43
UCFC execs reassure stockholders
By GRACE WYLER
boardman
United Community Financial Corp. shareholders remain frustrated by earnings losses and low stock prices, even as the economy appears to be turning a corner.
The company continues to be burdened by bad loans but is taking measures to resolve weaknesses in its portfolio, UCFC executives told about 200 shareholders at the annual meeting Thursday.
UCFC, the parent company of Home Savings & Loan, reported a net loss of $16.8 million in 2009, largely because of a $49.1 million allowance for loan-loss provisions. The report was an improvement from the company’s $35.3 million loss in 2008.
The stock price stayed below $2 for most of 2009. The stock closed at $2.10 Thursday.
Stock prices remain low as a result of poor asset quality and cease-and-desist orders, said Douglas McKay, UCFC’s chairman and chief executive. McKay pointed out that the stock’s tangible book value remained above $7 in 2009.
The company has been under cease-and-desist orders since August 2008, when federal regulators ordered the company to make changes in its lending practices and risk management.
“Our current price is certainly not any indication of the value of the company,” McKay said. “Once the company has achieved better control over asset quality, we believe we can get relief form the cease-and-desist order and then start to get consistent earnings performance.”
When asked by shareholders when the company expected to be relieved of the regulatory orders, McKay said he did not know.
In compliance with the orders, Home Savings has made significant strides in reducing loan concentrations in high-risk areas, notably commercial real estate, construction and land development, chief financial officer Jim Reske told shareholders.
UCFC’s assets have shrunk by about $300 million as the company tries to curb high-risk lending.
“This decline has been purposeful — we have pulled back from areas that have a higher lending risk,” Reske said. “This is a period of retrenchment. As the economy turns, we will turn, and our loan portfolio will grow again.”
In the future, Home Savings will focus its loan portfolio on residential real estate, consumer and small-business loans, said Patrick Bevack, the bank’s president and chief executive. The bank also plans to increase its focus on personal service.
“We will be a community bank that is smaller and more diversified,” Bevack said. “We know it is more profitable to deliver more services to the customers we already have than to go out and get new customers.”