United Community Financial (UCFC) 8-K Results of Operations and Financial Condition

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 First Quarter Income of $3.8 million;

Asset Quality Continues to Improve

YOUNGSTOWN, Ohio (May 8, 2012) – United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), today reported consolidated net income of $3.8 million, or $0.12 per diluted share, for the three months ended March 31, 2012. This represents the second consecutive quarter of profitability for the Company.

Selected first quarter results:

• Delinquent loans declined $21.2 million from the prior quarter

• Nonperforming loans declined $13.2 million from the prior quarter

• Nonperforming assets declined $17.6 million from the prior quarter

• Home Savings’ Tier 1 leverage ratio of 8.96% and the total risk based capital ratio of 15.21% both reflected increases from the prior quarter

Patrick W. Bevack, President and Chief Executive Officer of UCFC and Home Savings, commented that, “The Company has started 2012 with positive news. Net income of $3.8 million and continued improvement in asset quality reflects the progress the Company has made over the past few years. The results of the first quarter further emphasize that the hard work and dedication of management, employees and directors is truly paying off.” Bevack continued, “We recognize there is still more work to be done. We continue to move forward with our capital raising plan and achieving compliance with the recently agreed-to Consent Order.”

1

Asset Quality

Delinquent loans declined to $105.7 million at March 31, 2012, down $89.5 million, or 45.9%, from their high point of $195.2 million at March 31, 2010. Nonperforming loans at March 31, 2012 fell to $110.0 million, down $45.2 million, or 29.1%, from their high point of $155.1 million at June 30, 2010. Nonperforming assets dropped to $139.0 million at March 31, 2012, down $58.2 million, or 29.5%, from their high point of $197.2 million at June 30, 2010.

The provision for loan losses was $680,000 for the first quarter of 2012, as compared to $2.4 million for the fourth quarter in 2011. This $1.7 million decrease in the provision for loan losses was caused in part by a decrease in the volume of outstanding loans.

Net Interest Income and Margin

Net interest income for the three months ended March 31, 2012 was $15.9 million compared to $14.8 million for the three months ended December 31, 2011.

Total interest income decreased $909,000 in the first quarter of 2012 compared to the fourth quarter of 2011. The change is the result of a decrease of $56.4 million in the average balance of outstanding loans.

Total interest expense decreased $2.0 million for the quarter ended March 31, 2012, as compared to the quarter ended December 31, 2011. The change was attributable to a shift in deposit balances from certificates of deposit to relatively less expensive non-time deposits. The overall shift was the result of the maturity of the Company’s higher rate Step CDs. Primarily in the third quarter of 2008, Home Savings offered a 42-month time deposit product (Step CDs) to its customers in order to maintain adequate levels of liquidity as Home Savings entered into the Cease and Desist Order with regulators. While the Step CDs offered a blended rate over the 42-month term consistent with other 42-month certificates of deposit being offered in Home Savings’ market at that time, the interest rate paid on Step CDs increased in regular intervals over the life of the deposit, such that in the final six months of the deposit prior to maturity, the rate paid was 6.50%. In the first quarter of 2012, substantially all of the approximately $140.0 million Step CD’s matured.

As a result of the activity discussed above, the average net interest margin was 3.30% for the first quarter of 2012 compared with 3.04% for the fourth quarter of 2011.

2

Noninterest Income

Noninterest income decreased in the first quarter of 2012 to $5.1 million, as compared to $12.0 million in the fourth quarter of 2011. The decrease in noninterest income was largely driven by two gains that were reflected in the fourth quarter of 2011: a gain of $5.1 million recognized on the sale of available for sale securities, and a gain of $4.2 million recognized on the sale of four branches. These decreases were offset by an increase in service fees and other charges, which reflected the benefit of a reduction in the valuation allowance on deferred mortgage servicing rights of $948,000.

Noninterest Expense

Noninterest expense was $16.5 million in both the first quarter of 2012 and the fourth quarter of 2011. The first quarter of 2012 experienced an increase in salaries and benefits that was offset by savings in advertising and professional fees. All other noninterest expense categories remained essentially flat quarter over quarter.

Capital and Book Value

Home Savings’ Tier 1 leverage ratio was 8.96% as of March 31, 2012, as compared to 8.61% at December 31, 2011. The Bank’s total risk-based capital ratio was 15.21% at March 31, 2012, as compared to 14.57% at December 31, 2011. Tangible book value per share at March 31, 2012 was $5.77, as compared to $5.78 at December 31, 2011.

Home Savings is a wholly-owned subsidiary of the Company and operates 34 full-service banking offices and eight 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.

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UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	March 31,			December 31,
	2012			2011
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	24,557		$	26,573
Federal funds sold and other		20,361			27,563
Total cash and cash equivalents		44,918			54,136
Securities:
Available for sale, at fair value		530,283			459,598
Loans held for sale		17,504			12,727
Loans, net of allowance for loan losses of $34,523 and $42,271, respectively		1,325,101			1,379,276
Federal Home Loan Bank stock, at cost		26,464			26,464
Premises and equipment, net		20,845			19,175
Accrued interest receivable		6,622			6,741
Real estate owned and other repossessed assets		29,057			33,486
Core deposit intangible		317			346
Cash surrender value of life insurance		28,603			28,354
Other assets		12,250			10,384
Total assets	$	2,041,964		$	2,030,687
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,407,704		$	1,440,448
Noninterest bearing		164,155			148,049
Total deposits		1,571,859			1,588,497
Borrowed funds:
Federal Home Loan Bank advances		164,116			128,155
Repurchase agreements and other		90,613			90,618
Total borrowed funds		254,729			218,773
Advance payments by borrowers for taxes and insurance		14,767			23,282
Accrued interest payable		688			610
Accrued expenses and other liabilities		9,907			10,780
Total liabilities		1,851,950			1,841,942
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 32,876,453 and 32,597,762 shares, respectively, outstanding		128,026			128,031
Retained earnings		111,727			110,681
Accumulated other comprehensive income (loss)		2,149			5,032
Treasury stock, at cost, 4,928,004 and 5,206,695 shares, respectively		(51,888	)		(54,999	)
Total shareholders’ equity		190,014			188,745
Total liabilities and shareholders’ equity	$	2,041,964		$	2,030,687

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UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)

	For the Three Months Ended
	March 31,			December 31,			March 31,
	2012			2011			2011
	(Dollars in thousands, except per share data)
Interest income
Loans	$	17,656		$	18,801		$	22,510
Loans held for sale		100			272			66
Securities:
Available for sale		3,494			3,102			2,847
Federal Home Loan Bank stock dividends		300			267			300
Other interest earning assets		12			29			9
Total interest income		21,562			22,471			25,732
Interest expense
Deposits		4,032			5,957			6,331
Federal Home Loan Bank advances		732			748			825
Repurchase agreements and other		919			928			922
Total interest expense		5,683			7,633			8,078
Net interest income		15,879			14,838			17,654
Provision for loan losses		680			2,386			2,192
Net interest income after provision for loan losses		15,199			12,452			15,462
Non-interest income
Non-deposit investment income		541			348			354
Service fees and other charges		2,317			1,172			1,453
Net gains (losses):
Securities available for sale		414			5,133			1,313
Other -than-temporary loss on equity securities
Total impairment loss		—			(16	)		(10	)
Loss recognized in other comprehensive income		—			—			—
Net impairment loss recognized in earnings		—			(16	)		(10	)
Mortgage banking income		1,471			1,243			622
Real estate owned and other repossessed assets		(729	)		(1,184	)		(992	)
Gain on retail branch sale		—			4,154			—
Other income		1,077			1,171			1,248
Total non-interest income		5,091			12,021			3,988
Non-interest expense
Salaries and employee benefits		8,333			7,863			7,684
Occupancy		799			794			905
Equipment and data processing		1,689			1,680			1,694
Franchise tax		438			254			469
Advertising		141			354			121
Amortization of core deposit intangible		29			33			37
Deposit insurance premiums		1,109			1,282			1,405
Professional fees		880			1,132			962
Real estate owned and other repossessed asset expenses		702			766			873
Other expenses		2,374			2,387			2,338
Total non-interest expenses		16,494			16,545			16,488
Income before income taxes		3,796			7,928			2,962
Income tax expense		—			—			—
Net income	$	3,796		$	7,928		$	2,962
Earnings per share
Basic	$	0.12		$	0.25		$	0.10
Diluted		0.12			0.25			0.10

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UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011			March 31, 2011
	(In thousands, except per share data)
Financial Data
Total assets	$	2,041,964		$	2,030,687		$	2,071,001		$	2,102,419		$	2,115,080
Total loans, net		1,325,101			1,379,276			1,437,575			1,509,399			1,620,094
Total securities		530,283			459,598			416,460			392,749			289,388
Total deposits		1,571,859			1,588,497			1,687,941			1,697,797			1,712,523
Total shareholders’ equity		190,014			188,745			182,697			183,142			177,371
Net interest income		15,879			14,838			15,625			17,058			17,654
Provision for loan losses		680			2,386			11,836			8,244			2,192
Noninterest income, excluding other-than-temporary impairment losses		5,091			12,037			1,951			5,328			3,998
Net impairment losses recognized in earnings		—			16			35			28			10
Noninterest expense		16,494			16,545			14,569			15,910			16,488
Income tax expense (benefit)		—			—			—			—			—
Net income (loss)		3,796			7,928			(8,864	)		(1,796	)		2,962
Share Data
Basic earnings (loss) per share	$	0.12		$	0.25		$	(0.29	)	$	(0.06	)	$	0.10
Diluted earnings (loss) per share		0.12			0.25			(0.29	)		(0.06	)		0.10
Book value per share		5.78			5.79			5.90			5.91			5.73
Tangible book value per share		5.77			5.78			5.88			5.90			5.72
Market value per share		2.44			1.27			1.35			1.27			1.33
Shares outstanding at end of period		32,876			32,598			30,984			30,969			30,951
Weighted average shares outstanding—basic		32,693			31,295			30,953			30,932			30,890
Weighted average shares outstanding—diluted		23,697			31,295			30,953			30,932			30,892
Key Ratios
Return on average assets		0.74	%		1.53	%		-1.69	%		-0.34	%		0.55	%
Return on average equity		7.89	%		16.97	%		-18.98	%		-3.95	%		6.56	%
Net interest margin		3.30	%		3.04	%		3.18	%		3.39	%		3.50	%
Efficiency ratio		77.35	%		87.96	%		79.67	%		67.49	%		77.12	%
Capital Ratios
Tier 1 leverage ratio		8.96	%		8.61	%		8.13	%		8.40	%		8.44	%
Tier 1 risk-based capital ratio		13.94	%		13.30	%		11.98	%		12.20	%		11.75	%
Total risk-based capital ratio		15.21	%		14.57	%		13.25	%		13.47	%		13.02	%
Equity to assets		9.31	%		9.29	%		8.82	%		8.71	%		8.39	%
Tangible common equity to tangible assets		9.29	%		9.28	%		8.80	%		8.69	%		8.37	%

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UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011			March 31, 2011
	(Dollars in thousands)
Loan Portfolio Composition
Real Estate Loans
One-to four-family residential	$	649,000		$	667,375		$	677,708		$	693,435		$	762,065
Multi-family residential*		114,493			120,991			125,370			129,767			131,246
Nonresidential*		263,891			276,198			303,165			307,702			328,772
Land*		19,735			23,222			22,172			25,515			25,624
Construction Loans
One-to four-family residential and land development		49,311			59,339			66,761			87,827			88,075
Multi-family and nonresidential*		4,527			4,528			4,528			5,524			11,201
Total real estate loans		1,100,957			1,151,653			1,199,704			1,249,770			1,346,983
Consumer Loans		231,008			238,397			245,367			266,075			272,478
Commercial Loans		26,434			30,146			35,277			38,354			45,772
Total Loans		1,358,399			1,420,196			1,480,348			1,554,199			1,665,233
Less:
Allowance for loan losses		34,523			42,271			44,162			46,223			46,415
Deferred loan costs, net		(1,225	)		(1,351	)		(1,389	)		(1,423	)		(1,276	)
Total		33,298			40,920			42,773			44,800			45,139
Loans, net	$	1,325,101		$	1,379,276		$	1,437,575		$	1,509,399		$	1,620,094
*  Categories are considered commercial real estate
	At or for the quarters ended
	March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011			March 31, 2011
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	129,795		$	119,298		$	120,115		$	112,412		$	110,711
Non-interest bearing checking accounts		164,155			148,049			152,577			138,752			144,362
Total checking accounts		293,950			267,347			272,692			251,164			255,073
Savings accounts		256,628			234,828			249,426			245,838			234,295
Money market accounts		339,824			314,907			327,751			322,955			318,395
Total non-time deposits		890,402			817,082			849,869			819,957			807,763
Retail certificates of deposit		681,457			771,415			838,073			877,840			904,760
Total certificates of deposit		681,457			771,415			838,073			877,840			904,760
Total deposits	$	1,571,859		$	1,588,497		$	1,687,942		$	1,697,797		$	1,712,523
Certificates of deposit as a percent of total deposits		43.35	%		48.56	%		49.65	%		51.70	%		52.83	%

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UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011			March 31, 2011
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	42,271		$	44,162		$	46,223		$	46,415		$	50,883
Provision		680			2,386			11,836			8,244			2,192
Net chargeoffs		(8,428	)		(4,277	)		(13,897	)		(8,436	)		(6,660	)
Ending balance	$	34,523		$	42,271		$	44,162		$	46,223		$	46,415
Net Charge-offs
Real Estate Loans
One-to four-family	$	762		$	366		$	1,380		$	501		$	924
Multi-family		68			203			14			1,451			163
Nonresidential		2,579			975			3,693			1,873			1,038
Land		1,776			217			281			233			504
Construction Loans
One-to four-family residential and land development		2,098			1,874			6,737			1,159			2,295
Multi-family and nonresidential		—			—			—			101			—
Total real estate loans		7,283			3,635			12,105			5,318			4,924
Consumer Loans		745			493			864			642			856
Commercial Loans		400			149			928			2,476			880
Total	$	8,428		$	4,277		$	13,897		$	8,436		$	6,660
	At or for the quarters ended
	March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011			March 31, 2011
	(Dollars in thousands)
Nonperforming Loans
Real Estate Loans
One-to four family residential	$	23,721		$	26,637		$	27,250		$	28,776		$	29,062
Multi-family residential		5,411			5,860			6,517			6,414			8,239
Nonresidential		41,871			42,902			44,243			36,382			37,353
Land		8,472			11,142			11,655			8,316			6,722
Construction Loans
One-to four-family residential and land development		22,455			27,104			31,166			43,389			46,139
Multi-family and nonresidential		—			—			—			382			382
Total real estate loans		101,930			113,645			120,831			123,659			127,897
Consumer Loans		6,165			6,620			5,890			5,781			4,224
Commercial Loans		1,813			2,830			7,361			9,650			13,735
Total Loans	$	109,908		$	123,095		$	134,082		$	139,090		$	145,856
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	91,153		$	104,812		$	102,890		$	122,856		$	112,705
Past due 90 days and still accruing		303			39			3			1,121			2,868
Past due 90 days		91,456			104,851			102,893			123,977			115,573
Past due less than 90 days and on nonaccrual		18,452			18,244			31,189			15,112			30,283
Total Nonperforming Loans		109,908			123,095			134,082			139,089			145,856
Other Real Estate Owned		28,517			32,946			37,697			43,009			42,386
Repossessed Assets		540			540			619			676			487
Total Nonperforming Assets	$	138,965		$	156,581		$	172,398		$	182,774		$	188,729
Total Troubled Debt Restructured Loans
Accruing	$	35,657		$	33,146		$	30,784		$	30,546		$	30,129
Non-accruing		15,161			17,752			16,932			28,066			24,420
Total	$	50,818		$	50,898		$	47,716		$	58,612		$	54,549

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