<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
COMMISSION FILE #0-16640
UNITED BANCORP, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2606280
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)
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 and (2) has been subject to such filing requirements for
the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
/X/
As of March 1, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $59,580,000 (common stock, no par value.)
As of March 1, 1999, there were outstanding 1,730,480 shares of registrant's
common stock, no par value.
Documents Incorporated By Reference:
Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders
to be held April 20, 1999 are incorporated by reference.
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<TABLE>
<CAPTION>
CROSS REFERENCE TABLE
PAGE
ITEM NO. DESCRIPTION NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
PART I
1. Business 3
I Selected Statistical Information 5
II Securities Portfolio 6
III Loan Portfolio 6
(A) Types of Loans 6
(B) Maturities and Sensitivities of Loans to Changes in Interest 7
(C) Risk Elements 7
(D) Other Interest Bearing Assets 7
IV Summary of Loan Loss Experience 8
(A) Changes in Allowance for Loan Losses 8
(B) Allocation of Allowance for Loan Losses 9
V Deposits 9
VI Return on Equity and Assets 9
VII Short-term Borrowings 9
2. Properties 10
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 10
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters 10
6. Selected Financial Data 11
7. Management's Discussion and Analysis of Financial Condition and Results of Operations 11
7A. Quantitative and Qualitative Disclosures About Market Risk 12
8. Financial Statement and Supplementary Data 12
9. Changes in and disagreements with Accountants on Accounting and Financial Disclosure 12
PART III
10. Directors and Executive Officers of the Registrant 12
11. Executive Compensation 12
12. Security Ownership of Certain Beneficial Owners and Management 12
13. Certain Relationships and related Transactions 12
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 13
Signatures 15
Exhibit Index 16
</TABLE>
Page 2
<PAGE> 3
PART I
ITEM 1 - BUSINESS
United Bancorp, Inc. (the "Company") was incorporated on May 31, 1985 as a
business corporation under the Michigan Business Corporation Act, pursuant to
the authorization and direction of the Directors of United Bank & Trust (the
"Bank").
The Company is a bank holding company registered with the Board of Governors of
the Federal Reserve System under the Bank Holding Company Act, with the Bank as
its only wholly-owned subsidiary. The Bank was acquired by the Company effective
January 1, 1986. The Company has corporate power to engage in such activities as
permitted to business corporations under the Michigan Business Corporation Act,
subject to the limitations of the Bank Holding Company Act and regulations of
the Federal Reserve System. In general, the Bank Holding Company Act and
regulations restrict the Company with respect to its own activities and
activities of any subsidiaries to the business of banking or such other
activities which are closely related to the business of banking.
United Savings Bank opened in 1933 as a result of a merging of charters of
Lilley State Bank and Tecumseh State Savings Bank. Since that time, the Bank has
grown from a single office in Tecumseh to fifteen offices located in three
counties in Southeast Michigan. The Bank changed its name to United Bank & Trust
on January 1, 1992, at the time it acquired Thompson Savings Bank in Hudson, and
remains the Company's sole subsidiary.
The Bank offers a full range of services to individuals, corporations,
fiduciaries and other institutions. Banking services include checking, NOW
accounts, savings, time deposit accounts, money market deposit accounts, safe
deposit facilities and money transfers. Lending operations provide real estate
loans, secured and unsecured business and personal loans, consumer installment
loans, credit card and check-credit loans, home equity loans, accounts
receivable and inventory financing, equipment lease financing and construction
financing.
The Bank's Trust & Investment Group offers a wide variety of fiduciary services
to individuals, corporations and governmental entities, including services as
trustee for personal, corporate, pension, profit sharing and other employee
benefit trusts. The department provides securities custody services as an agent,
acts as the personal representative for estates and as a fiscal, paying and
escrow agent for corporate customers and governmental entities.
The Bank offers the sale of nondeposit investment products through licensed
representatives in its banking offices. In addition, the Bank is a co-owner of
Michigan Banker's Title Insurance Company of Mid-Michigan LLC, and derives
income from the sale of title insurance to its loan customers.
Banking services are delivered through a system of fifteen banking offices plus
thirteen automated teller machines, in Lenawee, Washtenaw, and Monroe Counties,
Michigan. The business base of the area is primarily agricultural and light
manufacturing, with its manufacturing sector exhibiting moderate dependence on
the automotive and refrigeration and air conditioning industries. The Bank
maintains correspondent bank relationships with a small number of larger banks,
which involve check clearing operations, securities safekeeping, transfer of
funds, loan participation, and the purchase and sale of federal funds and other
similar services.
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Supervision and Regulation
As a bank holding company within the meaning of the Bank Holding Company Act,
the Company is required by said Act to file annual reports of its operations and
such additional information as the Board of Governors may require and is
subject, along with its subsidiaries, to examination by the Board of Governors.
The Federal Reserve is the primary regulator of the Company.
The Bank Holding Company Act requires every bank holding company to obtain prior
approval of the Board of Governors before it may merge with or consolidate into
another bank holding company, acquire substantially all the assets of any bank,
or acquire ownership or control of any voting shares of any bank if after such
acquisition it would own or control, directly or indirectly, more than 5% of the
voting shares of such bank holding company or bank. The Board of Governors may
not approve the acquisition by the Company of voting shares or substantially all
the assets of any bank located in any state other than Michigan unless the laws
of such other state specifically authorize such an acquisition. The Bank Holding
Company Act also prohibits a bank holding company, with certain exceptions, from
acquiring direct or indirect ownership or control of more than 5% of the voting
shares of any company which is not a bank and from engaging in any business
other than that of banking, managing and controlling banks or furnishing
services to banks and their subsidiaries. However, holding companies may engage
in, and may own shares of companies engaged in, certain businesses found by the
Board of Governors to be so closely related to banking or the management or
control of banks as to be a proper incident thereto.
Under current regulations of the Board of Governors, a holding company and its
nonbank subsidiaries are permitted, among other activities, to engage, subject
to certain specified limitations, in such banking related business ventures as
sales and consumer finance, equipment leasing, computer service bureau and
software operations, data processing and services transmission, discount
securities brokerage, mortgage banking and brokerage, sale and leaseback and
other forms of real estate banking. The Bank Holding Company Act does not place
territorial restrictions on the activities of nonbank subsidiaries of bank
holding companies. In addition, federal legislation prohibits acquisition of
"control" of a bank or bank holding company without prior notice to certain
federal bank regulators. "Control" in certain cases may include the acquisition
of as little as 10% of the outstanding shares of capital stock.
Michigan's banking laws restrict the payment of cash dividends by a state bank
by providing, subject to certain exceptions, that dividends may be paid only out
of net profits then on hand after deducting therefrom its losses and bad debts
and no dividends may be paid unless the bank will have a surplus amounting to
not less than twenty percent (20%) of its capital after the payment of the
dividend.
United Bank & Trust is a Michigan banking corporation, and as such is subject to
the regulation of, and supervision and regular examination by, the Michigan
Financial Institutions Bureau ("FIB") and also the Federal Deposit Insurance
Corporation ("FDIC"). The FIB is the primary regulator of the Bank. Deposit
accounts of the Bank are insured by the FDIC. Requirements and restrictions
under the laws of the United States and the State of Michigan include the
requirement that banks maintain reserves against deposits, restrictions on the
nature and amount of loans which may be made by a bank and the interest that may
be charged thereon, restrictions on the payment of interest on certain deposits
and restrictions relating to investments and other activities of a bank.
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The Federal Reserve Board has established guidelines for risk-based capital by
bank holding companies. These guidelines establish a risk adjusted ratio
relating capital to risk-weighted assets and off-balance-sheet exposures. These
capital guidelines primarily define the components of capital, categorize assets
into different risk classes, and include certain off-balance-sheet items in the
calculation of capital requirements. Tier I capital consists of shareholders'
equity less intangible assets and unrealized gain or loss on securities
available for sale, and Tier 2 capital consists of Tier 1 capital plus
qualifying loan loss reserves.
The capital ratios of the Company exceed the regulatory guidelines for well
capitalized institutions, and in conjunction with regulatory ratings, have
qualified the Bank for the lowest FDIC insurance rate available to insured
financial institutions. Information in Note 18 on Page A-31 of the Company's
Proxy provides additional information regarding the Company's capital ratios,
and is incorporated herein by reference.
Information regarding accounting standards adopted by the Company are discussed
on Pages A-22 and A-23 of the Company's Proxy, and is incorporated herein by
reference.
Competition
The banking business in the Bank's service area is highly competitive. In its
market, the Bank competes with credit unions, savings associations, and various
finance companies and loan production offices. This competition is in addition
to a number of community banks and subsidiaries of large multi-state, multi-bank
holding companies.
The Company believes that the market perceives a competitive benefit to an
independent, locally controlled commercial bank. Much of the Bank's competition
comes from affiliates of organizations controlled from outside the area. Against
these competitors, the Bank continues to expand its loan and deposit portfolios.
Coupled with the fact that the Company offers the only locally-based trust
department in Lenawee County, this local focus has provided a significant
competitive advantage.
Employees
On December 31, 1998, the Bank employed 157 full-time and 33 part-time
employees. This compares to 149 full time and 38 part time employees as of
December 31, 1997. The Company has no full time employees. Its operation and
business are carried out by officers and employees of the Bank, who are not
compensated by the Company.
I SELECTED STATISTICAL INFORMATION
(A) DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
(B) INTEREST RATES AND INTEREST DIFFERENTIAL:
The information required by these sections are contained on Pages A-3 and A-4 of
the Company's Proxy Statement, and are incorporated herein by reference.
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II SECURITIES PORTFOLIO
The following table reflects the carrying values and yields of the Company's
securities portfolio for 1998. Average yields are based on amortized costs and
the average yield on tax exempt securities of states and political subdivisions
is adjusted to a taxable equivalent basis, assuming a 34% marginal tax rate.
<TABLE>
<CAPTION>
Carrying Values and Yields of Investments
In thousands of dollars where applicable 0 - 1 1 - 5 5 - 10 Over 10
Available For Sale Year Years Years Years Total
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
U.S. Treasury and Government Agencies (1) $ 9,025 $ 34,459 $ 4,608 $ - $ 48,092
Weighted average yield 5.69% 6.52% 7.04% - 6.41%
Other Securities (2) 2,324 7,388 664 - 10,376
Weighted average yield 7.55% 6.05% 6.18% - 6.40%
-------------------------------------------------------------
Total Securities $ 11,349 $ 41,847 $ 5,272 $ - $ 58,468
Weighted average yield 6.07% 6.44% 6.93% - 6.41%
Held to Maturity
Tax Exempt Securities of States and
Political Subdivisions $ 3,781 $ 19,160 $ 6,506 $ 5,879 $ 35,326
Weighted average yield 7.87% 7.91% 7.29% 8.33% 7.86%
Other Securities (2) 1,093 500 - - 1,593
Weighted average yield 5.42% 6.17% 5.66%
-------------------------------------------------------------
Total Securities $ 4,874 $ 19,660 $ 6,506 $ 5,879 $ 36,919
Weighted average yield 7.32% 7.87% 7.29% 8.33% 7.77%
</TABLE>
(1) Reflects the scheduled amortization and an estimate of future prepayments
based on past and current experience of amortizing U.S. agency
securities.
(2) Reflects the scheduled amortization and an estimate of future prepayments
based on past and current experience of the issuer for various
collateralized mortgage obligations.
The Company's securities portfolio contains no concentrations by issuer greater
than 10% of shareholders' equity. Additional information concerning the
Company's securities portfolio is included on Page A-7 and in Note 4 on Pages
A-24 and A-25 of the Company's Proxy Statement, and is incorporated herein by
reference.
III LOAN PORTFOLIO
(A) TYPES OF LOANS
The table below shows loans outstanding (net of unearned interest) at December
31. All loans are domestic and contain no concentrations by industry or
customer. Balances are stated in thousands of dollars.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Personal $ 58,797 $ 70,308 $ 69,477 $ 57,418 $ 47,102
Business and commercial mortgages 82,521 74,080 65,823 56,946 56,765
Tax exempt 1,381 1,482 1,078 1,224 1,513
Residential mortgage (1) 104,903 104,800 94,255 97,000 101,329
Construction loans 22,647 14,588 11,220 5,239 4,050
-------------------------------------------------------------
Total loans (1) $270,249 $265,258 $241,853 $217,827 $210,759
=============================================================
</TABLE>
(1) Includes loans held for sale
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(B) MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
The following table presents the maturity of total loans outstanding, other than
residential mortgages and personal loans, as of December 31, 1998, according to
scheduled repayments of principal. All figures are stated in thousands of
dollars.
<TABLE>
<CAPTION>
0 - 1 1 - 5 After 5
Year Years Years Total
---- ----- ----- -----
<S> <C> <C> <C> <C>
Business - fixed rate $ 6,359 $ 25,433 $ 10,676 $ 42,468
Business - variable rate 6,904 21,097 12,052 40,053
Tax exempt - fixed rate 8 232 908 1,148
Tax exempt - variable rate 233 - - 233
Construction loans -fixed rate 8,683 1,283 114 10,080
Construction loans -variable rate 12,567 - - 12,567
----------------------------------------------------
Total fixed rate 15,050 26,948 11,698 53,696
Total variable rate 19,704 21,097 12,052 52,853
----------------------------------------------------
Total Loans $ 34,754 $ 48,045 $ 23,750 $ 106,549
======== ======== ======== =========
</TABLE>
(C) RISK ELEMENTS
Non-Accrual, Past Due and Restructured Loans
The following shows the effect on interest revenue of nonperforming loans for
the year ended December 31, in thousands of dollars:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Gross amount of interest that would have been recorded at original rate $ 33
Interest that was included in revenue 8
------------
Net impact on interest revenue $ 25
============
</TABLE>
Additional information concerning nonperforming loans, the Bank's nonaccrual
policy, and loan concentrations is provided on Page A-7, in Note 1 on Page A-21,
Note 5 on Page A-25 and Note 6 on Page A-25 of the Company's Proxy Statement,
and is incorporated herein by reference.
At December 31, 1998, the Bank had two loans, other than those disclosed above,
for a total of $205,000 which would cause management to have concerns as to the
ability of the borrowers to comply with the present loan repayment terms. These
loans were included on the Bank's "watch list" and were classified as impaired,
however, payments are current.
(D) OTHER INTEREST BEARING ASSETS
As of December 31, 1998, there were no other interest bearing assets that would
be required to be disclosed under Item III, Parts (C)(1) or (C)(2) of the Loan
Portfolio listing if such assets were loans.
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IV SUMMARY OF LOAN LOSS EXPERIENCE
(A) CHANGES IN ALLOWANCE FOR LOAN LOSSES
The Bank's allowance for loan losses was 1.04% of total loans at December 31,
1998 and 0.93% at December 31, 1997. The table below summarizes changes in the
allowance for loan losses for the years 1994 through 1998, stated in thousands
of dollars.
<TABLE>
<CAPTION>
CHANGES IN ALLOWANCE FOR LOAN LOSSES
1998 1997 1996 1995 1994
----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 2,467 $ 2,320 $ 2,197 $ 2,127 $ 2,074
-------------------------------------------------------------
Charge-offs:
Business loans 9 95 25 6 19
Residential mortgages - 7 - - 2
Personal loans 1,097 1,087 547 355 222
-------------------------------------------------------------
Total charge-offs 1,106 1,189 572 361 243
-------------------------------------------------------------
Recoveries:
Business loans 29 8 5 4 12
Residential mortgages - - 9 - -
Personal loans 161 73 53 66 35
-------------------------------------------------------------
Total recoveries 190 81 67 70 47
-------------------------------------------------------------
Net charge-offs 916 1,108 505 291 196
-------------------------------------------------------------
Additions charged to operations 1,248 1,255 628 361 249
-------------------------------------------------------------
Balance at end of period $ 2,799 $ 2,467 $ 2,320 $ 2,197 $ 2,127
=============================================================
Ratio of net charge-offs to average loans 0.35% 0.44% 0.22% 0.14% 0.09%
</TABLE>
The allowance for loan losses is maintained at a level believed adequate by
Management to absorb losses inherent in the loan portfolio. Management's
determination of the adequacy of the allowance is based on an evaluation of the
portfolio, past loan loss experience, current economic conditions, volume,
amount and composition of the loan portfolio, and other factors. The provision
charged to earnings was $1,248,000 in 1998, compared to $1,255,000 in 1997 and
$628,000 in 1996. The allowance is based on the analysis of the loan portfolio
and a four year historical average of net charge offs to average loans of 0.34%
of the portfolio.
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(B) ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
The following table presents the portion of the allowance for loan losses
applicable to each loan category in thousands of dollars, and the percent of
loans in each category to total loans, as of December 31.
<TABLE>
<CAPTION>
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
---------------------------------------
1998 1997 1996
---------------------- ------------------------ ------------------------
Amount Percent Amount Percent Amount Percent
---------------------- ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
Business $ 864 30.5% $ 842 27.9% $ 1,012 27.2%
Tax exempt - 0.5% - 0.6% - 0.5%
Residential mortgage 36 38.8% 33 39.5% 27 39.0%
Personal 762 21.8% 792 26.5% 362 28.7%
Construction - 8.4% - 5.5% - 4.6%
Unallocated 1,137 800 919
------------ ------------ ------------
Total $ 2,799 100.0% $ 2,467 100.0% $ 2,320 100.0%
====================== ======================== ========================
1995 1994
---------------------- ------------------------
Amount Percent Amount Percent
---------------------- ------------------------
Business $ 1,056 26.1% $ 455 27.0%
Tax exempt - 0.6% - 0.7%
Residential mortgage 34 44.5% 57 48.1%
Personal 230 26.4% 169 22.3%
Construction - 2.4% - 1.9%
Unallocated 877 1,446
------------ ------------
Total $ 2,197 100.0% $ 2,127 100.0%
====================== ========================
</TABLE>
The allocation method used takes into account specific allocations for
identified credits and a four year historical loss average in determining the
allocation for the balance of the portfolio.
V DEPOSITS
The information concerning average balances of deposits and the weighted-average
rates paid thereon, is included on Page A-3 and maturities of time deposits is
provided in Note 9 on Page A-27 of the Company's Proxy Statement, and is
incorporated herein by reference.
VI RETURN ON EQUITY AND ASSETS
Various ratios required by this section and other ratios commonly used in
analyzing bank holding company financial statements are included on Page A-2 of
the Company's Proxy Statement, and is incorporated herein by reference.
VII SHORT-TERM BORROWINGS
The information required by this section is contained in Note 10 on Page A-27 of
the Company's Proxy Statement, and is incorporated herein by reference.
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ITEM 2 - PROPERTIES
The executive offices of the Company are located at the main office of United
Bank & Trust, 205 East Chicago Boulevard, Tecumseh, Michigan. The Bank owns and
occupies the entire two-story building, which was built in 1980. The Bank
operates a 12,000 square foot operations and training center in Tecumseh, and
also operates three other banking offices in the Tecumseh area, two in the city
of Adrian, one each in the cities of Hudson and Morenci, one each in the
villages of Britton and Blissfield, and one each in Clinton, Rollin and Raisin
Townships, all in Lenawee County. In addition, the Bank operates one office from
leased space in Saline, Washtenaw County, Michigan, and owns and operates one
office in Dundee, Monroe County, Michigan. The Bank owns all of the buildings
except for the Saline office, and leases the land for one office in the city of
Adrian. All offices except Saline offer drive-up facilities.
ITEM 3 - LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings. The Bank 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 more than five percent (5%) of the
outstanding stock of either 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 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1998.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
PRICE RANGE FOR COMMON STOCK
The following table shows the high and low selling prices of common stock of the
Company for each quarter of 1998 and 1997 as reported by Investment Management &
Research, Inc. These prices do not reflect private trades not involving
Investment Management & Research, Inc. The common stock of the Company is traded
over the counter. The Company had 969 shareholders as of December 31, 1998. The
prices and dividends per share have been adjusted to reflect the 1998 and 1997
stock dividends.
<TABLE>
<CAPTION>
1998 1997
---------------------------------- -------------------------------------
MARKET PRICE CASH MARKET PRICE CASH
---------------------- DIVIDENDS ------------------------- DIVIDENDS
QUARTER HIGH LOW DECLARED HIGH LOW DECLARED
------- ---------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st $37.62 $35.24 $0.248 $31.74 $29.93 $0.218
2nd 42.00 37.62 0.260 33.33 31.74 0.229
3rd 44.00 42.00 0.280 35.24 33.33 0.247
4th 44.00 44.00 0.400 35.24 35.24 0.362
</TABLE>
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ITEM 6 - SELECTED FINANCIAL DATA
The following table presents five years of financial data for the Company, for
the years ended December 31. (In thousands, except per share data).
<TABLE>
<CAPTION>
FINANCIAL CONDITION 1998 1997 1996 1995 1994
----- ----- ---- ---- ----
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and demand balances in other banks $ 12,348 $ 10,406 $ 10,252 $ 10,017 $ 7,049
Federal funds sold - - 11,400 8,700 -
Securities available for sale 58,468 42,488 44,990 45,420 41,900
Securities held to maturity 36,919 37,164 33,348 30,495 32,896
Net loans 267,450 262,791 239,533 215,630 208,632
Other assets 18,510 17,422 13,847 13,174 13,784
-------------------------------------------------------------
Total Assets $393,695 $370,271 $353,370 $323,436 $304,261
=============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest bearing deposits $ 42,468 $ 31,924 $ 30,335 $ 29,565 $ 26,712
Interest bearing certificates of deposit of
$100,000 or more 31,108 38,714 42,060 34,439 24,016
Other interest bearing deposits 263,691 246,197 225,308 221,168 213,556
-------------------------------------------------------------
Total deposits 337,267 316,835 297,703 285,172 264,284
Short term borrowings 3,874 4,942 609 578 6,800
Other borrowings 10,900 10,000 20,000 6,000 6,000
Other liabilities 2,890 3,028 3,010 2,833 2,019
-------------------------------------------------------------
Total Liabilities 354,931 334,805 321,322 294,583 279,103
Shareholders' Equity 38,764 35,466 32,048 28,853 25,158
-------------------------------------------------------------
Total Liabilities and Shareholders' Equity $393,695 $370,271 $353,370 $323,436 $304,261
=============================================================
RESULTS OF OPERATIONS 1998 1997 1996 1995 1994
----- ----- ---- ---- ----
Interest income $ 28,993 $ 27,705 $ 25,351 $ 23,492 $ 20,667
Interest expense 13,032 12,893 11,614 11,084 9,419
-------------------------------------------------------------
Net Interest Income 15,961 14,812 13,737 12,408 11,248
Provision for loan losses 1,248 1,255 628 361 249
Noninterest income 5,400 4,124 3,662 2,978 2,294
Noninterest expense 13,208 10,852 10,307 9,568 8,538
-------------------------------------------------------------
Income before Federal income tax 6,905 6,829 6,464 5,457 4,755
Federal income tax 1,803 1,816 1,713 1,422 1,171
-------------------------------------------------------------
Net Income $ 5,102 $ 5,013 $ 4,751 $ 4,035 $ 3,584
=============================================================
Basic and diluted earnings per share (1) $ 2.95 $ 2.90 $ 2.75 $ 2.34 $ 2.08
</TABLE>
(1) Per share data is based on average shares outstanding plus average
contingently issuable shares and has been adjusted to reflect the stock
split in 1994 and stock dividends paid in 1998, 1997 and 1996.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this section is contained on pages A-2 through A-14
of the Company's Proxy Statement, and is incorporated herein by reference.
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<PAGE> 12
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this section is contained on pages A-10 through A-12
of the Company's Proxy Statement, and is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this section is contained on pages A-17 through A-33
of the Company's Proxy Statement, and is incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The information required by this item is inapplicable, and therefore has been
omitted.
PART III
Some information called for by the items within this part is contained in the
Company's Proxy Statement for the Annual Meeting of Shareholders to be held
April 20, 1999, and is incorporated herein by reference, as follows:
<TABLE>
<CAPTION>
Pages in
Proxy
Statement
---------
<S> <C> <C>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 2-5
ITEM 11 - EXECUTIVE COMPENSATION 5-7
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 9-10
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 4-5
</TABLE>
Information appearing on page 5 and in Note 14 on Page A-29 of the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held April 20,
1999, is incorporated herein by reference in response to this item.
Page 12
<PAGE> 13
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) The following documents are filed as a part of this report:
1. The following financial statements of the Company and its
subsidiary, included in the Company's Proxy Statement are
incorporated herein by reference:
<TABLE>
<CAPTION>
Pages in
Proxy
Statement
---------
<S> <C>
Consolidated Balance Sheets - December 31, 1998 and 1997 A-17
Consolidated Statements of Income -
Years Ended December 31, 1998, 1997 and 1996 A-18
Consolidated Statements of Cash Flows -
Years Ended December 31, 1998, 1997 and 1996 A-19
Consolidated Statements of Changes in Shareholders' Equity -
Years Ended December 31, 1998, 1997 and 1996 A-20
Notes to Consolidated Financial Statements A-21
Report of Crowe, Chizek and Company LLP, Certified Public Accountants,
Dated January 22, 1999 A-16
</TABLE>
2. Not applicable.
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and
therefore have been omitted.
(b) No reports on Form 8-K were filed during the quarter ending December 31,
1998.
(c) Listing of Exhibits (numbered as in Item 601 of Regulation S-K):
Exhibit #
3(a) Restated Articles of Incorporation of United Bancorp, Inc., filed
as Exhibit (4)(a) to registrant's registration statement on Form
S-8 (File Number 333-03305) dated May 8, 1996, and incorporated
herein by reference.
3(b) Bylaws of United Bancorp, Inc., filed as Exhibit (4)(b) to
registrant's registration statement on Form S-8 (File Number
333-03305) dated May 8, 1996, and incorporated herein by reference.
4(a) Restated Articles of Incorporation of United Bancorp, Inc., filed
as Exhibit (4)(a) to registrant's
Page 13
<PAGE> 14
registration statement on Form S-8 (File Number 333-03305) dated
May 8, 1996, and incorporated herein by reference.
4(b) Bylaws of United Bancorp, Inc., filed as Exhibit (4)(b) to
registrant's registration statement on Form S-8 (File Number
333-03305) dated May 8, 1996, and incorporated herein by reference.
4(c) United Bancorp, Inc. Director Retainer Stock Plan, filed as
Appendix A to registrant's proxy statement dated March 25, 1996
(file number 0-16640) and incorporated herein by reference.
4(d) United Bancorp, Inc. Senior Management Bonus Deferral Stock Plan,
filed as Appendix B to registrant's proxy statement dated March 25,
1996 (file number 0-16640) and incorporated herein by reference.
11 The information required by this section is incorporated by
reference in Note 1 on Page A-22 of the Company's Proxy Statement.
13 Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1998 included in the Company's Proxy Statement
(not deemed filed except for those portions which are specifically
incorporated herein by reference).
21 Listing of Subsidiaries, filed herewith.
27 Financial Data Schedule, filed herewith.
(d) All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and
therefore have been omitted.
Page 14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/S/ David S. Hickman March 10, 1999
--------------------------------- --------------
David S. Hickman, President and Date
Chief Executive Officer, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated, on March 10, 1999.
<TABLE>
<S> <C>
/S/ John J. Wanke /S/ Dale L. Chadderdon
- ---------------------------------------- -------------------------------------------------
John J. Wanke Dale L. Chadderdon, Senior Vice
Executive Vice President, Director President, Secretary and Treasurer
/S/ L. Donald Bush /S/ James C. Lawson
- ---------------------------------------- -------------------------------------------------
L. Donald Bush, Director James C. Lawson, Director
/S/ Joseph D. Butcko /S/ David E. Maxwell
- ---------------------------------------- -------------------------------------------------
Joseph D. Butcko, Director David E. Maxwell, Director
/S/ Patrick D. Farver /S/ Kathryn M. Mohr
- ---------------------------------------- -------------------------------------------------
Patrick D. Farver, Director Kathryn M Mohr, Director
/S/ John H. Foss /S/ Richard R. Niethammer
- ---------------------------------------- -------------------------------------------------
John H. Foss, Director Richard R. Niethammer, Director
/S/ Richard A. Gurdjian /S/ John R. Robertstad
- ---------------------------------------- -------------------------------------------------
Richard A. Gurdjian, Director John R. Robertstad, Director
/S/ Ann Hinsdale Knisel /S/ Jeffrey T. Robideau
- ---------------------------------------- -------------------------------------------------
Ann Hinsdale Knisel, Director Jeffrey T. Robideau, Director
/S/ Jeffrey A. Kuhman /S/ Richard Whelan
- ---------------------------------------- -------------------------------------------------
Jeffrey A. Kuhman, Director Richard Whelan, Director
</TABLE>
Page 15
<PAGE> 16
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- ----------
Exhibit 21 Subsidiaries 17
Exhibit 27 Financial Data Schedule 18
Page 16
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
NAME JURISDICTION OF INCORPORATION
- ---- -----------------------------
United Bank & Trust Michigan
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 12,348
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 58,468
<INVESTMENTS-CARRYING> 36,919
<INVESTMENTS-MARKET> 37,999
<LOANS> 270,249
<ALLOWANCE> 2,799
<TOTAL-ASSETS> 393,695
<DEPOSITS> 337,267
<SHORT-TERM> 3,874
<LIABILITIES-OTHER> 2,890
<LONG-TERM> 10,900
0
0
<COMMON> 19,837
<OTHER-SE> 18,927
<TOTAL-LIABILITIES-AND-EQUITY> 393,695
<INTEREST-LOAN> 23,432
<INTEREST-INVEST> 5,052
<INTEREST-OTHER> 509
<INTEREST-TOTAL> 28,993
<INTEREST-DEPOSIT> 12,343
<INTEREST-EXPENSE> 13,032
<INTEREST-INCOME-NET> 15,961
<LOAN-LOSSES> 1,248
<SECURITIES-GAINS> 54
<EXPENSE-OTHER> 13,208
<INCOME-PRETAX> 6,905
<INCOME-PRE-EXTRAORDINARY> 5,102
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,102
<EPS-PRIMARY> 2.95
<EPS-DILUTED> 2.95
<YIELD-ACTUAL> 4.72
<LOANS-NON> 821
<LOANS-PAST> 194
<LOANS-TROUBLED> 136
<LOANS-PROBLEM> 205
<ALLOWANCE-OPEN> 2,467
<CHARGE-OFFS> 1,106
<RECOVERIES> 190
<ALLOWANCE-CLOSE> 2,799
<ALLOWANCE-DOMESTIC> 1,662
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,137
</TABLE>
