##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from           to   Commission File
    Number: 0-024399
 UNITED COMMUNITY FINANCIAL
    CORP.
 (Exact name of registrant as
    specified in its charter)
  Ohio

34-1856319(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)   275 West Federal Street,
    Youngstown, Ohio(Address of principal
    executive offices)

44503(Zip Code)   Registrants
    telephone number:
 (330)
    742-0500
  Securities registered pursuant to Section 12(b) of the
    Act:
  Common shares, no par value per share(Title of Class)

Nasdaq(Name of each exchange on
    which registered)   Securities registered pursuant to Section 12(g) of the
    Act:
  None (Title
    of Class)
  o þ
  o þ
  o þ
  Regulation S-K Form 10-K þ
  12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K 




---



##### 





TABLE OF
    CONTENTS
  ItemNumber



PagePART I1.


Description of Business


1General


1Discussion of Forward-Looking
    Statements


2Lending Activities


2Investment Activities


11Sources of Funds


12Competition


15Employees


15Regulation


151A.


Risk Factors


171B.


Unresolved Staff Comments


192.


Properties


193.


Legal Proceedings


194.


Submission of Matters to a Vote of Security
    Holders


19PART II5.


Market for Registrants Common Equity and
    Related Shareholder Matters


206.


Selected Financial Data


227.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


247A.


Quantitative and Qualitative Disclosures About
    Market Risk


378.


Financial Statements and Supplemental Data


409.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


809A.


Controls and Procedures


809B.


Other Information


80PART III10.


Directors and Executive Officers and Corporate
    Governance


8011.


Executive Compensation


8012.


Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


8013.


Certain Relationships and Related Transactions
    and Director Independence


8114.


Principal Accountant Fees and Services


81PART IV15.


Exhibits, Financial Statement Schedules and
    Reports on
    Form 8-K


81Signatures


82Exhibit Index


83EX-4EX-21EX-23EX-31.1EX-31.2EX-32.1




---



##### Table of Contents



PART I  Item 1.
    Description
    of Business GENERAL    http://www.ucfconline.com Form 10-K, Form 10-Q, Form 8-K,
           1




---



##### Table of Contents



DISCUSSION
    OF FORWARD-LOOKING STATEMENTS  Form 10-K
   LENDING
    ACTIVITIES  General.
 2




---



##### Table of Contents



Loan Portfolio Composition.
  At December 31,2007


2006


2005


2004


2003Percent of





Percent of





Percent of





Percent of





Percent ofAmount


Total Loans


Amount


Total Loans


Amount


Total Loans


Amount


Total Loans


Amount


Total Loans(Dollars in thousands)Real estate loans:Permanent loans:One- to four-family residential

$
871,019



38.41
%

$
854,829



37.65
%

$
749,362



35.44
%

$
690,413



37.68
%

$
599,370



37.62
%Multifamily residential


179,535



7.92



163,541



7.20



154,702



7.32



153,011



8.35



148,362



9.31Non-residential


359,070



15.84



348,528



15.35



314,124



14.86



289,755



15.81



291,588



18.30Land


22,818



1.01



26,684



1.18



14,979



0.71



14,701



0.80



14,147



0.89Total permanent


1,432,442



63.18



1,393,582



61.38



1,233,167



58.33



1,147,880



62.64



1,053,467



66.12Construction loans:One- to four-family residential


357,153



15.75



388,926



17.13



389,558



18.43



301,193



16.43



244,837



15.37Multifamily and non-residential


25,191



1.11



25,215



1.11



66,788



3.16



47,230



2.58



27,586



1.73Total construction


382,344



16.86



414,141



18.24



456,346



21.59



348,423



19.01



272,423



17.10Total real estate loans


1,814,786



80.04



1,807,723



79.62



1,689,513



79.92



1,496,303



81.65



1,325,890



83.22Consumer loans:Home equity


234,362



10.33



220,679



9.72



196,986



9.32



133,441



7.28



134,053



8.41Auto


31,206



1.38



36,605



1.61



42,975



2.03



58,148



3.17



48,219



3.03Marine


14,196



0.63



19,218



0.85



23,434



1.11



31,622



1.73



22,987



1.44RV


63,587



2.80



59,642



2.63



48,108



2.27



27,330



1.49



15



0.00Other(1)


6,096



0.27



9,463



0.42



12,012



0.57



17,105



0.94



13,488



0.85Total consumer


349,447



15.41



345,607



15.23



323,515



15.30



267,646



14.61



218,762



13.73Commercial loans


103,208



4.55



116,952



5.15



100,977



4.78



68,523



3.74



48,570



3.05Total loans


2,267,441



100.00
%


2,270,282



100.00
%


2,114,005



100.00
%


1,832,472



100.00
%


1,593,222



100.00
%Less net items


30,453







16,723







16,572







16,496







16,728Total loans, net

$
2,236,988






$
2,253,559






$
2,097,433






$
1,815,976






$
1,576,494     (1)
    
    Consists primarily of overdraft protection loans and loans to
    individuals secured by demand accounts, deposits and other
    consumer assets.  Loan Maturity. due-on-sale
 3




---



##### Table of Contents



Principal Repayments ContractuallyDue in the Years Ended December 31,2013 and2008


2009-2012


Thereafter


Total(Dollars in thousands)Construction loans:One- to four-family residential

$
328,529


$
1,604


$
27,020


$
357,153Multifamily and non-residential


1,526



20,054



3,611



25,191Commercial loans


80,480



18,368



4,360



103,208Total

$
410,535


$
40,026


$
34,991


$
485,552     Due After December 31, 2008(Dollars in thousands)Fixed rate

$
43,787Adjustable rate


31,230$
75,017   Loans Secured by One- to Four-Family Real
    Estate.
  30-year
       4




---



##### Table of Contents



Loans Secured by Multifamily Residences.
      Loans Secured by Nonresidential Real
    Estate.
      Loans Secured by Vacant Land.
  Construction Loans.
   5




---



##### Table of Contents



Consumer Loans.
          Commercial Loans.
   6




---



##### Table of Contents



Loan Solicitation and Processing.
          Loan Originations, Purchases and Sales.
    tm
 7




---



##### Table of Contents



Loans to One Borrower Limits.
    Delinquent Loans, Nonperforming Assets and Classified
    Assets.
    At December 31,2007


2006Percent of








PercentNet








of NetNumber


Amount


Loans


Number


Amount


Loans(Dollars in thousands)Loans delinquent for:30-59 days


341


$
41,478



1.85
%


347


$
32,315



1.43
%60-89 days


120



17,331



0.78



93



9,413



0.4290 days or over


425



92,671



4.14



297



52,313



2.32Total delinquent loans


886


$
151,480



6.77
%


737


$
94,041



4.17
%   deed-in-lieu
   8




---



##### Table of Contents



At December 31,2007


2006


2005


2004


2003(Dollars in thousands)Nonperforming loans:Nonaccrual loansReal estate loans:One- to four-family residential

$
12,708


$
8,977


$
6,795


$
6,511


$
7,121Multifamily and nonresidential


27,201



16,569



6,368



2,880



1,315Construction (net of loans in process) and land


48,043



20,858



4,732



1,350



1,724Total real estate loans


87,952



46,404



17,895



10,741



10,160Consumer


4,809



3,245



2,495



5,152



888Commercial


4,738



2,997



3,889



4,960



1,933Total nonaccrual loans


97,499



52,646



24,279



20,853



12,981Restructured loans


2,342



1,385



825



1,329



1,853Past due 90 days and still accruing


1,215



796



563



377



1,300Total nonperforming loans


101,056



54,827



25,667



22,559



16,134Real estate acquired through foreclosure and other repossessed
    assets


10,510



3,242



2,514



1,682



1,299Total nonperforming assets

$
111,566


$
58,069


$
28,181


$
24,241


$
17,433Nonperforming loans as a percent of loans, net


4.52
%


2.43
%


1.22
%


1.24
%


1.02
%Nonperforming assets as a percent of total assets


4.04



2.15



1.11



1.06



0.84Allowance for loan losses as a percent of nonperforming loans


31.67



30.92



61.26



70.38



93.66Allowance for loan losses as a percent of loans, net


1.41



0.75



0.74



0.87



0.96          9




---



##### Table of Contents



Allowance for Loan Losses.
    Year Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Balance at beginning of period

$
16,955


$
15,723


$
15,877


$
15,111


$
15,099Provision for loan losses


28,750



4,347



3,028



9,370



3,179Charge-offs:Permanent real estate


(962
)


(737
)


(961
)


(902
)


(1,008
)Construction real estate


(5,924
)


(320
)


(35
)


(114
)


(1,103
)Consumer


(3,605
)


(2,334
)


(2,848
)


(6,177
)


(650
)Commercial


(3,729
)


(47
)


(241
)


(1,867
)


(579
)Total charge-offs


(14,220
)


(3,438
)


(4,085
)


(9,060
)


(3,340
)Recoveries:Permanent real estate


10



34



51



325



93Construction real estate






1



2







1Consumer


509



283



848



72



41Commercial


2



5



2



59



38Total recoveries


521



323



903



456



173Net charge-offs


(13,699
)


(3,115
)


(3,182
)


(8,604
)


(3,167
)Balance at end of year

$
32,006


$
16,955


$
15,723


$
15,877


$
15,111Ratio of net charge-offs to average net loans


(0.60
)%


(0.14
)%


(0.16
)%


(0.50
)%


(0.21
)%    10




---



##### Table of Contents



At December 31,2007


2006


2005


2004


2003Percent of





Percent of





Percent of





Percent of





Percent ofLoans in Each





Loans in Each





Loans in Each





Loans in Each





Loans in EachCategory to





Category to





Category to





Category to





Category toAmount


Total Loans


Amount


Total Loans


Amount


Total Loans


Amount


Total Loans


Amount


Total Loans(Dollars in thousands)Permanent real estate loans

$
10,285



63.18
%

$
5,459



61.39
%

$
7,152



58.33
%

$
7,956



62.64
%

$
8,607



66.12
%Construction real estate loans


12,499



16.86



3,321



18.24



2,531



21.59



2,603



19.01



2,189



17.10Consumer loans


5,485



15.41



5,147



15.22



3,378



15.30



3,615



14.61



2,670



13.73Commercial loans


3,737



4.55



3,028



5.15



2,662



4.78



1,703



3.74



1,645



3.05Total

$
32,006



100.00
%

$
16,955



100.00
%

$
15,723



100.00
%

$
15,877



100.00
%

$
15,111



100.00
%  INVESTMENT
    ACTIVITIES  General.
  Home Savings Investment Activities.
    Butler Wick Investment Activities.
 11




---



##### Table of Contents



United Community Investment Activities.
    At December 31, 2007No Stated





After One Year through


Five Years throughMaturity


One Year or Less


Five Years


Ten YearsAmortized


Average


Amortized


Average


Amortized


Average


Amortized


AverageCost


Yield


Cost


Yield


Cost


Yield


Cost


Yield(Dollars in thousands)Securities:U.S Government agencies and corporations

$





%

$
22,421



4.00
%

$
19,136



4.85
%

$
42,619



5.21
%Mortgage-related securities










47



7.86



64



7.68



987



6.18Other securities(a)


2,337



1.38























Total securities

$
2,337



1.38
%

$
22,468



4.01
%

$
19,200



4.86
%

$
43,606



5.23
%   At December 31, 2007After Ten Years


TotalAmortized


Average


Amortized


Average


FairCost


Yield


Cost


Yield


Value(Dollars in thousands)Securities:U.S. Government agencies and corporations

$





%

$
84,716



4.81
%

$
84,388Mortgage-related securities


151,669



5.13



152,767



5.14



153,301Other securities(a)


5,000



5.93



7,337



4.48



7,064Total securities

$
156,669



5.16
%

$
244,820



5.00
%

$
244,753     (a)
    
    Yield on equity securities only; mutual funds excluded SOURCES
    OF FUNDS  General.
  Deposits.
 12




---



##### Table of Contents



At December 31, 2007


For the Year Ended December 31, 2007Percent


Weighted





Percent


Weightedof Total


Average





of Average


AverageAmount


Deposits


Rate


Average Balance


Deposits


Rate(Dollars in thousands)Noninterest bearing demand

$
106,449



5.68
%



%

$
103,268



5.70
%



%Checking and money market accounts


422,731



22.54



3.47



397,290



21.93



3.50Savings accounts


175,464



9.36



0.41



185,949



10.26



0.41Certificates of deposit


1,170,562



62.42



4.83



1,125,117



62.11



4.74Total deposits

$
1,875,206



100.00
%


3.84
%

$
1,811,624



100.00
%


3.75
%   For the Year Ended December 31, 2006


For the Year Ended December 31, 2005Percent


Weighted





Percent


Weightedof Average


Average





of Average


AverageAverage Balance


Deposits


Rate


Average Balance


Deposits


Rate(Dollars in thousands)Noninterest bearing demand

$
96,067



5.47
%



%

$
89,483



5.64
%



%Checking and money market accounts


330,856



18.83



3.04



269,652



17.00



1.20Savings accounts


218,590



12.44



0.41



287,714



18.15



0.42Certificates of deposit


1,111,602



63.26



4.29



938,957



59.21



3.57Total deposits

$
1,757,115



100.00
%


3.34
%

$
1,585,806



100.00
%


2.39
%     Over


OverUp to


1 Year to


2 Years toRate

One Year


2 Years


3 Years


Thereafter


Total(Dollars in thousands)2.00% or less

$
3,247


$
880


$
94


$
107


$
4,3282.01% to 4.00%


57,096



14,003



5,347



100



76,5464.01% to 6.00%


895,890



55,514



64,333



73,933



1,089,670Greater than 6.00%


18















18Total certificates of deposit

$
956,251


$
70,397


$
69,774


$
74,140


$
1,170,562Percent of total certificates of deposit


81.69
%


6.02
%


5.96
%


6.33
%


100.00
%    13




---



##### Table of Contents



Maturity

Amount(Dollars in thousands)Three months or less

$
58,685Over 3 months to 6 months


62,268Over 6 months to 12 months


97,000Over 12 months


52,157Total

$
270,110       Year Ended December 31,2007


2006(Dollars in thousands)Beginning balance

$
1,822,935


$
1,681,844Net (decrease) increase in deposits


(11,353
)


81,914Net deposits before interest credited


1,811,582



1,763,758Interest credited


63,624



59,177Ending balance

$
1,875,206


$
1,822,935Net increase

$
52,271


$
141,091Percent increase


2.87
%


8.39
%   Borrowings.
       14




---



##### Table of Contents



COMPETITION     EMPLOYEES   REGULATION     15




---



##### Table of Contents



truth-in-lending
          1 3
   16




---



##### Table of Contents



Item 1A.
    Risk
    Factors    Changes
    in interest rates could adversely affect our financial condition
    and results of operations.
        We
    operate in an extremely competitive market, and our business
    will suffer if we are unable to compete
    effectively.
    Legislative
    or regulatory changes or actions could adversely impact the
    financial services industry.
  10-K
  Our
    ability to pay cash dividends is limited.
   17




---



##### Table of Contents



The
    preparation of financial statements requires management to make
    estimates about matters that are inherently
    uncertain.
    We
    face risks with respect to future expansion.
      Increasing
    credit risks could continue to adversely affect our results of
    operations.
      Material
    breaches in security of our systems may have a significant
    effect on our business.
   18




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   19




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Shareholder Matters
    and Issuer Purchases of Equity Securities  ®
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2007High

$
12.49


$
11.08


$
10.21


$
7.65Low


10.39



9.98



6.44



5.30Dividends declared and paid


.095



.095



.095



.0952006High

$
13.13


$
12.48


$
13.22


$
13.30Low


11.38



11.06



11.25



12.00Dividends declared and paid


.09



.09



.09



.09      20




---



##### Table of Contents



Performance
    Graph
    United
    Community Financial Corp
    Total Return Performance
  
  Period EndingIndex

12/31/02

12/31/03

12/31/04

12/31/05

12/31/06

12/31/07United Community Financial Corp.


100.00



136.09



137.01



148.86



158.84



75.10NASDAQ Composite


100.00



150.01



162.89



165.13



180.85



198.60SNL Thrift


100.00



141.57



157.73



163.29



190.35



114.19  21




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  At December 31,2007


2006


2005


2004


2003(In thousands)Selected financial condition data:Total assets

$
2,760,039


$
2,703,545


$
2,528,850


$
2,287,788


$
2,073,833Cash and cash equivalents


37,363



35,637



37,545



40,281



81,155Securities:Trading, at fair value


5,064



10,786



10,812



32,316



15,600Available for sale, at fair value


244,753



237,531



201,870



198,404



227,525Loans held for sale


87,236



26,960



29,109



59,099



37,715Loans, net


2,236,988



2,253,559



2,097,433



1,815,976



1,576,494Federal Home Loan Bank stock, at cost


25,432



25,432



24,006



22,842



21,924Cash surrender value of life insurance


24,053



23,137



22,260



21,406



20,496Deposits


1,875,206



1,822,935



1,681,844



1,522,952



1,423,698Borrowed funds


586,786



563,764



550,763



483,503



338,463Total shareholders equity


269,714



281,333



264,735



252,352



279,836   Year Ended December 31,2007


2006


2005


2004


2003(In thousands)Summary of earnings:Interest income

$
169,950


$
165,430


$
136,052


$
113,441


$
111,663Interest expense


96,448



84,428



57,296



40,378



40,252Net interest income


73,502



81,002



78,756



73,063



71,411Provision for loan losses


28,750



4,347



3,028



9,370



3,179Net interest income after provision for loan losses


44,752



76,655



75,728



63,693



68,232Non-interest income


46,900



40,274



38,260



36,109



40,845Non-interest expenses


85,328



79,818



78,881



72,834



73,572Income before income taxes


6,324



37,111



35,107



26,968



35,505Income taxes


2,191



13,000



11,910



9,103



12,565Net income

$
4,133


$
24,111


$
23,197


$
17,865


$
22,940   22




---



##### Table of Contents



At or for the Year Ended December 31,2007


2006


2005


2004


2003Selected financial ratios and other data:Performance ratios:Return on average assets(1)


0.15
%


0.92
%


0.96
%


0.83
%


1.15
%Return on average shareholders equity(2)


1.44



8.72



8.89



7.01



8.27Interest rate spread(3)


2.39



2.83



3.15



3.34



3.51Net interest margin(4)


2.85



3.26



3.47



3.60



3.81Non-interest expense to average assets


3.13



3.04



3.27



3.37



3.70Efficiency ratio(5)


69.96



65.33



67.00



65.87



65.29Average interest earning assets to average interest bearing
    liabilities


112.28



112.41



112.41



113.16



114.24Capital ratios:Average equity to average assets


10.56



10.53



10.83



11.78



13.95Shareholders equity to assets at year end


9.77



10.41



10.47



11.03



13.49Tier 1 leverage ratio


7.47



7.68



8.36



8.36



8.22Tier 1 risk-based capital ratio


9.26



9.49



10.08



9.92



9.64Total risk-based capital ratio


11.88



11.70



10.86



10.79



10.56Asset quality ratios:Nonperforming loans to loans, net(6)


4.52



2.43



1.22



1.24



1.02Nonperforming assets to total assets at year end(7)


4.04



2.15



1.11



1.06



0.84Allowance for loan losses as a percent of loans


1.41



0.75



0.74



0.87



0.96Allowance for loan losses as a percent of nonperforming loans(6)


31.67



30.92



61.26



70.38



93.66Number of:Loans


44,842



46,333



43,630



41,690



37,668Deposits


187,132



189,588



183,565



173,997



169,920Per share data:Basic earnings(8)

$
0.14


$
0.83


$
0.81


$
0.61


$
0.73Diluted earnings(8)


0.14



0.82



0.80



0.60



0.72Book value(9)


8.97



9.08



8.52



8.09



8.21Dividend per share


0.38



0.36



0.33



0.30



0.30Dividend payout ratio(10)


271.43
%


43.90
%


41.25
%


50.00
%


41.67
%     (1)
    
    Net income divided by average total assets.(2)
    
    Net income divided by average total equity.(3)
    
    Difference between weighted average yield on interest earning
    assets and weighted average cost of interest bearing
    liabilities.(4)
    
    Net interest income as a percentage of average interest
    earning assets.(5)
    
    Non-interest expense, excluding the amortization of core
    deposit intangible, divided by the sum of net interest income
    and non-interest income, excluding gains and losses on
    securities and other.(6)
    
    Nonperforming loans consist of loans ninety days past due,
    loans less then ninety days past due and not accruing and
    restructured loans.(7)
    
    Nonperforming assets consist of nonperforming loans and real
    estate acquired in settlement of loans and other repossessed
    assets. 23




---



##### Table of Contents



(8)
    
    Net income divided by average number of basic or diluted
    shares outstanding.(9)
    
    Shareholders equity divided by number of shares
    outstanding.(10)
    
    Historical per share dividends declared and paid for the year
    divided by the diluted earnings per share for the year.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  General
      Forward-Looking
    Statements
    Changes
    in Financial Condition
           24




---



##### Table of Contents



30-year
       25




---



##### Table of Contents



Allowance for Loan LossesDecember 31,











December 31,Real Estate Loans

2006


Provision


Recovery


Chargeoff


2007(In thousands)PermanentOne-to four-family

$
2,234


$
1,385


$
10


$
(826
)

$
2,803Multifamily residential


818



1,617







(70
)


2,365Nonresidential


2,256



2,299







(67
)


4,488Land


151



478











629Total


5,459



5,779



10



(963
)


10,285Construction LoansOne-to four-family residential


3,092



14,723







(5,923
)


11,892Multifamily and nonresidential


229



378











607Total


3,321



15,101







(5,923
)


12,499Consumer LoansHome Equity


1,046



441



18



(245
)


1,260Auto


510



16



24



(103
)


447Marine


991



1,832



57



(1,412
)


1,468Recreational vehicle


1,888



1,175



7



(1,020
)


2,050Other


712



(30
)


403



(825
)


260Total


5,147



3,434



509



(3,605
)


5,485Commercial LoansSecured


1,936



3,122







(2,683
)


2,375Unsecured


1,092



1,314



2



(1,046
)


1,362Total


3,028



4,436



2



(3,729
)


3,737Total Allowance

$
16,955


$
28,750


$
521


$
(14,220
)

$
32,006       26




---



##### Table of Contents



Impaired LoansDecember 31,


December 31,2007


2006


Change(In thousands)Real Estate Loans PermanentOne-to four-family

$
2,681


$
794


$
1,887Multifamily residential


13,604



2,642



10,962Nonresidential


13,597



13,927



(303
)Land


3,700



6,699



(2,999
)Total


33,582



24,062



9,520Construction LoansOne-to four-family residential


43,518



11,698



31,820Multifamily and nonresidential


825



2,533



(1,708
)Total


44,343



14,231



30,112Consumer LoansHome Equity










Auto










Marine


1,714



1,377



337Recreational vehicle










Other










Total


1,714



1,377



337Commercial LoansSecured


4,554



2,282



2,272Unsecured


184



594



(410
)Total


4,738



2,876



1,862Total Impaired Loans

$
84,377


$
42,546


$
41,831     27




---



##### Table of Contents



Nonperforming LoansDecember 31,


December 31,





2007 Interest2007


2006


Change


Foregone(In thousands)Real Estate LoansPermanentOne-to four-family

$
12,752


$
8,976


$
3,776


$
342Multifamily residential


13,604



2,642



10,962



565Nonresidential


13,597



13,941



(344
)


1,166Land


3,700



6,699



(2,999
)


527Total


43,653



32,258



11,395



2,600Construction LoansOne-to four-family residential


44,680



11,853



32,827



3,269Multifamily and nonresidential


825



2,533



(1,708
)


(39
)Total


45,505



14,386



31,119



3,230Consumer LoansHome Equity


2,454



1,374



1,080



76Auto


211



252



(41
)


2Marine


1,714



1,383



331



60Recreational vehicle


376



540



(164
)


5Other


64



252



(188
)


1Total


4,819



3,801



1,018



144Commercial LoansSecured


4,554



2,380



2,174



511Unsecured


184



617



(433
)


(23
)Total


4,738



2,997



1,741



488Restructured Loans


2,341



1,385



956



Total Nonperforming Loans

$
101,056


$
54,827


$
46,229


$
6,462     
    A $10.0 million relationship with two related companies to
    acquire, develop, and build out a
    30-acre
    tract plus scattered site lots in the Columbus, Ohio area. The
    Companys cash flow ceased following successive deaths in
    executive management. The Company holds judgments against the
    borrowers and is pursuing guarantors. A receiver has been
    appointed. One-third of the assets pledged to the Company are in
    contract for sale and the Company expects third-party sales or
    for the Company to take ownership of the remaining assets in the
    second quarter 2008.
    A second relationship totaling $9.8 million is located in
    the Pittsburgh, Pennsylvania area. The two loans comprising the
    relationship were to acquire and develop a
    169-acre
    tract. The borrower and guarantors claim insolvency at this
    time. Currently the Company seeks a deed in lieu of foreclosure.
    In the event such is not received, foreclosure proceedings will
    commence. In addition, the Company has obtained judgments
    against the debtor companies and guarantors of those debts. In
    addition the Company is working with an engineering company, an
    energy company and developers to determine the feasibility and
    cost of development, and the cost/benefit of mining certain
    natural resources present on the property.
    A third project is located in the Springboro, Ohio area. This
    relationship, totaling $8.3 million, contemplated the
    acquisition and development of 195 acres of raw land and
    construction of single-family residences and condominiums. The
    borrowers and guarantors claim to be insolvent. The Company
    obtained a judgment against the borrowers and guarantors, and
    secured judgment liens against the borrowers, and the
    guarantors, collateral and other assets. 28




---



##### Table of Contents




    A $4.7 million relationship consists of two loans secured
    by a 98-unit
    apartment complex and a
    22-unit
    apartment complex in Wooster, Ohio. The cause of the
    nonperforming status is due to increased vacancy and the death
    of the owners. The borrower has initiated bankruptcy
    proceedings, which has caused a delay in the sale of the larger
    complex. The sale of the larger complex is expected in the
    second quarter of 2008. The Company anticipates minimal loss
    with the sale transaction, which has been reserved. The smaller
    complex remains for sale, but there are interested parties at
    this time.
    A $5.4 million relationship consists of three loans all
    secured by a newly constructed
    50-unit
    senior living complex in Mentor, Ohio. The cause of the
    nonperforming status is fewer leases were obtained than
    expected. This was further compounded by the downturn in the
    housing market as tenants have had difficulty in selling primary
    residences prior to moving into the complex.               29




---



##### Table of Contents



Employers
    Accounting for Defined Benefit Pension and Other
 30




---



##### Table of Contents



Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106 and 132(R)
  Comparison
    of Operating Results for the Years Ended December 31, 2007
    and December 31, 2006
  Net Income
  Net Interest Income
      Provision for Loan Losses
  Non-interest Income
 31




---



##### Table of Contents



Non-interest Expense
  Federal Income Taxes
  Comparison
    of Operating Results for the Years Ended December 31, 2006
    and December 31, 2005
  Net Income
  Net Interest Income
    Provision for Loan Losses
   32




---



##### Table of Contents



Non-interest Income
        Non-interest Expense
  Federal Income Taxes
  Critical
    Accounting Policies and Estimates
      Allowance for loan losses.
 33




---



##### Table of Contents



Mortgage servicing rights.
      Other-than-temporary impairment.
 34




---



##### Table of Contents



Yields
    Earned and Rates Paid
    Year Ended December 31,2007


2006


2005Average


Interest





Average


Interest





Average


InterestOutstanding


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)

$
2,268,914


$
154,252



6.80
%

$
2,186,559


$
151,029



6.91
%

$
1,979,294


$
123,749



6.25
%Loans held for sale


18,781



914



4.87



37,549



1,894



5.04



33,845



1,651



4.88Securities:Trading


6,176



263



4.26



6,494



300



4.62



29,777



943



3.17Available for sale


247,331



12,031



4.86



214,679



9,408



4.38



186,404



7,227



3.88Margin accounts














11,443



1,069



9.34



15,659



1,219



7.78Federal Home Loan Bank stock


25,432



1,677



6.59



24,533



1,426



5.81



23,250



1,164



5.01Other interest earning assets


8,275



813



9.82



4,816



304



6.31



3,867



99



2.56Total interest earning assets

$
2,574,909


$
169,950



6.60
%

$
2,486,073


$
165,430



6.65
%

$
2,272,096


$
136,052



5.98
%Non-interest earning assets


147,355











138,218











136,728Total assets

$
2,722,264










$
2,624,291










$
2,408,824Interest bearing liabilities:Deposits:Checking accounts

$
397,290


$
13,907



3.50
%

$
330,856


$
10,060



3.04
%

$
269,652


$
3,231



1.20
%Savings accounts


185,949



769



0.41



218,590



899



0.41



287,714



1,201



0.42Certificates of deposit


1,125,117



53,376



4.74



1,111,602



47,681



4.29



938,957



33,488



3.57Federal Home Loan Bank advances


448,714



21,493



4.79



452,023



21,246



4.70



460,205



17,364



3.77Repurchase agreements and other


136,173



6,903



5.07



98,457



4,542



4.61



64,776



2,012



3.11Total interest bearing liabilities

$
2,293,243


$
96,448



4.21
%

$
2,211,528


$
84,428



3.82
%

$
2,021,304


$
57,296



2.83
%Non-interest bearing liabilities


141,500











136,349











126,673Total liabilities

$
2,434,743










$
2,347,877










$
2,147,977Shareholders equity


287,521











276,414











260,847Total liabilities and equity

$
2,722,264










$
2,624,291










$
2,408,824Net interest income and interest rate spread





$
73,502



2.39
%





$
81,002



2.83
%





$
78,756



3.15
%Net interest margin










2.85
%










3.26
%










3.47
%Average interest earning assets to average interest bearing
    liabilities










112.28
%










112.41
%










112.41
%     (1)
    
    Nonaccrual loans are included in the average balance. 35




---



##### Table of Contents



Year Ended December 31,2007 vs. 2006


2006 vs. 2005Increase


Total


Increase


Total(Decrease) Due to


Increase


(Decrease) Due to


IncreaseRate


Volume


(Decrease)


Rate


Volume


(Decrease)(Dollars in thousands)Interest earning assets:Loans

$
(2,312
)

$
5,535


$
3,223


$
13,643


$
13,637


$
27,280Loans held for sale


(64
)


(916
)


(980
)


58



185



243Securities:Trading


(23
)


(14
)


(37
)


913



(1,556
)


(643
)Available for sale


1,101



1,522



2,623



1,008



1,173



2,181Margin accounts


(534
)


(535
)


(1,069
)


434



(584
)


(150
)Federal Home Loan Bank stock


197



54



251



195



67



262Other interest earning assets


222



287



509



176



29



205Total interest earning assets

$
(1,413
)

$
5,933


$
4,520


$
16,427


$
12,951


$
29,378Interest bearing liabilities:Checking accounts

$
1,653


$
2,194


$
3,847


$
5,951


$
878


$
6,829Savings accounts


5



(135
)


(130
)


(17
)


(285
)


(302
)Certificates of deposit


5,109



586



5,695



7,442



6,751



14,193Federal Home Loan Bank advances


401



(154
)


247



4,185



(303
)


3,882Repurchase agreements and other


484



1,877



2,361



1,220



1,309



2,530Total interest bearing liabilities

$
7,652


$
4,368


$
12,020


$
18,781


$
8,350


$
27,132Change in net interest income









$
(7,500
)









$
2,246   Contractual
    Obligations, Commitments, Contingent Liabilities and Off-balance
    Sheet Arrangements
    Payments Due InNote


One Year


One to


Three to


OverReference


or Less


Three Years


Five Years


Five Years


Total(Dollars in thousands)Operating leases


6


$
1,558


$
2,712


$
2,192


$
767


$
7,229Deposits without a stated maturity


8



704,644















704,644Certificates of deposit


8



956,251



140,171



72,148



1,992



1,170,562Federal Home Loan Bank advances


9



286,408



83,300



7,734



59,811



437,253Repurchase agreements and other borrowings


10



59,533











90,000



149,533  36




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Qualitative Aspects of Market Risk.
  Quantitative Aspects of Market Risk.
      Year Ended December 31, 2007NPV as% of Portfolio Value of Assets


Next 12 Months Net Interest IncomeInternal Policy








Internal PolicyChange in Rates (Basis Points)

NPV Ratio


Limitations


Change in%


$ Change


Limitations


% Change(Dollars in thousands)+300


7.99
%


5.00
%


(1.48
)%

$
(7,009
)


(15.00
)%


(9.93
)%+200


8.73



6.00



(0.75
)


(4,353
)


(10.00
)


(6.17
)+100


9.29



6.00



(0.18
)


(2,139
)


(5.00
)


(3.03
)Static


9.47



7.00















(100)


9.53



6.00



0.05



2,723



(5.00
)


3.86(200)


8.82



6.00



(0.66
)


3,467



(15.00
)


4.91(300)


7.90



5.00



(1.57
)


3,397



(20.00
)


4.81   37




---



##### Table of Contents



Year Ended December 31, 2006NPV as% of Portfolio Value of Assets


Next 12 Months Net Interest IncomeInternal Policy








Internal PolicyChange in Rates (Basis Points)

NPV Ratio


Limitations


Change in %


$ Change


Limitations


% Change(Dollars in thousands)+300


8.92
%


5.00
%


(2.27
)%

$
(10,078
)


(15.00
)%


(13.95
)%+200


9.81



6.00



(1.38
)


(6,455
)


(10.00
)


(8.94
)+100


10.60



6.00



(0.59
)


(2,972
)


(5.00
)


(4.12
)Static


11.19



7.00















(100)


11.19



6.00







2,651



(5.00
)


3.67(200)


10.62



6.00



(0.57
)


3,548



(15.00
)


4.91(300)


9.69



5.00



(1.50
)


2,254



(20.00
)


3.12       Potential
    Impact of Changes in Interest Rates
    Liquidity
    and Capital
    Years Ended December 31,2007


2006


2005(Dollars in thousands)Net income

$
4,133


$
24,111


$
23,197Adjustments to reconcile net income to net cash from operating
    activities


50,452



29,513



92,222Net cash from operating activities


54,585



53,624



115,419Net cash from investing activities


(108,157
)


(200,966
)


(335,345
)Net cash from financing activities


55,298



145,434



217,190Net change in cash and cash equivalents


1,726



(1,908
)


(2,736
)Cash and cash equivalents at beginning of year


35,637



37,545



40,281Cash and cash equivalents at end of year

$
37,363


$
35,637


$
37,545    38




---



##### Table of Contents



Excess of Actual


ApplicableActual Capital


Current Minimum Requirement


Capital Over Current Requirement


Asset BaseAmount


Percent


Amount


Percent


Amount


Percent


Total(Dollars in thousands)Tangible capital

$
201,779



7.47
%

$
40,525



1.50
%

$
161,254



5.98
%

$
2,701,644Core capital


201,779



7.47



108,066



4.00



93,713



3.48



2,701,644Risk-based capital


259,087



11.88



174,635



8.00



84,452



3.88



2,182,941  39




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  CONSOLIDATED
    STATEMENTS OF FINANCIAL CONDITION
  December 31,2007


2006(In thousands)ASSETSCash and deposits with banks

$
33,266


$
34,129Federal funds sold


4,097



1,508Total cash and cash equivalents


37,363



35,637Securities:Trading, at fair value


5,064



10,786Available for sale, at fair value


244,753



237,531Loans held for sale


87,236



26,960Loans, net of allowance for loan losses of $32,006 and $16,955


2,236,988



2,253,559Federal Home Loan Bank stock, at cost


25,432



25,432Premises and equipment, net


27,521



25,192Accrued interest receivable


13,077



13,703Real estate owned and other repossessed assets


10,510



3,242Goodwill


33,713



33,593Core deposit intangible


1,169



1,534Cash surrender value of life insurance


24,053



23,137Other assets


13,160



13,239Total assets

$
2,760,039


$
2,703,545LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesDeposits:Non-interest bearing

$
106,449


$
102,509Interest bearing


1,768,757



1,720,426Total deposits


1,875,206



1,822,935Borrowed funds:Federal Home Loan Bank advances


437,253



465,253Repurchase agreements and other


149,533



98,511Total borrowed funds


586,786



563,764Advance payments by borrowers for taxes and insurance


17,853



17,471Accrued interest payable


7,837



2,842Accrued expenses and other liabilities


2,643



15,200Total liabilities


2,490,325



2,422,212Commitments and contingent liabilities (Note 4 and
    Note 11)






Shareholders EquityPreferred stock-no par value; 1,000,000 shares authorized
    and unissued






Common stock  no par value; 499,000,000 shares
    authorized; 37,804,457 shares issued


146,683



145,834Retained earnings


213,727



220,527Accumulated other comprehensive income (loss)


661



(1,296
)Unearned employee stock ownership plan shares


(9,465
)


(11,287
)Treasury stock, at cost, 2007  7,752,684 shares
    and 2006  6,827,143 shares


(81,892
)


(72,445
)Total shareholders equity


269,714



281,333Total liabilities and shareholders equity

$
2,760,039


$
2,703,545    40




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF INCOME
  Year Ended December 31,2007


2006


2005(In thousands, except per share data)Interest incomeLoans

$
154,252


$
151,029


$
123,749Loans held for sale


914



1,894



1,651Securities:Trading


263



300



943Available for sale


12,031



9,408



7,227Margin accounts






1,069



1,219Federal Home Loan Bank stock dividends


1,677



1,426



1,164Other interest earning assets


813



304



99Total interest income


169,950



165,430



136,052Interest expenseDeposits


68,052



58,640



37,920Federal Home Loan Bank advances


21,493



21,246



17,364Repurchase agreements and other


6,903



4,542



2,012Total interest expense


96,448



84,428



57,296Net interest income


73,502



81,002



78,756Provision for loan losses


28,750



4,347



3,028Net interest income after provision for loan losses


44,752



76,655



75,728Non-interest incomeBrokerage commissions


26,392



19,882



18,508Service fees and other charges


14,057



12,546



12,471Underwriting and investment banking


764



814



876Net gains (losses):Securities available for sale


(21
)






195Trading securities


43



56



268Loans sold


2,624



2,943



2,250Other


(1,061
)


(63
)


(22
)Other income


4,102



4,096



3,714Total non-interest income


46,900



40,274



38,260Non-interest expenseSalaries and employee benefits


55,969



52,272



51,301Occupancy


4,846



4,450



4,115Equipment and data processing


9,017



8,998



9,067Franchise tax


2,102



2,091



1,894Advertising


1,662



1,567



1,570Amortization of core deposit intangible


365



584



769Other expenses


11,367



9,856



10,165Total non-interest expense


85,328



79,818



78,881Income before income taxes


6,324



37,111



35,107Income taxes


2,191



13,000



11,910Net income

$
4,133


$
24,111


$
23,197Earnings Per ShareBasic

$
0.14


$
0.83


$
0.81Diluted

$
0.14


$
0.82


$
0.80    41




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  Accumulated


UnearnedOther


Employee StockShares


Common


Retained


Comprehensive


Ownership


TreasuryOutstanding


Stock


Earnings


Income (Loss)


Plan Shares


Stock


Total(In thousands, except per share data)Balance December 31, 2004


31,202


$
142,337


$
193,690


$
1,063


$
(14,930
)

$
(69,808
)

$
252,352Comprehensive income:Net income










23,197















23,197Change in net unrealized gain (loss) on securities, net of taxes
    of $1,565














(2,908
)










(2,908
)Comprehensive income


























20,289Shares allocated to ESOP participants






1,432











1,822







3,254Purchase of treasury stock


(233
)


















(2,499
)


(2,499
)Exercise of stock options


93



127



(305
)










979



801Dividends paid, $0.33 per share










(9,462
)














(9,462
)Balance December 31, 2005


31,062



143,896



207,120



(1,845
)


(13,108
)


(71,328
)


264,735Comprehensive income:Net income










24,111















24,111Change in net unrealized gain (loss) on securities, net of taxes
    of $367














681











681Comprehensive income


























24,792Adjustment to initially apply SFAS 158, net of taxes of $72














(132
)










(132
)Shares allocated to ESOP participants






1,797











1,821







3,618Purchase of treasury stock


(196
)


















(2,298
)


(2,298
)Exercise of stock options


111



141



(303
)










1,181



1,019Dividends paid, $0.36 per share










(10,401
)














(10,401
)Balance December 31, 2006


30,977



145,834



220,527



(1,296
)


(11,287
)


(72,445
)


281,333Comprehensive income:Net income










4,133















4,133Change in net unrealized gain (loss) on securities and post
    retirement liabilities, net of reclassification and tax effect














1,957











1,957Comprehensive income


























6,090Shares allocated to ESOP participants






837











1,822







2,659Purchase of treasury stock


(950
)


















(9,709
)


(9,709
)Exercise of stock options


25



12



(86
)










262



188Dividends paid, $0.38 per share










(10,847
)














(10,847
)Balance December 31, 2007


30,052


$
146,683


$
213,727


$
661


$
(9,465
)

$
(81,892
)

$
269,714    42




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005(In thousands)Cash Flows from Operating ActivitiesNet income

$
4,133


$
24,111


$
23,197Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for loan losses


28,750



4,347



3,028Net gains on loans


(2,624
)


(2,943
)


(2,250
)Net losses (gains) on other assets


1,039







(173
)Amortization of premiums and accretion of discounts


3,337



3,105



2,139Depreciation and amortization


3,060



2,784



2,347Federal Home Loan Bank stock dividends






(1,426
)


(1,164
)Decrease (increase) in interest receivable


626



(1,650
)


(2,608
)Increase in interest payable


4,995



220



1,533(Increase) decrease in prepaid and other assets


(2,862
)


316



(4,273
)(Decrease) increase in other liabilities


(12,931
)


209



412Decrease in trading securities


5,765



26



21,504Decrease (increase) in margin accounts






15,705



(854
)Net principal disbursed on loans held for sale


(205,994
)


(219,924
)


(154,873
)Proceeds from sale of loans held for sale


224,632



225,126



224,200ESOP compensation


2,659



3,618



3,254Net cash from operating activities


54,585



53,624



115,419Cash Flows from Investing ActivitiesProceeds from principal repayments and maturities of:Securities available for sale


58,734



44,766



51,100Proceeds from sale of:Securities available for sale


16,899







20,883Commercial loan participations










1,500Nonperforming loans






210



6,173Premises and equipment






531



169Real estate owned and other repossessed assets


6,035



4,059



3,999Purchases of:Securities available for sale


(80,491
)


(79,445
)


(80,301
)Principal disbursed on loans, net of repayments


80,922



31,818



(46,836
)Loans purchased


(184,892
)


(198,229
)


(286,653
)Purchases of premises and equipment


(5,364
)


(4,676
)


(5,379
)Net cash from investing activities


(108,157
)


(200,966
)


(335,345
)Cash Flows from Financing ActivitiesNet increase (decrease) in checking, savings and money market
    accounts


35,824



53,093



(82,940
)Net increase in certificates of deposit


16,450



88,012



241,883Net increase in advance payments by borrowers for taxes and
    insurance


382



3,149



2,274Proceeds from Federal Home Loan Bank advances


737,953



671,326



702,570Repayment of Federal Home Loan Bank advances


(765,953
)


(681,622
)


(650,376
)Net change in repurchase agreements and other


51,022



23,297



15,066Dividends paid


(10,847
)


(10,401
)


(9,462
)Proceeds from exercise of stock options


176



878



674Purchase of treasury stock


(9,709
)


(2,298
)


(2,499
)Net cash from financing activities


55,298



145,434



217,190Change in cash and cash equivalents


1,726



(1,908
)


(2,736
)Cash and cash equivalents, beginning of year


35,637



37,545



40,281Cash and cash equivalents, end of year

$
37,363


$
35,637


$
37,545    43




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES    Nature
    of Operations
    Basis
    of Presentation
    Use of
    Estimates in the Preparation of Financial
    Statements
    Securities
   44




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
      Loans
    Held for Sale
    Loans
        Allowance
    for Loan Losses
     45




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  case-by-case loan-by-loan
  Servicing
    Assets
        Premises
    and Equipment
    Real
    Estate Owned and Other Repossessed Assets
   46




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  Goodwill
    and Core Deposit Intangible
      Cash
    Surrender Value of Life Insurance
    Long-term
    Assets
    Loan
    Fees
    Commissions
    and Service Fees
    Stock
    Compensation
     47




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  Income
    Taxes
      Accounting for
    Uncertainty in Income Taxes
    Employee
    Stock Ownership Plan
    Earnings
    Per Share
    Statements
    of Cash Flows
    Loss
    Contingencies
   48




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  Fair
    Value of Financial Instruments
    Comprehensive
    Income
    Commission
    Revenue and Expense
    Off
    Balance Sheet Financial Instruments
    New
    Accounting Standards
    No. 06-5, Accounting for Purchases of Life Insurance 
    Determining the Amount That Could Be Realized in Accordance with
    FASB Technical
    Bulletin No. 85-4
    (Accounting for Purchases of Life Insurance).
  Newly
    Issued But Not Yet Effective Accounting Standards
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
 49




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    No. 06-4, Accounting for Deferred Compensation and Postretirement
    Benefit Aspects of Endorsement Split-Dollar Life Insurance
    Arrangements
  Written Loan Commitments Recorded
    at Fair Value through Earnings Application of Accounting
    Principles to Loan Commitments
  Operating
    Segments
    Dividend
    Restriction
    Reclassifications
    2.
    CASH AND
    CASH EQUIVALENTS  Rule 15c3-3
 50




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  3.
    SECURITIES    December 31, 2007


December 31, 2006Gross


Gross





Gross


GrossFair


Unrealized


Unrealized


Fair


Unrealized


UnrealizedValue


Gains


Losses


Value


Gains


Losses(In thousands)Available for SaleU.S. Treasury and government sponsored entities securities

$
84,388


$
337


$
(126
)

$
96,847


$
63


$
(722
)Equity securities


7,064



221



(494
)


7,866



641



(112
)Mortgage-related securities


153,301



977



(443
)


132,818



131



(1,870
)Total

$
244,753


$
1,535


$
(1,063
)

$
237,531


$
835


$
(2,704
)     December 31, 2007Fair Value(In thousands)Due in one year or less

$
22,342Due after one year through five years


19,262Due after five years through ten years


42,784Mortgage-related securities


153,301Total

$
237,689       2007


2006


2005(In thousands)Proceeds

$
16,899


$



$
20,883Gross gains


96







239Gross losses


117







44       2007


2006(In thousands)Debt Securities:US Treasury and government sponsored entities

$
1,054


$
1,296State and municipal obligations


3,636



8,606Corporate bonds, debentures and notes


62



258Mutual funds


312



626Total trading securities

$
5,064


$
10,786  51




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    Less Than 12 Months


12 Months or More


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Loss


Value


Loss


Value


Loss(In thousands)Description of securities:U.S. Treasury and government sponsored entities

$
7,734


$
(12
)

$
22,844


$
(114
)

$
30,578


$
(126
)Equity securities


1,228



(473
)


92



(21
)


1,320



(494
)Mortgage-related securities


12







36,569



(443
)


36,581



(443
)Total temporarily impaired securities

$
8,974


$
(485
)

$
59,505


$
(578
)

$
68,479


$
(1,063
)     Less Than 12 Months


12 Months or More


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Loss


Value


Loss


Value


Loss(In thousands)Description of securities:U.S. Treasury and government sponsored entities

$
7,461


$
(44
)

$
65,621


$
(678
)

$
73,082


$
(722
)Equity securities


1,342



(112
)










1,342



(112
)Mortgage-related


15,205



(72
)


83,504



(1,798
)


98,709



(1,870
)Total temporarily impaired securities

$
24,008


$
(228
)

$
149,125


$
(2,476
)

$
173,133


$
(2,704
)    52




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  4.
    LOANS    December 31,2007


2006(In thousands)Real Estate:One- to four-family residential

$
871,019


$
854,829Multi-family residential


179,535



163,541Non-residential


359,070



348,528Land


22,818



26,684Construction:One- to four-family residential


357,153



388,926Multi-family and non-residential


25,191



25,215Total real estate


1,814,786



1,807,723Consumer


349,447



345,607Commercial


103,208



116,952Total loans


2,267,441



2,270,282Less:Allowance for loan losses


32,006



16,955Deferred loan fees, net


(1,553
)


(232
)Total


30,453



16,723Loans, net

$
2,236,988


$
2,253,559   sixty-day case-by-case
  December 31,2007


2006Fixed Rate


Variable Rate


Fixed Rate


Variable Rate(In thousands)Commitments to make loans

$
47,324


$
38,822


$
49,317


$
47,412Undisbursed loans in process


5,377



234,281



18,729



204,981Unused lines of credit


86,261



86,807



59,740



102,727      53




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  tm
      Year Ended December 31,2007


2006


2006(In thousands)Balance, beginning of year

$
16,955


$
15,723


$
15,877Provision for loan losses


28,750



4,347



3,028Amounts charged off


(14,220
)


(3,438
)


(4,085
)Recoveries


521



323



903Balance, end of year

$
32,006


$
16,955


$
15,723     As of or For the Year Ended December 31,2007


2006


2005(In thousands)Impaired loans on which no specific valuation allowance was
    provided

$
30,475


$
28,329


$
13,119Impaired loans on which specific valuation allowance was provided


53,902



14,217



4,573Total impaired loans at year-end

$
84,377


$
42,546


$
17,692Specific valuation allowances on impaired loans at year-end


13,165



2,841



667Average impaired loans during year


63,468



23,617



15,209Interest income recognized on impaired loans during the year


348



372



386Interest income received on impaired loans during the year


348



373



403   and/or
  (In thousands)Balance as of December 31, 2006

$
1,980New loans to officers and/or directors


42Loan payments during 2007


(552
)Reductions due to changes in officers and/or directors


(191
)Balance as of December 31, 2007

$
1,279  54




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  5.
    MORTGAGE
    BANKING ACTIVITIES      2007


2006


2005(In thousands)Balance, beginning of year

$
6,820


$
6,923


$
5,533Originations


1,268



1,917



2,961Sale of servicing






(323
)


Amortized to expense


(1,904
)


(1,697
)


(1,571
)Balance, end of year

$
6,184


$
6,820


$
6,923       2007


2006


2005(In thousands)Balance, beginning of year

$
(435
)

$



$
Impairment charges


(562
)


(435
)


Recoveries


435







Balance, end of year

$
(562
)

$
(435
)

$
     2007


2006Weighted average prepayment rate


272 PSA



261 PSAWeighted average life (in years)


3.87



4.50Weighted average discount rate


8
%


8
%     2008

$
1,6282009


1,5452010


1,2042011


7612012


394    55




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  6.
    PREMISES
    AND EQUIPMENT    December 31,2007


2006(In thousands)Land

$
7,691


$
7,691Buildings


24,170



21,068Leasehold improvements


1,644



1,511Furniture and equipment


22,018



20,07855,523



50,348Less: Accumulated depreciation and amortization


28,002



25,156Total

$
27,521


$
25,192     (In thousands)2008

$
1,5582009


1,3842010


1,3282011


1,2812012


911Thereafter


767Total

$
7,229   7.
    GOODWILL
    AND INTANGIBLE ASSETS  Goodwill
    Acquired
    Intangible Assets
  As of December 31,2007


2006Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


Amortization(In thousands)Amortized intangible assets:Core deposit intangibles

$
8,952


$
7,783


$
8,952


$
7,418Total

$
8,952


$
7,783


$
8,952


$
7,418Estimated amortization expense:For the year ended:December 31, 2008

$
285December 31, 2009


223December 31, 2010


176December 31, 2011


139December 31, 2012


109  56




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    8.
    DEPOSITS    December 31,2007


2006(In thousands)Checking accounts:Interest bearing

$
94,459


$
94,577Non-interest bearing


106,449



102,509Savings accounts


175,464



195,331Money market accounts


328,272



276,403Certificates of deposit


1,170,562



1,154,115Total deposits

$
1,875,206


$
1,822,935     Year Ended December 31,2007


2006


2005(In thousands)Interest bearing demand deposits and money market accounts

$
13,907


$
10,060


$
3,231Savings accounts


769



900



1,201Certificates of deposit


53,376



47,680



33,488Total

$
68,052


$
58,640


$
37,920     December 31, 2007(In thousands)Within 12 months

$
956,25112 months to 24 months


70,397Over 24 months to 36 months


69,774Over 36 months to 48 months


37,320Over 48 months


36,820Total

$
1,170,562     December 31, 2007


December 31, 2006(In thousands)Three months or less

$
58,685


$
50,510Over three months to six months


62,268



67,618Over six months to twelve months


97,000



90,141Over twelve months


52,157



67,600Total

$
270,110


$
275,869    57




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    9.
    FEDERAL
    HOME LOAN BANK ADVANCES    December 31,2007


2006Weighted





WeightedYear of Maturity

Amount


Average Rate


Amount


Average Rate(In thousands)2007


n/a



n/a


$
391,957



4.98
%2008

$
286,408



2.59
%


22,451



3.692009


65,913



4.74



30,913



4.662010


17,387



4.95



2,387



3.542011


5,871



4.93



5,871



4.932012


1,863



3.92



1,863



3.92Thereafter


59,811



4.14



9,811



3.86Total Federal Home Loan Bank advances

$
437,253






$
465,253     10.
    SECURITIES
    SOLD UNDER AGREEMENT TO REPURCHASE AND OTHER
    BORROWINGS    December 31,2007


2006Weighted





WeightedAmount


Average Rate


Amount


Average Rate(In thousands)Securities sold under agreement to repurchase-term

$
112,035



4.10
%

$
78,182



4.00
%Other borrowings


37,498



7.71



20,329



6.54Total repurchase agreements and other

$
149,533



5.01
%

$
98,511



4.52
%      58




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
          11.
    LOSS
    CONTINGENCY    12.
    INCOME
    TAXES    Year Ended December 31,2007


2006


2005(In thousands)Current

$
9,504


$
13,132


$
12,396Deferred


(7,313
)


(132
)


(486
)Total

$
2,191


$
13,000


$
11,910  59




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    Year Ended December 31,2007


2006


2005Dollars


Rate


Dollars


Rate


Dollars


Rate(In thousands)Tax at statutory rate

$
2,214



35.0
%

$
12,989



35.0
%

$
12,287



35.0
%Increase (decrease) due to:Tax exempt income


(86
)


(1.4
)


(88
)


(0.2
)


(78
)


(0.2
)Life insurance


(322
)


(5.1
)


(298
)


(0.8
)


(288
)


(0.8
)State taxes


(30
)


(0.5
)


(143
)


(0.4
)


(4
)


(0.0
)Other


415



6.6



540



1.4



(7
)


(0.0
)Income tax provision

$
2,191



34.6
%

$
13,000



35.0
%

$
11,910



34.0
%     December 31,2007


2006(In thousands)Deferred tax assets:Loan loss reserves

$
11,202


$
5,934Postretirement benefits


1,342



1,334ESOP shares released


1,262



1,311Compensation accruals


109



196Unrealized loss on securities available for sale






626SFAS 158 pension accrual






71Interest on non-accrual loans


4,041



1,795Other


174



225Deferred tax assets


18,130



11,492Deferred tax liabilities:Purchase accounting adjustments


238



385Deferred loan fees


572



113Federal Home Loan Bank stock dividends


6,354



6,354Mortgage servicing rights


1,968



2,235Unrealized gain on securities available for sale


180



SFAS 158 pension accrual


163



Prepaid expenses


448



327Other


218



362Deferred tax liabilities


10,141



9,776Net deferred tax asset

$
7,989


$
1,716    60




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
      13.
    SHAREHOLDERS
    EQUITY  Dividends
      Other
    Comprehensive Income
      As of December 31,2007


2006


2005Unrealized holding gain (loss) on securities available for sale
    and postretirement benefits

$
3,016


$
1,048


$
(4,596
)Reclassification adjustment for losses (gains) realized in income


5







(122
)Net unrealized gains


3,011



1,048



(4,474
)Tax effect (35%)


1,054



367



(1,566
)Net of tax amount

$
1,957


$
681


$
(2,908
)  61




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    Balance at


Current


Balance atDecember 31,


Period


December 31,2006


Change


2007Unrealized gains (losses) on securities available for sale

$
(1,164
)

$
1,523


$
359Unrealized gains (losses) on post-retirement benefits


(132
)


434



302Total

$
(1,296
)

$
1,957


$
661   Liquidation
    Account
    14.
    REGULATORY
    CAPITAL REQUIREMENTS      As of December 31, 2007To Be WellMinimum


Capitalized UnderCapital


Prompt CorrectiveActual


Requirements


Action ProvisionsAmount


Ratio


Amount


Ratio


Amount


Ratio(In thousands)Total capital (to risk-weighted assets)

$
259,087



11.88
%

$
174,635



8.00
%

$
218,294



10.00
%Tier 1 capital (to risk-weighted assets)


201,779



9.26



*



*



130,976



6.00Leverage (Tier 1) capital (to adjusted total assets)


201,779



7.47



108,066



4.00



135,082



5.00Tangible capital (to adjusted total assets)


201,779



7.47



40,525



1.50



*



*   62




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  As of December 31, 2006To Be WellCapitalized UnderMinimum Capital


Prompt CorrectiveActual


Requirements


Action ProvisionsAmount


Ratio


Amount


Ratio


Amount


Ratio(In thousands)Total capital (to risk-weighted assets)

$
248,445



11.70
%

$
169,879



8.00
%

$
212,349



10.00
%Tier 1 capital (to risk-weighted assets)


201,490



9.49



*



*



127,409



6.00Leverage (Tier 1) capital (to adjusted total assets)


201,490



7.68



104,196



4.00



131,207



5.00Tangible capital (to adjusted total assets)


201,490



7.68



39,362



1.50



*



*     *
    
    Ratio is not required under regulations.        15.
    BENEFIT
    PLANS  Postretirement
    Benefit Plans
   63




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    Year Ended December 31,2007


2006(In thousands)Change in Benefit Obligation:Benefit obligation at beginning of year

$
4,015


$
4,158Service cost






2Interest cost


221



221Actuarial (gain)/loss


(668
)


(89
)Benefits paid


(198
)


(277
)Benefit obligation at end of the year

$
3,370


$
4,015Funded status of the plan

$
(3,370
)

$
(4,015
)     The Year Ended December 31,2007


2006(In thousands)Net gains (losses)

$
302


$
(135
)Prior service credit (cost)






3$
302


$
(132
)     Year Ended December 31,2007


2006


2005(In thousands)Service cost

$



$
2


$
1Interest cost


222



221



215Expected return on plan assets










Net amortization of prior service cost


(1
)


(1
)


Recognized net actuarial gain










Net periodic benefit cost/(gain)


221



222



216Net loss (gain)


665







Prior service cost (credit)


3







Amortization of prior service cost










Total recognized in other comprehensive income


668







Total recognized in net periodic benefit cost and other
    comprehensive income

$
889


$
222


$
216Assumptions used in the valuations were as follows:Weighted average discount rate


5.75
%


5.75
%


5.50
%    64




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    1 Percentage

1 PercentagePoint Increase

Point Decrease(In thousands)Effect on total of service and interest cost components

$
14


$
(14
)Effect on the postretirement benefit obligation


221



(215
)     In thousands2008

$
2902009


2992010


3062011


3092012


3082013-2017


1,428Total

$
2,940   401(k)
    Savings Plan
      Employee
    Stock Ownership Plan
     65




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    Retention
    Plan
      Long-Term
    Incentive Plan
      For the Year Ended December 31, 2007Weighted Average


Aggregate IntrinsicShares


Exercise Price


ValueOutstanding at beginning of year


2,068,558


$
9.63Granted






Exercised


(24,702
)


7.12Forfeited






Outstanding at end of period


2,043,856


$
9.66


$
Options exercisable at end of period


2,043,856


$
9.66


$
  66




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
    2007


2006


2005(In thousands)Intrinsic value of options exercised

$
99


$
512


$
381Cash received from option exercises


176



878



674Tax benefit realized from option exercises


12



141



127Weighted average fair value of options granted










       Employee
    Stock Purchase Plan
    Deferred
    Compensation Plan
    16.
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS  and/or
  Cash and cash equivalents, accrued interest receivable and
    payable and advance payments by borrowers for taxes and
    insurance
  Securities
  Loans held for sale 
 67




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
   Loans 
  Federal Home Loan Bank stock
  Deposits
  Borrowed funds 
  Limitations
      68




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  December 31,


December 31,2007


2006Carrying


Fair


Carrying


FairValue


Value


Value


Value(In thousands)Assets:Cash and cash equivalents

$
37,363


$
37,363


$
35,637


$
35,637Securities:Trading


5,064



5,064



10,786



10,786Available for sale


244,753



244,753



237,531



237,531Loans held for sale


87,236



87,269



26,960



27,288Loans, net


2,236,988



2,246,948



2,253,559



2,256,796Federal Home Loan Bank stock


25,432



25,432



25,432



25,432Accrued interest receivable


13,077



13,077



13,703



13,703Liabilities:Deposits:Checking, savings and money market accounts


(704,644
)


(704,644
)


(668,820
)


(668,820
)Certificates of deposit


(1,170,562
)


(1,170,790
)


(1,154,115
)


(1,151,666
)Federal Home Loan Bank advances


(437,253
)


(440,910
)


(465,253
)


(462,302
)Repurchase agreements and other


(149,533
)


(152,827
)


(98,511
)


(98,550
)Advance payments by borrowers for taxes and insurance


(17,853
)


(17,853
)


(17,471
)


(17,471
)Accrued interest payable


(7,837
)


(7,837
)


(2,842
)


(2,842
)   17.
    STATEMENT
    OF CASH FLOWS SUPPLEMENTAL DISCLOSURE    Year Ended December 31,2007


2006


2005(In thousands)Supplemental disclosures of cash flow information:Cash paid during the year for:Interest on deposits and borrowings, net of amounts capitalized

$
91,452


$
84,208


$
55,764Interest capitalized on borrowings


30



19



42Income taxes


13,146



13,050



9,615Supplemental schedule of noncash activities:Loans transferred to held for sale


76,493







74,144Loans transferred from held for sale










37,075Transfers from loans to real estate owned


14,356



4,814



4,935  69




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  18.
    PARENT
    COMPANY FINANCIAL STATEMENTS  Condensed
    Statements of Financial Condition
  December 31,2007


2006(In thousands)AssetsCash and deposits with banks

$
8,234


$
811Federal funds sold and other






27Total cash and cash equivalents


8,234



838Securities:Trading


312



559Available for sale


2,064



2,866Note receivable from ESOP


13,071



15,033Subordinated note receivable from Home Savings


30,000



30,000Investment in subsidiary-Home Savings


237,430



235,058Investment in subsidiary-Butler Wick


15,944



16,448Other assets


131



149Total assets

$
307,186


$
300,951Liabilities and Shareholders EquityRepurchase agreements and other

$
36,300


$
18,300Accrued interest payable


243



101Accrued expenses and other liabilities


929



1,217Total liabilities


37,472



19,618Total shareholders equity


269,714



281,333Total liabilities and shareholders equity

$
307,186


$
300,951   Condensed
    Statements of Income
  Year Ended December 31,2007


2006


2005(In thousands)IncomeCash dividends from subsidiaries

$
9,000


$
30,000


$
7,000Interest income


3,380



1,411



1,530Non-interest income


31



60



166Total income


12,411



31,471



8,696ExpensesInterest expense


2,092



820



406Non-interest expenses


2,419



1,405



1,395Total expenses


4,511



2,225



1,801Income before income taxes


7,900



29,246



6,895Income tax (benefit) expense


(270
)


(425
)


(49
)Income before equity in undistributed net earnings of
    subsidiaries


8,170



29,671



6,944Equity in undistributed net earnings of subsidiaries


(4,037
)


(5,560
)


16,253Net income

$
4,133


$
24,111


$
23,197  70




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  Condensed
    Statements of Cash Flows
  Year Ended December 31,2007


2006


2005(In thousands)Cash Flows from Operating ActivitiesNet Income

$
4,133


$
24,111


$
23,197Adjustments to reconcile net income to net cash provided by
    operating activities:Equity in undistributed earnings of the subsidiaries


4,037



5,560



(16,253
)Security gains










(62
)Decrease in trading securities


247



433



998Decrease (increase) in interest receivable


18



(18
)


Decrease in other assets






27



1,128Increase in accrued interest payable


142



50



47Decrease in other liabilities


(64
)


(712
)


(1,948
)Net cash from operating activities


8,513



29,451



7,107Cash Flows from Investing ActivitiesProceeds from sale of:Securities available for sale










99Purchases of:Securities available for sale






(36
)


(227
)Investment in subordinated debt issued by Home Savings






(30,000
)


ESOP loan repayment


1,263



1,044



875Net cash from investing activities


1,263



(28,992
)


747Cash Flows from Financing ActivitiesDividends paid


(10,847
)


(10,401
)


(9,462
)Net increase in borrowed funds


18,000



11,700



3,100Purchase of treasury stock


(9,709
)


(2,298
)


(2,499
)Exercise of stock options


176



878



674Net cash from financing activities


(2,380
)


(121
)


(8,187
)Increase (decrease) in cash and cash equivalents


7,396



338



(333
)Cash and cash equivalents, beginning of year


838



500



833Cash and cash equivalents, end of year

$
8,234


$
838


$
500  71




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  19.
    SEGMENT
    INFORMATION    Banking


InvestmentServices


Services


Eliminations


Total(In thousands)2007Results of OperationsTotal interest income

$
168,815


$
1,135






$
169,950Total interest expense


96,103



345







96,448Provision for loan losses


28,750











28,750Net interest income after provision for loan losses


43,962



790







44,752Non-interest income


14,303



32,597







46,900Non-interest expense


55,640



29,688







85,328Income before income taxes


2,625



3,699







6,324Income taxes


911



1,280







2,191Net income

$
1,714


$
2,419






$
4,133Selected Financial InformationTotal assets

$
2,739,729


$
20,314


$
(4
)

$
2,760,039Capital expenditures


5,766



462







6,228Depreciation and amortization


2,779



281







3,0602006Results of OperationsTotal interest income

$
163,763


$
1,667






$
165,430Total interest expense


83,953



475







84,428Provision for loan losses


4,347











4,347Net interest income after provision for loan losses


75,463



1,192







76,655Non-interest income


13,203



27,071







40,274Non-interest expense


53,310



26,508







79,818Income before income taxes


35,356



1,755







37,111Income taxes


12,393



607







13,000Net income

$
22,963


$
1,148






$
24,111Selected Financial InformationTotal assets

$
2,682,641


$
20,923


$
(19
)

$
2,703,545Capital expenditures


4,086



335







4,421Depreciation and amortization


2,503



281







2,784 72




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  Banking


InvestmentServices


Services


Eliminations


Total(In thousands)2005Results of OperationsTotal interest income

$
133,794


$
2,258






$
136,052Total interest expense


56,357



939







57,296Provision for loan losses


3,028











3,028Net interest income after provision for loan losses


74,409



1,319







75,728Non-interest income


12,184



26,076







38,260Non-interest expense


53,413



25,468







78,881Income (loss) before income taxes


33,180



1,927







35,107Income taxes


11,234



676







11,910Net income (loss)

$
21,946


$
1,251






$
23,197Selected Financial InformationTotal assets

$
2,488,771


$
40,122


$
(43
)

$
2,528,850Capital expenditures


5,029



320







5,349Depreciation and amortization


2,026



321







2,347   20.
    EARNINGS
    PER SHARE    2007


2006


2005(In thousands, except per share data)Basic Earnings Per Share:Net income applicable to common stock

$
4,133


$
24,111


$
23,197Weighted average common shares outstanding


28,711



29,029



28,809Basic earnings per share

$
0.14


$
0.83


$
0.81Diluted Earnings Per Share:Net income applicable to common stock

$
4,133


$
24,111


$
23,197Weighted average common shares outstanding


28,711



29,029



28,809Dilutive effect of stock options


115



375



330Weighted average common shares outstanding for dilutive
    computation


28,826



29,404



29,139Diluted earnings per share

$
0.14


$
0.82


$
0.80  73




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  21.
    QUARTERLY
    FINANCIAL INFORMATION (UNAUDITED)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Total(Unaudited)(In thousands, except per share data)2007:Total interest income

$
42,825


$
42,004


$
42,390


$
42,731


$
169,950Total interest expense


23,424



23,852



24,512



24,660



96,448Net interest income


19,401



18,152



17,878



18,071



73,502Provision for loan losses


2,325



2,744



5,363



18,318



28,750Non-interest income


11,417



12,217



12,109



11,157



46,900Non-interest expense


21,242



21,500



20,732



21,854



85,328Income tax expense (benefit)


2,581



2,195



1,309



(3,894
)


2,191Net income (loss)

$
4,670


$
3,930


$
2,583


$
(7,050
)

$
4,133Earnings per share:Basic

$
0.16


$
0.14


$
0.09


$
(0.25
)

$
0.14Diluted


0.16



0.13



0.09



(0.25
)


0.14     First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Total(In thousands, except per share data)2006:Total interest income

$
38,627


$
41,647


$
42,464


$
42,692


$
165,430Total interest expense


17,936



20,611



22,492



23,389



84,428Net interest income


20,691



21,036



19,972



19,303



81,002Provision for loan losses


738



812



1,475



1,322



4,347Non-interest income


9,809



9,533



10,199



10,733



40,274Non-interest expense


20,356



20,126



19,365



19,971



79,818Income tax expense


3,273



3,381



3,272



3,074



13,000Net income

$
6,133


$
6,250


$
6,059


$
5,669


$
24,111Earnings per share:Basic

$
0.21


$
0.22


$
0.21


$
0.19


$
0.83Diluted


0.21



0.21



0.21



0.19



0.82    74




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS
    (Continued)
  22.
    BUSINESS
    COMBINATION  Form 8-K Form 8-K
 75




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              
      76




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rules 13a-15(f) 15d-15(f)
    Report of Independent
    Registered Public Accounting Firm on Internal Control Over
    Financial Reporting
  -s- Douglas M. McKay

-s- Patrick A. KellyDouglas M. McKay, Chief Executive Officer

Patrick A. Kelly,  Chief Financial OfficerMarch 28, 2008

March 28, 2008  77




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING
            to
   78




---



##### Table of Contents



79




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e) Form 10-K
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers and Corporate Governance      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters     80




---



##### Table of Contents



Equity
    Compensation Plan Information
  (a)

(b)

(c)Number of SecuritiesRemaining Available forFuture Issuance UnderNumber of Securities



Equity Compensationto be Issued Upon

Weighted-Average

Plans (ExcludingExercise of

Exercise Price of

SecuritiesPlan Category

Outstanding Options

Outstanding Options

Reflected in Column (a))Equity compensation plans approved by security holders


2,043,856


$
9.66



2,037,156   Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (c)
    Exhibits  3.1

Articles of Incorporation3.2

Amended Code of Regulations10

Material Contracts11

Statement Regarding Computation of Per Share Earnings20

Proxy Statement for 2008 Annual Meeting of Shareholders21

Subsidiaries of Registrant23

Crowe Chizek and Company LLC Consent31.1

Section 302 Certification by Chief Executive Officer31.2

Section 302 Certification by Chief Financial Officer32

Certification of Financial Statements by Chief Executive Officer
    and Chief Financial Officer   (a) Financial Statement Schedules.
 81




---



##### Table of Contents



SIGNATURES    UNITED COMMUNITY FINANCIAL CORP.
  /s/  Douglas
    M. McKay  
     /s/  Douglas
    M.
    McKay

/s/  Patrick
    A.
    KellyDouglas M. McKay, Chairman of the Board, Chief Executive Officer
    and Director

Patrick A. Kelly, Treasurer (Principal Financial Officer)
    Date:  March 28, 2008Date: March 28, 2008/s/  Eugenia
    C.
    Atkinson

/s/  Richard
    J.
    BuoncoreEugenia C. Atkinson, Director

Richard J. Buoncore, DirectorDate: March 28, 2008

Date:  March 28, 2008/s/  Thomas
    J.
    Cavalier

/s/  David
    G.
    LodgeThomas J. Cavalier, Director
    Date: March 28, 2008

David G. Lodge, President, Chief Operating Officer and DirectorDate:  March 28, 2008/s/  Richard
    J.
    Schiraldi

/s/  Clarence
    R.
    SmithRichard J. Schiraldi, Director

Clarence R. Smith, DirectorDate: March 28, 2008

Date:  March 28, 2008/s/  David
    C.
    Sweet

/s/  Donald
    J.
    VarnerDavid C. Sweet, Director

Donald J. Varner, DirectorDate: March 28, 2008

Date:  March 28, 2008  82




---



##### Table of Contents



INDEX TO
    EXHIBITS  ExhibitNumber3.1

Articles of Incorporation

Incorporated by reference to the Registration Statement on Form
    S-1 filed by United Community on March 13, 1998 (S-1) with the
    Securities and Exchange Commission (SEC), Exhibit 3.13.2

Amended Code of Regulations

Incorporated by reference to the 1998 10-K filed by United
    Community on March 31, 1999 via Edgar, film number 99582343,
    Exhibit 3.24

Agreement to furnish instruments and agreements defining rights
    of holders of long-term debt10.1

The Home Savings and Loan Company of Youngstown, Ohio Employee
    Stock Ownership Plan

Incorporated by reference to the 2001 10-K filed by United
    Community on March 29, 2002 via Edgar, film number 02593161,
    Exhibit 10.110.2

Employment Agreement between The Home Savings and Loan Company
    of Youngstown, Ohio and Douglas M. McKay, dated
    December 31, 2004.

Incorporated by reference to the 2004 10-K/A filed by United
    Community on May 2, 2005 via Edgar, film number 04666159 (2004
    10K/A), Exhibit 10.210.3

Employment Agreement between The Home Savings and Loan Company
    of Youngstown, Ohio and Patrick W. Bevack, dated
    December 31, 2004.

Incorporated by reference to the 2004 10-K/A, Exhibit 10.310.4

Employment Agreement between The Home Savings and Loan Company
    of Youngstown, Ohio and Patrick A. Kelly, dated
    December 31, 2004.

Incorporated by reference to the 2004 10-K/A, Exhibit 10.410.5

Employment Agreement between Butler Wick Corp. and Thomas J.
    Cavalier, dated August 12, 1999.

Incorporated by reference to the 1999 10-K filed by United
    Community on March 29, 2000 via Edgar, film number 582478,
    Exhibit 10.510.6

Employment Agreement between The Home Savings and Loan Company
    of Youngstown, Ohio and David G. Lodge, dated December 31,
    2004.

Incorporated by reference to the 2004 10-K/A, Exhibit 10.610.7

United Community 1999 Long -Term Incentive Plan

Incorporated by reference to the Proxy Statement filed by United
    Community via Edgar on June 7, 1999, file number 9964170 (1999
    Proxy), Exhibit A10.8

United Community Recognition and Retention Plan and
    Trust Agreement

Incorporated by reference to the 1999 Proxy, Exhibit B10.9

United Community 2007 Long-Term Incentive Plan

Incorporated by reference to the Proxy Statement filed by United
    Community via Edgar on March 21, 2007, film number 07715040,
    Exhibit A10.10

Agreement and Plan of Merger

Incorporated by reference to the Form 8-K filed by United
    Community via Edgar on July 26, 2007, film number 071001103,
    Exhibit 210.11

Amendment to Agreement and Plan of Merger

Incorporated by reference to the Form 8-K  filed by United
    Community via Edgar on October 1, 2007, film number 071145585,
    Exhibit 211

Statement Regarding Computation of Per Share Earnings

Incorporated by reference to Note 20 to the Financial Statements
    included in the Annual Report, Item 8. 83




---



##### Table of Contents



ExhibitNumber20

Proxy Statement for 2008 Annual Meeting of Shareholders

Incorporated by reference to the Proxy Statement, to be filed
    with the Securities and Exchange Commission on or about
    April 1, 2008.21

Subsidiaries of Registrant23

Crowe Chizek and Company LLC Consent31.1

Section 302 Certification by Chief Executive Officer31.2

Section 302 Certification by Chief Financial Officer32

Certification of Financial Statements by Chief Executive Officer
    and Chief Financial Officer  84