United Community Financial Corp.

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August 12, 2013 Issue

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A Publicly Traded Financial Services Company, United Community Financial Corp. Provides a Wide Array of Lending, Retail and Business Banking Products and Services through its Wholly Owned Subsidiary, The Home Savings and Loan Company

About United Community Financial Corp. (NASDAQ: UCFC):

www.ucfconline.com

United Community Financial Corp. (NASDAQ: UCFC), (the Company), a publicly traded financial services company, provides a wide array of lending, retail and business banking products and services through its wholly-owned subsidiary, The Home Savings and Loan Company (Bank).

Home Savings, headquartered in Youngstown, Ohio, is a community-oriented financial institution that has been serving its customers for nearly 125 years. In 1998, it became a publicly traded company through its initial public offering, which opened the door for expansion of its market through acquisition and internal growth. Today, Home Savings conducts business through 33 retail banking offices and nine loan production centers in Ohio and western Pennsylvania, employing approximately 500 people.

Patrick W. Bevack

CEO and President

Patrick W. Bevack is the President and Chief Executive Officer of The Home Savings and Loan Company. With over 35 years of experience in the financial services industry, 13 of which have been at Home Savings, Mr. Bevack has served as President and Chief Operating Officer and as the Executive Vice President and Chief Financial Officer of United Community Financial Corp. and its wholly-owned subsidiary, The Home Savings and Loan Company. Prior to that time, Mr. Bevack served in a variety of financial and banking positions, serving as CFO at 2 different institutions and EVP at 3 institutions ranging in size from $1.2Bn to $6.5Bn.

Mr. Bevack earned his Bachelor’s degree in Accounting and his Master’s degree in Finance from Cleveland State University. He is a member of Ohio’s Society of CPAs and is a board member for both the Youngstown-Warren Regional Chamber and Wick Neighbors. Most recently he was appointed by Governor Kasich to the Ohio Savings and Loan Associations and Savings Bank Board. Mr. Bevack has served on several other charitable and non-profit boards throughout his career.

Financial

Bank

United Community Financial Corp.
275 West Federal Street

Youngstown, OH 44503

330-742-0500

www.ucfconline.com

United Community Financial Corp.

Print Version

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – August 12, 2013

CEOCFO: Mr. Bevack, every bank has its own personality and story. Would you give us some basics about Home Savings?

Mr. Bevack: Home Savings has a great story and history to share. The Bank was founded in 1889 and was a family owned thrift until 1998, when it underwent a mutual-to-stock conversion to form the holding company, United Community Financial Corp., which enabled us to take advantage of opportunities for corporate growth and product diversity. After the IPO, we acquired a Youngstown broker dealer, Butler Wick Company and its trust company Butler Wick Trust.  In addition, we acquired some healthy thrifts which included Industrial Bank ($450 mil in assets) and Potters Financial Corporation ($150 mil in assets). We were heavily involved in the commercial A&D builder business until the economy took a turn for the worst in 2007-2009. In 2008, we were placed under a Cease and Desist Order which was agreed to by the Bank. At that point, many things changed and we had to shift gears from growth mode to survival mode. We knew we had to create a strong management team to navigate through what would be very tough times ahead. In 2009, I was appointed CEO and President of Home Savings and in 2011 I was appointed CEO of the Holding Company as well. Over the course of those few years we made many management changes which included the addition of a chief credit officer and chief lending officer. Our chief credit officer established a stronger credit culture which was and still is vital to the Bank’s future. Times were challenging from 2009 to 2012 but we implemented a solid strategic plan which has now proven to be successful. In 2012, we did a bulk asset sale and sold approximately $115 million of troubled loans. In 2013, we held a private stock offering for $40 million. Additionally, the board invested $2 million and we did a rights offering of $5 million. Altogether, we raised $47 million in 2013. All of our Orders have been lifted and we are now considered well capitalized. I believe we have a great story to tell and our comeback says a lot about the Bank and our great employees.

CEOCFO: What gave you the confidence to take on the challenge?

Mr. Bevack: Prior to taking over as CEO and president I worked at Home Savings for 8 years as the executive vice president/chief financial officer. Therefore, I knew the Bank had a great reputation and I had already had the opportunity to work with many of the talented employees. I knew we had a great foundation and I understood what needed to be done to restore profitability back to the Company. I was confident I could assemble a strong leadership team to take on the many challenges. I also believed in Youngstown (also referred to as the Mahoning Valley). The Valley is an area that has been under great pressure for many decades due to decline in manufacturing and the steel industry. However, with shale development on the rise, I knew the Mahoning Valley would be presented with significant opportunities. So far, this has been real positive for the area. Many of the properties in our area are under lease for the gas and oil drilling. In fact many landowners have turned to our Home Investment Services as a trusted place to seek investment advice for their shale wealth. I am a board member of the Youngstown-Warren Regional Chamber and we have been attracting many new companies to the area too. The economy is more robust and it is going to get even better. I am glad I accepted the challenge and I look forward to the future for both the Bank and Youngstown. 

CEOCFO: How does the bank breakdown today between consumer and business and would you like to see the mix change?

Mr. Bevack: Very good question. We are a community bank very strong in residential mortgage lending. We do residential mortgage lending throughout Ohio as well as northwestern Pennsylvania but primarily in Youngstown, Cleveland, and Akron. We have been fairly active in the consumer market as well. Another area we believe we can excel is C&I (commercial and industrial) type business; that is a focus for us now. We now have a strong team in place prepared for this type of lending due to the growth in our market. In terms of the future, we will seek out more commercial business than we have in the past. And we are in a great position being a community bank. While the bigger banks are not looking for the $3 to $5 million loan deals, we welcome them. We also have investment services for individuals through a third party brokerage and we would like to focus more on wealth management.

CEOCFO: When someone comes into a Home Savings branch what is different?

Mr. Bevack: We are a community bank that has been serving the Youngstown area for nearly 125 years. Home Savings is a household name in the Mahoning Valley. Youngstown is somewhat of a small town and everyone knows one another. Because of this, we have very loyal customers. We also have retail branches in Northwest Ohio and in Cleveland. We are still considered a community bank in those markets and although some of the branches are in bigger communities we still know our customers and we have the luxury of offering a hometown feel while still offering a vast array of products and services. The mega and regional banks do not have that same kind of following. Our branch employees are friendly, knowledgeable and they genuinely care about our customers. Home Savings is a bank with a lot of tradition and I think that makes us different. Not too many banks can say they have operated and remained the same bank for 125 years.

CEOCFO: Do you feel that the size and the number of branches enable you to provide more for the customers along with the hometown feel?

Mr. Bevack: Absolutely. Because we are not a megabank, we can take a more personalized approach to helping customers. Our customers know us and they continue to count on us to meet their financial needs. We also offer the same great products and services as a large bank but we have the luxury of maintaining a hometown feel; it is the best of both worlds. Our geography lends itself to great opportunities as well. If you are familiar with the area at all it consists of Pittsburgh, Youngstown, and Cleveland, which is sort of the corridor. In terms of future growth opportunities, we could not be in a better location.

CEOCFO: How do you reach potential new customers?

Mr. Bevack: There are several ways depending on the product. For example, if you are talking about residential mortgage loans one of the most important things we do is recruit qualified, experienced loan originators (LOs). These are experienced employees that have been in the business for many years and have done a tremendous number of loans. In fact, one of our loan originators has had over $60 million in loans closed this year alone. These employees are almost like independent business men/women whose businesses join ours. Our branches also refer business to our LOs on an ongoing basis. Other ways we attract new customers is through the branches, advertising, and word of mouth. Home Savings is a household name especially in Youngstown and so we do get a lot of customers referring business to us. Commercial lending is an area of the bank that is making a comeback and we are using our same model and philosophy for recruitment of mortgage LOs to recruit commercial LOs. Commercial lending is primarily about relationship building. It consists of prospecting and successfully identifying your centers of influence. Lastly, we are a very community oriented bank and our employees are involved in many non-profits and organizations, which allows them to network and in turn bring in new business to the Bank.

CEOCFO: Your site shows that giving back is important. Is there a particular focus or does each community or does the branch decide?

Mr. Bevack: It is a combination of both. Home Savings is committed to reinvesting in the local communities we serve by providing leadership, employee involvement and financial support. Our biggest source of funds to non-profits is through our charitable foundation, which is independent from the bank. Since its inception in1998, the Home Savings Charitable Foundation has provided over $11 million of support to worthy non-profit organizations, with our focus being primarily directed toward those that serve the needs of disadvantaged children or provide educational programs. We have a committee of local people that helps decide what kinds of initiatives we are going to contribute towards. Beyond that, each individual branch works on specific efforts in their communities as well. The branches know the community they serve better than anyone so on a smaller level we allow branches to request funds for initiatives they feel are beneficial. As a Bank we also support our own initiatives. In November 2012, we launched a hunger campaign called Home-Aide Meals. People could like us on Facebook and for every like we contributed $1.00, which provided four meals to those in need. The branches participated by collecting food and money. In total we raised fifty-thousand meals for children, adults and families. As you can see we are charitable through all networks – branches, Bank and foundation. And together we all make a difference.

CEOCFO: Why should the business and investment community pay attention to United Community Financial and Home Savings?
Mr. Bevack: I think if you understand our story of where we have been and the challenging times we have overcome, you will pay attention and take note. History is so important; the past does not project the future but the past gives you some indication of where you are going and our Bank is on the rise. When I took over, UCFC stock was selling for roughly $1.35 a share and currently it is selling at $4.80. Cleveland Crain’s just did an article on the top two-year returns as of April 30^th 2013 and United Community Financial led the list at 197%. From an investor standpoint, it has been good in terms of stock price. However, but not we have not been able to pay dividends for a few years due to the Orders we were under. Our Company has had significant issues and we have made it through them. Many banks in the country were faced with the same issues and they did not make it. It was not easy but we followed our plan and accomplished all of the goals and it has paid off. We have had our Orders lifted, sold troubled assets through a bulk loan sale and we successfully raised $47 million worth of capital. These private equity investors who purchased stock are individuals who study the numbers and the future and they had the confidence to invest in us. To be honest we could have raised much more than the $47 million but it was not warranted. If you look at the numbers, our prospects in the future as well as the markets we serve, you can see a Company that is in a great position to leverage growth opportunities. Our story is a good one for any investor; look at where we were and compare it to now. It is quite impressive.

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“If you look at the numbers, our prospects in the future as well as the markets we serve, you can see a Company that is in a great position to leverage growth opportunities. Our story is a good one for any investor; look at where we were and compare it to now. It is quite impressive.”- Patrick W. Bevack

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