United Community Bancorp Reports First Quarter Results

LAWRENCEBURG, Ind., Oct. 29 /PRNewswire-FirstCall/ — United Community Bancorp

(the “Company”) (Nasdaq: UCBA), the holding company for United Community Bank
(the “Bank”), today reported earnings of $271,000, or $0.04 per diluted share,
for the quarter ended September 30, 2010, compared to net income of $222,000, or
$0.03 per diluted share, for the quarter ended September 30, 2009.

United Community Bancorp
Summarized Statements of Income
(Unaudited, in thousands, except per share data)

For the three months
ended
9/30/2010 9/30/2009
——— ———
Net income $271 $222
Basic earnings per share 0.04 0.03
Diluted earnings per share 0.04 0.03
Weighted average shares
outstanding
Basic 7,687,263 7,612,070
Diluted 7,687,263 7,612,070

Summarized Statements of Financial Condition

(Unaudited) (Unaudited)
(In thousands, as of) 9/30/2010 6/30/2010 3/31/2010
——— ——— ———

ASSETS
Cash and cash equivalents $44,446 $32,023 $36,740
Investment securities 119,417 119,958 110,387
Loans receivable, net 305,795 309,575 270,621
Other Assets 29,475 30,548 22,898
—— —— ——
Total Assets $499,133 $492,104 $440,646

LIABILITIES
Municipal Deposits $147,010 $121,607 $131,040
Other Deposits 290,169 308,573 247,694
FHLB Advances 2,583 2,833 3,083
Other Liabilities 3,694 3,611 3,063
—– —– —–
Total Liabilities 443,456 436,624 384,880
Total Stockholders’ Equity 55,677 55,480 55,766
—— —— ——
Total Liabilities &
Stockholders’ Equity $499,133 $492,104 $440,646

(Unaudited) (Unaudited)
(In thousands, as of) 12/31/2009 9/30/2009
———- ———

ASSETS
Cash and cash equivalents $18,616 $24,341
Investment securities 84,672 82,439
Loans receivable, net 270,512 272,652
Other Assets 24,575 23,710
—— ——
Total Assets $398,375 $403,142

LIABILITIES
Municipal Deposits $103,498 $114,954
Other Deposits 233,419 225,912
FHLB Advances 3,333 3,583
Other Liabilities 2,789 3,100
—– —–
Total Liabilities 343,039 347,549
Total Stockholders’ Equity 55,336 55,593
—— ——
Total Liabilities &
Stockholders’ Equity $398,375 $403,142

Summarized Statements of Operations

(Unaudited) (Unaudited) (Unaudited)
9/30/2010 6/30/2010 3/31/2010
——— ——— ———
(for the three months ended, in thousands, except
per share data)

Interest Income $5,030 $4,688 $4,716
Interest Expense 1,635 1,594 1,542
—– —– —–
Net Interest Income 3,395 3,094 3,174
Provision for Loan
Losses 719 1,112 451
— —– —
Net Interest Income
after Provision
for Loan Losses 2,676 1,982 2,723
Total Non-Interest
Income 995 1,180 749
Total Non-Interest
Expenses 3,251 3,346 2,908
—– —– —–
Income before Tax
Provision (Benefit) 420 (184) 564
Income Tax Provision
(Benefit) 149 (150) 214
— —- —
Net Income (Loss) $271 ($34) $350
Basic and diluted
earnings (loss) per
share (1) 0.04 (0.00) 0.05

(Unaudited) (Unaudited)
12/31/2009 9/30/2009
———- ———
(for the three months ended, in thousands, except
per share data)

Interest
Income $4,711 $4,821
Interest
Expense 1,588 1,705
—– —–
Net
Interest
Income 3,123 3,116
Provision
for Loan
Losses 324 622
— —
Net
Interest
Income
after
Provision
for Loan
Losses 2,799 2,494
Total Non-
Interest
Income 942 686
Total Non-
Interest
Expenses 3,069 2,875
—– —–
Income
before
Tax
Provision
(Benefit) 672 305
Income Tax
Provision
(Benefit) 196 83
— —
Net Income
(Loss) $476 $222
Basic and
diluted
earnings
(loss)
per share
(1) 0.06 0.03

(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)
For the three months ended
9/30/2010 6/30/2010 3/31/2010
——— ——— ———
Performance Ratios:
Return on average assets
(1) 0.22% -0.03% 0.33%
Return on average equity
(1) 1.96% -0.25% 2.52%
Interest rate spread (2) 2.83% 2.74% 3.00%
Net interest margin (3) 2.93% 2.86% 3.15%
Noninterest expense to
average assets (1) 2.63% 3.15% 2.73%
Efficiency ratio (4) 74.05% 78.29% 74.13%
Average interest-earning
assets to
average interest-bearing
liabilities 106.78% 108.55% 109.56%
Average equity to average
assets 11.21% 12.19% 13.04%

Capital Ratios:
Tangible capital 9.31% 9.17% 11.30%
Core capital 9.31% 9.26% 11.30%
Total risk-based capital 16.47% 14.27% 17.61%

Asset Quality Ratios:
Nonperforming loans as a
percent
of total loans 6.11% 3.42% 3.44%
Allowance for loan losses
as a percent
of total loans 1.03% 0.78% 1.73%
Allowance for loan losses
as a percent
of nonperforming loans 16.86% 22.91% 50.11%
Net charge-offs to average
outstanding
loans during the period (1) 0.02% 0.04% 0.03%

(Unaudited) (Unaudited)
For the three months ended
12/31/2009 9/30/2009
———- ———
Performance Ratios:
Return on average assets
(1) 0.47% 0.22%
Return on average equity
(1) 3.44% 1.61%
Interest rate spread (2) 3.09% 3.11%
Net interest margin (3) 3.26% 3.30%
Noninterest expense to
average assets (1) 3.03% 2.86%
Efficiency ratio (4) 75.50% 75.62%
Average interest-earning
assets to
average interest-bearing
liabilities 110.17% 110.26%
Average equity to average
assets 13.68% 13.75%

Capital Ratios:
Tangible capital 12.43% 12.16%
Core capital 12.43% 12.16%
Total risk-based capital 18.10% 19.36%

Asset Quality Ratios:
Nonperforming loans as a
percent
of total loans 1.48% 1.45%
Allowance for loan losses
as a percent
of total loans 1.58% 1.47%
Allowance for loan losses
as a percent
of nonperforming loans 106.63% 101.22%
Net charge-offs to average
outstanding
loans during the period (1) 0.06% 1.22%

(1) Quarterly income and expense amounts used in ratio have been
annualized.
(2) Represents the difference between the weighted average yield
on average interest-earning assets and the weighted
average cost on average interest-bearing liabilities.
(3) Represents net interest income as a percent of average
interest-earning assets.
(4) Represents other expense divided by the sum of net interest
income and other income.
(5) The Bank closed on its purchase of three branches from
Integra Bank on June 4, 2010. As a result of that purchase
the Bank acquired loans with a fair value of $45.9 million. Under
ASC 805-20-30, the acquired loans are accounted or
at fair value, while there is a credit risk component to the fair
value measurement, there is no allowance for loan loss
included in this calculation.

Net interest income increased $279,000, or 9.0%, to $3.4 million for the quarter
ended September 30, 2010, as compared to $3.1 million for the prior year
quarter. The increase is the result of a an increase in total loans and a
decrease in the average interest rate paid on interest bearing liabilities from
1.99% to 1.50%, partially offset by an increase in total deposits and a decrease
in the average rate earned on interest earning assets from 5.10% to 4.34%.
Changes in interest rates are reflective of changes in overall market rates.
Increases in loans and deposits are primarily due to the acquisition of three
branches from Integra Bank on June 4, 2010.

Noninterest expense increased $376,000, or 13.1%, to $3.3 million for the
quarter ended September 30, 2010, from $2.9 million in the prior year quarter.
The increase is primarily the result of higher employee compensation expenses
and intangible asset amortization in the current year quarter, partially offset
by provision for loss on the sale of real estate owned in the prior year
quarter. The increases in employee compensation expenses and intangible asset
amortization are due to the aforementioned branch acquisition.

The provision for loan losses was $719,000 for the quarter ended September 30,
2010, compared to $622,000 for the same quarter in the prior year. On an ongoing
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,
and other relevant information, such as the size of the overall portfolio. Based
upon this evaluation, Management calculates the provision for loan loss in the
current period. The increase in the current year quarter is primarily
attributable to an increase in nonperforming loans. Nonperforming loans
increased from $10.6 million at June 30, 2010 to $18.7 million at September 30,
2010, compared to a decrease in nonperforming loans from $6.0 million at June
30, 2009 to $4.0 million at September 30, 2009.

Total assets were $499.1 million at September 30, 2010, compared to $492.1
million at June 30, 2010. The increase is primarily due to a $12.4 million
increase in cash, partially offset by a $4.1 million decrease in loans. The
increase in cash is a result of more loans being sold to Freddie Mac in the
current quarter. The decrease in loans is primarily the result of more loans
being sold to Freddie Mac in the current year. Total liabilities were $443.5
million at September 30, 2010, compared to $436.6 million at June 30, 2010. The
increase is a result of a $7.0 million increase in deposits. The increase in
deposits is attributable to increased advertising and promotional efforts in our
existing market area. Total stockholders’ equity was $55.7 million at September
30, 2010, compared to $55.5 million at June 30, 2010. The increase is primarily
the result of an increase of $244,000 in unrealized gains on available for sale
securities and net income of $271,000, partially offset by dividends paid of
$351,000.

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, changes in the quality or composition of the Company’s
loan or investment portfolios and the Company’s ability to successfully
integrate assets, liabilities, customers, systems and personnel of the three
branches of Integra Bank it acquired into its operations and the Company’s
ability to recognize revenue synergies and cost savings within expected time
frames. 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.