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, 2016, was $5.0 million, up 16.1% from the $4.3 million reported for the quarter ended December 31, 2015. Fourth quarter diluted earnings per share increased 18.9% to $0.107 from $0.090 per share reported at the same time last year. These results included $611,000 of acquisition costs (after-tax) related to the previously announced acquisition of Ohio Legacy Corp. Excluding these acquisition costs, the Company’s adjusted net income (non-GAAP) was $5.6 million and diluted earnings per share was $0.121 per share for the quarter ending December 31, 2016.

Net income for the twelve months ended December 31, 2016 totaled $18.8 million, up 15.6% from the $16.3 million reported for the twelve months ended December 31, 2015. For the same time period, diluted earnings per share increased to $0.399, up 19.1% from the $0.335 per share previously reported. Excluding the $611,000 acquisition costs (after-tax), adjusted net income (non-GAAP) for the twelve months ended December 31, 2016 was $19.4 million, or $0.412 per diluted share.

Gary M. Small, President and Chief Executive Officer of the Company, commented, “Excellent fourth quarter performance capped off an outstanding year for Home Savings. For the year we originated over $900 million in loans, delivered strong loan growth in our commercial and consumer business segments, successfully expanded our residential lending business into new markets, added insurance agency and mezzanine finance capabilities, and are well on our way to completing the integration process with Premier Bank and Trust.” Small continued, “All indications lead us to believe 2017 should prove to be an equally exciting year as business pipelines are full and we anticipate expansion of Premier’s asset management, trust and private banking business across the organization.”

Balance Sheet Highlights

Total Loans

Total net loans, including loans held for sale, increased $214.3 million, or 15.9% to $1.6 billion at December 31, 2016, compared to December 31, 2015. Loan growth is being driven primarily by the commercial loan portfolio. Commercial loan production totaled $308.7 million for 2016 and was approximately 35.8% higher than 2015. Commercial loan balances grew over 36.4%, or $134.5 million when compared to the same time period last year. Unfunded commercial loan commitments increased $45.3 million, or 43.8%, to $148.7 million, during 2016.

Residential loans, including residential loans held for sale, grew $51.0 million, or 6.3%, at December 31, 2016 compared to December 31, 2015. Total residential loan production increased 28.5% over the prior year. Over half of this increase is a result of growth within the Company’s residential construction loan program. Pipeline levels are 5.7% higher at December 31, 2016, compared to December 31, 2015.

Consumer loan balances increased $28.3 million, or 15.1% to $216.6 million at December 31, 2016. Consumer loan production increased 21.9%, driven primarily by auto loan production of $35.6 million during 2016.

Total Deposits

The Company lowered its overall cost of deposits to 38 basis points from 47 basis points for the three months ended December 31, 2016 compared to the same time period last year. This 19.2% reduction in cost was the result of a shift in deposit mix driven by a 17.3% growth in the average outstanding balance of noninterest bearing deposit accounts. Noninterest bearing deposit accounts grew primarily because of a 29% increase in commercial deposits. The Company also continued to grow public funds, which increased $15.7 million, or 17.1%, to $107.6 million at December 31, 2016, compared to $91.9 million at December 31, 2015. Lastly, the Company was able to diversify its deposit mix utilizing brokered deposits. As a result of this activity, total deposits increased $79.2 million, or 5.5% to $1.5 billion at December 31, 2016, compared to December 31, 2015.

Asset Quality

Nonperforming loans decreased 25.7% to $12.4 million as of December 31, 2016, compared to December 31, 2015. The reduction was driven by a single relationship aggregating $6.4 million that was classified as an Other Asset to more closely reflect the nature of the receivable. As a result, nonperforming loans to net loans at December 31, 2016 was 0.83%, compared to 1.27% at December 31, 2015. The Company’s allowance to total loan ratio was 1.25% at December 31, 2016.

During the first quarter of 2016, Home Savings recognized additional provision expense for a specific seasoned commercial loan, due to a loss of the property’s tenant. This loan was exited in January 2017. The following table depicts results had the resolution been achieved in the fourth quarter of 2016.

      Non-GAAP
As reported Proforma
December 31, December 31,
2016 Adjustment 2016
(Dollars in thousands)
Nonperforming loans $ 12,438 $ (3,389 ) $ 9,049
Nonperforming assets 20,599 (3,389 ) 17,210
Loans, net 1,503,577 (2,250 ) 1,501,327
Allowance for loan losses 19,087 (1,139 ) 17,948
 
Nonperforming loans to net loans 0.83 % 0.60 %
Nonperforming assets to total assets 0.94 % 0.79 %
Allowance for loan loss as a percent of loans 1.25 % 1.18 %

Fourth Quarter and Year-to-date Results

Net Interest Income and Margin

Net interest income on a fully taxable equivalent basis was $16.6 million in the fourth quarter of 2016, up 13.9% from the $14.5 million recorded in the fourth quarter of 2015. The improvement in net interest income was primarily due to the growth in average net loan balances and a decline in funding costs. Net interest income on a fully taxable equivalent basis was $63.0 million for the twelve months ended December 31, 2016, up 11.3% from the $56.6 million recorded for the twelve months ended December 31, 2015.

Net interest margin was 3.26% for the fourth quarter of 2016, an increase from 3.16% reported in the fourth quarter of 2015. The increase in net interest margin was due primarily to the overall reduction in funding costs.

Net interest margin was 3.24% for the twelve months ended December 31, 2016, an increase from 3.18% reported for the twelve months ended December 31, 2015.

Provision for Loan Losses

The Company recognized a provision for loan loss expense of $1.5 million in the fourth quarter of 2016 compared to a provision of $893,000 in the fourth quarter of 2015. Net charge offs for the quarter totaled 17 basis points on an annualized basis. The majority of the provision expense was related to the growth of the loan portfolio.

The Company recognized a provision for loan loss expense of $5.4 million for the twelve months ended December 31, 2016 compared to an expense of $2.1 million in the comparable period of 2015. Small continued, “The provision for 2016 was in line with our expectations based on anticipated loan growth, net charge-off activity and improvement in asset quality.”

Non-Interest Income

Non-interest income increased 3.4% to $5.6 million in the fourth quarter of 2016 compared to $5.5 million in the fourth quarter of 2015. Favorably affecting the change was the benefit of insurance agency income of $417,000. The Company also recognized a positive change in the valuation of mortgage servicing rights totaling $630,000 in the quarter. Partially offsetting these favorable changes was a decrease in mortgage banking income and a decline in deposit related fees.

Non-interest income increased 12.0% to $22.1 million for the twelve months ended December 31, 2016 compared to $19.7 million in the comparable period last year. Positively affecting the comparison was the benefit of insurance agency income totaling $1.7 million. Also contributing to the change was an increase in brokerage income, deposit related fees, mortgage servicing fees and debit/credit card fees, for a total of $533,000. The twelve months ended December 31, 2016 also saw security gains totaling $604,000. These increases were partially offset by a $397,000 decrease in mortgage banking income.

Non-Interest Expense

Non-interest expense was $13.7 million, up 7.5% for the fourth quarter of 2016, compared to the fourth quarter of 2015. After giving consideration to $787,000 in acquisition related costs associated with the Ohio Legacy Corp. acquisition announced in the third quarter of 2016, noninterest expense was essentially flat. The efficiency ratio continues to show improvement at 61.89% for the fourth quarter of 2016 as compared to 63.74% for the same time period last year.

Non-interest expense was $52.0 million, up 4.2% for the twelve months ended December 31, 2016, compared to the twelve months ended December 31, 2015. Non-interest expense was flat for the twelve months ended December 31, 2016, in comparison to the same period last year after taking into consideration the addition of James & Sons Insurance Company and the acquisition of Ohio Legacy Corp. The efficiency ratio was 61.01% for the twelve months ended December 31, 2016 compared to 65.10% for the twelve months ended December 31, 2015.

Pre-tax, Pre-provision Income

Pre-tax, pre-provision income was $8.3 million for the three months ended December 31, 2016, up $1.1 million, or 14.8%, from the $7.2 million recorded for the three months ended December 31, 2015. Pre-tax, pre-provision income was $32.4 million for the twelve months ended December 31, 2016, up $6.0 million, or 23.0%, from the $26.3 million recorded for the twelve months ended December 31, 2015. Pre-tax, pre-provision income is derived by adding provision for loan losses and income tax expense to net income.

Equity

Tangible book value per common share at December 31, 2016 improved to $5.32, as compared to $5.14 at December 31, 2015. This change was primarily due to net income for the twelve months ended December 31, 2016 offset partially by dividends paid and an increase in losses on available for sale securities.

During 2016, the Company continued its common share repurchase program, and purchased 1,562,959 shares at an average price of $6.01 per share. At December 31, 2016, United Community has 1,683,830 shares remaining to be repurchased under its current repurchase program.

Dividend to be Paid

On January 24, 2017, the Board of Directors declared a quarterly cash dividend of $0.03 per common share payable February 22, 2017 to shareholders of record at the close of business February 10, 2017.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, January 25, 2017, at 10:00 a.m. ET., to provide an overview of the Company's fourth quarter 2016 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 website ir.ucfconline.com. Click on 4th Quarter 2016 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, western Pennsylvania and West Virginia. Additional information on the Company, Home Savings and James & Sons Insurance may be found on the Company’s web site: ir.ucfconline.com.

______________

1 See supplementary information, Non-GAAP Disclosure Reconciliation

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.

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.

Important Information for Investors and Shareholders

This earnings release does not constitute an offer to sell or the solicitation of an offer to buy securities of United Community. United Community filed a registration statement on Form S-4 and other documents regarding the proposed merger with Ohio Legacy with the Securities and Exchange Commission (“SEC”) to register the shares of the Company’s common shares to be issued to the shareholders of Ohio Legacy. A proxy statement/prospectus was mailed to shareholders of Ohio Legacy on December 28, 2016, for the Special Shareholder Meeting to be held on January 27, 2017, at 1:00 p.m., at Acute Care Solutions Education Center, 4565 Dressler Road, NW, Canton, Ohio 44718. Investors and security holders are urged to read the proxy statement/prospectus and any other relevant documents to be filed with the SEC in connection with the proposed transaction because they contain important information about United Community, Ohio Legacy and the proposed transaction. Investors and security holders may obtain a free copy of these documents through the website maintained by the SEC at www.sec.gov, on the NASDAQ website at http://www.nasdaq.com and from either the United Community or Ohio Legacy websites at ir.ucfconline.com or at http://www.ohiolegacycorp.com.

       
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
 
December 31, December 31,
2016 2015
(Dollars in thousands)
Assets:
Cash and deposits with banks $ 27,690 $ 20,528
Federal funds sold   18,197     15,382  
Total cash and cash equivalents 45,887 35,910
Securities:
Available for sale, at fair value 343,284 357,670
Held to maturity (fair value of $96,151 and $109,644, respectively) 97,519 110,699
Loans held for sale, at lower of cost or market 165 9,085
Loans held for sale, at fair value 62,593 26,716
Loans, net of allowance for loan losses of $19,087 and $17,712 1,503,577 1,316,192
Federal Home Loan Bank stock, at cost 18,068 18,068
Premises and equipment, net 20,963 20,678
Accrued interest receivable 6,900 5,978
Real estate owned and other repossessed assets 1,777 2,727
Goodwill and customer list intangible 1,564 —
Core deposit intangible 5 30
Cash surrender value of life insurance 55,861 54,366
Other assets   32,904     29,870  
Total assets $ 2,191,067   $ 1,987,989  
 
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Non-interest bearing $ 256,918 $ 227,505
Interest bearing
Customer deposits 1,181,557 1,208,238
Brokered deposits   76,516     —  
Total interest bearing deposits   1,258,073     1,208,238  
Total deposits 1,514,991 1,435,743
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances 47,756 46,975
Short-term advances   343,000     232,000  
Total Federal Home Loan Bank advances 390,756 278,975
Repurchase agreements and other   512     535  
Total borrowed funds 391,268 279,510
Advance payments by borrowers for taxes and insurance 23,812 21,174
Accrued interest payable 145 53
Accrued expenses and other liabilities   11,323     7,264  
Total liabilities   1,941,539     1,743,744  
 
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 46,581,370 and 47,517,644 shares, respectively, outstanding 173,581 174,304
Retained earnings 153,176 140,819
Accumulated other comprehensive loss (21,040 ) (19,220 )
Treasury stock, at cost, 7,557,540 and 6,621,266 shares, respectively   (56,189 )   (51,658 )
Total shareholders’ equity   249,528     244,245  
Total liabilities and shareholders’ equity $ 2,191,067   $ 1,987,989  
         
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,
2016 2016 2015 2016 2015
(Dollars in thousands, except per share data)
Interest income
Loans $ 15,285 $ 14,633 $ 13,612 $ 57,903 $ 52,619
Loans held for sale 578 482 371 1,755 1,396
Securities:
Available for sale, nontaxable 377 339 35 1,129 35
Available for sale, taxable 1,569 1,630 2,002 6,915 10,141
Held to maturity, nontaxable 65 66 51 248 96
Held to maturity, taxable 422 466 573 1,989 590
Federal Home Loan Bank stock dividends 181 180 182 723 723
Other interest earning assets   18     19     10     67     35  
Total interest income 18,495 17,815 16,836 70,729 65,635
Interest expense
Deposits 1,425 1,389 1,664 5,922 6,526
Federal Home Loan Bank advances 732 661 387 2,486 1,334
Repurchase agreements and other   4     5     295     20     1,253  
Total interest expense   2,161     2,055     2,346     8,428     9,113  
Net interest income 16,334 15,760 14,490 62,301 56,522
Taxable equivalent adjustment   219     185     45     686     70  
Net interest income (FTE) (1) 16,553 15,945 14,535 62,987 56,592
Provision for loan losses   1,493     1,344     893     5,387     2,135  
Net interest income after provision for loan losses (FTE)   15,060     14,601     13,642     57,600     54,457  
Non-interest income
Insurance agency income 417 451 — 1,686 —
Brokerage income 248 337 316 1,281 1,115
Service fees and other charges:
Deposit related fees 1,380 1,418 1,573 5,486 5,384
Mortgage servicing fees 719 715 692 2,833 2,730
Mortgage servicing rights valuation 741 25 111 39 19
Mortgage servicing rights amortization (534 ) (525 ) (445 ) (2,094 ) (1,800 )
Other service fees 27 43 19 135 75
Net gains (losses):
Securities available for sale — 218 131 604 142
Mortgage banking income 1,236 1,957 1,538 6,444 6,841
Real estate owned and other repossessed assets charges, net (17 ) — (134 ) (93 ) (445 )
Debit/credit card fees 930 915 907 3,846 3,684
Other income   488     449     743     1,909     1,972  
Total non-interest income   5,635     6,003     5,451     22,076     19,717  
Non-interest expense
Salaries and employee benefits 7,376 6,950 5,756 28,600 26,724
Occupancy 809 847 744 3,373 3,249
Equipment and data processing 1,916 1,926 1,760 7,564 6,865
Financial institutions tax 410 411 317 1,694 1,241
Advertising 207 290 191 845 737
Amortization of intangible assets (26 ) 72 13 69 54
Prepayment penalty — — 1,280 — 1,280
FDIC insurance premiums 172 155 295 940 1,241
Other insurance premiums 77 89 102 328 355
Professional fees:
Legal and consulting fees 331 211 338 953 1,227
Other professional fees 284 341 502 1,046 1,733
Real estate owned and other repossessed asset expenses 1 41 45 191 338
Merger related expenses 787 — — 787 —
Other expenses   1,373     1,645     1,412     5,629     4,885  
Total non-interest expenses   13,717     12,978     12,755     52,019     49,929  
Income before income taxes 6,978 7,626 6,338 27,657 24,245
Taxable equivalent adjustment 219 185 45 686 70
Income tax expense   1,734     2,288     1,965     8,143     7,893  
Net income $ 5,025   $ 5,153   $ 4,328   $ 18,828   $ 16,282  
 
Earnings per common share:
Basic $ 0.108 $ 0.111 $ 0.091 $ 0.401 $ 0.337
Diluted 0.107 0.110 0.090 0.399 0.335
(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.
CONSOLIDATED AVERAGE BALANCES
(Unaudited)
 
 
For the three months ended
December 31, 2016 September 30, 2016 December 31, 2015
Average Interest Average Interest Average Interest
outstanding earned/ Yield/ outstanding earned/ Yield/ outstanding earned/ Yield/
balance paid rate balance paid rate balance paid rate
(Dollars in thousands)
Interest earning assets:
Net loans (1) $ 1,485,617 $ 15,286 4.12 % $ 1,422,294 $ 14,634 4.12 % $ 1,290,238 $ 13,612 4.22 %
Loans held for sale   61,289   578 3.77 %   49,095   482 3.93 %   39,589   371 3.75 %
Total loans, net 1,546,906 15,864 4.10 % 1,471,389 15,116 4.11 % 1,329,827 13,983 4.21 %
Securities:
Available for sale-taxable 292,115 1,569 2.15 % 300,522 1,630 2.17 % 355,438 2,002 2.25 %
Available for sale-nontaxable (2) 54,018 561 4.15 % 49,489 489 3.95 % 5,199 53 4.08 %
Held to maturity-taxable 87,480 422 1.93 % 92,077 466 2.02 % 102,172 573 2.24 %
Held to maturity-nontaxable (2)   13,438   99 2.95 %   13,563   100 2.95 %   9,401   77 3.28 %
Total securities 447,051 2,651 2.37 % 455,651 2,685 2.36 % 472,210 2,705 2.29 %
Federal Home Loan Bank stock 18,068 181 4.01 % 18,068 180 3.98 % 18,068 182 4.03 %
Other interest earning assets   22,071   18 0.33 %   20,028   19 0.38 %   18,185   10 0.22 %
Total interest earning assets 2,034,096 18,714 3.68 % 1,965,136 18,000 3.66 % 1,838,290 16,880 3.67 %
Non-interest earning assets   134,902   132,922   134,366
Total assets $ 2,168,998 $ 2,098,058 $ 1,972,656
Interest bearing liabilities:
Deposits:
Checking accounts $ 481,225 248 0.21 % $ 491,553 238 0.19 % $ 474,213 262 0.22 %
Savings accounts 291,212 25 0.03 % 290,998 24 0.03 % 278,748 41 0.06 %
Certificates of deposit
Customer certificates of deposit 416,299 1,077 1.03 % 424,493 1,126 1.06 % 456,102 1,361 1.19 %
Brokered certificates of deposit   47,760   75 0.63 %   814   1 0.49 %   —   — — %
Total certificates of deposit   464,059   1,152 0.99 %   425,307   1,127 1.06 %   456,102   1,361 1.19 %
Total interest bearing deposits 1,236,496 1,425 0.46 % 1,207,858 1,389 0.46 % 1,209,063 1,664 0.55 %
Federal Home Loan Bank advances
Long-term advances 47,628 337 2.83 % 47,432 319 2.69 % 46,847 272 2.32 %
Short-term advances   342,174   395 0.46 %   326,250   342 0.42 %   192,674   114 0.24 %

Total Federal Home Loan Bank advances

389,802 732 0.75 % 373,682 661 0.71 % 239,521 386 0.64 %
Repurchase agreements and other   514   4 3.11 %   520   5 3.85 %   27,929   295 4.22 %
Total borrowed funds   390,316   736 0.75 %   374,202   666 0.71 %   267,450   681 1.02 %
Total interest bearing liabilities $ 1,626,812   2,161 0.53 % $ 1,582,060   2,055 0.52 % $ 1,476,513   2,345 0.64 %
Non-interest bearing liabilities
Total noninterest bearing deposits 257,412 242,310 219,379
Other noninterest bearing liabilities   33,544   27,769   30,256
Total noninterest bearing liabilities   290,956   270,079   249,635
Total liabilities $ 1,917,768 $ 1,852,139 $ 1,726,148
Shareholders’ equity   251,230   245,919   246,508
Total liabilities and equity $ 2,168,998 $ 2,098,058 $ 1,972,656
Net interest income and interest rate spread $ 16,553 3.15 % $ 15,945 3.14 % $ 14,535 3.03 %
Net interest margin 3.26 % 3.25 % 3.16 %
Average interest earning assets to average interest bearing liabilities 125.04 % 124.21 % 124.50 %
 
 
Interest bearing deposits
Checking accounts $ 481,225 $ 248 0.21 % $ 491,553 $ 238 0.19 % $ 474,213 $ 262 0.22 %
Savings accounts 291,212 25 0.03 % 290,998 24 0.03 % 278,748 41 0.06 %
Customer certificates of deposit   416,299   1,077 1.03 %   424,493   1,126 1.06 %   456,102   1,361 1.19 %
Total customer deposits 1,188,736 1,350 0.45 % 1,207,044 1,388 0.46 % 1,209,063 1,664 0.55 %
Brokered certificates of deposit   47,760   75 0.63 %   814   1 0.49 %   —   — — %
Total interest bearing deposits 1,236,496 1,425 0.46 % 1,207,858 1,389 0.46 % 1,209,063 1,664 0.55 %
Noninterest bearing deposits   257,412   — 0.00 %   242,310   — 0.00 %   219,379   — 0.00 %
Total average deposits and cost of deposits $ 1,493,908 $ 1,425 0.38 % $ 1,450,168 $ 1,389 0.38 % $ 1,428,442 $ 1,664 0.47 %
Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances $ 47,628 $ 337 2.83 % $ 47,432 $ 319 2.69 % $ 46,847 $ 272 2.32 %
Short term advances   342,174   395 0.46 %   326,250   342 0.42 %   192,674   114 0.24 %
Total Federal Home Loan Bank advances 389,802 732 0.75 % 373,682 661 0.71 % 239,521 386 0.64 %
Repurchase agreements and other   514   4 3.11 %   520   5 3.85 %   27,929   295 4.22 %
Total borrowed funds   390,316   736 0.75 %   374,202   666 0.71 %   267,450   681 1.02 %
Total average deposits and other interest bearing liabilities and total cost of funds $ 1,884,224 $ 2,161 0.46 % $ 1,824,370 $ 2,055 0.45 % $ 1,695,892 $ 2,345 0.55 %

(1)

  

Nonaccrual loans are included in the average balance at a yield of 0%.

(2)

Yields are on a fully taxable equivalent basis.

         
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
 
At or for the quarters ended
December 31, September 30, June 30, March 31,

December 31,

2016   2016 2016 2016

2015

(Dollars in thousands, except per share data)
Financial Data
Total assets $ 2,191,067 $ 2,160,234 $ 2,080,542 $ 2,036,430 $ 1,987,989
Total loans, net 1,503,577 1,473,949 1,398,106 1,359,146 1,316,192
Total securities 440,803 457,671 474,707 473,207 468,369
Total deposits 1,514,991 1,473,043 1,455,746 1,466,614 1,435,743
Average interest-bearing deposits 1,236,496 1,207,858 1,231,157 1,212,701 1,209,063
Average noninterest-bearing deposits 257,412 242,310 241,098 228,308 219,379
Total shareholders' equity 249,528 256,403 254,075 251,804 244,245
Net interest income 16,334 15,760 15,334 14,873 14,490
Net interest income (FTE) (1) 16,553 15,945 15,520 14,967 14,535
Provision for loan losses 1,493 1,344 395 2,155 893
Noninterest income 5,635 6,003 5,780 4,658 5,451
Noninterest expense 13,717 12,978 12,860 12,464 12,755
Income tax expense 1,734 2,288 2,529 1,592 1,965
Net income 5,025 5,153 5,330 3,320 4,328
 
Share Data
Basic earnings per common share $ 0.108 $ 0.111 $ 0.113 $ 0.070 $ 0.091
Diluted earnings per common share 0.107 0.110 0.112 0.069 0.090
Book value per common share 5.36 5.51 5.46 5.30 5.14
Tangible book value per common share 5.32 5.48 5.43 5.27 5.14
Market value per common share 8.94 7.11 6.08 5.87 5.90
 
Common shares outstanding at end of period 46,581 46,542 46,493 47,507 47,518
Weighted average shares outstanding--basic 46,216 46,167 46,869 47,272 47,356
Weighted average shares outstanding--diluted 46,415 46,392 47,117 47,551 47,636
 
Key Ratios
Return on average assets (2) 0.93 % 0.98 % 1.04 % 0.66 % 0.88 %
Return on average equity (3) 8.00 % 8.38 % 8.63 % 5.33 % 7.02 %
Net interest margin 3.26 % 3.25 % 3.25 % 3.21 % 3.16 %
Efficiency ratio 61.89 % 59.40 % 60.81 % 63.90 % 63.74 %
Nonperforming loans to net loans, end of period 0.83 % 1.32 % 1.45 % 1.48 % 1.27 %
Nonperforming assets to total assets, end of period 0.94 % 0.98 % 1.06 % 1.08 % 0.98 %
Allowance for loan loss as a percent of loans, end of period 1.25 % 1.22 % 1.21 % 1.23 % 1.33 %
Delinquent loans to total net loans, end of period 1.26 % 1.48 % 1.49 % 1.50 % 1.70 %
 

(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

           
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family $ 93,597 $ 107,066 $ 81,022 $ 80,581 $ 80,170
Owner/nonowner occupied commercial real estate 231,400 225,699 196,110 184,279 175,456
Land 8,373 9,401 9,748 8,938 9,301
Construction 68,158 45,137 61,744 49,858 38,812
Commercial and industrial   102,729     106,880     88,804     83,256     66,013  
Total 504,257 494,183 437,428 406,912 369,752
Residential mortgage loans
Real estate 762,926 755,893 747,530 741,401 733,685
Construction   35,695     35,875     35,275     38,994     40,898  
Total 798,621 791,768 782,805 780,395 774,583
Consumer loans
Consumer   216,598     203,851     193,272     187,323     188,258  
Total   216,598     203,851     193,272     187,323     188,258  
Total loans 1,519,476 1,489,802 1,413,505 1,374,630 1,332,593
Less:
Allowance for loan losses 19,087 18,234 17,172 16,903 17,712
Deferred loan costs, net   (3,188 )   (2,381 )   (1,773 )   (1,419 )   (1,311 )
Total   15,899     15,853     15,399     15,484     16,401  
Total loans, net 1,503,577 1,473,949 1,398,106 1,359,146 1,316,192
Loans held for sale, net   62,758     60,345     43,847     35,998     35,801  
Total loans $ 1,566,335   $ 1,534,294   $ 1,441,953   $ 1,395,144   $ 1,351,993  
 
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts $ 158,271 $ 170,348 $ 182,713 $ 194,586 $ 160,264
Non-interest bearing checking accounts   256,918     252,923     236,173     230,831     227,505  
Total checking accounts 415,189 423,271 418,886 425,417 387,769
Savings accounts 294,563 290,325 292,232 288,324 280,889
Money market accounts   316,813     312,124     314,081     312,577     312,125  
Total non-time deposits 1,026,565 1,025,720 1,025,199 1,026,318 980,783
Customer certificates of deposit   411,910     422,370     430,547     440,296     454,960  
Total customer deposits 1,438,475 1,448,090 1,455,746 1,466,614 1,435,743
Brokered certificates of deposit   76,516     24,953     —     —     —  
Total deposits $ 1,514,991   $ 1,473,043   $ 1,455,746   $ 1,466,614   $ 1,435,743  
 
Customer certificates of deposit as a percent of total deposits 27.19 % 28.67 % 29.58 % 30.02 % 31.69 %
Brokered certificates of deposit as a percent of total deposits 5.05 % 1.69 % — % — % — %
         
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
 
Allowance For Loan Losses
Beginning balance $ 18,234 $ 17,172 $ 16,903 $ 17,712 $ 17,482
Provision 1,493 1,344 395 2,155 893
Net chargeoffs   (640 )   (282 )   (126 )   (2,964 )   (663 )
Ending balance $ 19,087   $ 18,234   $ 17,172   $ 16,903   $ 17,712  
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
Net (Charge-offs) Recoveries
Commercial loans
Multi-family $ 5 $ 35 $ 3 $ 7 $ 7
Owner/nonowner occupied commercial real estate (570 ) 17 (117 ) (2,213 ) (67 )
Land (100 ) (250 ) — — (100 )
Construction — — — — 21
Commercial and industrial   139     192     62     (74 )   141  
Total (526 ) (6 ) (52 ) (2,280 ) 2
Residential mortgage loans
Real estate (123 ) (146 ) (59 ) (300 ) (611 )
Construction   —     —     —     —     —  
Total (123 ) (146 ) (59 ) (300 ) (611 )
Consumer loans
Consumer   9     (130 )   (15 )   (384 )   (54 )
Total   9     (130 )   (15 )   (384 )   (54 )
Total net chargeoffs $ (640 ) $ (282 ) $ (126 ) $ (2,964 ) $ (663 )
 
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family $ — $ — $ — $ — $ —
Owner/nonowner occupied commercial real estate 3,546 6,879 7,362 7,557 3,599
Land 34 134 384 384 384
Construction — — — — —
Commercial and industrial   361     4,242     4,633     4,652     4,016  
Total 3,941 11,255 12,379 12,593 7,999
Residential mortgage loans
Real estate 6,084 5,835 5,713 5,312 6,181
Construction   —     —     —     —     —  
Total 6,084 5,835 5,713 5,312 6,181
Consumer loans
Consumer   2,413     2,358     2,249     2,200     2,567  
Total   2,413     2,358     2,249     2,200     2,567  
Total nonperforming loans $ 12,438   $ 19,448   $ 20,341   $ 20,105   $ 16,747  
 
 
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status $ 7,858 $ 15,350 $ 15,819 $ 15,663 $ 16,279
Past due 90 days and still accruing   —     —     —     —     —  
Past due 90 days 7,858 15,350 15,819 15,663 16,279
Past due less than 90 days and on nonaccrual   4,580     4,098     4,522     4,442     468  
Total nonperforming loans 12,438 19,448 20,341 20,105 16,747
Other real estate owned 1,726 1,790 1,613 1,832 2,651
Other classified assets 6,384 — — — —
Repossessed assets   51     3     3     14     76  
Total nonperforming assets $ 20,599   $ 21,241   $ 21,957   $ 21,951   $ 19,474  
           
UNITED COMMUNITY FINANCIAL CORP.
NON-GAAP DISCLOSURE RECONCILIATION
(Unaudited)
 

In reporting the results of the quarter ended December 31, 2016, the Company has provided supplemental performance measures on a tax-equivalent basis or excluding merger related costs. These measures are a supplement to GAAP used to prepare the Company’s financial statements and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures of other companies.

 
For the three and
twelve months ended
December 31, 2016
Merger related costs $ 787
Tax expense   (176 )
Merger related costs, net of tax $ 611  
 
As Reported Non-GAAP Proforma As Reported Non-GAAP Proforma
Three months ended Merger related Three months ended Twelve months ended Merger related Twelve months ended
December 31, 2016 costs, net of tax December 31, 2016 December 31, 2016 costs, net of tax December 31, 2016
(In thousands, except per share data)
Net income: $ 5,025   $ 611   $ 5,636   $ 18,828     611   $ 19,439  
 
Diluted EPS:
Net income $ 5,025 $ 611 $ 5,636 18,828 19,439
Net income allocated to participating securities   (37 )   (37 )   (121 )   (121 )
Net income available to common shareholders $ 4,988   $ 5,599     18,707     19,318  
Weighted average shares outstanding: diluted 46,415,038 46,415,038 46,860,065 46,860,065
Diluted EPS: $ 0.107   $ 0.121   $ 0.399   $ 0.412  
 
 
Net income $ 5,025 $ 611 $ 5,636 $ 18,828 $ 611 $ 19,439
Average assets 2,168,998 2,168,998 2,078,650 2,078,650
Average equity 251,230 251,230 248,362 248,362
ROA:   0.93 %   1.04 %   0.91 %   0.94 %
ROE:   8.00 %   8.97 %   7.58 %   7.83 %
 
Efficiency Ratio:
Noninterest Expense $ 13,719 $ (787 ) $ 12,932 $ 52,019 $ (787 ) $ 51,232
Intangible asset amortization (26 ) (26 ) 69 69
Net interest income 16,556 16,556 62,987 62,987
Noninterest income 5,635 5,635 22,076 22,076

Loss on real estate owned

(17 ) (17 ) (93 ) (93 )
Efficiency Ratio:   61.89 %   58.35 %   61.01 %   60.08 %
 
 
Expense growth:
Noninterest expense, current period 52,019 (787 ) 51,232
Noninterest expense, prior period 49,929 49,929
Noninterest expense growth   4.2 %   2.6 %