United Community Financial (UCFC) 8-K Ucfc Announces Strong Fourth Quarter Results

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 cscott@homesavings.com	(330) 742-0472

UCFC ANNOUNCES STRONG FOURTH QUARTER RESULTS

AND DECLARES DIVIDEND

• Net quarterly income of $4.3 million, or $0.09 per diluted share—Return on average assets 0.88%

• Robust annual loan growth of 15.7%, including loans held for sale

• Strong annual deposit growth of 6.5%

• Improved efficiency ratio of 63.7% for the quarter and 65.1% for the year

• Dividend of $0.025 per common share declared

YOUNGSTOWN, Ohio (January 26, 2016) – United Community Financial Corp. (Company) (Nasdaq: UCFC), parent company of The Home Savings and Loan Company (Home Savings), announced today that net income for the quarter ended December 31, 2015 totaled $4.3 million, or $0.09 per diluted common share compared to $2.8 million, or $0.06 per diluted common share for the quarter ended December 31, 2014. Net income for the twelve months ended December 31, 2015 totaled $16.3 million, or $0.34 per diluted common share compared to $50.2 million or $1.00 per diluted common share ($10.5 million, or $0.20 per diluted share adjusted for the recognition of $39.7 million of income tax benefit from the reversal of a deferred tax asset valuation reserve) for the twelve months ended December 31, 2014.

Gary M. Small, President and Chief Executive Officer of the Company and Home Savings, commented that, “Strong performance in the fourth quarter closes out an excellent year for the organization. We achieved our growth and profitability objectives, expanded our client base, and added a talented group of bankers. The organization is very well positioned heading into 2016.”

4

Balance Sheet Highlights

Total Loans

Total outstanding loans, net of allowance for loan losses and including loans held for sale, increased $183.2 million, or 15.7% to $1.4 billion at December 31, 2015, compared to December 31, 2014. Driving the growth in loans was an increase of $116.8 million, or 46.2%, in commercial loans during 2015. Additionally, during the year, unfunded commercial loan commitments grew by 77.8% to approximately $103.4 million at December 31, 2015. Residential loans, including residential loans held for sale, increased 7.8%, or $58.4 million during 2015.

Total Deposits

Total deposits increased $87.9 million, or 6.5%, to $1.4 billion at December 31, 2015, compared to $1.3 billion at December 31, 2014. Non-interest bearing accounts increased $39.5 million, or 21.0%. During the same time period, interest-bearing deposits increased 4.2%, or $48.4 million. Origination of public funds continues to drive the growth of interest-bearing deposits along with an increase in commercial deposits.

Fourth Quarter Results

Net Interest Income and Margin

Net interest income on a fully taxable equivalent basis was $14.5 million in the fourth quarter of 2015, up from the $13.4 million recorded in the fourth quarter of 2014 and the $14.3 million recorded in the third quarter of 2015. The improvement in net interest income, when comparing the fourth quarter of 2015 to the fourth quarter of 2014, was due to an increase in average net loan balances totaling approximately $157.4 million. Additionally, funding costs were reduced due to a modification of an FHLB advance and the prepayment of two repurchase agreements late in 2014.

Net interest margin was 3.16% for the fourth quarter of 2015, which did not change from the fourth quarter of 2014, and decreased from the 3.18% recorded in the previous quarter. Late in December of 2015, Home Savings prepaid a high cost $30.0 million repurchase agreement. While the elimination of the debt will be beneficial going forward, minimal benefit was recognized during the quarter.

Provision for Loan Losses

The Company recognized a provision for loan losses of $893,000 in the fourth quarter of 2015 compared to a provision of $194,000 in the fourth quarter of 2014, and a provision of $673,000 in the previous quarter. Provision expense continues to be driven primarily by strong loan growth.

Non-Interest Income

Non-interest income was $5.5 million in the fourth quarter of 2015 compared to $2.9 million in the fourth quarter of 2014, and up from $4.9 million in the previous quarter. The increase in non-interest income in comparing the fourth quarter of 2015 to the fourth quarter of 2014 was primarily a result of higher mortgage banking income due to a greater volume of loans sold along with higher deposit related fees earned. The increase in noninterest income compared to the prior quarter is a result of increased deposit fees, a favorable adjustment in the mortgage servicing rights valuation allowance and gains on securities available for sale.

5

Non-Interest Expense

Non-interest expense was $12.8 million for the fourth quarter of 2015 compared to $13.9 million for the fourth quarter of 2014, a decrease of $1.2 million. Salaries and employee benefits decreased in that time period due to organizational restructuring and modification of certain employee benefit plans. Additionally, during the fourth quarter of 2015, the Company incurred lower prepayment penalties for the repayment of repurchase agreements. Total non-interest expense increased $470,000, when comparing the fourth quarter of 2015 to the prior quarter. This change was primarily a result of a prepayment penalty in connection with a repurchase agreement and the reversal of the residential mortgage repurchase reserve in the third quarter of 2015.

Year to Date Results

Net Interest Income and Margin

Net interest income on a fully taxable equivalent basis was $56.6 million for the twelve months ended December 31, 2015, an increase of $5.2 million from the same period in 2014. Net interest margin was 3.18% for the full year of 2015 compared to 3.10% for the full year of 2014. As in prior quarters of 2015, the net interest margin continues to be positively impacted by the modification of an FHLB advance and the prepayment of two repurchase agreements that occurred at the end of 2014.

Provision for Loan Losses

The Company recognized a provision for loan losses of $2.1 million for 2015 compared to a negative provision of $1.3 million in 2014. The additional provision for loan losses resulted from the growth in outstanding loans during 2015.

Non-Interest Income

Non-interest income was $19.7 million for the twelve months ended December 31, 2015, compared to $13.7 million for the twelve months ended December 31, 2014. This favorable comparison is a result of increased mortgage banking income. During the year, the Company realized a high level of mortgage loan production being sold into the secondary market along with improved pricing on loans sold.

Non-Interest Expense

Total non-interest expense was $49.9 million for the twelve months ended December 31, 2015, a decrease of $6.0 million over the twelve months ended December 31, 2014. All major expense categories declined as a result of effective process improvements and cost reduction efforts.

Asset Quality

Measures of asset quality continued to improve during 2015 as evidenced by nonperforming assets to total assets decreasing to 0.98%, compared to 1.30% for 2014. The allowance for loan loss as a percentage of total loans was 1.33% at December 31, 2015 compared with 1.52% at December 31, 2014.

6

Equity

Tangible book value per common share at December 31, 2015 improved to $5.14, as compared to $4.88 at December 31, 2014. During the third quarter of 2015, Home Savings reclassified approximately $105.0 million of available for sale securities to held to maturity, providing for additional stability of tangible book value. The Company continues its share repurchase program, repurchasing 116,000 shares during the quarter.

Dividend to be Paid

The Board of Directors declared a quarterly cash dividend of $0.025 per common share payable February 19, 2016 to shareholders of record at the close of business February 8, 2016.

Purchase of James & Sons Insurance Company

The Company also was pleased to announce yesterday, January 25, 2016, the purchase of James & Sons Insurance Company of Youngstown, Ohio. James & Sons Insurance is engaged in the business of selling insurance including auto, commercial, homeowners and life-health insurance. Completion of the transaction is anticipated in the first quarter of 2016.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, January 27, 2016, at 10:00 a.m. ET., to provide an overview of the Company’s fourth quarter 2015 results and highlights. The conference call may be accessed by calling 1-877-272-7661 ten minutes prior to the start time. Please ask to be joined into the United Community Financial Corp. (UCFC) call. Additionally, a live webcast may be accessed from the Company’s websitewww.ucfconline.com. Click on4th Quarter 2015 Conference Call on our corporate profile page to join the webcast.

United Community Financial Corp.

Home Savings is a wholly-owned subsidiary of the Company and operates retail banking offices and loan production centers in 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”, “can expect” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

7

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.

8

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	December 31			December 31,
	2015			2014
	(Dollars in thousands)
Assets:
Cash and deposits with banks	$	20,528		$	21,152
Federal funds sold		15,382			11,828
Total cash and cash equivalents		35,910			32,980
Securities:
Available for sale, at fair value		357,670			499,790
Held to maturity (fair value of $109,644 and $0, respectively)		110,699			—
Loans held for sale, at lower of cost or market		9,085			20,730
Loans held for sale, at fair value		26,716			—
Loans, net of allowance for loan losses of $17,712 and $17,687		1,316,192			1,148,093
Federal Home Loan Bank stock, at cost		18,068			18,068
Premises and equipment, net		20,678			21,002
Accrued interest receivable		5,978			5,763
Real estate owned and other repossessed assets		2,727			3,467
Core deposit intangible		30			84
Cash surrender value of life insurance		54,366			46,401
Other assets		29,870			37,172
Total assets	$	1,987,989		$	1,833,550
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Interest bearing	$	1,208,238		$	1,159,871
Non-interest bearing		227,505			187,965
Total deposits		1,435,743			1,347,836
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances		46,975			46,194
Short-term advances		232,000			140,000
Total Federal Home Loan Bank advances		278,975			186,194
Repurchase agreements and other		535			30,558
Total borrowed funds		279,510			216,752
Advance payments by borrowers for taxes and insurance		21,174			19,904
Accrued interest payable		53			185
Accrued expenses and other liabilities		7,264			8,738
Total liabilities		1,743,744			1,593,415
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 47,517,644 and 49,239,004 shares, respectively, outstanding		174,304			174,385
Retained earnings		140,819			128,512
Accumulated other comprehensive loss		(19,220	)		(19,998	)
Treasury stock, at cost, 6,621,266 and 4,899,906 shares, respectively		(51,658	)		(42,764	)
Total shareholders’ equity		244,245			240,135
Total liabilities and shareholders’ equity	$	1,987,989		$	1,833,550

UNITED COMMUNITY FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended									For the Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2015			2015			2014			2015			2014
	(Dollars in thousands, except per share data)
Interest income
Loans	$	13,612		$	13,426		$	12,640		$	52,619		$	49,559
Loans held for sale		371			390			217			1,396			454
Securities:
Available for sale, nontaxable		35			—			—			35			—
Available for sale, taxable		2,002			2,599			2,946			10,141			12,314
Held to maturity, nontaxable		51			33			—			96			—
Held to maturity, taxable		573			17			—			590			—
Federal Home Loan Bank stock dividends		182			181			182			723			859
Other interest earning assets		10			8			7			35			58
Total interest income		16,836			16,654			15,992			65,635			63,244
Interest expense
Deposits		1,664			1,690			1,583			6,526			6,435
Federal Home Loan Bank advances		387			340			443			1,334			2,022
Repurchase agreements and other		295			323			615			1,253			3,368
Total interest expense		2,346			2,353			2,641			9,113			11,825
Net interest income		14,490			14,301			13,351			56,522			51,419
Taxable equivalent adjustment		45			19			—			70			—
Net interest income (FTE) (1)		14,535			14,320			13,351			56,592			51,419
Provision (recovery) for loan losses		893			673			194			2,135			(1,271	)
Net interest income after provision for loan losses (FTE)		13,642			13,647			13,157			54,457			52,690
Non-interest income
Non-deposit investment income		316			259			259			1,115			1,415
Service fees and other charges:
Mortgage servicing fees		692			683			684			2,730			2,737
Deposit related fees		1,573			1,405			1,051			5,384			4,901
Mortgage servicing rights valuation		111			(138	)		(54	)		19			(58	)
Mortgage servicing rights amortization		(445	)		(449	)		(428	)		(1,800	)		(1,687	)
Other service fees		19			19			17			75			20
Net gains (losses):
Securities available for sale		131			—			82			142			444
Mortgage banking income		1,538			1,709			(30	)		6,841			1,570
Real estate owned and other repossessed assets charges, net		(134	)		(119	)		(172	)		(445	)		(800	)
Card fees		907			1,036			893			3,684			3,354
Other income		743			468			603			1,972			1,845
Total non-interest income		5,451			4,873			2,905			19,717			13,741
Non-interest expense
Salaries and employee benefits		5,756			6,894			6,683			26,724			29,546
Occupancy		744			819			847			3,249			3,469
Equipment and data processing		1,760			1,714			1,918			6,865			7,470
Financial institutions tax		317			272			201			1,241			795
Advertising		191			183			221			737			838
Amortization of core deposit intangible		13			14			16			54			68
Prepayment penalty		1,280			—			2,013			1,280			3,409
FDIC insurance premiums		295			313			341			1,241			1,216
Other insurance premiums		102			84			85			355			495
Professional fees:
Legal and consulting fees		338			361			85			1,227			607
Other professional fees		502			469			381			1,733			1,945
Real estate owned and other repossessed asset expenses		45			134			92			338			631
Other expenses		1,412			1,028			1,056			4,885			5,471
Total non-interest expenses		12,755			12,285			13,939			49,929			55,960
Income before income taxes		6,338			6,235			2,123			24,245			10,471
Taxable equivalent adjustment		45			19			—			70			—
Income tax expense (benefit)		1,965			2,073			(685	)		7,893			(39,735	)
Net income	$	4,328		$	4,143		$	2,808		$	16,282		$	50,206
Earnings per common share:
Basic	$	0.09		$	0.09		$	0.06		$	0.34		$	1.00
Diluted		0.09			0.09			0.06			0.34			1.00

⁽¹⁾  Net interest income is also presented on a fully taxable equivalent (FTE) basis, the Company believes this non-GAAP measure is the preferred industry measurement for this item.

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
	(Dollars in thousands, except per share data)
Financial Data
Total assets	$	1,987,989		$	1,970,887		$	1,922,789		$	1,860,620		$	1,833,550
Total loans, net		1,316,192			1,277,330			1,224,468			1,168,434			1,148,093
Total securities		468,369			479,817			477,747			492,412			499,790
Total deposits		1,435,743			1,410,484			1,439,247			1,406,744			1,347,836
Average interest-bearing deposits		1,209,063			1,219,735			1,218,467			1,179,077			1,162,011
Average noninterest-bearing deposits		219,379			211,923			209,174			196,049			192,192
Total shareholders’ equity		244,245			243,929			236,462			247,104			240,135
Net interest income		14,490			14,301			13,851			13,880			13,351
Net interest income (FTE) (1)		14,535			14,320			13,857			13,880			13,351
Provision (recovery) for loan losses		893			673			753			(184	)		194
Noninterest income		5,451			4,873			5,275			4,118			2,905
Noninterest expense		12,755			12,285			12,208			12,681			13,939
Income tax expense (benefit)		1,965			2,073			2,040			1,815			(685	)
Net income		4,328			4,143			4,125			3,686			2,808
Share Data
Basic earnings per common share	$	0.09		$	0.09		$	0.08		$	0.07		$	0.06
Diluted earnings per common share		0.09			0.09			0.08			0.07			0.06
Book value per common share		5.14			5.12			4.95			5.01			4.88
Tangible book value per common share		5.14			5.12			4.95			5.01			4.88
Market value per common share		5.90			5.00			5.35			5.46			5.37
Common shares outstanding at end of period		47,518			47,614			47,763			49,309			49,239
Weighted average shares outstanding—basic		47,356			47,480			48,359			49,022			49,244
Weighted average shares outstanding—diluted		47,636			47,744			48,634			49,295			49,531
Key Ratios
Return on average assets(2)		0.88	%		0.85	%		0.88	%		0.80	%		0.62	%
Return on average equity(3)		7.02	%		6.87	%		6.73	%		5.99	%		4.70	%
Net interest margin		3.16	%		3.18	%		3.16	%		3.24	%		3.16	%
Efficiency ratio (4)		63.74	%		63.54	%		63.40	%		70.07	%		72.85	%
Nonperforming loans to net loans, end of period		1.27	%		1.20	%		1.55	%		1.72	%		1.78	%
Nonperforming assets to total assets, end of period		0.98	%		0.95	%		1.16	%		1.25	%		1.30	%
Allowance for loan loss as a percent of loans, end of period		1.33	%		1.35	%		1.36	%		1.45	%		1.52	%
Delinquent loans to total net loans, end of period		1.72	%		1.65	%		1.45	%		1.66	%		1.82	%

⁽¹⁾  Net interest income is presented on a fully taxable equivalent (FTE) basis, the Company believes this non-GAAP measure is the preferred industry measurement for this item

⁽²⁾  Net income divided by average total assets

⁽³⁾  Net income divided by average total equity

⁽⁴⁾  Excludes penalty on the prepayment of repurchase agreements

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
	(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family	$	80,170		$	74,042		$	69,485		$	63,597		$	60,546
Owner/nonowner occupied commercial real estate		175,455			167,366			148,025			132,305			121,595
Land		9,301			9,709			10,231			9,437			9,484
Construction		38,813			26,545			16,265			11,030			16,064
Commercial and industrial		66,013			65,004			69,269			54,036			45,222
Total		369,752			342,666			313,275			270,405			252,911
Residential mortgage loans
Real estate		733,685			723,619			709,342			696,387			694,105
Construction		40,898			40,723			34,074			37,293			37,113
Total		774,583			764,342			743,416			733,680			731,218
Consumer loans
Consumer		188,258			186,661			183,696			180,735			180,754
Total		188,258			186,661			183,696			180,735			180,754
Total loans		1,332,593			1,293,669			1,240,387			1,184,820			1,164,883
Less:
Allowance for loan losses		17,712			17,482			16,881			17,221			17,687
Deferred loan costs, net		(1,311	)		(1,143	)		(962	)		(835	)		(897	)
Total		16,401			16,339			15,919			16,386			16,790
Total loans, net		1,316,192			1,277,330			1,224,468			1,168,434			1,148,093
Loans held for sale, net		35,801			38,274			35,102			31,243			20,730
Total loans	$	1,351,993		$	1,315,604		$	1,259,570		$	1,199,677		$	1,168,823
	At or for the quarters ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
	(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts	$	160,264		$	168,025		$	179,969		$	184,029		$	137,511
Non-interest bearing checking accounts		227,505			208,598			206,228			199,512			187,965
Total checking accounts		387,769			376,623			386,197			383,541			325,476
Savings accounts		280,889			277,313			282,737			282,643			274,149
Money market accounts		312,125			309,004			313,602			310,983			312,911
Total non-time deposits		980,783			962,940			982,536			977,167			912,536
Retail certificates of deposit		454,960			447,544			456,711			429,577			435,300
Total certificates of deposit		454,960			447,544			456,711			429,577			435,300
Total deposits	$	1,435,743		$	1,410,484		$	1,439,247		$	1,406,744		$	1,347,836
Certificates of deposit as a percent of total deposits		31.69	%		31.73	%		31.73	%		30.54	%		32.30	%

UNITED COMMUNITY FINANCIAL CORP.

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

	At or for the quarters ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
	(Dollars in thousands)
Allowance For Loan Losses
Beginning balance	$	17,482		$	16,881		$	17,221		$	17,687		$	18,132
Provision (recovery)		893			673			753			(184	)		194
Net chargeoffs		(663	)		(72	)		(1,093	)		(282	)		(639	)
Ending balance	$	17,712		$	17,482		$	16,881		$	17,221		$	17,687
	At or for the quarters ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
	(Dollars in thousands)
Net (Charge-offs) Recoveries
Commercial loans
Multi-family	$	7		$	9		$	(64	)	$	13		$	—
Owner/nonowner occupied commercial real estate		(67	)		(109	)		(31	)		9			(25	)
Land		(100	)		(12	)		—			—			—
Construction		21			(88	)		(603	)		—			—
Commercial and industrial		141			137			127			75			199
Total		2			(63	)		(571	)		97			174
Residential mortgage loans
Real estate		(611	)		(17	)		(306	)		20			(141	)
Construction		—			—			—			—			(488	)
Total		(611	)		(17	)		(306	)		20			(629	)
Consumer loans
Consumer		(54	)		8			(216	)		(399	)		(184	)
Total		(54	)		8			(216	)		(399	)		(184	)
Total net chargeoffs	$	(663	)	$	(72	)	$	(1,093	)	$	(282	)	$	(639	)
	At or for the quarters ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
	(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family	$	—		$	—		$	85		$	85		$	93
Owner/nonowner occupied commercial real estate		3,599			3,694			5,637			5,700			5,781
Land		384			484			496			531			531
Construction		—			415			415			1,051			1,051
Commercial and industrial		4,016			4,016			4,016			4,016			4,016
Total		7,999			8,609			10,649			11,383			11,472
Residential mortgage loans
Real estate		6,181			4,845			6,475			6,652			6,816
Construction		—			—			—			—			—
Total		6,181			4,845			6,475			6,652			6,816
Consumer loans
Consumer		2,567			1,887			1,887			2,061			2,163
Total		2,567			1,887			1,887			2,061			2,163
Total nonperforming loans	$	16,747		$	15,341		$	19,011		$	20,096		$	20,451
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status	$	16,279		$	14,891		$	14,246		$	15,357		$	16,018
Past due 90 days and still accruing		—			—			—			—			—
Past due 90 days		16,279			14,891			14,246			15,357			16,018
Past due less than 90 days and on nonaccrual		468			450			4,765			4,739			4,433
Total nonperforming loans		16,747			15,341			19,011			20,096			20,451
Other real estate owned		2,651			3,262			3,127			2,908			3,345
Repossessed assets		76			54			234			211			122
Total nonperforming assets	$	19,474		$	18,657		$	22,372		$	23,215		$	23,918