Market Overview

UCFC Announces Record Results for the Year Net Income $39.5 Million — $0.81 Per Share, or $40.8 Million — $0.84 Per Share Adjusted for Merger Costs

Share:

Fourth quarter 2019 highlights compared with the fourth quarter of 2018:

  • Net quarterly income of $9.8 million (or $11.2 million, excluding merger related costs, up 17.0%)
  • Diluted EPS of $0.20 (or $0.23, excluding merger related costs, up 20.9%)
  • Noninterest income $6.8 million, up 22.6%
  • Noninterest expense $16.8 million (or $15.4 million, excluding merger costs, down 10.2%)
  • ROA of 1.36% (or 1.55%, excluding merger related costs, versus 1.36%)
  • ROE of 12.03% (or 13.68%, excluding merger related costs, versus 12.15%)
  • Efficiency ratio improved to 53.6% compared to 54.8%

Full year 2019 highlights compared with 2018:

  • Net income of $39.5 million (or $40.8 million, excluding merger related costs, up 9.8%)
  • Diluted EPS of $0.81 (or $0.84, excluding merger related costs, up 13.1%)
  • Noninterest income $26.6 million, up 13.7%
  • Noninterest expense $65.4 million (or $64.1 million, excluding merger costs, down 1.5%)
  • ROA of 1.38% (or 1.43%, excluding merger related costs, versus 1.35%)
  • ROE of 12.34% (or 12.77%, excluding merger related costs, versus 12.10%)
  • Efficiency ratio improved to 55.8% compared to 57.7%
  • Average total loan growth 5.4%
  • Average total customer deposit growth 7.5%

United Community Financial Corp. (Company) (NASDAQ:UCFC), parent company of Home Savings Bank (Home Savings), announced today that net income for the quarter ended December 31, 2019, was $9.8 million, up 2.8% from the $9.6 million reported for the quarter ended December 31, 2018. Fourth quarter diluted earnings per share increased 6.3% to $0.20 from $0.19 per share reported at the same time last year. These results included $1.4 million of merger costs related to the previously announced merger with First Defiance Financial Corp. Excluding these acquisition costs, the Company's adjusted net income (non-GAAP) was $11.2 million, up 17.0% and diluted earnings per share were $0.23 per share, up 20.9% for the quarter ending December 31, 2019 when compared to the same quarter last year.

Net income for the twelve months ended December 31, 2019 totaled $39.5 million, up 6.2% from the $37.2 million reported for the twelve months ended December 31, 2018. For the same time period, diluted earnings per share increased to $0.81, up 9.3% from the $0.74 per share previously reported in the prior year. Excluding the $1.4 million in merger costs (after-tax), adjusted net income (non-GAAP) for the twelve months ended December 31, 2019 was $40.8 million up 9.8%, or $0.84 per diluted share or 13.1% when compared to the prior year.

Gary M. Small, President and Chief Executive Officer of the Company, commented, "The year 2019 proved to be a challenging yet gratifying period for Home Savings. Our team took the steps necessary to overcome the difficulties presented by a tumultuous year for net interest margin management and a very active loan prepayment environment."

Small continued, "The organization set record levels of commercial and residential new business production, delivered exceptional fee income growth across all business lines, and drove strong deposit growth. As a result we posted excellent financial results … our best earnings on record."

Concluding, "I am very proud of the efforts of all of our associates. Thanks to their hard work, we remain right on track regarding our pending merger with First Defiance and we look forward to an exciting and successful 2020 with our new partners."

Strong Loan and Deposit Growth

Total average loans grew $119.2 million (including loans held for sale), or 5.4%, during the last twelve months and $90.6 million, or 4.0% when compared to the same quarter last year. At December 31, 2019, total net loans (including loans held for sale) aggregated $2.4 billion.

The increase in total loans for the period was driven by an increase in commercial loans, which grew $51.4 million, or 5.5%, over the last twelve months. Mortgage loans (including loans held for sale) increased $14.7 million, or 1.4%, over the previous twelve months. Consumer loan growth amounted to $9.2 million, or 3.4%, for the same time period.

Average customer deposits (which exclude brokered certificates of deposit) increased $142.7 million, or 7.5%, from December 31, 2018. During that same time period total business deposits increased $69.1 million, or 26.6%. Average non-interest bearing accounts increased $43.9 million or 10.4% while average non-interest bearing business deposits increased $27.1 million or 13.4% during the same time period.

Net Interest Income and Margin

Net interest income totaled $21.8 million on a fully taxable equivalent (FTE) basis for the quarter ended December 31, 2019 compared to $23.6 million for the quarter ended December 31, 2018. The fourth quarter of 2018 included the impact of the favorable resolution of an impaired loan that added approximately $1.1 million to loan income during that quarter.

The net interest margin on an FTE basis was 3.22% for the fourth quarter of 2019 compared to 3.58% in the fourth quarter of 2018. Excluding the 16 basis point impact of the aforementioned resolution of an impaired loan, the net interest margin declined 20 basis points. Of this, 5 basis points were from reduced purchase accounting accretion, while the remainder of the decline reflects the near term impact of multiple rate reductions by the Federal Reserve in 2019.

For the full year 2019, the net interest margin was 3.28% compared to 3.43% for the full year 2018. Excluding the income impact of the loan resolution, calendar year 2018 net interest margin would have been 3.39%. Of the 11 basis point reduction 3 basis points were from reduced purchase accounting accretion, and the remaining 8 basis points of the decline can be attributed to the fall in interest rates in 2019.

Asset Quality Remains Strong

Asset quality remained strong during the fourth quarter despite movement in nonperforming loans. At December 31, 2019, nonperforming loans aggregated $12.9 million compared to $6.5 million at the end of the same quarter in the previous year. The Company's level of nonperforming loans increased primarily as a result of a single credit. The allowance for loan losses at the end of the quarter, as a percent of nonperforming loans was 149.6%. The allowance for loan losses as a percent of loans totaled 0.86% at December 31, 2019 compared to 0.93% the same quarter last year.

The Company recognized a negative provision for loan losses of $422,000 for the fourth quarter of 2019, compared to a provision of $178,000 in the fourth quarter of 2018. The decline in provision is a result of decreased loan balances in the fourth quarter of 2019, quarterly realignment of factors and the resolution of one credit with a specific reserve. For the year, the provision totaled $290,000 compared to $699,000 the previous year. Net charge offs to average loans were 6.6 basis points for the year ended December 31, 2019.

Non-Interest Income

Non-interest income increased 22.6%, or $1.3 million to $6.9 million for the fourth quarter of 2019 compared to $5.6 million for the same quarter last year. The primary drivers for the increase are mortgage banking income (gain on sale) of $686,000 and an increase of $356,000 in the value of mortgage servicing rights along with a $260,000 improvement in security sales. These gains were offset by an increase in the amortization of mortgage servicing rights of $427,000.

The increase in mortgage banking income was primarily driven by increased saleable volumes when comparing the fourth quarter of 2019 to the fourth quarter of 2018. The drop in interest rates resulting in increased refinance activity is the primary driver for the increased volume.

For the full year 2019, non-interest income increased 13.7%, or $3.2 million to $26.6 million compared to $23.4 million for calendar year 2018. The primary reason for this is an increase in mortgage banking income (gain on sale) of $3.5 million along with increased mortgage servicing fees of $289,000. Also adding to the increase was $578,000 from improvement in security gains, along with an 11.6% increase in insurance income and 9.9% increase in investment management fees. This was offset by an increase in mortgage serving rights amortization of $608,000 and a negative mortgage servicing rights valuation adjustment of $1,457,000. The increase in mortgage banking income was primarily driven by an increase in saleable loan volumes of 24.1% and in increase in the gain on sale margin of 43 basis points.

Non-Interest Expense

Non-interest expense was $15.4 million (excluding merger costs) for the fourth quarter of 2019 compared to $17.2 million for the similar quarter last year, a decrease of $1.8 million, or 10.2%. The fourth quarter of 2018 includes a prepayment penalty of $937,000 for the early extinguishment of Federal Home Loan Bank debt. Excluding this expense non-interest expense was down 4.8%. Non-interest expense for the year was $64.1 million (excluding merger costs). When compared to the prior year of $65.1 million, expenses were down 1.5%. When excluding the Federal Home Loan Bank prepayment penalty expenses year over year remained flat. The Company's efficiency ratio improved to 55.8% for the year versus 57.7% for the same time period a year ago.

Equity

During 2019, the Company repurchased 1,145,434 of its common shares in the open market at an average price of $9.36. Tangible book value per common share at December 31, 2019 was $6.41 compared to $5.18 at December 31, 2018.

Dividend to be paid

Subject to the closing of the merger of United Community with and into First Defiance Financial Corp., which was announced on September 9, 2019, and is expected to close on January 31, 2020, it is anticipated that a dividend will be paid to all First Defiance shareholders, including UCFC's shareholders whose shares will be converted to First Defiance common shares upon the closing of the merger. First Defiance declared a dividend of $0.22 per share payable on February 21, to shareholders of record as of February 14. This action would be the equivalent of UCFC paying a dividend of $0.08173 on UCFC shares.

Other

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 33 retail banking offices (32 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 may be found on the Company's web site: 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, competition, and the ability to close the merger of the Company with and into First Defiance Financial Corp. 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,

 

December 31,

 

 

 

2019

 

2018

 

F/(U)

  (Dollars in thousands)
Assets:      
Cash and deposits with banks  

$

30,218

 

 

$

34,380

 

 

-12.1

%

Federal funds sold  

 

21,635

 

 

 

26,605

 

 

-18.7

%

Total cash and cash equivalents  

 

51,853

 

 

 

60,985

 

 

-15.0

%

Securities:      
Trading, at fair value  

 

516

 

 

 

364

 

 

41.8

%

Available for sale, at fair value  

 

306,786

 

 

 

241,643

 

 

27.0

%

Held to maturity (fair value of $0 and $75,075, respectively)  

 

 

77,491

 

 

-100.0

%

Loans held for sale, at fair value  

 

127,839

 

 

 

91,472

 

 

39.8

%

Gross loans  

 

2,237,224

 

 

 

2,197,285

 

 

1.8

%

Allowance for loan losses  

 

(19,281

)

 

 

(20,443

)

 

-5.7

%

Net loans  

 

2,217,943

 

 

 

2,176,842

 

 

1.9

%

Federal Home Loan Bank stock, at cost  

 

13,639

 

 

 

19,144

 

 

-28.8

%

Premises and equipment, net  

 

22,337

 

 

 

21,930

 

 

1.9

%

Accrued interest receivable  

 

8,660

 

 

 

9,080

 

 

-4.6

%

Real estate owned and other repossessed assets  

 

816

 

 

 

1,088

 

 

-25.0

%

Goodwill  

 

20,221

 

 

 

20,221

 

 

0.0

%

Core deposit intangible  

 

1,275

 

 

 

1,603

 

 

-20.5

%

Customer list intangible  

 

2,032

 

 

 

2,214

 

 

-8.2

%

Cash surrender value of life insurance  

 

65,798

 

 

 

64,220

 

 

2.5

%

Other assets  

 

28,598

 

 

 

23,060

 

 

24.0

%

Total assets  

$

2,868,313

 

 

$

2,811,357

 

 

2.0

%

       
Liabilities and Shareholders' Equity      
Liabilities:      
Deposits:      
Interest bearing  

$

1,665,042

 

 

$

1,528,057

 

 

9.0

%

Noninterest bearing  

 

430,040

 

 

 

394,208

 

 

9.1

%

Customer deposits  

 

2,095,082

 

 

 

1,922,265

 

 

9.0

%

Brokered deposits  

 

192,027

 

 

 

290,955

 

 

-34.0

%

Total deposits  

 

2,287,109

 

 

 

2,213,220

 

 

3.3

%

Borrowed funds:      
Federal Home Loan Bank advances      
Short-term advances  

 

191,000

 

 

 

243,000

 

 

-21.4

%

Total Federal Home Loan Bank advances  

 

191,000

 

 

 

243,000

 

 

-21.4

%

Repurchase agreements and other  

 

 

224

 

 

-100.0

%

Total borrowed funds  

 

191,000

 

 

 

243,224

 

 

-21.5

%

Advance payments by borrowers for taxes and insurance  

 

31,650

 

 

 

27,192

 

 

16.4

%

Accrued interest payable  

 

656

 

 

 

1,279

 

 

-48.7

%

Accrued expenses and other liabilities  

 

25,789

 

 

 

17,108

 

 

50.7

%

Total liabilities  

 

2,536,204

 

 

 

2,502,023

 

 

1.4

%

       
Shareholders' Equity:      
Preferred stock-no par value; 1,000,000 shares authorized and no shares outstanding  

 

 

0.0

%

Common stock-no par value; 499,000,000 shares authorized; 54,138,910 shares issued and 48,104,055 and 49,128,875 shares, respectively, outstanding  

 

177,392

 

 

 

177,492

 

 

-0.1

%

Retained earnings  

 

216,868

 

 

 

192,062

 

 

12.9

%

Accumulated other comprehensive loss  

 

(13,461

)

 

 

(21,436

)

 

-37.2

%

Treasury stock, at cost, 6,034,855 and 5,010,035 shares, respectively  

 

(48,690

)

 

 

(38,784

)

 

25.5

%

Total shareholders' equity  

 

332,109

 

 

 

309,334

 

 

7.4

%

Total liabilities and shareholders' equity  

$

2,868,313

 

 

$

2,811,357

 

 

2.0

%

       
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,

 

 

 

 

2019

 

2019

 

Variance

 

F/(U)

 

2018

 

Variance

 

F/(U)

 

2019

 

2018

 

Variance

 

F/(U)

(Dollars in thousands, except per share data)
Interest income
Loans

$

25,501

 

$

26,037

 

$

(536

)

-2.1

%

$

26,587

 

$

(1,086

)

-4.1

%

$

103,768

 

$

96,653

 

$

7,115

 

7.4

%

Loans held for sale

 

1,219

 

 

1,067

 

 

152

 

14.2

%

 

1,184

 

 

35

 

3.0

%

 

4,284

 

 

4,318

 

 

(34

)

-0.8

%

Securities:
Available for sale, nontaxable

 

234

 

 

235

 

 

(1

)

-0.4

%

 

334

 

 

(100

)

-29.9

%

 

1,012

 

 

1,412

 

 

(400

)

-28.3

%

Available for sale, taxable

 

1,781

 

 

1,828

 

 

(47

)

-2.6

%

 

1,148

 

 

633

 

55.1

%

 

6,483

 

 

4,732

 

 

1,751

 

37.0

%

Held to maturity, nontaxable

0.0

%

 

69

 

 

(69

)

-100.0

%

 

99

 

 

250

 

 

(151

)

-60.4

%

Held to maturity, taxable

0.0

%

 

380

 

 

(380

)

-100.0

%

 

497

 

 

1,574

 

 

(1,077

)

-68.4

%

Federal Home Loan Bank stock dividends

 

140

 

 

173

 

 

(33

)

-19.1

%

 

290

 

 

(150

)

-51.7

%

 

847

 

 

1,133

 

 

(286

)

-25.2

%

Other interest earning assets

 

125

 

 

203

 

 

(78

)

-38.4

%

 

178

 

 

(53

)

-29.8

%

 

752

 

 

500

 

 

252

 

50.4

%

Total interest income

 

29,000

 

 

29,543

 

 

(543

)

-1.8

%

 

30,170

 

 

(1,170

)

-3.9

%

 

117,742

 

 

110,572

 

 

7,170

 

6.5

%

Interest expense
Deposits

 

6,095

 

 

6,856

 

 

(761

)

11.1

%

 

5,866

 

 

229

 

-3.9

%

 

26,722

 

 

17,796

 

 

8,926

 

-50.2

%

Federal Home Loan Bank advances

 

1,157

 

 

1,103

 

 

54

 

-4.9

%

 

810

 

 

347

 

-42.8

%

 

3,460

 

 

4,830

 

 

(1,370

)

28.4

%

Repurchase agreements and other

0.0

%

0.0

%

 

1

 

 

1

 

100.0

%

Total interest expense

 

7,252

 

 

7,959

 

 

707

 

-8.9

%

 

6,676

 

 

(576

)

8.6

%

 

30,182

 

 

22,627

 

 

(7,555

)

33.4

%

Net interest income

 

21,748

 

 

21,584

 

 

164

 

0.8

%

 

23,494

 

 

(1,746

)

-7.4

%

 

87,560

 

 

87,945

 

 

(385

)

-0.4

%

Taxable equivalent adjustment

 

51

 

 

46

 

 

5

 

10.9

%

 

111

 

 

(60

)

-54.1

%

 

244

 

 

382

 

 

(138

)

-36.1

%

Net interest income (FTE) (1)

 

21,799

 

 

21,630

 

 

169

 

0.8

%

 

23,605

 

 

(1,806

)

-7.7

%

 

87,804

 

 

88,327

 

 

(523

)

-0.6

%

Provision for loan losses

 

(422

)

 

701

 

 

1,123

 

160.2

%

 

178

 

 

600

 

337.1

%

 

290

 

 

699

 

 

409

 

58.5

%

Net interest income after provision for loan losses (FTE)

 

22,221

 

 

20,929

 

 

1,292

 

6.2

%

 

23,427

 

 

(1,206

)

-5.1

%

 

87,514

 

 

87,628

 

 

(114

)

-0.1

%

Non-interest income
Insurance agency income

 

631

 

 

575

 

 

56

 

9.7

%

 

562

 

 

69

 

12.3

%

 

2,452

 

 

2,197

 

 

255

 

11.6

%

Brokerage income

 

383

 

 

480

 

 

(97

)

-20.2

%

 

305

 

 

78

 

25.6

%

 

1,642

 

 

1,216

 

 

426

 

35.0

%

Service fees and other charges:
Deposit related fees

 

1,515

 

 

1,490

 

 

25

 

1.7

%

 

1,521

 

 

(6

)

-0.4

%

 

5,762

 

 

5,706

 

 

56

 

1.0

%

Mortgage servicing fees

 

931

 

 

908

 

 

23

 

2.5

%

 

858

 

 

73

 

8.5

%

 

3,593

 

 

3,304

 

 

289

 

8.7

%

Mortgage servicing rights valuation

 

312

 

 

(336

)

 

648

 

-192.9

%

 

(44

)

 

356

 

-809.1

%

 

(1,518

)

 

(61

)

 

(1,457

)

-2388.5

%

Mortgage servicing rights amortization

 

(857

)

 

(702

)

 

(155

)

22.1

%

 

(430

)

 

(427

)

99.3

%

 

(2,557

)

 

(1,949

)

 

(608

)

-31.2

%

Other service fees

 

21

 

 

21

 

0.0

%

 

36

 

 

(15

)

-41.7

%

 

101

 

 

161

 

 

(60

)

-37.3

%

Net gains (losses):
Trading securities

 

68

 

 

29

 

 

39

 

134.5

%

 

669

 

 

(601

)

-89.8

%

 

200

 

 

669

 

 

(469

)

-70.1

%

Securities available for sale

 

128

 

 

(128

)

-100.0

%

 

(861

)

 

861

 

-100.0

%

 

420

 

 

(627

)

 

1,047

 

-167.0

%

Mortgage banking income

 

1,804

 

 

2,508

 

 

(704

)

-28.1

%

 

1,118

 

 

686

 

61.4

%

 

8,619

 

 

5,090

 

 

3,529

 

69.3

%

Real estate owned and other repossessed assets charges, net

 

4

 

 

(55

)

 

59

 

-107.3

%

 

(24

)

 

28

 

-116.7

%

 

(115

)

 

(260

)

 

145

 

55.8

%

Debit/credit card fees

 

1,039

 

 

1,057

 

 

(18

)

-1.7

%

 

1,033

 

 

6

 

0.6

%

 

4,251

 

 

4,158

 

 

93

 

2.2

%

Trust fee income

 

428

 

 

434

 

 

(6

)

-1.4

%

 

480

 

 

(52

)

-10.8

%

 

1,788

 

 

1,905

 

 

(117

)

-6.1

%

Bank owned life insurance

 

397

 

 

398

 

 

(1

)

-0.3

%

 

431

 

 

(34

)

-7.9

%

 

1,578

 

 

1,732

 

 

(154

)

-8.9

%

Other income

 

171

 

 

80

 

 

91

 

113.8

%

 

(69

)

 

240

 

-347.8

%

 

391

 

 

161

 

 

230

 

142.9

%

Total non-interest income

 

6,847

 

 

7,015

 

 

(168

)

-2.4

%

 

5,585

 

 

1,262

 

22.6

%

 

26,607

 

 

23,402

 

 

3,205

 

13.7

%

Non-interest expense
Salaries and employee benefits

 

9,278

 

 

8,831

 

 

447

 

-5.1

%

 

9,029

 

 

249

 

-2.8

%

 

37,790

 

 

37,071

 

 

719

 

-1.9

%

Occupancy

 

1,051

 

 

1,024

 

 

27

 

-2.6

%

 

1,023

 

 

28

 

-2.7

%

 

4,146

 

 

4,167

 

 

(21

)

0.5

%

Equipment and data processing

 

2,251

 

 

2,307

 

 

(56

)

2.4

%

 

2,122

 

 

129

 

-6.1

%

 

9,055

 

 

8,679

 

 

376

 

-4.3

%

Financial institutions tax

 

468

 

 

509

 

 

(41

)

8.1

%

 

464

 

 

4

 

-0.9

%

 

1,995

 

 

1,950

 

 

45

 

-2.3

%

Advertising

 

278

 

 

407

 

 

(129

)

31.7

%

 

414

 

 

(136

)

32.9

%

 

1,539

 

 

1,278

 

 

261

 

-20.4

%

Amortization of intangible assets

 

127

 

 

127

 

0.0

%

 

128

 

 

(1

)

0.8

%

 

510

 

 

501

 

 

9

 

-1.8

%

FDIC insurance premiums

 

211

 

 

(288

)

 

499

 

173.3

%

 

398

 

 

(187

)

47.0

%

 

551

 

 

1,270

 

 

(719

)

56.6

%

Other insurance premiums

 

74

 

 

74

 

0.0

%

 

70

 

 

4

 

-5.7

%

 

300

 

 

373

 

 

(73

)

19.6

%

Professional fees:
Legal fees

 

100

 

 

181

 

 

(81

)

44.8

%

 

292

 

 

(192

)

65.8

%

 

554

 

 

1,094

 

 

(540

)

49.4

%

Other professional fees

 

250

 

 

545

 

 

(295

)

54.1

%

 

721

 

 

(471

)

65.3

%

 

1,945

 

 

2,262

 

 

(317

)

14.0

%

Supervisory fees

 

48

 

 

48

 

0.0

%

 

34

 

 

14

 

-41.2

%

 

163

 

 

152

 

 

11

 

-7.2

%

Real estate owned and other repossessed asset expenses

 

27

 

 

39

 

 

(12

)

30.8

%

 

34

 

 

(7

)

20.6

%

 

123

 

 

129

 

 

(6

)

4.7

%

Acquisition related expenses

 

1,351

 

 

1,351

 

100.0

%

 

1,351

 

100.0

%

 

1,351

 

 

1,351

 

100.0

%

Other expenses

 

1,265

 

 

1,207

 

 

58

 

-4.8

%

 

2,449

 

 

(1,184

)

48.3

%

 

5,419

 

 

6,153

 

 

(734

)

11.9

%

Total non-interest expenses

 

16,779

 

 

15,011

 

 

(1,768

)

-11.8

%

 

17,178

 

 

399

 

-2.3

%

 

65,441

 

 

65,079

 

 

(362

)

0.6

%

Income before income taxes

 

12,289

 

 

12,933

 

 

(644

)

-5.0

%

 

11,834

 

 

455

 

3.8

%

 

48,680

 

 

45,951

 

 

2,729

 

5.9

%

Taxable equivalent adjustment

 

51

 

 

46

 

 

5

 

-10.9

%

 

111

 

 

(60

)

54.1

%

 

244

 

 

382

 

 

(138

)

36.1

%

Income tax expense

 

2,415

 

 

2,383

 

 

32

 

-1.3

%

 

2,172

 

 

243

 

-11.2

%

 

8,967

 

 

8,391

 

 

576

 

-6.9

%

Net income

$

9,823

 

$

10,504

 

$

(681

)

-6.5

%

$

9,551

 

$

272

 

2.8

%

$

39,469

 

$

37,178

 

$

2,291

 

6.2

%

 
Earnings per common share:
Basic

$

0.204

 

$

0.218

 

$

0.014

)

-6.4

%

$

0.192

 

$

0.012

 

6.2

%

$

0.815

 

$

0.746

 

$

0.069

 

9.2

%

Diluted

 

0.203

 

 

0.218

 

 

(0.015

)

-6.9

%

 

0.191

 

 

0.012

 

6.3

%

 

0.811

 

 

0.742

 

 

0.069

 

9.3

%

 
Diluted earnings per share excluding merger cost

 

0.231

 

 

0.218

 

 

0.013

 

6.0

%

 

0.191

 

 

0.040

 

20.9

%

 

0.839

 

 

0.742

 

 

0.097

 

13.1

%

 (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, 2019

 

September 30, 2019

 

December 31, 2018

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)

$

2,233,356

$

25,508

4.55

%

$

2,224,310

$

26,045

4.66

%

$

2,161,414

$

26,616

4.93

%

Loans held for sale

 

119,043

 

1,219

4.10

%

 

99,581

 

1,067

4.29

%

 

100,348

 

1,184

4.68

%

Total loans, net

 

2,352,399

 

26,727

4.55

%

 

2,323,891

 

27,112

4.66

%

 

2,261,762

 

27,800

4.91

%

Securities:
Trading

0.00

%

0.00

%

 

4

0.00

%

Available for sale-taxable

 

271,592

 

1,781

2.62

%

 

279,618

 

1,828

2.61

%

 

196,910

 

1,148

2.33

%

Available for sale-nontaxable (2)

 

34,968

 

278

3.18

%

 

35,054

 

273

3.12

%

 

48,370

 

399

3.30

%

Held to maturity-taxable

0.00

%

0.00

%

 

65,605

 

380

2.32

%

Held to maturity-nontaxable (2)

0.00

%

0.00

%

 

12,215

 

86

2.82

%

Total securities

 

306,560

 

2,059

2.69

%

 

314,672

 

2,101

2.67

%

 

323,104

 

2,013

2.49

%

Federal Home Loan Bank stock

 

13,639

 

140

4.11

%

 

13,872

 

173

4.99

%

 

19,144

 

290

6.06

%

Other interest earning assets

 

26,414

 

125

1.88

%

 

36,706

 

203

2.19

%

 

34,779

 

178

2.03

%

Total interest earning assets

 

2,699,012

 

29,051

4.29

%

 

2,689,141

 

29,589

4.38

%

 

2,638,789

 

30,281

4.59

%

Non-interest earning assets

 

180,691

 

181,208

 

176,579

Total assets

$

2,879,703

$

2,870,349

$

2,815,368

Interest bearing liabilities:
Deposits:
Checking accounts

$

807,682

 

2,440

1.21

%

$

770,268

 

2,391

1.24

%

$

620,306

 

1,114

0.71

%

Savings accounts

 

285,478

 

26

0.04

%

 

286,794

 

27

0.04

%

 

303,247

 

28

0.04

%

Certificates of deposit
Customer certificates of deposit

 

580,701

 

2,965

2.04

%

 

611,736

 

3,148

2.06

%

 

619,208

 

2,652

1.70

%

Brokered certificates of deposit

 

144,337

 

664

1.84

%

 

226,951

 

1,290

2.27

%

 

393,778

 

2,072

2.09

%

Total certificates of deposit

 

725,038

 

3,629

2.00

%

 

838,687

 

4,438

2.12

%

 

1,012,986

 

4,724

1.85

%

Total interest bearing deposits

 

1,818,198

 

6,095

1.34

%

 

1,895,749

 

6,856

1.45

%

 

1,936,539

 

5,866

1.20

%

Federal Home Loan Bank advances
Long-term advances

0.00

%

0.00

%

 

46,879

 

357

3.02

%

Short-term advances

 

245,250

 

1,157

1.89

%

 

189,370

 

1,103

2.33

%

 

75,033

 

453

2.40

%

Total Federal Home Loan Bank advances

 

245,250

 

1,157

1.89

%

 

189,370

 

1,103

2.33

%

 

121,912

 

810

2.64

%

Repurchase agreements and other

0.00

%

 

125

0.00

%

 

245

0.00

%

Total borrowed funds

 

245,250

 

1,157

1.89

%

 

189,495

 

1,103

2.33

%

 

122,157

 

810

2.63

%

Total interest bearing liabilities

$

2,063,448

 

7,252

1.41

%

$

2,085,244

 

7,959

1.53

%

$

2,058,696

 

6,676

1.29

%

Non-interest bearing liabilities
Total noninterest bearing deposits

 

433,275

 

411,106

 

395,649

Other noninterest bearing liabilities

 

56,267

 

54,197

 

46,559

Total noninterest bearing liabilities

 

489,542

 

465,303

 

442,208

Total liabilities

$

2,552,990

$

2,550,547

$

2,500,904

Shareholders' equity

 

326,713

 

319,802

 

314,464

Total liabilities and equity

$

2,879,703

$

2,870,349

$

2,815,368

Net interest income and interest rate spread

$

21,799

3.00

%

$

21,630

2.85

%

$

23,605

3.30

%

Net interest margin

3.22

%

3.21

%

3.58

%

Average interest earning assets to average interest bearing liabilities

130.80

%

128.96

%

128.18

%

 
 
Interest bearing deposits
Checking accounts

$

807,682

$

2,440

1.21

%

$

770,268

$

2,391

1.24

%

$

620,306

$

1,114

0.71

%

Savings accounts

 

285,478

 

26

0.04

%

 

286,794

 

27

0.04

%

 

303,247

 

28

0.04

%

Customer certificates of deposit

 

580,701

 

2,965

2.04

%

 

611,736

 

3,148

2.06

%

 

619,208

 

2,652

1.70

%

Total customer deposits

 

1,673,861

 

5,431

1.30

%

 

1,668,798

 

5,566

1.33

%

 

1,542,761

 

3,794

0.98

%

Brokered certificates of deposit

 

144,337

 

664

1.84

%

 

226,951

 

1,290

2.27

%

 

393,778

 

2,072

2.09

%

Total interest bearing deposits

 

1,818,198

 

6,095

1.34

%

 

1,895,749

 

6,856

1.45

%

 

1,936,539

 

5,866

1.20

%

Noninterest bearing deposits

 

433,275

0.00

%

 

411,106

0.00

%

 

395,649

0.00

%

Total average deposits and cost of deposits

$

2,251,473

$

6,095

1.08

%

$

2,306,855

$

6,856

1.19

%

$

2,332,188

$

5,866

1.01

%

Other interest bearing liabilities
Federal Home Loan Bank advances
Long term advances $

$

0.00

%

$

$

0.00

%

$

46,879

$

357

3.02

%

Short term advances

 

245,250

 

1,157

1.89

%

 

189,370

 

1,103

2.33

%

 

75,033

 

453

2.40

%

Total Federal Home Loan Bank advances

 

245,250

 

1,157

1.89

%

 

189,370

 

1,103

2.33

%

 

121,912

 

810

2.64

%

Repurchase agreements and other

 

-

0.00

%

 

125

0.00

%

 

245

0.00

%

Total borrowed funds

 

245,250

 

1,157

1.89

%

 

189,495

 

1,103

2.33

%

 

122,157

 

810

2.63

%

Total average deposits and other interest bearing liabilities and total cost of funds

$

2,496,723

$

7,252

1.26

%

$

2,496,350

$

7,959

1.26

%

$

2,454,345

$

6,676

1.09

%

 
 
Customer deposits interest bearing and noninterest bearing

$

2,107,136

$

5,431

1.03

%

$

2,079,904

$

5,566

1.07

%

$

1,938,410

$

3,794

0.78

%

Brokered deposits

 

144,337

 

664

1.84

%

 

226,951

 

1,290

2.27

%

 

393,778

 

2,072

2.09

%

Total borrowings

 

245,250

 

1,157

1.89

%

 

189,495

 

1,103

2.33

%

 

122,157

 

810

2.63

%

Cost of funds

 

2,496,723

 

7,252

1.26

%

 

2,496,350

 

7,959

1.26

%

 

2,454,345

 

6,676

1.09

%

(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,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

 

December 31,

2018

(Dollars in thousands, except per share data)

Financial Data
Total assets

$

2,868,313

 

$

2,906,573

 

$

2,869,116

 

$

2,852,041

 

$

2,811,357

 

Total loans, net

 

2,217,943

 

 

2,248,507

 

 

2,229,326

 

 

2,215,549

 

 

2,176,842

 

Total securities

 

307,302

 

 

315,755

 

 

319,714

 

 

313,847

 

 

319,498

 

Total deposits

 

2,287,109

 

 

2,105,758

 

 

2,259,179

 

 

2,289,803

 

 

2,213,220

 

Average interest-bearing deposits

 

1,818,198

 

 

1,895,749

 

 

1,973,104

 

 

1,963,567

 

 

1,936,539

 

Average noninterest-bearing deposits

 

433,275

 

 

411,106

 

 

405,535

 

 

400,874

 

 

395,649

 

Total shareholders' equity

 

332,109

 

 

326,856

 

 

317,554

 

 

314,709

 

 

309,334

 

Net interest income

 

21,748

 

 

21,584

 

 

22,043

 

 

22,186

 

 

23,494

 

Net interest income (FTE) (1)

 

21,799

 

 

21,630

 

 

22,105

 

 

22,270

 

 

23,605

 

Provision for loan losses

 

(422

)

 

701

 

 

(51

)

 

61

 

 

178

 

Noninterest income

 

6,847

 

 

7,015

 

 

6,671

 

 

6,073

 

 

5,585

 

Noninterest expense

 

16,779

 

 

15,011

 

 

15,976

 

 

17,674

 

 

17,178

 

Income tax expense

 

2,415

 

 

2,383

 

 

2,303

 

 

1,868

 

 

2,172

 

Net income

 

9,823

 

 

10,504

 

 

10,486

 

 

8,656

 

 

9,551

 

 
Share Data
Basic earnings per common share

$

0.204

 

$

0.218

 

$

0.216

 

$

0.177

 

$

0.192

 

Diluted earnings per common share

 

0.203

 

 

0.218

 

 

0.215

 

 

0.176

 

 

0.191

 

Book value per common share

 

6.90

 

 

6.80

 

 

6.61

 

 

6.44

 

 

6.30

 

Tangible book value per common share

 

6.41

 

 

6.31

 

 

6.11

 

 

5.95

 

 

5.81

 

Market value per common share

 

11.66

 

 

10.78

 

 

9.57

 

 

9.35

 

 

8.85

 

 
Common shares outstanding at end of period

 

48,104

 

 

48,087

 

 

48,069

 

 

48,853

 

 

49,129

 

Weighted average shares outstanding—basic

 

47,996

 

 

47,961

 

 

48,463

 

 

48,854

 

 

49,445

 

Weighted average shares outstanding—diluted

 

48,221

 

 

48,164

 

 

48,644

 

 

49,113

 

 

49,695

 

 
Key Ratios
Return on average assets (2)

 

1.36

%

 

1.46

%

 

1.48

%

 

1.22

%

 

1.36

%

Return on average assets excluding merger cost

 

1.55

%

 

1.46

%

 

1.48

%

 

1.22

%

 

1.36

%

Return on average equity (3)

 

12.03

%

 

13.14

%

 

13.22

%

 

10.99

%

 

12.15

%

Return on average equity excluding merger cost

 

13.68

%

 

13.14

%

 

13.22

%

 

10.99

%

 

12.15

%

Return on tangible equity (4)

 

12.96

%

 

14.19

%

 

14.30

%

 

11.90

%

 

13.16

%

Return on tangible equity excluding merger cost

 

14.75

%

 

14.19

%

 

14.30

%

 

11.90

%

 

13.16

%

Net interest margin

 

3.22

%

 

3.21

%

 

3.33

%

 

3.38

%

 

3.58

%

Efficiency ratio

 

53.55

%

 

52.15

%

 

55.37

%

 

62.29

%

 

54.79

%

Nonperforming loans to net loans, end of period

 

0.58

%

 

0.46

%

 

0.58

%

 

0.32

%

 

0.30

%

Nonperforming assets to total assets, end of period

 

0.48

%

 

0.39

%

 

0.48

%

 

0.34

%

 

0.27

%

Allowance for loan loss as a percent of loans, end of period

 

0.86

%

 

0.88

%

 

0.91

%

 

0.91

%

 

0.93

%

Delinquent loans to total net loans, end of period

 

0.74

%

 

0.63

%

 

0.58

%

 

0.41

%

 

0.50

%

 
 

 (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,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

 

December 31,

2018

(Dollars in thousands)
Loan Portfolio Composition
Commercial loans
Multi-family

$

177,363

 

$

166,027

 

$

154,630

 

$

163,243

 

$

134,143

 

Owner/nonowner occupied commercial real estate

 

401,600

 

 

409,687

 

 

414,780

 

 

412,550

 

 

409,979

 

Land

 

18,131

 

 

19,653

 

 

16,955

 

 

17,090

 

 

16,830

 

Construction

 

122,102

 

 

127,388

 

 

138,043

 

 

135,048

 

 

141,686

 

Commercial and industrial

 

275,179

 

 

271,292

 

 

249,898

 

 

246,740

 

 

240,293

 

Total

 

994,375

 

 

994,047

 

 

974,306

 

 

974,671

 

 

942,931

 

Residential mortgage loans
Real estate

 

914,073

 

 

938,899

 

 

942,698

 

 

934,586

 

 

927,255

 

Construction

 

34,931

 

 

44,636

 

 

46,196

 

 

45,102

 

 

43,435

 

Total

 

949,004

 

 

983,535

 

 

988,894

 

 

979,688

 

 

970,690

 

Consumer loans
Consumer

 

286,329