Item 2.06 Material Impairments

On June 26, 2012, the Board of Directors of The Home Savings and Loan Company of Youngstown, Ohio (Home Savings), a wholly owned subsidiary of United Community Financial Corp. (Company), recorded a material charge related to forgiveness of debt of a specific commercial loan customer. The Company received an agreed-upon settlement pertaining to seven loans related to a single loan customer. The aggregate unpaid principal balance of the seven loans totaled $22.1 million. Three of the loans in this relationship with aggregate balances of $15.7 million were both classified and impaired, and together represented the largest classified and impaired loan relationship at the Company. The Company determined that it was prudent to accept the settlement and recognize a loss on this relationship of $5.2 million. The Company believes this settlement resulted in a more favorable outcome as compared to alternative courses of action. The Company does not anticipate any further charges associated with this relationship.

Home Savings regularly reviews its allowance for loan losses at the end of each month to determine the adequacy of the allowance. The charge described above will be in addition to any other provision that may be required pursuant to this regular monthly review.

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