<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 April 15, 1997, there were outstanding 1,565,890 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
<TABLE>
<S> <C>
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 13
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
<TABLE>
<CAPTION>
(a) CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
March 31, December 31, March 31,
In thousands of dollars 1997 1996 1996
===================================================================================================================================
<S> <C> <C> <C>
ASSETS
Cash and demand balances in other banks $ 11,479 $ 10,252 $ 9,154
Federal funds sold 5,500 11,400 1,800
- -----------------------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 16,979 21,652 10,954
Securities available for sale 50,778 44,990 48,178
Securities held to maturity (fair value of
$32,424, $34,391 and $32,792 respectively) 31,808 33,348 31,749
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 82,586 78,338 79,927
Loans held for sale 608 799 498
Portfolio loans 240,147 241,054 220,100
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans 240,755 241,853 220,598
Less: allowance for loan losses 2,330 2,320 2,250
- -----------------------------------------------------------------------------------------------------------------------------------
Net loans 238,425 239,533 218,348
Premises and equipment, net 8,562 8,775 8,562
Accrued interest receivable and other assets 5,403 5,072 5,010
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 351,955 $ 353,370 $ 322,801
===================================================================================================================================
LIABILITIES
Deposits
Noninterest bearing $ 27,274 $ 30,335 $ 25,307
Interest bearing certificats of deposit of $100,000 or more 42,013 42,060 38,338
Other interest bearing deposits 236,631 225,308 220,279
- -----------------------------------------------------------------------------------------------------------------------------------
Total deposits 305,918 297,703 283,924
Federal funds and other short term borrowings 615 609 586
Other borrowings 10,000 20,000 6,000
Accrued interest payable and other liabilities 2,957 3,010 2,761
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 319,490 321,322 293,271
SHAREHOLDERS' EQUITY
Common stock, no par value; 5,000,000 shares authorized;
1,565,890, 1,565,890 and 1,489,840 shares issued and
outstanding, respectively 13,516 13,500 11,262
Stock dividend payable, 78,294 shares at $35 market value
and 74,492 shares at $29 market value 2,740 2,160
Retained earnings 16,332 18,419 16,113
Unrealized gain (loss) on securities available for sale,
net of tax of $63, $(67), and $2, respectively (123) 129 (5)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 32,465 32,048 29,530
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 351,955 $ 353,370 $322,801
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 3
<PAGE> 4
<TABLE>
<CAPTION>
(b) CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
---------
In thousands of dollars, except per share data 1997 1996
===================================================================================================================================
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans
Taxable $ 5,301 $ 4,911
Tax exempt 14 17
Interest on securities
Taxable 751 698
Tax exempt 428 417
Interest on federal funds sold 160 55
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 6,654 6,098
INTEREST EXPENSE
Interest on certificates of deposit of $100,000 or more 614 525
Interest on other deposits 2,355 2,210
Interest on short term borrowings 7 13
Interest on other borrowings 236 82
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 3,212 2,830
- -----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 3,442 3,268
Provision for loan losses 180 126
- -----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,262 3,142
NONINTEREST INCOME
Service charges on deposit accounts 305 268
Trust & Investment fee income 276 249
Loan sales and servicing 145 181
Sales of nondeposit investment products 57 72
Other income 112 112
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 895 882
NONINTEREST EXPENSE
Salaries and employee benefits 1,511 1,345
Occupancy and equipment expense 514 478
Other expense 755 694
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 2,780 2,517
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAX 1,377 1,507
Federal income tax 347 392
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,030 $ 1,115
===================================================================================================================================
Net income per share of common stock $ 0.66 $ 0.71
Cash dividends declared per share of common stock $ 0.240 $ 0.210
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4
<PAGE> 5
<TABLE>
<CAPTION>
(c) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
---------
In thousands of dollars 1997 1996
===================================================================================================================================
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 1,030 $ 1,115
- -----------------------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash from Operating Activities
Depreciation and amortization 340 340
Provision for loan losses 180 126
Loans originated for sale (5,935) (8,786)
Proceeds from sales of loans originated for sale 6,126 8,549
Change in accrued interest receivable and other assets (378) (240)
Change in accrued interest payable and other liabilities 312 133
- -----------------------------------------------------------------------------------------------------------------------------------
Total adjustments 645 122
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities 1,675 1,237
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Securities available for sale
Purchases (7,341) (10,225)
Maturities 83 6,000
Principal payments 1,071 1,226
Securities held to maturity
Purchases (3,154) (1,786)
Maturities 4,695 510
Change in portfolio loans 737 (2,607)
Premises and equipment expenditures, net (66) (401)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash from investing activities (3,975) (7,283)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net change in deposits 8,215 (1,248)
Net change in short term borrowings 6 8
Principal payments on other borrowings (10,000) 0
Proceeds from stock transactions 16 0
Dividends paid (610) (477)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash from financing activities (2,373) (1,717)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents (4,673) (7,763)
Cash and cash equivalents at beginning of year 21,652 18,717
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 16,979 $ 10,954
===================================================================================================================================
Cash Paid During the Period for
Interest $ 3,161 $ 2,822
Income taxes $0 $39
===================================================================================================================================
</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 three month
period ending March 31, 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 $90,973,000 and $76,381,000 at the end of March 31,
1997 and 1996. The balance of loans serviced for others related to servicing
rights that have been capitalized was $30,814,000 and $8,463,000 at March 31,
1997 and 1996
Mortgage servicing rights activity in thousands of dollars for the three months
ended March 31, 1997 and 1996 follows:
<TABLE>
<S> <C> <C>
Unamortized cost of mortgage servicing rights 1997 1996
---- ----
Balance at January 1 $185 $ 0
Amount capitalized year to date 46 61
Amount amortized year to date (4) (1)
---- ---
Balance at period end $227 $60
</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 27, 1996, the Company issued a 5% stock
dividend. 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 1,565,890 for 1997 and 1,564,332 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 three month period ending March 31, 1997.
FINANCIAL CONDITION
SECURITIES
Investment balances increased moderately during the first three months of 1997.
A slight decline in total loans combined with increased deposit growth is the
largest contributing factor for the increase.
The mix of the investment portfolio remained relatively unchanged from December
31 and March 31, 1996.
LOANS
Loan volume slowed for the first quarter 1997. Business loans increased,
continuing trends of prior quarters, while personal loans and residential
mortgages declined slightly. The Company sold $6.1 million of loans originated
for sale, compared to $8.5 million during the first quarter of 1996. Clients
continue to move from variable rate to fixed rate loans, resulting in a greater
number of loans being sold on the secondary market rather than being retained
in the portfolio.
The mix of the 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 March 31 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>
March 31, 1997 December 31, 1996 March 31, 1996
----------------------- ----------------------- -----------------------
Portfolio loans: Balance % of total Balance % of total Balance % of total
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Personal $ 68,884 28.6% $ 69,477 28.7% $ 61,461 27.9%
Business/commercial mtgs 67,451 28.0% 65,823 27.2% 57,361 26.0%
Tax exempt 1,010 0.4% 1,078 0.4% 1,088 0.5%
Residential mortgage 92,737 38.5% 94,255 39.0% 94,797 43.0%
Construction 10,673 4.4% 11,220 4.6% 5,891 2.7%
----------------------- ----------------------- -----------------------
Total loans $240,755 100.0% $241,853 100.0% $220,598 100.0%
</TABLE>
Page 7
<PAGE> 8
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 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>
3/31/97 12/31/96 3/31/96
------- -------- -------
<S> <C> <C> <C>
Nonaccrual loans $292 $450 $391
Loans past due 90 days or more 577 663 559
Troubled debt restructurings 0 0 0
--------------------------------------------
Total nonperforming loans $869 $1,113 $950
Other real estate 335 335 0
--------------------------------------------
Total nonperforming assets $1,204 $1,448 $950
Percent of total loans 0.50% 0.60% 0.43%
</TABLE>
Nonperforming loans decreased from end of year and from the same period in
1996. Loans past due ninety days or more remain relatively flat from the
comparable periods at December 31 and March 31, 1996. Overall, delinquency is
well below industry standards, although is higher than traditionally
experienced by the Company. The amount listed for other real estate relates to
property that has been leased to a third party with an option to purchase, and
no loss is anticipated.
An analysis of the allowance for loan losses, in thousands of dollars, for the
three months ended March 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Balance at beginning of period $2,320 $2,197
Loans charged off (187) (88)
Recoveries credited to allowance 17 15
Provision charged to operations 180 126
------ ------
Balance at end of period $2,330 $2,250
</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 grew moderately during the first quarter. Noninterest bearing
deposits continue to fluctuate with swings in corporate and public fund
balances. These deposits declined from year end, but show increases from the
first quarter of 1996.
Other interest bearing deposit balances increased during the first three months
of 1997 reflecting growth in our Cash Management and Certificates of Deposit
accounts. Seasonal increases in public sector funds account for a significant
portion of this growth. 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
LIQUIDITY AND FUNDS MANAGEMENT
LIQUIDITY
Loan balances decreased during the quarter, and coupled with moderate deposit
growth, resulted in increased liquidity during the period. The Bank moved from
a net fed funds borrowed position to a net funds sold position during the
quarter, and the increase in liquidity also provided funds to repay $10 million
of advances from the Federal Home Loan Bank and to fund investment security
purchases.
Management anticipates moving in and out of the fed funds market as liquidity
needs require. Seasonal deposit fluctuations, with continued loan demand, will
cause the borrowed funds position of the Company to vary. The Company has a
number of additional liquidity sources should the need arise, but 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 first
quarter of 1997, these ratios have changed only modestly from those reported at
March 31, 1996 and December 31, 1996, 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, 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 $21,411 $10,861 $ 45,670 $7,122 $3,022 $88,086
Loans 62,183 48,839 99,575 18,464 11,694 240,755
-------------------------------------------------------------------------------
Total earning assets $83,594 $59,700 $145,245 $25,586 $14,716 $328,841
===============================================================================
Interest bearing deposits $162,841 $57,164 $58,593 $46 $278,644
Other borrowings 615 0 10,000 10,615
-------------------------------------------------------------------------------
Total interest bearing liabilities $163,456 $57,164 $68,593 $46 $0 $289,259
===============================================================================
Net asset (liability)
funding gap ($79,862) $2,536 $76,652 $25,540 $14,716 $ 39,582
Cumulative net asset
(liability) funding gap ($79,862) ($77,326) ($674) $24,866 $39,582
Cumulative gap ratio 0.51 0.65 1.00 1.09 1.14 to 1
Cumulative gap, % of assets -22.7% -22.0% -0.2% 7.1% 11.2%
</TABLE>
Page 9
<PAGE> 10
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, 1997 and 1996 and December 31, 1996.
Dollars are shown in thousands.
<TABLE>
<CAPTION>
Regulatory Guidelines United Bancorp, Inc.
Adequat Well 3/31/97 12/31/96 3/31/96
<S> <C> <C> <C> <C> <C>
Tier 1 capital to average assets 4% 5% 8.9% 9.3% 8.8%
Tier 1 risk adjusted capital ratio 4% 6% 13.5% 13.2% 13.5%
Total risk adjusted capital ratio 8% 10% 14.6% 14.2% 14.6%
Total shareholders' equity $32,465 $32,048 $29,530
Intangible assets (1,444) (1,491) (1,635)
Unrealized (gain) loss on securities available for sale 123 (129) 5
------- ------- -------
Tier 1 capital 31,144 30,428 27,900
Qualifying loan loss reserves 2,330 2,320 2,250
------- ------- -------
Tier 2 capital $33,474 $32,748 $30,150
</TABLE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
First quarter net interest income increased $174,000 or 5.3% from the same
period in 1996. However, net spread showed a slight decline from prior
periods. The spread at March 31, 1997 was 3.84%, compared to 4.09% at March 31,
1996 and 4.15% for all of 1996. The net yield on interest earning assets was at
4.39% for the first quarter, compared to 4.62% at March 31, 1996 and 4.71% for
year end 1996.
This decline is a result of temporary excess liquidity during the quarter,
resulting in high levels of funds sold at relatively low rates. Management has
taken steps to invest this excess liquidity to provide a better return while
remaining flexible.
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, 1997 and
1996.
YIELD ANALYSIS OF CONSOLIDATED AVERAGE ASSETS AND LIABILITIES
DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
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 $ 12,264 $ 160 5.23% $ 3,868 $ 55 5.69%
Taxable securities 47,268 751 6.36% 47,093 698 5.93%
Tax exempt securities (b) 31,187 620 7.95% 29,738 604 8.13%
Taxable loans 239,763 5,301 8.84% 217,761 4,911 9.02%
Tax exempt loans (b) 1,054 20 7.71% 1,178 24 8.31%
----------------------- ----------------------
Total int. earning assets (b) 331,536 $6,853 8.27% 299,638 $6,293 8.40%
----------------------- ----------------------
Less allowance for loan losses (2,314) (2,211)
Other assets 22,946 21,416
TOTAL ASSETS $352,168 $318,843
======== ========
</TABLE>
Page 10
<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 AND SHAREHOLDERS' EQUITY
Interest bearing liabilities
NOW accounts $38,352 $166 1.73% $ 37,753 $170 1.80%
Savings deposits 70,132 485 2.76% 66,659 559 3.36%
CDs $100,000 and over 42,553 614 5.77% 35,588 525 5.91%
Other interest bearing deposits 122,732 1,705 5.56% 115,510 1,480 5.13%
---------------------- ------------------
Total int. bearing deposits 273,769 2,969 4.34% 255,510 2,735 4.28%
Short term borrowings 612 8 5.07% 970 13 5.34%
Other borrowings 16,000 236 5.89% 6,000 82 5.46%
---------------------- ------------------
Total int. bearing liabilities 290,381 $3,213 4.43% 262,480 2,830 4.31%
------ -----
Noninterest bearing deposits 26,664 24,875
Other liabilities 2,752 2,557
Shareholders' equity 32,371 28,931
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $352,168 $318,843
======== ========
Net interest income (b) $3,640 $3,463
====== ======
Net spread (b) 3.84% 4.09%
===== =====
Net yield on interest earning assets (b) 4.39% 4.62%
===== =====
Ratio of interest earning assets to
interest bearing liabilities 1.14 1.14
==== ====
</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 three months ended March 31, 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 $110 ($5) $105 $44 $ 0 $44
Taxable securities 3 50 53 (25) 73 48
Tax exempt securities 29 (13) 16 92 (54) 38
Taxable loans 488 (98) 390 188 222 410
Tax exempt loans (2) (2) (4) (7) (4) (11)
-----------------------------------------------------------------------------
Total interest income $628 ($68) $560 $292 $237 $529
=============================================================================
Interest paid on:
NOW accounts $3 ($7) ($4) $9 ($26) ($17)
Savings deposits 28 (103) (75) (45) 96 51
CDs $100,000 and over 101 (12) 89 84 2 86
Other interest bearing deposits 96 129 225 149 (29) 120
Short term borrowings (4) (1) (5) (35) (4) (39)
Other borrowings 147 7 154 0 12 12
----------------------------------------------------------------------------
Total interest expense $371 $13 $384 $162 $51 $213
============================================================================
Net change in net interest
income $257 ($81) $176 $130 $186 $316
============================================================================
</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.
Page 11
<PAGE> 12
NONINTEREST INCOME
Most categories of noninterest income increased from the same period in 1996.
However, due to volume decreases, income from sales and servicing of loans and
income from sales of nondeposit products showed modest declines from the first
quarter of 1996. Total noninterest income for the first three months is up by
1.4% from the same period of 1996.
NONINTEREST EXPENSES
Most categories of noninterest expense showed moderate increases over the first
quarter of 1996, reflecting continued growth and expansion of the Bank. Total
noninterest expense, excluding provision for loan losses, for the first quarter
is 10.4% 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 three months of 1997.
NET INCOME
Consolidated net income for the quarter decreased from the fourth quarter of
1996 and is slightly behind the record first quarter of a year ago. Year to
date consolidated net income of $1,030,000 is 7.62% below the $1,115,000 earned
in the first quarter of 1996. Return on consolidated average assets for the
quarter was 1.19%, compared to 1.45% for all of 1996, and 1.40% for the first
three months of 1996.
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, 1997.
Page 12
<PAGE> 13
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, 1997.
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, 1997.
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, 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.
April 30, 1997
/S/ Dale L. Chadderdon
- ----------------------
Dale L. Chadderdon
Senior Vice President, Secretary & Treasurer
Page 13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- -------------------------------------------------------------------------------
27 Financial Data Schedule
Page 14
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,479
<INT-BEARING-DEPOSITS> 0
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0
0
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</TABLE>
