<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 MARCH 31, 1996
OR
[ ] 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
UNITED BANCORP, INC.
-------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER.)
OHIO 34-1405357
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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 1,847,942 SHARES AS OF MAY 1, 1996.
------------------------------------------------------------------
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UNITED BANCORP, INC.
TABLE OF CONTENTS
FORM 10-Q
<TABLE>
<S> <C> <C>
FINANCIAL INFORMATION
PART I
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets...March 31, 1996
and December 31, 1995...................................... 3
Condensed Consolidated Statements of Income...Three Months
Ended March 31, 1996 and 1995.............................. 4
Condensed Consolidated Statements of Cash Flows...Three
Months Ended March 31, 1996 and 1995....................... 5
Notes to Condensed Consolidated Financial Statements...
March 31, 1996............................................. 6 - 14
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 15 - 20
PART II OTHER INFORMATION
Item 1. Legal Proceedings ........................................... 21
Item 2. Changes in Securities ....................................... 21
Item 3. Defaults Upon Senior Securities ............................. 21
Item 4. Submission of Matters to a Vote of Security Holders ......... 21
Item 5. Other Information............................................ 21
Item 6. Exhibits and Reports on Form 8-K ............................ 21
Signatures .................................................. 22
</TABLE>
Page 2
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UNITED BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
Cash And Due From Banks .............................................. $ 6,518 $ 6,382
Federal Funds Sold ................................................... 1,300 600
----------- ----------
TOTAL CASH AND CASH EQUIVALENTS .................................... 7,818 6,982
----------- ----------
Investment Securities Available For Sale ............................. 27,159 27,108
Investment Securities Held To Maturity (Estimated Fair Value Of
$30,548 At 03/31/96 And $29,986 At 12/31/95) ....................... 30,174 29,363
Loans
Commercial Loans (Non-Real Estate) ................................. 10,685 10,802
Commercial Loans (Real Estate) ..................................... 36,569 35,510
Real Estate Loans (Residential) .................................... 33,420 33,294
Installment Loans .................................................. 43,543 43,077
----------- ----------
TOTAL LOANS ...................................................... 124,217 122,683
Allowance For Loan Losses .......................................... (1,851) (1,775)
----------- ----------
NET LOANS 122,366 120,908
----------- ----------
Premises And Equipment, Net .......................................... 5,368 4,901
Accrued Interest Receivable And Other Assets ......................... 2,516 1,938
----------- ----------
TOTAL ASSETS .................................................... $ 195,401 $ 191,200
=========== ==========
LIABILITIES
Deposits
Non-Interest Bearing ............................................... $ 11,719 $ 12,617
Interest Bearing ................................................... 155,161 153,987
----------- ----------
TOTAL DEPOSITS ................................................... 166,880 166,604
----------- ----------
Short-Term Obligations
Short-Term Borrowings .............................................. 8,084 4,569
U.S. Treasury Note Account ......................................... 173 64
Accrued Expenses And Other Liabilities ............................... 1,504 1,511
----------- ----------
TOTAL BORROWINGS AND OTHER LIABILITIES ........................... 9,761 6,144
----------- ----------
TOTAL LIABILITIES ................................................ 176,641 172,748
----------- ----------
SHAREHOLDERS' EQUITY
Common Stock: ($1 Par Value) 10,000,000 Shares Authorized;
Issued And Outstanding: 1,847,942 Shares ........................... 1,848 1,848
Additional Paid-In-Capital ........................................... 9,359 9,359
Retained Earnings .................................................... 7,390 6,946
Unrealized Gain on Securities Available For Sale, Net of Tax ......... 163 299
----------- ----------
TOTAL SHAREHOLDERS' EQUITY ....................................... 18,760 18,452
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....................... $ 195,401 $ 191,200
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page 3
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UNITED BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
MARCH 31, MARCH 31,
1996 1995
--------- ---------
<S> <C> <C>
INTEREST INCOME
Interest and Fees on Loans .............................................. $ 2,785 $ 2,395
Interest on Investments Securities ......................................
Taxable ............................................................... 603 744
Tax Exempt ............................................................ 246 244
Interest on Federal Funds Sold .......................................... 26 13
------------- -------------
TOTAL INTEREST INCOME ................................................. 3,660 3,396
------------- -------------
INTEREST EXPENSE
Deposits ................................................................ 1,547 1,498
Other ................................................................... 86 58
------------- -------------
TOTAL INTEREST EXPENSE ................................................ 1,633 1,556
------------- -------------
NET INTEREST INCOME 2,027 1,840
Provision For Loan Losses ................................................. 111 71
------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ....................... 1,916 1,769
------------- -------------
NONINTEREST INCOME
Service Charges on Deposit Accounts ..................................... 143 118
Other ................................................................... 113 121
------------- -------------
TOTAL NONINTEREST INCOME .............................................. 256 239
------------- -------------
NONINTEREST EXPENSES
Salaries And Employee Benefits ......................................... 679 642
Premises, Furniture and Equipment Expense ............................... 188 211
Other Operating Expense ................................................. 436 506
------------- -------------
TOTAL NONINTEREST EXPENSES ............................................ 1,303 1,359
------------- -------------
INCOME BEFORE TAXES AND ACCOUNTING CHANGE ................................. 869 649
PROVISION FOR INCOME TAXES ................................................ 222 149
------------- -------------
NET INCOME ................................................................ $ 647 $ 500
============= =============
PER SHARE DATA:
Earnings Per Common Share ............................................... $ 0.35 $ 0.27
============= =============
Average Number of Shares Outstanding ...................................... 1,847,942 1,847,942
Dividends Per Common Share ................................................ $ 0.11 $ 0.10
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
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UNITED BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
MARCH 31, MARCH 31,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income .................................................................... 647 500
Adjustments To Reconcile Net Income To Net Cash From Operating Activities .....
Depreciation And Amortization ............................................. 98 110
Amortization Of Intangibles .............................................. 22 21
Provision For Loan Losses ................................................. 111 71
Deferred Taxes ............................................................ (10) (2)
Federal Home Loan Bank Stock Dividend ..................................... (10)
Amortization Of Investment Securities, Net ................................ 2 26
Net Changes In:
Accrued Interest Receivable And Other Assets .............................. (600) (195)
Accrued Expenses And Other Liabilities .................................... 73 (75)
----------- -----------
NET CASH FROM OPERATING ACTIVITIES ...................................... 333 456
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Securities Available For Sale
Proceeds From Sales Of Investment Securities ................................ 0 0
Proceeds From Maturities/Calls Of Investment Securities ..................... 1,750
Purchase Of Investment Securities ........................................... (1,999) (41)
Investment Securities Held To Maturity
Proceeds From Sales Of Investment Securities ................................ 0 0
Proceeds From Maturities/Calls Of Investment Securities ..................... 2,000 500
Purchase Of Investment Securities ........................................... (2,811) (52)
Net Change In Loans ......................................................... (1,569) (3,458)
Property And Equipment Expenditures ......................................... (565) (7)
----------- -----------
NET CASH FROM INVESTING ACTIVITIES ........................................ (3,194) (3,058)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change In Deposits ....................................................... 276 4,115
Net Change In Short-Term Obligations .......................................... 3,624 (1,346)
Cash Dividends ............................................................... (203) (185)
----------- -----------
NET CASH FROM FINANCING ACTIVITIES ........................................ 3,697 2,584
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS ......................................... 836 (18)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .................................. 6,982 6,730
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................................... $ 7,818 $ 6,712
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page 5
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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,
Ohio, (CITIZENS-STRASBURG). For purposes of consolidation, all
material intercompany balances and transactions have been eliminated.
The results of operations for the period ended March 31, 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. 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 March 31, 1996 and its results of operations and statement
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 March 31, 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.
Page 6
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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
non-performing 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.
Page 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 March 31, 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.
The weighted average number of shares used in the computation of
earnings per share was 1,847,942 for the comparative periods
presented.
STATEMENT OF CASH FLOWS
For purposes of the Statements of Cash Flows, the COMPANY considers
"cash and cash equivalents" to include cash, noninterest 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 March
31, 1996 and March 31, 1995, the COMPANY paid $1,683,495 and
$1,556,829 in interest on deposits and other borrowings.
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.
Page 8
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UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
2 INVESTMENT SECURITIES
The amortized cost and estimated fair values of investment securities
are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED COST UNREALIZED GAIN UNREALIZED LOSS MARKET VALUE
-------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE
U.S. Treasury Obligations ......................... $ 6,446,638 $ 115,505 $ (768) $ 6,561,375
U.S. Agency Obligations ........................... 19,535,436 174,399 (55,473) 19,654,362
State And Municipal Obligations ................... 336,474 14,030 0 350,504
Other Investments ................................. 592,800 0 0 592,800
--------------- --------------- --------------- ---------------
TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE... $ 26,911,348 $ 303,934 $ (56,241) $ 27,159,041
=============== =============== =============== ===============
INVESTMENT SECURITIES HELD TO MATURITY
U.S. Agency Obligations ........................... $ 10,897,169 $ 2,372 $ (147,116) $ 10,752,425
State And Municipal Obligations ................... 19,277,283 538,844 (20,733) 19,795,394
--------------- --------------- --------------- ---------------
TOTAL INVESTMENT SECURITIES HELD TO MATURITY... $ 30,174,452 $ 541,216 $ (167,849) $ 30,547,819
=============== =============== =============== ===============
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED COST UNREALIZED GAIN UNREALIZED LOSS MARKET VALUE
-------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE
U.S. Treasury Obligations ........................ $ 6,937,596 $ 171,964 $ (4,061) $ 7,105,499
U.S. 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
U.S. 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>
There were no sales of securities during either of the three month periods
ended March 31, 1996 or March 31, 1995.
The amortized cost and estimated fair value of debt securities at March 31,
1996, by contractual maturity is shown in the following table. Actual
maturities will 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 on 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.
Page 9
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UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
INVESTMENT SECURITIES
MARCH 31, 1996 AVAILABLE FOR SALE
- ---------------------------------------------------------------------------------------------------------------------------
ESTIMATED WEIGHTED
AMORTIZED FAIR AVERAGE AVERAGE
COST VALUE MATURITY YIELD
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Obligations
Zero Through Three Months .................... $ 499,990 $ 499,220 1.5 mos. 4.27%
Three Through Six Months ..................... 752,082 753,281 5.5 mos. 5.51%
Six Through Twelve Months .................... 1,996,062 2,016,093 10.2 mos. 6.60%
Two Through Five Years ....................... 3,198,504 3,292,781 2 Yrs 8.4 Mos. 7.04%
---------------- --------------- ---------------- -----
TOTAL .................................... 6,446,638 6,561,375 1 Yr 8.2 Mos. 6.52%
---------------- --------------- ---------------- -----
U.S. Agency Obligations
Zero Through Three Months ................... 1,002,265 1,006,250 2.3 mos. 7.28%
Three Through Six Months .................... 1,001,720 1,011,718 5.6 mos. 7.58%
Six Through Twelve Months ................... 2,510,251 2,540,937 10.2 mos. 7.00%
One Through Two Years ....................... 4,846,830 4,944,999 1 Yr 7.0 Mos. 6.92%
Two Through Five Years ...................... 3,174,986 3,206,550 3 Yrs 3.2 Mos. 6.48%
Five Through Ten Years ...................... 6,999,383 6,943,908 8 Yrs 1.1 Mos. 6.66%
---------------- --------------- ---------------- -----
TOTAL ................................... 19,535,435 19,654,362 3 Yrs 11.6 Mos. 6.82%
---------------- --------------- ---------------- -----
State & Municipal Obligations
FIVE THROUGH TEN YEARS ................... 336,475 350,504 8 Yrs 8.3 Mos. 8.37%
---------------- --------------- ---------------- -----
Other Investments
Equity Securities ........................ 592,800 592,800
---------------- --------------- ---------------- -----
Total Investment Securities Available For Sale.. $ 26,911,348 $ 27,159,041 3 Yrs 5.6 Mos. 6.77%
================ =============== ================ =====
</TABLE>
Page 10
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UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
INVESTMENT SECURITIES
MARCH 31, 1996 HELD TO MATURITY
- ---------------------------------------------------------------------------------------------------------------------------
ESTIMATED WEIGHTED
AMORTIZED FAIR AVERAGE AVERAGE
COST VALUE MATURITY YIELD
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Agency Obligations
Three Through Six Months ................ $ 500,000 $ 499,375 3.3 mos. 5.10%
Six Through Twelve Months ............... 1,000,000 992,343 8.9 mos. 4.70%
One Through Two Years ................... 1,799,104 1,782,633 1 Yr 6.9 mos. 5.49%
Two Through Five Years .................. 7,098,250 6,975,887 2 Yrs 7.3 mos. 5.27%
Five Through Ten Years .................. 499,815 502,187 5 Yrs 2.4 Mos. 8.71%
---------------- --------------- ---------------- -----
TOTAL ............................... 10,897,169 10,752,425 2 Yrs 3.5 mos. 5.39%
---------------- --------------- ---------------- -----
State & Municipal Obligations
Zero Through Three Months ................ 179,991 179,844 1.7 Mos. 4.74%
Three Through Six Months ................. 45,139 45,004 4.0 Mos. 6.74%
Six Through Twelve Months ................ 777,715 780,872 8.2 Mos. 6.62%
One Through Two Years ................... 638,766 636,992 1 Yr 5.5 Mos. 6.68%
Two through Five Years ................... 4,518,151 4,714,084 3 Yrs 11.7 Mos. 8.54%
Five Through Ten Years ................... 12,727,165 13,066,920 6 Yrs 11.7 Mos. 8.06%
Over Ten Years ........................... 390,356 371,678 10 Yrs 2.9 Mos. 6.94%
---------------- --------------- ---------------- -----
TOTAL ............................... 19,277,283 19,795,394 5 Yrs. 9.9 Mos. 8.01%
---------------- --------------- ---------------- -----
Total Investment Securities Held To Maturity... $ 30,174,452 $ 30,547,819 4 Yrs 5.5 Mos. 7.06%
================ =============== ================ =====
</TABLE>
Securities with a par value of approximately $22,716,000 at March 31,
1996 and $22,485,000 at December 31, 1995 were pledged to secure
public deposits, repurchase agreements and other liabilities as
requited 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 .............................. 220,420
Repayments.............................. (556,354)
------------
Aggregate balance - March 31, 1996 $ 2,636,574
============
</TABLE>
Page 11
<PAGE> 12
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
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 - 1/01/96 and 1/01/95 ............. $ 1,775,383 $ 1,437,734
Provision charged to operating expense .... 111,000 465,000
Loans charged-off ......................... (51,256) (151,200)
Recoveries ................................ 16,199 23,849
------------ ------------
Balance - 3/31/96 and 12/31/95 ............ $ 1,851,326 $ 1,775,383
============ ============
</TABLE>
There were no loans at March 31, 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
three months ended March 31, 1996 and March 31, 1995 was $0 and
$59,000 respectively. There was no interest recognized on a cash
received basis on impaired loans for the three months ended March 31,
1996 and March 31, 1995. Loans past due 90 days or more were not
significant at March 31, 1996.
5 PREMISES AND EQUIPMENT
Premises and equipment, at cost, and accumulated depreciation and
amortization as of March 31, 1996 and December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Buildings and land ........................... $ 5,300,333 $ 5,302,750
Furniture and equipment ...................... 2,557,095 2,224,331
Computer software ............................ 591,481 385,587
----------- ------------
Total 8,448,909 7,912,668
Accumulated depreciation and amortization ... 3,081,253 3,011,431
----------- ------------
PREMISES AND EQUIPMENT (NET) .............. $ 5,367,656 $ 4,901,237
=========== ============
</TABLE>
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>
MARCH 31, 1996 DECEMBER 31, 1995
------------------------------------
<S> <C> <C>
Commitments To Extend Credit ............. $ 10,979,405 $ 11,833,000
Standby Letters Of Credit ................ 286,000 286,000
</TABLE>
Page 12
<PAGE> 13
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
6 COMMITMENTS AND CONTINGENCIES (CONTINUED)
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 a 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 March 31, 1996 and December 31, 1995, the COMPANY was required to
have $703,000 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 Bank's grant commercial, 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 March
31, 1996, and December 31, 1995, total commercial and commercial real
estate loans make up 37.5% and 37.8%, respectively of the loan
portfolio with 29.8% 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 36.0% and 35.1% of the loan
portfolio and are secured by consumer assets including automobiles
which account for 74.6% and 76.5%, respectively of the installment
loan portfolio. Real estate loans comprise 26.5% and 27.1% of the
loan portfolio as of March 31, 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 bank and Federal funds sold is
$1,859,247 on deposit with National City Bank, Cleveland, Ohio and
$3,694,464 on deposit with Mellon Bank, N.A., Pittsburgh,
Pennsylvania.
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.
Page 13
<PAGE> 14
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
8 BENEFIT PLANS (CONTINUED)
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
$3,279,858 as of March 31, 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.
Page 14
<PAGE> 15
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 March 31, 1996 compared to December 31, 1995 and
results of operations for the three month period ended March 31, 1996 compared
to the same three month period ended March 31, 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, Ohio. UNITED BANCORP,
INC. has been traded on the Nasdaq Small Cap Market since February of 1993 under
the trading symbol UBCP.
The Markets served by both bank subsidiaries are rich in tradition, culture and
heritage. CITIZENS-MARTINS FERRY meets the commercial banking needs of
residents, business 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 center 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 March 31, 1996, gross loans were $124,217,000 compared to $122,683,000 at
December 31, 1995, representing an increase of 1.25%. Installment loans
remained the largest category with 36.0% of total loans, commercial real estate
loans were 29.0%, real estate mortgage loans were 26.5% and commercial loans
were 8.5% at March 31, 1996. At December 31, 1995, installment loans
represented 35.1%, commercial real estate 29.0%, real estate mortgage loans
27.1% and commercial loans 8.8%.
The COMPANY continues to be involved in all types of consumer lending, as well
as the more common types of domestic commercial lending. For the past few
year, CITIZENS-MARTINS FERRY has increased its assets through aggressively
marketing indirect automobile lending. Although this type of lending carries
somewhat more risk than real estate lending, it also carries higher yields.
The targeted lending areas encompass four metropolitan areas, minimizing the
BANK'S risk to changes in economic conditions in the two communities where it
has branches.
Page 15
<PAGE> 16
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
LOANS (CONTINUED)
The COMPANY expanded its commercial lending portfolio at both subsidiary Banks.
This expansion relies on intensified local marketing and lending outside of its
local market area. 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 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 is developing 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 to 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 March 31, 1996 increased $51,000
over balances at December 31, 1995. Investment securities held to maturity
increased $812,000 over balances at December 31, 1995. The marginal increases
are a byproduct of the COMPANY utilizing new borrowings and deposits to fund
loan growth.
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 other than
$6,500,000 of Government sponsored agency multi-step securities with call or
maturity dates within five years. 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
nonrated bonds of local schools, townships and municipalities, based on their
known levels of credit risk.
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 three months ended March 31,
1996. Deposits of the COMPANY 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 nonsimilar funding and
disbursement timeframes.
Page 16
<PAGE> 17
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
DEPOSITS (CONTINUED)
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 March 31, 1996, certificates of deposit over $100,000 increased less than
1%.
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. March 31, 1996 total short-term
borrowings increased $3,515,000, or 76.9% over December 31, 1995 totals due
primarily to increased daily sweep account balances.
PERFORMANCE OVERVIEW
Net income for the period ended March 31, 1996 increased 29.6% to $647,309,
over the same period ended March 31, 1995, yielding an annualized Return On
Average Assets of 1.35% and a Return On Average Equity of 13.88%. The increase
in earnings for the first quarter of 1996 over earnings from the first quarter
of 1995 were the result of continued loan growth which was the major
contributor to the increase in net interest income, continued effective
generation of other income through service charges, fees and nontraditional
banking services and effective cost containment of operating overhead.
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 months ended March 31, 1996 when compared
to the same period in 1995 increased by $265,000, or 7.8%. Interest and fee
income on loans increased $390,000 or 16.3% over the March 31, 1995 activity.
Total interest expense for the three months ended March 31, 1996 increased by
$77,000, up 4.9% from March 31, 1995. The increase reflects a higher cost of
funds experienced by the COMPANY during the three months ended March 31, 1996.
NONINTEREST INCOME AND EXPENSE
Noninterest income increased only slightly for the period ended March 31, 1996,
up $17,000, or 7.1% due to increases in service charge fees. The service
charge and fee income increases are a product of fee schedule increases during
the second quarter of 1995.
Noninterest expense for the three months ended March 31, 1996 compared to three
months ended March 31, 1995 decreased $56,000, or 4.1%. Benefits derived from
fully depreciated fixed assets related to Data Processing were responsible for
most of the cost savings. All phases of the new system upgrades in hardware
and software support will begin depreciating during the second quarter of 1996
as they are placed in service.
Page 17
<PAGE> 18
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
NONINTEREST INCOME AND EXPENSE (CONTINUED)
Salaries and employee benefits increased only slightly due to traditional
yearly incremental wage adjustments. Other operating expenses decreased
$70,000, or 13.8% due to savings recognized by the reduction in FDIC insurance
premiums which became effective 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
March 31, 1996 was $18,760,000 compared to $18,452,000 at December 31, 1995, a
1.67% increase. Equity at March 31, 1996 includes an $163,000 increase in
equity due to the after tax change in the fair value of securities categorized
as available-for-sale as compared to a $299,000 increase in equity at December
31, 1995. Total shareholders' equity in relation to total assets was 9.6% at
March 31, 1996 compared to 9.7% at December 31, 1995. The ratios for Average
Equity-to-Average total Assets at March 31, 1996 and December 31, 1995 were
9.7% and 9.1%, 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 a brokerage commission or service charge. 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.
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.
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, noncumulative
and cumulative perpetual preferred stock, and minority interests 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.
Page 18
<PAGE> 19
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
CAPITAL RESOURCES (CONTINUED)
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 March 31, 1996:
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------
<S> <C>
Common Shareholders' Equity ................ $ 18,760,188
Tier 1 Capital ............................. $ 18,381,327
Tier 2 Capital ............................. $ 1,594,309
Tier 1 and 2 Capital ....................... $ 19,975,636
Adjusted Total Assets ...................... $ 193,492,251
Total Risk-Adjusted Assets ................. $ 127,544,705
Leverage Ratio ............................. 9.50%
Tier 1 Risk-Based Capital Ratio............. 14.41%
Tier 1 and Tier 2 Risk-Based Capital Ratio.. 15.66%
</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.
For the period ended March 31, 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 $4,819,000 in
investment security purchases, $1,569,000 used to fund the net change in loans
and $565,000 utilized for the purchase of the next generation of in-house Data
Processing and Item Processing hardware and software. This was partially
offset by $3,750,000 in security maturities. The use of funds was offset by a
net cash infusion of $3,900,000 in deposits and Short-Term Obligations. For a
more detailed illustration of the COMPANY'S sources and uses of cash, refer to
the condensed consolidated statements of cash flows.
Page 19
<PAGE> 20
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10-Q
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. Citizens-Strasburg was subject to
a joint FDIC and Division of Financial Institutions regulatory safety and
soundness review on March 26, 1996 as of the close of business on January 31,
1996. There were no significant findings, which upon implementation, would have
a material effect on the holding company or its subsidiary banks.
Page 20
<PAGE> 21
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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 K's with the Securities
Exchange Commission during the quarter ending March
31, 1996.
Page 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.
May 1, 1996 By: /s/ James W. Everson
- ------------------------------ --------------------------------------
Date James W. Everson
President and Chief Executive Officer
May 1, 1996 By: /s/ Ronald S. Blake
- ------------------------------- --------------------------------------
Date Ronald S. Blake
Treasurer
Page 22
<PAGE> 23
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 6,518
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 27,159
<INVESTMENTS-CARRYING> 30,174
<INVESTMENTS-MARKET> 30,548
<LOANS> 124,217
<ALLOWANCE> 1,851
<TOTAL-ASSETS> 195,401
<DEPOSITS> 166,880
<SHORT-TERM> 8,257
<LIABILITIES-OTHER> 1,504
<LONG-TERM> 0
0
0
<COMMON> 1,848
<OTHER-SE> 16,912
<TOTAL-LIABILITIES-AND-EQUITY> 195,401
<INTEREST-LOAN> 2,785
<INTEREST-INVEST> 849
<INTEREST-OTHER> 26
<INTEREST-TOTAL> 3,660
<INTEREST-DEPOSIT> 1,547
<INTEREST-EXPENSE> 1,633
<INTEREST-INCOME-NET> 2,027
<LOAN-LOSSES> 111
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,303
<INCOME-PRETAX> 869
<INCOME-PRE-EXTRAORDINARY> 869
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 647
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
<YIELD-ACTUAL> 4.50
<LOANS-NON> 150
<LOANS-PAST> 115
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,775
<CHARGE-OFFS> 51
<RECOVERIES> 16
<ALLOWANCE-CLOSE> 1,851
<ALLOWANCE-DOMESTIC> 1,851
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 639
</TABLE>
