United Community Bancorp Reports Third Quarter Results

LAWRENCEBURG, Ind., May 8, 2014 /PRNewswire/ — United Community Bancorp (the
“Company”) (Nasdaq: UCBA), the parent company of United Community Bank (the
“Bank”), today reported net income of $583,000, or $0.12 per diluted share, for
the quarter ended March 31, 2014, compared to net income of $407,000, or $0.08
per diluted share, for the quarter ended March 31, 2013. Net income for the nine
months ended March 31, 2014 was $1.9 million, or $0.40 per diluted share,
compared to net income of $1.6 million, or $0.32 per diluted share, for the nine
months ended March 31, 2013.

United Community Bancorp

Summarized Statements of Income

(In thousands, except per share data)

For the nine months ended

3/31/2014 3/31/2013
——— ———

(Unaudited) (Unaudited)

Interest income $11,279 $12,175

Interest expense 2,008 2,639
—– —–

Net interest income 9,271 9,536

Provision for (recovery of) loan losses (292) 585
—- —

Net interest income after provision for 9,563 8,951
(recovery of) loan losses

Total other income 2,950 3,383

Total noninterest expense 9,948 10,214
—– ——

Income before income taxes 2,565 2,120

Income tax provision 638 523
— —

Net income $1,927 $1,597
====== ======

Basic and diluted earnings per share(1) $0.40 $0.32

Weighted average shares outstanding(1) 4,855,390 4,998,364

(1) Weighted average share and
related earnings per share
amounts for periods prior to
January 9, 2013 have been
restated retroactively to
reflect the previously
announced second step
conversion at a conversion rate
of 0.6573 to 1.

Summarized Consolidated Statements of Financial Condition
———————————————————

(Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)

(In thousands, as of) 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
——— ———- ——— ——— ———

ASSETS

Cash and Cash Equivalents $27,836 $21,553 $16,639 $16,787 $27,621

Investment Securities 210,181 204,677 208,828 202,547 204,783

Loans Receivable, net 246,162 247,165 247,202 254,578 258,454

Other Assets 41,636 38,817 38,782 38,719 35,109
—— —— —— —— ——

Total Assets $525,815 $512,212 $511,451 $512,631 $525,967

LIABILITIES

Municipal Deposits $107,127 $103,240 $101,994 $90,141 $103,483

Other Deposits 327,022 317,226 322,837 331,102 333,498

FHLB Advances 15,000 15,000 10,000 15,000 10,083

Other Liabilities 2,882 2,530 3,241 2,845 3,932
—– —– —– —– —–

Total Liabilities 452,031 437,996 438,072 439,088 450,996

Commitments and contingencies – – – – –

Total Stockholders’ Equity 73,784 74,216 73,379 73,543 74,971
—— —— —— —— ——

Total Liabilities & Stockholders’ Equity $525,815 $512,212 $511,451 $512,631 $525,967

Summarized Consolidated Statements of Income
——————————————–

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
——— ———- ——— ——— ———

(for the three months ended, in thousands, except per share data)

Interest Income $3,752 $3,768 $3,759 $3,712 $3,847

Interest Expense 622 638 748 712 747
— — — — —

Net Interest Income 3,130 3,130 3,011 3,000 3,100

Provision for (Recovery of) Loan Losses 75 75 (442) (651) 110
— — —- —- —

Net Interest Income after Provision

for (Recovery of) Loan Losses 3,055 3,055 3,453 3,651 2,990

Total Other Income 887 1,011 1,052 1,106 949

Total Noninterest Expense 3,206 3,294 3,448 3,381 3,427
—– —– —– —– —–

Income before Tax Provision 736 772 1,057 1,376 512

Income Tax Provision 153 190 295 406 105
— — — — —

Net Income $583 $582 $762 $970 $407

Basic and Diluted Earnings per Share (1) $0.12 $0.12 $0.16 $0.20 $0.08

Weighted Average Shares Outstanding (1):

Basic and Diluted 4,814,774 4,875,257 4,875,257 4,875,257 4,892,523

(1) Weighted average share and related earnings per share amounts for periods prior to January 9, 2013 have been restated retroactively to reflect the previously announced second step conversion at a conversion rate of 0.6573 to 1.

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

For the three months ended

3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
——— ———- ——— ——— ———

Performance Ratios:

Return on average assets (1) 0.45% 0.45% 0.59% 0.75% 0.31%

Return on average equity (1) 3.14% 3.14% 4.17% 5.19% 2.41%

Interest rate spread (2) 2.55% 2.58% 2.48% 2.43% 2.47%

Net interest margin (3) 2.60% 2.62% 2.53% 2.48% 2.53%

Noninterest expense to average assets (1) 2.46% 2.55% 2.68% 2.60% 2.61%

Efficiency ratio (4) 79.81% 79.55% 84.86% 82.34% 84.64%

Average interest-earning assets to

average interest-bearing liabilities 108.45% 108.81% 108.65% 109.29% 109.16%

Average equity to average assets 14.25% 14.36% 14.23% 14.37% 12.83%

Bank Capital Ratios:

Tangible capital 12.00% 12.30% 12.18% 12.07% 11.56%

Core capital 12.00% 12.30% 12.18% 12.07% 11.56%

Total risk-based capital 26.85% 27.33% 26.95% 26.72% 26.17%

Asset Quality Ratios:

Nonperforming loans as a percent

of total loans 4.95% 3.48% 3.74% 4.87% 5.39%

Nonperforming assets as a percent

of total assets 2.48% 1.88% 1.98% 2.60% 2.79%

Allowance for loan losses as a percent

of total loans 2.17% 2.12% 2.15% 2.09% 2.18%

Allowance for loan losses as a percent

of nonperforming loans 43.92% 60.90% 57.57% 42.83% 40.35%

Net charge-offs (recoveries) to average

outstanding loans during the period (1) (0.04)% 0.30% (0.76)% (0.56)% 0.13%

(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 noninterest expense divided by the sum of net interest income and total other income.

For the three months ended March 31, 2014:

Net income increased $176,000 to $583,000 for the quarter ended March 31, 2014,
compared to net income of $407,000 for the quarter ended March 31, 2013.

Net interest income remained flat at $3.1 million for the quarter ended March
31, 2014 compared to the same period in the prior year. A decrease of $95,000 in
interest income was offset by a decrease of $125,000 in interest expense. The
decrease in interest income was the result of a $14.8 million decrease in the
average balance of loans and a decrease in the average rate earned on loans from
4.75% for the quarter ended March 31, 2013 to 4.59% for the quarter ended March
31, 2014, partially offset by a $15.4 million increase in the average balance of
investments and an increase in the average rate earned on investments from 1.49%
for the quarter ended March 31, 2013 to 1.73% for the quarter ended March 31,
2014. The decrease in interest expense was primarily the result of a decrease in
the average interest rate paid on deposits from 0.64% for the quarter ended
March 31, 2013 to 0.52% for the quarter ended March 31, 2014. Changes in
interest rates are reflective of decreases in overall market rates.

The provision for loan losses was $75,000 for the quarter ended March 31, 2014,
compared to $110,000 for the same quarter in the prior year. The decrease in the
provision for loan losses is reflective of continued improvement in our asset
quality. Asset quality continues to improve primarily due to the Bank’s
continuing efforts to resolve asset quality issues. Nonperforming assets as a
percentage of total assets decreased from 2.79% at March 31, 2013 to 2.48% at
March 31, 2014.

Other income decreased $62,000, or 6.5%, to $887,000 for the quarter ended March
31, 2014 compared to $949,000 for the prior year quarter. The decrease is
primarily due to a $290,000 decrease in gain on sale of investments and a
$121,000 decrease in gain on sale of loans, partially offset by a $114,000
increase in other income. The decrease in gain on sale of investments is due to
the sale of mortgage-backed securities and other available for sale securities
in the quarter ended March 31, 2013 with no such sales in the current year
quarter. The decrease in gain on sale of loans is the result of a decrease in
refinancing activity during the quarter ended March 31, 2014 as compared to the
prior year quarter primarily due to the Bank’s decision to hold fifteen year
fixed-rate loans in its loan portfolio during the current year period. The
increase in other income is primarily due to an increase in the value of
mortgage servicing rights during the quarter ended March 31, 2014. The increase
in income from mortgage servicing rights is primarily due to the year over year
decrease in the prepayment of mortgages.

Noninterest expense decreased $221,000 to $3.2 million for the quarter ended
March 31, 2014 compared to $3.4 million for the prior year quarter. Decreases
included $84,000 in data processing expense and $60,000 in compensation and
employee benefits. The decreases in data processing expense and compensation and
employee benefits were primarily due to additional expenses in the prior year
related to a data processing conversion that was completed in February 2013.

For the nine months ended March 31, 2014:

Net income increased $330,000 to $1.9 million for the nine months ended March
31, 2014, compared to net income of $1.6 million for the nine months ended March
31, 2013.

Net interest income decreased $265,000, or 2.8%, to $9.3 million for the nine
months ended March 31, 2014 as compared to $9.5 million for the nine months
ended March 31, 2013. A decrease of $896,000 in interest income was partially
offset by a $631,000 decrease in interest expense. The decrease in interest
income was the result of a $21.0 million decrease in the average balance of
loans, a decrease in the average rate earned on loans from 4.89% for the nine
months ended March 31, 2013 to 4.78% for the nine months ended March 31, 2014,
and a decrease in the average rate earned on investments from 1.74% for the nine
months ended March 31, 2013 to 1.51% for the nine months ended March 31, 2014,
partially offset by a $33.6 million increase in the average balance of
investments. The decrease in interest expense was primarily the result of a
decrease in the average interest rate paid on deposits from 0.77% for the nine
months ended March 31, 2013 to 0.58% for the nine months ended March 31, 2014.
Changes in interest rates are reflective of decreases in overall market rates.

The recovery of loan losses was $292,000 for the nine months ended March 31,
2014, compared to a provision for loan losses of $585,000 for the same period in
the prior year. The decrease in the provision for loan losses was primarily due
to a $379,000 recovery of a commercial loan and a $124,000 recovery from two
one- to four-family loans during the nine months ended March 31, 2014. The
decrease in the provision for loan losses is also reflective of continued
improvement in our asset quality. Nonperforming assets as a percentage of total
assets decreased from 2.79% at March 31, 2013 to 2.48% at March 31, 2014.

Other income decreased $433,000, or 12.8%, to $3.0 million for the nine months
ended March 31, 2014 compared to $3.4 million for the prior year period. The
decrease is primarily due to a $553,000 decrease in gain on sale of investments
and a $527,000 decrease in gain on sale of loans, partially offset by a $276,000
increase in other income and a $136,000 increase in gain on sale of fixed
assets. The decrease in gain on sale of investments is due to the sale of
mortgage-backed securities and other available for sale securities in the nine
months ended March 31, 2013 with no such sales in the current year period. The
decrease in gain on sale of loans is the result of a higher level of refinancing
activity during the nine months ended March 31, 2013 as compared to the current
year period due to higher loan rates in the current year period and due to the
Bank’s decision to hold fifteen year fixed-rate loans in its loan portfolio
during the current year period. The increase in gain on sale of fixed assets was
the result of the sale of our Osgood branch facility during the nine months
ended March 31, 2014. The increase in other income is primarily due to an
increase in the value of mortgage servicing rights during the nine months ended
March 31, 2014. The increase in income from mortgage servicing rights is
primarily due to the decrease during the nine month period in the prepayment of
mortgages as compared to the prepayment of mortgages during the prior nine month
period.

Noninterest expense decreased $266,000 to $9.9 million for the nine months ended
March 31, 2014 compared to $10.2 million for the prior year period. Decreases of
$134,000 in premises and occupancy expense, $119,000 in deposit insurance
premium and $104,000 in provision for loss on real estate owned were partially
offset by increases of $113,000 in professional fees and $108,000 in other
operating expenses. The decrease in premises and occupancy expense was primarily
the result of non-recurring expenses for data processing upgrades in the prior
year period. The decrease in provision for loss on real estate owned is due to
write-downs on two commercial OREO properties in the prior year period with no
such write-downs during the nine months ended March 31, 2014. The increase in
professional fees is primarily the result of acquiring outside resources for
internal audit and planning in the current year. The increase in other operating
expenses is primarily the result of a short-term loan-related promotion during
the current year period.

Total assets were $525.8 million at March 31, 2014, compared to $512.6 million
at June 30, 2013. An $11.0 million increase in cash and cash equivalents and a
$7.6 million increase in investment securities were partially offset by an $8.4
million decrease in loans. The increase in cash and cash equivalents and
investment securities was the result of the payoff of loans with a portion of
the proceeds being redeployed into purchases of mortgage-backed securities and
available for sale securities. The decrease in loans was primarily the result of
net payoffs totaling $5.8 million in one- to four-family real estate loans and
$2.3 million in commercial real estate loans during the nine months ended March
31, 2014.

Total liabilities were $452.0 million at March 31, 2014, compared to $439.1
million at June 30, 2013. The increase in liabilities was the result of a $12.9
million increase in deposits. The increase in deposits is primarily due to an
increase in municipal deposits resulting from normal fluctuations in municipal
deposits.

Total stockholders’ equity was $73.8 million at March 31, 2014, compared to
$73.5 million at June 30, 2013. Net income of $1.9 million for the nine months
ended March 31, 2014 and amortization of ESOP shares totaling $308,000 for the
same period were offset by stock repurchases totaling $1.2 million and dividends
paid of $812,000. At March 31, 2014, the Bank was considered “well-capitalized”
under applicable regulatory requirements.

United Community Bancorp is the parent company of United Community Bank,
headquartered in Lawrenceburg, Indiana. The Bank currently operates eight
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 for
the year ended June 30, 2013 filed with the SEC on September 27, 2013 which is
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.

SOURCE United Community Bancorp

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