Press Release

United Bancorp, Inc. Reports an Increase in Net Income of 37% for the Nine Months Ended September 30, 2019; Diluted Earnings per Share of $0.88 versus $0.71 Reported in 2018, and a Forward Dividend Yield of 4.93%

Company Release - 10/10/2019 11:00 AM ET

MARTINS FERRY, Ohio, Oct. 10, 2019 /PRNewswire/ -- United Bancorp, Inc. (NASDAQ: UBCP) reported diluted earnings per share of $0.88 and net income of $5,041,000 for the nine months ended September 30, 2019, as compared to $0.71 and $3,691,000, respectively, for the corresponding nine-month period in 2018. The Company's diluted earnings per share for the three months ended September 30, 2019 was $0.31 as compared to $0.25 to the same period in the previous year. These year-over-year improvements in UBCP's earnings are directly related to the Company executing its strategic vision of achieving profitable growth by both growing organically and acquiring other like-minded community banking organizations.

United Bancorp, Inc. logo (PRNewsfoto/United Bancorp, Inc.)

Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, "We are pleased to report on our solid financial performance for the three-month period ended September 30, 2019 and year-to-date. For the most recently ended quarter, our Company had an increase in net income of $450,000, or 34%, on a year-over-year basis. For the nine-month period ending September 30, 2019, our Company saw its net income increase by $1,350,000, or 37%, to a level of $5,041,000 --- which is a new earnings record for our Company for the corresponding period. This increase in earnings is highly correlated to the strong organic and acquisition-related growth that our Company experienced during the past twelve months. Even with the issuance of common shares to facilitate our most recent acquisition completed in the fourth quarter of 2018, our diluted earnings per share was $0.31 versus $0.25 the prior year, an increase of 24%. The combination of the acquisition-related and strong organic growth that we achieved this past year facilitated the increase in the level of our Company's higher-yielding earning assets, which grew by $142.3 million, or 29%, on a year-over-year basis. This growth in earning assets was divided between steady growth in our Company's loan portfolio, which increased by $28.1 million, or 7.1%, and solid growth in our investment portfolio, with securities and other restricted stock increasing by $114.3 million or 126.1%. With our increased level of higher-yielding earning assets, our Company saw a year-over-year increase in the level of interest income that it generated for the nine months of 2019 of $4.6 million or 30%."

Greenwood further stated, "In order to fund this strong growth in our earning assets --- while improving our overall levels of profitability --- our Company needed to attract a substantial level of cost effective funding. We achieved this by successfully growing our lower-cost, retail balances (consisting of noninterest bearing and interest bearing demand deposits and savings deposits) by $88.5 million, or 25%, year-over-year. With lower-cost retail balances totaling $437.8 million as of September 30, 2019, they comprise 80% of total deposits for the Company. The remaining growth in deposits came in the area of time deposits (consisting of certificates of deposit or term funding), which increased by $27.1 million, or 32%, since September 2018. By funding our above-peer growth in earning assets primarily with lower-costing retail funding this past year our Company was able to maintain a very solid net interest margin which was 3.67% as of the most recent quarter end."

Greenwood continued, "From a qualitative perspective, we have successfully maintained overall strength and stability within our loan portfolio. Year-over-year, our Company continues to have very solid credit quality-related metrics supported by a relatively low level of nonaccrual loans and loans past due 30 plus days, which were $3.2 million, or 0.75 percent of total loans, at September 30, 2019. Further, net loans charged off, excluding overdrafts, was $164,000 for the nine months ended September 30, 2019, which is lower than the $238,000 charged off for the same nine-month period the previous year. Net charge offs to average loans for the first nine months of 2019 was 0.06% versus 0.08% for the same period in 2018. At these levels, we are very satisfied with the continued stable performance of our loan portfolio from a credit quality perspective."

Greenwood concluded, "Considering that we anticipate our earning assets to continue growing at very acceptable levels and our overall credit quality to remain very solid, we firmly expect that the double-digit earnings growth that we experienced in the first nine months of the year to continue for the remainder of the current year and into future periods."

Scott A. Everson, President and CEO stated, "We are extremely gratified to report on the strong earnings that our Company produced for the third quarter and first nine months of 2019. We greatly benefited from the positive execution of our strategic plan, which calls for us to grow through acquiring other like-minded community banking organizations, building new banking centers in key and complimentary markets and capitalizing on prudent, yet profitable, organic opportunities. Over the course of the past twelve months, we had success in these key areas on which we keenly focus. With the double-digit growth that we have experienced during this timeframe, our Company has produced record earnings. In addition, we are well on our way to achieving our strategic vision of growing our assets to a level of $1.0 billion, or greater, which should also help our Company gain even greater efficiencies and higher levels of performance than we have already seen in recent quarters. As previously announced, on May 14th of this year, our Company issued $20.0 million in subordinated debt at very favorable terms. Although this does not contribute to our Tier I Capital at the corporate-level, it does add to our Tier I Capital at our bank-level. Having this new leverageable (or growth) capital at our affiliate bank-level will greatly aid in helping us attain our lofty goal for growth and driving our earnings in a positive fashion in future periods."

Everson continued, "By continuing to utilize the "playbook" that we did last year and into the current year to achieve profitable growth, we are very optimistic about our future prospects. In addition, we will continue focusing on building our infrastructure (or, foundation) to support further growth while achieving greater efficiencies. As we have previously stated, we are strongly committed to remaining relevant within our industry by investing in our technology and origination/service platforms. Ultimately, our vision is to become an omnichannel bank --- by having complete channel integration and offering mobility to our customers --- thereby, serving them on their terms and through their preferred channels. We have started this initiative and believe that, for a community-minded bank, we will have a complete digital solution that will be highly appealing to our target clientele within the next year or so. Coupling this investment in technology with continued investment in growing our Company through acquisition and new branch construction in key complimentary markets, we firmly believe that we can continue to grow at acceptable levels while remaining very profitable." Everson further commented, "As we have previously announced on June 18, 2019, our Company purchased land in Moundsville, West Virginia and has plans to construct a new banking center in this very vibrant community in the heart of the proposed ethane cracker region. This will be the Company's first full service office in the State of West Virginia and this new location will further enhance our developing footprint in the Upper Ohio Valley Region (which is our traditional market), and nicely compliment our recent market expansion in Powhatan Point, Ohio, which is across the Ohio River from this new and exciting market. We anticipate that our new Moundsville Banking Center will be open for business toward the end of the first quarter of 2020. Even with the high level of growth that we experienced over the course of the past twelve months, we continued to maintain our overall profitability. With our year-to-date record earnings in 2019, our Company had a return on equity (ROE) of 11.2% and a return on assets (ROA) of 1.05% for the nine months ended, September 30, 2019. For many quarters, we have stated that our goal is to grow our Company in a highly profitable fashion. We are extremely delighted that we have done so and that we continue to accomplish this goal into the most recently ended quarter."

Everson concluded, "Our primary focus continues to be rewarding our shareholders by paying a very solid cash dividend and increasing their shareholder value in our Company. During the course of the current year, we have increased our cash dividend payout by $0.0025 per quarter and are currently paying $0.1375, which on a forward basis produces a dividend yield of 4.93% based on our closing price as of the most recent quarter end. Regarding our present market valuation, on a forward basis we are currently trading at a price to earnings multiple of 9 times. With our market sector trading more in the range of 12 to 13 times at present, we are highly optimistic that we will see a higher market valuation in future periods…assuming that we continue to drive our earnings at the levels we have seen and currently project. Overall, we are extremely pleased with the direction that we are going and the results that we are producing. We continue to be highly optimistic about our future potential and look forward to realizing this upside potential in future periods!"

As of September 30, 2019, United Bancorp, Inc. has total assets of $675.8 million and total shareholder's equity of $60.1 million. Through its single bank charter, Unified Bank, the Company has nineteen banking offices that serve the Ohio Counties of Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas. The Company also operates a Loan Production Office in Wheeling, WV. United Bancorp, Inc. 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 the Three Months Ended September 30,


%


$


2019


2018


Change


Change

Earnings








    Interest income on loans

$ 5,320,063


$ 4,599,416


15.67%


$ 720,647

    Loan fees

188,383


283,792


-33.62%


$ (95,409)

    Interest income on securities

1,412,494


639,308


120.94%


$ 773,186

    Total interest income

6,920,940


5,522,516


25.32%


$ 1,398,424

    Total interest expense

1,726,523


893,332


93.27%


$ 833,191

    Net interest income

5,194,417


4,629,184


12.21%


$ 565,233

    Provision for loan losses

120,000


72,000


66.67%


$ 48,000

    Net interest income after provision for loan losses

5,074,417


4,557,184


11.35%


$ 517,233

    Service charges on deposit accounts

731,066


666,255


9.73%


$ 64,811

    Net realized gains on sale of loans

24,851


17,652


40.78%


$ 7,199

    Other noninterest income

246,726


213,027


15.82%


$ 33,699

    Total noninterest income

1,002,643


896,934


11.79%


$ 105,709

    Total noninterest expense

4,161,797


3,855,586


7.94%


$ 306,211

    Earnings before taxes

1,915,263


1,598,532


19.81%


$ 316,731

    Income tax expense

134,515


268,199


-49.85%


$ (133,684)

    Net income

$ 1,780,748


$ 1,330,333


33.86%


$ 450,415









Per share








    Earnings per common share - Basic

$ 0.31


$ 0.25


24.00%



    Earnings per common share - Diluted

0.31


0.25


24.00%



    Cash Dividends paid

0.1375


0.1300


5.77%



    Annualized yield based on quarter end close

4.93%


3.95%


N/A











Shares Outstanding








    Average - Basic

5,519,677


4,854,934


--------



    Average - Diluted

5,519,677


4,859,859


--------



    Common stock, shares issued

5,959,351


5,560,304


--------



    Shares used for Book Value Computation

5,867,401


4,881,928





    Shares held as treasury stock

42,409


5,744


--------












For the Nine Months Ended September 30,


%


$


2019


2018


Change


Change

Earnings








    Interest income on loans

$ 15,560,775


$ 13,056,340


19.18%


$ 2,504,435

    Loan fees

581,162


720,149


-19.30%


$ (138,987)

    Interest income on securities

3,742,290


1,478,232


153.16%


$ 2,264,058

    Total interest income

19,884,227


15,254,721


30.35%


$ 4,629,506

    Total interest expense

4,402,131


2,122,999


107.35%


$ 2,279,132

    Net interest income

15,482,096


13,131,722


17.90%


$ 2,350,374

    Provision for loan losses

330,000


201,000


64.18%


$ 129,000

    Net interest income after provision for loan losses

15,152,096


12,930,722


17.18%


$ 2,221,374

    Service charges on deposit accounts

2,137,847


1,947,421


9.78%


$ 190,426

    Net realized gains on sale of loans

37,941


54,418


-30.28%


$ (16,477)

    Other noninterest income

718,854


663,227


8.39%


$ 55,627

    Total noninterest income

2,894,642


2,665,066


8.61%


$ 229,576

    Total noninterest expense

12,496,001


11,188,479


11.69%


$ 1,307,522

    Earnings before income taxes

5,550,737


4,407,309


25.94%


$ 1,143,428

    Income tax expense

509,556


716,549


-28.89%


$ (206,993)

    Net income

$ 5,041,181


$ 3,690,760


36.59%


$ 1,350,421

Per share








    Earnings per common share - Basic

$ 0.88


$ 0.71


23.94%



    Earnings per common share - Diluted

0.88


0.71


23.94%



    Cash dividends paid

0.4050


0.3900


3.85%



Shares Outstanding








   Average - Basic

5,518,500


4,924,859


--------



    Average - Diluted

5,518,500


4,924,859


--------



At quarter end








    Total assets

$ 675,821,076


$ 525,278,642


28.66%


$ 150,542,434

    Total assets (average)

640,070,000


491,841,000


30.14%


$ 148,229,000

    Other real estate and repossessions

30,000


387,225


-92.25%


$ (357,225)

    Gross loans

421,264,659


393,181,843


7.14%


$ 28,082,816

    Allowance for loan losses

2,120,999


2,003,868


5.85%


$ 117,131

    Net loans

419,143,660


391,177,975


7.15%


$ 27,965,685

    Net loans (charge offs)

(163,888)


(237,986)


-31.14%


$ 74,098

    Net overdrafts (charge offs)

(88,001)


(81,383)


8.13%


$ (6,618)

    Total net (charge offs)

(251,889)


(319,369)


-21.13%


$ 67,480

    Non-accrual loans

2,619,976


1,294,611


102.38%


$ 1,325,365

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

526,215


721,218


-27.04%


$ (195,003)

    Average loans

418,129,000


376,005,000


11.20%


$ 42,124,000

    Cash and due from Federal Reserve Bank

13,347,316


12,910,291


3.39%


$ 437,025

    Average cash and due from Federal Reserve Bank

19,699,000


13,043,000


51.03%


$ 6,656,000

    Securities and other required stock

204,887,864


90,630,172


126.07%


$ 114,257,692

    Average securities and other required stock

148,863,000


75,253,000


97.82%


$ 73,610,000

    Average total deposits

537,064,000


408,419,000


31.50%


$ 128,645,000

    Total deposits

549,996,178


434,331,092


26.63%


$ 115,665,086

        Non interest bearing demand

112,854,830


92,996,212


21.35%


$ 19,858,618

        Interest bearing demand

215,883,974


175,607,791


22.94%


$ 40,276,183

        Savings

109,049,618


80,649,300


35.21%


$ 28,400,318

        Time

112,207,756


85,077,789


31.89%


$ 27,129,967

    Securities sold under agreements to repurchase

9,901,835


15,399,352


-35.70%


$ (5,497,517)

    Advances from the Federal Home Loan Bank

20,800,000


22,138,879


-6.05%


$ (1,338,879)

        Overnight advances

20,800,000


22,000,000


N/A


$ (1,200,000)

        Term advances

-


138,879


-100.00%


$ (138,879)

    Shareholders' equity

60,054,705


45,112,465


33.12%


$ 14,942,240

    Shareholders' equity (average)

60,055,000


45,112,000


33.12%


$ 14,943,000

Stock data








    Market value - last close (end of period)

$ 11.15


$ 13.15


-15.21%



    Dividend payout ratio

46.02%


54.93%


-16.22%



    Book value (end of period)

10.24


9.24


10.82%



    Market price to book value

108.89%


142.32%


-23.49%



Key performance ratios








    Return on average assets (ROA)

1.05%


1.00%


0.05%



    Return on average equity (ROE)

11.19%


10.91%


0.28%



    Net interest margin (federal tax equivalent)

3.67%


3.90%


-0.23%



    Interest expense to average assets

0.92%


0.58%


0.34%



    Total allowance for loan losses








      to nonaccrual loans

80.95%


154.79%


-73.83%



    Total allowance for loan losses








      to total loans

0.50%


0.51%


-0.01%



    Nonaccrual loans to total loans

0.62%


0.33%


0.29%



    Nonaccrual assets to average assets

0.41%


0.34%


0.07%



    Net charge-offs to average loans

0.06%


0.08%


-0.02%



    Equity to assets at period end

8.89%


8.59%


0.27%











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SOURCE United Bancorp, Inc.