2 0 1 0 A N N U A L REPORT

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JIL UNITED COMMUNITY j ^ l F I N A N C I A L C O R P .

Building relationships. One neighbor at a time.

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CyO', ^ L United Community Financial Corp. (NASDAQ: UCFC) is the holding company for The Home Savings and Loan

Company (Home Savings), headquartered in Youngstown, Ohio. Home Savings operates 38 full-service banking

offices and six loan production offices located throughout Ohio and Western Pennsylvania. Additional information

on the Company and Home Savings may be found at wrww.ucfconline.com or www.homesavings.com.

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MAHONING & TRUMBULL

COUNTIES

Main, Downtown

Austintown

Boardman

Canfield

Eastwood

Howland

Kirk Road

Liberty

McCartney Road

McDonald

Newport Glen

Poland

Struthers

YSU - Kilcawley

Youngstown

Center

COLUMBIANA COUNTY

& BEAVER, PA

Beaver Calcutta Columbiana East Liverpool East Palestine Glenmoor Lisbon Salem

NORTHEASTERN OHIO

Aurora Chardon Mentor Streetsboro Tallmadge Road

NORTH CENTRAL OHIO

Ashland Bellevue

Clyde Fremont

Lexington Norwalk Sandusky Tiffin Downtown Tiffin Westgate Willard Blossom Willard Downtown

MORTGAGE LOAN CENTERS

Beachwood Chagrin Falls Boardman Columbus Canton Stow

N

" 1 ,

Patrick W. Bevack President and CEO

Our commitment

to you is stronger

than ever We will

continue to provide

superior service

to our customers

just as we have for

over 120 years. As

the communities

we serve continue

to rebound, so will

Home Savings.

DEAR FELLOW SHAREHOLDERS:

On behalf of the entire team, I'd like to thank you for your continued support as we work diligently to restore United Community Financial Corp. (Company) and its subsidiary. The Home Savings and Loan Company (Home Savings), back to profitability. While the financial industry remains challenged by the economy as it slowly transitions from recession to recovery, and even as the regulatory environment becomes more and more stringent, we are optimistic about the future.

As your local community bank for over 120 years, we share the successes and the struggles of the communities in which we serve. As you read this aimual report, please keep in mind that we have made significant changes to improve our fiiUire financial results, some of which are outlined below. While these improvements will not happen ovemight, we realize you are eager to see your Company generate a profit, and we share that same sentiment.

Although we posted a loss in 2010 of $37.3 million, this was largely attributable to a loan loss provision of $62.4 million. Our loan loss provision is almost entirely due to loan losses on construction and commercial real estate loans. These industries have been hit the hardest during the recession, so undoubtedly it has had a major impact on our bottom line. And while some loans may still fail given the economy, we are now

better prepared to handle those challenges. I'm confident we have made significant changes that better position us to recover and retum to a profitable state of eamings.

In 2010, we continued to take measures to accomplish the goal of restoring financial strength to the Company. A key initiative of our management team was - and will continue to be - controlling asset quality. It's imperative that we continue to resolve problem assets quickly and dispose of real estate owned (REO) as cost effectively as possible. That is why we added experienced individuals to both our Special Assets and REO Departments during 2010 who are focused on timely and cost effective resolutions of problematic assets. This greater emphasis on risk identification has resulted in Home Savings being timelier in identifying risk and it has allowed us to be more proactive in resolving these assets. In many cases, the Company has been able to restmcture these underperforming loans in a manner that improves Home Savings' position.

Once again, we had another outstanding year in residential mortgage loan origination. Despite continued declines in the housing market, we remained a prominent mortgage lender in the areas we serve. In fact, we were recognized by the Town Crier newspapers once again as "Best Bank" and "Best Mortgage Provider" in its market areas of Boardman, Poland, Canfield and Austintown, Ohio. In 2010, we far exceeded our budgeted mortgage loan originations by 33%. In order to continue to make home ownership dreams come true for oiu" customers and otu commimities, we added eight highly qualified Mortgage Loan Originators to our team. We are seeing the positive impact this has made already and it's a venture that should prove to be even more profitable in the years to come. As a complement to our current mortgage services, we established HSL Land Title, which is an additional source of revenue and, most importantly, another way for us to provide superior service to our customers.

Establishing a more robust Small Business Lending Department has proven to be a positive undertaking thus far. Business owners have suffered through a tough economy as well and are in need of sound banking relationships. We are pleased to support their needs through our comprehensive line of business banking products and services, which will continue to be an area of emphasis for us in the coming years. Small businesses play a prominent role in our communities, so facilitating their needs is of utmost importance to us. To show our commitment to this initiative, we've committed to lending $20 million throughout 2011 to small businesses.

A continued strength of Home Savings is its dedication to the local communities that surround us. Regardless of economic circumstances or market conditions, we've always kept our longstanding tradition of giving back to our communities. Not only do our employees contribute a considerable amount of their own personal time to volunteering on a myriad of community projects, but as a company, we also provide a significant amount of resources through the Home Savings Charitable Foimdation.

Through the Foundation, Home Savings provides leadership, employee involvement and financial support to the communities we serve. Since 1998, the Foundation has provided nearly $11 million in support to many non-profit organizations, with the primary focus being to serve the needs of disadvantaged children and to provide much-needed educational programs. Supporting these endeavors will continue to be one ofthe Foundation's goals.

The Home Savings and United Community Boards underwent significant changes in 2010. In September, Douglas M. McKay announced his retirement from his positions as President and Chief Executive Officer at United Community and from the Boards of United Community and Home Savings at the end of the year, becoming Director Emeritus of United Community.

1 am extremely pleased that the United Community Board selected me to assume the responsibilities of President and Chief Executive Officer of United Community, as well as retaining my current role as President and Chief Executive Officer of Home Savings. Over the past two years, I have assembled a very strong management team to meet the challenges facing our industry. We have done a lot of reorganizing and we've already made great strides in enhancing our credit culture. I believe that our entire team is well-prepared to accomplish our strategic objectives.

Over the past two years and moving forward, we have taken and will continue to take all measures possible to improve our financial condition. Through difficult times, you not only realize your weaknesses, but most importantly your strengths. We will continue to build on our strengths and move forward as we position ourselves to take advantage of numerous opportunities in the future.

Once again, we'd like to thank you for your continued support and encoiuagement as we restore your Company back to growth and prosperity.

Best regards,

\ ^ j t A A < ^ UJ ^ 3 J U ; ^ « - C - 4 ^ _ ^

U

Richard J. Schiraldi Chairman ofthe Board

Las t y e a r the C o m p a n y

s t r en g th en ed its c o r p o r a t e

g o v e r n a n c e p r a c t i c e s by

s e p a r a t i n g the roles o f

C h a i r m a n a n d C h i e f Execut ive

Officer. We f e e l tha t this

will he lp us b e c o m e an even

m o r e effective a n d efficient

company. As a resu l t o f t h i s

decis ion, R i c h a r d J. Sch i ra ld i

w a s n a m e d independent ,

non-execut ive C h a i r m a n o f

both the Uni ted C o m p a n y

a n d H o m e Savings boa rds ,

effective Sep tember 1, 2010 .

Rick is a longt ime res ident

o f Youngstown a n d h e is well

r e spec t ed a s a bus iness l e a d e r

t h roughou t the community.

Patrick W. Bevack President and CEO. UCFC President and CEO, Home Savings

UCFC OFFICERS

P a t r i c k W. B e v a c k President and CEO

J a m e s R . R e s k e CFO and Treasurer

J u d e J . N o h r a General Counsel and Secretary

UCFC BOARD OF DIRECTORS

K

R i c h a r d J . S c h i r a l d i Chairman ofthe Board, UCFC Partner, Cohen & Company, Certified Public Accountants

P a t r i c k W. B e v a c k President and CEO, UCFC President and CEO, Home Savings

E u g e n i a C . A t k i n s o n Retired, Youngstown Metropolitan Housing Authority H W j

R i c h a r d J . B u o n c o r e ^ ^ ^ Managing Partner, MAI Wealth Advisors, LLC

Sco t t N . C r e w s o n Retired, BP

T h e H o n o r a b l e Sco t t D . H u n t e r Mahoning County Area Court Judge ^m Judge ofthe Mahoning County Misdemeanor Drug Court ^ ^ L Managing Member, Hunter-Stevens Land Title Agency, LTD ^ ^ ^

Dr . D a v i d C . Swee t _ _ ^ Retired, Youngstown State University

D o n a l d J . V a r n e r Retired, H o m e Sav ings and U C F C

Front row (L-R): Eugenia C. Atkinson, Patrick W. Bevack and Richard J. Schiraldi

Middle row (L-R): Scott N. Crewson, Dr. David C. Sweet and Richard J. Buoncore

Baclc row (L-R): The Honorable Scott D. Hunter and Donald J. Vamer

From row (L-R): Barbara J. Radis, timothy W, hsson and Stanley R. Horaker

Middle row (L-R): Gregory G. Krontiris and Matthew T. Garrity

Back row (L-R): Jude J. Nohra and James R. Reske

Not pictured: Pamela S. Kloss

HOME SAVINGS

SENIOR MANAGEMENT TEAM

S t a n l e y R . F o r a k e r Senior Vice President, Residential Mortgage Lending

M a t t h e w T. G a r r i t y Senior Vice President, Chief Credit Officer

P a m e l a S. Kloss Senior Vice President, Chief Risk Officer

G r e g o r y G . K r o n t i r i s Senior Vice President, Chief Lending Officer

J u d e J . N o h r a Senior Vice President, General Counsel and Secretary

B a r b a r a J . R a d i s Senior Vice President, Retail Banking

J a m e s R. R e s k e

Senior Vice President, CFO and Treasurer

T i m o t h y W. Esson Vice President, Finance

United Commimity Financial Corp. common stock is listed on NASDAQ under the symbol UCFC.

ANNUAL REPORT ON FORM 10-K

A copy ofthe Annual Report on Form 10-K filed with the Securities and Exchange Commission is available at www.ucfconline.com or without charge upon request to:

James R. Reske, CFO and Treasurer United Community Financial Corp., 275 West Federal St., P.O. Box 1111, Youngstown, Ohio 44501-1111 Phone: 330.742.0500

For additional information, please visit: www.ucfconline.com or www.homesavings.com.

SAFE HARBOR STATEMENT

This document includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions ofthe Private Securities Litigation Reform Act of 1995. Terms such as "expect," "believe," "hope," "plan," "intend," "should," and "may," as well as similar phrases, are forward-looking in nature. The statements regarding continued implementation of United Community's strategic plan are also forward-looking in nature. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Such risks include, among other factors, govemment intervention in the U.S. financial system, the acceptance of new products and services in the marketplace, overall economic conditions, regulatory findings and success of finding new opportunities for product and geographic expansion. For a more complete list of risk factors, please read United Community's Form 10-K filed with the Securities and Exchange Commission.

This statement has not been reviewed, or confirmed for accuracy or relevance, by the Federal Deposit Insurance Corporation.

The pictures in the armual report were taken at Youngstown State University's Williamson College of Business

Administration (WCBA). This state-of-the-art facility is newly constructed and its doors opened in 2010. The

mission of the WCBA is "prepare leaders for business, govemment, nonprofit organizations, and society" and

to that end, they provide rigorous academic preparation for undergraduate and MBA students, focusing on the

leadership skills and professional development of students, and capitalizing on their strategic partnerships within

the business community.

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JIL UNITED COMMUNITY F I N A N C I A L C O R P .

275 West Federal St., Youngstown, Ohio 44503

330.742.0500 T.D.D. 330.743.7100

www.ucfconline.com

©2011 United Community Financial Corp.