Home Savings' parent company agrees to new regulatory orders

Home Savings and Loan's parent group has agreed to restructuring orders today issued by state and federal agencies.

The information was just released this morning. The Vindicator will be meeting with bank officials today to provide more clarity to the release issued after 8 a.m. this morning.

Below is the release sent by the bank:

United Community Financial Corp. and Home Savings and Loan Agree to Regulatory Orders

YOUNGSTOWN, Ohio (Aug. 13, 2008) – United Community Financial Corp. (Company) (Nasdaq: UCFC), holding company of The Home Savings and Loan Company (Home Savings) and Butler Wick Corp. (Butler Wick), announced today that the Company and Home Savings have consented to the issuance of cease and desist orders by federal and state regulatory agencies.

These orders followed routine regulatory exams at both companies in January of this year. In accordance with the orders, the companies have agreed to file a debt reduction plan, seek regulatory approval before paying dividends, reduce lending concentrations and enhance overall risk management programs. Other requirements include providing new written plans dealing with strategy, profitability, capital enhancement, information technology, audit routines, liquidity, management and organizational structure. Many of these initiatives have been in place since 2007.

Douglas M. McKay, Chief Executive Officer and Chairman of the Board for Home Savings and UCFC, emphasized that deposits at Home Savings remain safe and secure. “Federal deposit insurance remains intact, and Home Savings maintains a level of capital adequacy that further secures that safety,” he said. “We have been and will continue to implement strategies to raise regulatory capital ratios even further, however, so that by the time this process ends, we will be an even stronger Company.”

The banking industry is currently experiencing challenging market conditions, and while Home Savings is not immune to those conditions, it does remain financially strong, having reported positive earnings in each of the last 13 years, including the first two quarters of 2008. The company expects there will be a short term negative impact on earnings due to higher compliance costs associated with the order, but those costs are expected to eventually be offset by lower loan loss provisions and charge-off expenses.

“Like the boards and management teams of Home Savings and UCFC, the regulators want our companies to experience continued success,” said McKay. “Home Savings remains safe, sound and profitable and these orders are meant to provide operational guidelines from which we will become even stronger in the future.”

Copies of the orders from the Federal Deposit Insurance Corporation, Ohio Department of Financial institutions and Office of Thrift Supervision are included in Form 8-K, which the Company filed today with the SEC.

Home Savings and Butler Wick are wholly owned subsidiaries of the Company. Home Savings operates 39 full service banking offices and six loan production offices located throughout Ohio and western Pennsylvania. Butler Wick conducts business from its main office located in Youngstown, Ohio and 22 offices located in northeastern Ohio, western Pennsylvania, and western New York. Additional information on the Company, Home Savings and Butler Wick may be found on the Company’s web site: www.ucfconline.com.