United Bancorp(UBCP) - 2021 Q4 - Annual Report

PART I Item 1. Business United Bancorp, Inc. operates as a bank holding company through Unified Bank, providing banking services in Ohio and West Virginia, subject to competition and extensive regulation Business Overview United Bancorp, Inc. operates Unified Bank, providing commercial and retail banking services through nineteen branches in Ohio and West Virginia - United Bancorp, Inc. is a bank holding company headquartered in Martins Ferry, Ohio, with one wholly-owned subsidiary, Unified Bank[8] - The company engages in commercial and retail banking in various counties in Ohio and the Northern panhandle of West Virginia, offering services like deposits and loans through its main office and nineteen branches[9] - Unified Bank has a diversified customer base, with no single customer having a material impact on its earnings[10] Competition Unified Bank faces intense competition from 39 banking institutions, ranking sixth in deposit market share in its Ohio markets as of June 30, 2021 - The bank competes with a wide range of financial institutions, including commercial banks, savings and loans, finance companies, and credit unions across its geographic markets in Ohio and West Virginia[11] - According to FDIC data as of June 30, 2021, Unified Bank ranked sixth in total deposit market share among 39 competitors in its Ohio and West Virginia markets[12] Supervision and Regulation The company and Unified Bank are subject to comprehensive federal and state banking regulations, including capital adequacy and consumer protection, and were well-capitalized as of December 31, 2021 - The company is regulated by the Federal Reserve, FDIC, and the Ohio Division of Financial Institutions (ODFI), with a focus on protecting depositors and the overall financial system[13][20] - Regulators have broad enforcement powers, including issuing cease and desist orders, imposing fines, and removing officers and directors for unsafe practices or violations of law[17][18] - The Dodd-Frank Act introduced significant regulatory changes, including the creation of the Bureau of Consumer Financial Protection (Bureau) with broad authority over consumer financial laws[22][23] - As of December 31, 2021, Unified Bank was well-capitalized under the prompt corrective action guidelines of the Federal Deposit Insurance Corporation Improvement Act (FDICIA)[38] Employees and Executive Officers United Bancorp, Inc. has no employees, while Unified Bank employs 144 staff, with key executive officers including Scott Everson, Matthew Branstetter, and Randall Greenwood - The holding company has no employees, while its subsidiary, Unified Bank, has 124 full-time and 20 part-time employees[54] Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Scott Everson | 54 | President and Chief Executive Officer | | Matthew F. Branstetter | 54 | Senior Vice President – Chief Operating Officer | | Randall M. Greenwood | 58 | Senior Vice President, Chief Financial Officer, Treasurer & Corporate Secretary | Statistical Disclosures by Bank Holding Companies This section details United Bancorp, Inc.'s financial statistics, including average balances, net interest income, loan portfolio, and loan loss experience for 2019-2021 Average Balances and Net Interest Income (2020 vs 2019) | Metric | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Total Interest-Earning Assets (Avg. Balance) | $643,465 | $597,260 | | Net Interest Income | $24,172 | $21,906 | | Net Interest Spread | 3.57% | 3.38% | | Net Yield on Interest Earning Assets | 3.76% | 3.67% | Rate/Volume Analysis of Net Interest Income (2020 vs 2019) | (In thousands) | Total Change | Change Due To Volume | Change Due To Rate | | :--- | :--- | :--- | :--- | | Total interest and dividend income | $876 | $2,252 | $(1,376) | | Total interest expense | $(1,390) | $260 | $(1,650) | | Net interest income | $2,266 | $1,992 | $274 | Loan Portfolio Maturities (Commercial & Commercial Real Estate) as of Dec 31, 2021 | Maturity | Amount (in thousands) | | :--- | :--- | | One Year or Less | $11,467 | | One Through Five Years | $73,905 | | Five Through Fifteen Years | $162,224 | | After Fifteen Years | $110,073 | | Total | $357,669 | Analysis of Allowance for Loan Losses (2019-2021) | (In thousands) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Balance at beginning of year | $5,113 | $2,231 | $2,043 | | Net loan charge-offs | $185 | $455 | $720 | | (Credit) Provision for loan losses | $(1,255) | $3,337 | $908 | | Balance at end of year | $3,673 | $5,113 | $2,231 | | Ratio of net charge-offs to average loans | 0.04% | 0.10% | 0.17% | Item 1A. Risk Factors As a smaller reporting company, United Bancorp, Inc. is not required to provide risk factor disclosures - As a smaller reporting company, United Bancorp, Inc. is not required to provide risk factor disclosures[82] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - The company has no unresolved staff comments[83] Item 2. Properties The company owns its Main Office, an operations center, and nineteen branch offices in Ohio and West Virginia, all unencumbered and in good operating condition - The Company owns its Main Office, an operations center, and all nineteen of its branch offices located in Ohio and West Virginia[84] - Management confirms that all properties are in good operating condition, unencumbered by mortgages, and adequately insured[84] Item 3. Legal Proceedings The company and its subsidiary are not party to any material legal proceedings beyond ordinary business litigation - There are no material legal proceedings against the Company or its subsidiary outside of ordinary routine litigation[85] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the Company[86] PART II Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities This section details common stock trading, dividends, and the company's Q4 2021 purchase of 2,923 shares at $15.99 for its Deferred Compensation Plan Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2021 | — | $— | | Nov 2021 | — | $— | | Dec 2021 | 2,923 | $15.99 | | Total | 2,923 | $15.99 | - All purchased shares were acquired on the open market to fund the Company's Directors and Officers Deferred Compensation Plan[89] - The Deferred Compensation Plan allows directors and officers to defer fees and up to 50% of their annual cash incentive award to acquire common shares, which are not registered under the Securities Act of 1933 in reliance upon the exemption provided by Section 4(a)(2)[90] Item 6. [Reserved] This item is not applicable - Item 6 is not applicable[91] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The MD&A is incorporated by reference from the 2021 Annual Report, emphasizing the critical accounting policy for allowance for loan losses, which involves significant management estimates - The full MD&A is incorporated by reference from pages 10-22 of the 2021 Annual Report to Shareholders[91] - A critical accounting policy is the determination of the allowance for loan losses, which involves management estimates and judgment regarding credit risk, economic factors, and borrower situations[92][93] - Management regularly reviews the adequacy of the allowance based on historical loss experience, portfolio characteristics, and current economic conditions to ensure it can absorb probable losses[94][95] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, United Bancorp, Inc. is not required to provide market risk disclosures - The company is not required to provide disclosures about market risk because it is a smaller reporting company[96] Item 8. Financial Statements and Supplementary Data The company's audited financial statements, notes, and the independent auditor's report are incorporated by reference from the 2021 Annual Report - The audited financial statements and supplementary data are incorporated by reference from the 2021 Annual Report to Shareholders[97] Item 9. Changes In and Disagreements with Accountants This item is not applicable - There were no changes in or disagreements with accountants[98] Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes in Q4 2021 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of December 31, 2021[99] - Based on an evaluation using the COSO framework, management concluded that internal control over financial reporting was effective as of December 31, 2021. An attestation report from the registered public accounting firm was not included[100] - No material changes were made to the company's internal control over financial reporting during the fourth quarter ended December 31, 2021[101] Item 9B. Other Information The company reports no other information for this item - There is no other information to report[102] PART III Item 10. Directors and Executive Officers of the Registrant Information on directors, executive officers, corporate governance, and the Code of Ethics is incorporated by reference from the 2022 Annual Meeting Proxy Statement - Information on directors and corporate governance is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Shareholders[103] - The company has adopted a Code of Ethics applicable to its Principal Executive, Financial, and Accounting Officers, which is available on its website[103] Item 11. Executive Compensation Executive compensation details are incorporated by reference from the 2022 Annual Meeting Proxy Statement - Details on executive compensation are incorporated by reference from the 2022 Proxy Statement[104] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stock Holder Matters Security ownership information is incorporated by reference from the 2022 Proxy Statement, detailing 317,500 securities to be issued and 352,500 available under equity plans as of December 31, 2021 - Security ownership information is incorporated by reference from the 'Ownership of Voting Shares' section of the 2022 Proxy Statement[105] Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be issued upon exercise | Securities remaining available for future issuance | | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 317,500 | 352,500 | | Equity compensation plans not approved by security holders | — | — | | Total | 317,500 | 352,500 | Item 13. Certain Relationships and Related Transactions Information on certain relationships and related transactions is incorporated by reference from the 2022 Annual Meeting Proxy Statement - Information on related party transactions is incorporated by reference from the 2022 Proxy Statement[108] Item 14. Principal Accountant Fees and Services Details on principal accountant fees and services are incorporated by reference from the 2022 Annual Meeting Proxy Statement - Details on principal accountant fees and services are incorporated by reference from the 2022 Proxy Statement[108] PART IV Item 15. Exhibits and Financial Statement/Schedules This section lists financial statements and exhibits filed with the 10-K, incorporating consolidated financial statements and the independent auditor's report from the 2021 Annual Report - The Consolidated Financial Statements for the years ended December 31, 2021 and 2020, and the Report of Independent Registered Public Accounting Firm are incorporated by reference from the 2021 Annual Report[109] - A list of exhibits filed with the report is provided, including Articles of Incorporation, Code of Regulations, descriptions of securities, various agreements, stock incentive plans, the 2021 Annual Report, and CEO/CFO certifications[110]