Home savings reports $4.1 million earned in 2Q

Staff report

YOUNGSTOWN

Youngstown-based Home Savings & Loan Co. reported earnings of $4.1 million in the second quarter of 2015, Home Savings’ parent company United Community Financial Corp. announced.

That’s a nearly 12 percent increase from earnings of $3.7 million generated in the previous quarter, but a sharp decrease from earnings of $42.4 million – which includes the recognition of $38.8 million from an income-tax benefit – generated in the same quarter last year.

“Strong second-quarter performance reflects effective execution of our 2015 business plan, which focuses on commercial-loan growth and continuous improvement in operating efficiency. The Home Savings team delivered loan growth of approximately $59.6 million for the quarter, with growth in each business segment,” Gary M. Small, president and chief executive officer of United Community and Home Savings, said Tuesday.

Home Savings is a wholly owned subsidiary of United Community and operates 32 full-service banking offices and nine loan-production offices in Ohio and western Pennsylvania. It is the fourth-largest bank in the Youngstown area.

“We are very pleased with our consistent improvement in quarterly earnings, return on average assets and operating efficiency,” Small said.

Loans increased $90.7 million to $1.3 billion at June 30, compared with Dec. 31, 2014. Commercial loans, up 23.9 percent or $60.4 million, drove this improvement. Residential loans increased 3.5 percent or $26.6 million.

Total deposits increased $91.4 million to $1.4 billion at June 30, compared with $1.3 billion at Dec. 31, 2014.

Net interest income was $13.9 million in the second quarter of 2015. That’s up from the $12.7 million recorded in the second quarter of 2014 and level with the previous quarter. Net interest margin was 3.16 percent for the second quarter of 2015 compared with 3.09 percent in the second quarter of 2014, and decreased from the 3.24 percent net interest margin recorded in the previous quarter – a result of continued pressure on earning asset yields because of a change in loan mix that the company expects to improve during the next quarter.

Home Savings had a negative provision for loan losses of $753,000 in the second quarter of 2015 compared with $1.6 million of provision loan expense in the same quarter last year, and $184,000 of provision expense in the previous quarter.

The increase in the provision expense during the second quarter of 2015 was substantially driven by strong loan growth.

An increase in the mortgage banking, driven by an increase in the volume of loans sold into the secondary market, helped to increase the noninterest income from $3.4 million in the second quarter of 2014 to $5.3 million in the second quarter of 2015.

Total noninterest expense was $12.2 million in the second quarter of 2015, a decrease of $2 million over the second quarter of 2014 when adjusted for a $923,000 charge related to cost reduction initiatives that occurred at that time.

Total noninterest expense decreased $473,000 from the previous quarter.

For the second quarter of 2015, the allowance for loan loss as a percentage of total loans was 1.36 percent at June 30 compared with 1.52 percent at Dec. 31, 2014, and 1.65 percent at June 30, 2014.