<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
------------------------------------
Commission File Number: 0-16540
-------
<TABLE>
<S> <C>
UNITED BANCORP, INC.
--------------------
(Exact name of registrant as specified in its charter.)
OHIO 34-1405357
---- ----------
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
FOURTH AT HICKORY STREET, MARTINS FERRY, OHIO 43935
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(614) 633-0445
--------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of the issuer's classes of
common stock as of the latest practicable date.
COMMON STOCK, $1.00 PAR VALUE 2,032,588 SHARES AS OF AUGUST 9, 1996
-------------------------------------------------------------------
<PAGE> 2
UNITED BANCORP, INC.
TABLE OF CONTENTS
FORM 10-Q
PART I FINANCIAL INFORMATION
<TABLE>
<S> <C>
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets . . . June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income . . . Three and Six Months Ended
June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows . . . Six Months Ended
June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6-13
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 14-19
PART II OTHER INFORMATION
ITEM 1.
Legal Proceedings 20
ITEM 2.
Changes in Securities 20
ITEM 3.
Default Upon Senior Securities 20
ITEM 4.
Submission of Matters to a Vote of Security Holders 20
ITEM 5.
Other Information 21
ITEM 6.
Exhibits and Reports on Form 8-K 21
Signatures 22
</TABLE>
2
<PAGE> 3
UNITED BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 5,730 $ 6,382
Federal funds sold 500 600
-------- --------
TOTAL CASH AND DUE FROM BANKS 6,230 6,982
Investment securities available for sale 23,553 27,108
Investment securities held to maturity
(Estimated fair value of $31,036 at 06/30/96 and $29,986 at 12/31/95) 30,945 29,363
Loans
Commercial loans 10,476 10,802
Commercial real estate loans 38,234 35,510
Real estate loans 34,240 33,294
Installment loans 43,132 43,077
-------- --------
TOTAL LOANS 126,082 122,683
Allowance for loan losses (1,929) (1,775)
-------- --------
Net loans 124,153 120,908
Premises and equipment, net 5,330 4,901
Accrued interest receivable and other assets 2,199 1,938
-------- --------
TOTAL ASSETS $192,410 $191,200
======== ========
LIABILITIES
Deposits
Noninterest bearing $ 12,263 $ 12,617
Interest bearing 154,105 153,987
-------- --------
TOTAL DEPOSITS 166,368 166,604
Short-term borrowings 5,196 4,569
US Treasury note account 627 64
Accrued expenses and other liabilities 1,194 1,511
-------- --------
Total borrowings and other liabilities 7,017 6,144
TOTAL LIABILITIES 173,385 172,748
-------- --------
SHAREHOLDERS' EQUITY
Common stock:($1 Par Value) 10,000,000 shares authorized; issued and outstanding:
2,032,588 shares at 6/30/96 and 1,847,942 at 12/31/95 2,033 1,848
Additional-paid-in-capital 11,713 9,359
Retained earnings 5,283 6,946
Unrealized gain/(loss) on securities available for sale, net of tax (4) 299
Total Shareholders' Equity 19,025 18,452
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $192,410 $191,200
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
UNITED BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
06/30/96 06/30/95 06/30/96 06/30/95
------------------------- -----------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 2,808 $ 2,571 $ 5,593 $ 4,966
Interest on investment securities
Taxable 562 709 1,165 1,453
Tax exempt 266 240 512 484
Interest on federal funds sold 55 36 81 49
Dividends 11 1 11 1
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME 3,702 3,557 7,362 6,953
---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits 1,565 1,584 3,112 3,082
Other 81 63 167 121
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE 1,646 1,647 3,279 3,203
---------- ---------- ---------- ----------
NET INTEREST INCOME 2,056 1,910 4,083 3,750
Provision for loan losses (122) (98) (233) (169)
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,934 1,812 3,850 3,581
---------- ---------- ---------- ----------
NONINTEREST INCOME
Service charges on deposit accounts 158 143 301 261
Investment security gains, net 27 12 27 12
Other 76 83 189 204
---------- ---------- ---------- ----------
TOTAL NONINTEREST INCOME 261 238 517 477
---------- ---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 664 653 1,343 1,295
Premises, furniture and equipment expense 204 188 392 399
Other operating expense 473 487 909 993
---------- ---------- ---------- ----------
TOTAL NONINTEREST EXPENSE 1,341 1,328 2,644 2,687
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 854 722 1,723 1,371
Provision for income taxes (196) (188) (418) (337)
---------- ---------- ---------- ----------
NET INCOME $ 658 $ 534 $ 1,305 $ 1,034
========== ========== ========== ==========
PER SHARE DATA:
Earnings per common share $ 0.32 $ 0.26 $ 0.64 $ 0.51
========== ========== ========== ==========
Average number of shares outstanding 2,032,588 2,032,588 2,032,588 2,032,588
Dividends per common share $ 0.11 $ 0.09 $ 0.21 $ 0.18
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE> 5
UNITED BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
06/30/96 06/30/95
-------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,305 $ 1,034
Adjustments to reconcile net income to net cash from operating activities ------- -------
Depreciation and amortization 214 198
Amortization of intangibles 42 44
Provision for loan losses 233 169
Deferred taxes 26 55
Federal Home Loan Bank stock dividend (11)
Gain on sale/call of investment securities (27) (12)
Amortization of investment securities, net 5 43
Net changes in:
Accrued interest receivable and other assets (302) 252
Accrued expenses and other liabillities (183) (231)
------- -------
NET CASH FROM OPERATING ACTIVITIES 1,302 1,552
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment securities available for sale
Proceeds from sales of investment securities 3,015 500
Proceeds from maturities/calls of investment securities 8,250
Purchase of investment securities (8,120) (748)
Investment securities held to maturity
Proceeds from maturities/calls of investment securities 2,806 3,075
Purchase of investment securities (4,406) (176)
Net change in loans (3,479) (7,649)
Property and equipment expenditures (645) (50)
------- -------
NET CASH FROM INVESTING ACTIVITIES (2,579) (5,048)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits (236) 1,911
Net change in short-term obligations 1,190 1,102
Cash dividends (429) (370)
------- -------
NET CASH FROM FINANCING ACTIVITIES 525 2,643
------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS (752) (853)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,982 6,730
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,230 $ 5,877
======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed in
the preparation of the accompanying condensed consolidated financial
statements.
NATURE OF OPERATIONS
The accompanying condensed consolidated financial statements include the
accounts of United Bancorp, Inc. (COMPANY) and its wholly owned
subsidiaries, The Citizens Savings Bank of Martins Ferry, Ohio
(CITIZENS-MARTINS FERRY) and The Citizens-State Bank of Strasburg,
Strasburg, Ohio (CITIZENS-STRASBURG). For purposes of consolidation, all
material intercompany balances and transactions have been eliminated. The
results of operations for the period ended June 30, 1996 are not
necessarily indicative of the operating results for the full year of 1996.
The COMPANY is engaged in the business of commercial and retail banking in
Belmont, Tuscarawas and Carroll Counties and the surrounding localities in
north central and eastern Ohio. The subsidiary Banks provide a broad
range of banking and financial services, which include accepting demand,
savings and time deposits and granting commercial, real estate and
consumer loans. CITIZENS-MARTINS FERRY conducts its business through its
main office in Martins Ferry, Ohio and two branches located in Bridgeport
and Colerain, Ohio. CITIZENS-STRASBURG conducts its business through its
main office in Strasburg, Ohio and its four branches located in Dover, New
Philadelphia, Sherrodsville and Dellroy, Ohio.
These interim financial statements are prepared without audit and reflect
all adjustments which, in the opinion of management, are necessary to
present fairly the consolidated financial position of the COMPANY at June
30, 1996 and its results of operations and statements of cash flows for
the periods presented. These adjustments are of a normal and recurring
nature. The accompanying condensed consolidated financial statements do
not purport to contain all the necessary financial disclosures required by
generally accepted accounting principles that might otherwise be necessary
in the circumstances and should be read in conjunction with the 1995
United Bancorp, Inc. consolidated financial statements and related notes
thereto included in its Annual Report To Shareholders for the year ended
December 31, 1995.
INVESTMENT SECURITIES
The COMPANY classifies securities into held-to-maturity,
available-for-sale and trading categories. Held-to-maturity securities
are those which the COMPANY has the positive intent and ability to hold to
maturity, and are reported at amortized cost. Available-for-sale
securities are those which the COMPANY may decide to sell if needed for
liquidity, asset/liability management, or other reasons.
Available-for-sale securities are reported at fair value, with unrealized
gains or losses included as a separate component of shareholders' equity,
net of tax. Trading securities are bought principally for sale in the
near term and are reported at fair value with unrealized gains or losses
included in earnings. The COMPANY had no trading securities through June
30, 1996.
Realized gains or losses are determined based on the amortized cost of the
specific security sold. Interest and dividend income, adjusted by
amortization of purchase premium or discount is included in earnings.
6
<PAGE> 7
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses represents that amount which management and
the Board of Directors estimates is adequate to provide for inherent
losses in its loan portfolio. The allowance balance and the annual
provision charged to expense are reviewed by management and the Board of
Directors monthly, using a risk code model that considers past due
experience, economic conditions and various other circumstances that are
subject to change over time.
The COMPANY adopted Statement of Financial Accounting Standards ("SFAS")
No. 114, "Accounting By Creditors for Impairment Of A Loan" and SFAS No.
118, "Accounting By Creditors For Impairment Of A Loan - Income
Recognition And Disclosures" at January 1, 1995. Under SFAS No. 114,
loans considered to be impaired are reduced to the present value of
expected future cash flows or to the fair value of collateral, by
allocating a portion of the allowance for loan losses to such loans. If
these allocations cause the allowance for loan losses to increase, such
increases are reported as bad debt expense. The effect of adopting these
standards had no impact on the COMPANY'S allowance for loan losses at
January 1, 1995.
Management analyzes commercial and commercial real estate loans on an
individual basis and classifies a loan as impaired when an analysis of the
borrower's operating results and financial condition indicates that
underlying cash flows are not adequate to meet its debt service
requirement. Often this is associated with a delay or shortfall in
payments of 30 days or more. Smaller-balance homogeneous loans are
evaluated for impairment in total. Such loans include residential first
mortgage loans secured by one-to-four family residences, residential
construction loans, consumer automobile, boat and home equity loans.
Loans are generally moved to nonaccrual status when 90 days or more past
due. These loans are often also considered impaired. Impaired loans, or
portions thereof, are charged-off when deemed uncollectible. The nature
of disclosures for impaired loans is considered generally comparable to
prior nonaccrual loans and nonperforming and past due asset disclosures.
INTEREST AND FEES ON LOANS
Interest income on loans is accrued over the term of the loans based on
the principal amount outstanding. The accrual of interest is discontinued
and adjusted back to the date of nonpayment when, in management's opinion,
the collection of all or a portion of the loan principal has become
doubtful. Loan fees and direct costs associated with originating or
acquiring loans are deferred and recognized over the life of the related
loan as an adjustment of the yield. The net amount of fees and costs
deferred is reported in the condensed consolidated balance sheets as part
of loans.
Under SFAS No. 114, as amended by SFAS No. 118, the carrying values of
impaired loans are periodically adjusted to reflect cash payments, revised
estimates of future cash flows and increases in the present value of
expected cash flows due to the passage of time. Cash payments
representing interest income are reported as such and other cash payments
are reported as reductions in carrying value. Increases or decreases in
carrying value due to changes in estimates of future payments or the
passage of time are reported as reductions or increases in bad debt
expense.
7
<PAGE> 8
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Premises and related components are depreciated using the straight-line
method with lives ranging primarily from 20 to 50 years. Furniture and
equipment are depreciated using the straight-line method, with lives
ranging primarily from 5 to 15 years. Maintenance and repairs are
expensed and major improvements are capitalized. At the time of sale or
disposition of an asset, the applicable cost and accumulated depreciation
amounts are removed from the accounting records.
OTHER REAL ESTATE
Other real estate is included in other assets at fair value, less
estimated costs to sell. Any reduction from the carrying value of the
related loan to estimated fair value at the time the property is acquired
is accounted for as a loan charge-off. Any subsequent reductions in the
estimated fair value are reflected in a valuation allowance through a
charge to other real estate expense. Expenses incurred to carry other
real estate are charged to operations as incurred. There was no other
real estate held at June 30, 1996 and at December 31, 1995.
INCOME TAXES
The COMPANY follows the liability method in accounting for income taxes.
The liability method provides that deferred tax assets and liabilities are
recorded based on the difference between the tax basis of assets and
liabilities and their carrying amounts for financial reporting purposes.
EARNINGS AND DIVIDENDS PER COMMON SHARE
Earnings per common share have been computed based on the weighted average
number of shares outstanding during the periods presented. On April 17,
1996, an additional 10% share dividend was approved for all shareholders
of record on May 20, 1996 and distributed on June 20, 1996. This stock
dividend was recorded by transferring the fair market value of the shares
issued from Retained Earnings to Common Stock and
Additional-Paid-In-Capital. All per share data has been retroactively
adjusted for the stock dividend. The weighted average number of shares
used in the computation of earnings per share was 2,032,588 for the
comparative periods presented. Stock options outstanding do not presently
have a dilutive effect of greater than 3% on earnings per common share and
are therefore not considered for purposes of the earnings per share
disclosure.
STATEMENT OF CASH FLOWS
For purposes of the Statements of Cash Flows, the COMPANY considers "cash
and cash equivalents" to include cash, non interest bearing deposits with
financial institutions and Federal funds sold. The COMPANY reports net
cash flows for Federal funds sold, customer loan transactions, deposit
transactions, securities sold under agreements to repurchase and other
borrowed funds. For the periods ended June 30, 1996 and June 30, 1995,
the COMPANY paid $3,304,000 and $3,207,000 in interest on deposits and
other borrowings and $485,000 and $294,000 for income taxes, respectively.
INDUSTRY SEGMENT INFORMATION
The single industry in which the COMPANY is involved through the activities
of its two subsidiary Banks is commercial community banking serving the
financial needs of local commercial, individual and public entity
customers. Revenue received by the COMPANY is derived primarily from
upstream dividends paid by the two subsidiary banks with disbursement to
shareholders through UNITED BANCORP, INC. dividends. Subsidiary income is
generated from activities specific to the commercial banking industry.
8
<PAGE> 9
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
2. INVESTMENT SECURITIES
The amortized cost and estimated fair value of investment securities
are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996
AMORTIZED GROSS GROSS ESTIMATED
COST UNREALIZED GAIN UNREALIZED LOSS MARKET VALUE
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE
US Treasury obligations $ 4,457,054 $ 46,926 $ 4,503,980
US Agency obligations 18,042,745 63,015 ($125,935) 17,979,825
State and Municipal obligations 456,531 9,273 465,804
Other investments 603,400 603,400
----------- -------- --------- -----------
TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE $23,559,730 $119,214 ($125,935) $23,553,009
=========== ======== ========= ===========
Investment Securities Held To Maturity
US Agency obligations $10,771,323 ($215,388) $10,555,935
State and Municipal obligations 20,173,778 $341,056 (35,228) 20,479,606
----------- -------- --------- -----------
Total Investment Securities Held To Maturity $30,945,101 $341,056 ($250,616) $31,035,541
=========== ======== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
AMORTIZED GROSS GROSS ESTIMATED
COST UNREALIZED GAIN UNREALIZED LOSS MARKET VALUE
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE
US Treasury obligations $ 6,937,596 $171,964 ($4,061)* $ 7,105,499
US Agency obligations 18,789,021 270,386 (1,779) 19,057,628
State and Municipal obligations 336,419 16,822 353,241
Other investments 591,900 591,900
----------- -------- --------- -----------
TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE $26,654,936 $459,172 ($5,840) $27,108,268
=========== ======== ========= ===========
INVESTMENT SECURITIES HELD TO MATURITY
US Agency obligations $12,397,123 $8,533 ($84,591) $12,321,065
State and Municipal obligations 16,965,114 749,374 (49,641) 17,664,847
----------- -------- --------- -----------
TOTAL INVESTMENT SECURITIES HELD TO MATURITY $29,362,237 $757,907 ($134,232) $29,985,912
</TABLE>
Total proceeds from sales of investment securities classified as available for
sale for the six month period ended June 30, 1996 were $3,015,469 with $26,520
realized as gross gains on those sales. Total proceeds from sales of investment
securities classified as available for sale for the six months ended June 30,
1995 were $500,312. Gross gains of $11,778 were realized on those sales.
The amortized cost and estimated fair value of debt securities at June 30, 1996
by contractual maturity are shown in the following table. Actual maturities may
differ from contractual maturities because issuers may have the right to call or
repay obligations with or without call or prepayment penalties. The average
interest rates are based in coupon rates adjusted for amortization and
accretion. Yields on investment securities available for sale have been computed
on the basis of amortized cost. Yields on tax-exempt securities have been
computed on a tax equivalent basis.
9
<PAGE> 10
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
<TABLE>
<CAPTION>
INVESTMENT SECURITIES AVAILABLE FOR SALE AMORTIZED ESTIMATED WEIGHTED AVERAGE
06/30/96 COST FAIR VALUE AVERAGE MATURITY YIELD
<S> <C> <C> <C> <C> <C>
US TREASURY OBLIGATIONS
0 - 3 Months $ 751,823 $ 752,857 2.5 Mos 5.51%
6 - 12 Months 497,502 503,780 9.0 Mos. 7.50%
1 - 2 Years 477,101 488,593 2 Yrs 7.72%
2 - 5 Years 2,730,628 2,758,750 2 Yrs 6.4 Mos. 6.92%
----------- ----------- ---------------- -----
Total 4,457,054 4,503,980 1 Yr 10.6 Mos. 6.83%
----------- ----------- ---------------- -----
US AGENCY OBLIGATIONS
0 - 3 Months 1,000,838 1,005,469 2.6 Mos. 7.58%
6 - 12 Months 2,010,709 2,030,222 8.8 Mos. 6.67%
1 - 2 Years 3,959,779 3,995,991 1 Yr 5.5 Mos. 6.80%
2 - 5 Years 9,072,025 9,037,675 4 Yrs 2.5 Mos. 6.88%
5 - 10 Years 1,999,394 1,910,468 7 Yrs 9.0 Mos. 6.82%
----------- ----------- ---------------- -----
Total 18,042,745 17,979,825 3 Yrs 4.7 Mos. 6.87%
----------- ----------- ---------------- -----
STATE AND MUNICIPAL OBLIGATIONS
5 - 10 Years 336,531 345,204 8 Yrs 5.3 Mos. 8.37%
Over 10 Years 120,000 120,600 11 Yrs 5.0 Mos. 8.33%
----------- ----------- ---------------- -----
Total 456,531 465,804 9 Yrs 2.6 Mos. 8.36%
----------- ----------- ---------------- -----
OTHER INVESTMENTS?
Equity securities 603,400 603,400
----------- ----------- ---------------- -----
TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE $23,559,730 $23,553,009 3 Yrs 2.6 Mos. 6.89%
=========== =========== ================ =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT SECURITIES HELD TO MATURITY AMORTIZED ESTIMATED WEIGHTED AVERAGE
06/30/96 COST FAIR VALUE AVERAGE MATURITY YIELD
<S> <C> <C> <C> <C> <C>
US AGENCY OBLIGATIONS
0 - 3 Months $ 500,000 $ 499,843 .3 Mos. 5.10%
3 - 6 Months 500,000 497,812 4.5 Mos. 4.62%
6 - 12 Months 673,214 669,302 7.9 Mos. 5.11%
1 - 2 Years 3,499,997 3,442,925 1 Yr 8.0 Mos. 5.35%
2 - 5 Years 5,598,112 5,446,053 2 Yrs 11.0 Mos. 5.71%
----------- ----------- ---------------- -----
Total 10,771,323 10,555,935 2 Yrs 1.4 Mos. 5.48%
----------- ----------- ---------------- -----
STATE AND MUNICIPAL OBLIGATIONS
0 - 3 Months 45,036 44,987 1.0 Mos. 6.74%
3 - 6 Months 776,706 777,907 5.2 Mos. 6.62%
6 - 12 Months 145,380 144,853 10.3 Mos. 5.37%
1 - 2 Years 492,786 490,434 1 Yr 3.7 Mos. 7.06%
2 - 5 Years 4,714,779 4,868,814 3 Yrs 9.3 Mos. 8.55%
5 - 10 Years 13,512,840 13,677,668 6 Yrs 10.2 Mos. 8.00%
Over 10 Years 486,251 474,943 10 Yrs 6.9 Mos. 7.69%
----------- ----------- ---------------- -----
Total 20,173,778 20,479,606 5 Yrs 9.4 Mos. 8.02%
----------- ----------- ---------------- -----
TOTAL INVESTMENT SECURITIES HELD TO MATURITY $30,945,101 $31,035,541 4 Yrs 6.1 Mos. 7.14%
=========== =========== ================ =====
</TABLE>
10
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UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
2. INVESTMENT SECURITIES (CONTINUED)
Securities with a par value of approximately $22,231,000 at June 30, 1996
and $22,485,000 at December 31, 1995 were pledged to secure public
deposits, repurchase agreements and other liabilities as required or
permitted by law.
3. LOANS
The COMPANY has, and expects to have in the future, banking transactions
with directors and officers of the COMPANY and its subsidiaries. Loans to
such borrowers, their immediate families, affiliated corporations, and
other entities in which they own more than a 10% voting interest are
summarized below:
<TABLE>
<S> <C>
Aggregate balance - December 31, 1995 $2,972,508
New loans 624,160
Repayments (1,273,215)
----------
Aggregate balance - June 30, 1996 $2,323,453
==========
</TABLE>
4. ALLOWANCE FOR LOAN LOSSES
The allowance in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Balance 01/01/96 and 01/01/95 $1,775,383 $1,437,734
Provision charged to operating expense 233,400 465,000
Loans charged-off (108,312) (151,200)
Recoveries 28,528 23,849
---------- ----------
Balance 06/30/96 and 12/31/95 $1,928,999 $1,775,383
</TABLE> ========== ==========
There were no loans at June 30, 1996 and December 31, 1995 for which
impairment was required to be evaluated on an individual , loan by loan
basis. The average outstanding balance of impaired loans for the six
months ended June 30, 1996 and June 30, 1995 was $0 and $59,000,
respectively. There was no interest recognized on a cash received basis
on impaired loans for the six moths ended June 30, 1996 and June 30, 1995.
Loans past due 90 days or more were not significant at June 30, 1996.
5. PREMISES AND EQUIPMENT
Premises and equipment, at cost, and accumulated depreciation and
amortization as of June 30, 1996 and December 31, 1995 are as follows:
<TABLE>
<S> <C> <C>
1996 1995
---- ----
Buildings and land $5,297,333 $5,302,750
Furniture and equipment 2,587,396 2,224,331
Computer software 626,774 385,587
---------- ----------
Total 8,511,503 7,912,668
Accumulated depreciation and amortization 3,181,239 3,011,431
---------- ----------
Premises and equipment, net $5,330,264 $4,901,237
=========== ==========
</TABLE>
11
<PAGE> 12
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
6. COMMITMENTS AND CONTINGENCIES
The COMPANY'S subsidiaries are parties to financial instruments with
off-balance sheet risk in the normal course of business, to meet the
financing needs of their customers. These financial instruments include
lines of credit and commitments to make loans. The COMPANY'S exposure to
credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to make loans and standby letters of
credit is represented by the contractual amount of those instruments. The
COMPANY follows the same credit policy to make such commitments as is
followed for those loans recorded in the financial statements.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- -----------
<S> <C> <C>
Commitments to extend credit $10,948,000 $11,833,000
Standby letters of credit 146,000 286,000
</TABLE>
Since many commitments to make loans expire without being used, the amount
does not necessarily represent future cash commitments. The COMPANY does
not anticipate any losses as result of these commitments. In addition,
commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Collateral obtained upon the exercise of the commitment is determined
using the COMPANY'S evaluation of the borrower, and may include business
assets, real estate and other items.
The COMPANY on an ongoing basis, is a defendant in legal actions arising
from normal business activities. Management believes that those actions
are without merit or that the ultimate liability, if any, resulting from
them will not materially affect the COMPANY'S financial statements.
At June 30, 1996 and December 31, 1995, the COMPANY was required to have
$656,000 and $694,000, respectively, of cash on hand or on deposit with
the Federal Reserve Bank to meet regulatory reserve requirements. These
balances do not earn interest.
7. CONCENTRATION OF CREDIT RISK
The Banks grant commercial, commercial real estate, real estate and
installment loans to customers mainly in Belmont, Tuscarawas and Carroll
Counties and the surrounding localities. Substantially all loans are
secured by specific items of collateral including business assets,
consumer assets, commercial real estate and residential real estate. At
June 30, 1996 and December 31, 1995, total commercial and commercial real
estate loans made up 38.6% and 37.8%, respectively of the loan portfolio,
with 30.6% and 28.4% of these loans secured by commercial and residential
real estate and business assets in the Columbus, Ohio area. Installment
loans account for 34.2% and 35.1% of the loan portfolio and are secured by
consumer assets including automobiles which account for 79.1% and 76.5%,
respectively of the installment loan portfolio. Real estate loans
comprise 27.2% of the loan portfolio as of June 30, 1996 and December 31,
1995, respectively and primarily include first mortgage loans on
residential properties and home equity lines of credit.
Included in cash and due from banks and Federal funds sold as of June 30,
1996 and December 31, 1995 is $3,284,850 and $2,313,146, respectively on
deposit with Mellon Bank, NA, Pittsburgh, Pennsylvania.
12
<PAGE> 13
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
8. BENEFIT PLANS
The COMPANY adopted a nonqualified stock option plan on November 21, 1995,
ratified by shareholders on April 17, 1996. Options granted under this
plan shall not exceed 5% of the total number of shares of Common Stock
outstanding at the date of grant. The option purchase price shall be
determined by a committee, but shall be no less than 100% of the fair
market value of the shares on the date of grant. Generally, no stock
option will be exercisable after the expiration of ten years from the date
it is granted. The options become exercisable in whole at the end of nine
years and three months except to the extent certain performance goals are
achieved, thereby allowing the options to be exercised in whole or in part
in five years. On November 21, 1995, the COMPANY granted 16 options to
buy shares of common stock at an option price of $13.58 per share adjusted
for the 10% Stock Dividend Distributed June 20, 1996.
In October 1995, the FASB issued SFAS No. 123, "Accounting For Stock-Based
Compensation." SFAS No. 123 encourages, but does not require, entities to
use a "fair value based method" to account for stock-based compensation
plans. If the fair value accounting encouraged by SFAS No. 123 is not
adopted, entities must still disclose the pro forma effect on net income
and on earnings per share had the accounting method been adopted. Fair
value of a stock option is to be estimated using an option-pricing model,
such as Black-Scholes, that considers: exercise price, expected life of
the option, current price of the stock, expected price volatility,
expected dividends on the stock, and the risk-free interest rate. Once
estimated, the fair value of an option is not later changed. This
statement is effective for fiscal years beginning after December 15, 1995.
The COMPANY will not adopt the fair value based method to account for the
stock option plan, but will disclose the pro forma effect on net income
and on earnings per share had the accounting method been adopted in the
December 31, 1996 financial statements.
9. DIVIDEND RESTRICTION
Dividends paid by the subsidiary banks are the primary source of funds
available to the COMPANY for payment of dividends to shareholders and for
other working capital needs. Applicable state statutes and regulations
impose restrictions on the amount of dividends that may be declared by the
COMPANY. Those restrictions generally limit dividends to the current and
prior two years earnings, (as defined), totaling $3,790,000 as of June 30,
1996. In addition to these restrictions, as a practical matter, dividend
payments cannot reduce regulatory capital levels below minimum regulatory
guidelines. These restrictions would not limit the COMPANY'S ability to
pay normal dividends.
13
<PAGE> 14
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
In the following pages, Management presents an analysis of UNITED BANCORP,
INC.'S financial condition at June 30, 1996 compared to December 31, 1995
and results of operations for the three and six month periods ended June
30, 1996 compared to the same three and six month periods ended June 30,
1995. This discussion is designed to provide shareholders with a more
comprehensive review of the operating results and financial position than
could be obtained from an examination of the financial statements alone.
This analysis should be read in conjunction with the financial statements
and related footnotes and the selected financial data included elsewhere
in this report.
UNITED BANCORP, INC. is a multi-bank holding company located in Martins
Ferry, Ohio. The COMPANY originally became incorporated as a one bank
holding company in July of 1983, through the acquisition of 100% of the
voting stock of The Citizens Savings Bank of Martins Ferry, Ohio As a
shell holding company, the COMPANY is headquartered at the main office
location of The Citizens Savings Bank at 4th at Hickory Street, Martins
Ferry, Ohio. The COMPANY became a multi-bank holding company in December
of 1986, through the purchase of 100% of the voting stock of The
Citizens-State Bank of Strasburg, Strasburg, Ohio. UNITED BANCORP, INC.'S
common stock has been traded on The Nasdaq SmallCap Market tier of The
Nasdaq Stock Market under the trading symbol of UBCP since February of
1993.
The markets served by both Bank subsidiaries are rich in tradition,
culture and heritage. CITIZENS-MARTINS FERRY meets the commercial banking
needs of residents, businesses and industry of the eastern reaches of the
upper Ohio Valley. This area is experiencing a renaissance through
diversification of its economy. Industry is modernizing while new centers
of technology and retail complexes are strengthening the economic base.
CITIZENS-STRASBURG serves the market area of northeastern Ohio, including
the Dover and New Philadelphia market areas and portions of the
Akron-Canton metropolitan areas. The residential communities of this
service area continue to prosper, driven by an economy fueled by light
industry. Both Bank subsidiaries serve the traditional needs of their
customers while always reaching toward tomorrow by introducing new
technologies, products and services.
FINANCIAL CONDITION
EARNING ASSETS
LOANS
At June 30, 1996, gross loans were $126,082,000 compared to $122,683,000
at December 31, 1995, representing an increase of 2.77%. Commercial real
estate lending continues to maintain steady growth with a 7.67% increase
in volume compared to December 31, 1995. Real estate lending is also
showing signs of continued growth with a slight increase of 2.84% over
year end volume. Installment lending for the second quarter has softened
somewhat with less than 1% growth, however, it is anticipated that the
current downturn in consumer lending is a short-term decline rather than a
negative long-term decline developing within the local marketplace.
The COMPANY maintains a well balanced portfolio with continued involvement
in all types of consumer lending, as well as the more common types of
domestic commercial lending. CITIZENS-MARTINS FERRY has continued to be
aggressive in the indirect automobile lending market. Current growth
levels notwithstanding, the market for this product offering within the
competitive lending areas of both Bank subsidiaries continues to provide
optimism for growth.
14
<PAGE> 15
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
LOANS (CONTINUED)
The indirect lending type of financing carries somewhat more risk than
real estate lending, however, is also provides for higher yields. The
targeted lending areas encompass four metropolitan areas, minimizing the
risk to changes in economic conditions in the two communities housing the
COMPANY'S eight branch locations.
The ongoing expansion and development of the commercial lending portfolios
at both subsidiary Banks has provided numerous opportunities for
additional market penetration within the local market and also outside
local market areas. The various types of commercial loans as a mix of the
total portfolio continue to be diverse, with no material concentration in
any one industry. Risk associated with local economic dependence upon a
single employer is not considered to be material.
Out of area loans occur mostly in the Columbus and Akron-Canton, Ohio
areas. Lending beyond the local area has been for low risk projects and
for borrowers with substantial net worth. The majority of these loans are
secured by real estate. A slight concentration of loans continues to
develop in the hotel and motel industry and in loans for the construction
or expansion of churches. None of the loans in these two industries is
delinquent or has been classified and neither industry exceeded 10% of
loans.
The allowance for loan losses represents that amount which management and
the Board of Directors estimates is adequate to provide for inherent
losses in its loan portfolio. The allowance balance and the annual
provision charged to expense are reviewed by management and the Board of
Directors monthly using a risk code model that considers past due
experience, economic conditions and various other circumstances that are
subject to change over time.
INVESTMENT SECURITIES
Investment securities available for sale at June 30, 1996 decreased
$3,555,000, or 13.11% from December 31, 1995 totals. This downward
movement resulted partially from the liquidity needs necessary to sustain
known and anticipated loan growth at both Bank subsidiaries as well as
shifting more investments to state and municipal obligations holdings.
The investment securities held to maturity increased $1,582,000, or 5.39%
over December 31, 1995 totals primarily through the acquisition of
municipal bonds, partially offset by maturities of U.S. Government agency
obligations.
The investment portfolio is comprised of U.S. Treasury notes and other
U.S. Government agency-backed securities, tax-exempt obligations of states
and political subdivisions and certain other investments. The COMPANY
does not hold any collateralized mortgage-backed securities or
derivatives. The quality rating of obligations of state and political
subdivisions within Ohio is no less than Aaa, Aa or A, with all
out-of-state bonds rated at AAA. Board policy permits the purchase of
certain non rated bonds of local schools, townships and municipalities,
based on their known levels of credit risk.
15
<PAGE> 16
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
SOURCES OF FUNDS
DEPOSITS
The COMPANY'S primary source of funds is core deposits from retail and
business customers. These core deposits include interest bearing and
noninterest bearing deposits, excluding certificates of deposit over
$100,000. Total core deposits remained unchanged during the six months
ended June 30, 1996. The COMPANY'S deposits from public agencies,
including local school districts, city and township municipalities, public
works facilities and others may tend to be more seasonal in nature
resulting from the receipt and disbursement of state and Federal grants.
These entities have maintained fairly static balances with the COMPANY due
to non similar funding and disbursement timeframes.
Certificates of deposit over $100,000 are not considered part of core
deposits and as such are used to balance rate sensitivity as a tool of
funds management. At June 30, 1996, certificates of deposit over $100,000
remained unchanged from December 31, 1995 totals.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM
BORROWINGS
Other interest-bearing liabilities include securities sold under
agreements to repurchase, sweep accounts, Federal funds purchased,
Treasury, Tax & Loan note payable and Federal Home Loan Bank advances.
June 30, 1996 total short-term borrowings increased $1,190,000, or 25.69%
over December 31, 1995 totals due primarily to increased daily sweep
account balances.
PERFORMANCE OVERVIEW
Net income for the three months ended June 30, 1996 increased $124,000, or
23.22% over the same three month period in 1995. The six month comparison
for June 30, 1996 shows an increase of $271,000, or 26.21% over the same
six month period in 1995. This annualized six month performance yielded a
Return on Average Assets of 1.35% and a Return on Average Equity of
13.90%. The increase in earnings for the three and six months ended June
30, 1996 were primarily the result of continued loan growth in higher
yielding commercial and commercial real estate portfolios, with only
moderate increases to the cost of funds on depository products. The
COMPANY also had higher levels of fee income related to deposit accounts
because of higher levels of service charge and overdraft activity.
Finally, the COMPANY realized security gains of $26,519 on investment
securities sold from the available for sale portion of the portfolio.
Net interest income, by definition, is the difference between interest
income generated on interest earning assets and the interest expense
incurred on interest bearing liabilities. Various factors contribute to
changes in net interest income, including volumes, interest rates and the
composition or mix of interest earning assets in relation to interest
bearing liabilities. The COMPANY has continued to employ aggressive
marketing and pricing concepts to generate a higher yielding product mix
within the loan portfolio as well as increasing the percentage of loans to
earning assets to increase interest income.
Total interest income for the three and six months ended June 30, 1996
when compared to the same three and six month ended June 30, 1995
increased 4.04% and 5.87% respectively. Interest and fees on loans
increased 9.22% and 12.63% for the three and six months ended June 30,
1996.
16
<PAGE> 17
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
PERFORMANCE OVERVIEW (CONTINUED)
Total interest expense for the three months ended June 30, 1996 decreased
less than 1% and the six month interest expense increased only 2.34% over
the same periods in 1995. This slight change in cost of funds over the
previous year reflects the COMPANY'S softened deposit growth in
conjunction with a continuation of only moderate increases in interest
rates during 1996.
NONINTEREST INCOME AND EXPENSE
Noninterest income for the three and six month periods presented increased
$22,000, or 9.24% and $39,000, or 8.18%, respectively. Increases were
primarily due to increased service fee income on deposits and increased
gains on sales of investment securities.
Noninterest expense for the three months ended June 30, 1996 increased
less than 1% over the three months ended June 30, 1995. Noninterest
expense for the six month comparative period decreased 1.61%. Cost
savings realized from the new generation Item Processing equipment helped
offset the related depreciation expense increases effective during the
second quarter of 1996. From a comparative basis, the COMPANY continues
to outperform the 1995 period totals in noninterest expense largely due to
reduced FDIC premium expenses which were realigned during the third
quarter of 1995.
CAPITAL RESOURCES
Internal capital growth, through the retention of earnings, is the primary
means of maintaining capital adequacy for the COMPANY. Shareholder equity
at June 30, 1996 was $19,025,000 compared to $18,452,000 at December 31,
1995, a 3.11% increase. Equity at June 30, 1996 includes a $4,000
unrecognized loss in equity due to the after tax impact of the fair value
of securities categorized as available for sale as compared to a $299,000
increase in equity at December 31, 1995. Total shareholder's equity in
relation to total assets was 9.89% at June 30, 1996 compared to 9.65% at
December 31, 1995. The ratios for Average Equity-to-Average Total Assets
at June 30, 1996 and December 31, 1995 were 9.74% and 9.10%, respectively.
On February 20, 1996, the COMPANY issued a Prospectus describing
initiation of a Dividend Reinvestment Plan (The Plan) for shareholders
under which the COMPANY'S common stock will be purchased by the Plan for
participants with automatically reinvested dividends. The Plan provides
an economical and convenient method for the holders of shares of the
COMPANY'S common stock to purchase additional shares of common stock at
market prices and without payment of brokerage commissions or service
charges. The Plan does not represent a change in the COMPANY'S dividend
policy or a guarantee of future dividends. Shareholders who do not wish
to participate in the Plan will continue to receive cash dividends, as
declared in the usual and customary manner. The COMPANY has approved the
issuance of 150,000 authorized and unissued shares of the COMPANY'S common
stock for purchase under The Plan. To date, all shares purchased by the
Plan have been on the open market.
Regulatory standards require banks and bank holding companies to maintain
capital based on "risk adjusted" assets so that categories of assets with
potentially higher credit risk require more capital backing than assets
with lower risk. Additionally, banks and bank holding companies are
required to maintain capital to support, on a risk-adjusted basis, certain
off-balance sheet activities such as standby letters of credit and
interest rate swaps.
17
<PAGE> 18
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
CAPITAL RESOURCES(CONTINUED)
In order to monitor relative levels of risk throughout the financial
institution industry, the Federal Reserve Board classifies capital into
two tiers. Tier 1 capital consists of common shareholders' equity, non
cumulative and cumulative perpetual preferred stock, and minority interest
less goodwill. Tier 2 capital consists of allowance for loan and lease
losses, perpetual preferred stock (not included in Tier 1), hybrid capital
instruments, term subordinated debt, and intermediate-term preferred
stock. All banks are required to meet a minimum ratio of 8.0% of
qualifying total capital to risk-adjusted total assets. The tier 1
capital ratio must be at least 4.0%. Capital qualifying as tier 2 capital
is limited to 1.25% of gross risk-weighted assets. The minimum leverage
ratio for a bank holding company is 3.0% calculated by dividing tier 1
capital by adjusted total assets. The impact of SFAS 115 is disregarded
by banking regulators in determining compliance with capital requirements.
Under a current regulatory proposal, interest rate risk would become an
additional element in measuring risk-based capital. This proposed change
is not expected to significantly impact the COMPANY'S compliance with
capital guidelines. The following table illustrates the COMPANY'S
risk-weighted capital ratios at June 30, 1996:
<TABLE>
<CAPTION>
06/30/96
-----------
<S> <C>
Common Shareholders' Equity $19,025,000
Tier 1 Capital $18,834,000
Tier 2 Capital $1,595,000
Tier 1 and 2 Capital $20,430,000
Adjusted Total Assets $194,066,000
Total Risk Adjusted Assets $127,631,000
Leverage Ratio 9.70%
Tier 1 Risk-Based Capital Ratio 14.76%
Tier 1 and Tier 2 Risk-Based Capital Ratio 16.01%
</TABLE>
LIQUIDITY
The COMPANY'S objective in managing liquidity is to maintain the ability
to continue to meet the cash flow needs of its customers, such as
borrowings or deposit withdrawals, as well as its own financial
commitments. The principal sources of liquidity are net income, loan
payments, maturing investment securities and investment securities
available-for-sale, Federal funds sold and cash and deposits with banks.
Along with its liquid assets, the COMPANY has additional sources of
liquidity available to ensure that adequate funds are available as needed
which include, but are not limited to, the purchase of Federal funds, the
ability to borrow funds under line of credit agreements with correspondent
banks and a borrowing agreement with the Federal Home Loan Bank of
Cincinnati, Ohio and the adjustment of interest rates to obtain deposits.
Management feels that it has the capital adequacy, profitability and
reputation to meet the current and projected needs of its customers.
18
<PAGE> 19
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
LIQUIDITY(CONTINUED)
For the period ended June 30, 1996, the adjustments to reconcile net
income to net cash from operating activities consist mainly of
depreciation and amortization of premises and equipment and intangibles,
the provision for loan losses, gain on sales of investment securities, net
amortization of investment securities and net changes in other assets and
liabilities. The most significant use of the net cash from investing
activities was $12,526,000 in investment security purchases, $3,479,000
used to fund the net change in loans and $645,000 utilized for the
purchase of the next generation of in-house Data Processing and Item
Processing hardware and software. This was partially offset by
$14,071,000 in proceeds from investment securities sold, called or
maturing. Financing activities include net changes in deposits and
short-term borrowings and cash dividends paid. Short-term obligations
were the primary source of funds providing a net cash infusion of
$1,190,000. For a more detailed illustration of the COMPANY'S sources and
uses of cash, refer to the condensed consolidated statements of cash
flows.
INFLATION
Substantially all of the COMPANY'S assets and liabilities relate to
banking activities and are monetary in nature. The consolidated financial
statements and related financial data are presented in accordance with
Generally Accepted Accounting principles (GAAP). GAAP currently requires
the COMPANY to measure the financial position and results of operations in
terms of historical dollars, with the exception of securities
available-for-sale which are measured at fair value. Changes in the value
of money due to rising inflation can cause purchasing power loss.
Management's opinion is that movements in interest rates affects the
financial condition and results of operations to a greater degree than
changes in the rate of inflation. It should be noted that interest rates
and inflation do effect each other, but do not always move in correlation
with each other. The COMPANY'S ability to match the interest sensitivity
of its financial assets to the interest sensitivity of its liabilities in
its asset/liability management may tend to minimize the effect of changes
in interest rates on the COMPANY'S performance.
REGULATORY REVIEW
The COMPANY is subject to the regulatory requirements of The Federal
Reserve System as a multi-bank holding company. The affiliate banks are
subject to regulations of the Federal Deposit Insurance Corporation (FDIC)
and the State of Ohio, Division of Financial Institutions.
19
<PAGE> 20
UNITED BANCORP, INC.
OTHER INFORMATION
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
<TABLE>
<S><C>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to a vote of security
holders at the Annual Meeting of Shareholders' on April 17,
1996:
- Compensation for Outside Directors to continue to be set at $1,000 per year as retainer and $225 per meeting
attended.
Roll Call: Ayes: 1,357,200 Nays: 30,540 Abstaining: 69,780
- Number of Directors to be set at a minimum of nine and a maximum of thirteen.
Roll Call: Ayes: 1,357,200 Nays: 30,540 Abstaining: 69,780
- Election of Directors for the Class of 1998 to include the following:
John H. Clark, Jr. Ayes: 1,407,357 Nays: 25,181 Abstaining: 24,982
Michael J. Arciello Ayes: 1,389,405 Nays: 43,133 Abstaining: 24,982
Dr. Leon F. Favede Ayes: 1,389,405 Nays: 43,133 Abstaining: 24,982
- Ratify and approve United Bancorp, Inc. Stock Option Plan as proposed in the Proxy Statement.
Roll Call: Ayes: 1,349,934 Nays: 94,909 Abstaining: 12,677
- Crowe, Chizek and Company LLP, Independent Certified Public Accountants to continue to serve as the
COMPANY'S external audit firm for the fiscal year 1996.
Roll Call: Ayes: 1,413,572 Nays: 43,649 Abstaining: 299
</TABLE>
20
<PAGE> 21
UNITED BANCORP, INC.
OTHER INFORMATION
FORM 10 - Q
PART II - OTHER INFORMATION (CONTINUED)
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K
(a) Exhibits
(b) Reports on Form 8 K
The COMPANY filed no form 8 Ks with the Securities
Exchange Commission during the quarter ending June 30,
1996.
21
<PAGE> 22
UNITED BANCORP, INC.
OTHER INFORMATION
FORM 10 - Q
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 thereunto duly authorized.
August 9, 1996 By: /s/ James W. Everson
-------------- -------------------------------------
Date James W. Everson
President and Chief Executive Officer
August 9, 1996 By: /s/ Ronald S. Blake
-------------- -------------------------------------
Date Ronald S. Blake
Treasurer
22
<PAGE> 23
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- - ------- ----------- -------------
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,730
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,553
<INVESTMENTS-CARRYING> 30,945
<INVESTMENTS-MARKET> 31,036
<LOANS> 126,082
<ALLOWANCE> 1,929
<TOTAL-ASSETS> 192,410
<DEPOSITS> 166,368
<SHORT-TERM> 5,823
<LIABILITIES-OTHER> 1,194
<LONG-TERM> 0
0
0
<COMMON> 2,033
<OTHER-SE> 16,992
<TOTAL-LIABILITIES-AND-EQUITY> 192,410
<INTEREST-LOAN> 5,593
<INTEREST-INVEST> 1,688
<INTEREST-OTHER> 81
<INTEREST-TOTAL> 7,362
<INTEREST-DEPOSIT> 3,112
<INTEREST-EXPENSE> 3,279
<INTEREST-INCOME-NET> 4,083
<LOAN-LOSSES> 233
<SECURITIES-GAINS> 27
<EXPENSE-OTHER> 2,644
<INCOME-PRETAX> 1,723
<INCOME-PRE-EXTRAORDINARY> 1,723
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,305
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.64
<YIELD-ACTUAL> 4.51
<LOANS-NON> 134
<LOANS-PAST> 101
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,775
<CHARGE-OFFS> 108
<RECOVERIES> 29
<ALLOWANCE-CLOSE> 1,929
<ALLOWANCE-DOMESTIC> 1,929
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 715
</TABLE>
