United Community Bancorp Reports Second Quarter Results

LAWRENCEBURG, Ind., Feb. 10, 2012 /PRNewswire/ -- United Community Bancorp (the "Company") (Nasdaq: UCBA), the holding company for United Community Bank (the "Bank"), today reported net income of $531,000, or $0.07 per diluted share, for the quarter ended December 31, 2011, compared to net income of $579,000, or $0.08 per diluted share, for the quarter ended December 31, 2010.  Net income for the six months ended December 31, 2011 was $1.0 million, or $0.13 per diluted share, compared to $850,000, or $0.11 per diluted share, for the six months ended December 31, 2010.    


United Community Bancorp

Summarized Statements of Income

(Unaudited, in thousands, except per share data)



For the six months ended



12/31/2011


12/31/2010

Interest income


$9,387


$10,063

Interest expense


2,209


3,068

 Net interest income


7,178


6,995






Provision for loan losses


1,875


1,456

 Net interest income after provision for loan losses


5,303


5,539






Total other income


2,331


1,968

Total other expense


6,290


6,455

 Income before income taxes


1,344


1,052






Income tax provision


337


202

 Net income


$  1,007


$    850






Basic and diluted earnings per share


$0.13


$0.11

Weighted average shares outstanding


7,638,321


7,631,858





Summarized Consolidated Statements of Financial Condition


(Unaudited)

(Unaudited)


(Unaudited)

(Unaudited)

(In thousands, as of)

12/31/2011

9/30/2011

6/30/2011

3/31/2011

12/31/2010







ASSETS






Cash and Cash Equivalents

$      16,644

$      23,878

$      31,159

$      28,182

$      19,343

Investment Securities

126,369

131,031

123,913

127,602

141,305

Loans Receivable, net

285,709

283,577

286,173

289,644

298,240

Other Assets

38,095

37,212

31,467

30,540

31,885

Total Assets

$    466,817

$    475,698

$    472,712

$    475,968

$    490,773







LIABILITIES






Municipal Deposits

$    101,832

$    108,504

$    111,251

$    106,785

$    138,639

Other Deposits

305,611

306,840

301,840

310,124

291,169

FHLB Advances

1,333

1,583

1,833

2,083

2,333

Other Liabilities

3,265

3,563

3,461

3,580

3,412

Total Liabilities

412,041

420,490

418,385

422,572

435,553

Total Stockholders' Equity

54,776

55,208

54,327

53,396

55,220

Total Liabilities & Stockholders' Equity

$    466,817

$    475,698

$    472,712

$    475,968

$    490,773













Summarized Consolidated Statements of Operations


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)


12/31/2011

9/30/2011

6/30/2011

3/31/2011

12/31/2010


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







Interest Income

$        4,700

$        4,687

$        4,907

$        4,876

$        5,033

Interest Expense

1,057

1,152

1,233

1,286

1,433

Net Interest Income

3,643

3,535

3,674

3,590

3,600

Provision for Loan Losses

977

898

755

3,971

737

Net Interest Income (Loss) after Provision






   for Loan Losses

2,666

2,637

2,919

(381)

2,863

Total Other Income

1,205

1,126

1,275

795

973

Total Other Expense

3,141

3,149

3,082

2,949

3,204

Income before Tax Provision (Benefit)

730

614

1,112

(2,535)

632

Income Tax Provision (Benefit)

199

138

316

(814)

53

Net Income (Loss)

$           531

$           476

$           796

$     (1,721)

$           579

Basic and Diluted Earnings (Loss) per Share (1)

$          0.07

$          0.06

$          0.10

$       (0.23)

$          0.08

Weighted Average Shares Outstanding






Basic and Diluted

7,638,321

7,638,321

7,640,321

7,612,759

7,631,858



















(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


12/31/2011

9/30/2011

6/30/2011

3/31/2011

12/31/2010

Performance Ratios:






Return on average assets (1)

0.45%

0.40%

0.67%

-1.43%

0.46%

Return on average equity (1)

3.88%

3.48%

5.92%

-12.61%

4.15%

Interest rate spread  (2)

3.29%

3.17%

3.21%

3.05%

2.78%

Net interest margin  (3)

3.34%

3.22%

3.28%

3.17%

3.04%

Other expense to average assets (1)

2.66%

2.66%

2.58%

2.44%

2.55%

Efficiency ratio  (4)

64.79%

67.56%

62.28%

67.25%

70.06%

Average interest-earning assets to






    average interest-bearing liabilities

105.08%

105.83%

106.39%

106.69%

106.83%

Average equity to average assets

11.57%

11.55%

11.25%

11.31%

11.10%







Bank Capital Ratios:






Tangible capital

10.12%

9.86%

9.83%

9.58%

9.61%

Core capital

10.12%

9.86%

9.83%

9.58%

9.61%

Total risk-based capital

18.20%

17.97%

17.84%

17.26%

16.80%







Asset Quality Ratios:






Nonperforming loans as a percent






  of total loans

5.33%

5.25%

6.15%

7.01%

7.70%

Allowance for loan losses as a percent






  of total loans (5)

1.83%

1.96%

1.72%

1.65%

2.19%

Allowance for loan losses as a percent






  of nonperforming loans (5)

34.22%

37.25%

28.03%

23.53%

28.50%

Net charge-offs to average outstanding






  loans during the period (1)

2.25%

0.40%

0.13%

8.61%

0.30%







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




For the three months ended December 31, 2011:

Net interest income remained flat at $3.6 million for the quarter ended December 31, 2011 as compared to the quarter ended December 31, 2010.   A decrease of $333,000 in interest income was offset by a $376,000 decrease in interest expense.  The decrease in interest income was primarily the result of a $17.6 million decrease in average outstanding loans combined with a decrease in the average rate earned on loans from 5.74% to 5.60%.  The decrease in interest expense was primarily the result of a $27.2 million decrease in average deposits combined with a decrease in the average interest rate paid on deposits from 1.28% to 1.01%.  Changes in interest rates are reflective of decreases in overall market rates.  

The provision for loan losses was $977,000 for the quarter ended December 31, 2011, compared to $737,000 for the same quarter in the prior year. Management evaluates the Bank's allowance for loan loss for adequacy on at least a quarterly basis.  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.  Nonperforming loans increased $0.3 million, from $15.2 million at September 30, 2011 to $15.5 million at December 31, 2011, compared to an increase in nonperforming loans from $18.7 million at September 30, 2010 to $23.5 million at December 31, 2010.  

Other income increased $232,000, or 23.8%, from $973,000 in the prior year quarter to $1.2 million in the current year quarter.  The increase was primarily due to a $327,000 increase in gain on sale of investments offset by a $85,000 decrease in gain on the sale of loans. The increase in gain on sale of investments was the result of the sale of 19 securities totaling $26.0 million in the current year quarter, with no sales 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 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.

Other expense decreased $63,000, or 2.0%, to $3.1 million for the quarter ended December 31, 2011, from $3.2 million in the prior year quarter.  The decrease was primarily the result of a $103,000 decrease in deposit insurance premiums as a result of the aforementioned decrease in average deposits in the current year quarter from the prior year quarter.  

For the six months ended December 31, 2011:

Net interest income increased $183,000, or 2.62%, to $7.2 million for the six months ended December 31, 2011 as compared to $7.0 million for the six months ended December 31, 2010.  A decrease of $859,000 in interest expense was partially offset by a $676,000 decrease in interest income.  The decrease in interest expense was primarily the result of a $23.0 million decrease in average deposits combined with a decrease in the average interest rate paid on deposits from 1.39% to 1.06%.  The decrease in interest income was primarily the result of a $20.0 million decrease in average outstanding loans combined with a decrease in the average rate earned on loans from 5.69% to 5.53%.  Changes in interest rates are reflective of decreases in overall market rates.  

The provision for loan losses was $1.9 million for the six months ended December 31, 2011, compared to $1.5 million for the same period in the prior year. Nonperforming loans decreased $5.1 million, from $20.6 million at June 30, 2011 to $15.5 million at December 31, 2011, compared to an increase in nonperforming loans from $10.6 million at June 30, 2010 to $23.5 million at December 31, 2010.  The decrease in nonperforming loans in the current year period was primarily the result of troubled debt restructurings that were placed on accrual (performing) status after performing in accordance with their restructured terms for at least six consecutive months, partially offset by additional nonperforming loans in the current year period.

Other income increased $363,000, or 18.4%, from $2.0 million in the prior year period to $2.3 million in the current year period.  The increase was primarily due to a $519,000 increase in gain on sale of investments offset by a $229,000 decrease in gain on the sale of loans. The increase in gain on sale of investments was the result of the sale of 30 securities totaling $51.6 million in the current year period, compared to the sale of only two securities totaling $4.0 million in the prior year period.  The decrease in the gain on sale of loans was the result of fewer loan sales to Freddie Mac in the current year period when compared to the same period in the prior year.

Other expense decreased $165,000, or 2.6%, to $6.3 million for the six months ended December 31, 2011, from $6.5 million in the prior year period.  The decrease was primarily the result of a $194,000 decrease in deposit insurance premiums as a result of the aforementioned decrease in average deposits.  

Total assets were $466.8 million at December 31, 2011, compared to $472.7 million at June 30, 2011.  Total assets decreased $5.9 million, or 1.2%, as a result of a $14.5 decrease in cash partially offset by increases in investment securities of $2.5 million, Federal Home Loan Bank ("FHLB") stock of $4.1 million and bank owned life insurance ("BOLI") of $2.3 million.  The increase in investment securities was primarily due to purchases of mortgage-backed securities offset by sales of other available for sale securities. 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 cash is the result of funding the increases in these other assets in addition to a $5.6 million decrease in deposits.  

Total liabilities were $412.0 million at December 31, 2011, compared to $418.4 million at June 30, 2011.  The decrease was primarily the result of a $9.4 million decrease in municipal deposits partially offset by a $3.8 million increase in deposits other than municipal deposits.   The decrease in municipal deposits was due to the normal cyclical cash flow needs of the municipalities.

Total stockholders' equity was $54.8 million at December 31, 2011, compared to $54.3 million at June 30, 2011.  The increase was primarily the result of net income of $1.0 million, partially offset by dividends paid of $665,000.  At December 31, 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.

SOURCE United Community Bancorp



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