United Bancorp, Inc. Reports an Increase in Net Income of 41% for the Three Months Ended March 31, 2019; Diluted Earnings Per Share of $0.28 Versus $0.23 Reported in 2018, and a Forward Dividend Yield of 4.88%

Published

MARTINS FERRY, Ohio, April 24, 2019 /PRNewswire/ -- United Bancorp, Inc. (NASDAQ: UBCP), reported net income of $1,614,000 and diluted earnings per share of $0.28 for the three months ended March 31, 2019, as compared to $1,148,000 and $0.23 respectively for 2018.  These year-over-year improvements in UBCP's earnings are directly related to the Company executing its strategic vision to achieve profitable growth by growing in both an organic fashion and through acquiring other like-minded community banking organizations. 

Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, "We are pleased to report on our solid financial performance for the three-month period ended March 31, 2019.  Our Company had an increase in net income of $466,000, or 40.6%, on a year-over-year basis at the end of this most recently completed quarter.  This increase in earnings is strongly correlated to the strong organic and acquisition-related growth that our Company experienced during the past twelve months.  From an acquisition perspective (and, as previously reported), we acquired Powhatan Point Community Bancshares in the fourth quarter of last year and the merger is now completed… both financially and operationally.  Even with the issuance of common shares to facilitate this purchase, our diluted earnings per share was $0.28 versus $0.23 the prior year, an increase of 21.7%.  The combination of this acquisition and the strong organic growth that we achieved this past year facilitated the increase in the level of our Company's higher-yielding earning assets by $112.5 million, or 25.2%, on a year-over-year basis.  This growth in earning assets was divided between steady growth in our Company's loan portfolio, which increased by $43.4 million or 11.7%, and solid growth in our investment portfolio, with securities and other restricted stock increasing by $69.1 million or 92%.  With our increased level of higher-yielding earning assets, our Company saw a year-over-year increase in the level of interest income that it generated of $1.7 million or 36.6%."  

Greenwood further stated, "In order to fund this strong growth in our earning assets--- while improving our overall levels of profitability--- our Company needed to attract a substantial level of cost effective funding.  We achieved this by successfully growing our lower-cost, retail balances (consisting of noninterest bearing and interest bearing demand deposits and savings deposits) by $91.6 million, or 27%, year-over-year.  The remaining growth in deposits came in the area of time deposits (consisting of certificates of deposit or term funding), which increased by $43.3 million since March 2018.  By funding our above-peer growth in earning assets primarily with lower-costing retail funding this past year--- even though we operated in a rising rate environment; wherein, the Federal Open Market Committee (FOMC) increased the target rate for Federal funds by 1.0% over the course of the year---  our Company was able to maintain its solid net interest margin.  For the three months ended March 31, 2019, our net interest margin was 3.80%, compared to 3.86% for the same period in 2018."

Greenwood continued, "From a qualitative perspective, we have successfully maintained overall strength and stability within our loan portfolio.  Year-over-year, our Company continues to have very solid credit quality-related metrics supported by a relatively low level of nonaccrual loans, which was approximately $1.6 million, or 0.38 percent of total loans at March 31, 2019, compared to $1.4 million at March 31, 2018, an increase of $200,000.  Further--- net loans charged off, excluding overdrafts, was $18,000 for the three months ended March 31, 2019, which is a decrease of $14,000 from the previous year.  We are very satisfied with the continued strong performance of our loan portfolio from a credit quality perspective.  With the anticipation of our economy remaining fundamentally sound in the near to intermediate term, we anticipate that this trend will continue in the current year."

Greenwood concluded, "Considering that we anticipate our earning assets to continue growing at very acceptable levels and our overall credit quality to remain very solid, we strongly expect that we will be able to continue growing our earnings at the double-digit level that we experienced in the first quarter of this year throughout the course of 2019."      

Scott A. Everson, President and CEO stated, "We are extremely gratified to report on the strong earnings that our Company produced for the first quarter of 2019.  We greatly benefited from the positive execution of our strategic plan, which calls for us to grow through acquiring other like-minded community banking organizations and capitalizing on prudent, yet profitable, organic opportunities.  Over the course of the past twelve months, we had success in both of these key areas on which we keenly focus.  By profitably growing our Company, we achieved two milestones at March 31, 2019.  One milestone is that for the first time in our history, our Company's first quarter net income exceeded $1.6 million.  The second milestone is that, for the first time, our Company's total assets surpassed the $600 million threshold… finishing the quarter at $621 million, an increase of $132.6 million or 27.2% year-over-year.  Excitingly, we are well on our way to achieving our current vision of having assets in excess of $1.0 billion within the course of the next few years and we strongly anticipate that we will continue to see our Company produce record levels of core earnings for the foreseeable future."

Everson continued, "By continuing to utilize the 'playbook' that we did last year to achieve profitable growth, we are very optimistic about our future prospects.  In addition, we will continue focusing on building our infrastructure (or, foundation) to support further growth while achieving greater efficiencies.  As we have previously stated, we are strongly committed to remaining relevant within our industry by investing in our technology and origination/service platforms.  Ultimately, our vision is to become an omnichannel bank---  by having complete channel integration and offering mobility to our customers---  thereby, serving them on their terms and through their preferred channels.  We have started this initiative and believe that, for a community-minded bank, we will have a complete digital solution that will be highly appealing to our target clientele within the next year or two.  Coupling this investment in technology with continued investment in growing our Company through acquisition and new branch construction in key complimentary markets, we firmly believe that we can continue to grow at acceptable levels while remaining very profitable.  Even with the high level of growth that we experienced over the course of the past twelve months, we continued to maintain our overall profitability.  With our record earnings in the first quarter, our Company had a return on equity (ROE) of 12.0% and a return on assets (ROA) of 1.08% for the three months ended, March 31, 2019.  We have stated for many quarters that our goal is to profitably grow our Company.  We are extremely delighted that we are presently accomplishing this."    

Everson concluded, "Our primary foci are rewarding our shareholders by paying a very solid cash dividend while driving their shareholder value in our Company.  In the first quarter of this year, we increased our cash dividend payout from $0.13 to $0.1325 which, on a forward basis, produces a dividend yield of 4.88% based on our closing price as of the most recent quarter end.  Regarding our present market valuation, on a forward basis we are currently trading at a price to earnings multiple of 9.7 times.  With our market sector trading more in the range of 13.5 times at present, we are highly optimistic that we will see a higher market valuation in future periods… assuming that we continue to drive our earnings at the levels we have seen and currently project.  Overall, we are extremely pleased with the direction that we are going and the results that we are producing.  We continue to be highly optimistic about our future potential and look forward to realizing this upside potential in future periods!"

United Bancorp, Inc. is headquartered in Martins Ferry, Ohio and has total assets of $621.0 million and total shareholder's equity of $53.8 million as of March 31, 2019.  Through its single bank charter, Unified Bank, the Company has nineteen banking offices that serve the Ohio Counties of Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas. The Company also operates a Loan Production Office in Wheeling, WV.  United Bancorp, Inc. trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market under the symbol UBCP, Cusip #909911109.

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the Securities Exchange Act of 1934.  Forward-looking statements, which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms.  Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, changes in the financial and securities markets, including changes with respect to the market value of our financial  assets, and the availability of and costs associated with sources of liquidity.  The Company undertakes no obligation to update or carry forward-looking statements, whether as a result of new information, future events or otherwise.

UNITED BANCORP, INC.  (UBCP)
At or for the Quarter Ended
March 31, March 31, % $
2019 2018 Change Change
Earnings
     Interest income on loans $         5,045,302 $      4,112,870 22.67% $            932,432
     Loan fees 190,316 215,237 -11.58% $            (24,921)
     Interest income on securities 1,079,566 296,756 263.79% $            782,810
    Total interest income 6,315,184 4,624,863 36.55% $         1,690,321
    Total interest expense 1,207,188 523,605 130.55% $            683,583
    Net interest income 5,107,996 4,101,258 24.55% $         1,006,738
    Provision for loan losses 90,000 57,000 57.89% $              33,000
    Net interest income after provision for loan losses 5,017,996 4,044,258 24.08% $            973,738
    Service charge on deposit account 713,294 630,589 13.12% $              82,705
    Net realized gains on sale of loans 3,804 14,220 -73.25% $            (10,416)
    Other noninterest income 227,850 235,346 -3.19% $              (7,496)
    Total noninterest income 944,948 880,155 7.36% $              64,793
    Total noninterest expense 4,162,328 3,578,562 16.31% $            583,766
    Income tax expense 187,008 198,299 -5.69% $            (11,291)
    Net income $         1,613,608 $      1,147,552 40.61% $            466,056
Key performance data
    Earnings per common share - Basic $                  0.28 $               0.23 21.74% $                0.050
    Earnings per common share - Diluted 0.28 0.23 21.74% $                0.050
    Cash dividends paid 0.1325 0.130 1.92% $            0.00250
Stock data
    Dividend payout ratio 47.32% 59.09% -11.77%
    Price earnings ratio 9.69 x 14.72 x -34.17%
    Market price to book value 118% 147% -19.68%
    Annualized yield based on quarter end close 4.88% 4.02% 21.39%
    Market value - last close (end of period) 10.85 12.95 -16.22%
    Book value (end of period) 9.19 8.81 4.31%
Shares Outstanding
    Average - Basic 5,515,418 4,874,479 --------
    Average - Diluted 5,515,418 4,874,479 --------
    Common stock, shares issued 5,897,227 5,560,304 --------
    Shares held as treasury stock 29,624 5,744 --------
    Return on average assets (ROA) 1.08% 1.00% 0.08%
    Return on average equity (ROE) 12.00% 10.38% 1.63%
At quarter end
    Total assets $     621,007,755 $  488,376,569 27.16% $     132,631,186
    Total assets (average) 599,312,000 461,300,000 29.92% $     138,012,000
     Cash and due from Federal Reserve Bank 32,692,099 14,770,515 121.33% $       17,921,584
     Average cash and due from Federal Reserve Bank 21,723,000 14,043,000 54.69% $         7,680,000
     Securities and other restricted stock 144,329,961 75,228,928 91.85% $       69,101,033
     Average securities and other restricted stock 131,402,000 52,518,000 150.20% $       78,884,000
    Other real estate and repossessions 91,000 384,630 -76.34% $          (293,630)
    Gross loans 413,896,086 370,485,374 11.72% $       43,410,712
    Allowance for loan losses (2,083,480) (2,125,369) -1.97% $              41,889
    Net loans 411,812,606 368,360,005 11.80% $       43,452,601
    Average loans 412,671,000 366,173,000 12.70% $       46,498,000
    Net loans charged-off 18,420 32,376 -43.11% $            (13,956)
    Net overdrafts charged-off 30,988 21,493 44.18% $                9,495
    Total net charge offs 49,408 53,869 -8.28% $              (4,461)
    Nonaccrual loans 1,576,045 1,395,363 12.95% $            180,682
    Loans past due 30+ days (excludes non accrual loans) 1,953,368 1,999,059 -2.29% $            (45,691)
    Total Deposits
        Noninterest bearing demand 102,447,401 66,418,796 54.24% $       36,028,605
        Interest bearing demand 212,620,075 183,544,936 15.84% $       29,075,139
        Savings 110,923,522 84,474,961 31.31% $       26,448,561
        Time < $250,000 94,268,487 63,783,823 47.79% $       30,484,664
        Time > $250,000 18,671,486 5,840,817 219.67% $       12,830,669
    Total Deposits 538,930,971 404,063,333 33.38% $     134,867,638
    Average total deposits 526,632,000 394,127,000 33.62% $     132,505,000
    Advances from the Federal Home Loan Bank 79,505 8,194,518 -99.03% $       (8,115,013)
       Overnight advances - 8,000,000 N/A $       (8,000,000)
       Term advances 79,505 194,518 -59.13% $          (115,013)
    Repurchase Agreements 13,440,580 15,583,346 -13.75% $       (2,142,766)
    Shareholders' equity 53,786,271 44,274,344 21.48% $         9,511,927
    Shareholders' equity (average) 53,786,000 44,211,000 21.66% $         9,575,000
Key performance ratios
    Net interest margin (Federal tax equivalent) 3.80% 3.86% -0.06%
    Interest expense to average assets 0.81% 0.45% 0.36%
    Total allowance for loan losses
       to nonperforming loans 132.20% 152.32% -20.12%
    Total allowance for loan losses
        to total loans 0.50% 0.57% -0.07%
   Total past due and nonaccrual loans to gross loans 0.85% 0.92% 0.07%
   Nonperforming assets to total assets 0.27% 0.36% -0.09%
   Net charge-offs to average loans 0.05% 0.06% -0.01%
   Equity to assets at period end 8.66% 9.07% -0.41%

 

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SOURCE United Bancorp, Inc.

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