2014

United Bancorp, Inc. Reports Earnings of $469,000 for the Three Months Ended June 30, 2013

MARTINS FERRY, Ohio, July 29, 2013 /PRNewswire/ -- United Bancorp, Inc. (NASDAQ: UBCP), headquartered in Martins Ferry, Ohio reported net income of $469,000 for the three months ended June 30, 2013 compared to $731,000 for same three month period ended June 30, 2012.  From a quarterly perspective, net income has increased for the fourth consecutive quarter and is up by approximately $4,000 on a linked quarter basis. Also on a linked quarter basis, the Company's diluted earnings per share were $0.09 for each of the last two quarterly ending periods.

Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, "The Company's net income realized in the second quarter of 2013 generated an annualized 0.44% return on average assets ("ROA") and a 5.15% return on average equity ("ROE") compared to 0.70% ROA and 8.21% ROE for the three months ended June 30, 2012.  On a linked quarter basis, the Company's ROA and ROE were up slightly.  The Company's year over year numbers were impacted by the previously reported conservative posturing relating to the management of its investment portfolio due to the Government's ongoing zero rate monetary policy.  The current Federal Reserve monetary policy now in its fifth year has made it extremely risky for a financial institution to generate a normalized historic return without taking on an excessive amount of interest rate risk.  With the Federal Reserve's present monetary policy leading to higher yielding securities being called, the Company's six-month average investments declined $53.0 Million from June 30, 2012 to the same period in 2013, reducing the net interest margin to 3.59% as of June 30, 2013 compared to 3.94% for the period ended June 30, 2012.  This decline in margin is attributed to the continued downward re-pricing of its assets in this continued low rate environment.  As securities were called, the Company's liquidity was invested in short term, lower yielding investment alternatives such as Cash and Due from the Federal Reserve Bank which increased on a six month average balance comparison by $36.3 million from June 30, 2012 to June 30, 2013.  To help offset the downward pressure on the margin, the Company continued its focus on putting funds to work in higher yielding quality loans.  Gross loans were up $16.6 million on a year over year basis to a level of $296.1 million.  During this same period, the Company's credit quality improved as non-accrual loans were down $340,000 to a level of $3.6 million and net loans charged off were down by over $673,000 to a level of $100,000.  With this improvement in credit quality, the Company continued to provide a provision for loan losses which was $659,000 as June 30, 2013 compared to $501,000 as of June 30, 2012, an increase of $158,000. The provision for loan losses increased due to the credit uncertainly of several commercial relationships.  This increased provision brought the total allowance for loan losses to total loans to a level of 1.10% and the total allowance for loan losses to non-accrual loans to 92%, both respectively increasing from levels of 0.95% and 68% as of June 30, 2012.  With this continued improving trend of the overall credit quality, the Company projects a decrease of the provision for loan losses which will have a positive impact on future earnings.  On the liability side of the balance sheet, the Company continued to see a positive return on its strategy of attracting lower cost funding while allowing higher cost funding to run off.  Low cost funding consisting of interest bearing demand and savings deposits increased by over $22.0 million from June 30, 2012 to June 30, 2013 as higher costing time deposit balances decreased by over $28.3 million during this same period.  A positive effect of attracting a higher level of transaction accounts was the Company's service charges on deposit accounts increased by more than $94,000 on a linked quarter basis from March to June, 2013.  It is projected this trend will continue even with the continuing Government mandated regulations relating to the Dodd-Frank Act, which have had a limiting effect on the level of revenue realized per account, being more fully implemented.  This has been offset by the Company's focus on attracting more transaction account customers and having a higher overall level of transaction accounts that can generate fee based income.  From year to date 2012 to year to date 2013, non-interest expense increased on a year over year basis by $327,000 or 5.11%.  This increase is attributed to several factors including:  higher incentives paid to loan officers relating to the increase in loan originations; ever-increasing health care and benefits costs; and the acquiring and opening of the Company's new Retail Banking and Training Center located on the west-side of the highly appealing St. Clairsville, Ohio."  Greenwood concluded, "With this new facility which opened during the second quarter of 2013,  the significant liquid position in cash-type investments that can be invested in future periods at higher yields as market conditions improve, and the potential of a lower loan loss provision, we  are projecting a continuing improvement in our profitability."

James W. Everson, Chairman and CEO stated, "Our mantra in our earnings releases for the past three quarters has centered on the fact we are managing our balance sheet causing 'short term pain for long term gain'.  As stated above, our conservative risk management of keeping our liquidity in lower yielding short term investments has stifled our recent earnings reports, yet continues to be prudent with the anticipation of interest rate increases as the Federal Reserve eases out of its current monetary policy.  At present, we continue to aggressively make loans in our banking communities and resist seeking a higher return by stretching maturities on our investment portfolio until we have a clearer definition of the Federal Reserve's direction.  By investing in longer maturities today, we would expose our shareholders to losses in capital and earnings when interest rates normalize.  We continue to be satisfied to cover our overhead, provide for a proper amount of capital and reserves and make our dividend payment which is generous in today's market with a current yield of 3.9%. We project our strategy will be proven right as inflation and higher interest rates return, bringing our shareholders the gain we are postured to earn."

United Bancorp, Inc. is headquartered in Martins Ferry, Ohio with total assets of approximately $414.6 million and total shareholder's equity of approximately $36.4 million as of June 30, 2013.  Through its single bank charter with its twenty banking offices and an operations center, The Citizens Savings Bank through its Community Bank Division serves the Ohio Counties of Athens, Fairfield and Hocking and through its Citizens Bank Division serves Belmont, Carroll, Harrison, Jefferson and Tuscarawas. United Bancorp, Inc. is a part of the Russell Microcap Index and trades on The NASDAQ Capital Market tier of the NASDAQ Stock Market under the symbol UBCP, Cusip #909911109.

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the Securities Exchange Act of 1934.  Forward-looking statements, which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms.  Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, changes in the financial and securities markets, including changes with respect to the market value of our financial  assets, and the availability of and costs associated with sources of liquidity.  The Company undertakes no obligation to update or carry forward-looking statements, whether as a result of new information, future events or otherwise.

 

 


United Bancorp, Inc. (UBCP)




For Three Months Ended


%


June 30, 


March 31,




2013


2013


Change

Earnings 






     Interest income on loans

$                     3,706,081


$                     3,742,537


-0.97%

     Loan Fees

266,752


254,086


4.98%

     Interest income on securities

250,085


322,342


-22.42%

    Total interest income

4,222,918


4,318,965


-2.22%

    Total interest expense

794,410


830,260


-4.32%

    Net interest income

3,428,508


3,488,705


-1.73%

    Provision for loan losses

340,019


319,028


6.58%

    Net interest income after provision for loan losses

3,088,489


3,169,677


-2.56%

    Service charge on deposit account

586,555


492,428


19.11%

    Net realized gains on sale of loans

23,777


26,563


-10.49%

    Net realized loss on sale of foreclosed real estate

(15,419)


-


N/A

    Other noninterest income

201,380


221,664


-9.15%

    Total noninterest income

796,293


740,655


7.51%

    Deposit insurance premiums

74,400


82,040


-9.31%

    Provision for losses on foreclosed real estate

10,340


-


N/A

    Noninterest expense (excluding deposit insurance premiums and 






        provision for losses on impairment on foreclosed real estate)

3,249,328


3,326,251


-2.31%

        Total noninterest expense

3,334,068


3,408,291


-2.18%

    Income tax expense

81,514


36,768


121.70%

    Net income

$                        469,200


$                        465,273


0.84%

Key performance data






    Earnings per common share - Basic

$                              0.10


$                              0.09


11.11%

    Earnings per common share - Diluted 

0.09


0.09


0.00%

    Cash dividends paid

0.07


0.07


0.00%

Stock data






    Dividend payout ratio

70.00%


77.78%


-7.78%

    Price earnings ratio

17.26

x

20.28

x

-14.87%

    Market price to book value

96%


96%


0.10%

    Annualized yield based on quarter end close

3.86%


3.84%


0.69%

    Market value - last close (end of period)

7.25


7.30


-0.68%

    Book value (end of period)

7.58


7.64


-0.79%

Shares Outstanding






    Average - Basic

4,802,987


4,809,538


--------

    Average - Diluted 

4,862,910


4,863,309


--------

    Common stock, shares issue

5,375,304


5,375,304


--------

    Shares held as treasury stock

12,496


2,496


--------

    Return on average assets (ROA)

0.44%


0.43%


0.02%

    Return on average equity (ROE)

5.15%


5.07%


0.09%

At quarter end






    Total assets

$                 414,589,078


$                 428,073,363


-3.15%

    Total assets (average)

428,358,000


436,730,000


-1.92%

     Cash and due from Federal Reserve Bank

58,557,818


70,643,945


-17.11%

     Average cash and due from Federal Reserve Bank

69,287,000


74,336,000


-6.79%

     Securities and other restricted stock

35,102,802


36,738,575


-4.45%

     Average securities and other restricted stock

37,972,000


40,949,000


-7.27%

    Other real estate and repossessions

2,349,765


1,825,313


28.73%

    Gross loans

296,071,664


295,558,753


0.17%

    Average loans

295,455,000


295,786,000


-0.11%

    Allowance for loan losses

(3,267,549)


(2,973,739)


9.88%

    Net loans

292,804,115


292,585,014


0.07%

    Net loans charged-off

46,208


53,334


-13.36%

    Non-accrual loans

3,565,448


4,079,583


-12.60%

    Loans past due 30+ days (excludes non accrual loans)

2,024,832


2,055,131


-1.47%

    Intangible asset

245,040


274,800


-10.83%

    Mortgage servicing asset

99,710


106,240


-6.15%

    Total Deposits






        Non interest bearing demand

67,573,848


72,135,381


-6.32%

        Interest bearing demand

101,520,983


103,340,440


-1.76%

        Savings

68,438,359


67,206,441


1.83%

        Time

88,478,366


93,450,142


-5.32%

    Total Deposits

326,011,556


336,132,404


-3.01%

    Advances from the Federal Home Loan Bank

32,254,442


32,349,386


-0.29%

    Repurchase Agreements

12,228,083


15,141,429


-19.24%

    Shareholders' equity

36,424,416


36,735,739


-0.85%

    Shareholders' equity (average)

36,426,000


36,735,000


-0.84%

Key performance ratios 






    Net interest margin (Federal tax equivalent)

3.59%


3.58%


0.01%

    Interest expense to average assets

0.74%


0.76%


-0.02%

    Total allowance for loan losses






       to nonaccrual loans

91.64%


72.89%


18.75%

    Total allowance for loan losses






        to total loans

1.10%


1.01%


0.09%

   Nonaccrual loans to total loans

1.20%


1.38%


-0.18%

   Nonaccrual assets to total assets

1.43%


1.38%


0.05%

   Net charge-offs to average loans

0.06%


0.07%


-0.01%

   Equity to assets at period end

8.79%


8.58%


0.21%

 

 


United Bancorp, Inc. ("UBCP")




For the Three Months Ended June 30,


%


2013


2012


Change

Earnings 






     Interest Income on loans

$             3,706,081


$     3,848,481


-3.70%

     Loan Fees

266,752


312,614


-14.67%

     Interest income on securities

250,085


468,080


-46.57%

     Total Interest Income

4,222,918


4,629,175



    Total interest expense

794,410


993,390


-20.03%

    Net interest income

3,428,508


3,635,785


-5.70%

    Provision for loan losses

340,019


167,691


102.77%

    Net interest income after provision for loan losses

3,088,489


3,468,094


-10.95%

    Service charges on deposit accounts

586,555


485,917


20.71%

    Net realized gains on sale of loans

23,777


5,461


-335.40%

    Net realized loss on sale of  other real






         estate and repossessions

(15,419)


(14,107)


-9.30%

    Other noninterest income

201,380


200,309


0.53%

         Total noninterest income

796,293


677,580


17.52%

    Deposit insurance premiums

74,400


68,310


8.92%

    Provision for losses on foreclosed real estate

10,340


52,160


---

    Other noninterest expense 

3,249,328


3,060,267


6.18%

           (Excluding FDIC Insurance Premiums and






           provision for losses on impairment of foreclosed real estate)






          Total noninterest expense

3,334,068


3,180,737


4.82%

    Income tax expense

81,514


233,482


-65.09%

    Net income

$                469,200


$        731,455


-35.85%







Per share






    Earnings per common share - Basic

$                      0.10


$              0.15


-33.33%

    Earnings per common share - Diluted 

0.09


0.15


-40.00%

    Cash dividends paid

0.07


0.14


-50.00%

    Annualized yield based on quarter end close

3.86%


6.22%









Shares Outstanding






    Average - Basic

4,802,987


4,781,770


--------

    Average - Diluted 

4,862,910


4,862,269


--------








For the Six Months Ended June 30,


%


2013


2012


Change

Earnings 






     Interest income on loans

$             7,448,618


$     7,872,922


-5.39%

     Loan Fees

520,838


$        506,116


2.91%

     Interest income on securities

572,427


941,811


-39.22%

     Total interest income

8,541,883


9,320,849


-8.36%

    Total interest expense

1,624,670


2,025,786


-19.80%

    Net interest income

6,917,213


7,295,063


-5.18%

    Provision for loan losses

659,047


501,039


31.54%

    Service charges on deposit accounts

1,078,983


1,016,451


6.15%

    Net realized gains of sales on securities

-


-


---

    Net realized gains on sale of loans

50,340


9,347


438.57%

    Net realized losses on sale of  Other real





---

         estate and repossessions

(15,419)


(5,797)


---

    Other noninterest income

423,044


397,865


6.33%

         Total noninterest income

1,536,948


1,417,866


8.40%

    Deposit Insurance premiums 

156,440


142,343


9.90%

    Provision for losses on foreclosed real estate

10,340


52,160


-80.18%

    Other noninterest expense 






           (Excluding FDIC Insurance Premiums and

6,575,579


6,220,357


5.71%

           provision for losses on impairment of foreclosed real estate)






         Total noninterest expense 

6,742,359


6,414,860


5.11%

    Income tax expense

118,282


304,692


-61.18%

    Net income

$                934,473


$     1,492,338


-37.38%







Per share






    Earnings per common share - Basic

$                      0.19


$              0.30


-36.67%

    Earnings per common share - Diluted 

0.19


0.30


-36.67%

    Cash dividends paid

0.14


0.28


-50.00%

Shares Outstanding






    Average - Basic

4,806,244


4,775,423


--------

    Average - Diluted 

4,866,168


4,853,181


--------

At quarter end 






    Total assets

$         414,589,078


$ 423,774,803


-2.17%

    Total assets (average)

428,358,000


428,804,000


-0.10%

    Other real estate and repossessions ("OREO")

2,349,765


1,983,383


18.47%

    Gross loans

296,071,664


279,490,150


5.93%

    Allowance for loan losses

3,267,549


2,649,425


23.33%

    Net loans

292,804,115


276,840,725


5.77%

    Non-accrual loans

3,565,448


3,905,257


-8.70%

    Net loans charged off 

99,542


772,682


-87.12%

    Average loans

295,455,000


279,058,000


5.88%

    Cash and due from Federal Reserve Bank

58,557,818


44,361,828


32.00%

    Average cash and due from Federal Reserve Bank

69,287,000


33,010,000


109.90%

    Securities and other restricted stock

35,102,802


74,805,967


-53.07%

    Average securities and other restricted stock

37,972,000


91,021,000


-58.28%

    Total deposits

326,011,556


336,114,368


-3.01%

       Non interest bearing demand

67,573,848


71,362,602


-5.31%

       Interest bearing demand

101,520,983


82,156,325


23.57%

       Savings

68,438,359


65,793,809


4.02%

       Time

88,478,366


116,801,632


-24.25%

    Advances from the Federal Home Loan Bank

32,254,442


32,742,167


-1.49%

    Securities sold under agreements to repurchase

12,228,083


10,933,250


11.84%

    Shareholders' equity

36,424,416


36,382,413


0.12%

    Shareholders' equity (average)

36,426,000


36,351,000


0.21%

Stock data






    Market value - last close (end of period)

$                      7.25


$              9.01


-19.53%

    Dividend payout ratio

73.68%


93.33%


-19.65%

    Price earnings ratio

17.26

x

15.02

x

1.41%

    Book value (end of period)

7.58


7.59


-0.13%

    Market price to book value

95.65%


118.71%


-19.43%

Key performance ratios 






    Return on average assets (ROA)

0.44%


0.70%


-0.26%

    Return on average equity (ROE)

5.13%


8.21%


-3.08%

    Net interest margin (federal tax equivalent))

3.59%


3.94%


-0.35%

    Interest expense to average assets

0.76%


0.94%


0.18%

    Total allowance for loan losses






        to nonaccrual loans

91.64%


67.84%


23.80%

    Total allowance for loan losses






        to total loans

1.10%


0.95%


0.10%

   Nonaccrual loans to total loans

1.20%


1.40%


-0.20%

   Nonaccrual loans and OREO to total assets

1.43%


1.39%


0.04%

   Net charge-offs to average loans

0.07%


0.55%


-0.48%

   Equity to assets at period end

8.79%


8.59%


0.20%

SOURCE United Bancorp, Inc.



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