Corrective steps are painful for banks on the comeback trail.
United Community Financial's (UCFC) third-quarter loss tripled from last year after a $33 million charge related to a bulk loan sale. The Youngstown, Ohio, company reported a loss of $26.9 million, compared with an $8.9 million loss a year earlier.
"The bulk asset sale completed in September represented an enormous step forward for the company," Patrick W. Bevack, president and chief executive United Community, said in a news release Tuesday. "We have achieved a substantial improvement in our asset quality and a dramatic reduction in our risk profile, and have exceeded our regulatory asset quality targets well ahead of schedule."
United Community sold assets valued at $114.8 million through a bulk sale to meet requirements from a March consent order. The order from the Federal Deposit Insurance Corp. and the Ohio Division of Financial Institutions required the company's Home Savings and Loan unit to lower its classified assets below $219.2 million by Sept. 30 and below than $146 million by March 31, 2013.
United Community, which has assets of $1.8 billion, reported that its third-quarter classified assets totaled $78.6 million, down 60% from the previous quarter. United Community's third-quarter provision for loan losses was $30.3 million, up almost 156% from a year earlier. This expense included $29.4 million associated with the bulk loan sale.
Net interest income totaled $14.1 million, down more than 9% from a year earlier. Noninterest income almost doubled, to $3.8 million, as income from mortgage banking tripled to $2.1 million.
Noninterest expense rose 19%, to $17.3 million from a year earlier as costs from professional fees were higher from hiring professionals to assist in completing the bulk loan sale.
For the first nine months of the year, United Community lost $23 million, compared with a $7.7 million loss for the same period a year earlier.