United Community Bancorp Reports First Quarter Results

LAWRENCEBURG, Ind., Nov. 11, 2011 /PRNewswire/ — United Community Bancorp (the
“Company”) (Nasdaq: UCBA), the holding company for United Community Bank (the
“Bank”), today reported net income of $476,000, or $0.06 per diluted share, for
the quarter ended September 30, 2011, compared to net income of $271,000, or
$0.04 per diluted share, for the quarter ended September 30, 2010.

Summarized Consolidated Statements of Financial Condition
———————————————————
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In thousands, as of) 9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010
——— ——— ——— ———- ———

ASSETS
Cash and Cash Equivalents $23,878 $31,159 $28,182 $19,343 $44,446
Investment Securities 131,031 123,913 127,602 141,305 119,417
Loans Receivable, net 283,577 286,173 289,644 298,240 304,923
Other Assets 37,212 31,467 30,540 31,885 30,347
—— —— —— —— ——
Total Assets $475,698 $472,712 $475,968 $490,773 $499,133

LIABILITIES
Municipal Deposits $108,504 $111,251 $106,785 $138,639 $147,010
Other Deposits 306,840 301,840 310,124 291,169 290,169
FHLB Advances 1,583 1,833 2,083 2,333 2,583
Other Liabilities 3,563 3,461 3,580 3,412 3,694
—– —– —– —– —–
Total Liabilities 420,490 418,385 422,572 435,553 443,456
Total Stockholders’ Equity 55,208 54,327 53,396 55,220 55,677
—— —— —— —— ——
Total Liabilities & Stockholders’
Equity $475,698 $472,712 $475,968 $490,773 $499,133

Summarized Consolidated Statements of Operations
————————————————
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010
——— ——— ——— ———- ———
(for the three months ended, in thousands, except
per share data)

Interest Income $4,687 $4,907 $4,876 $5,033 $5,030
Interest Expense 1,152 1,233 1,286 1,433 1,635
—– —– —– —– —–
Net Interest Income 3,535 3,674 3,590 3,600 3,395
Provision for Loan Losses 898 755 3,971 737 719
— — —– — —
Net Interest Income (Loss) after Provision
for Loan Losses 2,637 2,919 (381) 2,863 2,676
Total Non-Interest Income 1,126 1,275 795 973 995
Total Non-Interest Expenses 3,149 3,082 2,949 3,204 3,251
—– —– —– —– —–
Income before Tax Provision
(Benefit) 614 1,112 (2,535) 632 420
Income Tax Provision (Benefit) 138 316 (814) 53 149
— — —- — —
Net Income (Loss) $476 $796 $(1,721) $579 $271
Basic and Diluted Earnings
(Loss) per Share (1) $0.06 $0.10 $(0.23) $0.08 $0.04
Weighted Average Shares Outstanding
Basic 7,638,321 7,640,321 7,612,759 7,631,858 7,687,263
Diluted 7,638,321 7,640,321 7,612,759 7,631,858 7,687,263

(1) -For all periods shown, United Community MHC has held 4,655,200 shares of
outstanding common stock. Since its inception, the MHC has waived receipt of
quarterly dividends on common stock.

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
For the three months ended
9/30/2011 6/30/2011 3/31/2011 12/31/2010 9/30/2010
——— ——— ——— ———- ———
Performance
Ratios:
Return
on
average
assets
(1) 0.40% 0.67% -1.43% 0.46% 0.22%
Return
on
average
equity
(1) 3.48% 5.92% -12.61% 4.15% 1.96%

Interest
rate
spread
(2) 3.17% 3.21% 3.05% 2.78% 2.83%

Net
interest
margin
(3) 3.22% 3.28% 3.17% 3.04% 2.93%
Non-
interest
expense
to
average
assets
(1) 2.66% 2.58% 2.44% 2.55% 2.63%

Efficiency
ratio
(4) 67.56% 62.28% 67.25% 70.06% 74.05%
Average
interest-
earning
assets
to
average
interest-
bearing
liabilities 105.83% 106.39% 106.69% 106.83% 106.78%
Average
equity
to
average
assets 11.55% 11.25% 11.31% 11.10% 11.21%

Bank
Capital
Ratios:
Tangible
capital 9.86% 9.83% 9.58% 9.61% 9.31%
Core
capital 9.86% 9.83% 9.58% 9.61% 9.31%
Total
risk-
based
capital 17.97% 17.84% 17.26% 16.80% 16.47%

Asset
Quality
Ratios:
Nonperforming
loans as
a
percent
of
total
loans 5.25% 6.15% 7.01% 7.70% 5.99%
Allowance
for loan
losses as
a percent
of
total
loans
(5) 1.96% 1.72% 1.65% 2.19% 1.99%
Allowance
for loan
losses as
a percent
of
nonperforming
loans
(5) 37.25% 28.03% 23.53% 28.50% 33.13%
Net
charge-
offs to
average
outstanding
loans
during
the
period
(1) 0.40% 0.13% 8.61% 0.30% 0.29%

(1) Quarterly income and expense
amounts used in calculating the
ratio have been annualized.
(2) Represents the difference between the
weighted average yield on average interest-
earning assets and the weighted average cost
of average interest-bearing liabilities.

(3) Represents net interest
income as a percent of average
interest-earning assets.
(4) Represents total non-
interest expense divided by the sum
of net interest income and total
non-interest income.
(5) The Bank purchased three branches from
Integra Bank on June 4, 2010 and acquired
loans with a fair value of $43.9 million.
Under ASC 805-20-30, the acquired loans are
accounted for at fair value. While there is
a credit risk component to the fair value
measurement, there is no allowance for loan
losses related to the acquired loans.

Net interest income increased $140,000, or 4.1%, to $3.5 million for the quarter
ended September 30, 2011, as compared to $3.4 million for the same quarter in
the prior year. The increase was primarily the result of a decrease in the
average interest rate paid on interest-bearing liabilities from 1.50% to 1.11%,
partially offset by a decrease in interest earned on average interest-earning
assets from 4.34% to 4.27%. Changes in interest rates are reflective of
decreases in overall market rates.

Non-interest income increased $131,000, or 13.2%, from $995,000 in the prior
year first quarter to $1.1 million in the current year first quarter. The
increase in the current year quarter was due to a $192,000 increase in gain on
sale of investments, a $49,000 increase in other non-interest income, and a
$38,000 increase in service charges, partially offset by a $144,000 decrease in
the gain on sale of loans. The increase in gain on sale of investments was the
result of the sale of 11 securities totaling $25.6 million in the current year
quarter, compared to only two totaling $4.0 million in the prior year quarter.
The Company has implemented a strategy where it will sell a portion of its
securities to recognize gains and reinvest the proceeds in securities with
similar interest rates and terms without significantly affecting the interest
rate risk to the Company. The increase in other non-interest income was
primarily the result of an increase in loan servicing income and late charges
collected on loan payments. The increase in service charges was the result of
increased ATM volume, including the addition of one ATM, and the increase in
checkcards issued in the current year quarter. The decrease in the gain on sale
of loans was the result of fewer loan sales to Freddie Mac in the current year
quarter when compared to the same quarter in the prior year. The decrease in
loan sales was the result of interest rates remaining relatively unchanged over
the last year, leading to a decrease in refinances.

Non-interest expense decreased $102,000, or 3.1%, to $3.1 million for the
quarter ended September 30, 2011, from $3.3 million in the prior year September
quarter. The decrease was primarily the result of a decrease in deposit
insurance premiums of $91,000, a decrease in other non-interest expenses of
$72,000, and a decrease in branch acquisition expenses of $38,000, partially
offset by an increase in compensation expenses of $65,000, data processing
expenses of $23,000 and premises and occupancy expenses of $19,000. The decrease
in deposit insurance premiums was the result of a decrease in average deposits
of approximately $18.5 million from the prior year quarter compared to the
current year quarter, primarily related to a decrease in municipal deposits over
that time period. The decrease in other non-interest expenses was primarily the
result of a decrease in the amortization of intangible assets from the
acquisition of the three branches from Integra Bank in the fourth quarter of
fiscal 2010. The decrease in acquisition expenses was the result of there being
no acquisitions carried out during the current year quarter. The increase in
compensation expenses is the result of the net addition of one employee and the
effect of annual increases in compensation. The increase in data processing
expense was caused by the increased customer base primarily attributable to the
previously mentioned branch acquisition. The increases in premises and occupancy
expenses was the result of remodeling several branches during the year,
including updating and replacing several fully depreciated assets.

The provision for loan losses was $898,000 for the quarter ended September 30,
2011, compared to $719,000 for the same quarter in the prior year. On at least a
quarterly basis, management evaluates the Bank’s allowance for loan loss for
adequacy. As part of this evaluation, management considers the amounts and types
of loans, concentrations, the value of underlying collateral, current economic
conditions, historical charge-offs, and other relevant information, such as the
size of the overall portfolio and the financial condition of the borrowers.
Based upon this evaluation, management recorded a provision for loan loss of
$898,000 in the current quarterly period. Nonperforming loans decreased from
$20.6 million at June 30, 2011 to $15.2 million at September 30, 2011, compared
to an increase in nonperforming loans from $10.6 million at June 30, 2010 to
$18.7 million at September 30, 2010. The decrease in nonperforming loans in the
current year quarter was primarily the result of troubled debt restructurings
that have been placed on accrual (performing) status since they have been
performing in accordance with their restructured terms for at least six
consecutive months, and the absence of the addition of any significant
additional nonperforming loans in the current year quarter.

Total assets were $475.7 million at September 30, 2011, compared to $472.7
million at June 30, 2011. Total assets remained relatively flat even though
there were increases in investment securities of $7.1 million, Federal Home Loan
Bank (“FHLB”) stock of $4.1 million and bank owned life insurance (“BOLI”) of
$2.1 million. These increases were partially offset by decreases in cash of $7.3
million, net loans receivable of $2.8 million and deferred income taxes, prepaid
expenses and other assets of $1.0 million. The increase in investment securities
was funded by the decrease in cash. The increase in FHLB stock was attributable
to the Bank’s desire to increase its borrowing capacity. BOLI was increased to
offset and recover existing benefit expenses. The decrease in loans receivable
was due to fewer loans being made and the proceeds from repayments of loans
being used to purchase FHLB stock and BOLI.

Total liabilities were $420.5 million at September 30, 2011, compared to $418.4
million at June 30, 2011. The increase was primarily the result of a $2.3
million increase in deposits due primarily to a $5.0 million increase in
deposits other than municipal deposits.

Total stockholders’ equity was $55.2 million at September 30, 2011, compared to
$54.3 million at June 30, 2011. The increase was primarily the result of an
increase of $710,000 in unrealized gains on available for sale securities
combined with net income of $476,000, partially offset by dividends paid of
$372,000. At September 30, 2011, the Bank was considered “well-capitalized”
under applicable regulatory requirements.

United Community Bancorp is the holding company of United Community Bank,
headquartered in Lawrenceburg, Indiana. The Bank currently operates nine offices
in Dearborn and Ripley Counties, Indiana.

This news release may contain forward-looking statements, which can be
identified by the use of words such as “believes,” “expects,” “anticipates,”
“estimates” or similar expressions. Such forward-looking statements and all
other statements that are not historic facts are subject to risks and
uncertainties which could cause actual results to differ materially from those
currently anticipated due to a number of factors. These factors include, but are
not limited to, general economic conditions, changes in the interest rate
environment, legislative or regulatory changes that may adversely affect our
business, changes in accounting policies and practices, changes in competition
and demand for financial services, adverse changes in the securities markets,
changes in deposit flows and changes in the quality or composition of the
Company’s loan or investment portfolios. Additionally, other risks and
uncertainties may be described in the Company’s annual report on Form 10-K, or
its quarterly reports on Form 10-Q, which are available through the SEC’s
website at www.sec.gov. Should one or more of these risks materialize, actual
results may vary from those anticipated, estimated or projected. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Except as may be required by
applicable law or regulation, the Company assumes no obligation to update any
forward-looking statements.