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FDIC Lifts Consent Order on Home Savings and Loan
YOUNGSTOWN, Ohio – The Federal Deposit Insurance Corp. and Ohio Division of Financial Institutions have lifted their consent orders on the Home Savings and Loan Co., its parent company, United Community Financial Corp., announced after markets closed Tuesday.
Home Savings agreed to the consent orders last March 30 after operating under cease-and-desist orders since August 2008.
“We’re very, very happy,” said Patrick W. Bevack, president and CEO of the holding company and the bank. “It’s an important day for the bank. This took a lot of work and all credit goes to our employees.
“Do you remember at our annual meeting when I compared our bank to an airplane looking to the tower for the signal to take off?” the CEO continued. “Well, we’ve been given the authority to take off.”
The lifting of the consent order, Bevack noted, “means Home Savings is now considered well capitalized and no longer in a troubled condition. Once again we can take deposits from public institutions.”
State law prohibits Ohio financial institutions under a cease-and-desist or consent order from accepting or holding deposits from township and county governments, municipalities and schools districts.
Home Savings, which offered checking accounts and savings instruments to many municipal governments and school districts in the Mahoning Valley before August 2008, will re-enter that market, Bevack said.
With the end of the consent order Jan. 31, UCFC entered a memorandum of understanding with the FDIC and Ohio Division that it will still seek their consent before declaring and paying any dividends. It also agreed to maintain its Tier 1 Leverage Capital Ratio at 8.50% and Total Risk-Based Capital Ratio at 12.0%. In its December call report, the former ratio stood at 8.70% and the latter at 14.59% according to its third-quarter earnings report.
On Jan. 15, UCFC announced plans to raise an additional $47 million in capital through a private placement and a rights offering. The capital raise remains subject to regulatory approval, and shareholders have yet to meet to approve those plans as well.
Bevack praised the FDIC and Ohio Divisions staff for their role in helping restore UCFC to health.
“Over the last four years, we have established a very good working relationship with our regulators,” he said. “As a result, we will continue to work closely with them to ensure that we remain focused on resolving Home Savings’ remaining asset quality issues and that Home Savings maintains capital levels commensurate with its risk profile.”
Trading in shares of UCFC Tuesday was light, only 3,037 shares changing hands when the average daily volume is 26,000. Shares finished at $3.18, 8 cents ahead of Monday’s close.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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