Banking & Finance

CEO Tells Shareholders UCFC Is Fulfilling Promises

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YOUNGSTOWN, Ohio – United Community Financial Corp., holding company for the Home Savings and Loan Co., is showing more promise this year by keeping the promises it made last year.

Its president and CEO, Gary M. Small, told shareholders Thursday that they can expect to see the bank enjoy “double-digit increases” in the growth of its loan portfolio the rest of this year, “robust fee income growth,” serve more households, improve its efficiency ratio, further improve its asset quality, increase the cash dividend and see the holding company continue to repurchase shares.

The price of UCFC shares, which opened at $3.57 Jan. 2, 2014, and closed Dec. 31 at $5.46, began to pick up in the second quarter, crossing $4 in July and $5 in late October.

UCFC shares “outperformed” the nine banks in its peer group, Small noted. “When the markets saw we were doing what we said we would do,” share prices rose and stayed up, he said.

Small characterized 2014 as “a year of many achievements.” Among them were “a focused expansion of our commercial banking efforts” in the Mahoning Valley, the Cleveland market and the efforts of the Home Savings special real estate lending team. “Each is doing wonderfully,” Small said.

Commercial loan growth “is up 55% from last year” with the loan portfolio 12% larger at year-end than at the outset.

Mortgage banking, the mainstay of Home Savings since its founding in 1889, “continues to perform well,” Small related, and the bank is seeing more activity in home equity lending, auto lending, and its return to municipal lending.

The return to municipal lending helped Home Savings increase its deposits, 17% annualized during the first quarter, to $1.407 billion. “We won’t see that every quarter,” Small said, but he does see double-digit growth.

The efficiency ratio for Home Savings, 70.1% the first quarter, was down from 72.85% the preceding quarter and 83.45% the year-ago quarter. Small expects to see it fall below 70% this year. The efficiency ratio measures how much a company spends to earn a dollar of income. So Home Savings spent just more than 70 cents the first quarter to earn a dollar of revenue.

While the CEO was careful not to explicitly say the performance of UCFC will lead the board of directors to increase the dividend, he assured shareholders, “We will align the dividend to higher earnings” with a target of returning “20% of earnings” in the form of cash dividends.

Shareholders liked what they heard and reports of UCFC’s return to profitability. They gave the three directors up for re-election better than 30 million votes each of the 41.3 million eligible to be cast. Marty E. Adams was elected to a full three-year term with 95% of the votes while Lee Burdman, a director since 2011, and Scott D. Hunter, a director since 2009, each received 97% of the votes.

Crowe Horwath LLP was ratified as outside auditors for 2015 with 98.94% of the vote.

The advisory vote on executive compensation and vote on the 2015 long-term incentive compensation plan received 93% and 93.57% approval respectively.

The latter replaces the 2007 plan, scheduled to expire in 2017, the proxy statement says, “and no further awards will be made from the 2007 plan following the effective date of the 2015 plan.”

Pictured: Gary Small, CEO of United Community Financial Corp., addresses shareholders at the company’s annual meeting Thursday.

Published by The Business Journal, Youngstown, Ohio.