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	Gary M. Small
Vice President of Marketing	President and Chief Executive Officer
Home Savings	United Community Financial Corp.
(330) 742-0638	(330) 742-9823
cscott@homesavings.com

United Community Financial Corp. Announces

Profitable First Quarter 2014

YOUNGSTOWN, Ohio (April 24, 2014) – 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 $2.1 million for the three months ended March 31, 2014.

Selected results:

• Net loans increased $31.7 million from the prior quarter, or 3.0%

• Net income for first quarter of 2014 was $2.1 million compared to a net income of $2.2 million for the prior quarter and $2.7 million for the same quarter last year

• Noninterest expense for the first quarter of 2014 was $13.5 million, down 9.6% from the previous quarter and down 2.3% from the first quarter of 2013

• Credit quality continues to improve as nonperforming loans, nonperforming assets and delinquent loans decreased during the first quarter of 2014

• Home Savings’ continues to be well capitalized. At quarter end, the Tier 1 leverage ratio was 10.71% and the total risk based capital ratio was 19.68%

Gary M. Small, President and Chief Executive Officer of the Company and Home Savings, commented, “We are very pleased to deliver first quarter loan growth of $31 million, up 3%, with meaningful growth in both the residential mortgage and commercial and industrial loan categories. Credit quality remains strong and our cost of funds has improved 9 basis points as compared to the first quarter of 2013. These achievements are in keeping with 2014 objectives to grow and diversify our loan portfolio and improve operating efficiencies.”

1

Net Interest Income

Net interest income for the three months ended March 31, 2014 and 2013 was $12.6 million and $12.9 million, respectively. Net interest margin for the three months ended March 31, 2014 and 2013 was 3.07% and 3.01%, respectively.

Total interest income decreased $731,000 in the first quarter of 2014 compared to the first quarter of 2013, primarily as a result of a decrease of $5.4 million in the average balance of outstanding loans as well as a decrease in the yield on net loans of 17 basis points. Further impacting the comparison, the Company also recognized a decrease in the average balance of available for sale securities of $86.2 million in the first quarter of 2014 as compared to the same quarter last year, despite an increase in the yield on those assets of 23 basis points.

Total interest expense decreased $416,000 for the quarter ended March 31, 2014, as compared to the same quarter last year. The change was due primarily to reductions of $410,000 in interest paid on deposits. The overall decrease in interest expense was partially attributable to a 9.3% growth in noninterest bearing deposits. Also contributing to the decrease between the two quarterly periods was a reduction of 8 basis points in the cost of certificates of deposit. The average outstanding balance of certificates of deposit in the first quarter of 2014 declined by $69.0 million as compared to the first quarter of 2013. Furthermore, the average balance of non-time deposits decreased $10.6 million and the cost of non-time deposits decreased 5 basis points.

Net interest income for the three months ended March 31, 2014 and December 31, 2013 was $12.6 million and $13.1 million, respectively. Net interest margin for the three months ended March 31, 2014 and December 31, 2013 was 3.07% and 3.17%, respectively.

Total interest income decreased $607,000 in first quarter of 2014 compared to the fourth quarter of 2013, primarily as a result of a decrease in the yield on net loans of 34 basis points offset by an increase of $26.9 million in the average balance of outstanding loans. Further affecting the comparison, the Company also recognized a decrease in the average balance of available for sale securities of $7.7 million in the first quarter of 2014 as compared to the prior quarter despite a minimal increase in the yield on available for sale securities of one basis point.

Total interest expense decreased $135,000 for the three months ended March 31, 2014, as compared to the quarter ended December 31, 2013. The change was due primarily to reductions of $103,000 in interest paid on deposits. The overall decrease in deposit interest expense was attributable to a shift in deposit balances from certificates of deposit to less expensive non-time deposits. Between December 31, 2013, and March 31, 2014, the average outstanding balance of certificates of deposit declined by $24.1 million, while non-time deposits increased by $5.7 million. Also contributing to the decrease in interest expense was a reduction of three basis points in the cost of certificates of deposit.

Asset Quality

Delinquent loans continued to decline in the first quarter of 2014. As of March 31, 2014, delinquent loans were $22.0 million, down $1.8 million, or 7.7%, from $23.8 million at December 31, 2013. Nonperforming loans also continued to decline; as of March 31, 2014, nonperforming loans were $23.0 million, down $605,000, or 2.6%, from $23.6 million at December 31, 2013. Nonperforming assets were $27.7 million as of March 31, 2014, down $2.2 million, or 7.5%, from $29.9 million at December 31, 2013.

2

The provision for loan losses decreased to $33,000 in the first quarter of 2014, compared to $2.1 million in the first quarter of 2013, and $282,000 in the preceding quarter reflecting the continual improvement in asset quality.

The Company continued to make significant progress in the resolution of foreclosed properties in the first quarter of 2014. At March 31, 2014, other real estate owned and other repossessed assets consisted of properties with a net book value of $4.7 million, a decrease of $1.6 million from the prior quarter.

Noninterest Income

Noninterest income in the first quarter of 2014 was $3.2 million, as compared to noninterest income for the first quarter of 2013 of $5.7 million. The decrease in noninterest income was driven by decreases in investment advisory income, mortgage banking income, gains on the sale of available for sale securities and other income. The decrease in investment advisory income was the result of lower sales volume in the current quarter, as compared to the same quarter last year. A $50.5 million reduction in mortgage originations sold resulted in a $1.0 million decline in mortgage banking income. The change in gains recognized on the sale of available for sale securities was the result of sales made in the first quarter of 2013 that did not reoccur in the first quarter of 2014. The change in other income was the result of lower net rental income received on real estate owned in the current quarter, compared to the same quarter last year. Also, Home Savings recognized a recovery of $138,000 on interest rate caps in the first quarter of 2013.

When comparing the current quarter to the prior quarter, noninterest income decreased $900,000. Deposit related fee income, mortgage banking income, and losses on the valuation and disposal of other real estate owned (“OREO”) accounted for the change. The change in deposit related fees can be attributed to a decline in NSF and overdraft service charges. A $238,000 reduction in mortgage banking income was due to a decline in volume of $9.6 million in mortgages being sold. In addition a $209,000 OREO valuation reserve was established in the first quarter.

Noninterest Expense

Noninterest expense was $13.5 million in the first quarter of 2014, compared to $13.9 million in the first quarter of 2013; a difference of $321,000. In the first quarter of 2014, other expenses decreased primarily because of lower expenses incurred on loans sold in the secondary market. Reduced FDIC premiums of $301,000 and franchise/financial institutions tax expenses of $233,000 also contributed to the change. These reductions were offset by an increase of $707,000 in salaries and employee benefits, due primarily to annual wage and benefit increases, incentive accruals, and lower deferred salary expenses related to loan origination.

Compared to the prior quarter, noninterest expense in the first quarter of 2014decreased $1.4 million. Compared to the prior quarter, other expenses decreased because of lower expenses incurred on loans sold in the secondary market. Reduced FDIC insurance premiums of $339,000 and franchise/financial institutions tax expense of $153,000 also contributed to the positive variance. Professional fees were $320,000 lower during the three months ended March 31, 2014 as compared to the prior quarter. These reductions were offset by an increase of $729,000 in salaries and employee benefits, substantially due to annual wage and benefit increases and lower deferred salary expenses related to loan originations.

3

Capital and Book Value per Common Share

Home Savings’ Tier 1 leverage ratio was 10.71% as of March 31, 2014, as compared to 10.50% as of December 31, 2013. Home Savings’ total risk-based capital ratio was 19.68% at March 31, 2014, as compared to 19.76% at December 31, 2013. Home Savings is considered well capitalized. Tangible book value per common share at March 31, 2014 was $3.76, as compared to $3.47 at December 31, 2013.

As of March 31, 2014, the net deferred tax asset (DTA), before valuation allowance, was $37.3 million compared to $42.8 million at December 31, 2013. The primary cause of the change in the net DTA at March 31, 2014 was the tax effect of the redemption of stock by the Federal Home Loan Bank in March. The Company has established a full valuation allowance against the entire net DTA. Management will continue to conduct a regular assessment of the need to maintain a full valuation allowance against its deferred tax asset. To that end, management will continue to apply its judgment in weighing positive and negative evidence in anticipation of the ultimate reversal of the deferred tax asset valuation allowance.

Home Savings is a wholly-owned subsidiary of the Company and operates 33 full-service banking offices and 10 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,” “will have” 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.

4

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	March 31,			December 31,
	2014			2013
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	21,762		$	20,937
Federal funds sold		40,473			56,394
Total cash and cash equivalents		62,235			77,331
Securities:
Available for sale, at fair value		517,388			511,006
Loans held for sale		4,230			4,838
Loans, net of allowance for loan losses of $20,554 and $21,116		1,060,901			1,029,192
Federal Home Loan Bank stock, at cost		18,068			26,464
Premises and equipment, net		20,602			20,924
Accrued interest receivable		5,161			5,694
Real estate owned and other repossessed assets		4,700			6,341
Core deposit intangible		133			152
Cash surrender value of life insurance		45,322			44,972
Other assets		10,404			10,936
Total assets	$	1,749,144		$	1,737,850
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,212,447		$	1,221,162
Non-interest bearing		185,620			170,590
Total deposits		1,398,067			1,391,752
Borrowed funds:
Federal Home Loan Bank advances		50,000			50,000
Repurchase agreements and other		90,572			90,578
Total borrowed funds		140,572			140,578
Advance payments by borrowers for taxes and insurance		12,246			20,060
Accrued interest payable		585			550
Accrued expenses and other liabilities		7,845			9,836
Total liabilities		1,559,315			1,562,776
Shareholders’ Equity:
Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding		—			—
Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 50,422,161 and 50,339,089 shares, respectively, outstanding		174,522			174,719
Retained earnings		82,847			81,515
Accumulated other comprehensive loss		(29,097	)		(41,665	)
Treasury stock, at cost, 3,716,749 and 3,799,821 shares, respectively		(38,443	)		(39,495	)
Total shareholders’ equity		189,829			175,074
Total liabilities and shareholders’ equity	$	1,749,144		$	1,737,850

5

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
	(Dollars in thousands, except per share data)
Interest income
Loans	$	12,122		$	12,657		$	12,627
Loans held for sale		49			63			89
Securities:
Available for sale		3,241			3,278			3,428
Federal Home Loan Bank stock dividends		267			267			283
Other interest earning assets		26			47			9
Total interest income		15,705			16,312			16,436
Interest expense
Deposits		1,677			1,780			2,087
Federal Home Loan Bank advances		518			530			523
Repurchase agreements and other		908			928			909
Total interest expense		3,103			3,238			3,519
Net interest income		12,602			13,074			12,917
Provision for loan losses		33			282			2,064
Net interest income after provision for loan losses		12,569			12,792			10,853
Non-interest income
Non-deposit investment income		341			373			541
Service fees and other charges
Mortgage servicing fees		689			704			704
Deposit related fees		1,198			1,499			1,260
Mortgage servicing rights valuation		(1	)		4			435
Mortgage servicing rights amortization		(392	)		(431	)		(660	)
Other service fees		—			—			43
Net gains (losses):
Securities available for sale		3			(1	)		721
Mortgage banking income		612			850			1,643
Real estate owned and other repossessed assets charges, net		(383	)		(215	)		(431	)
Card fees		772			850			734
Other income		385			491			703
Total non-interest income		3,224			4,124			5,693
Non-interest expense
Salaries and employee benefits		7,580			6,851			6,873
Occupancy		933			906			822
Equipment and data processing		1,798			1,863			1,760
Franchise tax		198			351			431
Advertising		189			247			139
Amortization of core deposit intangible		19			20			23
Deposit insurance premiums		253			592			554
Other insurance premiums		137			137			176
Professional fees
Legal and consulting fees		161			354			192
Other professional fees		392			519			216
Real estate owned and other repossessed asset expenses		213			310			493
Other expenses		1,670			2,827			2,185
Total non-interest expenses		13,543			14,977			13,864
Income before income taxes		2,250			1,939			2,682
Income tax expense		156			(300	)		—
Net income		2,094			2,239			2,682
Amortization of discount on preferred stock		—			—			821
Earnings available to common shareholders	$	2,094		$	2,239		$	1,861
Earnings per common share
Basic	$	0.04		$	0.04		$	0.06
Diluted		0.04			0.04			0.05

6

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

				At or for the quarters ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
	(In thousands, except per share data)
Financial Data
Total assets	$	1,749,144		$	1,737,850		$	1,756,202		$	1,787,071		$	1,831,776
Total loans, net		1,060,901			1,029,192			1,009,029			1,008,843			1,034,415
Total securities		517,388			511,006			542,811			555,188			602,107
Total deposits		1,398,067			1,391,752			1,410,610			1,433,815			1,460,960
Total shareholders’ equity		189,829			175,074			183,322			183,759			206,511
Net interest income		12,602			13,074			12,704			12,636			12,917
Provision for loan losses		33			282			657			1,113			2,064
Noninterest income		3,224			4,124			3,548			6,384			5,693
Noninterest expense		13,543			14,977			13,528			14,368			13,864
Income tax expense (benefit)		156			(300	)		350			150			—
Net income		2,094			2,239			1,717			3,389			2,682
Share Data
Basic earnings (loss) per common share	$	0.04		$	0.04		$	0.03		$	(0.06	)	$	0.06
Diluted earnings (loss) per common share		0.04			0.04			0.03			(0.06	)		0.05
Book value per common share		3.76			3.48			3.65			3.66			4.81
Tangible book value per common share		3.76			3.47			3.65			3.66			4.81
Market value per common share		3.92			3.57			3.89			4.65			3.88
Common shares outstanding at end of period		50,422			50,339			50,225			50,189			39,607
Weighted average shares outstanding—basic		50,196			50,114			50,110			43,160			33,565
Weighted average shares outstanding—diluted		50,451			50,360			50,382			43,160			33,829
Key Ratios
Return on average assets(1)		0.48	%		0.51	%		0.39	%		0.74	%		0.59	%
Return on average equity(2)		4.52	%		4.82	%		3.75	%		6.46	%		6.14	%
Net interest margin		3.07	%		3.17	%		3.04	%		2.93	%		3.01	%
Efficiency ratio		83.45	%		85.89	%		81.14	%		78.38	%		75.55	%
Nonperforming loans to total loans, end of period		2.17	%		2.29	%		2.72	%		2.88	%		4.32	%
Nonperforming assets to total assets, end of period		1.58	%		1.72	%		2.10	%		2.26	%		3.30	%
Allowance for loan loss as a percent of loans, end of period		1.90	%		2.01	%		2.04	%		1.85	%		2.07	%
Delinquent loans to total loans, end of period		2.07	%		2.32	%		2.77	%		3.38	%		4.51	%
Capital Ratios
Tier 1 leverage ratio		10.71	%		10.50	%		10.26	%		10.03	%		9.84	%
Tier 1 risk-based capital ratio		18.42	%		18.50	%		18.52	%		18.17	%		17.02	%
Total risk-based capital ratio		19.68	%		19.76	%		19.78	%		19.42	%		18.28	%
Equity to assets		10.85	%		10.07	%		10.44	%		10.28	%		11.27	%
Tangible common equity to tangible assets(3)		10.85	%		10.07	%		10.43	%		10.27	%		11.26	%

⁽¹⁾  Net income divided by average total assets

⁽²⁾  Net income divided by average total equity

⁽³⁾  We use certain non-GAAP financial measures, such as the tangible common equity to tangible common assets ratio (TCE), to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. We believe TCE is useful because it is a measure utilized by regulators, market analysts and investors in evaluating a Company’s financial condition and capital strength. TCE, as defined by us, represents common equity less core deposit intangible assets. A reconciliation form our GAAP total equity to total assets ratio to the non-GAAP tangible common equity to tangible assets ratio is presented below:

	At or for the quarters ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
	(Dollars in thousands)
Total assets	$	1,749,144		$	1,737,850		$	1,756,202		$	1,787,071		$	1,831,776
Less: Core deposit intangible		133			152			172			192			215
Tangible assets (Non-GAAP)	$	1,749,011		$	1,737,698		$	1,756,030		$	1,786,879		$	1,831,561
Total common equity		189,829			175,074			183,322			183,759			206,511
Less: Core deposit intangible		133			152			172			192			215
Tangible common equity (Non-GAAP)	$	189,696		$	174,922		$	183,150		$	183,567		$	206,296
Total equity/Total assets		10.85	%		10.07	%		10.44	%		10.28	%		11.27	%
Tangible common equity/Tangible assets (non-GAAP)		10.85	%		10.07	%		10.43	%		10.27	%		11.26	%

7

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
										(Dollars in thousands)
Loan Portfolio Composition
Real Estate Loans
One-to four-family residential	$	610,879		$	585,025		$	575,791		$	572,575		$	570,377
Multi-family residential*		54,233			54,485			55,696			62,559			69,857
Nonresidential*		125,796			131,251			127,699			120,586			132,662
Land*		9,829			9,683			9,546			9,821			15,216
Construction Loans
One-to four-family residential and land development		55,082			53,349			38,932			32,512			32,866
Multi-family and nonresidential*		207			—			—			4,584			4,584
Total real estate loans		856,026			833,793			807,664			802,637			825,562
Consumer Loans		184,409			189,231			194,383			199,634			206,496
Commercial Loans		40,013			26,141			26,888			24,526			23,077
Total Loans		1,080,448			1,049,165			1,028,935			1,026,797			1,055,135
Less:
Allowance for loan losses		20,554			21,116			21,032			19,037			21,827
Deferred loan costs, net		(1,007	)		(1,143	)		(1,126	)		(1,083	)		(1,107	)
Total		19,547			19,973			19,906			17,954			20,720
Loans, net	$	1,060,901		$	1,029,192		$	1,009,029		$	1,008,843		$	1,034,415
*       Categories are considered commercial real estate
	At or for the quarters ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
										(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	136,031		$	132,751		$	134,766		$	135,228		$	136,952
Non-interest bearing checking accounts		185,620			170,590			167,167			165,224			169,790
Total checking accounts		321,651			303,341			301,933			300,452			306,742
Savings accounts		278,906			267,515			267,062			272,991			274,419
Money market accounts		329,163			328,625			331,449			334,242			341,804
Total non-time deposits		929,720			899,481			900,444			907,685			922,965
Retail certificates of deposit		468,347			492,271			510,166			526,130			537,995
Total certificates of deposit		468,347			492,271			510,166			526,130			537,995
Total deposits	$	1,398,067		$	1,391,752		$	1,410,610		$	1,433,815		$	1,460,960
Certificates of deposit as a percent of total deposits		33.50	%		35.37	%		36.17	%		36.69	%		36.82	%

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
										(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	21,116		$	21,032		$	19,037		$	21,827		$	21,130
Provision		33			282			657			1,113			2,064
Net recoveries (chargeoffs)		(595	)		(198	)		1,338			(3,903	)		(1,367	)
Ending balance	$	20,554		$	21,116		$	21,032		$	19,037		$	21,827
Net Charge-offs (Recoveries)
Real Estate Loans
One-to four-family	$	(163	)	$	(42	)	$	201		$	487		$	637
Multi-family		(5	)		—			(13	)		113			41
Nonresidential		(252	)		29			381			1,288			459
Land		—			(12	)		(10	)		1,639			(196	)
Construction Loans
One-to four-family residential and land development		(79	)		(451	)		(1,876	)		108			(75	)
Multi-family and nonresidential		—			620			—			(4	)		18
Total real estate loans		(499	)		144			(1,317	)		3,631			884
Consumer Loans		(233	)		193			143			387			443
Commercial Loans		137			(139	)		(164	)		(115	)		40
Total	$	(595	)	$	198		$	(1,338	)	$	3,903		$	1,367
	At or for the quarters ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
										(Dollars in thousands)
Nonperforming Loans
Real Estate Loans
One-to four-family residential	$	6,132		$	6,356		$	6,127		$	4,993		$	5,978
Multi-family residential		1,158			641			705			727			1,727
Nonresidential		5,033			5,560			8,963			10,429			21,021
Land		532			496			628			656			5,957
Construction Loans
One-to four-family residential and land development		2,884			3,084			3,320			4,385			4,931
Total real estate loans		15,739			16,137			19,743			21,190			39,614
Consumer Loans		3,089			3,293			3,564			3,459			3,608
Commercial Loans		4,155			4,158			4,177			4,453			1,492
Total Loans	$	22,983		$	23,588		$	27,484		$	29,102		$	44,714
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	18,708		$	20,188		$	20,946		$	22,487		$	36,515
Past due 90 days and still accruing		—			45			3,413			3,501			3,594
Past due 90 days		18,708			20,233			24,359			25,988			40,109
Past due less than 90 days and on nonaccrual		4,276			3,356			3,125			3,114			4,605
Total Nonperforming Loans		22,984			23,589			27,484			29,102			44,714
Other Real Estate Owned		4,700			6,318			9,276			11,203			15,349
Repossessed Assets		—			23			39			156			433
Total Nonperforming Assets	$	27,684		$	29,930		$	36,799		$	40,461		$	60,496
Total Troubled Debt Restructured Loans
Accruing	$	26,614		$	26,577		$	26,629		$	25,165		$	23,812
Nonaccruing		4,724			4,941			5,474			5,455			3,616
Total	$	31,338		$	31,518		$	32,103		$	30,620		$	27,428

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