United Community Bancorp Reports Fourth Quarter and Year End Results

LAWRENCEBURG, Ind., Aug. 23, 2011 /PRNewswire/ — United Community Bancorp (the
“Company”) (Nasdaq: UCBA), the holding company for United Community Bank (the
“Bank”), today reported net income of $796,000, or $0.10 per diluted share, for
the quarter ended June 30, 2011, compared to a net loss of $34,000 for the
quarter ended June 30, 2010. Earnings per diluted share for the quarter ended
June 30, 2010 were negligible. The net loss for the fiscal year ended June 30,
2011 was $75,000, or ($0.01) per diluted share, compared to net income of $1.0
million, or $0.13 per diluted share, for the fiscal year ended June 30, 2010.

Statement of Operations
(In thousands, except per share data)

For the year ended

6/30/2011 6/30/2010
——— ———
Interest income $19,846 $18,936
Interest expense 5,587 6,429
—– —–
Net interest income 14,259 12,507
Provision for loan losses 6,182 2,509
—– —–
Net interest income after provision
for loan losses 8,077 9,998
Total non-interest income 4,038 3,557
Total non-interest expense 12,486 12,198
—— ——
Income (loss) before tax provision (371) 1,357
Income tax provision (benefit) (296) 343
—- —
Net income (loss) $( 75) $1,014
======= ======
Basic earnings (loss) per share $(0.01) $0.13
Diluted earnings (loss) per share
(1) $(0.01) $0.13

(1) – Due to the net loss for the year ended June 30, 2011, no
adjustments were made for outstanding stock options and unearned
restricted shares as such effect would be anti-dilutive.

United Community Bancorp

Summarized Statements of Financial Condition

(Unaudited) (Unaudited) (Unaudited)
(In thousands, as of) 6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010
——— ——— ———- ——— ———

ASSETS
Cash and cash
equivalents $31,159 $28,182 $19,343 $44,446 $32,023
Investment securities 123,913 127,602 141,305 119,417 119,958
Loans receivable, net 286,173 289,644 298,240 304,923 309,575
Other assets 31,331 30,540 31,885 30,347 30,548
—— —— —— —— ——
Total assets $472,576 $475,968 $490,773 $499,133 $492,104
======== ======== ======== ======== ========

LIABILITIES
Municipal deposits $111,251 $106,785 $138,639 $147,010 $121,607
Other deposits 301,840 310,124 291,169 290,169 308,573
FHLB advances 1,833 2,083 2,333 2,583 2,833
Other liabilities 3,616 3,580 3,412 3,694 3,611
—– —– —– —– —–
Total liabilities 418,540 422,572 435,553 443,456 436,624
Total stockholders’
equity 54,036 53,396 55,220 55,677 55,480
—— —— —— —— ——
Total liabilities &
stockholders’ equity $472,576 $475,968 $490,773 $499,133 $492,104
======== ======== ======== ======== ========

Summarized Statements of Operations

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

Interest
income $4,907 $4,876 $5,033 $5,030 $4,688
Interest
expense 1,233 1,286 1,433 1,635 1,594
—– —– —– —– —–
Net
interest
income 3,674 3,590 3,600 3,395 3,094
Provision
for loan
losses 755 3,971 737 719 1,112
— —– — — —–
Net
interest
income
(loss)
after
provision
for loan
losses 2,919 (381) 2,863 2,676 1,982
Total
non-
interest
income 1,275 795 973 995 1,180
Total
non-
interest
expenses 3,082 2,949 3,204 3,251 3,346
—– —– —– —– —–
Income
(loss)
before
income
tax
provision
(benefit) 1,112 (2,535) 632 420 (184)
Income
tax
provision
(benefit) 316 (814) 53 149 (150)
— —- — — —-
Net
income
(loss) $796 ($1,721) $579 $271 ($34)
==== ======= ==== ==== ====
Basic and
diluted
earnings
(loss)
per
share
(1) $0.10 ($0.23) $0.08 $0.04 $0.00

(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 all quarterly dividends on common stock.

(Unaudited) (Unaudited)
For the three months ended
6/30/2011 3/31/2011
——— ———
Performance Ratios:
Return on average assets (1) 0.67% -1.43%
Return on average equity (1) 5.92% -12.61%
Interest rate spread (2) 3.21% 3.05%
Net interest margin (3) 3.28% 3.17%
Non-interest expense to
average assets (1) 2.58% 2.44%
Efficiency ratio (4) 140.51% 67.25%
Average interest-earning
assets to
average interest-bearing
liabilities 106.39% 106.69%
Average equity to average
assets 11.25% 11.31%

Capital Ratios:
Tangible capital 9.83% 9.58%
Core capital 9.83% 9.58%
Total risk-based capital 17.84% 17.26%

Asset Quality Ratios:
Nonperforming loans as a
percent
of total loans 6.15% 7.01%
Allowance for loan losses as
a percent
of total loans (5) 1.72% 1.65%
Allowance for loan losses as
a percent
of nonperforming loans (5) 28.03% 23.53%
Net charge-offs to average
outstanding
loans during the period (1) 0.13% 8.61%

(Unaudited) (Unaudited) (Unaudited)
For the three months ended
12/31/2010 9/30/2010 6/30/2010
———- ——— ———
Performance Ratios:
Return on average assets (1) 0.46% 0.22% -0.03%
Return on average equity (1) 4.15% 1.96% -0.25%
Interest rate spread (2) 2.78% 2.83% 2.74%
Net interest margin (3) 3.04% 2.93% 2.86%
Non-interest expense to
average assets (1) 2.55% 2.63% 3.15%
Efficiency ratio (4) 70.06% 74.05% 78.29%
Average interest-earning
assets to
average interest-bearing
liabilities 106.83% 106.78% 108.55%
Average equity to average
assets 11.10% 11.21% 12.19%

Capital Ratios:
Tangible capital 9.61% 9.31% 9.17%
Core capital 9.61% 9.31% 9.26%
Total risk-based capital 16.80% 16.47% 14.27%

Asset Quality Ratios:
Nonperforming loans as a
percent
of total loans 7.70% 5.99% 3.35%
Allowance for loan losses as
a percent
of total loans (5) 2.19% 1.99% 1.80%
Allowance for loan losses as
a percent
of nonperforming loans (5) 28.50% 33.13% 53.73%
Net charge-offs to average
outstanding
loans during the period (1) 0.30% 0.29% 0.14%

(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 of
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 $43.9 million. Under ASC
805-20-30-1, the acquired loans are accounted for at fair value.
Consequently, there is no allowance for loan loss related to the
acquired loans to be included in this calculation.

For the three months ended June 30, 2011:

Net interest income increased $580,000 or 18.7% in the current year quarter,
when compared to the prior year quarter. The increase was primarily attributable
to a decrease in the cost of interest-bearing liabilities from 1.60% to 1.17%
and an increase in average balances in interest-earning assets from $431.6
million to $447.4 million, partially offset by an increase in average balances
in interest-bearing liabilities from $397.6 million to $420.6 million. The
decrease in the cost of interest-bearing liabilities was the result of the
continued low interest rate environment. The increase in average balances is the
result of the purchase of three branches from Integra Bank, National Association
that occurred on June 4, 2010 which resulted in the assumption of $53.0 million
in deposits.

Noninterest income increased $95,000 or 8.1%, in the current year quarter, when
compared to the prior year quarter. The increase was attributable to an increase
of $294,000 in gain on sale of investments and an increase of $81,000 in service
charges, partially offset by a decrease of $307,000 in other income. The
increase in gain on sale of investments was the result of the increased profit
from the sale of certain investments that were in an unrealized gain position at
the time of the sale. The securities were sold in an effort to better diversify
the Bank’s investment portfolio in both types and durations of investments. The
increase in service charges was attributable to an increase in the Bank’s
customer base with the closing on the previously mentioned branch acquisition.
Since this transaction occurred during the third month of the quarter ended June
30, 2010, its impact on net interest income, other income, and other expenses
was minimal. Other income was higher in the 2010 quarter due to the settlement
of a state tax refund.

Noninterest expense decreased $264,000 or 7.9% in the current year quarter
compared to the prior year quarter. The decrease in the current year quarter was
attributable to branch acquisition related expenses of $213,000 incurred in the
prior year quarter and a $113,000 provision for loss on the sale of other real
estate owned (“REO”) in the prior year quarter with no such provision in the
current year quarter, partially offset by an increase of $89,000 in data
processing expense. The acquisition related expenses in the prior year quarter
and the subsequent increase in data processing expenses in the current year
quarter were attributable to the previously mentioned branch acquisition.

For the year ended June 30, 2011:

Net income decreased from $1.0 million in the year ended June 30, 2010 to a net
loss of $75,000 in the year ended June 30, 2011. The decrease was primarily the
result of an increase in the provision for loan losses of $3.7 million,
partially offset by an increase in net interest income of $1.8 million and a
decrease in the provision for income taxes of $639,000.

The increase in the provision for loan losses was primarily the result of the
charge-off of $6.8 million in loans, of which $4.4 million related to the
restructuring of 13 loans having an aggregate outstanding principal balance
prior to their restructurings of $18.0 million.

The increase in net interest income was the result of an increase in the average
balances in interest-earning assets from $400.9 million in the prior year to
$459.5 million in the current year combined with a decrease in the average
interest rate paid on interest-bearing liabilities from 1.76% for the prior year
to 1.30% for the current year, partially offset by a decrease in the average
rate earned on interest-earning assets from 4.72% for the prior year to 4.32%
for the current year and an increase in the average balance of interest-bearing
liabilities from $366.1 million in the prior year to $430.7 million in the
current year. The decrease in rates and yields was driven by continued low
market interest rates in the current year. The increase in average balances was
due to the aforementioned branch acquisition.

The decrease in provision for income taxes is the result of the decrease in
pre-tax income attributable to the factors described above and to the receipt of
a prior period state tax refund received during the current year.

Total assets were $472.6 million at June 30, 2011, compared to $492.1 million at
June 30, 2010. Total liabilities were $418.5 million at June 30, 2011, compared
to $436.6 million at June 30, 2010. Total stockholders’ equity was $54.0 million
at June 30, 2011, compared to $55.5 million at June 30, 2010. The decrease in
assets was primarily due to a $23.4 million decrease in loans, reflecting the
combined effect of the refinancing of $20.1 million of residential mortgage
loans into lower fixed-rate loans which were sold to Freddie Mac, and the
prepayment of several large commercial loans aggregating $7.7 million in the
current fiscal year. The decrease in liabilities was primarily due to a $10.4
million decrease in municipal deposits and a $6.7 million decrease in other
deposits resulting from the Bank’s decision to reduce its reliance on municipal
deposits and other higher cost deposits. At June 30, 2011, the Bank’s regulatory
capital exceeded the levels required to be categorized as “well capitalized”
under applicable regulatory capital guidelines.

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.