Press Release

United Bancorp, Inc. Reports on Its Earnings for the Three Months Ended March 31, 2020

Company Release - 5/1/2020 3:00 PM ET

MARTINS FERRY, Ohio, May 1, 2020 /PRNewswire/ -- United Bancorp, Inc. (NASDAQ: UBCP) reported diluted earnings per share of $0.28 and net income of $1,579,000 for the three months ended March 31, 2020, as compared to $0.28 and $1,614,000, respectively, for the corresponding three-month period in 2019.  Even though the Company achieved the same level of earnings on a year-over-year basis, first quarter earnings were negatively impacted by a higher provision for loan losses in recognition of the unprecedented economic environment in which it is presently operating due to the global COVID-19 pandemic.

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

Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, "In light of recent events, we are pleased to report on our overall solid financial performance for the quarter ended March 31, 2020.  As noted above, our Company achieved diluted earnings per share of $0.28 in the first quarter of 2020 ---which was the same level as the previous year--- even though we booked an additional $473,000 of loan loss provision to give proper recognition to the risks posed to our Company by the COVID-19 pandemic.  Significantly contributing to our achievement of a sound level of earnings this past quarter was the solid growth that our Company experienced in its earning assets on a year-over-year basis.  Year-over-year, gross loans increased by $34.4 million, or 8.3%, and securities and other restricted stock increased by $57.5 million or 39.8%.  This strong growth in our earning assets, along with robust loan fee generation during the first quarter of this year, led to an increase in total interest income of $1.0 million, or 15.9%, over the previous year.  As we have formerly disclosed, our Company started to position its balance sheet to be more liability sensitive over the course of the past year in response to the FOMC's sudden change in the direction of monetary policy, which helped to control overall interest expense levels.  Even with this change, interest expense did increase by $478,000 over last year's level.  But, with our focus on both growing assets and aggressively managing our sensitivity, our Company saw a year-over-year increase in its net interest income of $525,000 or 10.3%.  As of March 31, 2020, our Company's net interest margin was 3.76%, which compares very favorably to our peer and is relatively stable compared to the previous year." 

Greenwood continued, "Even though we fully realize that the present pandemic situation has the potential to change our qualitative metrics relating to credit, we have successfully maintained overall strength and stability within our loan portfolio as of March 31, 2020.  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 $2.6 million, or 0.58 percent of total loans at quarter end versus $3.5 million and .85%, respectively, the previous year.  Further, net loans charged off, excluding overdrafts, was $63,000, or .06% annualized.  With our additional provision for loan losses this past quarter, our total allowance for loan losses increased ten basis points on a year-over-year basis to a level of 0.60% and our total allowance for loan losses to nonperforming loans was 146.4%, which was up over the previous year by 14.2%.  We are committed under the present situation with which we are confronted to closely work with our valued loan customers to keep their loans current by adopting payment relief practices fully supported by both regulatory and accounting guidance, which has evolved over the course of recent weeks.  We are hopeful that these positive actions will allow our customers to weather this present storm and our Company to maintain overall sound credit quality.  Obviously, time will ultimately bear this out."  Greenwood further stated, "Our Company continues to have very sound levels of capital.  As previously announced in the second quarter of last year, we enhanced our capital levels by issuing $20.0 million in subordinated debt at very favorable terms.  Even though this capital is only measured at the bank-level, it has provided some very welcome cushion during these very challenging times.  Overall, our Company saw shareholders' equity grow by $9.1 million, or 17.0%, year-over-year, and its book value increase (on a percentage basis) by the same amount to a level of $10.75." 

Scott A. Everson, President and CEO stated, "It is truly amazing how quickly things can change on a global basis.  The COVID-19 pandemic has had a tremendous and negative impact on all of us.  Our thoughts and prayers go out to everyone as we work to navigate through this unimaginable time and come to some semblance of normalcy, once again.  I am extremely grateful that both our valued employees and customers have adapted to the modified operating structure that we adopted during the latter half of the first quarter.  Our number one priority at this time is to protect the health and welfare of our team members and customer base while delivering the highest quality of service possible under the circumstances.  We are blessed to have both systems and personnel capable of enacting quick change in our delivery, which has led to results that are similar to those when we are fully functional as a community bank.  Being observant of both the stay-at-home orders and best practices guidance being provided by governmental authorities, many of our team members are currently working from home.  In addition, delivery of our services is primarily being conducted at our drive-ups or through electronic/ digital channels.  Despite all of the challenges with which we are presently confronted, our Company produced very solid earnings results in the first quarter of 2020… even with the additional loan loss provision expense of $473,000, which was over six times the level that we allocated the previous year.  Prior to the stay-at-home order and pandemic spread, our loan production team had an excellent quarter of loan generation as evidenced by the $322,000 increase in loan fees quarter-over-quarter."  Everson concluded, "Our Company has always had a long-term view, predicated on sound underwriting practices, superior customer service and prudent liquidity and capital management, which has served us well through various operating environments.  We are confident that this operating philosophy will, once again, prove to be sound as we support our customers and work through this present crisis; therefore, protecting our shareholder value."         

As of March 31, 2020, United Bancorp, Inc. has total assets of $715.8 million and total shareholders' equity of $62.9 million.  Through its single bank charter, Unified Bank, the Company currently 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"






At or for the Quarter Ended






March 31,


March 31,


%


$


2020


2019


Change


Change

Earnings 








     Interest income on loans

$                     5,330,034


$                     5,045,302


5.64%


$            284,732

     Loan fees

512,135


190,316


169.10%


$            321,819

     Interest income on securities

1,476,745


1,079,566


36.79%


$            397,179

    Total interest income

7,318,914


6,315,184


15.89%


$         1,003,730

    Total interest expense

1,685,435


1,207,188


39.62%


$            478,247

    Net interest income

5,633,479


5,107,996


10.29%


$            525,483

    Provision for loan losses

563,000


90,000


525.56%


$            473,000

    Net interest income after provision for loan losses

5,070,479


5,017,996


1.05%


$              52,483

    Service charge on deposit account

659,147


713,294


-7.59%


$             (54,147)

    Net realized gains on sale of loans

6,032


3,804


58.57%


$                2,228

    Other noninterest income

379,730


227,850


66.66%


$            151,880

    Total noninterest income

1,044,909


944,948


10.58%


$              99,961

    Total noninterest expense

4,410,582


4,162,328


5.96%


$            248,254

    Income tax expense

125,642


187,008


-32.81%


$             (61,366)

    Net income

$                     1,579,164


$                     1,613,608


-2.13%


$             (34,444)

Key performance data








    Earnings per common share - Basic

$                              0.28


$                              0.28


0.00%


$                        -

    Earnings per common share - Diluted 

0.28


0.28


0.00%


$                        -

    Cash dividends paid

0.1425


0.1325


7.55%


$            0.01000

Stock data








    Dividend payout ratio

50.89%


47.32%


3.57%



    Price earnings ratio

10.58

x

9.69

x

9.17%



    Market price to book value

103%


118%


-13.17%



    Annualized yield based on quarter end close

5.17%


4.88%


5.94%



    Market value - last close (end of period)

11.02


10.85


1.57%



    Book value (end of period)

10.75


9.19


16.97%



Shares Outstanding








    Average - Basic

5,463,739


5,515,418


--------



    Average - Diluted 

5,463,739


5,515,418


--------



    Common stock, shares issued

5,959,351


5,897,227


--------



    Shares held as treasury stock

79,593


29,624


--------



    Return on average assets (ROA)

0.91%


1.08%


-0.17%



    Return on average equity (ROE)

10.03%


12.00%


-1.96%



At quarter end








    Total assets

$                 715,821,865


$                 621,007,755


15.27%


$       94,814,110

    Total assets (average)

693,400,000


599,312,000


15.70%


$       94,088,000

     Cash and due from Federal Reserve Bank

28,042,242


32,692,099


-14.22%


$        (4,649,857)

     Average cash and due from Federal Reserve Bank

10,850,000


21,723,000


-50.05%


$      (10,873,000)

     Securities and other restricted stock

201,853,626


144,329,961


39.86%


$       57,523,665

     Average securities and other restricted stock

193,449,000


131,402,000


47.22%


$       62,047,000

    Other real estate and repossessions

818,450


91,000


799.40%


$            727,450

    Gross loans

448,336,574


413,896,086


8.32%


$       34,440,488

    Allowance for loan losses

(2,708,559)


(2,083,480)


30.00%


$           (625,079)

    Net loans

445,628,015


411,812,606


8.21%


$       33,815,409

    Average loans

444,116,000


412,671,000


7.62%


$       31,445,000

    Net loans charged-off 

63,290


18,420


243.59%


$              44,870

    Net overdrafts charged-off 

22,268


30,988


-28.14%


$               (8,720)

    Total net charge offs 

85,558


49,408


73.17%


$              36,150

    Nonaccrual loans

1,850,476


1,576,045


17.41%


$            274,431

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

765,019


1,953,368


-60.84%


$        (1,188,349)

    Total Deposits








        Noninterest bearing demand

104,010,945


102,447,401


1.53%


$         1,563,544

        Interest bearing demand

241,437,588


212,620,075


13.55%


$       28,817,513

        Savings

111,065,936


110,923,522


0.13%


$            142,414

        Time < $250,000

86,723,750


94,268,487


-8.00%


$        (7,544,737)

        Time > $250,000

12,279,625


18,671,486


-34.23%


$        (6,391,861)

    Total Deposits

555,517,844


538,930,971


3.08%


$       16,586,873

    Average total deposits

547,025,000


526,632,000


3.87%


$       20,393,000

    Advances from the Federal Home Loan Bank

51,000,000


79,505


64046.91%


$       50,920,495

       Overnight advances

11,000,000


-


N/A


$       11,000,000

       Term advances

40,000,000


79,505


50211.30%


$       39,920,495

    Repurchase Agreements

14,587,355


13,440,580


8.53%


$         1,146,775

    Shareholders' equity

62,948,669


53,786,271


17.03%


$         9,162,398

    Shareholders' equity (average)

62,988,000


53,786,000


17.11%


$         9,202,000

Key performance ratios 








    Net interest margin (Federal tax equivalent)

3.76%


3.80%


-0.04%



    Interest expense to average assets

0.97%


0.81%


0.16%



    Total allowance for loan losses








       to nonperforming loans

146.37%


132.20%


14.17%



    Total allowance for loan losses








        to total loans

0.60%


0.50%


0.10%



   Total past due and nonaccrual loans to gross loans

0.58%


0.85%


-0.27%



   Nonperforming assets to total assets

0.37%


0.27%


0.10%



   Net charge-offs to average loans

0.08%


0.05%


0.03%



   Equity to assets at period end

8.79%


8.66%


0.13%



 

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SOURCE United Bancorp, Inc.