Exhibit 99.2
United Bancshares, Inc.
Quarterly Report
June 30, 2020
Shareholders, Clients and Team Members:
Despite the unprecedented operating environment, I am pleased to report that your Company recorded pre-tax income of $8.2 million for the first six months of 2020, which was a 69% increase as compared to the same period in 2019. In addition to those record profits, your Company also reached $1 billion in assets and the Company’s Board of Directors approved a $0.14 per common share second quarter dividend, which amounted to approximately 8% of net income for the second quarter.
I could not be more proud of the Company’s team members. Early in the quarter they recognized the tremendous needs in our communities to help companies fund their employees’ wages, lower interest rates on their home mortgages and remain open to ensure confidence in the country’s financial systems. They worked numerous extra hours, made house calls, relocated their offices, assisted non-clients and other banks, made at least one personal phone call to every client, and countless other sacrifices to live up to our motto of “Success through Service”. Those efforts not only made a positive impact on others, but added significantly to the Company’s bottom line.
Increased revenues for the period were primarily the result of the Company’s ability to close approximately $268 million in residential mortgage loans generating $8.5 million in gains on loan sales, and secure over 1,500 Paycheck Protection Program (“PPP”) loans totaling $118 million, and generating $4.8 million in loan fees. For the period ended June 30, 2020, $1.0 million of fees received from the Small Business Administration was recorded as a reduction to non-interest expenses to cover PPP loan origination costs and $337,000 of deferred fees was amortized into interest income. The remaining $3.4 million of fees received from the SBA have been deferred and will be amortized into interest income over the two year life of the loans. While we have not experienced increases in delinquencies or losses through June 30, 2020, management allocated an additional $1,450,000 to our allowance for loan losses to recognize the added risk of this environment over the first six months of the year.
Although it is still unclear how long our communities or the economy will be negatively impacted, one thing is clear, the continued accomplishments of your Company is the undeniable result of the ongoing efforts of the Company’s dedicated team members and Board of Directors in implementing our Strategic Plan. Their efforts and our strong corporate values of respect for and accountability to our shareholders, clients, colleagues, and communities are the foundation for the continued success of your Company. Thank you for your ongoing support and the trust you have placed in us.
Respectfully,
Brian D. Young
President and CEO
United Bancshares, Inc.
and Subsidiaries
Financial Information (unaudited) | | Six months ended June 30, 2020 | | | Six months ended June 30, 2019 | |
| | | (dollars in thousands, except per share data) | |
Condensed Statement of Income | | | | | | | | |
Interest income | | $ | 19,310 | | | $ | 18,456 | |
Interest expense | | | 3,600 | | | | 4,276 | |
Net interest income | | | 15,710 | | | | 14,180 | |
Provision for loan losses | | | 1,450 | | | | 250 | |
Net interest income after provision for loan losses | | | 14,260 | | | | 13,930 | |
Non-interest income | | | 10,955 | | | | 5,641 | |
Non-interest expenses | | | 17,015 | | | | 14,714 | |
Income before income taxes | | | 8,200 | | | | 4,857 | |
Provision for income taxes | | | 1,444 | | | | 758 | |
Net income | | $ | 6,756 | | | $ | 4,099 | |
| | | | | | | | | |
Average common shares outstanding (basic) | | | 3,270,351 | | | | 3,270,522 | |
| | | | | | | | | |
PER COMMON SHARE | | | | | | | | |
Net income | | $ | 2.07 | | | $ | 1.25 | |
Book value | | $ | 32.04 | | | $ | 26.92 | |
Tangible book value (non-GAAP)* | | $ | 23.07 | | | $ | 17.91 | |
Closing price | | $ | 18.00 | | | $ | 20.17 | |
| | | | | | | | | |
FINANCIAL RATIOS | | | | | | | | |
Return on average assets | | | 1.44 | % | | | 0.97 | % |
Return on average tangible equity (non-GAAP)* | | | 19.47 | % | | | 15.16 | % |
Net interest margin, tax equivalent (non-GAAP)* | | | 3.74 | % | | | 3.77 | % |
Efficiency ratio (non-GAAP)* | | | 63.14 | % | | | 73.36 | % |
Loans (including held for sale) to deposits | | | 84.02 | % | | | 84.54 | % |
PERIOD END BALANCES
| | | As of June 30, 2020 | | | As of June 30, 2019 | |
Assets | | $ | 1,014,047 | | | $ | 855,412 | |
Loans, gross | | $ | 671,216 | | | $ | 572,594 | |
Deposits | | $ | 831,227 | | | $ | 689,158 | |
Shareholders' equity | | $ | 104,794 | | | $ | 88,054 | |
| | | | | | | | | |
Common shares outstanding | | | 3,270,814 | | | | 3,270,635 | |
* Some of the financial measures included in this press release are not measures of financial performance recognized by U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measures include tangible book value, return on average tangible equity, net interest margin (tax-equivalent), and the efficiency ratio. Management uses these non-GAAP financial measures in its analysis of its performance, and believes financial analysts and investors frequently use these measures, and other similar measures, to evaluate capital adequacy. Reconciliations of non-GAAP disclosures used in this press release to the comparable GAAP measures are provided in the accompanying table. Management, as well as regulators, financial analysts and other investors may use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.
These non-GAAP financial measures should not be considered in isolation or as a substitute for total shareholders’ equity, total assets, book value per share, return on average assets, return on average equity, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.
United Bancshares, Inc.
and Subsidiaries
Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited)
(dollars and shares in thousands, except per share data)
Shareholders' Equity to Tangible Equity | | June 30, 2020 | | | June 30, 2019 | |
Shareholders' equity | | $ | 104,794 | | | $ | 88,054 | |
Less goodwill and other intangibles | | | 29,334 | | | | 29,490 | |
Tangible common equity | | $ | 75,458 | | | $ | 58,564 | |
Average Shareholders' equity | | $ | 98,766 | | | $ | 83,590 | |
Less average goodwill and other intangibles | | | 29,367 | | | | 29,525 | |
Average tangible common equity | | $ | 69,399 | | | $ | 54,065 | |
| | | | | | | | | |
Tangible Book Value Per Common Share | | | | | | | | |
Tangible common equity (a) | | $ | 75,458 | | | $ | 58,564 | |
Total common shares issued and outstanding (b) | | | 3,270,814 | | | | 3,270,635 | |
Tangible book value per common share (a)/(b) | | $ | 23.07 | | | $ | 17.91 | |
| | | | | | | | | |
Return on Average Tangible Equity | | | | | | | | |
Net income, annualized (c) | | $ | 13,512 | | | $ | 8,198 | |
Average tangible common equity (d) | | $ | 69,399 | | | $ | 54,065 | |
Return on average tangible common equity (c/d) | | | 19.47 | % | | | 15.16 | % |
| | | | | | | | | |
Net Interest Margin, Tax-Equivalent | | | | | | | | |
Net interest income, annualized | | $ | 31,420 | | | $ | 28,360 | |
Tax-equivalent adjustment | | | 568 | | | | 472 | |
Tax-equivalent net interest income, annualized (e) | | $ | 31,988 | | | $ | 28,832 | |
Average earning assets (f) | | $ | 855,581 | | | $ | 763,812 | |
Net interest margin, tax-equivalent (e)/(f) | | | 3.74 | % | | | 3.77 | % |
| | | | | | | | | |
Efficiency Ratio, Tax-Equivalent | | | | | | | | |
Non-interest expense (g) | | $ | 17,015 | | | $ | 14,714 | |
Tax-equivalent net interest income | | | 15,994 | | | | 14,416 | |
Non-interest income | | | 10,955 | | | | 5,641 | |
Total revenue (h) | | $ | 26,949 | | | $ | 20,057 | |
Efficiency ratio (g)/(h) | | | 63.14 | % | | | 73.36 | % |
UNITED BANCSHARES, INC.
DIRECTORS Robert L. Benroth Herbert H. Huffman H. Edward Rigel David P. Roach | Daniel W. Schutt – Chairman R. Steven Unverferth Brian D. Young |
OFFICERS
Brian D. Young - President/CEO
Heather M. Oatman - Secretary
Stacy A. Cox – Chief Financial Officer
THE UNION BANK COMPANY
DIRECTORS
Robert L. Benroth Anthony M.V. Eramo Herbert H. Huffman Kevin L. Lammon William R. Perry | H. Edward Rigel David P. Roach Carol R. Russell Daniel W. Schutt R. Steven Unverferth |
Brian D. Young - Chairman/President/CEO |
INVESTOR MATERIALS:
United Bancshares, Inc. has traded its common stock on the NASDAQ Markets Exchange under the symbol “UBOH” since March 2001. Annual and quarterly shareholder reports, regulatory filings, press releases, and articles about United Bancshares, Inc. are available in the Shareholder Information section of our website www.theubank.com or by calling 1-800-837-8111.
Locations
1300 N. Main St.
Bowling Green, OH 43402
419-353-6088
100 S. High St.
Columbus Grove, OH 45830
419-659-2141
101 Progressive Dr.
Columbus Grove, OH 45830
419-659-4250
30 Coal Bend
Delaware, OH 43015
740-549-3400
114 E. 3rd St.
Delphos, OH 45833
419-692-2010
1500 Bright Rd.
Findlay, OH 45840
419-424-1400
461 Beecher Road
Gahanna, OH 43230
614-269-4400
230 W. Madison St.
Gibsonburg, OH 43431
419-637-2124
110 E. North St.
Kalida, OH 45853
419-532-3366
318 S. Belmore St.
Leipsic, OH 45856
419-943-2171
1410 Bellefontaine Ave.
Lima, OH 45804
419-229-6500
3211 Elida Rd.
Lima, OH 45805
419-331-3211
701 Shawnee Rd.
Lima, OH 45805
419-228-2114
111 S. Main St.
Marion, OH 43302
740-387-2265
220 Richland Rd.
Marion, OH 43302
740-386-2171
245 W. Main St.
Ottawa, OH 45875
419-523-2265
132 E. Front St.
Pemberville, OH 43450
419-287-3211
2660 US Hwy 224, Ste. 3
Plymouth, OH 44865
419-659-2141
468 Polaris Parkway
Westerville, OH 43082
614-269-4402
