<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 MARCH 31, 1997
[ ] 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 of (IRS Employer Identification No.)
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 2,033,385 SHARES AS OF APRIL 25, 1997
<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 . . . March 31, 1997 and December 31, 1996....... 3
Condensed Consolidated Statements of Income . . . Three Months Ended
March 31, 1997 and 1996................................................................ 4
Condensed Consolidated Statements of Cash Flows . . . Three Months Ended
March 31, 1997 and 1996................................................................ 5
Notes to Condensed Consolidated Financial Statements.............................. 6 - 16
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................ 17 - 23
PART II OTHER INFORMATION
ITEM 1.
Legal Proceedings..................................................................... 24
ITEM 2.
Changes in Securities................................................................. 24
ITEM 3.
Default Upon Senior Securities........................................................ 24
ITEM 4.
Submission of Matters to a Vote of Security Holders................................... 24
ITEM 5.
Other Information..................................................................... 24
ITEM 6.
Exhibits and Reports on Form 8-K...................................................... 24
Signatures............................................................................ 25
</TABLE>
2
<PAGE> 3
UNITED BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FORM 10-Q (IN THOUSANDS)
PART 1 FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------- ------------
<S> <C> <C>
Assets
Cash and due from banks $ 8,982 $ 6,394
Federal funds sold 2,275 225
---------- ----------
Total cash and cash equivalents 11,257 6,619
Securities available for sale 25,812 28,064
Securities held to maturity
(Estimated fair value of $29,719 at 03/31/97 and $30,252 at 12/31/96) 29,324 29,794
Loans receivable
Commercial loans 12,857 12,415
Commercial real estate loans 40,988 41,213
Real estate loans 33,452 33,886
Installment loans 44,969 45,147
---------- ----------
Total loans receivable 132,266 132,661
Allowance for loan losses (2,130) (2,023)
---------- ----------
Net loans receivable 130,136 130,638
Premises and equipment, net 5,223 5,185
Accrued interest receivable and other assets 2,657 2,065
---------- ----------
Total Assets $ 204,409 $ 202,365
========== ==========
Liabilities
Demand deposits
Noninterest bearing $ 13,213 $ 13,384
Interest bearing 26,748 26,815
Savings deposits 50,504 49,882
Time deposits - under $100,000 68,285 67,491
Time deposits - $100,000 and over 14,279 13,940
---------- ----------
Total deposits 173,029 171,512
Securities sold under agreements to repurchase 8,658 8,642
Other borrowed funds 930 704
Accrued expenses and other liabilities 1,509 1,491
---------- ----------
Total Liabilities 184,126 182,349
Shareholders' Equity
Common stock - $1 Par Value: 10,000,000 shares authorized;
2,033,385 - 03/31/97 and 12/31/96 issued and outstanding 2,033 2,033
Additional-paid-in-capital 11,726 11,726
Retained earnings 6,570 6,115
Unrealized (loss)/gain on securities available for sale, net of tax (46) 142
---------- ----------
Total Shareholders' Equity 20,283 20,016
---------- ----------
Total Liabilities and Shareholders' Equity $ 204,409 $ 202,365
========== ==========
</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
MARCH 31,
1997 1996
----------------------
<S> <C> <C>
Interest and dividend income
Loans, including fees $ 3,004 $ 2,785
Taxable securities 585 603
Non-taxable securities 277 246
Other interest and dividend income 21 26
--------- ---------
Total interest and dividend income 3,887 3,660
Interest expense
Deposits
Demand 158 153
Savings 373 367
Time 1,105 1,027
Other borrowed funds 110 86
--------- ---------
Total interest expense 1,746 1,633
NET INTEREST INCOME 2,141 2,027
Provision for loan losses (111) (111)
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,030 1,916
Noninterest income
Service charges on deposit accounts 138 143
Other income 100 91
--------- ---------
Total noninterest income 238 234
Noninterest expense
Salaries and employee benefits 698 683
Occupancy 157 161
Other expenses 519 437
--------- ---------
Total noninterest expense 1,374 1,281
INCOME BEFORE INCOME TAXES 894 869
Income tax expense 216 222
--------- ---------
NET INCOME $ 678 $ 647
--------- ---------
Earnings per common share $ 0.33 $ 0.32
Weighted average shares outstanding 2,033 2,033
Dividends per common share $ 0.11 $ 0.10
</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>
THREE MONTHS ENDED
MARCH 31,
1997 1996
-------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 678 $ 647
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization 116 98
Amortization of intangibles 22 22
Provision for loan losses 111 111
Deferred taxes (46) (10)
Federal Home Loan Bank stock dividend (12) (10)
(Accretion)/amortization of securities, net (1) 2
Gain on sale of other real estate owned (5) 0
Net changes in accrued interest receivable and other asset (506) (600)
Net changes in accrued expenses and other liabilities 18 73
------- ------
Net cash from operating activities 375 333
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale
Proceeds from sales - -
Proceeds from maturities/calls 2,000 1,750
Purchases - (1,999)
Securities held to maturity
Proceeds from maturities/calls 536 2,000
Purchases (76) (2,811)
Net change in loans 391 (1,569)
Net purchases of premises and equipment (154) (565)
Proceeds from sale of other real estate owned 30 -
------- ------
Net cash from investing activities 2,727 (3,194)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 1,517 276
Net change in short-term borrowings (156) 3,624
Proceeds from long-term debt 400 0
Princiapl payments on long-term debt (2) 0
Cash dividends paid (223) (203)
------- ------
Net cash from financing activities 1,536 3,697
------- ------
Net change in cash and cash equivalents 4,638 836
Cash and cash equivalents at beginning of year 6,619 6,982
------- ------
Cash and cash equivalents at end of period $11,257 $7,818
======= ======
Interest paid $ 1,795 $1,684
Income taxes paid - -
</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
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, 1997 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 1996 United
Bancorp, Inc. consolidated financial statements and related notes thereto
included in its Annual Report To Shareholders for the year ended December
31, 1996.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of United
Bancorp, Inc. (Company) and its wholly owned subsidiaries, (Banks) The
Citizens Savings Bank, Martins Ferry, Ohio (Citizens-Martins Ferry) and The
Citizens-State Bank of Strasburg, Strasburg, Ohio (Citizens-Strasburg). All
significant intercompany transactions and balances have been eliminated in
consolidation. The results of operations for the period ended March 31,
1997 are not necessarily indicative of the operating results for the full
year of 1997.
NATURE OF OPERATIONS:
The Company and Banks' revenues, operating income and assets are
primarily from the banking industry. Loan customers are mainly located in
Belmont, Jefferson, Tuscarawas and Carroll Counties and the surrounding
localities in northeastern and eastern Ohio, and include a wide range of
individuals, businesses and other organizations. A major portion of loans
are secured by various forms of collateral including real estate, business
assets, consumer property and other items, although borrower cash flow may
also be a primary source of payment. 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.
USE OF ESTIMATES:
To prepare financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions based on
available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided and
future results could differ. The collectibility of loans, fair values of
financial instruments and status of contingencies are particularly subject
to change.
CASH FLOW REPORTING:
Cash and cash equivalents are defined as cash and due from banks and
federal funds sold. Net cash flows are reported for customer loan and
deposit transactions, securities sold under agreements to repurchase and
short-term borrowings.
6
<PAGE> 7
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SECURITIES:
Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold
them to maturity. Securities are classified as available for sale when
they might be sold before maturity. Securities available for sale are
carried at fair value, with unrealized holding gains and losses reported
separately in shareholders' equity, net of tax. Securities are classified
as trading when held for short term periods in anticipation of market
gains and are carried at fair value. Securities are written down to fair
value when a decline in fair value is not temporary.
Gains and losses on sales are determined using the amortized cost of
the specific security sold. Interest income includes amortization of
purchase premiums and discounts.
LOANS:
Loans are reported at the principal balance outstanding, net of
deferred loan fees and costs. Interest income is reported on the interest
method and includes amortization of net deferred loan fees and costs over
the loan term.
Interest income is not reported when full loan repayment is in doubt,
typically when payments are past due over 90 days. Payments received on
such loans are reported as principal reductions.
ALLOWANCE FOR LOAN LOSSES:
The allowance for loan losses is a valuation allowance, increased by
the provision for loan losses and decreased by charge-offs less
recoveries. Management estimates the allowance balance required based on
past loan loss experience, known and inherent risks in the portfolio,
information about specific borrower situations and estimated collateral
values, economic conditions and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is
available for any loan that, in management's judgment, should be
charged-off.
Effective January 1, 1995, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") Nos. 114 and 118,
which modify the accounting for impaired loans. A loan is considered
impaired when management believes that full collection of principal and
interest is not probable. The Company reduces the carrying value of
impaired loans to the present value of expected future cash flows, or to
the fair value of collateral if the loan is collateral dependent, by
allocating a portion of the allowance for loan losses to such loans. If
these allocations should require an increase to the allowance, such
increase is reported as bad debt expense.
7
<PAGE> 8
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ALLOWANCE FOR LOAN LOSSES: (CONTINUED)
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
requirements. Often this is associated with a delay or shortfall in
payments of 30 days or more, or when the internal grading system indicates
a doubtful classification. Loan impairment is evaluated in total for
smaller-balance loans of similar nature. Such loans include residential
first mortgage loans secured by one-to-four family residences, residential
construction loans and consumer automobile, boat and home equity loans.
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. Other cash
payments are reported as reductions in carrying value, while increases or
decreases due to changes in future payments and due to the passage of time
are reported as part of the provision for loan losses.
PREMISES AND EQUIPMENT:
Asset cost is reported net of accumulated depreciation. Depreciation
expense is calculated on the straight-line method over asset useful lives.
These assets are reviewed for impairment when events indicate the
carrying amount may not be recoverable.
OTHER REAL ESTATE:
Real estate acquired in settlement of loans is initially reported at
estimated fair value at acquisition. After acquisition, a valuation
allowance reduces the reported amount to the lower of the initial amount
or fair value less costs to sell. Expenses, gains and losses on
disposition and changes in the valuation allowance are reported in other
expenses.
LOAN SERVICING:
The Company became subject to the provisions of SFAS No. 122,
"Accounting for Mortgage Servicing Rights," on January 1, 1996. This
Standard requires entities to recognize, as separate assets, rights to
service mortgage loans for others, regardless of how these rights are
acquired. Mortgage servicing rights acquired through either the purchase
or the origination of mortgage loans which are subsequently sold with
servicing rights retained should be determined by allocating the total
cost of the mortgage loans to mortgage servicing rights and to loans
(without the mortgage servicing rights) based on their relative fair
values. Mortgage servicing rights recorded as a separate asset are
amortized in proportion to, and over the period of, estimated net
servicing income. SFAS 122 did not have a material impact on the
Company's financial statements at January 1, 1996.
8
<PAGE> 9
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IDENTIFIED INTANGIBLES:
Identified intangibles include the value of depositor relationships
purchased which are being amortized on an accelerated method over eight
years. Identified intangibles also include a non-compete covenant and
capitalized organizational costs which are being amortized on a
straight-line method over five years. Identified intangibles are assessed
for impairment based on estimated undiscounted cash flows and written down
if necessary. At March 31, 1997 and December 31, 1996, identified
intangibles net of accumulated amortization totaled $151,150 and $173,638
and are included in other assets in the accompanying consolidated balance
sheets.
EMPLOYEE BENEFITS:
A defined benefit pension plan covers all employees who have
completed 1,000 hours of service during an anniversary year, measured from
their date of hire, who have attained age 21 and who were hired before age
60. The plan calls for benefits to be paid to eligible employees at
retirement, based primarily upon years of service and compensation rates
near retirement. Contributions to the plan reflect benefits attributed to
employees' services to date, as well as services expected to be earned in
the future. Plan assets consist of primarily common stock and
certificates of deposit.
Beginning March of 1995, the Company began offering a 401(k) plan
which covers all employees who have attained the age of 21 and have
completed one year of service. Eligible employees may contribute up to
15% of their compensation subject to a maximum statutory limitation. The
Company may make a discretionary matching contribution equal to a
percentage of each participant's elective deferral not to exceed 6% of the
participant's annual compensation. Employee contributions are always
vested. Employer contributions become 100% vested after 5 years of
service.
Expense of the defined benefit plan is reported by spreading the
expected contributions to the plan less long-term earnings on plan assets
over the employee's service period. Expense of the 401(k) plan is based
on the annual contribution.
STOCK COMPENSATION:
Expense for employee compensation under stock option plans is based
on Opinion 25, with expense reported only if options are granted below
market price at grant date.
INCOME TAXES:
Income tax expense is the sum of the current year income tax due or
refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax
consequences of temporary differences between the carrying amounts and tax
bases of assets and liabilities, computed using enacted tax rates. A
valuation allowance, if needed, reduces deferred tax assets to the amount
expected to be realized.
9
<PAGE> 10
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK DIVIDENDS:
Dividends issued in stock are reported by transferring the market
value of the stock issued from retained earnings to common stock and
additional paid-in-capital. Stock splits are recorded by transferring the
par value of shares issued from retained earnings to common stock. On
April 17, 1996, a 10% stock dividend was approved for all shareholders of
record on May 20, 1996 and distributed on June 20, 1996.
EARNINGS AND DIVIDENDS PER COMMON SHARE:
Earnings per common share is based on the weighted-average number of
shares outstanding for the period. Stock options outstanding do not
presently have a dilutive effect greater than or equal to 3% on earnings
per common share. All per share data has been retroactively adjusted for
the 10% stock dividend in 1996.
RECLASSIFICATIONS:
Some items in prior financial statements have been reclassified to
conform with the current presentation.
IMPACT OF RECENT ACCOUNTING STANDARDS:
SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities," was issued by the Financial
Accounting Standards Board ("FASB") in 1996. It revises the accounting
for transfers of financial assets, such as loans and securities, and for
distinguishing between sales and secured borrowings. It was originally
effective for some transactions in 1997 and others in 1998. SFAS No. 127,
"Deferral of the Effective Date of Certain Provisions of FASB Statement
No. 125" was issued in December 1996. SFAS No. 127 defers for one year
the effective date of provisions related to securities lending, repurchase
agreements and other similar transactions. The remaining portions of SFAS
No. 125 will continue to be effective January 1, 1997. SFAS No. 125 did
not have a material impact on the Company's financial statements.
In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share"
which is effective for financial statements for periods ending after
December 15, 1997, including interim periods. SFAS No. 128 simplifies the
calculation of earnings per share by replacing primary EPS with basic EPS.
It also requires dual presentation of basis EPS and diluted EPS for
entities with complex capital structures. Basic EPS includes no dilution
and is computed by dividing income available to common shareholders by
the weighted-average common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could share in
earnings such as stock options, warrants or other common stock
equivalents. All prior period EPS data will be restated to conform with
the new presentation.
10
<PAGE> 11
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
2. SECURITIES:
The amortized cost and estimated fair values of investment securities are
as follows:
<TABLE>
<CAPTION>
--------- ---------------- ----------------- ----------
AMORTIZED GROSS GROSS ESTIMATED
COST UNREALIZED GAINS UNREALIZED LOSSES FAIR VALUE
--------- ---------------- ----------------- ----------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE - MARCH 31, 1997
US Treasury obligations $ 3,236,519 $ 43,137 $ 3,279,656
US Agency obligations 21,532,514 42,625 $ (173,889) 21,401,250
State and Municipal obligations 456,705 17,700 474,405
Other investments 647,461 9,675 657,136
----------- ---------- ----------- ------------
$25,873,199 $ 113,137 $ (173,889) $ 25,812,447
=========== ========== =========== ============
AVAILABLE FOR SALE - DECEMBER 31, 1996
US Treasury obligations $ 3,725,832 $73,570 $ 3,799,402
US Agency obligations 23,032,148 146,839 $ (35,153) 23,143,834
State and Municipal obligations 456,645 19,298 475,943
Other investments 635,175 9,675 644,850
----------- ---------- ----------- ------------
$27,849,800 $ 249,382 $ (35,153) $ 28,064,029
=========== ========== =========== ============
HELD TO MATURITY - MARCH 31, 1997
US Agency obligations $ 8,999,723 $ (97,154) $ 8,902,569
State and Municipal obligations 20,324,226 $ 584,180 (91,855) 20,816,551
----------- ---------- ----------- ------------
$29,323,949 $ 584,180 $ (189,009) $ 29,719,120
=========== ========== =========== ============
HELD TO MATURITY - DECEMBER 31, 1996
US Agency obligations $ 9,535,396 $ 1,000 $ (84,324) $ 9,452,072
State and Municipal obligations 20,258,388 634,056 (92,335) 20,800,109
----------- ---------- ----------- ------------
$29,793,784 $635,056 $ (176,659) $ 30,252,181
=========== ========== =========== ============
</TABLE>
11
<PAGE> 12
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
2. SECURITIES: (CONTINUED)
There were no sales of securities during the three months ended
March 31, 1997 or March 31, 1996
Contractual maturities of securities at March 31, 1997 were as follows:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
<S> <C> <C>
US Treasury obligations
1 - 2 Years 2,236,686 2,265,906
2 - 5 Years 999,833 1,013,750
----------- -----------
Total 3,236,519 3,279,656
----------- -----------
US Agency obligations
0 - 3 Months 499,989 500,468
3 - 6 Months 500,000 499,687
6 - 12 Months 2,951,894 2,976,816
1 - 2 Years 479,339 491,562
2 - 5 Years 11,598,811 11,533,537
5 - 10 Years 5,502,481 5,399,180
----------- -----------
Total 21,532,514 21,401,250
----------- -----------
State and municipal obligations
5 - 10 Years 336,705 350,301
Over 10 Years 120,000 124,104
----------- -----------
Total 456,705 474,405
----------- -----------
Other investments
Equity securities 647,461 657,136
----------- -----------
Total securities available for sale $25,873,199 $25,812,447
=========== ===========
HELD TO MATURITY
US Agency obligations
6 - 12 Months $1,500,000 $1,495,138
1 - 2 Years 6,499,723 6,424,231
2 - 5 Years 1,000,000 983,200
----------- -----------
Total 8,999,723 8,902,569
----------- -----------
State and municipal obligations
0 - 3 Months 145,073 145,079
3 - 6 Months 145,138 145,780
6 - 12 Months 346,121 345,078
1 - 2 Years 792,548 817,035
2 - 5 Years 7,263,583 7,492,816
5 - 10 Years 11,525,534 11,766,743
Over 10 Years 106,229 104,020
----------- -----------
Total 20,324,226 20,816,551
----------- -----------
Total securities held to maturity $29,323,949 $29,719,120
=========== ===========
</TABLE>
12
<PAGE> 13
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
2. SECCURITIES (CONTINUED)
Securities with a cost of approximately $24,738,000 at March 31, 1997
and $25,125,000 at December 31, 1996 were pledged to secure public
deposits, repurchase agreements and other liabilities as required or
permitted by law.
3. LOANS
Loans to directors and officers, 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, 1996 $ 2,135,565
New loans 776,961
Repayments (937,922)
------------
Aggregate balance - March 31, 1997 $ 1,974,604
============
</TABLE>
4. ALLOWANCE FOR LOAN LOSSES
The allowance in the allowance for loan losses is summarized as
follows:
<TABLE>
<CAPTION>
1997 1996
--------------- --------------
<S> <C> <C>
Balance 01/01/97 and 01/01/96 $ 2,022,987 $ 1,775,383
Provision charged to operating expense 111,000 455,400
Loans charged-off (21,660) (251,241)
Recoveries 18,053 43,445
------------- ------------
Balance 03/31/97 and 12/31/96 $ 2,130,380 $ 2,022,987
============= ============
</TABLE>
Loans considered impaired under the provisions of SFAS No. 114 were
not material at March 31, 1997 and December 31, 1996 and during the
three months ended March 31, 1997 and 1996.
13
<PAGE> 14
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
5. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase are financing
arrangements whereby the Banks sell securities and agree to repurchase the
identical securities at the maturities of the agreements at specified
prices. Physical control is maintained for all securities sold under
repurchase agreements. Information concerning securities sold under
agreements to repurchase is summarized as follows:
<TABLE>
<CAPTION>
Three months Twelve months
ended ended
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Average daily balance during the period $ 7,710,076 $ 6,523,271
Average interest rate during the period 4.27% 4.30%
Maximum month-end balance during the period $ 8,658,035 $ 8,667,310
</TABLE>
Securities underlying these agreements were as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Carrying value of securities $ 8,919,909 $ 9,574,054
Fair value of securities 8,940,146 9,606,556
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
There are various contingent liabilities that are not reflected in
the financial statements, including claims and legal actions arising in
the ordinary course of business. In the opinion of management, after
consultation with legal counsel, the ultimate disposition of these matters
is not expected to have a material effect on financial condition or
results of operations.
Some financial instruments are used in the normal course of business
to meet the financing needs of customers. These financial instruments
include commitments to extend credit, standby letters of credit and
financial guarantees. These involve, to varying degrees, credit and
interest-rate risk in excess of the amount reported in the financial
statements.
Exposure to credit loss if the other party does not perform is
represented by the contractual amount for commitments to extend credit,
standby letters of credit and financial guarantees written. The same
credit policies are used for commitments and conditional obligations as
are used for loans. The amount of collateral obtained, if deemed
necessary, upon extension of credit is based on management's credit
evaluation. Collateral varies, but may include accounts receivable,
inventory, property, equipment, income-producing commercial properties,
residential real estate and consumer assets.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
commitment. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being used, the total
commitments does not necessarily represent future cash requirements.
Standby letters of credit and financial guarantees written are conditional
commitments to guarantee a customer's performance to a third party.
14
<PAGE> 15
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
A summary of the notional or contractual amounts of financial
instruments with off-balance sheet risk at March 31, 1997 and December 31,
1996 follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Commitments to extend credit $ 15,431,000 $11,751,000
Standby letters of credit 156,000 156,000
------------ -----------
$ 15,587,000 $11,907,000
============ ===========
</TABLE>
At March 31, 1997 and December 31, 1996 and included above,
commitments to make fixed-rate loans at current market rates totaled
$85,000 and $80,000, respectively with the interest rates on those
fixed-rate commitments ranging from 7.84% to 10.50% and 7.84% to 9.99%,
respectively.
At March 31, 1997 and December 31, 1996, reserves of $602,000 and
$676,000 were required as deposits with the Federal Reserve or as cash on
hand. These reserves 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. The Banks also grant commercial
and commercial real estate loans in the Columbus, Ohio area.
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, 1997 and December 31, 1996, total
commercial and commercial real estate loans made up 40.7% and 40.4%,
respectively of the loan portfolio, with 27.1% and 29.4% of these loans
secured by commercial and residential real estate and business assets in
the Columbus, Ohio area. At March 31, 1997 and December 31, 1996,
installment loans account for 34.0% of the loan portfolio and are secured
by consumer assets including automobiles which account for 83.9% and
83.1%, respectively of the installment loan portfolio. Real estate loans
comprise 25.3% and 25.5% of the loan portfolio as of March 31, 1997 and
December 31, 1996, 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
March 31, 1997 and December 31, 1996 is $8,259,836 and $3,639,127,
respectively on deposit with a correspondent bank.
15
<PAGE> 16
UNITED BANCORP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FORM 10-Q
8. STOCK OPTIONS
The Company adopted a nonqualified stock option plan for directors
and bank holding company officers in 1995. The plan was subsequently
ratified by shareholders on April 17, 1996. The exercise price for
options granted under this plan will be no less than 100% of the fair
market value of the shares on the date of grant.
<TABLE>
<CAPTION>
AVERAGE
EXERCISE
SHARES PRICE
------ --------
<S> <C> <C>
Outstanding at December 31, 1996 71,350 $ 13.60
Granted - -
Exercised - -
Forfeited - -
------
Outstanding at March 31, 1997 71,350
======
Remaining shares available for
grant at March 31, 1997 30,287
Options exercisable at March 31, 1997 -
</TABLE>
The following table summarizes information about stock options
outstanding at March 31, 1997:
<TABLE>
<CAPTION>
NUMBER NUMBER
EXERCISE OUTSTANDING DATE OF EXERCISABLE
PRICE AT 03/31/97 EXPRIRATION AT 03/31/97
------------- --------------- --------------- -------------------
<S> <C> <C> <C>
$ 13.59 69,850 11/21/05 -
14.26 1,500 11/21/05 -
</TABLE>
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
$4,306,323 as of March 31, 1997. 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.
16
<PAGE> 17
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, 1997 compared to December
31, 1996 and results of operations for the three month period ended March
31, 1997 compared to the same period in 1996. 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. was created as a single 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. United Bancorp, Inc. 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. Common stock was available through over-the-counter
trading until February 1994 when it began trading on The Nasdaq SmallCaps
Market tier of The Nasdaq Stock Market under the trading symbol UBCP.
The Citizens Savings Bank (Citizens-Martins Ferry), originally
established as The German Savings Bank in 1902, remains the lead bank in
the multi-bank holding company and continues as an integral part of the
development of the commercial and residential base in Martins Ferry and
other local communities. The Bank expanded its market through the
construction of a full service branch banking facility six miles west in
nearby Colerain, Ohio in 1974. Expansion opportunities continued in 1978
with the construction of another full service branch bank in Bridgeport,
Ohio, located two miles south of Martins Ferry. A limited service
auto-teller facility was opened in Martins Ferry in 1980, one block south
of the former main office location. An Automated Teller Machine (ATM)
began operation in nearby Aetnaville, Ohio in 1983, providing additional
24 hour limited banking services to area residents. The main banking
facility outgrew the physical limitations of its previous location and
subsequently relocated in 1984 to a newly constructed 21,500 square foot
addition to the auto-teller facility mentioned above.
The Citizens-State Bank of Strasburg (Citizens-Strasburg), was also
established in 1902 and is located in an area of northeastern Ohio whose
economy is supported by agriculture and light industry. Additionally, it
benefits as a "bedroom community" for the Akron-Canton metropolitan area.
Citizens-Strasburg joined the bank holding company in 1986 through the
acquisition of 100% of its voting stock by UBCP. Citizens-Strasburg
constructed a new full service banking facility in Dover, Ohio in 1990.
This expansion was soon followed with the acquisition of two branch
banking facilities in New Philadelphia and Sherrodsville in 1992.
Additionally, a branch banking facility located in Dellroy, Ohio was
acquired in 1994. This most recent acquisition brought the number of
offices to five for Citizens-Strasburg and eight overall for UBCP.
17
<PAGE> 18
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10 - Q
FINANCIAL CONDITION
EARNING ASSETS - LOANS
At March 31, 1997, gross loans were $132,266,000 compared to
$132,661,000 at year-end 1996. This decline in lending volume is the
result of several large dollar prepayments of commercial loans at the end
of the quarter and the impact of a local steel strike in the
Citizens-Martins Ferry market area. While some commercial loan growth
opportunities continue to be available within the Company's markets, the
installment lending growth potential remains questionable within the
Citizens-Martins Ferry market due to the prolonged strike. Real estate
loan origination volume is expected to increase due to the Banks'
involvement in the secondary market program, however, as these loans will
be sold, the balance of real estate loans held in the portfolio is
expected to decline.
Installment loans, with continued emphasis placed on support of the
indirect automobile lending market, remained static at 34.0 % of total
loans at March 31, 1997 compared to year-end 1996. The indirect lending
type of financing carries somewhat more risk than real estate lending,
however, it also provides for higher yields. The targeted lending areas
encompass four metropolitan areas, minimizing the risk to changes in
economic conditions in the communities housing the Company's eight branch
locations.
Commercial real estate loans comprised 31.0% of total loans at March
31, 1997 compared to 31.1% at year-end 1996. Commercial loans were 9.7%
and 9.4% of the total portfolio mix at March 31, 1997 and year-end 1996.
Only slight to moderate commercial loan growth is anticipated throughout
the remainder of 1997.
Out of area loans occur mostly in the Columbus and Akron-Canton, Ohio
areas. Lending beyond the local area has been for projects and borrowers
with substantial net worth. The majority of these loans are secured by
real estate holdings comprised of hotels, motels and churches located in
various geographic locations minimizing potential risks associated with
lending activities specific to a limited area. Out of area loans at March
31, 1997 were 11.0% of total loans and 27.1% of total commercial, and
commercial real estate loans compared to 11.9% and 29.4% at year-end 1996.
Real estate loans were 25.3% of total loans at March 31, 1997
compared to 25.5% at year-end 1996. As indicated above, the Banks'
involvement in the secondary market program should yield increases in loan
origination volume. It is anticipated that borrower preferences will
favor the secondary market product offerings with a decline expected in
real estate loans held within the loan portfolio.
The allowance for loan losses represents the amount which management
and the Board of Directors estimates is adequate to provide for inherent
losses in the 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 borrowers past
due experience, economic conditions and various other circumstances that
are subject to change over time. Management believes the balance of the
allowance for loan losses currently in place continues to be sufficient to
deal with potential losses associated with the steel strike. Charge-offs
for the three months ended March 31, 1997 were less than half of the total
for the same period in 1996.
18
<PAGE> 19
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10 - Q
EARNING ASSETS - SECURITIES AND FEDERAL FUNDS SOLD
The securities 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, other
than those issued by U.S. government agencies or derivative securities.
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.
Securities available for sale at March 31, 1997 decreased $2,252,000,
or 8.0% from year-end 1996 totals. This downward movement resulted
partially from the calls and maturities of $2,000,000 in securities and
the unrealized loss market value adjustment of approximately $61,000
(before tax effect) at March 31, 1997 compared to an unrealized gain market
value adjustment of approximately $214,000 (before tax effect) at year-end
1996. Securities held to maturity decreased a net $470,000 at March 31,
1997 compared to year-end 1996 totals.
Short-term federal funds sold are used to manage interest rate
sensitivity and to meet liquidity needs of the Banks. At March 31, 1997,
federal funds sold totaled $2,275,000 compared to $225,000 at year-end
1996. The Company maintained a higher balance in liquid funds such as
overnight funds awaiting anticipated changes in yields related to
securities and to fund loan growth.
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 increased $1,187,000 during the three
months ended March 31, 1997 primarily from savings accounts and
certificates of deposit less than $100,000. The Company has a strong
deposit base from public agencies, including local school districts, city
and township municipalities, public works facilities and others which 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 various 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 March 31, 1997, certificates of deposit over
$100,000 increased $339,000 over year-end 1996 totals.
SOURCES OF FUNDS - 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.
Total short-term borrowings at March 31, 1997 remained fairly constant in
relation to year-end 1996 levels.
19
<PAGE> 20
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10 - Q
PERFORMANCE OVERVIEW
NET INCOME
Net income for the three months ended March 31, 1997 was $678,434,
representing a 4.8% increase in earnings over March 31, 1996 totals. This
equates to an annualized income performance of 1.34% Return on Average
Assets (ROA) and a 13.41% Return on Average Equity (ROE).
NET INTEREST INCOME
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. Net interest income increased 5.6% for the
three months ended March 31, 1997 compared to the same three month period
in 1996.
Total interest income for the three months ended March 31, 1997 when
compared to the same three months ended March 31, 1996 increased $227,000,
or 6.2%. The largest component of this increase was interest and fee
income from loans, increasing 7.9% due to a higher average balance of
loans in the first quarter of 1997 compared to the first quarter of 1996.
Total interest expense for the three months ended March 31, 1997
increased $113,000, or 6.9% over the same three months in 1996. This
increase in interest expense was primarily the result of a higher volume
of interest-bearing liabilities.
PROVISION FOR LOAN LOSSES
The provision for loan losses is an operating expense recorded to
maintain the related balance sheet allowance for loan losses at an amount
considered adequate to cover losses that may occur in the normal course of
lending. The total provision for loan losses was $111,000 for both the
three months ended March 31, 1997 and 1996. Management has maintained the
relative level of the provision in relation to loan growth experienced
throughout the first three months of 1997. If events in the
Wheeling-Pittsburgh Steel strike mentioned above unfold in ways
unforeseen, changes to the provision amount would be initiated as
management deems appropriate.
NONINTEREST INCOME
Total noninterest income is made up of Bank related fees and service
charges, as well as other income producing services provided, including
ATM income, early redemption penalties for certificates of deposits, safe
deposit rental income and other miscellaneous items. Noninterest income
for the three months ended March 31, 1997 remained fairly constant in
relation to the same three months ended March 31, 1996.
NONINTEREST EXPENSE
Noninterest expense for the three months ended March 31, 1997
increased $93,000, or 7.3% over the three months ended March 31, 1996.
The largest contributor to this change was the additional depreciation
expense recognized on new data processing and item processing equipment
which was installed during the third quarter of 1996. The prior year
three month period had reduced expense due to the original Data Processing
equipment being fully depreciated in May of 1995.
20
<PAGE> 21
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10 - Q
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, 1997 was $20,283,000 compared to
$20,016,000 at December 31, 1996, a 1.3% increase. Equity at March 31,
1997 includes a $46,000 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 $141,000 increase in equity at December 31, 1996. Total
shareholder's equity in relation to total assets was 9.9% at March 31,
1997 and December 31, 1996.
During 1996, the Company initiated 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 except for 797 shares purchased on
October 21, 1996 have been purchased on the open market.
The Company and Banks are subject to regulatory capital requirements
administered by federal banking agencies. Capital adequacy guidelines and
prompt corrective action regulations involve quantitative measures of
assets, liabilities and certain off-balance sheet items calculated under
regulatory accounting practices. Capital amounts and classifications are
also subject to qualitative judgments by regulators about components, risk
weightings and other factors and the regulators can lower classifications
in certain cases. Failure to meet various capital requirements can
initiate regulatory action that could have a direct material effect on the
Banks' operations.
The prompt corrective action regulations provide five
classifications, including well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized, although these terms are not used to represent overall
financial condition. If adequately capitalized, regulatory approval is
required to accept brokered deposits. If undercapitalized, capital
distributions are limited, as is asset growth and expansion and plans for
capital restoration are required. The minimum requirements are:
<TABLE>
<CAPTION>
TOTAL TIER 1 TIER 1
CAPITAL TO CAPITAL TO CAPITAL TO
RISK-WEIGHTED RISK WEIGHTED AVERAGE
ASSETS ASSETS ASSETS
------------------- ------------------ ------------------------
<S> <C> <C> <C>
Well capitalized 10.00% 6.00% 5.00%
Adequately capitalized 8.00% 4.00% 4.00%
Undercapitalized 6.00% 3.00% 3.00%
</TABLE>
21
<PAGE> 22
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10 - Q
CAPITAL RESOURCES (CONTINUED)
The following table illustrates the Company's risk-weighted capital
ratios at March 31, 1997:
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------
<S> <C>
Tier 1 capital $ 20,173,000
Total risk-based capital $ 21,880,000
Risk-weighted assets $ 136,151,000
Average total assets $ 202,498,000
Tier 1 capital to average assets 9.96%
Tier 1 risk-based capital ratio 14.82%
Total risk-based capital ratio 16.07%
</TABLE>
LIQUIDITY
Management'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 securities and sales of securities available for sale,
federal funds sold and cash and deposits with banks. Along with its
liquid assets, the Banks have 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 depositors. Management feels that
is has the capital adequacy, profitability and reputation to meet the
current and projected needs of its customers.
For the three months ended March 31, 1997, the adjustment to
reconcile net income to net cash from operating activities consisted
mainly of depreciation and amortization of premises and equipment and
intangibles, the provision for loan losses, net amortization of securities
and net changes in other assets and liabilities. The net cash increase of
$4,638,000, of which $2,536,000 was from the maturities/calls of
securities, was held in anticipation of expected loan funding in early
April. For a more detailed illustration of 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.
22
<PAGE> 23
UNITED BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORM 10 - Q
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.
23
<PAGE> 24
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 Ks with the Securities
Exchange Commission during the quarter ending March
31, 1997.
24
<PAGE> 25
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 12, 1997 By:
- ------------ ----------------
Date James W. Everson
Chairman, President &
Chief Executive Officer
May 12, 1997 By:
------------ ---------------
Date Ronald S. Blake
Treasurer
25
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<S> <C> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,982
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,275
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,812
<INVESTMENTS-CARRYING> 29,324
<INVESTMENTS-MARKET> 29,719
<LOANS> 130,136
<ALLOWANCE> 2,130
<TOTAL-ASSETS> 204,409
<DEPOSITS> 173,029
<SHORT-TERM> 9,588
<LIABILITIES-OTHER> 1,509
<LONG-TERM> 0
0
0
<COMMON> 2,033
<OTHER-SE> 18,250
<TOTAL-LIABILITIES-AND-EQUITY> 204,409
<INTEREST-LOAN> 3,004
<INTEREST-INVEST> 874
<INTEREST-OTHER> 9
<INTEREST-TOTAL> 3,887
<INTEREST-DEPOSIT> 1,636
<INTEREST-EXPENSE> 1,746
<INTEREST-INCOME-NET> 2,141
<LOAN-LOSSES> 111
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,374
<INCOME-PRETAX> 894
<INCOME-PRE-EXTRAORDINARY> 678
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 678
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
<YIELD-ACTUAL> 4.50
<LOANS-NON> 208
<LOANS-PAST> 365
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,023
<CHARGE-OFFS> 22
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 2,130
<ALLOWANCE-DOMESTIC> 2,130
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 538
</TABLE>
