UCFC Earns $42.4 Million, Declares Cash Dividend
YOUNGSTOWN, Ohio -- United Community Financial Corp., holding company of the Home Savings and Loan Co., Tuesday reported net income of $42.4 million for the quarter ended June 30, or 84 cents a share, and that its directors declared a penny per common share cash dividend.
The dividend is payable Aug. 15 to shareholders of record Aug. 1. It is the first cash dividend the company has declared since 2008.
In a prepared statement, the president and CEO of UCFC, Gary M. Small, noted, “The dividend reflects a payout ratio of normalized annual earnings.”
The net income figure of $42.4 million reflects recognition of $38.8 million of income tax benefit from the reversal of a deferred tax asset valuation reserve created at the end of 2010. Without that reversal, net income would have been $3.6 million for the second quarter.
UCFC reported net income of $2.1 million for the quarter ended March 31, or four cents a share, and net income of $3.9 million for the second quarter of 2013, or a loss of six cents a share. (The six-cent per share loss reflected the company accounting for the amortization of the discount on the preferred stock it issued, that preferred stock since converted to common shares.)
At the end of 2010, UCFC said in its earnings release, it established a deferred tax asset valuation allowance. In the course of its periodic assessment of that deferred tax asset, UCFC “determined that it is more likely than not … to fully realize its net deferred asset, including its tax loss carry-forward.” This caused the company to recognize the $38.8 million income tax benefit this year.
Besides allowing UCFC to report record quarterly earnings, recognizing the deferred tax asset increased the company’s tangible book value by 77 cents to $4.66 per share. It was $3.76 at March 31.
Trading in UCFC stock Tuesday was 145,949 shares, not quite 2,000 below its daily average of 147,713 shares. Its price closed at $4.05, up four cents from Monday’s close.
The UCFC earnings release was issued after markets closed.
During the second quarter, UCFC reported it recognized a $923,000 charge as part of its initiative to reduce annual costs on a go-forward basis by more than $5 million.
Key ratios for the quarters ended June 30, March 31 and June 30, 2013:
- Return on average assets, 9.67%, 0.48%, 0.74%.
- Return on average equity, 84.84%, 4.52%, 6.46%.
- Net interest margin, 3.09%, 3.07%, 2.93%.
- Efficiency ratio, 97.77%, 83.45%, 78.38%.
- Nonperforming assets to total assets, 1.39%, 1.58%, 2.26%.
- Delinquent loans to total loans, 1.86%, 2.07%, 3.38%.
Net interest income was $12.74 million compared to $12.60 the first quarter and $12.64 million the second quarter a year ago.
Noninterest income, which includes mortgage servicing fees, was $3.44 million compared to $3.22 million the first quarter and $6.34 million at June 30, 2013.
Noninterest expense (includes wages and benefits, rents, marketing, Federal Deposit Insurance Corp. premiums and maintaining repossessed properties) was $14.23 million, up from $13.54 million the preceding quarter but less than $14.39 million the same quarter a year ago.
Asset quality continued to show improvement. The delinquent loan portfolio, $20.31 million, was less than the $22.98 million recorded March 31 and the $23.59 million recorded Dec. 31. Delinquent loans are 89 or fewer days overdue.
Total nonperforming assets also show decreases, $24.86 million at June 30, $27.68 million at March 31, and $40.46 million at June 30, 2013.
Small called the second-quarter results “solid core earnings progress for Home Savings. The growth in commercial loan commitments, combined with meaningful cost-reduction efforts across the organization are expected to fuel continued performance improvement in future quarters.”
SOURCE: United Community Financial Corp.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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