United Bancorp(UBCP) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements United Bancorp, Inc. reported increased assets and decreased net income for Q1 2022, primarily due to higher expenses and unrealized securities losses Condensed Consolidated Balance Sheets Total assets increased to $733.4 million, while stockholders' equity decreased to $63.9 million due to unrealized losses Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $733,399 | $724,456 | | Loans, net | $459,119 | $450,699 | | Total Deposits | $612,494 | $605,136 | | Total Liabilities | $669,498 | $652,755 | | Total Stockholders' Equity | $63,901 | $71,701 | Condensed Consolidated Statements of Income Net income decreased to $1.75 million in Q1 2022, primarily due to a significant rise in noninterest expenses Condensed Consolidated Statements of Income (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Interest Income | $5,510 | $5,313 | | Provision (Credit) for Loan Losses | $(500) | $(205) | | Total Noninterest Income | $987 | $926 | | Total Noninterest Expense | $5,110 | $4,449 | | Net Income | $1,751 | $1,908 | | Diluted Earnings Per Share | $0.3025 | $0.33 | Condensed Consolidated Statements of Comprehensive Loss The company reported a comprehensive loss of $6.0 million in Q1 2022, driven by unrealized losses on securities Condensed Consolidated Statements of Comprehensive Loss (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Income | $1,751 | $1,908 | | Other comprehensive (loss) | $(7,748) | $(2,170) | | Comprehensive (Loss) | $(5,997) | $(262) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $63.9 million, primarily due to comprehensive loss and cash dividends - Key changes in stockholders' equity for Q1 2022 included net income of $1.75 million, other comprehensive loss of $7.75 million, cash dividends of $1.78 million, and common stock repurchases of $0.77 million[13] Condensed Consolidated Statements of Cash Flows Cash and cash equivalents decreased by $14.2 million in Q1 2022, driven by significant investing activities Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,021 | $1,402 | | Net cash provided by (used in) investing activities | $(31,115) | $2,542 | | Net cash provided by financing activities | $11,858 | $41,515 | | (Decrease) in Cash and Cash Equivalents | $(14,236) | $45,459 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, securities and loan portfolio changes, fair value measurements, and CECL adoption impact - The company's operations are aggregated into one reportable operating segment, primarily banking, with customers located in specific counties in Ohio and West Virginia[19] - The allowance for loan losses is based on historical experience, borrower conditions, collateral value, and economic conditions, and consists of allocated (for impaired loans) and general components[35][36] - The company has adopted ASU 2016-13 (CECL), with an effective date for small reporting companies after December 15, 2022. The company anticipates a significant change in processes and a potential increase in the allowance for loan losses upon adoption[45][48] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 results, highlighting net income, net interest income growth, increased expenses, and stable credit quality - Diluted earnings per share were $0.31 on net income of $1.75 million for Q1 2022, compared to a record $0.33 per share on net income of $1.91 million in Q1 2021[119] - Net interest income increased by $198,000 (3.7%) year-over-year, driven by a $289,000 (37.3%) decrease in interest expense[121] - The company released $500,000 from its loan loss reserves during the quarter, citing sound credit quality and an improving economy[126] - The company's growth goal is to increase total assets to $1.0 billion or greater in the short to intermediate term[127] Critical Accounting Policies The allowance for loan losses is identified as the most critical accounting policy due to its subjective nature and reliance on estimates - The allowance for loan losses is identified as the most critical accounting policy due to its reliance on management's estimates and subjective judgment regarding probable losses inherent in the loan portfolio[137][139] Analysis of Financial Condition Gross loans increased to $462.3 million, securities portfolio grew, and core deposits increased by $9.2 million - Gross loans increased by $7.9 million to $462.3 million at March 31, 2022, from $454.4 million at December 31, 2021[141] - The allowance for loan losses decreased to $3.2 million (0.69% of total loans) from $3.7 million (0.81% of total loans) at year-end 2021[147] - Available-for-sale securities increased by approximately $13.2 million from December 31, 2021[148] - Core deposits (interest and non-interest bearing accounts and savings) increased by approximately $9.2 million, or 1.5%, from December 31, 2021[149] Results of Operations Net interest income increased, a loan loss credit was recorded, and noninterest expense rose significantly due to employee costs - Net interest income increased by $197,000 (3.7%) for Q1 2022 compared to Q1 2021[155] - The provision for loan losses was a credit to expense of $500,000 in Q1 2022, as the company released a portion of its COVID-19 related reserves[156] - Noninterest expense increased by $661,000 (14.9%) year-over-year, with salary and employee benefits increasing by $700,000 due to the one-time vesting of certain stock awards[158] Capital Resources and Liquidity Stockholders' equity decreased due to comprehensive loss, yet the company remains well-capitalized with adequate liquidity - Stockholders' equity decreased by $7.8 million during the quarter, primarily due to accumulated other comprehensive loss on the available-for-sale securities portfolio[161] Capital Ratios | Capital Ratio | Value | | :--- | :--- | | Common equity tier 1 capital ratio | 11.40% | | Tier 1 capital ratio | 12.13% | | Total capital ratio | 16.34% | | Leverage ratio | 9.28% | - Management believes it has adequate capital and profitability to meet current and projected liquidity needs[168] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, United Bancorp, Inc. is not required to provide these market risk disclosures - Smaller Reporting Companies are not required to provide this disclosure[172] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2022[173] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[174] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any material legal proceedings beyond ordinary routine litigation - The company is not involved in any material legal proceedings outside of ordinary routine litigation[177] Item 1A. Risk Factors As a smaller reporting company, United Bancorp, Inc. is not required to provide risk factor information - Smaller reporting companies are not required to provide this information[178] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company purchased 2,447 common shares in Q1 2022 for its Directors and Officers Deferred Compensation Plan Common Stock Purchases | Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | January 2022 | –– | –– | | February 2022 | 2,447 | $17.47 | | March 2022 | –– | –– | - Share purchases are related to the United Bancorp, Inc. Affiliate Banks Directors and Officers Deferred Compensation Plan, where participants can defer fees to acquire common shares[179] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - Not applicable[180] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[183] Item 6. Exhibits The report lists various concurrently filed exhibits, including corporate governance documents and officer certifications - A list of filed exhibits is provided, including corporate governance documents (Articles of Incorporation, Code of Regulations), officer certifications (Rule 13a-14(a), Section 1350), and XBRL interactive data files[184] SIGNATURES Signatures The quarterly report was signed on May 13, 2022, by the CEO and CFO of the company - The report was signed on May 13, 2022, by the company's President and CEO, Scott A. Everson, and its EVP, CFO and Risk Officer, Randall M. Greenwood[188]