 million in common dividends. ~~Accumulated~~A positive change in accumulated other comprehensive income of ~~$2.6~~$3.1 million also contributed to the change in shareholders’ equity.

Book value per common share as of ~~June~~September 30, 2017 was ~~$5.74~~$5.87 as compared to $5.36 per common share as of December 31, 2016. The Company’s tangible book value per share ~~decreased~~increased from $5.32 per share at December 31, 2016 to ~~$5.27~~$5.38 at ~~June~~September 30, 2017. The increase in book value was due to the issuance of shares in the OLCB acquisition while the ~~decrease~~increase in tangible book value can be attributed to the ~~creation~~earnings of ~~goodwill and~~the Company along with an improvement in accumulated other ~~intangible assets.~~comprehensive income. Book value per share is calculated as total shareholders’ equity divided by the number of common shares outstanding. Tangible book value per share is calculated as total shareholders’ equity less goodwill and other intangible assets divided by the number of common shares outstanding.

Net Income. United Community recognized net income for the three months ended ~~June~~September 30, 2017, of ~~$8.2~~$7.6 million, or ~~$0.16~~$0.15 per diluted common share compared to net income of ~~$5.3~~$5.2 million for the three months ended ~~June~~September 30, 2016, or $0.11 per diluted share. The acquisition of OLCB, the continued growth in earning assets and noninterest income along with a strong focus on expense control have all led to the growth in net income.

Net Interest Income. Net interest income was $20.5 million in the ~~second~~third quarter of 2017 up from the ~~$15.3~~$15.8 million recorded in the ~~second~~third quarter of 2016. The growth of interest earning assets, both organically and from the acquisition of OLCB, drove this increase along with a 2938 basis point improvement in the yield on interest earning assets. Net interest margin was ~~3.46%~~3.45% for the ~~second~~third quarter of 2017 compared to 3.25% in the ~~second~~third quarter of 2016. The increase in the yield on interest earning assets was driven by an increase in yield on total securities of 1521 basis points along with a 1622 basis point increase in the yield on net loans. The yield on securities improved primarily due to a change in mix toward higher yielding municipal securities. The improvement in the yield on net loans was primarily due to the accretion of loan discounts recognized in the acquisition of ~~OLCB.~~OLCB along with an increase in market rates on floating and adjustable rate loans.

Interest income increased by ~~$6.2~~$6.3 million in the ~~second~~third quarter of 2017 compared to the same period in 2016, to ~~$23.6~~$24.0 million from ~~$17.4~~$17.8 million. The increase is primarily a result of an increase in average net loans and loans held for sale from both the acquisition and organic growth along with accretion of loan discounts discussed above. Average net loans increased ~~$493.8~~$484.5 million in the ~~second~~third quarter compared to the same period in 2016. Interest income from net loans increased to ~~$20.0~~$20.7 million for the quarter ended ~~June~~September 30, 2017 compared to ~~$14.2~~$14.6 million for the same period in 2016. Income from loans held for sale increased to ~~$872,000~~$882,000 for the quarter ended ~~June~~September 30, 2017 compared to ~~$363,000~~$482,000 for the quarter ended ~~June~~September 30, 2016.

Interest expense increased by ~~$994,000~~$1.5 million in the ~~second~~third quarter of 2017 to ~~$3.1~~$3.5 million compared to the same period in 2016. This increase was primarily due to a ~~$393.1~~$346.3 million increase in average interest-bearing liabilities from the acquisition and growth over the previous twelve months along with a 1022 basis point increase in the cost of interest-bearing liabilities. The cost of average interest-bearing deposits increased 111 basis ~~point~~points to 5057 basis points for the three months ended ~~June~~September 30, 2017 from 4946 basis points ~~at June~~for the three months ended September 30, 2016. The cost of average borrowed funds ~~however,~~ increased to ~~1.26%~~1.45% for the quarter ending ~~June~~September 30, 2017 compared to ~~0.77%~~0.71% for the quarter ended ~~June~~September 30, 2016.

	For the Three Months Ended June 30,									For the Three Months Ended September 30,
	2017 vs. 2016									2017 vs. 2016
	Increase						Total			Increase						Total
	(decrease) due to						increase			(decrease) due to						increase
	Rate			Volume			(decrease)			Rate			Volume			(decrease)
	(Dollars in thousands)									(Dollars in thousands)
Interest earning assets:
Loans	$	540		$	5,286		$	5,826		$	844		$	5,221		$	6,065
Loans held for sale		50			459			509			5			395			400
Securities:
Available for sale-taxable		27			(329	)		(302	)		79			(433	)		(354	)
Available for sale-nontaxable		3			176			179			25			97			122
Held to maturity-taxable		15			(85	)		(70	)		40			(82	)		(42	)
Held to maturity-nontaxable		9			(26	)		(17	)		14			(38	)		(24	)
Federal Home Loan Bank stock		34			13			47			60			13			73
Other interest earning assets		22			3			25			33			(1	)		32
Total interest earning assets	$	700		$	5,497		$	6,197		$	1,100		$	5,172		$	6,272
Interest bearing liabilities:
Interest bearing deposits:
Savings accounts	$	(9	)	$	2		$	(7	)	$	2		$	2		$	4
Checking accounts		142			77			219			174			56			230
Customer certificates of deposit		(2,325	)		2,290			(35	)		(49	)		255			206
Brokered certificates of deposit		157			157			314			3			394			397
Federal Home Loan Bank advances:
Long-term advances		58			5			63			64			5			69
Short-term advances		391			47			438			601			(16	)		585
Repurchase agreements and other		—			2			2			—			(1	)		(1	)
Total interest bearing liabilities	$	(1,586	)	$	2,580			994		$	795		$	695			1,490
Change in net interest income							$	5,203								$	4,782

Provision for Loan Losses. A provision for loan losses is charged to income to bring the total allowance for loan losses to a level considered by management to be adequate, based on management’s evaluation of such factors as the delinquency status of loans, current economic conditions, the net realizable value of the underlying collateral, changes in the composition of the loan portfolio and prior loan loss experience. The Company recognized a loan loss provision of ~~$842,000~~$721,000 in the ~~second~~third quarter of 2017, compared to ~~$395,000~~$1.3 million in the ~~second~~third quarter of 2016. Provision expense in the ~~second~~third quarter of 2017 was primarily driven by organic loan growth during the period.

Noninterest Income. Non-interest income was ~~$7.1~~$6.3 million in the ~~second~~third quarter of 2017 compared to ~~$5.8~~$6.0 million in the ~~second~~third quarter of 2016. Favorably affecting this change was the ~~recognition of OLCB’s~~increased customer base due to the OLCB acquisition increasing various fee income ~~for a full quarter~~ including ~~$420,000~~$449,000 in trust fees recognized during that time frame. ~~The Company also realized better~~Offsetting the increase was a decline in mortgage banking income ~~in the second quarter of 2017~~ due to ~~a one-time bulk mortgage loan sale of $27.7 million, which generated $527,000 in gain on sale~~lower sales volumes compared to the prior year quarter.

Noninterest Expense. Non-interest expense increased to ~~$15.2~~$15.5 million during the ~~second~~third quarter of 2017 compared to ~~$12.9~~$13.0 million during the ~~second~~third quarter of 2016. The increase is primarily due to the acquisition of OLCB. ~~Cost savings associated with reduced salary and employee benefits were not realized for the entire second quarter due to the timing of employee departures.~~

Income Taxes. During the three months ended ~~June~~September 30, 2017, the Company recognized tax expense of ~~$3.4~~$3.1 million on pre-tax income of ~~$11.6~~$10.6 million, compared to tax expense of ~~$2.5~~$2.3 million on pre-tax income of ~~$7.8~~$7.4 million for the three months ended ~~June~~September 30, 2016. The increased pre-tax income discussed in the narratives above was the primary reason for the increased income tax along with a lower effective tax rate compared to the same quarter a year ago. The lower effective tax rate is due primarily to nontaxable municipal ~~securites~~securities income, BOLI income, tax benefits derived from vesting of restricted stock above grant price, stock option exercises and affordable housing tax credits. See Note 14 to the consolidated financial statements for additional information regarding the composition of income taxes.

Net Income. United Community recognized net income for the ~~six~~nine months ended ~~June~~September 30, 2017, of ~~$9.7~~$17.3 million, or ~~$0.20~~$0.35 per diluted common share compared to net income of ~~$8.7~~$13.8 million for the ~~six~~nine months ended ~~June~~September 30, 2016, or ~~$0.18~~$0.29 per diluted share. The increase is primarily the result of the acquisition of OLCB and continued growth in earning assets and fee income lines of business. Acquisition expenses, net of tax, of $3.3 million related to acquisition activities in the first quarter of 2017 reduced net income and diluted earnings per common share.

Net Interest Income. Net interest income was ~~$39.0~~$59.5 million in the first ~~six~~nine months of 2017 up from the ~~$30.2~~$46.0 million recorded in the first ~~six~~nine months of 2016. The growth of interest earning assets, both organically and from the acquisition of OLCB, drove this increase along with a 1925 basis point improvement in the yield on interest earning assets. Net interest margin was ~~3.38%~~3.40% for the first ~~six~~nine months of 2017 compared to 3.23% for the first ~~six~~nine months of 2016. The increase in the yield on interest earning assets was driven by an increase in yield on total securities of 1215 basis points along with a 712 basis point increase in the yield on net loans. The yield on securities improved primarily due to a change in mix toward higher yielding municipal securities. The improvement in the yield on net loans was primarily due to the accretion of loan discounts recognized in the acquisition of ~~OLCB.~~OLCB along with an increase in market rates on floating and adjustable rate loans.

Interest income increased by ~~$10.2~~$16.4 million in the first ~~half~~nine months of 2017 compared to the same period in 2016, to ~~$44.6~~$68.7 million from ~~$34.4~~$52.2 million. The increase is primarily a result of an increase in average net loans and loans held for sale from both the acquisition and organic growth. Average total loans, net increased ~~$472.4~~$489.9 million during the first ~~six~~nine months of 2017 compared to the same period in 2016. Interest income from loans increased to ~~$37.6~~$58.3 million for the first ~~half~~nine months of 2017 compared to ~~$28.0~~$42.6 million for the same period in 2016. Income from loans held for sale increased to ~~$1.5~~$2.4 million for the ~~six~~nine months ended ~~June~~September 30, 2017 compared to ~~$695,000~~$1.2 million for the ~~six~~nine months ended ~~June~~September 30, 2016.

Interest expense increased by ~~$1.4~~$2.9 million in the first ~~six~~nine months of 2017 to ~~$5.6~~$9.2 million compared to the same period in 2016. This increase was primarily due to a ~~$363.4~~$357.8 million increase in average interest-bearing liabilities from the acquisition and growth over the previous twelve months. The cost of average interest-bearing deposits ~~declined 3~~increased 2 basis points to 4851 basis points for the ~~six~~nine months ended ~~June~~September 30, 2017 from 5149 basis points at ~~June~~September 30, 2016. ~~Offsetting this was a 35 basis point increase in the cost of average~~Average borrowed funds increased 48 basis for the ~~six~~nine months ended ~~June~~September 30, 2017 compared to the ~~six~~nine months ended ~~June~~September 30, 2016.

	For the Six Months Ended June 30,									For the Nine Months Ended September 30,
	2017 vs. 2016									2017 vs. 2016
	Increase						Total			Increase						Total
	(decrease) due to						increase			(decrease) due to						increase
	Rate			Volume			(decrease)			Rate			Volume			(decrease)
	(Dollars in thousands)									(Dollars in thousands)
Interest earning assets:
Loans	$	441		$	9,143		$	9,584		$	1,273		$	14,376		$	15,649
Loans held for sale		64			774			838			70			1,168			1,238
Securities:
Available for sale-taxable		(32	)		(603	)		(635	)		47			(1,036	)		(989	)
Available for sale-nontaxable		5			605			610			29			704			733
Held to maturity-taxable		(11	)		(171	)		(182	)		24			(248	)		(224	)
Held to maturity-nontaxable		2			(8	)		(6	)		14			(44	)		(30	)
Federal Home Loan Bank stock		57			22			79			117			35			152
Other interest earning assets		57			33			90			92			30			122
Total interest earning assets	$	583		$	9,795		$	10,378		$	1,666		$	14,985		$	16,651
Interest bearing liabilities:
Interest bearing deposits:
Savings accounts	$	(23	)	$	5		$	(18	)	$	(21	)	$	7		$	(14	)
Checking accounts		163			127			290			336			184			520
Customer certificates of deposit		(588	)		321			(267	)		1,751			(1,812	)		(61	)
Brokered certificates of deposit		247			248			495			2			890			892
Federal Home Loan Bank advances:
Long-term advances		112			10			122			176			15			191
Short-term advances		614			190			804			1,232			157			1,389
Repurchase agreements and other		(1	)		6			5			(1	)		5			4
Total interest bearing liabilities	$	524		$	907			1,431		$	3,475		$	(554	)		2,921
Change in net interest income							$	8,947								$	13,730

Provision for Loan Losses. The Company recognized a loan loss provision of ~~$2.3~~$3.0 million in the first ~~half~~nine months of 2017, compared to ~~$2.6~~$3.9 million in the first ~~half~~nine months of 2016. Provision expense in the last ~~two years~~year has primarily been driven by organic loan growth.

Noninterest Income. Non-interest income was ~~$12.5~~$18.8 million in the first ~~half~~nine months of 2017 compared to ~~$10.4~~$16.4 million in the first ~~half~~nine months of 2016. Favorably affecting this change was the ~~recognition of OLCB’s~~increased customer base due to the OLCB acquisition increasing various fee income for ~~five~~eight months including ~~$702,000~~$1.2 million in trust fees recognized during that time frame. The Company also a had minimal negative change in the valuation adjustment of the mortgage serving asset in the first ~~half~~nine months of 2017, compared with a negative adjustment of ~~$727,000~~$702,000 in the first ~~half~~nine months of 2016.

Noninterest Expense. Non-interest expense increased to ~~$35.5~~$50.9 million during the first ~~half~~nine months of 2017 compared to ~~$25.3~~$38.3 million during the first ~~half~~nine months of 2016. Excluding the $5.0 million of acquisition related expense, non-interest expense was up ~~$5.2~~$7.6 million during the first ~~half~~nine months of 2017 compared to the first ~~half~~nine months of 2016. The increase is primarily due to the acquisition of OLCB. ~~Much of the cost savings associated with the acquisition, primarily in salaries and employee benefits, will not be realized until the second half of 2017.~~

Income Taxes. During the ~~six~~nine months ended ~~June~~September 30, 2017, the Company recognized tax expense of ~~$3.9~~$7.0 million on pre-tax income of ~~$13.7~~$24.3 million, compared to tax expense of ~~$4.1~~$6.4 million on pre-tax income of ~~$12.8~~$20.2 million for the ~~six~~nine months ended ~~June~~September 30, 2016. ~~A lower effective tax rate is the primary reason for the decrease in income tax.~~ The lower effective tax rate is due primarily to nontaxable municipal ~~securites~~securities income, BOLI income, tax benefits derived from vesting of restricted stock above grant price, stock option exercises and affordable housing tax credits. See Note 14 to the consolidated financial statements for additional information regarding the composition of income taxes.

United Community's liquidity, primarily represented by cash and cash equivalents, is a result of its operating, investing and financing activities.

The principal sources of funds for United Community are deposits, loan repayments, maturities of securities, borrowings from financial institutions, repurchase agreements and other funds provided by operations. Home Savings also has the ability to borrow from the Federal Home Loan Bank. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan prepayments are more influenced by interest rates, general economic conditions and competition. Investments in liquid assets maintained by United Community and Home Savings are based upon management's assessment of (1) the need for funds, (2) expected deposit flows, (3) yields available on short-term liquid assets, and (4) objectives of the asset and liability management program. At ~~June~~September 30, 2017, approximately ~~$408.1~~$440.6 million of Home Savings’ certificates of deposit were expected to mature within one year. Based on past experience and Home Savings’ prevailing pricing strategies, management believes that a substantial percentage of such certificates will be renewed with Home Savings at maturity, although there can be no assurance that this will occur.

Home Savings’ Asset/Liability Committee (ALCO) is responsible for establishing and monitoring liquidity guidelines, policies and procedures. ALCO uses a variety of methods to monitor the liquidity position of Home Savings including a liquidity analysis that measures potential sources and uses of funds over future time periods out to one year. ALCO also performs contingency funding analyses to determine Home Savings’ ability to meet potential liquidity needs under stress scenarios that cover varying time horizons ranging from immediate to long-term.

At ~~June~~September 30, 2017, United Community had total on-hand liquidity, defined as cash and cash equivalents, unencumbered securities and additional FHLB borrowing capacity, of ~~$521.6~~$500.6 million.

The following table presents the total dollar amounts of interest income and interest expense on the indicated amounts of average interest-earning assets or interest-bearing liabilities, together with the weighted average interest rates for the three months ended ~~June~~September 30, 2017 and 2016. Average balance calculations were based on daily balances.

	For the Three Months Ended June 30,														For the Three Months Ended September 30,
	2017							2016							2017							2016
	Average		Interest					Average		Interest					Average		Interest					Average		Interest
	outstanding		earned/		Yield/			outstanding		earned/		Yield/			outstanding		earned/		Yield/			outstanding		earned/		Yield/
	balance		paid		rate			balance		paid		rate			balance		paid		rate			balance		paid		rate
	(Dollars in thousands)														(Dollars in thousands)
Interest earning assets:
Net loans ⁽¹⁾	$	1,863,525	$	20,012		4.30	%	$	1,369,683	$	14,186		4.14	%	$	1,906,786	$	20,699		4.34	%	$	1,422,294	$	14,634		4.12	%
Loans held for sale		80,205		872		4.35	%		37,521		363		3.87	%		88,854		882		3.97	%		49,095		482		3.93	%
Total loans, net		1,943,730		20,884		4.30	%		1,407,204		14,549		4.14	%		1,995,640		21,581		4.33	%		1,471,389		15,116		4.11	%
Securities:
Available for sale-taxable		258,217		1,479		2.29	%		315,583		1,781		2.26	%		224,927		1,276		2.27	%		300,522		1,630		2.17	%
Available for sale-nontaxable ⁽²⁾		59,209		619		4.18	%		42,394		440		4.15	%		59,057		611		4.14	%		49,489		489		3.95	%
Held to maturity-taxable		80,817		454		2.25	%		95,933		524		2.18	%		77,947		424		2.18	%		92,077		466		2.02	%
Held to maturity-nontaxable ⁽²⁾		9,843		79		3.21	%		12,971		96		2.96	%		9,239		76		3.29	%		13,563		100		2.95	%
Total securities		408,086		2,631		2.58	%		466,881		2,841		2.43	%		371,170		2,387		2.57	%		455,651		2,685		2.36	%
Federal Home Loan Bank stock		19,324		227		4.70	%		18,068		180		3.98	%		19,324		253		5.24	%		18,068		180		3.98	%
Other interest earning assets		22,129		40		0.72	%		18,978		15		0.32	%		18,881		51		1.08	%		20,028		19		0.38	%
Total interest earning assets		2,393,269		23,782		3.97	%		1,911,131		17,585		3.68	%		2,405,015		24,272		4.04	%		1,965,136		18,000		3.66	%
Non-interest earning assets		180,524							132,780							185,773							132,922
Total assets	$	2,573,793						$	2,043,911						$	2,590,788						$	2,098,058
Interest bearing liabilities:
Deposits:
Checking accounts	$	633,276		480		0.30	%	$	505,284		261		0.21	%	$	591,982		468		0.32	%	$	491,553		238		0.19	%
Savings accounts		308,683		27		0.03	%		291,820		34		0.05	%		308,829		28		0.04	%		290,998		24		0.03	%
Certificates of deposit
Customer certificates of deposit		504,397		1,166		0.92	%		434,053		1,201		1.11	%		526,697		1,333		1.01	%		425,307		1,127		1.06	%
Brokered certificates of deposit		133,082		314		0.94	%		—		—		—	%		135,956		397		1.17	%		—		—		—	%
Total certificates of deposit		637,479		1,480		0.93	%		434,053		1,201		1.11	%		662,653		1,730		1.04	%		425,307		1,127		1.06	%
Total interest bearing deposits		1,579,438		1,987		0.50	%		1,231,157		1,496		0.49	%		1,563,464		2,226		0.57	%		1,207,858		1,389		0.46	%
Federal Home Loan Bank advances
Long-term advances		48,019		370		3.08	%		47,237		307		2.60	%		48,212		388		3.22	%		47,432		319		2.69	%
Short-term advances		286,604		694		0.97	%		246,967		256		0.41	%		310,152		927		1.20	%		326,250		342		0.42	%
Total Federal Home Loan Bank advances		334,623		1,064		1.27	%		294,204		563		0.77	%		358,364		1,315		1.47	%		373,682		661		0.71	%
Repurchase agreements and other		4,844		8		0.66	%		527		6		4.55	%		6,483		4		0.25	%		520		5		3.85	%
Total borrowed funds		339,467		1,072		1.26	%		294,731		569		0.77	%		364,847		1,319		1.45	%		374,202		666		0.71	%
Total interest bearing liabilities	$	1,918,905		3,059		0.64	%	$	1,525,888		2,065		0.54	%	$	1,928,311		3,545		0.74	%	$	1,582,060		2,055		0.52	%
Non-interest bearing liabilities
Noninterest-bearing deposits		333,784							241,098							337,067							242,310
Other noninterest-bearing liabilities		38,771							29,751							35,577							27,769
Total noninterest bearing liabilities		372,555							270,849							372,644							270,079
Total liabilities	$	2,291,460						$	1,796,737						$	2,300,955						$	1,852,139
Shareholders’ equity		282,333							247,174							289,834							245,919
Total liabilities and equity	$	2,573,793						$	2,043,911						$	2,590,789						$	2,098,058
Net interest income and interest rate spread			$	20,723		3.33	%			$	15,520		3.14	%			$	20,727		3.30	%			$	15,945		3.14	%
Net interest margin						3.46	%						3.25	%						3.45	%						3.25	%
Average interest earning assets to average interest bearing liabilities						124.72	%						125.25	%						124.72	%						124.21	%

The following table presents the total dollar amounts of interest income and interest expense on the indicated amounts of average interest-earning assets or interest-bearing liabilities, together with the weighted average interest rates for the ~~six~~nine months ended ~~June~~September 30, 2017 and 2016. Average balance calculations were based on daily balances.

	For the Six Months Ended June 30,														For the Nine Months Ended September 30,
	2017							2016							2017							2016
	Average		Interest					Average		Interest					Average		Interest					Average		Interest
	outstanding		earned/		Yield/			outstanding		earned/		Yield/			outstanding		earned/		Yield/			outstanding		earned/		Yield/
	balance		paid		rate			balance		paid		rate			balance		paid		rate			balance		paid		rate
	(Dollars in thousands)														(Dollars in thousands)
Interest earning assets:
Net loans ⁽¹⁾	$	1,785,202	$	37,572		4.21	%	$	1,350,474	$	27,988		4.14	%	$	1,826,175	$	58,271		4.25	%	$	1,374,588	$	42,622		4.13	%
Loans held for sale		74,067		1,533		4.14	%		36,440		695		3.81	%		79,050		2,415		4.07	%		40,689		1,177		3.86	%
Total loans, net		1,859,269		39,105		4.21	%		1,386,914		28,683		4.14	%		1,905,225		60,686		4.25	%		1,415,277		43,799		4.13	%
Securities:
Available for sale-taxable		272,914		3,081		2.26	%		326,306		3,716		2.28	%		256,742		4,357		2.26	%		317,752		5,346		2.24	%
Available for sale-nontaxable ⁽²⁾		59,285		1,240		4.18	%		30,362		630		4.15	%		59,208		1,851		4.17	%		36,681		1,118		4.06	%
Held to maturity-taxable		82,228		919		2.24	%		97,488		1,101		2.26	%		80,785		1,343		2.22	%		95,671		1,567		2.18	%
Held to maturity-nontaxable ⁽²⁾		11,140		173		3.11	%		11,673		179		3.07	%		10,499		249		3.16	%		12,308		279		3.02	%
Total securities		425,567		5,413		2.54	%		465,829		5,626		2.42	%		407,234		7,800		2.55	%		462,412		8,310		2.40	%
Federal Home Loan Bank stock		19,116		441		4.61	%		18,068		362		4.01	%		19,186		694		4.82	%		18,068		542		4.00	%
Other interest earning assets		32,537		120		0.74	%		18,554		30		0.32	%		27,934		171		0.82	%		19,144		49		0.34	%
Total interest earning assets		2,336,489		45,079		3.86	%		1,889,365		34,701		3.67	%		2,359,579		69,351		3.92	%		1,914,901		52,700		3.67	%
Non-interest earning assets		173,537							132,985							177,643							133,202
Total assets	$	2,510,026						$	2,022,350						$	2,537,222						$	2,048,103
Interest bearing liabilities:
Deposits:
Checking accounts	$	599,279		817		0.27	%	$	493,318		527		0.21	%	$	596,820		1,285		0.29	%	$	492,698		765		0.21	%
Savings accounts		305,198		57		0.04	%		287,856		75		0.05	%		306,422		85		0.04	%		288,911		99		0.05	%
Certificates of deposit
Customer certificates of deposit		486,639		2,239		0.92	%		440,756		2,506		1.14	%		500,139		3,572		0.95	%		435,569		3,633		1.11	%
Brokered certificates of deposit		116,324		495		0.85	%		—		—		—	%		122,940		892		0.97	%		—		—		—	%
Total certificates of deposit		602,963		2,734		0.91	%		440,756		2,506		1.14	%		623,079		4,464		0.96	%		435,569		3,633		1.11	%
Total interest bearing deposits		1,507,440		3,608		0.48	%		1,221,930		3,108		0.51	%		1,526,321		5,834		0.51	%		1,217,178		4,497		0.49	%
Federal Home Loan Bank advances
Long-term advances		47,921		718		3.00	%		47,140		596		2.53	%		48,019		1,106		3.07	%		47,238		915		2.58	%
Short-term advances		316,660		1,301		0.82	%		241,857		497		0.41	%		314,467		2,228		0.94	%		270,193		839		0.41	%
Total Federal Home Loan Bank advances		364,581		2,019		1.11	%		288,997		1,093		0.76	%		362,486		3,334		1.23	%		317,431		1,754		0.74	%
Repurchase agreements and other		2,857		16		1.12	%		530		11		4.15	%		4,079		20		0.65	%		526		16		4.06	%
Total borrowed funds		367,438		2,035		1.11	%		289,527		1,104		0.76	%		366,565		3,354		1.22	%		317,957		1,770		0.74	%
Total interest bearing liabilities	$	1,874,878		5,643		0.60	%	$	1,511,457		4,212		0.56	%	$	1,892,886		9,188		0.65	%	$	1,535,135		6,267		0.54	%
Non-interest bearing liabilities
Noninterest-bearing deposits		320,578							234,714							326,151							237,281
Other noninterest-bearing liabilities		36,278							28,346							36,019							28,279
Total noninterest bearing liabilities		356,856							263,060							362,170							265,560
Total liabilities	$	2,231,734						$	1,774,517						$	2,255,056						$	1,800,695
Shareholders’ equity		278,292							247,833							282,166							247,408
Total liabilities and equity	$	2,510,026						$	2,022,350						$	2,537,222						$	2,048,103
Net interest income and interest rate spread			$	39,436		3.26	%			$	30,489		3.11	%			$	60,163		3.27	%			$	46,433		3.13	%
Net interest margin						3.38	%						3.23	%						3.40	%						3.23	%
Average interest earning assets to average interest bearing liabilities						124.62	%						125.00	%						124.66	%						124.74	%

ITEM 3. ~~Quantitative~~Quantitative and Qualitative Disclosures About Market Risk.

Qualitative Aspects of Market Risk. The principal market risk affecting United Community is interest rate risk. United Community is subject to interest rate risk to the extent that its interest-earning assets reprice differently than its interest-bearing liabilities. Interest rate risk is defined as the sensitivity of United Community’s earnings and net asset values to changes in interest rates. As part of its efforts to monitor and manage the interest rate risk, the Board of Directors of Home Savings has adopted an interest rate risk policy that requires the Home Savings Board to review quarterly reports related to interest rate risk and to annually set exposure limits for Home Savings as a guide to management in setting and implementing day to day operating strategies.

Quantitative Aspects of Market Risk. As part of its interest rate risk analysis, Home Savings uses the net portfolio value (NPV) and net interest income methodology. Generally, NPV is the discounted present value of the difference between incoming cash flows on interest-earning and other assets and outgoing cash flows on interest-bearing and other liabilities. The application of the methodology attempts to quantify interest rate risk as the change in the NPV and net interest income that would result from various levels of theoretical basis point changes in market interest rates.

Home Savings uses an NPV and earnings simulation model prepared internally as its primary method to identify and manage its interest rate risk profile. The model is based on actual cash flows and repricing characteristics for all financial instruments and incorporates market-based assumptions regarding the impact of changing interest rates on future volumes and the prepayment rate of applicable financial instruments. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates also are incorporated into the model. These assumptions inherently are uncertain and, as a result, the model cannot measure precisely NPV or net interest income or precisely predict the impact of fluctuations in interest rates on net interest rate changes as well as changes in market conditions and management strategies.

Presented below are analyses of Home Savings’ interest rate risk as measured by changes in NPV and net interest income for instantaneous and sustained parallel shifts of 100 basis point increments in market interest rates. As noted, for the quarter ended ~~June~~September 30, 2017 and the year ended December 31, 2016, the percentage changes fall within the policy limits set by the Board of Directors of Home Savings as the minimum NPV ratio and the maximum change in interest income the Home Savings Board deems advisable in the event of various changes in interest rates. See the table below for Board adopted policy limits.

Quarter Ended June 30, 2017
Quarter Ended September 30, 2017																							Quarter Ended September 30, 2017
NPV as % of portfolio value of assets	NPV as % of portfolio value of assets													Next 12 months net interest income									NPV as % of portfolio value of assets													Next 12 months net interest income
														(Dollars in thousands)																						(Dollars in thousands)
Change in rates (Basis points)		NPV Ratio			Internal policy limitations			Change in %			Internal policy limitations on NPV Change			$ Change			Internal policy limitations			% Change				NPV Ratio			Internal policy limitations			Change in %			Internal policy limitations on NPV Change			$ Change			Internal policy limitations			% Change
400			11.63	%		6.00	%		(0.32	)%		-25.00	%	$	(1,574	)		(18.00	)%		(1.94	)%			11.25	%		6.00	%		(0.66	)%		-25.00	%	$	(2,763	)		(18.00	)%		(3.39	)%
300			11.93	%		6.00	%		(0.01	)%		-20.00	%		(1,094	)		(13.00	)%		(1.35	)%			11.64	%		6.00	%		(0.27	)%		-20.00	%		(1,879	)		(13.00	)%		(2.31	)%
200			12.14	%		7.00	%		0.20	%		-15.00	%		(637	)		(8.00	)%		(0.78	)%			12.00	%		7.00	%		0.08	%		-15.00	%		(1,020	)		(8.00	)%		(1.25	)%
100			12.37	%		7.00	%		0.43	%		-10.00	%		(553	)		(3.00	)%		(0.68	)%			12.11	%		7.00	%		0.20	%		-10.00	%		(545	)		(3.00	)%		(0.67	)%
Static			11.94	%		9.00	%		—	%		0.00	%		—			—	%		—	%			11.91	%		9.00	%		—	%		0.00	%		—			—	%		—	%
-100			11.06	%		7.00	%		(0.88	)%		-15.00	%		(1,727	)		(5.00	)%		(2.13	)%			11.23	%		7.00	%		(0.68	)%		-15.00	%		(1,864	)		(5.00	)%		(2.29	)%

Due to a low interest rate environment, it was not meaningful to calculate results for a drop in interest rates at December 31, 2016. For the quarter ended ~~June~~September 30, 2017, it was only meaningful to calculate a drop of 100 basis points.

As with any method of measuring interest rate risk, certain shortcomings are inherent in the above approach. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Further, in the event of a change in interest rates, expected rates of prepayment on loans and early withdrawal levels from certificates of deposit may deviate significantly from those assumed in making risk calculations.

Potential Impact of Changes in Interest Rates. Home Savings’ profitability depends to a large extent on its net interest income, which is the difference between interest income from loans and securities and interest expense on deposits and borrowings. Like most financial institutions, Home Savings’ short-term interest income and interest expense are affected significantly by changes in market interest rates and other economic factors beyond its control.

An evaluation was carried out by United Community’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of United Community’s disclosure controls and procedures (as defined in Rules 13a-15(e)/15d-15(e) of the Securities Exchange Act of 1934 (the Exchange Act)) as of ~~June~~September 30, 2017. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that United Community’s disclosure controls and procedures as of ~~June~~September 30, 2017, were effective in ensuring that information required to be disclosed in the reports that United Community files or submits under the Exchange Act was recorded, processed, summarized and reported on a timely basis, including those controls and procedures designed to ensure that such information is accumulated and communicated to management, including United Community’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. During the quarter ended ~~June~~September 30, 2017, there were no changes in United Community’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect United Community’s internal control over financial reporting.

United Community and its subsidiaries are parties to litigation arising in the normal course of business. While it is impossible to determine the ultimate resolution of these contingent matters, management believes any resulting liability would not have a material effect upon United Community’s financial statements.

There have been no material changes in United Community’s risk factors as outlined in United Community’s Annual Report on Form 10-K for the year ended December 31, 2016. The risk factors described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that management currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results. Moreover, the Company undertakes no obligation and disclaims any intention to publish revised information or updates to forward-looking statements contained in such risk factors or in any other statement made at any time by the Company or any of its directors, officers, employees or other representatives, unless and until any such revisions or updates are expressly required to be disclosed by securities laws or regulations.

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.

~~Incorporated by reference to Exhibit 2.1 in the Third Quarter Form 10-Q filed by United Community on November 8, 2016 with the SEC, film number 161981248.~~

~~Incorporated by reference to Exhibit 3.1 in the Second Quarter 2016 Form 10-Q filed by United Community on August 5, 2016 with the SEC, film number 161811451.~~

~~Incorporated by reference to Exhibit 3.2 in the 1998 Form 10-K filed by United Community on March 31, 1999 with the SEC, film number 99582343.~~

~~Incorporated by reference to Exhibit 10.1 in the Form 8-K filed by United Community on July 7, 2017 with the SEC, film number 17955395.~~

~~Incorporated by reference to Exhibit 10.2 in the Form 8-K filed by United Community on July 7, 2017 with the SEC, film number 17955395.~~

~~Incorporated by reference to Exhibit 10.3 in the Form 8-K filed by United Community on July 7, 2017 with the SEC, film number 17955395.~~

~~Incorporated by reference to Exhibit 10.4 in the Form 8-K filed by United Community on July 7, 2017 with the SEC, film number 17955395.~~

OHIO		000-024399		34-1856319
(State or other jurisdiction of incorporation)		(Commission File No.)		(IRS Employer I.D. No.)

			PAGE

Part I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Financial Condition as of ~~June~~September 30, 2017 (Unaudited) and December 31, 2016		3
	Condensed Consolidated Statements of Income and Comprehensive Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2017 and 2016 (Unaudited)		4
	Condensed Consolidated Statement of Shareholders’ Equity for the ~~Six~~Nine Months ended ~~June~~September 30, 2017and 2016 (Unaudited)		6
	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2017and 2016 (Unaudited)		7
	Notes to Consolidated Financial Statements (Unaudited)		~~8-57~~8-58
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~58-67~~59-68
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6869
	Item 4.	Controls and Procedures	6970
Part II.OTHER INFORMATION			7071
	Item 1.	Legal Proceedings	7071
	Item 1A.	Risk Factors	7071
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7071
	Item 3.	Defaults Upon Senior Securities (None)	7071
	Item 4.	Mine Safety Disclosures (None)	7071
	Item 5.	Other Information (None)	7071
	Item 6.	Exhibits	7172
Signatures			72
~~Exhibits~~			73

	(In thousands)
Cash	$	20,379
United Community shares issued		25,816
Total fair value of consideration paid	$	46,195

	(In thousands)
Cash	$	46,159
Loans		259,373
Available for sale securities		9,996
FHLB stock, at cost		1,256
Premises and equipment		2,940
Accrued interest		679
Other intangible assets		2,426
Other real estate owned		89
Other assets		7,988
Total assets acquired	$	330,906

Deposits assumed	$	266,279
Federal Home Loan Bank advances		23,500
Repurchase agreements and other borrowings		10,771
Accrued expenses and other liabilities		2,581
Total liabilities assumed	$	303,131

Goodwill created	$	18,420

	~~Number~~ ~~of loans~~		~~Recorded~~ ~~Investment~~
			~~(Dollars in thousands)~~
~~Commercial loans~~
~~Multifamily~~		—	$	—
~~Nonresidential~~		—		—
~~Land~~		—		—
~~Construction~~		—		—
~~Secured~~		—		—
~~Unsecured~~		—		—
~~Total commercial loans~~		—		—
~~Residential mortgage loans~~
~~One-to four-family~~		—		—
~~Construction~~		—		—
~~Total residential mortgage loans~~		—		—
~~Consumer loans~~
~~Home equity~~		—		—
~~Auto~~		—		—
~~Marine~~		—		—
~~Recreational vehicle~~		—		—
~~Other~~		—		—
~~Total consumer loans~~		—		—
~~Total restructured loans~~		—	$	—

	~~June~~September 30, 2017
	(Dollars in thousands)
Loans at beginning of year	$	—
Loans purchased during the year		1,797
Loans at end of period		~~1,221~~1,204

			Fair Value Measurements at December 31, 2016 Using:
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities' securities	$	186,033	$	—	$	186,033	$	—
States of the U.S. and political subdivisions		57,757		—		57,757		—
Mortgage-backed GSE securities: residential		99,494		—		99,494		—
Loans held for sale, at fair value		62,593		—		8,832		53,761
Purchased certificate of deposit option		882		—		882		—
Liabilities
Written certificate of deposit option		882		—		882		—

			Valuation	Unobservable
	Fair Value		Technique(s)	Input(s)	Range
Loans held for sale, at fair value	$	69,995	Comparable sales	Time discount	0.00-1.80%

	~~Fair Value~~		~~Valuation Technique(s)~~	~~Unobservable Input(s)~~	~~Range (Weighted Average)~~
~~Impaired loans:~~
~~Commercial loans~~
~~Nonresidential~~	$	~~2,257~~	~~Sales comparison approach~~	~~Adjustment for differences~~ ~~between comparable sales~~	~~0.00-35.00% (15.00%)~~
~~Secured~~		~~284~~	~~Sales comparison approach~~	~~Adjustment for differences~~ ~~between comparable sales~~	~~0.00%-64.00% (16.00%)~~
~~Residential loans~~
~~One-to four-family residential~~		~~919~~	~~Sales comparison approach~~	~~Adjustment for differences~~ ~~between comparable sales~~	~~0.00%-10.77% (4.27%)~~
~~Consumer loans~~
~~Home Equity~~		~~228~~	~~Sales comparison approach~~	~~Adjustment for differences~~ ~~between comparable sales~~	~~0.00%-17.85% (8.93%)~~
~~Other real estate owned:~~
~~Commercial loans~~
~~Construction loans~~		~~748~~	~~Sales comparison approach~~	~~Adjustment for differences~~ ~~between comparable sales~~	~~0.00%-90.40% (27.46%)~~
			~~Cost approach~~	~~Adjustment for differences in cost~~	~~0.00%-33.33% (16.67%)~~
~~Residential loans~~
~~One-to four-family residential~~		~~281~~	~~Sales comparison approach~~	~~Adjustment for differences~~ ~~between comparable sales~~	~~0.00%-27.00% (7.74%)~~

Year Ended December 31, 2016
NPV as % of portfolio value of assets													Next 12 months net interest income
													(Dollars in thousands)
Change in rates (Basis points)	NPV Ratio			Internal policy limitations			Change in %			Internal policy limitations on NPV Change			$ Change			Internal policy limitations			% Change
400		10.04	%		6.00	%		(2.07	)%		-30.00	%	$	(8,716	)		(20.00	)%		(13.27	)%
300		10.73	%		6.00	%		(1.39	)%		-25.00	%		(6,903	)		(15.00	)%		(10.51	)%
200		11.35	%		7.00	%		(0.77	)%		-20.00	%		(4,198	)		(10.00	)%		(6.39	)%
100		11.88	%		7.00	%		(0.24	)%		-15.00	%		(1,726	)		(5.00	)%		(2.63	)%
Static		12.12	%		9.00	%		—	%		0.00	%		—			—	%		—	%

Period	Total number of common shares purchased		Average price paid per common share		Total number of common shares purchased as part of publicly announced plans		Maximum number of shares that may yet be purchased under the plan⁽²⁾
April 1 through April 30, 2017⁽¹⁾		20,709	$	8.34		—		1,683,830
May 1 through May 31, 2017		—		—		—		1,683,830
June 1 through June 30, 2017		—		—		—		1,683,830
Total		20,709	$	8.34		—		1,683,830

			UNITED COMMUNITY FINANCIAL CORP.
Date: ~~August~~November 9, 2017			/s/ Gary M. Small
			Gary M. Small President and Chief Executive Officer
			(Principal Executive Officer)
Date: ~~August~~November 9, 2017			/s/ Timothy W. Esson
			Timothy W. Esson Chief Financial Officer
			(Principal Financial Officer)

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