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Home Savings reports second-quarter earnings
By Kalea Hall
YOUNGSTOWN
Despite unfavorable interest rates for banks, Youngstown-based United Community Financial Corp. has posted a 29.2 percent year-over-year increase in its second-quarter earnings.
The parent company of Home Savings and Loan Co. reported net income of $5.3 million, up from $4.1 million reported in the second quarter of 2015.
“We have developed a much more diverse business model over the past 24 months,” said Gary M. Small, president and chief executive officer of Home Savings. “We are in a better position to continue to deliver a better performance.”
Mekael Teshome, PNC economist, explained that while the low Federal Reserve interest rates benefit consumers, they make it a challenge for banks to make money.
“Banks are having to rely on other sources of income,” Teshome said. “Rates are low all across the yield curve, so there really is only so much a bank can charge.”
The Fed sets two benchmark rates: the discount rate, which is the interest rate the Federal Reserve banks use when they lend money to depository institutions; and the fed funds rate, which is the interest rate that depository institutions charge each other.
In December, the Fed raised the federal funds rate for the first time in nearly a decade from a range of 0 percent to 0.25 percent to a range of 0.25 percent to 0.50 percent.
Those low rates mean the banks lend at low rates.
“There will still be a very low interest rate environment for some time,” Teshome said.
PNC economists expect the Fed will set a 0.25 percent increase in December.
“I am very proud of the team’s accomplishments during a very challenging period,” Small said in a statement. “Regardless of the somewhat unfavorable rate environment facing the industry, we have managed to stay on our growth track in each business group.”
Home Savings reported total loans increased by $182.4 million to $1.4 billion. Total deposits increased $16.5 million to $1.5 billion from the second quarter of 2015. Net interest income was $15.5 million in the second quarter of 2016, up from the $13.9 million recorded in the second quarter of 2015.
The UCFC Board of Directors declared an increase in a quarterly cash dividend of $0.03 per common share payable Aug. 12 to shareholders of record at the close of business Aug. 1.