Form 8-K UNITED BANCORP INC /OH/ For: Jul 24

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 24, 2015

 

 

UNITED BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio		0-16540		34-1405357
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

201 South 4th Street, Martins Ferry, Ohio		43935-0010
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (740) 633-0445

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On July 24, 2015, United Bancorp, Inc. issued a press release announcing its results of operations and financial condition for and as of the three and six month periods ended June 30, 2015, unaudited. The press release is furnished as Exhibit No. 99 hereto.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits

The following exhibits are furnished herewith:

 

Exhibit Number		Exhibit Description
99		Press release, dated July 24, 2015, announcing Registrant’s unaudited results of operations and financial condition for and as of the three and six month periods ended June 30, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit Description
99		Press release, dated July 24, 2015, announcing Registrant’s unaudited results of operations and financial condition for and as of the three and six month periods ended June 30, 2015.

Exhibit 99

 

P. O. BOX 10  ●  MARTINS FERRY, OHIO 43935  ●  Phone: 740/633-BANK        Fax: 740/633-1448

We are United to Better Serve You

 

 

 

PRESS RELEASE

 

 

United Bancorp, Inc. 201 South 4th at Hickory Street, Martins Ferry, OH 43935

 

Contact:		Scott A. Everson		Randall M. Greenwood
		President and CEO		Senior Vice President, CFO and Treasurer
Phone:		(740) 633-0445 Ext. 6154		(740) 633-0445 Ext. 6181
		[email protected]		[email protected]

FOR IMMEDIATE RELEASE: 11:00 a.m. July 24, 2015

 

Subject:		United Bancorp, Inc. Reports a 25% Increase in Diluted Earnings per Share for the Six Months Ended June 30, 2015 and an Annualized Dividend Yield of 4.01%

MARTINS FERRY, OHIO ¿¿¿ United Bancorp, Inc. (NASDAQ: UBCP), headquartered in Martins Ferry, Ohio reported diluted earnings per share of $0.30 for the six months ended June 30, 2015 compared to $0.24 for the six months ended June 30, 2014, an increase of 25%. This growth in earnings can be attributed to several factors which are explained below in detail. The Company’s diluted earnings per share for the three months ended June 30, 2015 increased 14% to $0.16 from $0.14 for the three months ended June 30, 2014.

Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, “We are very happy to report on the earnings improvement of our Company, both quarterly and semi-annually, as of June 30, 2015. From an operating perspective, the Company’s net interest margin decreased slightly for the first six months of 2015 to a level of 3.75% compared to 3.85% for the same period in 2014. This decrease in the net interest margin is attributed to the Company having a higher level of investment securities for the six months ended June 30, 2015 as compared to the same period in 2014. Even though the yield on these short-duration securities had somewhat of a dilutive impact on the net interest margin, the increased position in these securities helped keep the Company’s level of investment income relatively stable. Period-over-period, the Company’s average loans decreased $333,000. The Company maintained its funds management policy by continuing to keep the majority of its surplus funding in very liquid, lower-yielding excess reserves at the Federal Reserve, which totaled $31.1 million on an average basis for the six months ended June 30, 2015, and resisting the temptation of extending the duration of its investment portfolio to achieve higher investment yields; although, investment in shorter-duration securities accelerated during the quarter as previously mentioned. As a result, the securities and other restricted stock balance increased by $14.4 million to a level of $44.0 million at quarter-end. On a year-over-year basis, the Company’s credit quality improved dramatically as nonaccrual loans were down $707,000, or 31.70%, to a level of $1.5 million. For the six months ended June 30, 2015, the Company actually recorded a net loan recovery of $35,000 as compared to having a net charge off of $194,000 for the six months ended June 30, 2014. With the improvement in credit quality, the Company decreased the provision for loan losses by $171,000 year-over-year. The overall total allowance for loan losses to total loans was 0.86% resulting in a total allowance for loan losses to nonperforming loans of 177.00% at June 30, 2015 compared to 0.99% and 140.37% respectively at June 30, 2014. With this continued trend of improving credit quality and coverage, the Company projects a further reduction of its provision for loan losses which should 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 additional customers into lower-cost funding accounts while allowing higher-cost funding to run off. Year-over-year, low-cost funding, consisting of demand and savings deposits, increased by $14.1 million while higher-cost time deposit balances decreased by over $9.9 million, helping to reduce the overall interest expense of the Company. The Company continued to see the positive impact of attracting a higher number of active transaction accounts which resulted in service charges on deposit accounts increasing by $82,000, or 6.14%, on a year-over-year basis as of June 30, 2015. It is projected that this trend will continue even with the Government mandated regulations relating to the Dodd-Frank Act being more fully implemented. The heightened implementation of this legislation may potentially have a limiting effect on the level of revenue realized per account which should be offset by the Company’s focus on attracting a higher number of transaction accounts that can generate fee-based income. Lastly, the Company was able to further reduce its level of noninterest expense or overhead. As of June 30, 2015, noninterest expense decreased on a year-over-year basis by $539,000 or 7.94%. A portion of this cost savings is attributed to a pre-tax impairment charge of $162,000 on foreclosed real estate that was realized in the first quarter of 2014. Even without consideration of this impairment charge, noninterest expense still decreased $353,000 or 5.45%. As previously announced, the Company’s office consolidation in its Glouster, Ohio marketplace was completed on March 16, 2015 and has lead to additional cost savings which should help to further contain noninterest expense in future

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periods. Greenwood stated that, “Our goal is to control our level of noninterest expense while continuing to build and strengthen our operational foundation which should lead to future growth, higher levels of earnings and, ultimately, a higher level of performance. Over the next 24 months, it is projected that the Company’s interest expense will be positively impacted by the repricing of $26 million in fixed-rate advances with the Federal Home Loan Bank that are set to mature. The average cost of these advances is 3.66% and, given the current interest rate environment, the Company will either pay off these advances with its current liquidity or replace the advances at a substantial savings to interest expense. In addition, the Company’s $4.1 million subordinated debenture is set to reprice January 1, 2016 from a fixed rate of 6.25% to a variable rate based on the three-month LIBOR plus a margin of 1.35%. With three-month LIBOR currently priced at approximately 28 basis points, the Company’s rate on its debenture would decrease approximately 4.62%. This would save approximately $190,000 in interest expense annually beginning January 1, 2016.” Greenwood concluded, “With our continued focus of shifting lower-yielding liquid assets into higher-yielding quality loans, growing service charge income on deposit accounts, controlling of our noninterest expense, reducing our interest expense in 2016 and the potential lowering of our loan loss provision even further, we are projecting continued improvement in our earnings for 2015 and into 2016.”

Scott A. Everson, President and CEO stated, “We are very pleased with the double-digit earnings growth results that our Company has produced during the current year on a quarterly and year-to-date basis. The results that we are seeing today are reflective of the somewhat conservative posturing that we undertook in recent years to protect both our capital base and earnings stream. Most of these recent earnings improvements have come from process changes and product enhancements that have been undertaken in recent years which have led to operational efficiencies that have lowered our non-interest expense levels while driving higher levels of fee based revenue for our Company. We are happy with the results that we are starting to see and will continue to look for additional opportunities in these key areas as we have done this year with the office consolidation that we completed in the late first quarter in our Glouster, Ohio market and other internal process enhancements that continue to help our organization become more operationally efficient and produce higher levels of quality earnings. Such opportunities have led to our Company decreasing our federal tax equivalent employee count by 4.5% year-over-year while still serving our customer base at a high level and building profitable relationships as demonstrated by our continued growth in fee based revenue. Being a very well capitalized Bank in today’s environment will allow us to change our focus in the coming quarters to further implement a growth strategy that was initiated late in the second quarter of this current year which exclusively focusses on driving the loan volumes of our company. This strategy, which has added additional origination personnel to our commercial and residential lending platforms and enhanced the lending programs that our Company offers, should generate higher levels of interest and fee based revenue in the coming quarters. We strongly anticipate that this newly initiated revenue enhancement strategy, along with the aforementioned downward pricing of a large portion of our borrowed funds base, should help enhance the overall net interest margin of our Company over the course of the next twenty-four months and drive earnings growth that is similar to what we have seen in recent quarters. Our Company is beginning to be rewarded by the markets for this level of performance as we have seen the market value of our stock increase from $8.03 at year-end to $8.97 at the most recent quarter-end. We believe with our Company’s present price-to-earnings multiple and projected direction of earnings that our stock can continue to trade at higher market valuations in the near term.” Everson concluded, “Our number one focus continues to be protecting and growing our shareholders investment in our Company through sound and profitable operations and strategic growth. In addition to driving the market value appreciation of our shareholders ownership, we will continue to strive to reward our owners by paying a solid cash dividend which increased 12.5% on a year-over-year basis and is presently yielding 4.01%. At this level, our Company’s cash dividend is yielding nearly twice that of the average bank in our country. Overall, we are very pleased with the present operating performance of our Company and the direction that we are going.”

United Bancorp, Inc. is headquartered in Martins Ferry, Ohio with total assets of approximately $406.7 million and total shareholder’s equity of approximately $41.1 million as of June 30, 2015. Through its single bank charter with its eighteen banking offices, a dedicated training center and an operations center, The Citizens Savings Bank through its Community Bank Division serves Athens and Fairfield Counties and through its Citizens Bank Division serves Belmont, Carroll, Harrison, Jefferson and Tuscarawas Counties in Ohio. 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.

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United Bancorp, Inc. (“UBCP”)

		For the Three Months Ended June 30,								%
		2015				2014				Change
Earnings
Interest income on loans		$	3,529,684			$	3,716,652				-5.03	%
Loan fees			292,324				207,382				40.96	%
Interest income on securities			218,473				210,003				4.03	%
Total interest Income			4,040,481				4,134,037				-2.26	%
Total interest expense			582,326				620,043				-6.08	%
Net interest income			3,458,155				3,513,994				-1.59	%
Provision for loan losses			145,749				216,000				-32.52	%
Net interest income after provision for loan losses			3,312,406				3,297,994				0.44	%
Service charges on deposit accounts			710,848				701,507				1.33	%
BOLI benefit in excess of surrender value			—				35,398				N/A
Net realized gains on sale of loans			17,767				12,441				N/A
Net realized gain on sale of available-sale-securities			11,261				—				N/A
Net realized gain on sale of other real estate and repossessions			2,160				—				N/A
Other noninterest income			192,276				210,113				-8.49	%
Total noninterest income			934,312				959,459				-2.62	%
Deposit insurance premiums			51,000				71,999				-29.17	%
Provision for losses on foreclosed real estate			—				—				N/A
Other noninterest expense			3,060,032				3,227,976				-5.20	%
(Excluding FDIC Insurance Premiums and provision for losses on impairment of foreclosed real estate)
Total noninterest expense			3,111,032				3,299,975				-5.73	%
Income tax expense			330,913				241,939				36.78	%
Net income		$	804,773			$	715,539				12.47	%
Per share
Earnings per common share - Basic		$	0.16			$	0.14				14.29	%
Earnings per common share - Diluted			0.16				0.14				14.29	%
Cash dividends paid			0.09				0.08				12.50	%
Annualized yield based on quarter end close			4.01	%			3.93	%			0.08	%
Shares Outstanding
Average - Basic			4,854,020				4,851,805				—
Average - Diluted			4,938,542				4,932,020				—
		For the Six Months Ended June 30,								%
		2015				2014				Change
Earnings
Interest income on loans		$	7,076,281			$	7,403,408				-4.42	%
Loan fees			427,755				413,323				3.49	%
Interest income on securities			395,340				414,430				-4.61	%
Total interest income			7,899,376				8,231,161				-4.03	%
Total interest expense			1,163,165				1,246,250				-6.67	%
Net interest income			6,736,211				6,984,911				-3.56	%
Provision for loan losses			261,498				432,000				-39.47	%
Net interest income after provision for loan losses			6,474,713				6,552,911				-1.19	%
Service charges on deposit accounts			1,410,110				1,328,520				6.14	%
BOLI benefit in excess of surrender value			—				35,398				N/A
Net realized gains on sale of loans			29,020				16,155				79.63	%
Net realized gain on sale of available-sale-securities			31,672				—				N/A
Net realized gain on sale of other real estate and repossessions			2,160				—				N/A
Other noninterest income			404,888				416,957				-2.89	%
Total noninterest income			1,877,850				1,797,030				4.50	%
Deposit Insurance premiums			114,000				136,998				-16.79	%
Provision for losses on foreclosed real estate			—				162,420				N/A
Other noninterest expense
(Excluding FDIC Insurance Premiums and provision for losses on impairment of foreclosed real estate)			6,132,857				6,486,222				-5.45	%
Total noninterest expense			6,246,857				6,785,640				-7.94	%
Income tax expense			607,076				364,060				66.75	%
Net income		$	1,498,630			$	1,200,241				24.86	%
Per share
Earnings per common share - Basic		$	0.30			$	0.24				25.00	%
Earnings per common share - Diluted			0.30				0.24				25.00	%
Cash dividends paid			0.18				0.16				12.50	%
Shares Outstanding
Average - Basic			4,854,684				4,832,847				—
Average - Diluted			4,939,207				4,913,062				—
Common stock, shares issued			5,385,304				5,385,304				—
Shares held as Treasury			7,850				10,918				—
At quarter end
Total assets		$	406,736,513			$	399,020,630				1.93	%
Total assets (average)			413,385,000				404,307,000				2.25	%
Other real estate and repossessions (“OREO”)			1,106,686				1,379,895				-19.80	%
Gross loans			311,921,669				315,396,994				-1.10	%
Allowance for loan losses			2,696,989				3,131,716				-13.88	%
Net loans			309,224,680				312,265,278				-0.97	%
Non-accrual loans			1,523,704				2,231,041				-31.70	%
Loans past due 30+ days (excludes non accrual loans)			1,545,388				2,658,849				-41.88	%
Net loans and overdraft accounts charged off (net recovery)			(35,065	)			194,229				-118.05	%
Average loans			313,093,000				313,426,000				-0.11	%
Cash and due from Federal Reserve Bank			25,291,544				31,016,733				-18.46	%
Average cash and due from Federal Reserve Bank			31,064,000				36,239,000				-14.28	%
Securities and other restricted stock			44,010,357				29,659,387				48.39	%
Average securities and other restricted stock			37,889,000				30,303,000				25.03	%
Intangible assets			6,960				126,000				-94.48	%
Mortgage servicing asset			65,524				79,083				-17.15	%
Total deposits			323,442,487				319,552,574				1.22	%
Non interest bearing demand			66,187,349				66,474,662				-0.43	%
Interest bearing demand			121,138,736				110,772,475				9.36	%
Savings			73,537,041				69,796,438				5.36	%
Time < $100,000			47,150,087				55,021,215				-14.31	%
Time > $100,000			15,429,274				17,487,784				-11.77	%
Average total deposits			328,946,000				322,804,000				1.90	%
Advances from the Federal Home Loan Bank			26,634,955				26,840,493				-0.77	%
Securities sold under agreements to repurchase			9,027,663				6,577,293				37.25	%
Shareholders’ equity			41,053,106				39,740,475				3.30	%
Shareholders’ equity (average)			40,627,000				39,740,000				2.23	%
Stock data
Market value - last close (end of period)		$	8.97			$	8.14				10.20	%
Dividend payout ratio			60.00	%			66.67	%			-6.67	%
Price earnings ratio			14.95 x				16.96 x				-2.01	%
Book value (end of period)			8.44				8.16				3.43	%
Market price to book value			106.28	%			99.75	%			6.53	%
Key performance ratios
Return on average assets (ROA)			0.73	%			0.59	%			0.14	%
Return on average equity (ROE)			7.38	%			6.04	%			1.34	%
Net interest margin (federal tax equivalent))			3.75	%			3.85	%			-0.10	%
Interest expense to average assets			0.56	%			0.62	%			-0.06	%
Total allowance for loan losses to nonaccrual loans			177.00	%			140.37	%			36.63	%
Total allowance for loan losses to total loans			0.86	%			0.99	%			-0.13	%
Nonaccrual loans to total loans			0.49	%			0.71	%			-0.22	%
Nonaccrual loans and OREO to total assets			0.65	%			0.90	%			-0.25	%
Net charge-offs (recoveries) to average loans			-0.02	%			0.12	%			-0.14	%
Equity to assets at period end			10.09	%			9.96	%			0.13	%
Federal tax equivalent (FTE) employees			128				134				-4.48	%

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