Company Website:
http://www.ucfconline.com
YOUNGSTOWN, Ohio -- (Business Wire)
United Community Financial Corp. (United Community) (Nasdaq: UCFC), the
holding company of The Home Savings and Loan Company (Home Savings),
announced today that the Federal Deposit Insurance Corporation and the
Ohio Division of Financial Institutions (Home Savings’ Regulators)
terminated Home Savings’ Order to Cease and Desist, which was issued by
Home Savings’ Regulators in August 2008. However, the Board of Directors
of Home Savings has entered into a Consent Order with Home Savings’
Regulators, which lays the foundation for a stronger bank.
Patrick W. Bevack, President and CEO of United Community and Home
Savings said, “We are very pleased that Home Savings’ Regulators have
acknowledged the progress and significant efforts we’ve made over the
last several years. The dedicated Directors and employees of Home
Savings have worked, and continue to work, tirelessly to strengthen Home
Savings and restore United Community back to profitability. In fact, we
believe the Consent Order confirms the positive changes in management
made by the Board by providing that Home Savings ‘shall continue to
retain qualified management.’ However, we know there is more work to be
done, and we have plans in place to achieve our goals.”
The terminated Cease and Desist Order included 22 provisions, while the
Consent Order includes 13 provisions. Those 13 provisions contain few
new requirements. One new requirement is the submission of a formal
capital plan to Home Savings’ Regulators. It is important to note that
for the past two years, United Community filed a capital plan with its
Regulators as part of its strategic planning process.
In working with our Regulators, Home Savings will prepare a revised
capital plan that achieves compliance with the new capital requirements
of the Consent Order, continues to strengthen Home Savings and positions
Home Savings to meet the challenges, and take advantage of the
opportunities, that the future holds. The Consent Order requires a 9.00%
Tier 1 Leverage ratio (up from 8.00% in the terminated order) and a
12.00% Total Risk Based Capital ratio (unchanged). Many institutions are
being directed by the various federal and state regulators to increase
capital so as to continue to ensure the safety and soundness of these
institutions. The Board and management likewise agree that Home Savings’
capital ratios should be increased given Home Savings’ current risk
profile. Bevack added, “When we succeed in our capital plan, the Consent
Order allows Home Savings to petition its Regulators to ease the capital
requirements of the Consent Order to match the level of risk at Home
Savings.”
One provision in the Consent Order states that should Home Savings be
unable to meet the required capital ratios, Home Savings, upon notice of
its Regulators, could be asked to submit a contingency plan to merge,
sell or invest capital into Home Savings. “We believe that this
particular provision is now required in all (or nearly all) consent
orders in which specific capital levels must be maintained,” said
Bevack. He also added, “Over the last three years, we have established a
very good working relationship with our Regulators. As a result, we will
work closely with our Regulators to ensure that Home Savings meets the
regulatory requirements of the Consent Order and maintains a sufficient
level of capital so that no such contingency plan is required.”
United Community has developed and maintained a capital plan that is
consistent with and incorporated into the strategic planning process
that Home Savings undertook under the terms of the terminated Cease and
Desist Order. United Community’s capital plan considers several possible
ways in which to raise capital both internally and externally.
In keeping with this capital plan, United Community engaged an
investment banking advisory firm, in June 2011, to advise the board and
management on the Company’s strategic alternatives, including raising
outside capital. Bevack stated, “United Community has been moving
forward with a capital raising plan that we believe will achieve
compliance with the Consent Order. In order to give us adequate time to
pursue our capital plan, we will be postponing our annual shareholder
meeting until summer. In the coming months, we anticipate further
announcements regarding our capital raising efforts. As previously
stated, we contemplate that if we raise capital from new investors, we
also anticipate providing existing shareholders the right to purchase
United Community shares at the same price as those investors. The Board
and management are very excited about these opportunities and the future
of Home Savings.”
The majority of any capital raised by United Community will be
contributed to Home Savings, with the remainder to be used for general
corporate purposes. Home Savings will then utilize the capital to
accelerate the disposition of its nonperforming loans and real estate
owned and meet the capital requirements of the Consent Order.
On March 15th, United Community reported consolidated net
income of $7.9 million, or $0.25 per diluted share, for the three months
ended December 31, 2011. United Community also reported net income of
$230,000, or $0.01 per diluted share, for the year ended December 31,
2011. Delinquent loans, nonperforming loans and nonperforming assets for
the fourth quarter of 2011 all decreased when compared to the prior
quarter ended September 30, 2011. As of December 31, 2011, Home Savings’
Tier 1 leverage ratio was 8.61% and the total risk based capital ratio
was 14.57%, both of which reflected increases from the prior quarter.
This press release does not constitute an offer of any securities for
sale by United Community and should not be deemed as such.
Home Savings is a wholly-owned subsidiary of United Community and
operates 34 full-service banking offices and eight loan production
offices located throughout Ohio and western Pennsylvania. Additional
information on United Community and Home Savings may be found on United
Community’s web site: www.ucfconline.com.
When used in this press release, the words or phrases “believes,”
“will likely result,” “are expected to,” “will continue,” “is
anticipated,” “estimate,” “project” 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 United Community’s market area, changes in
policies by regulatory agencies, fluctuations in interest rates, demand
for loans in United Community’s market area, Home Savings’ ability to
comply with the terms of the Consent Order, Untied Community’s ability
to raise capital at all or on terms satisfactory to it, and competition
that could cause actual results to differ materially from historical
earnings and those presently anticipated or projected.United
Community cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.United
Community advises readers that the factors listed above could affect
United Community ’s financial performance and could cause United
Community ’s actual results for future periods to differ materially from
any opinions or statements expressed with respect to future periods in
any current statements.
United Community 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 unless required by law.
Contacts:
Media Contact:
Home Savings
Colleen Scott, 330-742-0638
Vice
President of Marketing
cscott@homesavings.com
or
Investor
Contact:
United Community Financial Corp.
James R. Reske,
330-742-0592
Chief Financial Officer
jreske@ucfconline.com
Source: United Community Financial Corp.