United Community Financial Corp. (Company) (NASDAQ:UCFC), parent company of Home Savings Bank (Home Savings), today announced net income of $4.5 million, or $0.090 per diluted common share for the three months ended December 31, 2017. For the year ended December 31, 2017, net income was $21.8 million, or $0.437 per diluted common share.

During the year, three non-recurring charges were recognized. In the fourth quarter, a revaluation of net deferred tax assets increased tax expense $1.9 million and an asset write down of $1.5 million, after tax, was prompted by an unfavorable ruling from an Appellate Court. For the year, non-recurring acquisition related expenses totaling $3.3 million, after tax, were also recognized. By adjusting reported earnings adjusted for these non-recurring items, the Company’s normalized quarterly net income (non-GAAP) was $7.9 million for the quarter, or $0.158 per diluted share and normalized full-year net income was $28.5 million, or $0.571 per diluted common share.

Fourth quarter 2017 highlights:

  • Continued strong organic loan growth at 10.1% annualized
  • Average deposit growth at 5.8% annualized
  • Net interest margin of 3.43%
  • Return on average assets of 0.68%, or 1.20% normalized
  • Return on average equity of 6.09%, or 10.72% normalized
  • Efficiency ratio was 63.73%, or 53.76% normalized
  • Increased dividend 50% to $0.06 per common share

Full year 2017 highlights:

  • Continued strong organic loan growth, including loans held for sale, at 16.5%
  • Net interest margin of 3.41%
  • Return on average assets of 0.85%, or 1.11% normalized
  • Return on average equity of 7.63%, or 9.97% normalized
  • Efficiency ratio was 64.28%, or 57.01% normalized

Gary M. Small, President and Chief Executive Officer of the Company commented, “I am very pleased with the organization’s fourth quarter core performance. Commercial and consumer growth exceeded expectations, deposit growth initiatives took hold, and our core expenses for the quarter were well contained. These results, combined with the anticipated positive impacts for our customers from the recent tax legislation, certainly provide excellent momentum as we head into 2018.”

Strong Organic Loan Growth

Total loan growth for the fourth quarter was $51.4 million, or 10.1% on an annualized basis. At year-end, total loans aggregated $2.08 billion.

Commercial loan growth was $31.5 million for the quarter ended December 31, 2017, or 15.9% on an annualized basis. Residential mortgage loans, including loans held for sale, increased $10.3 million, or 4.1% annualized during the quarter. Consumer loans increased $9.8 million, or 14.9%, annualized during the same time period.

Meaningful Organic Customer Deposit Growth

Average customer deposit growth for the fourth quarter of 2017 totaled $25.4 million, or 5.8% annualized. Average annualized consumer and business deposit growth was 11.5% for the period. The Company also saw annualized growth of 21.6% in average noninterest bearing deposits for the quarter. Our success in these areas is a reflection of our focus on treasury management, product enhancement and pricing and promotional changes.

Net Interest Margin Remains Stable

Net interest income on a fully-taxable equivalent basis increased to $21.1 million for the quarter ended December 31, 2017, compared to $20.7 million for the quarter ended September 30, 2017, or 1.8%, and increased 27.5% from $16.6 million for the quarter ended December 31, 2016. The increase in net interest income was primarily due to a higher level of earning assets compared to the prior quarter. The increase in net interest income compared to the fourth quarter of 2016 was driven by an increase in earning assets along with an expansion in net interest margin, primarily related to purchase accounting adjustments.

The net interest margin was 3.43% for the three months ended December 31, 2017, a two basis point decrease from 3.45% reported in the prior quarter. For the quarter ended December 31, 2016, the net interest margin was 3.26%. The increased margin from the same quarter last year was primarily due to the increased yield on earning assets along with the recognition of purchase accounting adjustments.

Excluding purchase accounting yield adjustments, the net interest margin would have been 12 basis points lower, or 3.31%, for the three months ended December 31, 2017. The net interest margin would have been 11 basis points lower, or 3.30%, for the year.

Nonperforming Loans to Net Loans Ratio Decreases

The ratio of nonperforming loans to net loans continues to improve. The ratio was 0.59% at December 31, 2017, which is down from 0.83% reported at December 31, 2016. During the quarter ended December 31, 2017, the Company recognized total net chargeoffs of $568,000, or 11.5 basis points as a percentage of average loans. Full-year net chargeoffs were $2.1 million, or 11.5 basis points as a percentage of average loans.

The Company’s provision for loan losses totaled $1.2 million for the fourth quarter of 2017, which was up in comparison to the prior quarter and down from the fourth quarter of 2016. As of December 31, 2017, the Company’s allowance for loan losses to total loans was 1.05%, versus 1.25% at December 31, 2016.

Loans acquired through the acquisition during the first quarter of 2017 were recorded at fair value. When combining the remaining fair value adjustment of $3.8 million and the Company’s allowance, the Company’s allowance as a percentage of total loans increases to 1.23%.

Non-Interest Income

Non-interest income increased to $6.5 million in the fourth quarter of 2017, compared to $6.3 million in the prior quarter. A one-time gain of $595,000 from the sale of a bank-owned building was partially offset by lower gains on mortgage loan sales due to seasonality and no recognized security gains in the fourth quarter.

Non-Interest Expense

Non-interest expense was $17.3 million for the quarter and normalized was $15.0 million, excluding a $2.3 million one-time asset write down, compared to $15.5 million recognized during last quarter.

In 2003, Home Savings entered into two development loans on which the borrower subsequently filed bankruptcy, and a Court appointed receiver liquidated the collateral. The proceeds from the sale of the collateral have remained in escrow with the Court since 2007 as a number of competing claims were made against the proceeds. In 2011, a lower court affirmed Home Savings' priority position in the proceeds, and its lien validity was affirmed by the same Court in 2016. However, in December 2017, an Appellate Court ruled that a portion of the proceeds should be awarded to another claimant. The $2.3 million charge reflects the Appellate court ruling. It is the Company’s intent to continue to pursue a full recovery.

The Company’s efficiency ratio remained on target at a normalized level of 53.77%, for the quarter ended December 31, 2017.

Tangible Book Value

Tangible book value per common share at December 31, 2017 was $5.41 compared to $5.32 at December 31, 2016. Tangible book value per share was lowered $0.037 per share because of the recent change in tax law.

Increased Dividend to be Paid

On January 23, 2018, the Board of Directors declared a quarterly cash dividend of $0.06 per common share, a 50% increase from the quarterly dividend paid last quarter. The dividend is payable February 16, 2018 to shareholders of record at the close of business February 2, 2018. This increase reflects both the sentiments of the Company to move to a higher dividend payout ratio and anticipated increased earnings due to recent changes in tax law.

Conference Call

United Community Financial Corp. will host an earnings conference call on Wednesday, January 24, 2018, at 10:00 a.m. ET., to provide an overview of the Company's fourth quarter 2017 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 2017 Conference Call on the corporate profile page to join the webcast.

United Community Financial Corp.

Home Savings is a wholly owned subsidiary of the Company, offering a full line of commercial, wealth management and consumer banking products and services with 35 retail banking offices (34 in Ohio and one in Pennsylvania). Home Savings also has residential mortgage loan centers servicing Ohio, West Virginia, western Pennsylvania, northern Kentucky, and eastern Indiana. Additional information on the Company, Home Savings and James & Sons Insurance is available at ir.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.

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

 
UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
           
December 31, September 30, December 31,
2017 2017 F/(U) 2016 F/(U)
(Dollars in thousands)
Assets:
Cash and deposits with banks $ 34,365 $ 29,600 16.1 % $ 27,690 24.1 %
Federal funds sold   12,515     8,410   48.8 %   18,197   -31.2 %
Total cash and cash equivalents 46,880 38,010 23.3 % 45,887 2.2 %
Securities:
Available for sale, at fair value 270,561 274,822 -1.6 % 343,284 -21.2 %
Held to maturity (fair value of $82,126, $85,024 and $96,150, respectively) 82,911 85,549 -3.1 % 97,519 -15.0 %
Loans held for sale, at lower of cost or market 211 196 7.7 % 165 27.9 %
Loans held for sale, at fair value 83,541 84,349 -1.0 % 62,593 33.5 %
Loans, net of allowance for loan losses of $21,202, $20,555 and $19,087 1,999,877 1,947,695 2.7 % 1,503,577 33.0 %
Federal Home Loan Bank stock, at cost 19,324 19,324 0.0 % 18,068 7.0 %
Premises and equipment, net 22,094 22,132 -0.2 % 20,963 5.4 %
Accrued interest receivable 8,190 7,253 12.9 % 6,900 18.7 %
Real estate owned and other repossessed assets 1,253 1,143 9.6 % 1,777 -29.5 %
Goodwill 20,221 19,488 3.8 % 208 9621.6 %
Core deposit intangible 1,934 2,017 -4.1 % 5 38580.0 %
Customer list intangible 2,060 2,090 -1.4 % 1,356 51.9 %
Cash surrender value of life insurance 62,488 62,050 0.7 % 55,861 11.9 %
Other assets   27,789     36,247   -23.3 %   33,182   -16.3 %
Total assets $ 2,649,334   $ 2,602,365   1.8 % $ 2,191,345   20.9 %
 
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Non-interest bearing $ 354,970 $ 343,146 3.4 % $ 256,918 38.2 %
Interest bearing   1,601,769     1,595,553   0.4 %   1,258,073   27.3 %
Total deposits 1,956,739 1,938,699 0.9 % 1,514,991 29.2 %
Borrowed funds:
Federal Home Loan Bank advances
Long-term advances 48,536 48,341 0.4 % 47,756 1.6 %
Short-term advances   308,000     280,000   10.0 %   343,000   -10.2 %
Total Federal Home Loan Bank advances 356,536 328,341 8.6 % 390,756 -8.8 %
Repurchase agreements and other   197     10,191   -98.1 %   512   -61.5 %
Total borrowed funds 356,733 338,532 5.4 % 391,268 -8.8 %
Advance payments by borrowers for taxes and insurance 25,038 16,048 56.0 % 23,812 5.1 %
Accrued interest payable 1,097 722 51.9 % 145 656.6 %
Accrued expenses and other liabilities   16,033     16,513   -2.9 %   11,323   41.6 %
Total liabilities   2,355,640     2,310,514   2.0 %   1,941,539   21.3 %
 
Shareholders' Equity:

Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding

— — 0.0 % — 0.0 %

Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 49,800,126, 49,758,487 and 46,581,370 shares, respectively, outstanding

177,458 177,460 0.0 % 174,360 1.8 %
Retained earnings 167,500 164,988 1.5 % 152,675 9.7 %
Accumulated other comprehensive loss (18,904 ) (17,929 ) 5.4 % (21,040 ) -10.2 %
Treasury stock, at cost, 4,338,784, 4,380,423 and 7,557,540 shares, respectively   (32,360 )   (32,668 ) -0.9 %   (56,189 ) -42.4 %
Total shareholders’ equity   293,694     291,851   0.6 %   249,806   17.6 %
Total liabilities and shareholders’ equity $ 2,649,334   $ 2,602,365   1.8 % $ 2,191,345   20.9 %
 
 
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,
2017 2017 F/(U) 2016 F/(U) 2017 2016 F/(U)
(Dollars in thousands, except per share data)
Interest income
Loans $ 21,529 $ 20,697 4.0 % $ 15,285 40.9 % $ 79,795 $ 57,903 37.8 %
Loans held for sale 886 882 0.5 % 578 53.3 % 3,301 1,755 88.1 %
Securities:
Available for sale, nontaxable 416 416 0.0 % 377 10.3 % 1,668 1,129 47.7 %
Available for sale, taxable 1,222 1,276 -4.2 % 1,569 -22.1 % 5,579 6,915 -19.3 %
Held to maturity, nontaxable 51 49 4.1 % 65 -21.5 % 214 248 -13.7 %
Held to maturity, taxable 421 424 -0.7 % 422 -0.2 % 1,764 1,989 -11.3 %
Federal Home Loan Bank stock dividends 267 253 5.5 % 181 47.5 % 961 723 32.9 %
Other interest earning assets   57     51   11.8 %   18   216.7 %   228     67   240.3 %
Total interest income 24,849 24,048 3.3 % 18,495 34.4 % 93,510 70,729 32.2 %
Interest expense
Deposits 2,603 2,226 -16.9 % 1,425 -82.7 % 8,437 5,922 -42.5 %
Federal Home Loan Bank advances 1,365 1,315 -3.8 % 732 -86.5 % 4,699 2,486 -89.0 %
Repurchase agreements and other   1     4   75.0 %   4   75.0 %   21     20   -5.0 %
Total interest expense   3,969     3,545   -12.0 %   2,161   -83.7 %   13,157     8,428   -56.1 %
Net interest income 20,880 20,503 1.8 % 16,334 27.8 % 80,353 62,301 29.0 %
Taxable equivalent adjustment   221     224   -1.3 %   219   0.9 %   911     686   32.8 %
Net interest income (FTE) (1) 21,101 20,727 1.8 % 16,553 27.5 % 81,264 62,987 29.0 %
Provision for loan losses   1,215     721   -68.5 %   1,493   18.6 %   4,253     5,387   21.1 %
Net interest income after provision for loan losses (FTE)   19,886     20,006   -0.6 %   15,060   32.0 %   77,011     57,600   33.7 %
Non-interest income
Insurance agency income 552 509 8.4 % 417 32.4 % 2,006 1,686 19.0 %
Brokerage income 264 271 -2.6 % 248 6.5 % 1,158 1,281 -9.6 %
Service fees and other charges:
Deposit related fees 1,436 1,499 -4.2 % 1,380 4.1 % 5,636 5,486 2.7 %
Mortgage servicing fees 780 760 2.6 % 719 8.5 % 3,005 2,833 6.1 %
Mortgage servicing rights valuation 6 (10 ) -160.0 % 741 -99.2 % (9 ) 39 123.1 %
Mortgage servicing rights amortization (518 ) (491 ) 5.5 % (534 ) -3.0 % (1,944 ) (2,094 ) 7.2 %
Other service fees 42 21 100.0 % 27 55.6 % 125 135 -7.4 %
Net gains (losses):
Securities available for sale — 236 -100.0 % — 0.0 % 566 604 -6.3 %
Mortgage banking income 1,375 1,688 -18.5 % 1,236 11.2 % 6,503 6,444 0.9 %
Real estate owned and other repossessed assets charges, net (46 ) (73 ) -37.0 % (17 ) -100.0 % (189 ) (93 ) -103.2 %
Debit/credit card fees 995 971 2.5 % 930 7.0 % 4,215 3,846 9.6 %
Trust fee income 467 449 4.0 % — 100.0 % 1,618 — 100.0 %
Other income   1,107     475   133.1 %   488   126.8 %   2,549     1,909   33.5 %
Total non-interest income   6,460     6,305   2.5 %   5,635   14.6 %   25,239     22,076   14.3 %
Non-interest expense
Salaries and employee benefits 8,347 8,736 4.5 % 7,376 -13.2 % 34,807 28,600 -21.7 %
Occupancy 1,023 1,013 -1.0 % 809 -26.5 % 3,943 3,373 -16.9 %
Equipment and data processing 2,256 2,303 2.0 % 1,916 -17.7 % 8,944 7,564 -18.2 %
Financial institutions tax 300 348 13.8 % 410 26.8 % 1,648 1,694 2.7 %
Advertising 317 285 -11.2 % 207 -53.1 % 991 845 -17.3 %
Amortization of intangible assets 114 113 -0.9 % (26 ) 538.5 % 422 69 -511.6 %
FDIC insurance premiums 249 301 17.3 % 172 -44.8 % 1,078 940 -14.7 %
Other insurance premiums 114 115 0.9 % 77 -48.1 % 450 328 -37.2 %
Professional fees:
Legal fees 155 156 0.6 % 124 -25.0 % 724 583 -24.2 %
Other professional fees 545 666 18.2 % 491 -11.0 % 2,151 1,416 -51.9 %
Real estate owned and other repossessed asset expenses 17 33 48.5 % 1 -1600.0 % 135 191 29.3 %
Acquisition related expenses 39 — 0.0 % 787 0.0 % 5,001 787 -100.0 %
Other expenses   3,853     1,395   -176.2 %   1,373   -180.6 %   7,965     5,629   -41.5 %
Total non-interest expenses   17,329     15,464   -12.1 %   13,717   -26.3 %   68,259     52,019   -31.2 %
Income before income taxes 9,017 10,847 -16.9 % 6,978 29.2 % 33,991 27,657 22.9 %
Taxable equivalent adjustment 221 224 1.3 % 219 -0.9 % 911 686 -32.8 %
Income tax expense   4,294     3,067   -40.0 %   1,734   -147.6 %   11,295     8,143   -38.7 %
Net income $ 4,502   $ 7,556   -40.4 % $ 5,025   -10.4 % $ 21,785   $ 18,828   15.7 %
 
Earnings per common share:
Basic $ 0.090 $ 0.152 -40.8 % $ 0.108 -16.7 % $ 0.440 $ 0.401 9.7 %
Diluted 0.090 0.151 -40.4 % 0.107 -15.9 % 0.437 0.399 9.5 %
 
(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, 2017 September 30, 2017 December 31, 2016
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) $ 1,975,847 $ 21,531 4.36 % $ 1,906,786 $ 20,699 4.34 % $ 1,485,617 $ 15,286 4.12 %
Loans held for sale   88,247   886 4.02 %   88,854   882 3.97 %   61,289   578 3.77 %
Total loans, net 2,064,094 22,417 4.34 % 1,995,640 21,581 4.33 % 1,546,906 15,864 4.10 %
Securities:
Available for sale-taxable 214,631 1,222 2.28 % 224,927 1,276 2.27 % 292,115 1,569 2.15 %
Available for sale-nontaxable (2) 58,903 609 4.14 % 59,057 611 4.14 % 54,018 561 4.15 %
Held to maturity-taxable 75,136 421 2.24 % 77,947 424 2.18 % 87,480 422 1.93 %
Held to maturity-nontaxable (2)   9,233   77 3.34 %   9,239   76 3.29 %   13,438   99 2.95 %
Total securities 357,903 2,329 2.60 % 371,170 2,387 2.57 % 447,051 2,651 2.37 %
Federal Home Loan Bank stock 19,324 267 5.53 % 19,324 253 5.24 % 18,068 181 4.01 %
Other interest earning assets   22,656   57 1.01 %   18,881   51 1.08 %   22,071   18 0.33 %
Total interest earning assets 2,463,977 25,070 4.07 % 2,405,015 24,272 4.04 % 2,034,096 18,714 3.68 %
Non-interest earning assets   179,023   185,773   134,902
Total assets $ 2,643,000 $ 2,590,788 $ 2,168,998
Interest bearing liabilities:
Deposits:
Checking accounts $ 600,249 589 0.39 % $ 591,982 468 0.32 % $ 481,225 248 0.21 %
Savings accounts 304,229 27 0.04 % 308,829 28 0.04 % 291,212 25 0.03 %
Certificates of deposit
Customer certificates of deposit 530,297 1,458 1.10 % 526,697 1,333 1.01 % 416,299 1,077 1.03 %
Brokered certificates of deposit   164,147   529 1.29 %   135,956   397 1.17 %   47,760   75 0.63 %
Total certificates of deposit   694,444   1,987 1.14 %   662,653   1,730 1.04 %   464,059   1,152 0.99 %
Total interest bearing deposits 1,598,922 2,603 0.65 % 1,563,464 2,226 0.57 % 1,236,496 1,425 0.46 %
Federal Home Loan Bank advances
Long-term advances 48,409 404 3.34 % 48,212 388 3.22 % 47,628 337 2.83 %
Short-term advances   301,424   961 1.28 %   310,152   927 1.20 %   342,174   395 0.46 %
Total Federal Home Loan Bank advances 349,833 1,365 1.56 % 358,364 1,315 1.47 % 389,802 732 0.75 %
Repurchase agreements and other   2,114   1 0.19 %   6,483   4 0.25 %   514   4 3.11 %
Total borrowed funds   351,947   1,366 1.55 %   364,847   1,319 1.45 %   390,316   736 0.75 %
Total interest bearing liabilities $ 1,950,869   3,969 0.81 % $ 1,928,311   3,545 0.74 % $ 1,626,812   2,161 0.53 %
Non-interest bearing liabilities
Total noninterest bearing deposits 355,225 337,067 257,412
Other noninterest bearing liabilities   41,400   35,576   33,544
Total noninterest bearing liabilities   396,625   372,643   290,956
Total liabilities $ 2,347,494 $ 2,300,954 $ 1,917,768
Shareholders’ equity   295,506   289,834   251,230
Total liabilities and equity $ 2,643,000 $ 2,590,788 $ 2,168,998
Net interest income and interest rate spread $ 21,101 3.26 % $ 20,727 3.30 % $ 16,553 3.15 %
Net interest margin 3.43 % 3.45 % 3.26 %
Average interest earning assets to average interest bearing liabilities 126.30 % 124.72 % 125.04 %
 
 
Interest bearing deposits
Checking accounts $ 600,249 $ 589 0.39 % $ 591,982 $ 468 0.32 % $ 481,225 $ 248 0.21 %
Savings accounts 304,229 27 0.04 % 308,829 28 0.04 % 291,212 25 0.03 %
Customer certificates of deposit   530,297   1,458 1.10 %   526,697   1,333 1.01 %   416,299   1,077 1.03 %
Total customer deposits 1,434,775 2,074 0.58 % 1,427,508 1,829 0.51 % 1,188,736 1,350 0.45 %
Brokered certificates of deposit   164,147   529 1.29 %   135,956   397 1.17 %   47,760   75 0.63 %
Total interest bearing deposits 1,598,922 2,603 0.65 % 1,563,464 2,226 0.57 % 1,236,496 1,425 0.46 %
Noninterest bearing deposits   355,225   — 0.00 %   337,067   — 0.00 %   257,412   — 0.00 %
Total average deposits and cost of deposits $ 1,954,147 $ 2,603 0.53 % $ 1,900,531 $ 2,226 0.47 % $ 1,493,908 $ 1,425 0.38 %
Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances $ 48,409 $ 404 3.34 % $ 48,212 $ 388 3.22 % $ 47,628 $ 337 2.83 %
Short term advances   301,424   961 1.28 %   310,152   927 1.20 %   342,174   395 0.46 %
Total Federal Home Loan Bank advances 349,833 1,365 1.56 % 358,364 1,315 1.47 % 389,802 732 0.75 %
Repurchase agreements and other   2,114   1 0.19 %   6,483   4 0.25 %   514   4 3.11 %
Total borrowed funds   351,947   1,366 1.55 %   364,847   1,319 1.45 %   390,316   736 0.75 %
Total average deposits and other interest bearing liabilities and total cost of funds $ 2,306,094 $ 3,969 0.69 % $ 2,265,378 $ 3,545 0.63 % $ 1,884,224 $ 2,161 0.46 %
 
 
Customer deposits interest bearing and noninterest bearing $ 1,790,000 $ 2,074 0.46 % $ 1,764,575 $ 1,829 0.41 % $ 1,446,148 $ 1,350 0.37 %
Brokered deposits 164,147 529 1.29 % 135,956 397 1.17 % 47,760 75 0.63 %
Total borrowings 351,947 1,366 1.55 % 364,847 1,319 1.45 % 390,316 736 0.75 %
Cost of funds 2,306,094 3,969 0.69 % 2,265,378 3,545 0.63 % 1,884,224 2,161 0.46 %
(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,
2017 2017 2017 2017 2016
(Dollars in thousands, except per share data)
Financial Data
Total assets $ 2,649,334 $ 2,602,365 $ 2,553,565 $ 2,557,010 $ 2,191,345
Total loans, net 1,999,877 1,947,695 1,869,095 1,835,000 1,503,577
Total securities 353,472 360,371 375,738 430,357 440,803
Total deposits 1,956,739 1,938,699 1,893,993 1,905,205 1,514,991
Average interest-bearing deposits 1,598,922 1,563,464 1,579,438 1,434,644 1,236,496
Average noninterest-bearing deposits 355,225 337,067 333,784 306,402 257,412
Total shareholders' equity 293,694 291,851 285,480 277,102 249,806
Net interest income 20,880 20,503 20,494 18,476 16,334
Net interest income (FTE) (1) 21,101 20,727 20,723 18,713 16,553
Provision for loan losses 1,215 721 842 1,475 1,493
Noninterest income 6,460 6,305 7,090 5,384 5,635
Noninterest expense 17,329 15,464 15,176 20,290 13,717
Income tax expense 4,294 3,067 3,377 557 1,734
Net income 4,502 7,556 8,189 1,538 5,025
 
Share Data
Basic earnings per common share $ 0.090 $ 0.152 $ 0.165 $ 0.032 $ 0.108
Diluted earnings per common share 0.090 0.151 0.163 0.032 0.107
Book value per common share 5.90 5.87 5.74 5.58 5.36
Tangible book value per common share 5.41 5.38 5.27 5.10 5.32
Market value per common share 9.13 9.60 8.31 8.34 8.94
 
Common shares outstanding at end of period 49,800 49,758 49,715 49,695 46,581
Weighted average shares outstanding--basic 49,497 49,460 49,392 48,289 46,216
Weighted average shares outstanding--diluted 49,827 49,851 49,795 48,646 46,415
 
Key Ratios
Return on average assets (2) 0.68 % 1.17 % 1.27 % 0.25 % 0.93 %
Return on average equity (3) 6.09 % 10.43 % 11.60 % 2.24 % 8.00 %
Return on tangible equity (4) 6.62 % 11.35 % 12.66 % 2.39 % 8.05 %
Net interest margin 3.43 % 3.45 % 3.46 % 3.28 % 3.26 %
Efficiency ratio 63.73 % 57.13 % 54.71 % 83.78 % 61.89 %
Nonperforming loans to net loans, end of period 0.59 % 0.62 % 0.58 % 0.58 % 0.83 %
Nonperforming assets to total assets, end of period 0.64 % 0.75 % 0.72 % 0.74 % 0.94 %
Allowance for loan loss as a percent of loans, end of period 1.05 % 1.04 % 1.04 % 1.02 % 1.25 %
Delinquent loans to total net loans, end of period 0.86 % 0.89 % 0.77 % 0.81 % 1.26 %
 

__________________________________________________

 

(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)

Net income divided by average total equity, minus average intangible assets

 
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
         
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family $ 120,479 $ 126,977 $ 121,565 $ 108,330 $ 93,597
Owner/nonowner occupied commercial real estate 381,611 366,747 342,300 325,633 231,401
Land 15,162 13,666 10,867 9,276 8,373
Construction 116,863 108,106 96,765 94,727 68,158
Commercial and industrial   188,500     175,580     170,758     170,398     102,729  

Total

 822,615 791,076 742,255 708,364 504,258
Residential mortgage loans
Real estate 870,939 851,863 834,349 839,413 762,926
Construction   49,092     57,081     56,946     51,372     35,695  
Total 920,031 908,944 891,295 890,785 798,621
Consumer loans
Consumer   273,494     263,692     251,151     251,215     216,598  
Total   273,494     263,692     251,151     251,215     216,598  
Total loans 2,016,140 1,963,712 1,884,701 1,850,364 1,519,477
Less:
Allowance for loan losses 21,202 20,555 19,660 18,970 19,087
Deferred loan costs, net   (4,939 )   (4,538 )   (4,054 )   (3,606 )   (3,187 )
Total   16,263     16,017     15,606     15,364     15,900  
Total loans, net 1,999,877 1,947,695 1,869,095 1,835,000 1,503,577
Loans held for sale, net   83,752     84,545     86,153     75,698     62,758  

Total loans

 $ 2,083,629   $ 2,032,240   $ 1,955,248   $ 1,910,698   $ 1,566,335  
 
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands)
Deposit Portfolio Composition
Checking accounts
Interest bearing checking accounts $ 170,478 $ 173,170 $ 175,800 $ 211,875 $ 158,271
Non-interest bearing checking accounts   354,970     343,146     339,067     333,940     256,918  
Total checking accounts 525,448 516,316 514,867 545,815 415,189
Savings accounts 301,716 307,169 310,012 308,533 294,563
Money market accounts   424,234     418,294     427,348     418,449     316,813  
Total non-time deposits 1,251,398 1,241,779 1,252,227 1,272,797 1,026,565
Certificates of deposit less than or equal to $250,000 651,255 617,839 557,300 547,823 425,893
Certificates of deposit greater than $250,000   54,086     79,080     84,466     84,585     62,533  
Total certificates of deposit   705,341     696,919     641,766     632,408     488,426  
Total deposits $ 1,956,739   $ 1,938,698   $ 1,893,993   $ 1,905,205   $ 1,514,991  
 
 
UNITED COMMUNITY FINANCIAL CORP.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
         
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands)
 
Allowance For Loan Losses
Beginning balance $ 20,555 $ 19,660 $ 18,970 $ 19,087 $ 18,234
Provision 1,215 721 842 1,475 1,493
Net recoveries (chargeoffs)   (568 )   174     (152 )   (1,592 )   (640 )
Ending balance $ 21,202   $ 20,555   $ 19,660   $ 18,970   $ 19,087  
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands)
Net (Charge-offs) Recoveries
Commercial loans
Multi-family $ (126 ) $ (4 ) $ 4 $ 1 $ 5
Owner/nonowner occupied commercial real estate 23 39 24 (1,141 ) (570 )
Land — — — (25 ) (100 )
Construction — — — — —
Commercial and industrial   (90 )   314     108     1     139  
Total (193 ) 349 136 (1,164 ) (526 )
Residential mortgage loans
Real estate (257 ) (291 ) (239 ) (196 ) (123 )
Construction   —     —     —     —     —  
Total (257 ) (291 ) (239 ) (196 ) (123 )
Consumer loans
Consumer   (118 )   116     (49 )   (232 )   9  
Total   (118 )   116     (49 )   (232 )   9  
Total net chargeoffs $ (568 ) $ 174   $ (152 ) $ (1,592 ) $ (640 )
 
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands)
Nonperforming Loans
Commercial loans
Multi-family $ 275 $ 402 $ 413 $ 419 $ —
Owner/nonowner occupied commercial real estate 1,218 1,234 1,331 1,398 3,546
Land 9 9 9 9 34
Construction — — — — —
Commercial and industrial   1,505     234     190     354     361  
Total 3,007 1,879 1,943 2,180 3,941
Residential mortgage loans
Real estate 6,076 6,627 6,701 5,868 6,084
Construction   —     —     —     —     —  
Total 6,076 6,627 6,701 5,868 6,084
Consumer loans
Consumer   2,620     2,332     2,137     2,513     2,414  
Total   2,620     2,332     2,137     2,513     2,414  
Total nonperforming loans $ 11,703   $ 10,838   $ 10,781   $ 10,561   $ 12,439  
 
 
Total Nonperforming Loans and Nonperforming Assets
Past due 90 days and on nonaccrual status $ 8,620 $ 7,634 $ 7,706 $ 7,581 $ 7,859
Past due 90 days and still accruing   —     8     2     —     —  
Past due 90 days 8,620 7,642 7,708 7,581 7,859
Past due less than 90 days and on nonaccrual   3,083     3,196     3,073     2,980     4,580  
Total nonperforming loans 11,703 10,838 10,781 10,561 12,439
Other real estate owned 1,047 1,133 1,197 1,137 1,726
Other classified assets 4,050 6,384 6,384 6,384 6,384
Repossessed assets   206     10     —     —     51  
Total nonperforming assets $ 17,006   $ 18,365   $ 18,362   $ 18,082   $ 20,600  
 
 
UNITED COMMUNITY FINANCIAL CORP.
NON-GAAP DISCLOSURE RECONCILIATION
(Unaudited)
         

 

Reconciliation of Average Shareholders' Equity to Average Tangible Equity:
 
At or for the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands, except per share data)
Average shareholders equity $ 295,506 $ 295,506 $ 282,335 $ 274,277 $ 251,230
Average intangible assets   23,563     23,642     23,699     26,935     1,543  
Average tangible equity $ 271,943   $ 271,864   $ 258,636   $ 247,342   $ 249,687  
 
Net income $ 4,502 $ 7,556 $ 8,189 $ 1,538 $ 5,025
 
Return on tangible equity 6.62 % 11.12 % 12.66 % 2.49 % 8.05 %
 
Reconciliation of Fully Taxable Equivalent Net Interest Income to Net Interest Income:
 
For the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands)
 
Interest income $ 24,849 $ 24,048 $ 23,553 $ 21,060 $ 18,495
Fully taxable equivalent adjustment   221     224     229     237     219  
Fully taxable equivalent interest income 25,070 24,272 23,782 21,297 18,714
Interest expense   3,969     3,545     3,059     2,584     2,161  
Fully taxable net interest income $ 21,101   $ 20,727   $ 20,723   $ 18,713   $ 16,553  
 
For the twelve months ended
December 31, December 31,
2017 2016
(Dollars in thousands)
 
Interest income $ 93,510 $ 70,729
Fully taxable equivalent adjustment   911     686  
Fully taxable equivalent interest income 94,421 71,415
Interest expense   13,157     8,428  
Fully taxable net interest income $ 81,264   $ 62,987  
 
Reconciliation of Net Interest Margin without Accretion/Amortization of Purchase Accounting Adjustments:
 
For the three For the twelve
months ended months ended
December 31, December 31,
2017 2017
(Dollars in thousands)
Fully taxable net interest income $ 21,101 $ 81,264

Accretion/amortization of purchase accounting adjustments

  711     2,566  
Fully taxable net interest income, without purchase accounting adjustments $ 20,390   $ 78,698  
 
Average interest earning assets $ 2,463,977 $ 2,385,893

Net interest margin excluding accretion amortization of purchase accounting adjustments

3.31 % 3.30 %
 
Reconciliation of Coverage Ratio to Coverage Ratio with Fair Value Adjustments Included with Allowance for Loan Losses:
 
December 31,
2017
(Dollars in thousands)
Allowance for loan losses $ 21,202
Fair value adjustments   3,785  
  24,987  
 
Loans, net $ 1,999,877
Add: Allowance for loan losses and fair value adjustment   24,987  
Gross loans $ 2,024,864  
 

Coverage ratio with the Fair Value adjustments included in Allowance for loan losses

1.23 %
 
 
Tangible Book Value Per Share:
Tangible book value, per share is defined at shareholders equity minus intangible assets divided by the number of shares outstanding.
 
At the quarters ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
(Dollars in thousands, except per share data)
Total shareholders' equity $ 293,694 $ 291,851 $ 285,480 $ 277,102 $ 249,806
Goodwill 20,221 19,488 19,467 19,460 208
Customer list intangible 2,060 2,090 2,060 2,090 1,356
Core deposit intangible 1,934 2,017 2,099 2,182 5
Total common shares outstanding 49,800,126 49,758,487 49,715,021 49,695,487 46,581,370
Tangible book value, as reported $ 5.41 $ 5.39 $ 5.27 $ 5.10 $ 5.32
 
UNITED COMMUNITY FINANCIAL CORP.
NON-GAAP DISCLOSURE RECONCILIATION
(Unaudited)
       
 
Reconciliation of Normalized Net Income and Earnings Per Diluted Share:
 
For the three months ended For the twelve months ended
December 31, 2017 December 31, 2017
Diluted Diluted
Dollars in Earnings Per Dollars in Earnings Per
thousands   Share   thousands   Share
Net Income and diluted earnings per share $ 4,502 $ 0.090 $ 21,785 $ 0.437
Add: Acquisition related expenses, net of tax 39 — 3,293 0.066
Add: Deferred tax asset revaluation 1,861 0.037 1,861 0.038
Add: Litigation receivable adjustment, net of tax   1,517     0.030     1,517   0.031
Normalized net income and diluted earnings per share $ 7,919   $ 0.158   $ 28,456 $ 0.571
 
Weighted average shares outstanding--diluted 49,827 49,492
 
 
Calculation of Normalized Return on Average Assets and Normalized Return on Average Equity:
 
For the three For the twelve
months ended   months ended
December 31, December 31,
2017 2017
(Dollars in thousands)
Normalized net income $ 7,919 $ 28,456
Average assets 2,643,000 2,564,160
Average equity 295,506 285,511
 
Normalized return on average assets 1.20 % 1.11 %
Normalized return on average equity 10.72 % 9.97 %
 
Calculation of Normalized Efficiency Ratio:
For the three For the twelve
months ended   months ended
December 31, December 31,
2017 2017
(Dollars in thousands)
Noninterest expense $ 17,329 $ 68,259
Subtract: intangible asset amortization (114 ) (422 )
Subtract: merger related expenses (39 ) (5,001 )
Subtract: litigation receivable adjustment   (2,334 )   (2,334 )
$ 14,842 $ 60,502
 
Net interest income (FTE) $ 21,101 $ 81,264
Noninterest income 6,460 25,239
Subtract: Securities gains — (566 )
Add: Loss on disposal of REO   46     189  
$ 27,607 $ 106,126
 
Normalized efficiency ratio 53.76 % 57.01 %