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Edited Transcript of UCFC earnings conference call or presentation 17-Oct-18 2:00pm GMT

Q3 2018 United Community Financial Corp Earnings Call

Youngstown Oct 18, 2018 (Thomson StreetEvents) -- Edited Transcript of United Community Financial Corp earnings conference call or presentation Wednesday, October 17, 2018 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gary M. Small

United Community Financial Corp. - President, CEO & Director

* Matthew T. Garrity

United Community Financial Corp. - Executive VP of Commercial Lending & Credit Administration and Director of Home Savings Bank

* Timothy W. Esson

United Community Financial Corp. - CFO

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Conference Call Participants

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* Adela Dashian

Keefe, Bruyette, & Woods, Inc., Research Division - Assistant Analyst

* Daniel Edward Cardenas

Raymond James & Associates, Inc., Research Division - Research Analyst

* James Prescott Beury

Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts

* Robert Scott Siefers

Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research

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Presentation

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Operator [1]

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Good morning, and welcome to the United Community Financial Corp. Third Quarter 2018 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded.

I would now like to turn the conference over to Tim Esson, Chief Financial Officer. Please go ahead, sir.

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Timothy W. Esson, United Community Financial Corp. - CFO [2]

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Good morning, and thank you for participating in today's conference call. As always, before we begin, I would like to refer you to the company's forward-looking statements and risk factors that appear on the screen in front of you. Additionally, the risk factors can be found at our Investor Relations website, ir.ucfconline.com. This statement provides the standard cautionary language required by the Securities and Exchange Commission for forward-looking statements that may be included in today's call. In addition, a copy of the third quarter earnings release can be obtained at the same website.

With that said, I would now like to introduce Gary Small, President and CEO of both UCFC and Home Savings.

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [3]

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Thank you, Tim, and welcome all. Thank you for joining us this morning. Let me start out by saying we're pleased with our financial performance for the quarter, delivering $9.5 million of net income or $0.19 per share. Third quarter performance was right on par with our expectations, and we remain on pace with our year-to-date expectations. We continue to produce excellent loan growth, and Matt Garrity will share more detail on that later on the call. And that growth is coming at both full year and a linked-quarter basis. Strong deposit growth supports our loan growth and our customer deposits, which would exclude our broker deposit position, are up over 9% versus the prior year.

Portfolio quality continues to shine as we're experiencing outstanding credit performance. Q3 saw nonperforming loans dropped to 42 basis points, nonperforming assets dropped to 36. Our ALLL is currently at 235% of our nonperforming loans.

These strong credit trends are triggering a release of reserves, and when we combine that with our loan net charge-offs, it just makes for a very low provision for the quarter, consistent with the rest of the year. Fee income was up 5% on a linked-quarter basis. And we experienced the recovery in our residential mortgage gain on sale category and continue to see strong origination activity with pricing firming up a bit. Asset management fee income was also nicely up for the quarter. Expenses remained flattish and well in hand, and that's creating a positive operating leverage for the organization. For the quarter, we saw revenue climbed 2.3% on a linked-quarter basis and pretax provision grew 3.2%.

Within our business segments, commercial banking continues to be a strength in portfolio growth. C&I activity for the year is running at twice the rate that it was last year, we continue to see good CRE opportunities, but we do remain very selective. Our indirect auto origination activity for the quarter slowed a bit as we purposely rolled out some pricing adjustments. We expect our production activity to return to more normal levels over time.

During the third quarter, we maintained customer deposit balances, while we were not actually in a promotional pricing mode for the quarter. We had loaded up on deposits at lower rates earlier in the year and late in '17, and really had planned for little or no growth at what we would think of is traditional customer deposits for the third quarter. We continue to feel a shorter funding position will serve us well over the next 24 months.

The wealth management group delivered another good quarter with year-to-date deposit generation up over $35 million. The investment management and advisory business is doing very, very well. And recurring fees top $300,000, and that's just an annuity for the year and that's just an annuity that builds every year going forward, building a very stable revenue stream for us. And assets under management and advisory totaled $775 million as we close out the quarter.

Again, the residential mortgage team continues to originate loans at a higher pace than the industry. New construction lending continues to be very strong for us, and the opportunities tend to be higher dollar loans with better credit, and that drives a lower cost per origination. So all good. Again, all in all, the third quarter performance is right on the mark and met our expectations, both our customers and business clients' balance sheets remained strong, and we do not foresee a change in direction in that topic in the near term.

With that, I'm going to turn it over to Matt Garrity to provide some more color on commercial and residential and credit activity.

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Matthew T. Garrity, United Community Financial Corp. - Executive VP of Commercial Lending & Credit Administration and Director of Home Savings Bank [4]

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Thanks, Gary. As Gary mentioned, we are very pleased with the continued strong performance of our commercial business as well as the improved performance of our residential mortgage business in a challenging operating environment. In our commercial business, we continued to show solid growth as our portfolio grew over 3.4% during the third quarter with year-over-year portfolio growth of 17.8%. As we have discussed on previous calls, we continued to see planned payoff activities during the third quarter and we expect the pace of planned payoff activity to intensify in the fourth quarter. With that said, we expect fourth quarter balances to remain relatively flat and continue to reaffirm our full year guidance of 12% to 15% commercial portfolio growth as part of overall loan growth of between 9% and 10% this year.

We continue to be pleased with our improved levels of C&I production. For the third quarter, C&I production was 38% of total originations. And on a year-to-date basis, C&I production stands at over 40% of total production. By comparison, C&I production for the first 9 months of 2017 was 19.6%. Deposit activity was strong during the third quarter as average commercial deposits grew by over 6% compared to the second quarter. While market conditions in the commercial segment remain competitive with respect to rate and structure, we remain pleased with the overall performance of the business this year and are confident in our ability to continue to deliver strong results. In our mortgage business, we were able to improve our gain on sale performance, while maintaining solid levels of loan production. Originations for the third quarter increased over 5% when compared to the third quarter of 2017. The portfolio continues to meet our expectations of measured balance growth as we continue to focus on our mix of salable originations. As we have mentioned on previous calls, market conditions remain very competitive, which continues to challenge mortgage banking income. With that said, we were able to improve mortgage banking income by close to 17% on a linked-quarter basis. While we expect the competitive environment to remain challenging for the foreseeable future, we remain committed to the business long term as we continue to address opportunities to improve in other areas of our mortgage business to enhance operating efficiencies and improve yield.

Asset quality remained strong in the third quarter as evidenced by the continued reduction in our ratio of nonperforming loans to total loans and nonperforming assets to total assets. Payment delinquency improved 7.6% when comparing the third quarter of 2018 to the third quarter of 2017. The reduction in nonperforming assets was driven by the reclassification of a receivable asset as a result of a legal resolution. Charge-offs for the quarter were 6 basis points and the outlook for asset quality remained stable.

I would now like to turn the call over to Tim Esson, who will discuss our financial performance in greater detail.

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Timothy W. Esson, United Community Financial Corp. - CFO [5]

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Thank you, Matt. Let me begin by reiterating Gary's opening comments that Q3 demonstrated solid performance numbers, along with positive growth in both loans and deposits, in addition to outstanding credit performance and tight expense management. Our quarterly results of $0.19 per share on a fully diluted basis are consistent with our expectations. Matt provided commentary regarding the 2 major sectors of the loan portfolio; however, let's touch briefly on the total portfolio.

During Q3, we saw total net loan portfolio increase $49.2 million or 2.3% on a linked quarter comparison. During the past 12 months, total loans grew $201 million, or a little greater than 10%. Again, to reiterate, asset quality has remained very strong.

Looking further at the balance sheet, average customer deposit growth, which excludes broker deposits, remained constant during the quarter, but did increase 10% year-over-year. Aiding in that growth was an increase in average noninterest-bearing deposits, which increased 13% over the past 12 months. Also, in that period, we saw an increase in business deposits of 22%. The net interest margin declined 2 basis points compared to the prior quarter when adjusted for the purchase accounting marks. As discussed in the press release, the flattening yield curve, along with the runoff of the accretion of the marks from last year's acquisition, has been a factor in the margin moving down this year. We saw minimal customer CD growth in the third quarter as we had front-end loaded CDs in the first and second quarter.

With this, we saw some stabilization in the margin in August and September, and with the lag move in LIBOR, we expect some margin improvement in the fourth quarter. Deposit betas have averaged approximately 43% for the year, but a majority of the move is coming from the growth in CDs and money market accounts, as savings and noninterest checking have seen no beta movement. As we discussed earlier, asset quality remained strong. We did recognize a provision for loan losses of $251,000 in the quarter. Charge-offs for the quarter were minimal at 6 basis points and 2 basis points for the year. The allowance for loan losses as compared to total loans was just short of 1%. This percentage increases to 110 when combining the remaining fair value adjustment for the loans acquired through acquisition last year.

Given our favorable asset quality, we would anticipate the provision in Q4 to be minimal. Continuing on, noninterest income was $6.1 million in Q3. This level of performance is approximately 6.7% greater than Q2, excluding the security gains recognized in that quarter. Mortgage banking income increased 17% in comparison to the linked quarter. While the mortgage banking environment is still challenging, pricing changes that were made led to better margins in the third quarter. Noninterest expense was $15.8 million for the quarter. This level aligns right with plan and meets our expectations.

Going forward, we would anticipate the last quarter to fall in line with plan at around $16 million. Essentially, for the year, there will be approximately a 3% increase over last year's level normalized. This level of increase is consistent with the guidance we offered at the beginning of last year. Our efficiency ratio continues to improve and now is at 57.3% quarter-to-date. One final comment regarding our effective tax rate on an FTE basis for the quarter. The rate is steady at 19.5%, which should continue for the remainder of the year.

With that said, I'd now like to turn the call back to Gary Small.

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [6]

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Thank you, Tim. I'll take a moment to share some thoughts with regard to the fourth quarter. Again, I'm happy to affirm that our performance expectations from a net income statement -- standpoint and the balance sheet growth for the year continue to be as expected. Total loans are expected to be up 9% to 10% on a year-over-year basis, and the fourth quarter linked quarter growth will be tempered a bit due to the payoffs, as Matt was discussing, and that's consistent with our guidance earlier in the year. We've always expected the fourth quarter to be a strong payoff period. There is a potential for some upside, however, last year, we also expected strong payoffs and many were delayed till the first or second quarter, so we'll assume the worse and will be happy if a few folks drag their feet. And I wouldn't be surprised if we experience the same.

Margin expectations for the year still remain 340 on a full year basis. We have a very strong fourth quarter margin expectation as we have a known interest recovery item that will land in the quarter. We initially expected this item to land in the third quarter, but the timing crossed quarter end, so fourth quarter it is. And also note that in the third quarter, we did increase our position in broker deposits quite a bit. You'll note that it was almost an exact offset to the reduction in the federal home loan bank borrowings. We view these funding sources as interchangeable. And there's anomalies in the rate, from time to time, and we'll take advantage of that and that's what you saw with our movement into broker deposits. We felt there was about 20 bp advantage to be there versus like-kind borrowing at the home loan bank. So I say that to explain why we made the move, but also to give you caution that, that could change from quarter-to-quarter, depending on how we see the -- our funding costs and where we get the lowest money.

Obviously, our financial valuations have swooned over the last month or so along with the industry. We do find ourselves in the acceptable buyback range, and you could expect that we'll be opportunistic on our repurchasing activity in the fourth quarter, but again we are within range.

With that, I'll turn it over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Daniel Cardenas from Raymond James.

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Daniel Edward Cardenas, Raymond James & Associates, Inc., Research Division - Research Analyst [2]

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As we think a little bit about '19, especially, as we look at the loan growth opportunities, I mean, is the current thought still kind of in that high single to low-double digit range for '19? Or does that get maybe truncated a little bit, just given various factors?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [3]

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So Dan, as we look at our pipelines now and the general tenor in the marketplace, I think, you're right on at the high -- we're -- we will be targeting 10% to 12%. If we come in at 9%, we won't be disappointed, but we're still in that range. Matt, do you have anything to add with that?

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Matthew T. Garrity, United Community Financial Corp. - Executive VP of Commercial Lending & Credit Administration and Director of Home Savings Bank [4]

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Dan, I think the environment remains competitive, but we think '19 still going to be a very solid year for us. We expect '19 to largely be an extension of what we're achieving in 2018. I think the only variable will just be the degree of payoff activity. As Gary mentioned, how much stuff pays off this year versus sliding into next year and things like that. But the origination activity and what we expect to achieve in the market should be pretty consistent year-over-year.

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Timothy W. Esson, United Community Financial Corp. - CFO [5]

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The payoffs that we mentioned are just the standard churning, if you will, of the CRE portfolio. There's nothing unusual. It's just lumpy, but no change in future prospects.

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Daniel Edward Cardenas, Raymond James & Associates, Inc., Research Division - Research Analyst [6]

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Okay. Good. Good. All right. And then looking at the margin, as we think about Q4, so it sounds like maybe a couple events could be concurring. So we should see some catch up right from the LIBOR-based loans and then it sounded like a onetime nonrecurring uptick in the margin. So as I think about it, so I heard you had a core of 3.27% for this quarter, can we see that core number kind of build up? And what's kind of the range you think Q4 would look like for your margin?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [7]

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So Dan, I think you described it correctly. Outside of the onetime event, we are seeing improved core margin and actual reported margin just due to the actions that we took in July and August. And the trend on that, that's not reported in the numbers, is what we can see our September specific margin and gained back 2 or 3 basis points versus where we were earlier, which would say we're on the right path. The one time only event will fall in the fourth quarter. It's a large item. You could do the math backwards, we'll be probably looking at margin in Q4 that'll post somewhere between 3.45% and 3.50%. And the core margin, I would expect to be up that 2 to 3 basis points and the rest of the benefit, if you will, will be due to the onetime item.

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Daniel Edward Cardenas, Raymond James & Associates, Inc., Research Division - Research Analyst [8]

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Okay. Great. And then last question, then I'll step back. In terms of the buyback, how much of it is left in your program right now?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [9]

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Dan, I think, we have close to 1.5 million shares still remaining. We really haven't tapped it in any material way in the last 2 years. So we've got plenty authorized. I wouldn't want to give any guidance as to the percentage expectation at this point. I'll leave it at opportunistic. We might have more to say on that as we go into our January call to be more specific on what expectations would be.

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Operator [10]

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And the next question comes from Scott Beury from Boenning and Scattergood.

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James Prescott Beury, Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts [11]

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You mentioned in your prepared remarks that you weren't necessarily in a promotion mode with regard to deposits this quarter. And I was just curious if there were any changes to the strategy just based on what you've been able to bring in through the private banking channel and what you're seeing in terms of competition in the marketplace?

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Timothy W. Esson, United Community Financial Corp. - CFO [12]

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I'll take this in reverse. On the private banking side, we are really only 12 months since we expanded the group and went to market with the 5 individuals in play, that built upon the group that we got as a result of our Premier transaction earlier in '17. So we're really very pleased with what they've been able to get done. And that's a mix of non-interest-bearing and time and money market, all the normal things you would expect to see. So just good velocity for that group, and I will continue to see that -- expect that to expand. As far as the overall deposit raising philosophy, last year, about this same time, maybe a little earlier, we thought -- I'm going to believe what the Fed's saying and those rate hikes are coming, and I know I'm going to need X amount of deposit growth, so let's go get it now, while the getting's good. And we really took strong action in the fourth quarter of last year and the first quarter of last year because we really didn't want to be in the market trying to attract money over the summer -- really from May through the end of the summer. And so that's why I say for the third quarter, we really didn't have high expectations of a deposit growth because we wanted to be quiet because we expected that to be the most expensive period of the year and it absolutely turned out to be that. So we were happy not to be in the market. We did mask pricing as we needed to, but we weren't really trying to make anything happen. As we get closer now to the end of the year and thinking about the beginning of next year, although same thoughts of last year come back, we start looking at the Fed and we'll start thinking about how quickly we want to fund '19's growth, will we follow last year's path or change it a bit. So it's a year-by-year sort of analysis.

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James Prescott Beury, Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts [13]

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Great. No -- that's certainly helpful. You kind of led into what the second part of my question was. With regard to some of the bigger upticks in deposit cost that we saw in the beginning of the year as you kind of prefunded the growth, if you will. As we look at '19, generally, should we kind of, at this point, expect a less severe uptick, I guess, if you will, a more modest increase in deposit cost relative to what we expect for the Fed?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [14]

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I don't know if I would -- I can say that with that kind of confidence. Our betas, as Tim was mentioning were probably in the 40% to 43% range over the last 12 months. I'd say the difference between now and last year is just the level of activity of folks that are in the market, also needing to raise deposits. And so we might see that there's a little bit more rate velocity at the beginning of the year than there was last year. That's a TBD. Right now, as we stand here, we see folks who are very thoughtful in the deposit raising mode, putting pretty modest rates on their promotional rates at the one year and 13 months stage. I think consistent with what we're thinking of, there's no sense in placing a long bet here, we're not sure that -- that that's -- that the market's quite the same and they're happy to take money at 200 or 210, although there are still folks out there that are trying to raise at a 275, they're the anomaly versus the average.

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Operator [15]

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And our next question comes from Michael Perito from KBW.

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Adela Dashian, Keefe, Bruyette, & Woods, Inc., Research Division - Assistant Analyst [16]

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This is actually Adela Dashian on for Mike Perito. Most of my questions have already been answered, but I do have a question on M&A. If you could please give us an update on the current M&A environment in Ohio? And are you seeing any good opportunities to do bank acquisitions at this point?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [17]

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Thank you. Welcome to the call. Thanks for the question. I would say that consistent with the last couple of quarters, the discussion levels are up, but Ohio as a state has been probably a little bit behind the national pace for the M&A deals. And if you think of drawing a line through Ohio between north and south, all the activity and that literally is 3 or 4 transactions have been south in the bottom half of the state, south of Columbus and toward Cincinnati, and really not much activity up here in the northern side. It speaks to we have a lot of community banks and everyone's enjoying a pretty strong performance here. So as we talked about in the past, the sense of urgency of needing to do something because of impending financial cramping margin compression so forth is still being overwhelmed by the -- for all the benefit of the tax act. So again conversations are as numerous as they've ever been informally, but actual ready to take a step and so forth, it's been a pretty quiet market all year long in the northern Ohio market. We continue to have those conversations with folks.

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Operator [18]

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And our next question comes from Scott Siefers with Sandler O'Neill + Partners.

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Robert Scott Siefers, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [19]

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Let's see, Gary, you had talked about the sort of complexion shift within the funding base. I guess, just as I look at the sequential move from -- of borrowed funds into brokerage CDs, obviously, improves the cost of funds, but what in your mind does that end up doing to the overall rate sensitivity for the company over, say, next several quarters?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [20]

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I'll put on my treasurer hat here a little bit and Tim chime in, but we really, as I said, we think of it as neutral relative to the source of funds. We have deep liquidity with the federal home loan bank and the duration that we're taking on these 2 and -- whether in 1 or the other is the same. So we continue to have good liquidity. We have -- that's never been our problem. And if anything, it's just in our internal or the external metrics of watching the loan-to-deposit ratio. And we don't really want to be an outlier relative to that calculation, excluding broker deposits. So we manage to that number a little bit as well, but we don't think of it in terms of impacting our liquidity one way or the other between those two.

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Robert Scott Siefers, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [21]

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Okay. All right. Perfect. And then, just as I look at lot of the moves that you've made on interest-rate positioning, have been on -- looks like more or less the funding side of the balance sheet. I guess, just as I look at loan yields, up about, call it, 20 -- just a little more than 20 basis points-or-so over the course of the last year. Any opportunities there -- I guess, just -- how satisfied have you been with overall movement in yields in the loan portfolio? And maybe if you can sort of parse the different dynamics, whether it's just repricing characteristics or competitive dynamics, et cetera? How are you thinking about the loan yield side specifically?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [22]

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I'll make a macro comment, and then ask Matt to follow-up on the specific book on the commercial side. If we look at the quarter, and I think it's consistent with the full year. If we looked at earning asset yield movement versus our customer deposit cost of funds movement, we've been very close to neutral. The difference in our book is that we do have a pretty high borrowed funds piece between the federal home loan bank and the broker combined, and that moves at a much higher velocity. So on an overall, how's your cost of funds looking, it's moved at a higher velocity than the repricing on all of our assets to some degree. But on the things where we're controlling the pricing, we feel like we've got a nice neutral position. And that's been pretty consistent over the year. We're not a bank that's 90% commercial, that's all LIBOR, that's going to see a big run-up in margin because of rates running up. We would still say we're a very neutral bank on our existing book. As rates move in one direction or the other, we don't see huge and anticipate huge movements either way. On the asset pricing side, Matt you want to comment on that?

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Matthew T. Garrity, United Community Financial Corp. - Executive VP of Commercial Lending & Credit Administration and Director of Home Savings Bank [23]

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Scott, intuitively, we would expect our yields to continue to grow as rates continue to move. It's probably not going to grow as much as anyone would like it too, simply because it's, again, a very competitive environment. So you might not be able to price up as much as you might like to depending on the client and the product, but we certainly do expect to continue to see yield expansion as we go forward for sure.

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [24]

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As I mentioned on the call, we made an adjustment on our indirect portfolio, which is running about $80 million now and it's grown nicely over the last couple of years. And we've started to tweak the buckets and so forth, and back off certain pieces of the business and expand on the others. So we're just continuously looking for where can we get another 3 or 4 bp on the yield side, very active conversation.

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Robert Scott Siefers, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [25]

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Okay. Perfect. And then, I guess, just one final question. For the most part, at least directionally, the growth dynamic of the story still remains very much intact. I think you guys are probably doing about the best you can within the confines of the balance sheet on the margin. And then you had some nice redundancies this quarter, although the mortgage environment overall remains tough. Just as you look at over the course of next few quarters, any opportunities on the, say, the cost side or anything that you could do to maybe kind of pull some additional levers if some of these growth drivers from the last couple of years get a little more challenged?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [26]

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I think you would -- you should expect it if we do get challenged in that respect, we will make the adjustments. That we always have some cards we can play on the cost side. Over the last 18 months, we've actually been expanding our capabilities, which have relative targets we added to our cost structure little bit, and we've been trying to build for the future. But I think, if we got in that situation, Scott, you could expect to see there would be some trimming on the cost side. Having said that, if we go back 4 years ago when we came up with, gosh, it was almost a 20% cost reduction initiative, nothing like that. This would just be trimming as you might expect, but I still would say, our -- when we sit down in January to talk about things, you're going to see revenue growth of 7%, and expenses that are down in the sub-3% level. That -- we haven't baked that cake fully yet, but that's still the dynamic that we're expecting in the near term, and might be plus or minus a percentage point on either side of those factors.

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Robert Scott Siefers, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [27]

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Okay. It sounds like even if the future doesn't necessarily exactly replicate the past there -- that's still going to be a very wide positive operating leverage creation dynamic?

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [28]

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That is the number we keep an eye on all the time, positive operating leverage. And yes, we'll maintain that spread one way or another without hurting the franchise doing it.

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Operator [29]

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And this concludes our question-and-answer session. I would like to turn the conference back over to Gary Small for any closing remarks.

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Gary M. Small, United Community Financial Corp. - President, CEO & Director [30]

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Well, again, thank you all for joining us this morning. And look forward to seeing what everyone else has done through the earnings season. We'd encourage anyone who is seeing some trends that wants to backtrack and have a conversation relative to our call since we are first out to please do so. Thanks, very much.

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Operator [31]

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The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.