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PRESS RELEASE
Contact: United Community Bancorp
William F. Ritzmann, President and Chief Executive Officer
(812) 537-4822
UNITED COMMUNITY BANCORP REPORTS THIRD QUARTER RESULTS
Lawrenceburg, Indiana - April 27, 2007 - United Community Bancorp (the
"Company") (Nasdaq: UCBA), the holding company for United Community Bank (the
"Bank"), announced net income of $713,000, or $0.09 per diluted share, for the
quarter ended March 31, 2007 compared to a net loss of $764,000 for the quarter
ended March 31, 2006. The increase in net income was the result of an $86,000
increase in net interest income, an $884,000 increase in non-interest income and
a $1.5 million reduction in non-interest expenses, partially offset by a $65,000
increase in provision for loan losses and a $948,000 increase in income tax
expense. Net income for the nine months ended March 31, 2007 was $1.9 million,
or $0.24 per diluted share, compared to $337,000 for the nine months ended March
31, 2006. The increase in net income for the nine month period was the result of
a $974,000 increase in net interest income, a $1.5 million increase in
non-interest income and a $638,000 reduction in non-interest expenses, partially
offset by a $545,000 increase in provision for loan losses and a $980,000
increase in income tax expense. Due to the timing of the Bank's reorganization
into the mutual holding company form and the completion of the initial public
offering on March 30, 2006, earnings per share for the period from March 30,
2006 to March 31, 2006 is not considered meaningful and is not shown.
Net interest income for the quarter ended March 31, 2007 totaled $2.7 million
compared to $2.6 million for the prior year quarter. The increase from the prior
year quarter is primarily due to an increase in total interest income of
$883,000, partially offset by an increase in total interest expense of $797,000.
Interest income on loans increased by $738,000 primarily due to the combined
effect of an increase in average balance from $224.5 million to $265.7 million
and an increase in average yield from 6.45% to 6.56%. Interest income on
investment and mortgage-backed securities decreased by $144,000 to $603,000,
primarily due to the impact of a decrease in average balance from $74.4 million
to $51.7 million, partially offset by an increase in average yield from 4.01% to
4.67%. Interest income on other interest-earning assets increased $289,000 to
$465,000, primarily due to the impact of an increase in average balance from
$31.1 million to $47.1 million and an increase in average yield from 2.26% to
3.95%. Interest expense on interest-bearing deposits increased by $838,000,
primarily due to the effect of an increase in average balance from $302.6
million to $317.9 million and an increase in the average rate paid from 2.51% to
3.44%. Interest expense on borrowed funds decreased $41,000 due to average
outstanding borrowings of $6.7 million for the quarter ended March 31, 2006
compared with the absence of any such borrowings during the quarter ended March
31, 2007. The increases in the average yields on loans and investments and in
the average rates paid on interest-bearing deposits are primarily the result of
an increase in market interest rates.
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Net interest income for the nine months ended March 31, 2007 totaled $8.2
million compared to $7.2 million for the prior year period. The increase from
the prior year period is primarily due to an increase in total interest income
of $2.8 million, partially offset by an increase in total interest expense of
$1.8 million. Interest income on loans increased by $2.7 million primarily due
to the combined effect of an increase in average balance from $213.9 million to
$258.6 million and an increase in average yield from 6.29% to 6.60%. Interest
income on investment and mortgage-backed securities decreased by $31,000 to $2.1
million, primarily due to the impact of a decrease in average balance from $77.9
million to $59.8 million, partially offset by an increase in average yield from
3.58% to 4.59%. Interest income on other interest-earning assets increased
$129,000 to $854,000, primarily due to the impact of an increase in average
balance from $24.2 million to $27.4 million and an increase in average yield
from 4.00% to 4.16%. Interest expense on interest-bearing deposits increased by
$1.8 million, primarily due to the effect of an increase in average rate paid
from 2.53% to 3.35%, partially offset by a decrease in average balance from
$298.5 million to $295.6 million. Interest expense on borrowed funds increased
$56,000 due to an increase in average outstanding borrowings from $2.0 million
to $2.7 million and an increase in average rate paid from 2.77% to 4.73%. The
increases in the average yields on loans and investments and in the average
rates paid on interest-bearing deposits and borrowed funds are primarily the
result of an increase in market interest rates. The increase in borrowings was
used to fund loan growth.
The provision for loan losses was $95,000 for the quarter ended March 31, 2007
compared to $30,000 for the quarter ended March 31, 2006. The provision for loan
losses was $635,000 for the nine months ended March 31, 2007 compared to $90,000
for the nine months ended March 31, 2006. The increase is primarily due to the
increase in size of the loan portfolio, as well as an increase of $2.2 million
in nonperforming loans for the nine months ended March 31, 2007 as compared to a
decrease of $214,000 in nonperforming loans for the nine months ended March 31,
2006. The increase in nonperforming loans is primarily the result of three
commercial real estate loans totaling $1.8 million and three one-to-four family
residential real estate loans totaling $0.3 million.
Noninterest income was $1.0 million for the quarter ended March 31, 2007,
compared to $117,000 for the same period in 2006. A gain on sale of investments
of $587,000 was reported for the quarter ended March 31, 2007, compared to a
loss of $286,000 for the same period in 2006. The gain is primarily related to
the sale of securities issued by Freddie Mac and the proceeds were used to fund
loan growth. Noninterest income was $2.4 million for the nine months ended March
31, 2007, compared to $844,000 for the same period in 2006, primarily due to the
gain on sale of investments of $1.2 million that was reported for the nine
months ended March 31, 2007, compared to a loss of $286,000 for the same period
in 2006. The gain is primarily related to the sale of securities issued by
Freddie Mac.
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Noninterest expense was $2.3 million for the quarter ended March 31, 2007
compared to $3.8 million for the same prior year period. The decrease in
noninterest expense was primarily the result of a $1.9 million decrease in
charitable contributions, partially offset by an increase in compensation and
benefit expense of $307,000 and an increase in other expenses of $103,000. The
reduction in charitable contributions is due to the funding of the United
Community Charitable Foundation of $1.9 million during the quarter ended March
31, 2006. The increase in compensation and benefit expense is primarily due to
stock-based compensation expense of $298,000 during the quarter ended March 31,
2007 as well as an increase in the number of employees to staff our new Aurora
branch and our proposed St. Leon branch, which will open in May 2007. The
increase in other expenses is primarily due to additional expenses associated
with being a public company. Noninterest expense was $6.8 million for the nine
months ended March 31, 2007 compared to $7.4 million for the same prior year
period. The decrease in noninterest expense was primarily the result of a $1.9
million decrease in charitable contributions, partially offset by a $714,000
increase in compensation and benefit expense, and a $531,000 increase in other
operating expenses. The reduction in charitable contributions is due to the
absence of the 2006 funding of the United Community Charitable Foundation as
discussed above. The increase in compensation and benefit expense is due to
stock-based compensation expense of $298,000 during the nine months ended March
31, 2007 as well as an increase in the number of employees to staff our new
Aurora and proposed St. Leon branches as discussed above. The increase in other
expenses is primarily due to additional expenses associated with being a public
company. Other operating expenses are primarily comprised of miscellaneous loan
expense, professional fees, bank fees and office expenses.
Income tax expense was $567,000 for the quarter ended March 31, 2007 compared to
an income tax benefit of $381,000 for the same period in 2006. The increase in
expense is primarily due to a $2.4 million increase in pre-tax earnings as well
as an increase in the annual effective tax rate resulting primarily from
nondeductible charges related to certain stock-based compensation awards. Income
tax expense increased $980,000 to $1.2 million for the nine months ended March
31, 2007, compared to $245,000 for the same period in 2006. The increase in
expense is primarily due to a $2.6 million increase in pre-tax earnings.
Total assets were $386.2 million at March 31, 2007 compared to $354.7 million at
June 30, 2006. Nonperforming assets increased from $972,000 at June 30, 2006 to
$3.1 million at March 31, 2007. During the nine months ended March 31, 2007,
cash and cash equivalents increased $33.2 million to $48.2 million due to a
$21.3 million increase in certificates of deposit and a $10.8 million increase
in municipal deposits. Securities available for sale decreased $21.1 million to
$21.0 million and mortgage backed securities available for sale decreased $5.3
million to $29.0 million. The decreases are due to the redeployment of these
funds into higher yielding loans. Loans receivable increased $24.1 million to
$268.6 million primarily as a result of increases in our commercial real estate
loan portfolio. Loan growth in this portfolio is primarily the result of our
marketing efforts which include media and personal contacts. Loan growth was
funded primarily by sales and maturities of investment securities and by the
increase in deposits.
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Total liabilities increased $31.8 million to $324.1 million at March 31, 2007
from $292.2 million at June 30, 2006. The increase in liabilities is primarily
the result of a $31.4 million increase in deposits, primarily relating to
increases in certificates of deposit of $21.3 million, demand deposits of $2.7
million and municipal deposits of $7.9 million, and an increase in accrued
liabilities primarily resulting from an increase in income taxes payable.
Stockholders' equity at March 31, 2007 was $62.2 million compared to $62.5
million at June 30, 2006. The decrease is primarily due to the previously
disclosed repurchase of 165,894 shares of common stock to fund a trust used to
fund restricted stock awards under the Company's 2006 Equity Incentive Plan at
an aggregate cost of $2.1 million and dividends paid of $799,000, offset by net
income of $1.9 million for the nine months ended March 31, 2007, a decrease in
unrealized losses on securities available for sale of $131,000, a reduction in
unearned ESOP shares and related market value adjustments of $238,000, and
stock-based compensation expense of $298,000.
United Community Bancorp is the holding company of United Community Bank
headquartered in Lawrenceburg, Indiana. The Bank currently operates five 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, 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.
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<Table>
<Caption>
UNITED COMMUNITY BANCORP
SUMMARY OF FIRNANCIAL HIGHLIGHTS
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
At At
March 31, June 30,
2007 2006
(In Thousands)
ASSETS
Cash and cash equivalents $ 48,200 $ 15,010
Investment securities 50,173 76,591
Loans receivable, net 268,602 244,537
Other Assets 19,265 18,569
TOTAL ASSETS $386,240 $354,707
LIABILITIES
Deposits (1) $321,179 $289,807
Other Liabilities 2,892 2,415
TOTAL LIABILITIES 324,071 292,222
Total Stockholders' Equity 62,169 62,485
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $386,240 $354,707
</Table>
(1) Includes municipal deposits of $146.5 million at March 31, 2007 and $138.6
million at June 30, 2006.
<Table>
<Caption>
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2007 2006 2007 2006
(IN THOUSANDS, EXCEPT SHARE DATA)
Interest Income $ 5,429 $ 4,546 $ 15,722 $12,915
Interest Expense 2,737 1,940 7,530 5,697
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Net Interest Income 2,692 2,606 8,192 7,218
Provision for Loan Losses 95 30 635 90
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Net Interest Income after Provision
for Loan Losses 2,597 2,576 7,557 7,128
Total Non-Interest Income 1,001 117 2,355 844
Total Non-Interest Expenses 2,318 3,838 6,752 7,390
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INCOME (LOSS) BEFORE TAX PROVISION (BENEFIT) 1,280 (1,145) 3,160 582
Income Tax Provision (Benefit) 567 (381) 1,225 245
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NET INCOME (LOSS) $ 713 $ (764) $ 1,935 $337
EARNINGS PER SHARE(2)
Basic $ 0.09 n/a $ 0.24 n/a
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Diluted $ 0.09 n/a $ 0.24 n/a
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WEIGHTED AVERAGE SHARES OUTSTANDING(2)
Basic 8,001,316 n/a 8,097,974 n/a
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Diluted 8,016,579 n/a 8,109,423 n/a
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</Table>
(2) Due to the timing of the Bank's reorganization into the mutual holding
company form and the completion of the initial public offering on March
30, 2006, earnings per share for the period from March 30, 2006 to March
31, 2006 is not considered meaningful and is not shown.
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<Table>
<Caption>
AT OR FOR THE AT OR FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31
2007 2006 2007 2006
(UNAUDITED) (UNAUDITED)
PERFORMANCE RATIOS (1):
Return on average assets 0.74% (0.89)% 0.71% 0.13%
Return on average equity 4.59 (7.41) 4.09 1.33
Interest rate spread (2) 2.51 3.00 2.70 2.92
Net interest margin (3) 2.95 3.16 3.16 3.05
Noninterest expense to average assets 2.42 2.15 2.47 2.16
Efficiency ratio (4) 62.77 140.95 64.02 109.09
Average interest-earning assets to
average interest-bearing liabilities 114.65 106.71 115.93 105.17
Average equity to average assets 16.23 11.95 17.30 10.10
CAPITAL RATIOS:
Tangible capital 12.48 17.03 12.48 17.03
Core capital 12.48 17.03 12.48 17.03
Total risk-based capital 20.75 29.09 20.75 29.09
ASSET QUALITY RATIOS:
Nonperforming loans as a percent
of total loans 1.11 0.56 1.11 0.56
Allowance for loan losses as a percent
of total loans 0.98 0.89 0.98 0.89
Allowance for loan losses as a percent
of nonperforming loans 88.40 159.92 88.40 159.92
Net charge-offs (recoveries) to average
outstanding loans during the period (0.07) 0.08 (0.02) 0.16
</Table>
(1) 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.