<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
/X/ Quarterly Report Pursuant to Section 13
of the Securities Exchange Act of 1934
_________________________
FOR THE QUARTER ENDED MARCH 31, 1995
COMMISSION FILE #0-16640
UNITED BANCORP, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2606280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
205 E. CHICAGO BOULEVARD, TECUMSEH, MI 49286
(Address of principal executive offices, including Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (517) 423-8373
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 shorter periods 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
----- -----
As of April 15, 1995, there were outstanding 1,488,375 shares of the
registrant's common stock, no par value.
Page 1
<PAGE> 2
CROSS REFERENCE TABLE
ITEM NO. DESCRIPTION PAGE NO.
- ------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Condensed)
(a) Consolidated Balance Sheet 3
(b) Consolidated Statement of Income 4
(c) Consolidated Statement of Changes in Shareholder Equity 5
(d) Consolidated Statement of Cash Flows 6
(e) Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
Financial Condition 9
Liquidity and Funds Management 10
Results of Operations 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
Page 2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
(a) CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31, March 31,
In thousands of dollars 1995 1994 1994
(Unaudited) (Audited) (Unaudited)
=============================================================================================================
<S> <C> <C> <C>
ASSETS
Cash and demand balances in other banks $ 8,092 $ 7,049 $ 6,790
Federal funds sold 4,300 0 4,500
- -----------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 12,392 7,049 11,290
Securities available for sale 40,001 41,900 46,702
Securities held to maturity (fair value of
$32,208, $32,911 and $36,265, respectively) 31,534 32,896 36,741
- -----------------------------------------------------------------------------------------------------------
Total securities 71,535 74,796 83,443
Loans held for sale 125 1,301 4,719
Portfolio loans 208,961 209,458 193,227
- -----------------------------------------------------------------------------------------------------------
Total loans 209,086 210,759 197,946
Less: allowance for loan losses 2,152 2,127 2,150
- -----------------------------------------------------------------------------------------------------------
Net loans 206,934 208,632 195,796
Premises and equipment, net 8,299 8,310 7,014
Accrued interest receivable and other assets 5,347 5,474 5,443
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $304,507 $304,261 $302,986
=============================================================================================================
LIABILITIES
Deposits
Noninterest bearing $ 25,444 $ 26,712 $ 26,617
Interest bearing certificates of deposit of $100,000 or more 31,328 24,016 25,863
Other interest bearing deposits 213,544 213,556 218,742
- -----------------------------------------------------------------------------------------------------------
Total deposits 270,316 264,284 271,222
Short term borrowings 0 6,800 0
Other borrowings 6,000 6,000 6,000
Accrued interest payable and other liabilities 1,967 2,019 1,853
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 278,283 279,103 279,075
SHAREHOLDERS' EQUITY
Common stock, no par value; 5,000,000 shares authorized;
1,488,375 shares issued and outstanding. 4,961 4,961 4,961
Capital surplus 6,260 6,260 6,260
Retained earnings 15,403 14,791 12,937
Unrealized gain (loss) on securities available for sale,
net of tax of $206, $440, and $127, respectively. (400) (854) (247)
- -----------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 26,224 25,158 23,911
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $304,507 $304,261 $302,986
=============================================================================================================
Book value per share of common stock $17.62 $16.90 $16.06
</TABLE>
1994 per share book value has been restated to reflect the 3 for 1 stock split
in 1994.
Page 3
<PAGE> 4
(b) CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
In thousands of dollars 1995 1994
=====================================================================================================
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans
Taxable $4,501 $3,857
Tax exempt 23 28
Interest on securities
Available for sale - taxable 557 549
Held to maturity - taxable 92 140
Held to maturity - tax exempt 374 361
Interest on federal funds sold 11 31
- -----------------------------------------------------------------------------------------------------
Total interest income 5,558 4,966
INTEREST EXPENSE
Interest on certificates of deposit of $100,000 or more 439 298
Interest on other deposits 2,055 1,955
Interest on short term borrowings 52 1
Interest on other borrowings 69 69
- -----------------------------------------------------------------------------------------------------
Total interest expense 2,615 2,323
- -----------------------------------------------------------------------------------------------------
NET INTEREST INCOME 2,943 2,643
Provision for loan losses 102 101
- -----------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,841 2,542
OTHER INCOME
Service charges on deposit accounts 211 178
Trust & Investment fee income 231 215
Gains on securities transactions 0 29
Loan sales and servicing 96 101
Other income 146 116
- -----------------------------------------------------------------------------------------------------
Total other income 684 639
OTHER EXPENSE
Salaries and employee benefits 1,186 1,011
Occupancy and equipment expense 373 372
Federal deposit insurance premiums 149 151
Other expense 631 619
- -----------------------------------------------------------------------------------------------------
Total other expense 2,339 2,153
- -----------------------------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAX 1,186 1,028
Federal income tax 291 235
- -----------------------------------------------------------------------------------------------------
NET INCOME $ 895 $ 793
=====================================================================================================
Net income per share of common stock $0.60 $0.53
Cash dividends declared per share of common stock $0.190 $0.183
1994 net income and cash dividends per share have been restated to
reflect the 3 for 1 stock split in 1994.
Return on average assets (annualized) 1.20% 1.07%
Return on average equity (annualized) 13.70% 13.34%
</TABLE>
Page 4
<PAGE> 5
(c) STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Common Capital Retained
In thousands of dollars Stock Surplus Earnings (a) Total
================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $4,961 $6,260 $12,417 $196 $23,834
Net income, 1994 3,584 3,584
Cash dividends declared, $0.813 per share (1,210) (1,210)
Net change in unrealized gain (loss)
on securities available for sale (1,050) (1,050)
- ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 4,961 6,260 14,791 (854) 25,158
Net income YTD 1995 895 895
Cash dividends declared, $0.190 per share (283) (283)
Net change in unrealized gain (loss)
on securities available for sale 454 454
- ----------------------------------------------------------------------------------------------------------------
Balance, March 31, 1995 $4,961 $6,260 $15,403 ($400) $26,224
================================================================================================================
</TABLE>
(a) Unrealized Gain (Loss) on Securities Available for Sale
Cash dividends have been restated to reflect a 3 for 1 stock split in 1994.
Page 5
<PAGE> 6
(d) YEAR TO DATE CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
In thousands of dollars 1995 1994
==================================================================================================================
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 895 $ 793
- ------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash from Operating Activities
Depreciation 225 213
Accretion/amortization on securities 89 141
Provision for loan losses 102 101
Gain on sale of securities available for sale 0 (29)
Loans originated for sale (1,984) (10,819)
Proceeds from sales of loans originated for sale 3,160 9,395
Change in deferred loan fees (79) (3)
Change in accrued interest receivable and other assets (108) (107)
Change in accrued interest payable and other liabilities 53 149
- ------------------------------------------------------------------------------------------------------------------
Total adjustments 1,458 (959)
- ------------------------------------------------------------------------------------------------------------------
Net cash from operating activities 2,353 (166)
- ------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Proceeds from maturities of securities available for sale 2,000 2,000
Proceeds from sales of securities available for sale 0 2,136
Principal payments on securities available for sale 515 2,518
Purchase of securities available for sale 0 (7,215)
Proceeds from maturities of securities held to maturity 1,345 1,540
Purchase of securities held to maturity 0 (2,699)
Net decrease in portfolio loans 499 766
Premises and equipment expenditures, net (214) (197)
- ------------------------------------------------------------------------------------------------------------------
Net cash from investing activities 4,145 (1,151)
- ------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net increase in deposits 6,032 4,075
Net change in short term borrowings (6,800) 0
Dividends paid (387) (372)
- ------------------------------------------------------------------------------------------------------------------
Net cash from financing activities (1,155) 3,703
- ------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 5,343 2,386
Cash and cash equivalents at beginning of year 7,049 8,904
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $12,392 $ 11,290
==================================================================================================================
Cash Paid During the Period for
Interest $ 2,591 $ 2,369
Income taxes $100 $75
==================================================================================================================
</TABLE>
Page 6
<PAGE> 7
(e) NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements of United
Bancorp, Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ending March 31, 1995 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
NOTE 2 - SECURITIES
The amortized cost and fair value of securities at March 31, 1995 are shown
below, in thousands of dollars.
<TABLE>
<CAPTION>
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
-----------------------------------------------
<S> <C> <C> <C> <C>
Securities Available for Sale
U.S. Treasury and agency securities $23,740 $16 ($362) $23,394
Mortgage backed agency securities 13,776 55 (303) 13,528
Asset backed and other securities 3,091 1 (13) 3,079
-----------------------------------------------
Total $40,607 $72 ($678) $40,001
===============================================
Securities Held to Maturity
Tax exempt obligations of states and
political subdivisions $25,312 $797 ($87) $26,022
Corporate and taxable municipal securities 6,222 2 (38) 6,186
-----------------------------------------------
Total $31,534 $799 ($125) $32,208
===============================================
</TABLE>
The amortized cost and fair value of securities by contractual maturity at
March 31, 1995 are shown below, in thousands of dollars.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
-------------------- ----------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
-------------------- ----------------------
<S> <C> <C> <C> <C>
Due in one year or less $15,774 $15,593 $5,842 $5,828
Due after one year through five years 24,833 24,408 8,817 9,012
Due after five years through ten years 15,368 15,791
Due after ten years 1,507 1,577
-------------------- ----------------------
Total $40,607 $40,001 $31,534 $32,208
==================== ======================
</TABLE>
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. Asset backed securities are included in periods based on
their estimated average lives. Equity securities are included with securities
available for sale due in one year or less.
Page 7
<PAGE> 8
Sales activity of securities for the period ending March 31, 1994 is shown in
the following table, in thousands of dollars. All sales during 1994 were of
securities identified as available for sale. There were no sales of securities
during the period ending March 31, 1995.
<TABLE>
<CAPTION>
1994
----
<S> <C>
Sales proceeds $2,136
Gross gains 29
Gross losses 0
</TABLE>
Securities carried at $9,153,000 as of March 31, 1995 were pledged to secure
deposits of public funds and for other purposes as required by law. A "Blanket
Collateral" agreement with the Federal Home Loan Bank was in effect to secure
advances. This agreement, however, does not require the pledging of specific
securities.
NOTE 3 - ALLOWANCE FOR LOAN LOSSES
An analysis of the allowance for loan losses, in thousands of dollars, for the
three months ended March 31, 1995 and 1994 follows.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Balance at beginning of period $2,127 $2,074
Loans charged off (93) (34)
Recoveries credited to allowance 16 9
Provision charged to operations 102 101
------ ------
Balance at end of period $2,152 $2,150
</TABLE>
The Company adopted Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," ("SFAS 114") at January 1,
1995. Under this standard, the carrying value of loans considered to be
impaired is reduced to the present value of expected future cash flows or to
the fair value of the collateral by allocating a portion of the allowance for
loan losses to such loans. If these allocations cause the allowance for loan
losses to require increase, such increase is reported as bad debt expense.
There was no increase in the allowance for loan losses due to the adoption of
SFAS 114 at January 1, 1995.
Information regarding impaired loans, in thousands of dollars, is as follows
for the three months ended March 31, 1995.
<TABLE>
<CAPTION>
1995
----
<S> <C>
Average investment in impaired loans 263
Interest income recognized on impaired loans including
interest income recognized on cash basis 4
Interest income recognized on cash basis 0
</TABLE>
Information regarding impaired loans, in thousands of dollars, at the end of
March 31, 1995 follows.
<TABLE>
<CAPTION>
1995
----
<S> <C>
Balance of impaired loans 263
Portion for which no allowance for loan losses is allocated 0
Portion for which an allowance for loan losses is allocated 263
Portion of allowance for loan losses allocated to impaired
loans 63
</TABLE>
Page 8
<PAGE> 9
NOTE 4 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS
The following table shows the commitments to make loans and the unused lines of
credit, in thousands of dollars, available to Bank customers at March 31.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Outstanding commitments to make fixed rate loans $1,292 $1,500
Outstanding commitments to make variable rate loans 2,080 2,250
Unused lines of credit - fixed rate 881 884
Unused lines of credit - variable rate 28,027 25,318
Standby letters of credit - fixed rate 0 0
Standby letters of credit - variable rate 4,383 4,348
</TABLE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This discussion provides information about the consolidated financial condition
and results of operations of United Bancorp, Inc. and its subsidiary, United
Bank & Trust ("Bank") for the three month period ending March 31, 1995.
FINANCIAL CONDITION
SECURITIES
Investment balances continued to decline during the first quarter of 1995.
These decreases are due to maturities in the portfolio which were not replaced
in light of the Bank's current funds position. The mix of the portfolio
remained relatively unchanged from December 31 and March 31, 1994.
LOANS
During the first quarter of 1995, the Company sold $1.3 million of loans
classified as held for sale at December 31, 1994. Balances of portfolio loans
decreased during the first three months of 1995, reflecting continued slowing
of demand for residential mortgage loans following record levels achieved in
1993 and 1994. Loan volume has traditionally softened during the first quarter
of the year, and the Bank experienced a similar decline in loan balances from
December 31, 1993 to March 31, 1994. Management does not believe that this
slowdown will be representative of loan growth for the balance of 1995.
The percentage makeup of the loan portfolio is not significantly changed from
March 31, 1994. The table below shows total portfolio loans outstanding, in
thousands of dollars, at March 31, and their percentage of the total loan
portfolio. All loans are domestic and contain no concentrations by industry or
customer.
<TABLE>
<CAPTION>
1995 1994
----------------------- -----------------------
Portfolio loans: Balance % of total Balance % of total
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Personal $49,376 23.6% $37,121 19.2%
Business 54,498 26.1% 50,061 25.9%
Tax exempt 1,383 0.7% 1,824 0.9%
Residential mortgage 100,695 48.2% 98,196 50.8%
Construction 3,009 1.4% 6,025 3.1%
-------- ------ -------- ------
Total portfolio loans $208,961 100.0% $193,227 100.0%
</TABLE>
Page 9
<PAGE> 10
CREDIT QUALITY
The Company continues to maintain a high level of asset quality as a result of
actively monitoring delinquencies, nonperforming assets and potential problem
loans. In addition, the Bank uses an independent loan review firm to assess the
continued quality of its business loan portfolio. Nonperforming loans are
comprised of (1) loans accounted for on a nonaccrual basis: (2) loans
contractually past due 90 days or more as to interest or principal payments
(but not included in the nonaccrual loans in (1) above); and (3) other loans
whose terms have been renegotiated to provide a reduction or deferral of
interest or principal because of a deterioration in the financial position of
the borrower (exclusive of loans in (1) or (2) above). The aggregate amount of
nonperforming loans, in thousands of dollars, is shown in the table below.
<TABLE>
<CAPTION>
3/31/95 3/31/94
------- -------
<S> <C> <C>
Nonaccrual loans $93 $173
Loans past due 90 days or more 386 111
Troubled debt restructurings 0 33
----- -----
Total nonperforming loans $479 $317
Percent of total loans 0.23% 0.16%
</TABLE>
DEPOSITS
Interest bearing deposit balances increased during the first quarter of 1995,
continuing a trend begun during the third quarter of 1994. This growth occurred
principally in certificates of deposit of $100,000 or more, reflecting typical
seasonal growth in public funds deposits. Other interest bearing deposits
remained flat during the quarter, reversing deposit declines experienced in
1994.
Noninterest bearing deposits continue to fluctuate with swings in corporate and
public fund balances, but the Company experienced growth during the quarter in
personal noninterest bearing deposits as a result of a new product introduced
during the fourth quarter of 1994.
Management anticipates that deposit growth during 1995 will be steady, with
growth anticipated from new markets, as well as from consumer re-entry into the
certificate of deposit market following sharp increases in rates experienced in
1994.
LIQUIDITY AND FUNDS MANAGEMENT
LIQUIDITY
Loan balances declined during the quarter, and coupled with deposit growth,
resulted in improved liquidity during the quarter. Short term borrowed funds
were eliminated, and by the end of the first quarter, the Bank was selling
excess funds in the federal funds market. This liquidity was also enhanced by
runoff in the investment portfolio due to maturities and principal repayments
on asset backed investments. Finally, sale of $1.3 million of loans held for
sale at December 31, 1994 contributed to the Company's liquidity.
Temporary deposit growth from public funds has artificially inflated the funds
position of the Company, but Management does not anticipate a return in the
near future to borrowing levels experienced during 1994.
Page 10
<PAGE> 11
FUNDS MANAGEMENT
The Funds Management Policy of the Bank provides for a cumulative gap ratio
between .8 and 1.1 to one at the one year time period, with total exposure of
+/-15% of total assets. During the first quarter of 1995, these ratios have not
changed significantly from those reported at December 31, 1994, in spite of
significant shifts in the Bank's liquidity position.
The following table shows the rate sensitivity of earning assets and
liabilities, in thousands of dollars, as of March 31, 1995.
<TABLE>
<CAPTION>
0-3 4-12 1-5 5-10 Over 10
Months Months Years Years Years Total
------ ------ ----- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Securities & federal funds $13,194 $18,806 $31,841 $11,288 $706 $75,835
Loans 55,398 51,070 58,712 24,622 19,284 209,086
------------------------------------------------------------------
Total earning assets $68,592 $69,876 $90,553 $35,910 $19,990 $284,921
==================================================================
Interest bearing deposits $103,578 $50,972 $77,686 $12,636 $244,872
Other borrowings 3,000 3,000 6,000
------------------------------------------------------------------
Total interest bearing liabilities $106,578 $50,972 $80,686 $12,636 $0 $250,872
==================================================================
Net asset (liability)
funding gap ($37,986) $18,904 $9,867 $23,274 $19,990 $34,049
Cumulative net asset
(liability) funding gap ($37,986) ($19,082) ($9,215) $14,059 $34,049
Cumulative gap ratio 0.64 0.88 0.96 1.06 1.14 to 1
Cumulative gap, % of assets -12.5% -6.3% -3.0% 4.6% 11.2%
</TABLE>
CAPITAL RESOURCES
The capital ratios of the Company exceed the regulatory guidelines for well
capitalized institutions. The following table shows the Company's capital
ratios and ratio calculations at March 31, 1995 and 1994. Dollars are shown in
thousands.
<TABLE>
<CAPTION>
Regulatory Guidelines United Bancorp, Inc.
--------------------- --------------------
Adequate Well 1995 1994
-------- ---- ---- ----
<S> <C> <C> <C> <C>
Tier 1 leverage ratio 4% 5% 8.2% 7.3%
Tier 1 risk adjusted capital ratio 4% 8% 12.9% 11.9%
Total risk adjusted capital ratio 8% 10% 14.0% 13.1%
Total shareholders' equity $26,224 $23,911
Intangible assets (1,857) (2,075)
Unrealized (gain) loss on securities
available for sale 400 247
--------------------
Tier 1 capital 24,767 22,083
Qualifying loan loss reserves 2,152 2,150
--------------------
Tier 2 capital $26,919 $24,233
</TABLE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income began to show improvement during the first quarter of 1995,
following minimal changes since 1992. This reflects recent changes in market
interest rates, as well as a decline in dependence on borrowed funds as
discussed under "Liquidity," above. The spread at March 31, 1995 was 3.92%,
compared to 3.81 for all of 1994. The net yield on interest earning assets
improved to 4.41%, from 4.26% for 1994.
Page 11
<PAGE> 12
The table below shows the year to date daily average Consolidated Balance
Sheet, interest earned (on a taxable equivalent basis) or paid, and the
annualized effective rate or yield, for the period ended March 31, 1995 and
1994.
<TABLE>
<CAPTION>
YIELD ANALYSIS OF CONSOLIDATED AVERAGE ASSETS AND LIABILITIES
DOLLARS IN THOUSANDS
-----------------------------------------------------------------------------
1995 1994
-----------------------------------------------------------------------------
Average Interest Yield/ Average Interest Yield/
ASSETS Balance (b) Rate Balance (b) Rate
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets (a)
Federal funds sold $745 $11 5.91% $3,957 $31 3.13%
Taxable securities 48,892 650 5.32% 58,120 689 4.74%
Tax exempt securities (b) 25,369 566 8.92% 23,895 547 9.16%
Taxable loans 209,215 4,501 8.61% 194,642 3,857 7.93%
Tax exempt loans (b) 1,487 35 9.41% 1,921 42 8.75%
----------------------- --------------------
Total int. earning assets (b) 285,708 $5,763 8.07% 282,535 $5,166 7.31%
----------------------- --------------------
Cash and due from banks 7,980 6,693
Premises and equipment, net 8,366 7,006
Intangible assets 1,892 2,113
Other assets 2,614 2,867
Unrealized gain securities-AFS (1,023) 204
Less allowance for loan losses (2,146) (2,107)
-------- --------
TOTAL ASSETS $303,391 $299,311
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities
Interest bearing demand
deposits $35,913 $187 2.08% $31,053 $166 2.14%
Savings deposits 72,707 508 2.79% 82,876 515 2.49%
CDs $100,000 and over 29,861 439 5.88% 22,464 298 5.31%
Other interest bearing deposits 103,916 1,360 5.23% 107,697 1,274 4.73%
----------------------- --------------------
Total int. bearing deposits 242,397 2,494 4.12% 244,090 2,253 3.69%
Short term borrowings 3,607 52 5.75% 110 1 3.64%
Other borrowings 6,000 70 4.67% 6,000 70 4.67%
----------------------- --------------------
Total int. bearing liabilities 252,004 $2,616 4.15% 250,200 $2,324 3.72%
Noninterest bearing deposits 24,542 ------ 23,118 ------
Other liabilities 369 2,121
Shareholders' equity 26,476 23,872
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $303,391 $299,311
======== ========
Net interest income $3,147 $2,842
====== ======
Net spread (b) 3.92% 3.60%
====== ======
Net yield on interest earning assets (b) 4.41% 4.02%
====== ======
Ratio of interest earning assets to
interest bearing liabilities 1.13 1.13
======== ========
</TABLE>
(a) Non-accrual loans and overdrafts are included in the average balances of
loans.
(b) Fully tax-equivalent basis; 34% tax rate.
Page 12
<PAGE> 13
The table below shows the effect of volume and rate changes on net interest
income for the three months ended March 31, on a taxable equivalent basis, in
thousands of dollars.
<TABLE>
<CAPTION>
------------------------------------------------------------------
1995 Compared to 1994 1994 Compared to 1993
------------------------------------------------------------------
Increase (Decrease) Due to: (a) Increase (Decrease) Due to: (a)
------------------------------- --------------------------------
Interest earned on: Volume Rate Net Volume Rate Net
-------- ----- ------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold ($36) $16 ($20) ($3) $0 ($3)
Taxable securities (117) 78 (39) 16 (80) (64)
Tax exempt securities 33 (14) 19 (52) (13) (65)
Taxable loans 300 344 644 203 (339) (136)
Tax exempt loans (10) 3 (7) (8) (6) (14)
-----------------------------------------------------------------
Total interest income $170 $427 $597 $156 ($438) ($282)
=================================================================
Interest paid on:
NOW accounts $25 ($4) $21 $7 ($80) ($73)
Savings deposits (67) 60 (7) 19 (94) (75)
CDs $100,000 and over 106 35 141 8 (31) (23)
Other interest bearing deposits (46) 132 86 (62) (93) (155)
Short term borrowings 50 1 51 (32) (13) (45)
Other borrowings 0 0 0 70 0 70
-----------------------------------------------------------------
Total interest expense $68 $224 $292 $10 ($311) ($301)
=================================================================
Net change in net interest
income $102 $203 $305 $146 ($127) $19
=================================================================
</TABLE>
(a) The change in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
OTHER INCOME
All categories of noninterest income increased from the same period in 1994,
with the exception of income from loan sales and servicing, and income from
securities transactions.
The decline in income from sales and servicing of loans reflects the slowing of
the demand for residential real estate mortgages, following the unprecedented
origination volume experienced throughout the country in 1993 and 1992. Rising
interest rates substantially reduced the income generated from gains on the
sale of fixed rate residential real estate loans in 1994, and continuing into
1995. On the other hand, the Company continues to service a portfolio of sold
loans, which provides a steady stream of income.
OTHER EXPENSES
Most categories of noninterest expense showed moderate increases over the first
quarter of 1994. Increases in salaries and benefits reflect the continued
growth and expansion of the Bank. Occupancy and equipment expenses have leveled
out, following conversion to new data processing hardware and software late in
1993. Year to date totals for this category are virtually unchanged from the
same period in 1994. Other expenses continue at levels consistent with the same
period in 1994, reflecting efforts to control overhead where possible.
FEDERAL INCOME TAX
There is no significant change in the income tax position of the Company during
the first three months of 1995.
Page 13
<PAGE> 14
NET INCOME
Year to date consolidated net income was $895,000 compared to $793,000 for the
same period in 1994. Improved interest margin, combined with improved
noninterest income, as well as careful control of operating expenses, have
contributed to this improvement. Net income for the year is 12.9% above the
same period last year. Return on consolidated average assets for the quarter
was 1.20%, compared to 1.20% for 1994, and 1.07% for the first quarter period
in 1994.
PROSPECTIVE ACCOUNTING CHANGES
Management does not anticipate adopting any prospective accounting changes
during 1995.
PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings. The Company's
sole subsidiary, United Bank & Trust, is involved in ordinary routine
litigation incident to its business; however, no such proceedings are expected
to result in any material adverse effect on the operations or earnings of the
Bank. Neither the Bank nor the Company is involved in any proceedings to which
any director, principal officer, affiliate thereof, or person who owns of
record or beneficially five percent (5%) or more of the outstanding stock of
the Company or the Bank, or any associate of the foregoing, is a party or has a
material interest adverse to the Company or the Bank.
ITEM 2 - CHANGES IN SECURITIES
No changes in the securities of the Company occurred during the quarter ended
March 31, 1995.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
There have been no defaults upon senior securities relevant to the requirements
of this section during the three months ended March 31, 1995.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter
ended March 31, 1995.
Page 14
<PAGE> 15
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits (numbered as in Item 601 of Regulation S-K):
27. Financial Data Schedule.
(b) The Company has filed no reports on Form 8-K during the quarter ended
March 31, 1995.
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.
United Bancorp, Inc.
May 5, 1995
/s/ Dale L. Chadderdon
--------------------------------------------
Dale L. Chadderdon
Senior Vice President, Secretary & Treasurer
Page 15
<PAGE> 16
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 8,092
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,001
<INVESTMENTS-CARRYING> 31,534
<INVESTMENTS-MARKET> 32,208
<LOANS> 209,086
<ALLOWANCE> 2,152
<TOTAL-ASSETS> 304,507
<DEPOSITS> 270,316
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,967
<LONG-TERM> 6,000
<COMMON> 4,961
0
0
<OTHER-SE> 21,263
<TOTAL-LIABILITIES-AND-EQUITY> 304,507
<INTEREST-LOAN> 4,524
<INTEREST-INVEST> 1,023
<INTEREST-OTHER> 11
<INTEREST-TOTAL> 5,558
<INTEREST-DEPOSIT> 2,494
<INTEREST-EXPENSE> 2,615
<INTEREST-INCOME-NET> 2,943
<LOAN-LOSSES> 102
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,339
<INCOME-PRETAX> 1,186
<INCOME-PRE-EXTRAORDINARY> 1,186
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 895
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
<YIELD-ACTUAL> 4.41
<LOANS-NON> 93
<LOANS-PAST> 386
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 51
<ALLOWANCE-OPEN> 2,127
<CHARGE-OFFS> 93
<RECOVERIES> 16
<ALLOWANCE-CLOSE> 2,152
<ALLOWANCE-DOMESTIC> 346
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,806
</TABLE>
