##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 UNITED COMMUNITY FINANCIAL CORP.
  OHIO
    
    0-024399
    
    34-1856319(State or other jurisdiction of incorporation)
    
    (Commission File No.)
    
    (IRS Employer I.D. No.)
 275 West Federal Street, Youngstown, Ohio 44503-1203
  (330) 742-0500
  (Former name or former address, if changed since last report)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o (Do not check if a smaller reporting company)
    
    Small reporting company o
  o þ




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##### 



TABLE OF CONTENTS
 PAGEPart I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition as of March 31, 2009 (Unaudited)
and December 31, 2008
    
    
    1Consolidated Statements of Income for the Three Months Ended
March 31, 2009 and 2008 (Unaudited)
    
    
    2Consolidated Statement of Shareholders Equity for the Three Months ended March 31,
2009 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2009 and 2008 (Unaudited)
    
    
    5Notes to Consolidated Financial Statements
    
    
    6 - 18Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    19-27Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    29Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities (None)Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information (None)Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibits
    
    
    32-54EX-10.1EX-10.2EX-10.3EX-10.4EX-31.1EX-31.2EX-32




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 UNITED COMMUNITY FINANCIAL CORP.
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Assets:Cash and deposits with banks
    
    $
    20,059
    
    
    $
    21,745Federal funds sold and other
    
    
    26,724
    
    
    
    21,672Total cash and cash equivalents
    
    
    46,783
    
    
    
    43,417Securities:Available for sale, at fair value
    
    
    248,981
    
    
    
    215,731Loans held for sale
    
    
    14,170
    
    
    
    16,032Loans, net of allowance for loan losses of $37,856 and $35,962, respectively
    
    
    2,114,855
    
    
    
    2,203,453Federal Home Loan Bank stock, at cost
    
    
    26,464
    
    
    
    26,464Premises and equipment, net
    
    
    24,649
    
    
    
    25,015Accrued interest receivable
    
    
    9,237
    
    
    
    10,082Real estate owned and other repossessed assets
    
    
    30,430
    
    
    
    29,258Core deposit intangible
    
    
    824
    
    
    
    884Cash surrender value of life insurance
    
    
    25,337
    
    
    
    25,090Assets of discontinued operationsButler Wick Corp.
    
    
    
    
    
    
    5,562Other assets
    
    
    20,858
    
    
    
    17,085Total assets
    
    $
    2,562,588
    
    
    $
    2,618,073Liabilities and Shareholders EquityLiabilities:Deposits:Interest bearing
    
    $
    1,722,746
    
    
    $
    1,779,676Non-interest bearing
    
    
    112,769
    
    
    
    106,255Total deposits
    
    
    1,835,515
    
    
    
    1,885,931Borrowed funds:Federal Home Loan Bank advances
    
    
    334,828
    
    
    
    337,603Repurchase agreements and other borrowings
    
    
    119,401
    
    
    
    125,269Total borrowings
    
    
    454,229
    
    
    
    462,872Advance payments by borrowers for taxes and insurance
    
    
    14,067
    
    
    
    19,806Accrued interest payable
    
    
    3,039
    
    
    
    3,077Liabilities of discontinued operationsButler Wick Corp.
    
    
    
    
    
    
    2,388Accrued expenses and other liabilities
    
    
    16,441
    
    
    
    9,076Total liabilities
    
    
    2,323,291
    
    
    
    2,383,150Shareholders 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 and 30,897,825 shares outstanding
    
    
    146,178
    
    
    
    146,439Retained earnings
    
    
    168,717
    
    
    
    165,447Accumulated other comprehensive income
    
    
    4,545
    
    
    
    3,635Unearned employee stock ownership plan shares
    
    
    (7,188
    )
    
    
    (7,643
    )Treasury stock, at cost, 6,906,632 shares
    
    
    (72,955
    )
    
    
    (72,955
    )Total shareholders equity
    
    
    239,297
    
    
    
    234,923Total liabilities and shareholders equity
    
    $
    2,562,588
    
    
    $
    2,618,073
 See Notes to Consolidated Financial Statements.
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UNITED COMMUNITY FINANCIAL CORP.
 
 CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited)
 For the Three Months EndedMarch 31,2009
    
    
    2008(Dollars in thousands, except per share data)Interest incomeLoans
    
    $
    31,067
    
    
    $
    35,808Loans held for sale
    
    
    263
    
    
    
    188Securities:Available for sale
    
    
    2,770
    
    
    
    3,241Federal Home Loan Bank stock dividends
    
    
    299
    
    
    
    332Other interest earning assets
    
    
    29
    
    
    
    58Total interest income
    
    
    34,428
    
    
    
    39,627Interest expenseDeposits
    
    
    12,651
    
    
    
    17,036Federal Home Loan Bank advances
    
    
    1,858
    
    
    
    3,692Repurchase agreements and other
    
    
    1,190
    
    
    
    1,957Total interest expense
    
    
    15,699
    
    
    
    22,685Net interest income
    
    
    18,729
    
    
    
    16,942Provision for loan losses
    
    
    8,444
    
    
    
    2,466Net interest income after provision for loan losses
    
    
    10,285
    
    
    
    14,476Non-interest incomeNon-deposit investment income
    
    
    304
    
    
    
    477Service fees and other charges
    
    
    1,512
    
    
    
    1,765Net gains (losses):Securities available for sale
    
    
    
    
    
    
    931Other than temporary impairment charges on securities
available for sale
    
    
    (150
    )
    
    
    Loans sold
    
    
    1,140
    
    
    
    2,184Real estate owned and other repossessed assets sold
    
    
    (1,138
    )
    
    
    (140
    )Other income
    
    
    1,075
    
    
    
    1,053Total non-interest income
    
    
    2,743
    
    
    
    6,270Non-interest expenseSalaries and employee benefits
    
    
    8,023
    
    
    
    9,050Occupancy
    
    
    984
    
    
    
    947Equipment and data processing
    
    
    1,730
    
    
    
    1,721Franchise tax
    
    
    592
    
    
    
    580Advertising
    
    
    229
    
    
    
    265Amortization of core deposit intangible
    
    
    60
    
    
    
    78Deposit insurance premiums
    
    
    1,783
    
    
    
    51Professional fees
    
    
    716
    
    
    
    586Real estate owned and other repossessed asset expenses
    
    
    951
    
    
    
    388Other expenses
    
    
    1,331
    
    
    
    1,298Total non-interest expenses
    
    
    16,399
    
    
    
    14,964Income (loss) before income taxes and discontinued operations
    
    
    (3,371
    )
    
    
    5,782Income taxes expense (benefit)
    
    
    (1,692
    )
    
    
    2,018Net income (loss) before discontinued operations
    
    
    (1,679
    )
    
    
    3,764Discontinued operationsNet income of Butler Wick Corp., net of tax
    
    
    4,949
    
    
    
    279Net income
    
    $
    3,270
    
    
    $
    4,043
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UNITED COMMUNITY FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Comprehensive income (loss)
    
    $
    4,180
    
    
    $
    6,178Earnings (loss) per shareBasiccontinuing operations
    
    $
    (0.06
    )
    
    $
    0.13Basicdiscontinued operations
    
    
    0.17
    
    
    
    0.01Basic
    
    
    0.11
    
    
    
    0.14Dilutedcontinuing operations
    
    
    (0.06
    )
    
    
    0.13Diluteddiscontinued operations
    
    
    0.17
    
    
    
    0.01Diluted
    
    
    0.11
    
    
    
    0.14
 See Notes to Consolidated Financial Statements.
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UNITED COMMUNITY FINANCIAL CORP.
 
 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(Unaudited)
 UnearnedEmployeeAccumulated
    
    
    StockOther
    
    
    OwnershipShares
    
    
    Common
    
    
    Retained
    
    
    Comprehensive
    
    
    Plan
    
    
    TreasuryOutstanding
    
    
    Stock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Shares
    
    
    Stock
    
    
    Total(Dollars thousands, except per share data)Balance December 31, 2008
    
    
    30,898
    
    
    $
    146,439
    
    
    $
    165,447
    
    
    $
    3,635
    
    
    $
    (7,643
    )
    
    $
    (72,955
    )
    
    $
    234,923Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    3,270
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,270Change in net unrealized gain/(loss) on securities, net of taxes of $490
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    910
    
    
    
    
    
    
    
    
    
    
    
    910Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,180Shares allocated to ESOP participants
    
    
    
    
    
    
    (261
    )
    
    
    
    
    
    
    
    
    
    
    455
    
    
    
    
    
    
    
    194Balance March 31, 2009
    
    
    30,898
    
    
    $
    146,178
    
    
    $
    168,717
    
    
    $
    4,545
    
    
    $
    (7,188
    )
    
    $
    (72,955
    )
    
    $
    239,297
 See Notes to Consolidated Financial Statements.
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UNITED COMMUNITY FINANCIAL CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Cash Flows from Operating ActivitiesNet income
    
    $
    3,270
    
    
    $
    4,043Adjustments to reconcile net income to net cash provided by operating activitiesProvision for loan losses
    
    
    8,444
    
    
    
    2,466Net gains on loans
    
    
    (1,140
    )
    
    
    (2,184
    )Net losses on real estate owned and other repossessed assets
    
    
    1,138
    
    
    
    140Net gains on other assets
    
    
    (21
    )
    
    
    (905
    )Other than temporary impairment of securities available for sale
    
    
    150
    
    
    
    Amortization of premiums and accretion of discounts
    
    
    1,061
    
    
    
    583Depreciation and amortization
    
    
    586
    
    
    
    653Federal Home Loan Bank stock dividends
    
    
    
    
    
    
    (332
    )Decrease in interest receivable
    
    
    845
    
    
    
    1,392(Decrease) increase in interest payable
    
    
    (38
    )
    
    
    165(Increase) decrease in prepaid and other assets
    
    
    (4,150
    )
    
    
    9,890Increase (decrease) in other liabilities
    
    
    2,436
    
    
    
    (9,524
    )Decrease in trading securities
    
    
    
    
    
    
    (27
    )Stock based compensation
    
    
    
    
    
    
    306Net principal disbursed on loans originated for sale
    
    
    (134,445
    )
    
    
    (64,005
    )Proceeds from sale of loans originated for sale
    
    
    137,447
    
    
    
    140,158ESOP Compensation
    
    
    194
    
    
    
    428Operating cash flows from discontinued operations
    
    
    (4,949
    )
    
    
    (279
    )Net cash from operating activities
    
    
    10,828
    
    
    
    82,968Cash Flows from Investing ActivitiesProceeds from principal repayments and maturities of:Securities available for sale
    
    
    10,011
    
    
    
    18,268Proceeds from sale of:Securities available for sale
    
    
    
    
    
    
    38,299Real estate owned and other repossessed assets
    
    
    3,085
    
    
    
    3,654Purchases of:Securities available for sale
    
    
    (42,050
    )
    
    
    (115,672
    )Net change in loans
    
    
    76,035
    
    
    
    39,381Loans purchased
    
    
    (1,476
    )
    
    
    (24,066
    )Purchases of premises and equipment
    
    
    (190
    )
    
    
    (220
    )Investing cash flows from discontinued operations
    
    
    11,921
    
    
    
    (16
    )Net cash from investing activities
    
    
    57,336
    
    
    
    (40,372
    )Cash Flows from Financing ActivitiesNet increase in checking, savings and money market accounts
    
    
    19,872
    
    
    
    47,845Net decrease in certificates of deposit
    
    
    (70,288
    )
    
    
    (47,082
    )Net decrease in advance payments by borrowers for taxes and insurance
    
    
    (5,739
    )
    
    
    (4,962
    )Proceeds from Federal Home Loan Bank advances
    
    
    172,000
    
    
    
    217,100Repayment of Federal Home Loan Bank advances
    
    
    (174,775
    )
    
    
    (272,971
    )Net change in repurchase agreements and other borrowed funds
    
    
    (5,868
    )
    
    
    19,324Cash dividends paid
    
    
    
    
    
    
    (2,709
    )Net cash from financing activities
    
    
    (64,798
    )
    
    
    (43,455
    )Change in cash and cash equivalents
    
    
    3,366
    
    
    
    (859
    )Cash and cash equivalents, beginning of period
    
    
    43,417
    
    
    
    33,502Cash and cash equivalents, end of period
    
    $
    46,783
    
    
    $
    32,643
 See Notes to Consolidated Financial Statements.
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UNITED COMMUNITY FINANCIAL CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. BASIS OF PRESENTATION
     2. REGULATORY ENFORCEMENT ACTION
     6




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3. DISCONTINUED OPERATIONS
  For the Three MonthsEnded March 31,2009
    
    
    2008(Dollars in thousands)IncomeInterest income
    
    $
    32
    
    
    $
    229Brokerage commissions
    
    
    
    
    
    
    6,101Service fees and other charges
    
    
    1,287
    
    
    
    1,690Underwriting and investment banking
    
    
    
    
    
    
    29Gain on the sale of Butler Wick Trust
    
    
    7,904
    
    
    
    Other income
    
    
    
    
    
    
    27Total income
    
    
    9,223
    
    
    
    8,076ExpensesInterest expense on borrowings
    
    
    
    
    
    
    69Salaries and employee benefits
    
    
    1,198
    
    
    
    5,679Occupancy expenses
    
    
    68
    
    
    
    388Equipment and data processing
    
    
    84
    
    
    
    619Other expenses
    
    
    258
    
    
    
    865Total expenses
    
    
    1,608
    
    
    
    7,620Income before taxes
    
    
    7,615
    
    
    
    456Income tax
    
    
    2,666
    
    
    
    177Net income
    
    $
    4,949
    
    
    $
    279
 4. RECENT ACCOUNTING DEVELOPMENTS
 Business
Combinations
 Non-controlling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Disclosures
about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133
 7




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The Hierarchy of
Generally Accepted Accounting Principles
 Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions
 Determination of the Useful Life of
Intangible Assets
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 Determining the Fair Value of a Financial
Asset When the Market for That Asset is not Active
  Recognition and Presentation
of Other-Than-Temporary Impairments
 Determining Fair Value When the Volume and
Level of Activity for the Asset and Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly.
 8




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Interim Disclosures about
Fair Value of Financial Instruments. Disclosures about Fair
Value of Financial Instruments,
 5. STOCK COMPENSATION
     For the three months ended March 31, 2009AggregateWeighted
    
    intrinsicaverage
    
    value (inShares
    
    exercise price
    
    thousands)Outstanding at beginning of year
    
    
    2,092,128
    
    
    $
    9.08Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (178,113
    )
    
    
    9.10Outstanding at end of period
    
    
    1,914,015
    
    
    $
    9.08
    
    
    $
    Options exercisable at end of period
    
    
    1,914,015
    
    
    $
    9.08
    
    
    $
    
  March 31,2009Intrinsic value of options exercised
    
    $
    Cash received from option exercises
    
    
    Tax benefit realized from option exercises
    
    
    Weighted average fair value of options granted, per share
    
    
    
  9




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6. SECURITIES
  March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Gross
    
    
    Gross
    
    
    
    
    
    
    Gross
    
    
    GrossFair
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedValue
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury and
government
sponsored entities
securities
    
    $
    37,295
    
    
    $
    897
    
    
    $
    (15
    )
    
    $
    27,170
    
    
    $
    865
    
    
    $
    Equity securities
    
    
    719
    
    
    
    73
    
    
    
    (455
    )
    
    
    910
    
    
    
    70
    
    
    
    (411
    )Mortgage-related securities
    
    
    210,967
    
    
    
    6,091
    
    
    
    (119
    )
    
    
    187,651
    
    
    
    4,527
    
    
    
    (107
    )Total
    
    $
    248,981
    
    
    $
    7,061
    
    
    $
    (589
    )
    
    $
    215,731
    
    
    $
    5,462
    
    
    $
    (518
    )
    10




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7. LOANS
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Real Estate:One- to four-family residential
    
    $
    888,948
    
    
    $
    909,567Multifamily residential
    
    
    168,432
    
    
    
    187,711Nonresidential
    
    
    381,263
    
    
    
    375,463Land
    
    
    22,968
    
    
    
    23,517Construction:One- to four-family residential
    
    
    233,708
    
    
    
    255,355Multifamily and non-residential
    
    
    33,992
    
    
    
    35,797Total real estate
    
    
    1,729,311
    
    
    
    1,787,410Consumer
    
    
    331,853
    
    
    
    348,834Commercial
    
    
    90,089
    
    
    
    101,489Total loans
    
    
    2,151,253
    
    
    
    2,237,733Less:Allowance for loan losses
    
    
    37,856
    
    
    
    35,962Deferred loan fees, net
    
    
    (1,458
    )
    
    
    (1,682
    )Total
    
    
    36,398
    
    
    
    34,280Loans, net
    
    $
    2,114,855
    
    
    $
    2,203,453
  As of or for theThree Months
    
    
    As of or for theEnded
    
    
    Year EndedMarch 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Balance, beginning of year
    
    $
    35,962
    
    
    $
    32,006Provision for loan losses
    
    
    8,444
    
    
    
    25,329Amounts charged off
    
    
    (6,691
    )
    
    
    (22,088
    )Recoveries
    
    
    141
    
    
    
    715Balance, end of period
    
    $
    37,856
    
    
    $
    35,962
  11




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##### Table of Contents



As of or for the
    
    
    As of or forThree
    
    
    the YearMonths Ended
    
    
    EndedMarch 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Impaired loans on which no specific valuation allowance was provided
    
    $
    48,407
    
    
    $
    43,256Impaired loans on which a specific valuation allowance was provided
    
    
    46,433
    
    
    
    43,992Total impaired loans at period-end
    
    $
    94,840
    
    
    $
    87,248Specific valuation allowances on impaired loans at period-end
    
    $
    10,999
    
    
    $
    10,968Average impaired loans during the period
    
    
    90,326
    
    
    
    85,812Interest income recognized on impaired loans during the period
    
    
    135
    
    
    
    513Interest income received on impaired loans during the period
    
    
    135
    
    
    
    513
 8. MORTGAGE BANKING ACTIVITIES
   As of or for theThree Months
    
    
    As of or for theEnded
    
    
    Year EndedMarch 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Balance, beginning of year
    
    $
    5,562
    
    
    $
    6,184Originations
    
    
    831
    
    
    
    1,337Amortized to expense
    
    
    (710
    )
    
    
    (1,959
    )Balance, end of period
    
    
    5,683
    
    
    
    5,562Less valuation allowance
    
    
    (2,165
    )
    
    
    (2,233
    )Net balance
    
    $
    3,518
    
    
    $
    3,329
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Balance, beginning of year
    
    $
    (2,233
    )
    
    $
    (562
    )Impairment charges
    
    
    
    
    
    
    (2,233
    )Recoveries
    
    
    68
    
    
    
    562Balance, end of period
    
    $
    (2,165
    )
    
    $
    (2,233
    )
  12




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##### Table of Contents



March 31,
    
    December 31,2009
    
    2008Weighted average prepayment rate
    
    621
    PSA
    
    644
    PSAWeighted average life (in years)
    
    
    3.40
    
    
    
    3.34Weighted average discount rate
    
    
    8
    %
    
    
    8
    %
 9. OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Real estate owned and other repossessed assets
    
    $
    33,319
    
    
    $
    32,012Valuation allowance
    
    
    (2,889
    )
    
    
    (2,754
    )End of year
    
    $
    30,430
    
    
    $
    29,258
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Beginning of year
    
    $
    2,754
    
    
    $
    Additions charged to expense
    
    
    713
    
    
    
    3,753Direct write-downs
    
    
    (578
    )
    
    
    (999
    )End of year
    
    $
    2,889
    
    
    $
    2,754
  For the three months endedMarch 31,2009
    
    
    2008(Dollars in thousands)Net loss on sales
    
    $
    425
    
    
    $
    95Provision for unrealized losses
    
    
    713
    
    
    
    45Operating expenses, net of rental income
    
    
    951
    
    
    
    388Total expenses
    
    $
    2,089
    
    
    $
    528
 13




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##### Table of Contents



10. OTHER POSTRETIREMENT BENEFIT PLANS
   Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Service cost
    
    $
    
    
    
    $
    Interest cost
    
    
    47
    
    
    
    48Expected return on plan assets
    
    
    
    
    
    
    Net amortization of prior service cost
    
    
    
    
    
    
    Net amortization of actuarial gain
    
    
    (4
    )
    
    
    (3
    )Net periodic benefit cost
    
    $
    43
    
    
    $
    45Assumptions used in the valuations
were as follows:Weighted average discount rate
    
    
    6.00
    %
    
    
    6.00
    %
 11. FAIR VALUE MEASUREMENT
       14




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Fair Value Measurements at March 31, 2009 Using:Quoted Prices inActive Markets
    
    
    
    
    
    Significantfor Identical
    
    Significant Other
    
    UnobservableMarch 31,
    
    Assets
    
    Observable
    
    Inputs2009
    
    (Level 1)
    
    Inputs (Level 2)
    
    (Level 3)Assets:Available for sale securities
    
    $
    248,981
    
    
    $
    644
    
    
    $
    248,337
    
    
    $
    
 Fair Value Measurements at December 31, 2008 Using:Quoted Prices inActive Markets
    
    
    
    
    
    Significantfor Identical
    
    Significant Other
    
    UnobservableDecember 31,
    
    Assets
    
    Observable
    
    Inputs2008
    
    (Level 1)
    
    Inputs (Level 2)
    
    (Level 3)Assets:Available for sale securities
    
    $
    215,731
    
    
    $
    809
    
    
    $
    214,922
    
    
    $
    
  Fair Value Measurements at March 31, 2009 Using:Quoted Prices inActive Markets
    
    
    
    
    
    Significantfor Identical
    
    Significant Other
    
    UnobservableMarch 31,
    
    Assets
    
    Observable
    
    Inputs2009
    
    (Level 1)
    
    Inputs (Level 2)
    
    (Level 3)Assets:Impaired loans
    
    $
    35,434
    
    
    
    
    
    
    
    
    
    
    $
    35,434Mortgage servicing assets
    
    
    3,518
    
    
    
    
    
    
    
    3,518
    
    
    
    Foreclosed assets
    
    
    11,353
    
    
    
    
    
    
    
    
    
    
    
    11,353
 Fair Value Measurements at December 31, 2008 Using:Quoted Prices inActive Markets
    
    
    
    
    
    Significantfor Identical
    
    Significant Other
    
    UnobservableDecember 31,
    
    Assets
    
    Observable
    
    Inputs2008
    
    (Level 1)
    
    Inputs (Level 2)
    
    (Level 3)Assets:Impaired loans
    
    $
    33,024
    
    
    
    
    
    
    
    
    
    
    $
    33,024Mortgage servicing rights
    
    
    2,421
    
    
    
    
    
    
    
    2,421
    
    
    
    
    15




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12. STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
  March 31, 2009
    
    March 31, 2008(Dollars in thousands)Supplemental disclosures of cash flow informationCash paid during the period for:Interest on deposits and borrowings
    
    $
    15,738
    
    
    $
    22,589Interest capitalized on borrowings
    
    
    
    
    
    
    Income taxes
    
    
    
    
    
    
    Supplemental schedule of noncash activities:Transfers from loans to real estate owned and other repossessed assets
    
    
    5,395
    
    
    
    3,274
 13. SEGMENT INFORMATION
   14. EARNINGS PER SHARE
  Three Months EndedMarch 31,2009
    
    
    2008Numerator:Income (loss) from continuing operations
    
    $
    (1,679
    )
    
    $
    3,764Income from discontinued operations
    
    
    4,949
    
    
    
    279Net income
    
    $
    3,270
    
    
    $
    4,043Denominator:Weighted average common shares outstandingbasic
    
    
    29,632
    
    
    
    29,349Dilutive effect of stock options
    
    
    
    
    
    
    Weighted average common shares outstandingdilutive
    
    
    29,632
    
    
    
    29,349Basic earnings (loss) per share:Basic earnings (loss) per common sharecontinuing operations
    
    $
    (0.06
    )
    
    $
    0.13Basic earnings per common sharediscontinued operations
    
    
    0.17
    
    
    
    0.01Basic earnings (loss) per common share
    
    
    0.11
    
    
    
    0.14Dilutive earnings (loss) per share:Dilutive earnings (loss) per common sharecontinuing operations
    
    
    (0.06
    )
    
    
    0.13Dilutive earnings per common sharediscontinued operations
    
    
    0.17
    
    
    
    0.01Dilutive earnings (loss) per common share
    
    
    0.11
    
    
    
    0.14
 16




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15. BROKERED CERTIFICATES OF DEPOSIT
  16. OTHER COMPREHENSIVE INCOME
   March 31,
    
    
    March 31,2009
    
    
    2008(Dollars in thousands)Unrealized holding gain on securities available for sale
    
    $
    1,250
    
    
    $
    4,216Changes in net gains on postretirement benefit plan
    
    
    
    
    
    
    Reclassification adjustment for losses (gains) realized in income
    
    
    150
    
    
    
    (931
    )Net unrealized gains
    
    
    1,400
    
    
    
    3,285Tax effect (35%)
    
    
    490
    
    
    
    1,150Net of tax amount
    
    $
    910
    
    
    $
    2,135
  Balance at
    
    Current
    
    Balance atDecember 31,
    
    Period
    
    March 31,2008
    
    Change
    
    2009Unrealized gains on securities available for sale
    
    $
    3,297
    
    
    $
    910
    
    
    $
    4,207Unrealized gains on post-retirement benefits
    
    
    338
    
    
    
    
    
    
    
    338Total
    
    $
    3,635
    
    
    $
    910
    
    
    $
    4,545
 17. REGULATORY CAPITAL REQUIREMENTS
   17




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As of March 31, 2009Minimum
    
    To Be Well CapitalizedCapital
    
    Under Prompt CorrectiveActual
    
    Requirements
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total risk-based capital to
risk-weighted assets
    
    $
    240,930
    
    
    
    12.48
    %
    
    $
    154,498
    
    
    
    8.00
    %
    
    $
    193,122
    
    
    
    10.00
    %Tier 1 capital to risk-weighted assets
    
    
    216,620
    
    
    
    11.22
    
    
    
    *
    
    
    
    *
    
    
    
    115,873
    
    
    
    6.00Tier 1 capital to average total assets
    
    
    216,620
    
    
    
    8.33
    
    
    
    104,030
    
    
    
    4.00
    
    
    
    130,038
    
    
    
    5.00Tangible capital to adjusted total assets
    
    
    216,620
    
    
    
    8.33
    
    
    
    39,011
    
    
    
    1.50
    
    
    
    *
    
    
    
    *
 As of December 31, 2008Minimum
    
    To Be Well CapitalizedCapital
    
    Under Prompt CorrectiveActual
    
    Requirements
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total risk-based capital to
risk-weighted assets
    
    $
    242,944
    
    
    
    12.06
    %
    
    $
    161,163
    
    
    
    8.00
    %
    
    $
    201,454
    
    
    
    10.00
    %Tier 1 capital to risk-weighted assets
    
    
    217,630
    
    
    
    10.80
    
    
    
    *
    
    
    
    *
    
    
    
    120,872
    
    
    
    6.00Tier 1 capital to average total assets
    
    
    217,630
    
    
    
    8.20
    
    
    
    106,180
    
    
    
    4.00
    
    
    
    132,724
    
    
    
    5.00Tangible capital to adjusted total assets
    
    
    217,630
    
    
    
    8.20
    
    
    
    39,817
    
    
    
    1.50
    
    
    
    *
    
    
    
    *
 
 *Ratio is not required under regulations.   18




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UNITED COMMUNITY FINANCIAL CORP.
 At or For the ThreeMonths EndedMarch 31,2009
    
    2008Selected financial ratios and other data: (1)Performance ratios:Return on average assets (2)
    
    
    0.50
    %
    
    
    0.59
    %Return on average equity (3)
    
    
    5.30
    %
    
    
    5.72
    %Interest rate spread (4)
    
    
    2.74
    %
    
    
    2.21
    %Net interest margin (5)
    
    
    3.04
    %
    
    
    2.61
    %Non-interest expense to average assets
    
    
    2.51
    %
    
    
    2.17
    %Efficiency ratio (6)
    
    
    71.85
    %
    
    
    66.39
    %Average interest-earning assets to average interest-bearing liabilities
    
    
    111.51
    %
    
    
    111.59
    %Capital ratios:Average equity to average assets
    
    
    9.45
    %
    
    
    10.25
    %Equity to assets, end of period
    
    
    9.34
    %
    
    
    10.01
    %Tier 1 leverage ratio
    
    
    8.33
    %
    
    
    7.67
    %Tier 1 risk-based capital ratio
    
    
    11.22
    %
    
    
    9.83
    %Total risk-based capital ratio
    
    
    12.48
    %
    
    
    12.51
    %Asset quality ratios:Non-performing loans to total loans at end of period (7)
    
    
    4.96
    %
    
    
    4.71
    %Non-performing assets to average assets (8)
    
    
    5.19
    %
    
    
    4.15
    %Allowance for loan losses as a percent of loans
    
    
    1.76
    %
    
    
    1.48
    %Allowance for loan losses as a percent of nonperforming loans (7)
    
    
    36.09
    %
    
    
    31.79
    %Office data:Number of full service banking offices
    
    
    39
    
    
    
    39Number of loan production offices
    
    
    6
    
    
    
    6Per share data:Basic earnings (loss) from continuing operations (9)
    
    $
    (0.06
    )
    
    $
    0.13Basic earnings from discontinued operations (9)
    
    
    0.17
    
    
    
    0.01Basic earnings (loss) (9)
    
    
    0.11
    
    
    
    0.14Diluted earnings (loss) from continuing operations (9)
    
    
    (0.06
    )
    
    
    0.13Diluted earnings from discontinued operations (9)
    
    
    0.17
    
    
    
    0.01Diluted earnings (loss) (9)
    
    
    0.11
    
    
    
    0.14Book value (10)
    
    
    7.74
    
    
    
    7.96Tangible book value (11)
    
    
    7.72
    
    
    
    9.12
 
 (1)
    
    Ratios for the three month periods are annualized where appropriate. Ratios for the period ending March 31, 2008 have been revised
to reflect the impact of discontinued operations.(2)
    
    Net income divided by average total assets.(3)
    
    Net income divided by average total equity.(4)
    
    Difference between weighted average yield on interest-earning assets and weighted average cost of interest-bearing liabilities.(5)
    
    Net interest income as a percentage of average interest-earning assets.(6)
    
    Noninterest expense, excluding the amortization of core deposit intangible, divided by the sum of net interest income and noninterest
income, excluding gains and losses on securities, other than temporary impairment charges and other.(7)
    
    Nonperforming loans consist of nonaccrual loans, loans past due ninety days and still accruing, and restructured loans.(8)
    
    Nonperforming assets consist of nonperforming loans, real estate acquired in the settlement of loans and other repossessed assets.(9)
    
    Net income divided by average number of basic or diluted shares outstanding.(10)
    
    Shareholders equity divided by number of shares outstanding.(11)
    
    Historical per share dividends declared and paid for the period divided by the diluted earnings per share for the period(12)
    
    Market value divided by book value. 19




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Forward Looking Statements
  Comparison of Financial Condition at March 31, 2009 and December 31, 2008
       20




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Allowance For Loan Losses(Dollars in thousands)December 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 31,2008
    
    
    Provision
    
    
    Recovery
    
    
    Chargeoff
    
    
    2009Real Estate LoansPermanentOne-to four-family residential
    
    $
    4,986
    
    
    $
    957
    
    
    $
    2
    
    
    $
    (1,098
    )
    
    $
    4,847Multifamily residential
    
    
    2,344
    
    
    
    578
    
    
    
    3
    
    
    
    (1,384
    )
    
    
    1,541Nonresidential
    
    
    4,870
    
    
    
    1,333
    
    
    
    1
    
    
    
    (653
    )
    
    
    5,551Land
    
    
    585
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    635Total
    
    
    12,785
    
    
    
    2,918
    
    
    
    6
    
    
    
    (3,135
    )
    
    
    12,574Construction LoansOne-to four-family residential
    
    
    10,620
    
    
    
    3,814
    
    
    
    4
    
    
    
    (1,554
    )
    
    
    12,884Multifamily and nonresidential
    
    
    722
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    707Total
    
    
    11,342
    
    
    
    3,799
    
    
    
    4
    
    
    
    (1,554
    )
    
    
    13,591Consumer LoansHome Equity
    
    
    1,386
    
    
    
    503
    
    
    
    
    
    
    
    (362
    )
    
    
    1,527Auto
    
    
    242
    
    
    
    30
    
    
    
    5
    
    
    
    (64
    )
    
    
    213Marine
    
    
    1,504
    
    
    
    125
    
    
    
    4
    
    
    
    (6
    )
    
    
    1,627Recreational vehicle
    
    
    1,425
    
    
    
    548
    
    
    
    22
    
    
    
    (559
    )
    
    
    1,436Other
    
    
    313
    
    
    
    88
    
    
    
    100
    
    
    
    (218
    )
    
    
    283Total
    
    
    4,870
    
    
    
    1,294
    
    
    
    131
    
    
    
    (1,209
    )
    
    
    5,086Commercial LoansSecured
    
    
    3,355
    
    
    
    (340
    )
    
    
    
    
    
    
    (212
    )
    
    
    2,803Unsecured
    
    
    3,610
    
    
    
    773
    
    
    
    
    
    
    
    (581
    )
    
    
    3,802Total
    
    
    6,965
    
    
    
    433
    
    
    
    
    
    
    
    (793
    )
    
    
    6,605Total
    
    $
    35,962
    
    
    $
    8,444
    
    
    $
    141
    
    
    $
    (6,691
    )
    
    $
    37,856
 21




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##### Table of Contents



Nonperforming Loans(Dollars in thousands)March 31,
    
    
    December 31,2009
    
    
    2008
    
    
    ChangeReal Estate LoansPermanentOne-to four-family residential
    
    $
    24,409
    
    
    $
    21,669
    
    
    $
    2,740Multifamily residential
    
    
    5,747
    
    
    
    8,724
    
    
    
    (2,977
    )Nonresidential
    
    
    13,191
    
    
    
    15,246
    
    
    
    (2,055
    )Land
    
    
    5,179
    
    
    
    4,840
    
    
    
    339Total
    
    
    48,526
    
    
    
    50,479
    
    
    
    (1,953
    )Construction LoansOne-to four-family residential
    
    
    42,232
    
    
    
    43,167
    
    
    
    (935
    )Multifamily and nonresidential
    
    
    789
    
    
    
    816
    
    
    
    (27
    )Total
    
    
    43,021
    
    
    
    43,983
    
    
    
    (962
    )Consumer LoansHome Equity
    
    
    2,654
    
    
    
    2,312
    
    
    
    342Auto
    
    
    138
    
    
    
    154
    
    
    
    (16
    )Marine
    
    
    2,612
    
    
    
    2,614
    
    
    
    (2
    )Recreational vehicle
    
    
    939
    
    
    
    756
    
    
    
    183Other
    
    
    32
    
    
    
    33
    
    
    
    (1
    )Total
    
    
    6,375
    
    
    
    5,869
    
    
    
    506Commercial LoansSecured
    
    
    3,331
    
    
    
    3,496
    
    
    
    (165
    )Unsecured
    
    
    924
    
    
    
    1,057
    
    
    
    (133
    )Total
    
    
    4,255
    
    
    
    4,553
    
    
    
    (298
    )Restructured Loans
    
    
    2,726
    
    
    
    1,797
    
    
    
    929Total Nonperforming Loans
    
    $
    104,903
    
    
    $
    106,681
    
    
    $
    (1,778
    )
   22




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##### Table of Contents



Impaired Loans(Dollars in thousandsMarch 31,
    
    
    December 31,2009
    
    
    2008
    
    
    ChangeReal Estate LoansPermanentOne-to four-family residential
    
    $
    18,784
    
    
    $
    12,675
    
    
    $
    6,109Multifamily residential
    
    
    5,747
    
    
    
    8,724
    
    
    
    (2,977
    )Nonresidential
    
    
    13,047
    
    
    
    14,855
    
    
    
    (1,808
    )Land
    
    
    5,180
    
    
    
    4,757
    
    
    
    423Total
    
    
    42,758
    
    
    
    41,011
    
    
    
    1,747Construction LoansOne-to four-family residential
    
    
    42,232
    
    
    
    36,903
    
    
    
    5,329Multifamily and nonresidential
    
    
    789
    
    
    
    816
    
    
    
    (27
    )Total
    
    
    43,021
    
    
    
    37,719
    
    
    
    5,302Consumer LoansHome Equity
    
    
    1,819
    
    
    
    1,657
    
    
    
    162Auto
    
    
    14
    
    
    
    
    
    
    
    14Boat
    
    
    2,612
    
    
    
    2,614
    
    
    
    (2
    )Recreational vehicle
    
    
    361
    
    
    
    
    
    
    
    361Other
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    4,806
    
    
    
    4,271
    
    
    
    535Commercial LoansSecured
    
    
    3,416
    
    
    
    3,496
    
    
    
    (80
    )Unsecured
    
    
    839
    
    
    
    751
    
    
    
    88Total
    
    
    4,255
    
    
    
    4,247
    
    
    
    8Total Impaired Loans
    
    $
    94,840
    
    
    $
    87,248
    
    
    $
    7,592
     23




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##### Table of Contents



Comparison of Operating Results for the Three Months Ended
March 31, 2009 and March 31, 2008
 Net Income.
 Net Interest Income.
  24




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##### Table of Contents



For the Three Months Ended March 31,2009 vs. 2008Increase
    
    
    Total(decrease) due to
    
    
    increaseRate
    
    
    Volume
    
    
    (decrease)(Dollars in thousands)Interest-earning assets:Loans
    
    $
    (2,971
    )
    
    $
    (1,770
    )
    
    $
    (4,741
    )Loans held for sale
    
    
    (21
    )
    
    
    96
    
    
    
    75Investment securities:Available for sale
    
    
    (188
    )
    
    
    (283
    )
    
    
    (471
    )Federal Home Loan Bank stock
    
    
    (47
    )
    
    
    14
    
    
    
    (33
    )Other interest earning assets
    
    
    (38
    )
    
    
    9
    
    
    
    (29
    )Total interest earning assets
    
    $
    (3,265
    )
    
    $
    (1,934
    )
    
    $
    (5,199
    )Interest bearing liabilities:Savings accounts
    
    
    49
    
    
    
    13
    
    
    
    62Checking accounts
    
    
    (1,492
    )
    
    
    (364
    )
    
    
    (1,856
    )Certificates of deposit
    
    
    (2,671
    )
    
    
    80
    
    
    
    (2,591
    )Federal Home Loan Bank advances
    
    
    (1,493
    )
    
    
    (341
    )
    
    
    (1,834
    )Repurchase agreements and other
    
    
    (386
    )
    
    
    (381
    )
    
    
    (767
    )Total interest bearing liabilities
    
    $
    (5,993
    )
    
    $
    (993
    )
    
    
    (6,986
    )Change in net interest income
    
    
    
    
    
    
    
    
    
    $
    1,787
 Provision for Loan Losses.
 Non-interest Income.
 25




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##### Table of Contents



Non-interest Expense.
 Discontinued Operations.
 26




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##### Table of Contents



UNITED COMMUNITY FINANCIAL CORP.
AVERAGE BALANCE SHEETS
  Three Months Ended March 31,2009
    
    
    2008Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestOutstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Cost
    
    
    Balance
    
    
    Paid
    
    
    Cost(Dollars In thousands)Interest-earning assets:Net loans (1)
    
    $
    2,158,931
    
    
    $
    31,067
    
    
    
    5.76
    %
    
    $
    2,275,133
    
    
    $
    35,808
    
    
    
    6.30
    %Net loans held for sale
    
    
    24,172
    
    
    
    263
    
    
    
    4.35
    %
    
    
    15,014
    
    
    
    188
    
    
    
    5.01
    %Investment securities:Trading
    
    
    
    
    
    
    
    
    
    
    
    %
    
    
    312
    
    
    
    
    
    
    
    
    %Available for sale
    
    
    239,656
    
    
    
    2,770
    
    
    
    4.62
    %
    
    
    263,500
    
    
    
    3,241
    
    
    
    4.92
    %Federal Home Loan Bank stock
    
    
    26,464
    
    
    
    299
    
    
    
    4.52
    %
    
    
    25,436
    
    
    
    332
    
    
    
    5.22
    %Other interest-earning assets
    
    
    18,927
    
    
    
    29
    
    
    
    0.61
    %
    
    
    16,659
    
    
    
    58
    
    
    
    1.37
    %Total interest-earning assets
    
    
    2,468,150
    
    
    
    34,428
    
    
    
    5.58
    %
    
    
    2,596,054
    
    
    
    39,627
    
    
    
    6.11
    %Noninterest-earning assets
    
    
    137,183
    
    
    
    
    
    
    
    
    
    
    
    143,220Assets of discontinued operations
    
    
    4,468
    
    
    
    
    
    
    
    
    
    
    
    20,540Total assets
    
    $
    2,609,801
    
    
    
    
    
    
    
    
    
    
    $
    2,759,814Interest-bearing liabilities:Checking accounts
    
    $
    375,113
    
    
    $
    1,202
    
    
    
    1.28
    %
    
    $
    432,893
    
    
    $
    3,058
    
    
    
    2.83
    %Savings accounts
    
    
    187,566
    
    
    
    245
    
    
    
    0.52
    %
    
    
    175,442
    
    
    
    183
    
    
    
    0.42
    %Certificates of deposit
    
    
    1,176,028
    
    
    
    11,204
    
    
    
    3.81
    %
    
    
    1,169,251
    
    
    
    13,795
    
    
    
    4.72
    %Federal Home Loan Bank advances
    
    
    350,427
    
    
    
    1,858
    
    
    
    2.12
    %
    
    
    389,582
    
    
    
    3,692
    
    
    
    3.79
    %Repurchase agreements and other
    
    
    124,306
    
    
    
    1,190
    
    
    
    3.83
    %
    
    
    159,159
    
    
    
    1,957
    
    
    
    4.92
    %Total interest-bearing liabilities
    
    
    2,213,440
    
    
    
    15,699
    
    
    
    2.84
    %
    
    
    2,326,327
    
    
    
    22,685
    
    
    
    3.90
    %Noninterest-bearing liabilities
    
    
    147,172
    
    
    
    
    
    
    
    
    
    
    
    146,241Liabilities of discontinued operations
    
    
    2,449
    
    
    
    
    
    
    
    
    
    
    
    4,494Total liabilities
    
    
    2,363,061
    
    
    
    
    
    
    
    
    
    
    
    2,477,062Equity
    
    
    246,740
    
    
    
    
    
    
    
    
    
    
    
    282,752Total liabilities and equity
    
    $
    2,609,801
    
    
    
    
    
    
    
    
    
    
    $
    2,759,814Net interest income and interest
rate spread
    
    
    
    
    
    $
    18,729
    
    
    
    2.74
    %
    
    
    
    
    
    $
    16,942
    
    
    
    2.21
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.04
    %
    
    
    
    
    
    
    
    
    
    
    2.61
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    111.51
    %
    
    
    
    
    
    
    
    
    
    
    111.59
    %
 
 (1)
    
    Nonaccrual loans are included in the average balance at a yield of 0%. 27




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
 Qualitative Aspects of Market Risk.
 Quantitative Aspects of Market Risk.
   Quarter ended March 31, 2009NPV as % of portfolio value of assets
    
    Next 12 months net interest income(Dollars in thousands)Change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Internal policyin rates
    
    
    
    
    
    Internal policy
    
    
    
    
    
    
    
    
    
    limitations on(Basis
    
    
    
    
    
    limitations as to
    
    
    
    
    
    
    
    
    
    maximumpoints)
    
    NPV Ratio
    
    minimum %
    
    Change in %
    
    $ Change
    
    change
    
    % Change+300
    
    
    7.59
    %
    
    
    5.00
    %
    
    
    (1.48
    )%
    
    $
    (2,366
    )
    
    
    (15.00
    )%
    
    
    (2.98
    )%+200
    
    
    8.65
    
    
    
    6.00
    
    
    
    (0.42
    )
    
    
    (953
    )
    
    
    (10.00
    )
    
    
    (1.20
    )+100
    
    
    9.30
    
    
    
    6.00
    
    
    
    023
    
    
    
    65
    
    
    
    (5.00
    )
    
    
    0.08Static
    
    
    9.07
    
    
    
    7.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 28




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##### Table of Contents



Year Ended December 31, 2008NPV as % of portfolio value of assets
    Next 12 months net interest income(Dollars in thousands)Changein rates(Basis
    
    
    
    
    
    Internal policy
    
    
    
    
    
    
    
    
    
    Internal policypoints)
    
    NPV Ratio
    
    limitations
    
    Change in %
    
    $ Change
    
    limitations
    
    % Change+300
    
    
    7.37
    %
    
    
    5.00
    %
    
    
    (1.38
    )%
    
    $
    (1,879
    )
    
    
    (15.00
    )%
    
    
    (2.48
    )%+200
    
    
    8.35
    
    
    
    6.00
    
    
    
    (0.40
    )
    
    
    (734
    )
    
    
    (10.00
    )
    
    
    (0.97
    )+100
    
    
    8.99
    
    
    
    6.00
    
    
    
    0.24
    
    
    
    60
    
    
    
    (5.00
    )
    
    
    0.08Static
    
    
    8.75
    
    
    
    7.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   Potential Impact of Changes in Interest Rates.
  
 ITEM 4. Controls and Procedures
  29




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##### Table of Contents



PART II. OTHER INFORMATION
 UNITED COMMUNITY FINANCIAL CORP.
 
 ITEM 1   Legal Proceedings
  
 ITEM 1A   Risk Factors
  
 ITEM 2  Unregistered Sales of Equity Securities and Use of Proceeds
  
 ITEM 4  Submission of Matters to a Vote of Security Holders
  Director
    
    For
    
    WithheldDouglas M. McKay
    
    
    21,053,777
    
    
    
    2,146,632Donald J. Varner
    
    
    18,894,268
    
    
    
    4,306,141
   For
    
    Against
    
    Abstain21,860,718
    
    
    844,897
    
    
    
    494,794
 
 ITEM 6  Exhibits
  Exhibit Number

    
    Description3.1
    
    
    Articles of Incorporation3.2
    
    
    Amended Code of Regulations10
    
    
    Material Contracts31.1
    
    
    Section 302 Certification by Chief Executive Officer31.2
    
    
    Section 302 Certification by Chief Financial Officer32
    
    
    Certification of Statements by Chief Executive Officer and
Chief Financial Officer
 30




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##### Table of Contents



UNITED COMMUNITY FINANCIAL CORP.
 
 SIGNATURES
   Date: May 11, 2009
    
    /S/ Douglas M. McKay

Douglas M. McKayChief Executive OfficerDate: May 11, 2009
    
    /S/ James R. ReskeJames R. Reske, CFAChief Financial Officer
 31




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##### Table of Contents



UNITED COMMUNITY FINANCIAL CORP.
 Exhibit 3.1
  Exhibit 3.2
  32