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Home Savings takes a loss of $5.2M on loans
YOUNGSTOWN
The Home Savings and Loan Co. revealed Monday that it took a loss of $5.2 million on seven loans totaling $22.1 million owed by an unspecified company.
In a filing with the Securities and Exchange Commission, United Community Financial Corp., the holding company of Home Savings, said it had reached an “agreed-upon settlement” with the company in question, which resulted in the write-off.
The filing also reported that the company managed to pay $15.7 million of its debt before reaching the settlement.
United Financial “determined that it was prudent to accept the settlement and recognize a loss on this relationship of $5.2 million,” according to the SEC filing.
It went on to say, “the company believes this settlement resulted in a more favorable outcome as compared to alternative courses of action.”
Attempts to reach Home Savings on Tuesday were unsuccessful.
Three of the seven loans included in the package were deemed “impaired.”
Altogether, the loans represented the “largest classified and impaired loan relationship with [United Financial Corp.].”
Going forward, United Financial does not anticipate any further losses from the relationship.
Home Savings reviews its allowances for loan losses at the end of each month, though that figure is unclear for the period in which the loss occurred.
The announcement seemed to have little effect on United Financial’s performance on the NASDAQ on Tuesday, where its share price opened at $3.29 per share and was down only slightly at $3.25 when the market closed, but near its 52-week high of $3.31.
Though its unclear what types of loans led to the write-off, according to United Financial’s latest quarterly filing with the SEC, net loans decreased by $52.2 million during the first three months of 2012.
The primary source of the decrease was the overall decline in commercial real-estate loans and construction loans.
“Home Savings has, in the current environment, made a conscious effort to decrease its exposure in construction and segments of its commercial real- estate loan portfolios,” the quarterly report said.