The $2.7 billion-asset Home Savings and Loan Co. in Youngstown, Ohio — deemed by regulators a troubled institution in August — has succeeded in boosting capital as required by cease-and-desist orders.

United Community Financial Corp., its parent company, said it achieved higher capital ratios despite a $4.3 million fourth-quarter loss, in part by selling its trust and securities businesses. Still, its tone was subdued as it cited the floundering economy and stressed housing market.

Home Savings, which has been hammered by losses on construction loans and mortgages, had a Tier 1 leverage ratio of 8.20% and a total risk-based capital ratio of 12.06% at yearend, United Community announced after the market closed Monday.

The thrift, under orders from the Office of Thrift Supervision, the Federal Deposit Insurance Corp., and Ohio regulators, had to increase the respective ratios to at least 8% and 12% — well above the minimums regulators generally require to be considered well capitalized.

Last month United Community sold its Butler Wick & Co. Inc. to Stifel Financial Corp. for $12 million. Because regulators also ordered the paying down of debt, United Community said it used $9.8 million of the proceeds to do so.

The company also has a deal, announced last month, to sell Butler Wick Trust to Farmers National Banc Corp. in Canfield, Ohio, for $12.1 million.

"We accomplished three important strategic objectives in the fourth quarter. We negotiated favorable terms on the Butler Wick sale, significantly reduced outstanding debt, and successfully met the increased capital requirements set by bank regulators," Douglas M. McKay, United Community's chairman and chief executive officer, said in a press release. "Nevertheless, economic conditions facing banks like ours continue to be challenging, including declining real estate collateral valuations and difficulties in the housing sector in general."

The company did not specify whether the regulatory orders remain in effect. Besides adding capital and reducing debt, Home Savings was required by the orders to assess management and improve lending practices.

The company's $4.3 million fourth-quarter loss, or 15 cents per share, compares to a loss of $7.7 million, or 26 cents per share, a year earlier.

For the full year, it lost $37.2 million, or $1.26 per share, after earning $1.7 million, or 6 cents per share, the previous year.

Driving the quarterly loss was a loan-loss provision of $10.6 million. However, the provision was 42% smaller than a year earlier.

Chargeoffs for the year jumped 56%, to $21.4 million, as the company took losses on construction loans and partially charged off mortgages to reflect declining home prices.

Nonperforming assets totaled $136 million at yearend, up 22%, and real estate owned nearly tripled, to $29.5 million.

By midday Tuesday, United Community's stock had slipped 3 cents, to 51 cents a share. It has lost about 91% of its value in the past 52 weeks.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.