<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
-------------------
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 October 15, 1997, there were outstanding 1,644,008 shares of the
registrant's common stock, no par value.
Page 1
<PAGE> 2
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION PAGE NO.
- -----------------------------------------------------------------------------
<S> <C>
Part I - Financial Information
Item 1. Financial Statements (Condensed)
(a) Consolidated Balance Sheets 3
(b) Consolidated Statements of Income 4
(c) Consolidated Statements of Cash Flows 5
(d) Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
Financial Condition 7
Liquidity and Funds Management 9
Results of Operations 10
Part II - Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
Exhibit Index 14
</TABLE>
Page 2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1 -FINANCIAL STATEMENTS
(A) CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
September 30, December 31, September 30,
In thousands of dollars 1997 1996 1996
============================================================================================================
<S> <C> <C> <C>
ASSETS
Cash and demand balances in other banks $ 10,477 $ 10,252 $ 8,644
Federal funds sold 11,400
- ------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 10,477 21,652 8,644
Securities available for sale 48,107 44,990 46,168
Securities held to maturity (fair value of
$35,269, $34,391 and $33,389, respectively) 34,237 33,348 32,522
- ------------------------------------------------------------------------------------------------------------
Total securities 82,344 78,338 78,690
Loans held for sale 77 799 302
Portfolio loans 253,998 241,054 234,896
- ------------------------------------------------------------------------------------------------------------
Total loans 254,075 241,853 235,198
Less: allowance for loan losses 2,270 2,320 2,256
- ------------------------------------------------------------------------------------------------------------
Net loans 251,805 239,533 232,942
Premises and equipment, net 9,584 8,775 8,837
Accrued interest receivable and other assets 5,662 5,072 5,137
- ------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $359,872 $353,370 $334,250
============================================================================================================
LIABILITIES
Deposits
Noninterest bearing $ 30,866 $ 30,335 $ 27,984
Interest bearing certificates of deposit
of $100,000 or more 41,565 42,060 38,857
Other interest bearing deposits 233,730 225,308 216,833
- ------------------------------------------------------------------------------------------------------------
Total deposits 306,161 297,703 283,674
Federal funds and other short term borrowings 5,833 609 3,601
Other borrowings 10,000 20,000 13,000
Accrued interest payable and other liabilities 3,239 3,010 2,783
- ------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 325,233 321,322 303,058
SHAREHOLDERS' EQUITY
Common stock, no par value; 5,000,000 shares authorized;
1,644,008, 1,565,890 and 1,564,271 shares issued and
outstanding, respectively 16,279 13,500 13,428
Retained earnings 18,121 18,419 17,803
Unrealized gain (loss) on securities available for sale,
net of tax of $(123), $(67), and $20, respectively 239 129 (39)
- ------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 34,639 32,048 31,192
- ------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $359,872 $353,370 $334,250
============================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 3
<PAGE> 4
(B) CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
==================================================================================================================
In thousands of dollars, except per share data 1997 1996 1997 1996
==================================================================================================================
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans
Taxable $ 5,731 $ 5,172 $ 16,615 $ 15,104
Tax exempt 20 15 49 47
Interest on securities
Taxable 801 749 2,394 2,195
Tax exempt 436 427 1,280 1,259
Interest on federal funds sold 26 0 213 77
- ------------------------------------------------------------------------------------------------------------------
Total interest income 7,014 6,363 20,551 18,682
INTEREST EXPENSE
Interest on certificates of deposit of $100,000 or more 611 538 1,826 1,595
Interest on other deposits 2,436 2,146 7,163 6,506
Interest on short term borrowings 12 109 68 143
Interest on other borrowings 177 120 563 278
- ------------------------------------------------------------------------------------------------------------------
Total interest expense 3,236 2,913 9,620 8,522
- ------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 3,778 3,450 10,931 10,160
Provision for loan losses 230 126 600 378
- ------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,548 3,324 10,331 9,782
NONINTEREST INCOME
Service charges on deposit accounts 432 320 1,095 891
Trust & Investment fee income 379 244 907 728
Loan sales and servicing 134 131 407 440
Sales of nondeposit investment products 89 63 241 200
Other income 97 110 318 375
- ------------------------------------------------------------------------------------------------------------------
Total noninterest income 1,131 868 2,968 2,634
NONINTEREST EXPENSE
Salaries and employee benefits 1,473 1,342 4,405 3,999
Occupancy and equipment expense 567 477 1,592 1,433
Other expense 777 738 2,328 2,192
- ------------------------------------------------------------------------------------------------------------------
Total noninterest expense 2,817 2,557 8,325 7,624
- ------------------------------------------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAX 1,862 1,635 4,974 4,792
Federal income tax 512 434 1,332 1,267
- ------------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,350 $ 1,201 $ 3,642 $ 3,525
==================================================================================================================
Net income per share of common stock $ 0.82 $ 0.73 $ 2.21 $ 2.15
Cash dividends declared per share of common stock 0.260 0.229 0.729 0.638
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4
<PAGE> 5
(C) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30,
-------------
In thousands of dollars 1997 1996
=====================================================================================================================
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 3,642 $ 3,525
- ---------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash from Operating Activities
Depreciation and amortization 1,047 985
Provision for loan losses 600 378
Loans originated for sale (17,464) (19,574)
Proceeds from sales of loans originated for sale 16,742 19,533
Change in accrued interest receivable and other assets (730) (375)
Change in accrued interest payable and other liabilities 356 126
- ---------------------------------------------------------------------------------------------------------------------
Total adjustments 551 1,073
- ---------------------------------------------------------------------------------------------------------------------
Net cash from operating activities 4,193 4,598
- ---------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Securities available for sale
Purchases (9,309) (20,523)
Sales 739
Maturities 1,993 14,000
Principal payments 4,340 4,651
Securities held to maturity
Purchases (8,851) (3,586)
Maturities and calls 7,921 1,495
Increase in portfolio loans (12,150) (17,649)
Premises and equipment expenditures, net (1,651) (1,174)
- ---------------------------------------------------------------------------------------------------------------------
Net cash from investing activities (17,707) (22,047)
- ---------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net change in deposits 8,458 (1,498)
Net change in short term borrowings 5,224 3,023
Principal payments on other borrowings (10,000) (8,000)
Proceeds from advances in other borrowings 15,000
Proceeds from stock transactions 38
Dividends paid (1,381) (1,149)
- ---------------------------------------------------------------------------------------------------------------------
Net cash from financing activities 2,339 7,376
- ---------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents (11,175) (10,073)
Cash and cash equivalents at beginning of year 21,652 18,717
- ---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 10,477 $ 8,644
=====================================================================================================================
Cash Paid During the Period for
Interest $ 9,522 $ 8,370
Income taxes 1,253 1,294
=====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5
<PAGE> 6
(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 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 nine month
period ending September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997. 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, 1996.
NOTE 2 - LOANS HELD FOR SALE
Mortgage loans serviced for others are not included in the accompanying
consolidated statements. The unpaid principal balances of mortgage loans
serviced for others was $94,409,000 and $81,950,000 at the end of September
1997 and 1996. The balance of loans serviced for others related to servicing
rights that have been capitalized was $39,626,000 and $18,514,000 at September
30, 1997 and 1996.
Mortgage servicing rights activity in thousands of dollars for the nine months
ended September 30, 1997 and 1996 follows:
<TABLE>
<CAPTION>
Unamortized cost of mortgage servicing rights 1997 1996
--------------------------------------------- ---- ----
<S> <C> <C>
Balance at January 1 $ 185 $ -
Amount capitalized year to date 127 142
Amount amortized year to date (22) (5)
----- -----
Balance at period end $ 290 $ 137
===== =====
</TABLE>
No valuation allowance was considered necessary for mortgage servicing
rights at period end 1997 and 1996.
NOTE 3 - COMMON STOCK AND EARNINGS PER SHARE
Earnings per share are based upon the weighted average number of shares
outstanding during the year. On May 30, 1997 and May 27, 1996, the Company
issued 5% stock dividends. Earnings per share, dividends per share and weighted
average shares have been restated to reflect the stock dividend. The weighted
average number of shares outstanding was 1,644,073 for 1997 and 1,642,517 for
1996.
Page 6
<PAGE> 7
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 nine month period ending September 30, 1997.
FINANCIAL CONDITION
SECURITIES
Investment balances increased during the third quarter of 1997, and are up $4
million year to date. For the quarter, maturities have generally been replaced,
and additions have been made to the portfolio in anticipation of approximately
$15 million of deposits which are expected to be added through a branch
purchase in the fourth quarter of 1997. The mix of the investment portfolio
remained relatively unchanged from prior periods.
LOANS
Loan volume continued to be strong during the second and third quarters
of 1997, following declines in the first quarter of the year. All
categories of loans enjoyed strong growth during the quarter and year to date,
reflecting the economic activity of the area.
The mix of the loan portfolio has remained relatively unchanged from prior
periods, although the general trend is toward an increased percentage of
personal and business loans, with slight declines in tax exempt and residential
mortgage loans. The table below shows total loans outstanding, in thousands of
dollars, at September 30 and December 31, and their percentage of the total
loan portfolio. All loans are domestic and contain no concentrations by
industry or customer.
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996 September 30, 1996
------------------------- ----------------------- ----------------------
Portfolio loans: Balance % of total Balance % of total Balance % of total
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Personal $ 72,001 28.3% $ 69,477 28.7% $ 67,422 28.7%
Business/commercial mtgs 70,010 27.6% 65,823 27.2% 62,258 26.5%
Tax exempt 1,536 0.6% 1,078 0.4% 1,129 0.5%
Residential mortgage 97,342 38.3% 94,255 39.0% 94,200 40.1%
Construction 13,186 5.2% 11,220 4.6% 10,189 4.3%
------------------------ ---------------------- ---------------------
Total loans $254,075 100.0% $241,853 100.0% $235,198 100.0%
</TABLE>
CREDIT QUALITY
The Company continues to maintain a high level of asset quality compared to
peers, 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
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<PAGE> 8
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. The Company's classification of nonperforming loans are
generally consistent with loans identified as impaired.
<TABLE>
<CAPTION>
9/30/97 12/31/96 9/30/96
------- -------- -------
<S> <C> <C> <C>
Nonaccrual loans $ 74 $ 450 $ 1,125
Loans past due 90 days or more 727 663 410
Troubled debt restructurings - - -
------------------------------------------
Total nonperforming loans $ 801 $ 1,113 $ 1,535
Other real estate 385 335 -
------------------------------------------
Total nonperforming assets $ 1,186 $ 1,448 $ 1,535
Percent of total loans 0.47% 0.57% 0.65%
</TABLE>
Nonperforming loans decreased from June 30, 1997 and December 31, 1996. Loans
past due ninety days or more and nonaccrual loans declined during the quarter,
in spite of continued loan growth. Overall, nonperforming loans as a percent
of total loans remain well below industry standards, although higher than
traditionally experienced by the Company. The amount listed for other real
estate relates primarily to property that has been leased to a third party with
an option to purchase, and no loss is anticipated on that property. The Company
has no troubled debt restructurings.
The Company has increased its provision for loan losses over 1996 as a result
of the increase in loan delinquency. An analysis of the allowance for loan
losses, in thousands of dollars, for the nine months ended September 30, 1997
and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Balance at beginning of period $ 2,320 $ 2,197
Loans charged off (702) (378)
Recoveries credited to allowance 52 59
Provision charged to operations 600 378
------- -------
Balance at end of period $ 2,270 $ 2,256
</TABLE>
The allowance for loan losses is maintained at a level believed adequate by
Management to absorb potential losses in the loan portfolio.
DEPOSITS
Total deposits are up for the quarter and year to date. Noninterest bearing and
interest bearing balances continue to fluctuate with swings in corporate and
public fund balances. In August, the Bank opened its first office outside of
Lenawee County, and deposit growth at that office was reflected to a small
degree in the increases in deposit balances during the third quarter. The
office, located in Saline, Michigan, is the Bank's fourteenth office.
The category of other interest bearing deposit balances enjoyed the greatest
growth during the quarter, reflecting continued growth in Cash Management and
Certificates of Deposit accounts. Other interest bearing deposits remain
relatively flat year to date. Management anticipates that deposit growth during
the remainder of 1997 will be steady, with anticipated growth from new markets,
as well as from consumer re-entry into the certificate of deposit market.
Page 8
<PAGE> 9
The Bank has reached an agreement with NBD Bank to purchase its Dundee,
Michigan office, and has applied for regulatory approval to consummate that
purchase. If approved, the acquisition of the office will provide approximately
$15 million of additional deposits, and will afford the Bank its first entry
into Monroe County, Michigan. It is anticipated that the transaction will be
approved, and will be effective early in December, 1997.
LIQUIDITY
The Bank continues to move in and out of the fed funds market, as liquidity
needs vary. Deposit growth moving at different times than loan growth will
cause continued variation in the short term funds position of the Bank. The
Company has a number of additional liquidity sources should the need arise, and
Management has no concerns for the liquidity position of the Company.
FUNDS MANAGEMENT
The Funds Management Policy of the Bank provides tolerances for the cumulative
gap ratio and total interest rate exposure. While the internal measures as
dictated by policy are calculated with a slight difference than shown in the
table below, all funds management ratios remain within policy. During the third
quarter of 1997, these ratios have changed modestly from those reported at June
30, 1997 and December 31, 1996, reflecting periodic 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 September 30, 1997.
<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 $ 14,979 $ 13,856 $ 45,711 $ 6,849 $ 949 $ 82,344
Loans 66,632 50,226 100,842 25,317 11,057 254,074
---------------------------------------------------------------------------------
Total earning assets $ 81,611 $ 64,082 $ 146,553 $ 32,166 $ 12,006 $ 336,418
=================================================================================
Interest bearing deposits $ 163,663 $ 57,644 $ 53,940 $ 48 $ 275,295
Other borrowings 5,833 3,000 7,000 15,833
---------------------------------------------------------------------------------
Total interest bearing liabilities $ 169,496 $ 60,644 $ 60,940 $ 48 $ - $ 291,128
=================================================================================
Net asset (liability)
funding gap $ (87,885) $ 3,438 $ 85,613 $ 32,118 $ 12,006 $ 45,290
Cumulative net asset
(liability) funding gap $ (87,885) $ (84,447) $ 1,166 $ 33,284 $ 45,290
Cumulative gap ratio 0.48 0.63 1.00 1.11 1.16 to 1
Cumulative gap, % of assets -24.4% -23.5% 0.3% 9.2% 12.6%
</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 September 30, 1997 and 1996 and December 31,
1996. Dollars are shown in thousands.
Page 9
<PAGE> 10
<TABLE>
<CAPTION>
Regulatory Guidelines United Bancorp, Inc.
--------------------- --------------------
Adequate Well 9/30/97 12/31/96 9/30/96
-------- ---- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Tier 1 capital to average assets 4% 5% 9.4% 9.3% 9.2%
Tier 1 risk adjusted capital ratio 4% 6% 13.9% 13.2% 13.4%
Total risk adjusted capital ratio 8% 10% 14.8% 14.2% 14.4%
Total shareholders' equity $ 34,639 $ 32,048 $ 31,192
Intangible assets (1,352) (1,491) (1,539)
Unrealized (gain) loss on securities available for sale (239) (129) 39
-------- ---------------------
Tier 1 capital 33,048 30,428 29,692
Qualifying loan loss reserves 2,270 2,320 2,256
-------- ---------------------
Tier 2 capital $ 35,318 $ 32,748 $ 31,948
</TABLE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
In general, yields increased for the third quarter compared to the second
quarter and the same period in 1996. At the same time, the Company's cost of
funds have remained relatively flat compared to the prior quarter, but have
increased considerably compared to the same period in 1996. This resulted in
continued improvement in net interest income over prior periods. At the same
time, net spread remains below the same period of 1996, while showing
improvement over the prior quarter.
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 September 30, 1997 and
1996.
YIELD ANALYSIS OF CONSOLIDATED AVERAGE ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
dollars in thousands 1997 1996
-------------------------------------------- --------------------------------------
Average Interest Yield/ Average Interest Yield/
Balance (b) Rate Balance (b) Rate
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets (a)
Federal funds sold $ 5,387 $ 213 5.28% $ 1,814 $ 77 5.66%
Taxable securities 49,464 2,393 6.45% 48,434 2,195 6.04%
Tax exempt securities (b) 31,026 1,851 7.96% 30,160 1,826 8.07%
Taxable loans 245,074 16,615 9.04% 222,778 15,104 9.04%
Tax exempt loans (b) 1,221 71 7.75% 1,088 69 8.46%
--------------------------- -------------------------
Total int. earning assets (b) 332,172 $ 21,144 8.49% 304,274 $ 19,271 8.44%
--------------------------- -------------------------
Less allowance for loan losses (2,292) (2,227)
Other assets 23,271 21,698
--------- ---------
Total Assets $ 353,151 $ 323,745
========= =========
Liabilities and Shareholders' Equity
NOW accounts $ 38,734 $ 448 1.54% $ 39,318 $ 526 1.78%
Savings deposits 70,435 1,502 2.84% 75,449 1,606 2.84%
CDs $100,000 and over 41,684 1,826 5.84% 36,523 1,596 5.83%
Other interest bearing deposits 123,397 5,213 5.63% 103,963 4,374 5.61%
--------------------------- -------------------------
Total int. bearing deposits 274,250 8,989 4.37% 255,253 8,102 4.23%
</TABLE>
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<PAGE> 11
YIELD ANALYSIS OF CONSOLIDATED AVERAGE ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
----------------------------------- --------------------------------
1997 1996
----------------------------------- --------------------------------
Average Interest Yield/ Average Interest Yield/
Balance (b) Rate Balance (b) Rate
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES, CONTINUED
Short term borrowings 2,239 92 5.46% 3,521 143 5.42%
Other borrowings 12,024 539 5.98% 6,555 278 5.65%
---------------------- ---------------------
Total int. bearing liabilities 290,510 $ 9,620 4.42% 265,329 $ 8,523 4.28%
-------- --------
Noninterest bearing deposits 28,420 25,996
Other liabilities 939 2,481
Shareholders' equity 33,282 29,939
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 353,151 $ 323,745
========= =========
Net interest income (b) $ 11,524 $ 10,748
======== ========
Net spread (b) 4.07% 4.16%
===== =====
Net yield on interest earning assets (b) 4.63% 4.71%
===== =====
Ratio of interest earning assets to
interest bearing liabilities 1.14 1.15
========= =========
</TABLE>
(a) Non-accrual loans and overdrafts are included in the average balances of
loans.
(b) Fully tax-equivalent basis; 34% tax rate.
The table below shows the effect of volume and rate changes on net interest
income for the nine months ended September 30, on a taxable equivalent basis,
in thousands of dollars.
<TABLE>
<CAPTION>
1997 Compared to 1996 1996 Compared to 1995
--------------------------------------- -----------------------------------
Increase (Decrease) Due To: (a) Increase (Decrease) Due To: (a)
------------------------------- -------------------------------
Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Federal funds sold $ 142 $ (6) $ 136 $ (28) $ (10) $ (38)
Taxable securities 47 151 198 19 235 254
Tax exempt securities 52 (27) 25 316 (169) 147
Taxable loans 1,511 0 1,511 858 239 1,097
Tax exempt loans 8 (6) 2 (14) (8) (22)
-----------------------------------------------------------------------------------
Total interest income $ 1,760 $ 112 $ 1,872 $ 1,151 $ 287 $ 1,438
===================================================================================
Interest paid on:
NOW accounts $ (8) $ (70) $ (78) $ 49 $ (89) $ (40)
Savings deposits (107) 3 (104) 99 9 108
CDs $100,000 and over 226 4 230 312 (61) 251
Other interest bearing deposits 821 18 839 (42) 98 56
Short term borrowings (52) 1 (51) (30) (20) (50)
Other borrowings 244 17 261 22 30 52
-----------------------------------------------------------------------------------
Total interest expense $ 1,124 $ (27) $ 1,097 $ 410 $ (33) $ 377
===================================================================================
Net change in net interest
income $ 636 $ 139 $ 775 $ 741 $ 320 $ 1,061
===================================================================================
</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.
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<PAGE> 12
NONINTEREST INCOME
Substantially all categories of noninterest income increased from the same
period in 1996. However, due to volume decreases, income from sales and
servicing of loans is marginally behind that achieved in the comparable periods
of 1996. Total noninterest income for the first nine months is up 12.7% from
the same period of 1996.
NONINTEREST EXPENSES
Most categories of noninterest expense showed moderate increases over the same
periods of 1996, reflecting continued growth and expansion of the Bank. Total
noninterest expense, excluding provision for loan losses, for the first nine
months is 9.2% above the same period for 1996.
FEDERAL INCOME TAX
There is no significant change in the income tax position of the Company during
the first nine months of 1997.
NET INCOME
Consolidated net income for the year surpassed that of the same period in 1996
during the third quarter. Management anticipates that income will continue to
improve, and will exceed 1996 levels for the year.
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
September 30, 1997.
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 september 30, 1997.
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<PAGE> 13
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 September 30, 1997.
ITEM 5 - OTHER INFORMATION
At a regular meeting of the Board of Directors held on September 10, 1997, a
resolution was unanimously adopted to increase the number of directors to 21.
At the same meeting the following were unanimously elected to serve as
directors for the terms indicated:
<TABLE>
<CAPTION>
Class Term
----- ----
<S> <C> <C>
Jeffrey A. Kuhman I 1998
John R. Robertstad II 1999
Richard R. Niethammer III 2000
Joseph D. Butcko III 2000
</TABLE>
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
September 30, 1997.
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.
October 31, 1997
/S/ Dale L. Chadderdon
---------------------------------------------
Dale L. Chadderdon
Senior Vice President, Secretary & Treasurer
Page 13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------------------------------------------------------------------
<S> <C>
27 Financial Data Schedule
</TABLE>
Page 14
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,477
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 48,107
<INVESTMENTS-CARRYING> 34,237
<INVESTMENTS-MARKET> 35,269
<LOANS> 254,075
<ALLOWANCE> 2,270
<TOTAL-ASSETS> 359,872
<DEPOSITS> 306,161
<SHORT-TERM> 5,833
<LIABILITIES-OTHER> 3,239
<LONG-TERM> 10,000
0
0
<COMMON> 16,279
<OTHER-SE> 18,360
<TOTAL-LIABILITIES-AND-EQUITY> 359,872
<INTEREST-LOAN> 16,664
<INTEREST-INVEST> 3,674
<INTEREST-OTHER> 213
<INTEREST-TOTAL> 20,551
<INTEREST-DEPOSIT> 8,989
<INTEREST-EXPENSE> 9,620
<INTEREST-INCOME-NET> 10,931
<LOAN-LOSSES> 600
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 8,325
<INCOME-PRETAX> 4,974
<INCOME-PRE-EXTRAORDINARY> 4,974
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,642
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 0.00
<YIELD-ACTUAL> 4.63
<LOANS-NON> 74
<LOANS-PAST> 727
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 188
<ALLOWANCE-OPEN> 2,320
<CHARGE-OFFS> 702
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 2,270
<ALLOWANCE-DOMESTIC> 1,456
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 814
</TABLE>
