United Community Financial 8K . Announces Third Quarter Results; Asset Quality Indicators Continue to Improve | UCFC 14 Nov 11

EXHIBIT 99

275 West Federal Street
Youngstown, Ohio 44503-1203

FOR IMMEDIATE RELEASE



Media Contact:		Investor Contact:
Colleen Scott		James R. Reske
Vice President of Marketing		Chief Financial Officer
Home Savings		United Community Financial Corp.
(330) 742-0638		(330) 742-0592
cscott@homesavings.com		jreske@ucfconline.com

United Community Financial Corp. Announces Third Quarter Results;
Asset Quality Indicators Continue to Improve

YOUNGSTOWN, Ohio (November 14, 2011) — United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), today reported a consolidated net loss of $8.9 million, or $(0.29) per diluted share, for the three months ended September 30, 2011. This compares to a net loss of $9.9 million, or $(0.32) per diluted share, for the three months ended September 30, 2010. Current earnings have been negatively impacted by the level of the provision for loan losses, which totaled $11.8 million in the third quarter. The Company also reported a cumulative net loss of $7.7 million, or $(0.25) per diluted share, for the nine months ended September 30, 2011, as compared to a cumulative net loss of $19.9 million, or $(0.66) per diluted share, for the nine months ended September 30, 2010.

Selected third quarter results:

	•		Delinquent loans declined $10.9 million from the prior quarter to $130.9 million

	•		Nonperforming loans declined $5.0 million from the prior quarter to $134.1 million

	•		Nonperforming assets declined $10.4 million from the prior quarter to $172.4 million

	•		Home Savings’ Tier 1 leverage ratio of 8.13% and the total risk based capital of 13.25% both exceed regulatory requirements

	•		Tangible book value per share at September 30, 2011 was $5.88, down from $5.90 at June 30, 2011

Patrick W. Bevack, President and Chief Executive Officer of UCFC and Home Savings, commented that, “The positive trend of decreasing delinquent loans, nonperforming loans and nonperforming assets continued through the third quarter. The branch sale previously announced is still expected to close in the fourth quarter. This sale is expected to generate a net gain of approximately $4.0 million. The Bank was also able to recognize a gain of $4.5 million on the sale of select investment securities in October. These two actions will have a positive effect on both earnings and capital ratios in the fourth quarter.”

Asset Quality

Delinquent loans declined to $130.9 million at September 30, 2011, down $64.3 million, or 32.9%, from their high point of $195.2 million at March 31, 2010. Nonperforming loans at September 30, 2011 fell to $134.1 million, down $21.1 million, or 13.6%, from their high point of $155.1 million in at June 30, 2010. Nonperforming assets dropped to $172.4 million at September 30, 2011, down $24.8 million, or 12.6%, from their high point of $197.2 million at June 30, 2010.

The provision for loan losses was $11.8 million for the third quarter of 2011, as compared to $17.1 million for the same quarter in 2010. For the first nine months of 2011, the provision for loan losses were $22.3 million, down from $39.9 million for the same period in 2010. The provision expense included $1.8 million in the third quarter of 2011, and $5.4 million for the first nine months of 2011, associated with sales of classified loans, in keeping with the Bank’s strategy of accelerating the resolution of problem credits.

Net Interest Income and Margin

The net interest margin was 3.18% for the third quarter of 2011 compared with 3.42% for the third quarter of 2010. However, the net interest margin was 3.36% for the first nine months of 2011 compared with 3.33% for the first nine months of 2010.

Net interest income for the three months ended September 30, 2011 was $15.6 million compared to $18.8 million for the three months ended September 30, 2010. Total interest income decreased $4.9 million in the third quarter of 2011 compared to the third quarter of 2010. The Bank recognized $3.7 million less in interest on net loans because of a $279.3 million reduction in the average balance of outstanding loans. The Company also experienced a decrease in interest income on net loans of $1.3 million due to lower rates.

Total interest expense decreased $1.8 million for the quarter ended September 30, 2011, as compared to the same quarter last year. The change was due primarily to a reduction of $1.6 million in interest paid on deposits. The overall decrease in interest expense was attributable to a shift in deposit balances from certificates of deposit to relatively lower cost non-time deposits.

Net interest income for the nine months ended September 30, 2011, was $50.3 million, compared to $54.5 million for the nine months ended September 30, 2010. Total interest income decreased $11.3 million in the first nine months of 2011 compared to the first nine months of 2010. The Bank recognized $9.4 million less in interest on net loans because of a $231.5 million reduction in the average balance of outstanding loans. The Company also experienced a decrease in interest income on net loans of $2.5 million due to lower rates.

Total interest expense decreased $7.2 million for the nine months ended September 30, 2011, as compared to the same period last year. This change was due primarily to reductions of $6.9 million in interest paid on deposits.

Noninterest Income

Noninterest income decreased in the third quarter of 2011 to $1.9 million, as compared to $4.1 million in the third quarter of 2010. Affecting this comparison was the recognition of lower service fees due to the establishment of a valuation allowance of $1.3 million for mortgage servicing rights during the third quarter of 2011. The third quarter of 2011 also reflected $2.6 million in losses and valuation adjustments recognized on certain real estate owned properties, including $1.5 million in valuation adjustments for three specific properties. These declines in income were offset partially by a $1.2 million increase in gains recognized on the sale of available for sale securities.

Noninterest income decreased in the first nine months of 2011 to $11.2 million, as compared to the first nine months of 2010 of $15.4 million. Driving the decrease in noninterest income was the recognition of lower gains on the sale of fewer available for sale securities and the gain recognized on the sale of Home Savings’ Findlay, Ohio branch in 2010. Partially offsetting these declines was an increase in mortgage banking income due to the $2.7 million gain recognized on the bulk mortgage loan sale, which was completed in the second quarter of 2011.

Noninterest Expense

Noninterest expense was $14.6 million in the third quarter of 2011, compared to $15.7 million in the third quarter of 2010. The decrease in noninterest expense was driven by lower deposit insurance premiums. Regulatory changes resulting from the enactment of the Dodd-Frank Act revised the method for calculating deposit insurance premiums and caused those expenses to decline. Also positively affecting the comparison, United Community recognized fewer expenses associated with the maintenance of real estate owned and other repossessed assets during the third quarter of 2011, as compared to the same quarter last year. Finally, lower expenses related to nonperforming loans having negative escrow balances were recognized during the period.

Noninterest expense was $47.0 million in the first nine months of 2011, compared to $50.0 million in the first nine months of 2010. Lower salaries and benefits paid to employees drove the decrease in noninterest expense. This decrease was driven primarily by the Employee Stock Ownership Plan’s repayment in 2010 of the loan made by the Company to the ESOP.

Capital and Book Value

Home Savings’ Tier 1 leverage ratio was 8.13% as of September 30, 2011, compared to 8.40% at June 30, 2011. The Company’s total risk-based capital ratio was 13.25% at September 30, 2011, as compared to 13.47% at June 30, 2011. Tangible book value per share at September 30, 2011 was $5.88, down from $5.90 at June 30, 2011.

Home Savings is a wholly-owned subsidiary of the Company and operates 38 full-service banking offices and seven loan production offices located throughout Ohio and western Pennsylvania. Additional information on the Company and Home Savings may be found on the Company’s web site: www.ucfconline.com.

###

When used in this press release, the words or phrases “believes,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)


	September 30,			December 31,
	2011			2010
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	21,355		$	18,627
Federal funds sold and other		27,803			18,480

Total cash and cash equivalents		49,158			37,107
Securities:
Available for sale, at fair value		416,460			362,042
Loans held for sale		38,366			10,870
Loans, net of allowance for loan losses of $44,162 and $50,883, respectively		1,437,575			1,649,486
Federal Home Loan Bank stock, at cost		26,464			26,464
Premises and equipment, net		19,213			22,076
Accrued interest receivable		7,016			7,720
Real estate owned and other repossessed assets		38,316			40,336
Core deposit intangible		379			485
Cash surrender value of life insurance		28,089			27,303
Other assets		9,965			13,409

Total assets	$	2,071,001		$	2,197,298


Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,535,365		$	1,551,210
Non-interest bearing		152,576			138,571

Total deposits		1,687,941			1,689,781
Borrowed funds:
Federal Home Loan Bank advances		88,324			202,818
Repurchase agreements and other		90,623			97,797

Total borrowed funds		178,947			300,615
Advance payments by borrowers for taxes and insurance		13,202			20,668
Accrued interest payable		793			809
Accrued expenses and other liabilities		7,421			9,370

Total liabilities		1,888,304			2,021,243


Shareholders’ Equity:
Preferred stock-no par value; 1,000,000 shares authorized and unissued		—			—
Common stock-no par value; 499,000,000 shares authorized; 37,804,457 shares issued and 30,968,960 and 30,937,704 shares, respectively, outstanding		142,694			142,318
Retained earnings		102,903			111,049
Accumulated other comprehensive income (loss)		9,141			(4,778	)
Treasury stock, at cost, 6,820,113 and 6,866,753 shares, respectively		(72,041	)		(72,534	)

Total shareholders’ equity		182,697			176,055

Total liabilities and shareholders’ equity	$	2,071,001		$	2,197,298

UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(Dollars in thousands, except per share data)
Interest income
Loans	$	19,558		$	24,589		$	63,489		$	75,350
Loans held for sale		163			109			270			248
Securities:
Available for sale		3,323			3,235			9,264			8,716
Federal Home Loan Bank stock dividends		264			297			858			891
Other interest earning assets		13			10			35			25

Total interest income		23,321			28,240			73,916			85,230
Interest expense
Deposits		5,972			7,528			18,384			25,254
Federal Home Loan Bank advances		793			984			2,414			2,707
Repurchase agreements and other		931			942			2,781			2,796

Total interest expense		7,696			9,454			23,579			30,757

Net interest income		15,625			18,786			50,337			54,473
Provision for loan losses		11,836			17,116			22,272			39,876

Net interest income after provision for loan losses		3,789			1,670			28,065			14,597

Non-interest income
Non-deposit investment income		388			388			1,050			1,300
Service fees and other charges		203			1,563			3,244			3,738
Net gains (losses):
Securities available for sale		1,958			781			3,500			7,295
Other -than-temporary loss on equity securities
Total impairment loss		(35	)		(44	)		(73	)		(44	)
Loss recognized in other comprehensive income		—			—			—			—

Net impairment loss recognized in earnings		(35	)		(44	)		(73	)		(44	)
Mortgage banking income		682			1,419			4,432			2,456
Real estate owned and other repossessed assets		(2,627	)		(1,273	)		(4,981	)		(4,512	)
Gain on retail branch sale		—			—			—			1,387
Other income		1,347			1,281			4,032			3,800

Total non-interest income		1,916			4,115			11,204			15,420

Non-interest expense
Salaries and employee benefits		7,927			7,568			23,297			24,847
Occupancy		854			850			2,615			2,693
Equipment and data processing		1,592			1,562			4,910			4,949
Franchise tax		370			498			1,241			1,512
Advertising		204			205			466			574
Amortization of core deposit intangible		33			43			106			136
Deposit insurance premiums		1,111			1,391			3,573			4,311
Professional fees		1,290			948			2,545			2,921
Real estate owned and other repossessed asset expenses		361			1,027			2,125			2,658
Other expenses		827			1,608			6,089			5,358

Total non-interest expenses		14,569			15,700			46,967			49,959

Income (loss) before income taxes		(8,864	)		(9,915	)		(7,698	)		(19,942	)
Income tax expense (benefit)		—			—			—			—

Net income (loss)	$	(8,864	)	$	(9,915	)	$	(7,698	)	$	(19,942	)


Earnings (loss) per share
Basic	$	(0.29	)	$	(0.32	)		(0.25	)		(0.66	)
Diluted		(0.29	)		(0.32	)		(0.25	)		(0.66	)

UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)


	At or for the quarters ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2011			2011			2011			2010			2010
	(In thousands, except per share data)
Financial Data
Total assets	$	2,071,001		$	2,102,419		$	2,115,080		$	2,197,298		$	2,317,948
Total loans, net		1,437,575			1,509,399			1,620,094			1,649,486			1,726,381
Total securities		416,460			392,749			289,388			362,042			390,636
Total deposits		1,687,941			1,697,797			1,712,523			1,689,781			1,685,033
Total shareholders’ equity		182,697			183,142			177,371			176,055			201,333
Net interest income		15,625			17,058			17,654			16,888			18,786
Provision for loan losses		11,836			8,244			2,192			22,551			17,116
Noninterest income, excluding other-than-temporary impairment losses		1,951			5,328			3,998			6,487			4,159
Net impairment losses recognized in earnings		35			28			10			14			44
Noninterest expense		14,569			15,910			16,488			18,372			15,700
Income tax expense (benefit)		—			—			—			(231	)		—
Net income (loss)		(8,864	)		(1,796	)		2,962			(17,331	)		(9,915	)

Share Data
Basic earnings (loss) per share	$	(0.29	)	$	(0.06	)	$	0.10		$	(0.56	)	$	(0.32	)
Diluted earnings (loss) per share		(0.29	)		(0.06	)		0.10			(0.56	)		(0.32	)
Book value per share		5.90			5.91			5.73			5.69			6.51
Tangible book value per share		5.88			5.90			5.72			5.67			6.49
Market value per share		1.35			1.27			1.33			1.34			1.33

Shares outstanding at end of period		30,984			30,969			30,951			30,938			30,925
Weighted average shares outstanding—basic		30,953			30,932			30,917			30,906			30,899
Weighted average shares outstanding—diluted		30,953			30,932			30,919			30,906			30,899

Key Ratios
Return on average assets		-1.69	%		-0.34	%		0.55	%		-3.06	%		-1.70	%
Return on average equity		-18.98	%		-3.95	%		6.56	%		-33.91	%		-18.41	%
Net interest margin		3.18	%		3.39	%		3.49	%		3.17	%		3.42	%
Efficiency ratio		79.67	%		67.49	%		77.12	%		78.08	%		66.80	%

Capital Ratios
Tier 1 leverage ratio		8.13	%		8.40	%		8.44	%		7.84	%		8.23	%
Tier 1 risk-based capital ratio		11.98	%		12.20	%		11.74	%		11.26	%		11.85	%
Total risk-based capital ratio		13.25	%		13.47	%		13.02	%		12.54	%		13.12	%
Equity to assets		8.82	%		8.71	%		8.39	%		8.01	%		8.69	%
Tangible common equity to tangible assets		8.80	%		8.69	%		8.37	%		7.99	%		8.67	%

UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)


	At or for the quarters ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2011			2011			2011			2010			2010
	(Dollars in thousands)
Loan Portfolio Composition
Real Estate Loans
One-to four-family residential	$	677,708		$	693,435		$	762,065		$	757,426		$	778,005
Multi-family residential*		125,370			129,767			131,246			135,771			136,681
Nonresidential*		303,165			307,702			328,772			331,390			355,914
Land*		22,172			25,515			25,624			25,138			25,413
Construction Loans
One-to four-family residential and land development		66,761			87,827			88,075			108,583			117,297
Multi-family and nonresidential*		4,528			5,524			11,201			15,077			14,537

Total real estate loans		1,199,704			1,249,770			1,346,983			1,373,385			1,427,847
Consumer Loans		245,367			266,075			272,478			279,453			289,296
Commercial Loans		35,277			38,354			45,772			46,304			48,902

Total Loans		1,480,348			1,554,199			1,665,233			1,699,142			1,766,045
Less:
Allowance for loan losses		44,162			46,223			46,415			50,883			40,884
Deferred loan costs, net		(1,389	)		(1,423	)		(1,276	)		(1,227	)		(1,220	)

Total		42,773			44,800			45,139			49,656			39,664

Loans, net	$	1,437,575		$	1,509,399		$	1,620,094		$	1,649,486		$	1,726,381


*		Such categories are considered commercial real estate


	At or for the quarters ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2011			2011			2011			2010			2010
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	120,115		$	112,412		$	110,711		$	110,092		$	103,204
Non-interest bearing checking accounts		152,577			138,752			144,362			138,571			128,702

Total checking accounts		272,692			251,164			255,073			248,663			231,906
Savings accounts		249,426			245,838			234,295			218,946			214,197
Money market accounts		327,751			322,955			318,395			311,692			310,884

Total non-time deposits		849,869			819,957			807,763			779,301			756,987
Retail certificates of deposit		838,073			877,840			904,760			910,480			928,046

Total certificates of deposit		838,073			877,840			904,760			910,480			928,046

Total deposits	$	1,687,942		$	1,697,797		$	1,712,523		$	1,689,781		$	1,685,033

Certificates of deposit as a percent of total deposits		49.65	%		51.70	%		52.83	%		53.88	%		55.08	%

UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)


	At or for the quarters ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2011			2011			2011			2010			2010
	(Dollars in thousands)

Allowance For Loan Losses
Beginning balance	$	46,223		$	46,415		$	50,883		$	40,884		$	—
Provision		11,836			8,244			2,192			22,551			17,116
Net chargeoffs		(13,897	)		(8,436	)		(6,660	)		(12,552	)		(16,960	)

Ending balance	$	44,162		$	46,223		$	46,415		$	50,883		$	156


Net Charge-offs
Real Estate Loans
One-to four-family	$	1,380		$	501		$	924		$	1,483		$	1,834
Multi-family		14			1,451			163			1,819			160
Nonresidential		3,693			1,873			1,038			6,923			7,041
Land		281			233			504			284			11
Construction Loans
One-to four-family residential and land development		6,737			1,159			2,295			669			6,595
Multi-family and nonresidential		—			101			—			(1	)		—

Total real estate loans		12,105			5,318			4,924			11,177			15,641
Consumer Loans		864			642			856			639			905
Commercial Loans		928			2,476			880			736			414

Total	$	13,897		$	8,436		$	6,660		$	12,552		$	16,960


	At or for the quarters ended
	September 30,		June 30,		March 31,		December 31,		September 30,
	2011		2011		2011		2010		2010
	(Dollars in thousands)
Nonperforming Loans
Real Estate Loans
One-to four family residential	$	27,250	$	28,776	$	29,062	$	27,417	$	27,505
Multi-family residential		6,517		6,414		8,239		10,983		12,443
Nonresidential		44,243		36,382		37,353		39,838		44,561
Land		11,655		8,316		6,722		5,188		5,943
Construction Loans
One-to four-family residential and land development		31,166		43,389		46,139		44,021		40,000
Multi-family and nonresidential		—		382		382		2,414		2,414

Total real estate loans		120,831		123,659		127,897		129,861		132,866
Consumer Loans		5,890		5,781		4,224		3,725		3,543
Commercial Loans		7,361		9,650		13,735		5,945		6,304

Total Loans	$	134,082	$	139,090	$	145,856	$	139,531	$	142,713


Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	102,890	$	122,856	$	112,705	$	117,499	$	126,062
Past due 90 days and still accruing		3		1,121		2,868		6,330		4,253

Past due 90 days		102,893		123,977		115,573		123,829		130,315
Past due less than 90 days and on nonaccrual		31,189		15,112		30,283		15,702		12,398

Total Nonperforming Loans		134,082		139,089		145,856		139,531		142,713
Other Real Estate Owned		37,697		43,009		42,386		39,914		39,963
Repossessed Assets		619		676		487		422		334

Total Nonperforming Assets	$	172,398	$	182,774	$	188,729	$	179,867	$	183,010


Total Troubled Debt Restructured Loans
Accruing	$	30,784	$	30,546	$	30,129	$	33,331	$	13,254
Non-accruing		16,932		28,066		24,420		11,240		14,934

Total	$	47,716	$	58,612	$	54,549	$	44,571	$	28,188

United Community Financial (UCFC) 8-KUnited Community Financial Corp. Announces Third Quarter Results; Asset Quality Indicators Continue to Improve