United Community Financial Corp. :UCFC-US: Earnings Analysis: 2016 By the Numbers : January 31, 2017

United Community Financial Corp. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of United Community Financial Corp. – First Defiance Financial Corp., FFD Financial Corporation and New York Community Bancorp, Inc. (FDEF-US, FFDF-US and NYCB-US) that have also reported for this period.


  • Net interest income margins narrowed from 73.87% to 72.30% compared to the same period last year.
  • Net loan assets changed 13.75% compared to same period last year and 13.75% from previous period, total deposits changed 5.52% compared to same period last year and 5.52% from previous period.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 87.12 76.52 67.33 75.13 88.87
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 18.83 16.2 50 3.24 -20.38
Earnings Growth (YOY) 16.22 -67.6 1443.12 115.9 -8960
Net Margin 21.61 21.17 74.25 4.31 -22.93
EPS 0.4 0.34 1 0.07 -0.62
Return on Equity 7.63 6.69 24.08 1.87 -11.34
Return on Assets 0.9 0.84 2.79 0.18 -1.06

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Earnings Growth Analysis

UCFC-US‘s earnings rose year-on-year. But this growth has not come as a result of improvement in net interest income margins or any loan loss improvement activities in its operations. Net interest income margins were 72.30% compared to 73.87% in the immediate last period. Net interest income after provisions margins were 66.12% this period compared to 71.08% in the previous period. In addition, loan loss provisions as a percentage of net interest income were 8.55% this period and 3.78% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (HY YOY)
Total Deposits Growth Rate History (HY YOY)

The firm’s decline in net interest income margins came despite the relative increase in the levels of net loan assets. In addition, total deposits as a percentage of equity went from 5.88% to 6.07%. On an absolute basis, net loan assets changed 13.75% compared to the same period last year and 13.75% from the previous period. Total deposits changed 5.52% compared to the same period last year and 5.52% from the previous period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 31.99% to 32.65% and (2) one-time items. The company’s pretax margins are now 31.75%, compared to 31.59% for the same period last year.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

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Company Profile

United Community Financial Corp. operates as a financial holding company. The company provides retail and business banking products and services through Home Savings & Loan Co. The bank’s primary lending activity is the origination of conventional residential real estate loans secured by real estate located in Home Savings primary market area. It originates commercial real estate, commercial and industrial loans, and various types of consumer loans, including home equity loans, loans secured by savings accounts, motor vehicles, boats and recreational vehicles and unsecured loans. Investment activity classified upon acquisition as available for sale, held to maturity or trading. The bank offers various deposit products, including regular passbook savings accounts, demand deposits, individual retirement accounts, checking accounts, money market accounts and certificates of deposit. The company was founded in February 1998 and is headquartered in Youngstown, OH.

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