PR Newswire | Jul 29, 2020 01:00PM EDT

2020

07/29 12:00 CDT

United Bancorp, Inc. Reports on its Earnings for the Six Months Ended June 30, 2020 MARTINS FERRY, Ohio, July 29, 2020

MARTINS FERRY, Ohio, July 29, 2020 /PRNewswire/ -- United Bancorp, Inc. (NASDAQ: UBCP) reported diluted earnings per share of $0.57 and net income of $3,254,000 for the six months ended June 30, 2020, as compared to $0.57 and $3,260,000, respectively, for the corresponding six-month period in 2019. The Company's diluted earnings per share for the three months ended June 30, 2020 was $0.29 as compared to $0.29 for the same period in the previous year. Even though the Company achieved the same level of earnings on a year-over-year basis, year-to-date 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.

Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, "In light of current events, we are pleased to report on our overall solid financial performance for both the most recently ended quarter and the six months ended June 30, 2020. As noted above, our Company achieved diluted earnings per share of $0.29 for the second quarter of 2020 and $0.57 year-to-date-- which was the same for both corresponding periods the previous year-- even though we booked an additional $1,761,000 of loan loss provision to give proper recognition to the risks posed to our Company by the continuing COVID-19 pandemic. 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 $20.5 million, or 4.8%, and securities and other restricted stock increased by $30.3 million or 18.3%. This strong growth in our earning assets, along with robust loan fee generation during the first six months of this year, led to an increase in total interest income of $1.3 million, or 10.1%, 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 $436,000 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 $868,000 or 8.4%. As of June 30, 2020, our Company's net interest margin was 3.52%, which compares favorably to our peer."

Greenwood continued, "Even though we fully realize that the continuing 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 June 30, 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 $2.0 million, or 0.43 percent of total loans, at quarter end versus $3.3 million and 0.79 percent, respectively, the previous year. Further, net loans charged off, excluding overdrafts, was $162,000, or .07% annualized. With our additional provision for loan losses this past quarter, our total allowance for loan losses increased forty basis points over the course of the past twelve months to a level of 0.90% and our total allowance for loan losses to nonaccrual loans was 254.2%, both of which are up significantly year-over-year. 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 present regulatory and accounting guidance. 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. Toward the end of the most recent quarter, we have started to see a large percentage of our loan customer base that received some level of payment relief begin to resume contractual payments on their loans. We are hopeful that this current trend will continue over the course of the remainder of the year; but, being realistic, we firmly recognize that our credit quality metrics could become worse if our economy does not normalize in the near term." 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 shareholder's equity grow by $9.0 million, or 15.8%, year-over-year, and its book value increase by $1.69 or 17.4%."

Scott A. Everson, President and CEO stated, "As our Company continues to navigate through these very uncertain times, we are extremely grateful to report on our level of quarterly and six month earnings for 2020. Even though the earnings that we achieved for both of these periods equaled those realized last year when we had a record year, we continue to posture our Company for a longer duration downturn due to the negative macroeconomic forces with which we are presently confronted related to the impacts of the COVID-19 pandemic on both our domestic and world economies. Accordingly, we did sell some investment securities in the most recently ended quarter, which led to a gain of $1.18 million. With the present gain position that we have within our investment portfolio, we felt a partial monetization of this gain was prudent under the current circumstances in order to further build our allowance for loan losses to protect our Company. On a year-over-year basis, our allowance for loan losses has increased by $1.873 million or 87.4%." Everson continued, "We are somewhat encouraged by the continuing strong performance of our overall loan portfolio; but, we firmly realize that some of the potential risk within this portfolio could be masked due to present payment relief practices and government stimulus support which ultimately will go away. Only time will truly tell how great this potential risk is for our Company and all financial institutions." Everson further stated, "We are comforted to know that our Company continues to be well capitalized under regulatory and industry guidelines, which should help us weather any storm that may confront us. In addition, 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."

Everson concluded, "Our thoughts and prayers continue to go out to everyone as we work through the challenges presented to all of us by this horrible and unprecedented COVID-19 pandemic. Our number one priority continues to be protecting 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. From an operating perspective, our Company was able to get back to some semblance of normalcy during the latter part of the second quarter as we reopened our lobbies and, once again, began in-person banking without a scheduled appointment. Although we are now open to the public once again, we are taking extreme precautions in our operations by following strict and evolving guidance provided by both governmental and health department authorities. We are truly blessed to have an extremely caring and resilient team of employees that continue to provide a high level of service while operating on a more restricted basis. It is only through the diligence of our team members that we have been able to produce the operating results that we have during the first six months of 2020. For this, our team is to be commended and I am extremely proud of their fortitude!"

As of June 30, 2020, United Bancorp, Inc. has total assets of $701.3 million and total shareholder's equity of $66.0 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")

For the Three Months Ended June 30, % $

2020 2019 Change Change

Earnings

Interest $ 5,162,032 $ 5,109,571 1.03% $ 52,461income on loans

Loan fees 262,967 288,302 -8.79% $ (25,335)

Interestincome on 1,524,563 1,250,230 21.94% $ 274,333securities

Total 6,949,562 6,648,103 4.53% $ 301,459interest income

Total interest 1,426,867 1,468,420 -2.83% $ (41,553)expense

Net interest 5,522,695 5,179,683 6.62% $ 343,012income

Provision for 1,408,000 120,000 1073.33% $ 1,288,000loan losses

Net interestincome after 4,114,695 5,059,683 -18.68% $ (944,988)provision for loanlosses

Servicecharges on deposit 670,712 693,487 -3.28% $ (22,775)accounts

Net realizedgains on sale of 1,180,863 - N/A $ 1,180,863available-for-salesecurities

Net realizedgains on sale of 40,338 9,286 334.40% $ 31,052loans

Other 263,091 244,278 7.70% $ 18,813noninterest income

Total 2,155,004 947,051 127.55% $ 1,207,953noninterest income

Totalnoninterest 4,578,268 4,171,876 9.74% $ 406,392expense

Earningsbefore income 1,691,431 1,834,858 -7.82% $ (143,427)taxes

Income tax 16,533 188,033 -91.21% $ (171,500)expense

Net income $ 1,674,898 $ 1,646,825 1.70% $ 28,073

Per share

Earnings percommon share - $ 0.29 $ 0.29 0.00%Basic

Earnings percommon share - 0.29 0.29 0.00%Diluted

Cash dividends 0.1425 0.1350 5.56%paid

Shares Outstanding

Average - 5,466,035 5,520,259 ------Basic

Average - 5,466,035 5,520,259 ------Diluted

For the Six Months Ended June 30, % $

2020 2019 Change Change

Earnings

Interest $ 10,492,066 $ 10,240,712 2.45% $ 251,354income on loans

Loan fees 775,102 392,779 97.34% $ 382,323

Interestincome on 3,001,308 2,329,796 28.82% $ 671,512securities

Total 14,268,476 12,963,287 10.07% $ 1,305,189interest income

Total interest 3,112,302 2,675,608 16.32% $ 436,694expense

Net interest 11,156,174 10,287,679 8.44% $ 868,495income

Provision for 1,971,000 210,000 838.57% $ 1,761,000loan losses

Net interestincome after 9,185,174 10,077,679 -8.86% $ (892,505)provision for loanlosses

Servicecharges on deposit 1,329,859 1,406,781 -5.47% $ (76,922)accounts

Net realizedgains on sale of 1,250,363 - N/A $ 1,250,363available-for-salesecurities

Net realizedgains on sale of 46,370 13,090 254.24% $ 33,280loans

Other 573,321 472,128 21.43% $ 101,193noninterest income

Total 3,199,913 1,891,999 69.13% $ 1,307,914noninterest income

Totalnoninterest 8,988,850 8,334,204 7.85% $ 654,646expense

Earningsbefore income 3,396,237 3,635,474 -6.58% $ (239,237)taxes

Income tax 142,175 375,041 -62.09% $ (232,866)expense

Net income $ 3,254,062 $ 3,260,433 -0.20% $ (6,371)

Per share

Earnings percommon share - $ 0.57 $ 0.57 0.00%Basic

Earnings percommon share - 0.57 0.57 0.00%Diluted

Cash dividends 0.2850 0.2675 6.54%paid

Annualizedyield based on 4.95% 4.65% 0.30%quarter end close

Shares Outstanding

Average - 5,464,899 5,517,852 ------Basic

Average - 5,464,899 5,517,852 ------Diluted

Common stock, 5,966,351 5,939,351 ------shares issued

Shares held as 79,593 42,410 ------Treasury

At quarter end

Total assets $ 701,327,751 $ 648,627,000 8.12% $ 52,700,751

Total assets 695,557,000 629,540,000 10.49% $ 66,017,000(average)

Other realestate and 719,000 30,000 2296.67% $ 689,000repossessions("OREO")

Gross loans 445,900,352 425,432,621 4.81% $ 20,467,731

Allowance for 4,014,502 2,141,790 87.44% $ 1,872,712loan losses

Net loans 441,885,850 423,290,831 4.39% $ 18,595,019

Non-accrual 1,579,116 2,814,220 -43.89% $ (1,235,104)loans

Loans past due30+ days (excludes 375,457 530,648 -29.25% $ (155,191)non accrual loans)

Net loans 162,427 56,179 189.12% $ 106,248charged-off

Net overdrafts 25,187 54,919 -54.14% $ (29,732)charged-off

Net 187,614 111,098 68.87% $ 76,516charge-offs

Average loans 447,023,000 415,829,000 7.50% $ 31,194,000

Cash and duefrom Federal 21,647,194 20,107,980 7.65% $ 1,539,214Reserve Bank

Average cashand due from 8,257,000 5,272,000 56.62% $ 2,985,000Federal ReserveBank

Securities andother restricted 195,951,994 165,617,415 18.32% $ 30,334,579stock

Averagesecurities and 188,128,000 131,739,000 42.80% $ 56,389,000other restrictedstock

Total deposits 592,020,465 546,246,079 8.38% $ 45,774,386

Noninterest bearing 127,582,412 113,354,585 12.55% $ 14,227,827demand

Interest 255,090,198 205,850,931 23.92% $ 49,239,267bearing demand

Savings 116,559,001 110,884,640 5.12% $ 5,674,361

Time < 80,887,226 99,092,547 -18.37% $ (18,205,321)$100,000

Time > 11,901,628 17,063,376 -30.25% $ (5,161,748)$100,000

Average total 567,931,000 543,553,000 4.48% $ 24,378,000deposits

Advances fromthe Federal Home - 1,633 N/A $ (1,633)Loan Bank

Overnight - - N/A $ -advances

Term - 1,633 N/A $ (1,633)advances

Subordinateddebt (net of 19,449,651 19,396,372 N/A $ 53,279unamortizedissuance costs)

Securitiessold under 9,494,389 7,674,291 23.72% $ 1,820,098agreements torepurchase

Stockholders' 65,984,734 57,005,357 15.75% $ 8,979,377equity

Stockholders' 65,326,000 57,028,000 14.55% $ 8,298,000equity (average)

Stock data

Market value -last close (end of $ 11.52 $ 11.50 0.17%period)

Dividend 50.00% 46.93% 3.07%payout ratio

Price earnings 9.93 x 10.09 x -0.16%ratio

Book value $ 11.42 $ 9.73 17.37%(end of period)

Market price 100.88% 118.19% -14.65%to book value

Key performanceratios

Return onaverage assets 0.94% 1.04% -0.10%(ROA)

Return onaverage equity 9.96% 11.43% -1.47%(ROE)

Net interestmargin (federal 3.52% 3.73% -0.21%tax equivalent))

Interestexpense to average 0.89% 0.85% 0.04%assets

Totalallowance for loan 254.22% 76.11% 178.11%losses tononaccrual loans

Totalallowance for loan 0.90% 0.50% 0.40%losses to totalloans

Nonaccrualloans to total 0.35% 0.66% -0.31%loans

Nonaccrualloans and OREO to 0.33% 0.44% -0.11%total assets

Net charge-offs(recoveries) to 0.08% 0.05% 0.03%average loans

Equity toassets at period 9.41% 8.79% 0.62%end

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SOURCE United Bancorp, Inc.