United Community Bancorp Reports First Quarter Results

October 30, 2009 3:00 PM EDT

LAWRENCEBURG, Ind.--(BUSINESS WIRE)-- United Community Bancorp (the "Company") (Nasdaq: UCBA), the holding company for United Community Bank (the "Bank"), today reported earnings of $222,000, or $0.03 per diluted share, for the quarter ended September 30, 2009, compared to net income of $387,000, or $0.05 per diluted share, for the quarter ended September 30, 2008.

United Community Bancorp

Statements of Income

(Unaudited, in thousands, except per share data)

                                       For the three months ended

                                       9/30/2009  9/30/2008

Net income                             $222       $387

Basic earnings per share               0.03       0.05

Diluted earnings per share             0.03       0.05

Weighted average shares outstanding

Basic                                  7,612,070  7,597,109

Diluted                                7,612,070  7,597,109

United Community Bancorp

Summarized Statements of Financial Condition

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

(In thousands,    9/30/2009    6/30/2009    3/31/2009    12/31/2008   9/30/2008
as of)

ASSETS

Cash and cash     $24,341      $27,004      $42,029      $19,824      $27,808
equivalents

Investment        82,439       76,657       58,325       41,614       36,948
securities

Loans             272,652      272,270      278,184      288,349      287,486
receivable, net

Other Assets      23,710       25,648       23,076       23,389       23,904

Total Assets      $403,142     $401,579     $401,614     $373,176     $376,146

LIABILITIES

Municipal         $114,954     $124,282     $134,126     $116,343     $120,420
Deposits

Other Deposits    225,912      215,334      204,959      194,372      193,879

FHLB Advances     3,583        3,833        4,083        4,333        4,583

Other             3,100        3,051        2,844        2,662        2,665
Liabilities

Total             347,549      346,500      346,012      317,710      321,547
Liabilities

Total
Stockholders'     55,593       55,079       55,602       55,466       54,599
Equity

Total
Liabilities &     $403,142     $401,579     $401,614     $373,176     $376,146
Stockholders'
Equity

Summarized Statements of Operations

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

                  9/30/2009    6/30/2009    3/31/2009    12/31/2008   9/30/2008

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

Interest Income   $4,821       $4,689       $5,049       $5,030       $5,144

Interest Expense  1,705        1,733        1,774        2,091        2,308

Net Interest      3,116        2,956        3,275        2,939        2,836
Income

Provision for     622          1,052        664          396          335
Loan Losses

Net Interest
Income after      2,494        1,904        2,611        2,543        2,501
Provision for
Loan Losses

Total
Non-Interest      686          854          735          502          696
Income

Total
Non-Interest      2,875        3,480        2,738        2,639        2,593
Expenses

Income before
Tax Provision     305          (722     )   608          406          604
(Benefit)

Income Tax
Provision         83           (443     )   259          144          217
(Benefit)

Net Income        $222         $(279    )   $349         $262         $387
(Loss)

Basic earnings
(loss) per share  0.03         (0.04    )   0.05         0.03         0.05
(1)

Diluted earnings
(loss) per share  0.03         (0.04    )   0.05         0.03         0.05
(2)

(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.

(2) - Due to the net loss for the three month period ended June 30, 2009, no
adjustments were made for outstanding stock options and unearned restricted
shares, as such effect would be anti-dilutive.

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

                  For the three months ended

                  9/30/2009    6/30/2009    3/31/2009    12/31/2008   9/30/2008

Performance
Ratios:

Return on
average assets    0.22     %   (0.28    %)  0.35     %   0.27     %   0.41     %
(1)

Return on
average equity    1.61     %   (2.02    %)  2.51     %   1.91     %   2.84     %
(1)

Interest rate     3.11     %   2.93     %   3.30     %   3.03     %   2.91     %
spread (2)

Net interest      3.30     %   3.12     %   3.50     %   3.28     %   3.18     %
margin (3)

Noninterest
expense to        2.86     %   3.46     %   2.76     %   2.76     %   2.72     %
average assets
(1)

Efficiency ratio  75.62    %   91.34    %   68.28    %   76.69    %   73.41    %
(4)

Average
interest-earning
assets to         110.26   %   110.28   %   110.51   %   110.47   %   110.30   %
average
interest-bearing
liabilities

Average equity
to average        13.75    %   13.75    %   14.00    %   14.33    %   14.30    %
assets

Capital Ratios:

Tangible capital  12.16    %   12.08    %   12.69    %   13.58    %   13.34    %

Core capital      12.16    %   12.08    %   12.69    %   13.58    %   13.34    %

Total risk-based  19.36    %   18.40    %   20.07    %   20.02    %   20.64    %
capital

Asset Quality
Ratios:

Nonperforming
loans as a        1.45     %   2.19     %   2.56     %   1.96     %   2.17     %
percent of total
loans

Allowance for
loan losses as a  1.47     %   1.55     %   1.53     %   1.26     %   1.36     %
percent of total
loans

Allowance for
loan losses as a
percent of        101.22   %   70.51    %   59.65    %   64.53    %   62.65    %
nonperforming
loans

Net charge-offs
to average
outstanding       1.22     %   1.59     %   0.07     %   0.85     %   1.47     %
loans during the
period (1)

(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.

Net interest income increased $280,000, or 9.9%, to $3.1 million in the quarter ended September 30, 2009, as compared to $2.8 million for the prior year quarter. The increase is the result of a decrease in the average interest rate paid on interest bearing liabilities from 2.85% to 1.99%, partially offset by a decrease in the average rate earned on interest earning assets from 5.76% to 5.10%. Changes in interest rates are reflective of changes in overall market rates during that same period.

Noninterest expense increased $282,000, or 10.9 %, to $2.9 million for the quarter ended September 30, 2009, from $2.6 million in the prior year quarter. The increase is primarily a result of a $100,000 provision for loss on the sale of other real estate owned ("REO") by the Bank for the quarter ended September 30, 2009 compared to no such provision in the prior year quarter, and an increase of $157,000 in the Bank's FDIC insurance premium in the current period. The increase in FDIC insurance premium is a result of rate increases.

The provision for loan losses was $622,000 for the quarter ended September 30, 2009 compared to $335,000 for the same quarter in the prior year. The increase is attributable to troubled debt restructurings increasing from $4.5 million at June 30, 2009 to $7.1 million at September 30, 2009. These increases are primarily the result of the economic conditions in our market area. At September 30, 2009, troubled debt restructurings included ten commercial real estate loans representing eight commercial lending relationships. These loans have been restructured with lower-than-market interest rates of 0% to 3%, for fixed terms that will end between 2010 and 2012.

Other nonperforming assets (comprised of nonperforming loans and REO) decreased to $6.6 million at September 30, 2009 from a balance of $7.9 million at June 30, 2009. Included in REO at September 30, 2009 are six separate properties totaling $2.7 million, at June 30, 2009 there were four separate properties totaling $1.9 million. The Bank is actively working to sell all of the assets in REO. Where necessary, management has reserved for losses on the sale of certain properties (these reserves are included in the REO balance at September 30, 2009 and June 30, 2009), and continues to maintain the properties and monitor their values based upon current market conditions. For the quarter ended September 30, 2009, the Bank has recorded $100,000 in provision for loss on the sale of REO, compared to $0 in the prior year quarter. Nonperforming loans decreased to $3.9 million at September 30, 2009 from $6.0 million at June 30, 2009. A $1.1 million commercial real estate loan was included in both troubled debt restructuring and nonperforming loans at September 30, 2009 and June 30, 2009. The decrease in nonperforming loans is attributable to $1.6 million in the previously mentioned, newly classified troubled debt restructurings, $1.7 million in loans being charged off, and $643,000 in loans coming current, partially offset by $1.8 million in new nonperforming loans being added.

Total assets were $403.1 million at September 30, 2009, compared to $401.6 million at June 30, 2009. The increase is primarily due to a $5.8 million increase in investments, partially offset by a $2.7 million decrease in cash, and a $2.1 million decrease in loans available for sale (included in other assets). The increase in investments is the result of the purchase of $8.1 million in investment securities during the quarter, partially offset by payments, sales and maturities on investments. The purchase of securities was funded by cash on hand and cash obtained through the sale of loans held for sale. Total liabilities were $347.5 million at September 30, 2009, compared to $346.5 million at June 30, 2009. The increase is a result of a $10.6 million increase in other deposits, partially offset by a $9.3 million decrease in municipal deposits. The increase in other deposits is attributable to increased advertising and promotional efforts in our existing market area. The decrease in municipal deposits is the result of the cyclical nature of these accounts, which is affected by the timing of the receipt of tax revenues and spending for ongoing civic projects. Total stockholders' equity was $55.6 million at September 30, 2009, compared to $55.1 million at June 30, 2009. The increase is primarily the result of an increase of $475,000 in unrealized gains on available for sale securities and net income of $222,000, partially offset by dividends paid of $321,000.

United Community Bancorp is the holding company of United Community Bank, headquartered in Lawrenceburg, Indiana. The Bank currently operates six offices in Dearborn County, 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.

    Source: United Community Bancorp

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