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United Community Financial Lowers Q3 Earnings
YOUNGSTOWN, Ohio -- United Community Financial Corp.'s third quarter net income dropped to $194,000 from the previously announced earnings of $3 million, officials reported yesterday. The earnings reduction is the result of additional impairment charges on a group of consumer and commercial loans, which resulted in additional provision for loan losses, officials said. Annualized return on average equity for the third quarter of 2004 was 0.31% compared to 8.28% for the same period in 2003. UCFC is the holding company of The Home Savings and Loan Company and Butler Wick Corp.For the nine months ended Sept. 30, net income was $10.7 million, or 36 cents per diluted share, compared with $17.8 million, or 55 cents per diluted share, for the first nine months of 2003. Annualized return on average equity for the nine months of 2004 was 5.55%, compared to 8.58% in the prior year. The allowance for loan losses increased to $25.1 million at Sept. 30 from $15.1 million at Dec. 31, 2003. The increase in the allowance was primarily a result of a determination that impairment charges were necessary for 25 consumer loans and two commercial loans. Those loans are part of a group of 87 loans, consisting of a $5 million commercial line of credit to a boat dealer, with a current principal balance of approximately $4.8 million, a $500,000 standby letter of credit issued on behalf of that dealer (and fully drawn upon), and 85 consumer loans made to purchasers of boats from that dealer with an unpaid principal balance of $33.4 million at Sept. 30, 2004, bank officials said.In August 2004 and October 2004, UCFC recorded and announced impairment charges totaling $4 million in the third quarter for the two commercial and 21 of the consumer loans in this group. Based on current information regarding the collateral securing, and/or the collectability, of these 87 loans which became known to the company after the end of the quarter, officials determined an additional impairment charge of $4.4 million was required, bringing the total impairment charges on these loans to $8.4 million. At Sept. 30, the outstanding principal balance of these impaired loans was $15.2 million, which includes $9.9 million of consumer loans and $5.3 million of commercial loans. Visit United Community Financial Corp.: www.ucfconline.com"