Exhibit 99.1
FOR IMMEDIATE RELEASE: | CONTACT: | Robert K. Chapman |
April 24, 2009 | United Bancorp, Inc. | |
734-214-3801 |
UNITED BANCORP, INC. ANNOUNCES FIRST QUARTER 2009
RESULTS AND SUSPENDS CASH DIVIDEND
TECUMSEH, MI – United Bancorp, Inc. (UBMI) reported that additions to the Company’s provision for loan losses and a non-cash impairment of its goodwill resulted in a net loss of $4.70 million, or $.96 per share for the quarter ended March 31, 2009, compared to income of $1.89 million or $.37 per share for the same quarter of 2008. In other actions, the Board of Directors of United suspended payment of a cash dividend on its common shares in the second quarter of 2009.
First quarter 2009 results of operations for the Company included a substantial provision to its allowance for loan losses in its portfolio of residential construction and development loans and commercial real estate loans. The Company’s provision for loan losses of $6.87 million for the first quarter was down from $9.00 million recorded by the Company in the fourth quarter of 2008. Nonperforming loans at March 31, 2009 were $29.2 million, or 4.23% of total loans, up from $21.5 million, or 3.09%, at December 31, 2008. The Company’s allowance for loan loss as a percent of nonperforming loans was 70.9% at March 31.
Robert K. Chapman, President and Chief Executive Officer of the Company, commented that continued decline in the Michigan economy in the first quarter has resulted in further deterioration in collateral values, and corresponding increases in related credit issues and costs. As markets continue to be volatile and challenging from this economic uncertainty, we are acting aggressively to address the issues and manage our problem loans.
Based upon a recently completed goodwill impairment evaluation, United took a charge to earnings during the first quarter of approximately $2.44 million after tax as a result of a goodwill impairment of $3.47 million. The goodwill originally resulted from the acquisition of various banking offices by the Company between 1992 and 1999. The impairment of goodwill is a non-cash charge that does not affect the liquidity of the Company or its subsidiary banks. As goodwill is excluded from regulatory capital, the impairment charge will not have an adverse effect on the regulatory capital ratios of the Company or its subsidiary banks, all of which continue to be "well capitalized" under regulatory requirements.
Chapman continued, "All companies are periodically required to determine the appropriate carrying value of goodwill. The U.S. economy has experienced significant declines in asset values during this recessionary environment, and we believe our goodwill impairment charge is the most conservative course of action for us to take at this time.” He indicated that this write-off of goodwill is not related to the Company's receipt of capital from the United States Department of the Treasury under the TARP Capital Purchase Program, nor does this event have any effect on the ability of the subsidiary banks to make loans in support of our community's economy.
Mr. Chapman noted that the Company had positive results in several areas during the first quarter. United’s net revenues were up 5.7% over the same quarter of 2008, and the Company’s net interest income improved by 3.0% over the fourth quarter of 2008. In addition, mortgage volume continued to be very strong, and was approximately 2.5 times the level of the first quarter of 2008. Income from loan sales and servicing of $1.625 million for the quarter resulted in noninterest income that was 35.1% of net revenues. Deposits grew $31.7 million during the first quarter. Over the past twelve months, gross portfolio loan balances increased by 5.4%, while deposits grew 11.0 % in the same period. Chapman commented that this strong growth is due in part to the success of United’s current “BANK LOCALLY”
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campaign, which is important in allowing the Company to meet the needs of its communities. “When depositors choose to deposit their money in local community banks like ours, it is re-invested locally for all of us to prosper,” stated Chapman.
As a result of net losses for the most recent two quarters, the Board of Directors of the Company suspended payment of a quarterly dividend on its common shares in the second quarter of 2009. The Board believes that it is in the Company’s best interest to preserve capital given the severe financial market conditions in Michigan. In addition, the Company has instituted cost containment and reduction measures intended to protect the Company’s capital levels in the face of its uncertain future level of earnings.
About United Bancorp, Inc.
United Bancorp, Inc. is an independent financial holding company that is the parent company for United Bank & Trust and United Bank & Trust – Washtenaw. The subsidiary banks operate seventeen banking offices in Lenawee, Washtenaw and Monroe counties, and United Bank & Trust maintains an active wealth management group that serves the Company’s market area. For more information, visit the company’s website at www.ubat.com.
Forward-Looking Statements
This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and United Bancorp, Inc. Forward-looking statements are identifiable by words or phrases such as that an event or trend "will" occur or that United Bancorp, Inc. or its management "believes" or "intends" that a particular result or event will occur, or other words or phrases such as "move forward", "continue", and variations of such words and similar expressions. Management's determination of the provision and allowance for loan losses and the appropriate carrying value of its goodwill and other intangible assets involves judgments that are inherently forward-looking. The future effect of changes in the real estate, financial and credit markets and the national and regional economy on the banking industry, generally, and United Bancorp, Inc., specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“risk factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Risk factors include, but are not limited to, the risk factors described in "Item 1A - Risk Factors" of United Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008. United Bancorp, Inc. undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Unaudited Consolidated Financial Statements Follow.
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United Bancorp, Inc. and Subsidiaries | ||||||||||||||||||||||||
Comparative Consolidated Balance Sheet Data (Unaudited) | ||||||||||||||||||||||||
Period-end Balance Sheet | Mar 31 | Dec 31 | Percent | Mar 31 | Percent | |||||||||||||||||||
Dollars in thousands except per share data | 2009 | 2008 | Change | 2008 | Change | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash and due from banks | $ | 15,206 | $ | 18,472 | -17.7 | % | $ | 15,755 | -3.5 | % | ||||||||||||||
Interest bearing balances with banks | 52,631 | - | 100.0 | % | - | 100.0 | % | |||||||||||||||||
Federal funds sold | - | - | 0.0 | % | 1 | 0.0 | % | |||||||||||||||||
Total cash and cash equivalents | 67,837 | 18,472 | 267.2 | % | 15,756 | 330.5 | % | |||||||||||||||||
Securities available for sale | 93,295 | 85,093 | 9.6 | % | 90,739 | 2.8 | % | |||||||||||||||||
Loans held for sale | 3,693 | 4,988 | -26.0 | % | 6,070 | -39.2 | % | |||||||||||||||||
Portfolio loans | ||||||||||||||||||||||||
Personal | 110,193 | 112,095 | -1.7 | % | 98,293 | 12.1 | % | |||||||||||||||||
Business | 482,019 | 482,564 | -0.1 | % | 463,178 | 4.1 | % | |||||||||||||||||
Residential mortgage | 98,143 | 102,360 | -4.1 | % | 93,494 | 5.0 | % | |||||||||||||||||
Total loans | 690,355 | 697,019 | -1.0 | % | 654,965 | 5.4 | % | |||||||||||||||||
Allowance for loan losses | 20,698 | 18,312 | 13.0 | % | 12,047 | 71.8 | % | |||||||||||||||||
Net loans | 669,657 | 678,707 | -1.3 | % | 642,918 | 4.2 | % | |||||||||||||||||
Premises and equipment, net | 12,926 | 13,205 | -2.1 | % | 13,212 | -2.2 | % | |||||||||||||||||
Goodwill | - | 3,469 | -100.0 | % | 3,469 | -100.0 | % | |||||||||||||||||
Bank owned life insurance | 12,569 | 12,447 | 1.0 | % | 12,076 | 4.1 | % | |||||||||||||||||
Other assets | 18,361 | 16,012 | 14.7 | % | 13,634 | 34.7 | % | |||||||||||||||||
Total Assets | $ | 878,338 | $ | 832,393 | 5.5 | % | $ | 797,874 | 10.1 | % | ||||||||||||||
Liabilities | ||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||
Non-interest bearing | $ | 105,191 | $ | 89,487 | 17.5 | % | $ | 82,596 | 27.4 | % | ||||||||||||||
Interest bearing | 636,091 | 620,062 | 2.6 | % | 584,927 | 8.7 | % | |||||||||||||||||
Total deposits | 741,282 | 709,549 | 4.5 | % | 667,523 | 11.0 | % | |||||||||||||||||
Fed funds borrowed | - | - | 0.0 | % | 7,500 | -100.0 | % | |||||||||||||||||
FHLB advances outstanding | 48,126 | 50,036 | -3.8 | % | 42,991 | 11.9 | % | |||||||||||||||||
Other liabilities | 3,676 | 3,357 | 9.5 | % | 5,767 | -36.3 | % | |||||||||||||||||
Total Liabilities | 793,084 | 762,942 | 4.0 | % | 723,781 | 9.6 | % | |||||||||||||||||
Shareholders' Equity | 85,254 | 69,451 | 22.8 | % | 74,093 | 15.1 | % | |||||||||||||||||
Total Liabilities and Equity | $ | 878,338 | $ | 832,393 | 5.5 | % | $ | 797,874 | 10.1 | % | ||||||||||||||
First Quarter | Year to Date | |||||||||||||||||||||||
Average Balance Data | 2009 | 2008 | % Change | 2009 | 2008 | % Change | ||||||||||||||||||
Total loans | $ | 704,412 | $ | 654,940 | 7.6 | % | $ | 704,412 | $ | 633,855 | 11.1 | % | ||||||||||||
Earning assets | 837,712 | 768,288 | 9.0 | % | 837,712 | 741,133 | 13.0 | % | ||||||||||||||||
Total assets | 866,243 | 801,301 | 8.1 | % | 866,243 | 777,243 | 11.5 | % | ||||||||||||||||
Deposits | 727,715 | 677,023 | 7.5 | % | 727,715 | 647,342 | 12.4 | % | ||||||||||||||||
Shareholders' Equity | 86,081 | 72,757 | 18.3 | % | 86,081 | 75,042 | 14.7 | % | ||||||||||||||||
Asset Quality | ||||||||||||||||||||||||
Net charge offs | $ | 4,484 | $ | 919 | 387.9 | % | $ | 4,485 | $ | 4,182 | 7.2 | % | ||||||||||||
Non-accrual loans | 25,962 | 13,253 | 95.9 | % | ||||||||||||||||||||
Non-performing loans | 29,181 | 16,235 | 79.7 | % | ||||||||||||||||||||
Non-performing assets | 32,582 | 18,626 | 74.9 | % | ||||||||||||||||||||
Nonperforming loans/total loans | 4.23 | % | 2.48 | % | 70.5 | % | ||||||||||||||||||
Allowance for loan loss/total loans | 3.00 | % | 1.84 | % | 63.0 | % | ||||||||||||||||||
Allowance/nonperforming loans | 70.9 | % | 74.2 | % | -4.4 | % |
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United Bancorp, Inc. and Subsidiaries | |||||||||||||
Comparative Consolidated Income Statement and Performance Data (Unaudited) | |||||||||||||
Dollars in thousands except per share data | |||||||||||||
Three months ended Mar 31 | |||||||||||||
Consolidated Income Statement | 2009 | 2008 | % Change | ||||||||||
Interest Income | |||||||||||||
Interest and fees on loans | $ | 10,141 | $ | 11,332 | -10.5 | % | |||||||
Interest on investment securities | 871 | 964 | -9.6 | % | |||||||||
Interest on federal funds sold | 17 | 120 | -85.8 | % | |||||||||
Total interest income | 11,029 | 12,416 | -11.2 | % | |||||||||
Interest Expense | |||||||||||||
Interest on deposits | 2,938 | 4,408 | -33.3 | % | |||||||||
Interest on federal funds purchased | - | 7 | -100.0 | % | |||||||||
Interest on FHLB advances | 529 | 523 | 1.1 | % | |||||||||
Total interest expense | 3,467 | 4,938 | -29.8 | % | |||||||||
Net Interest Income | 7,562 | 7,478 | 1.1 | % | |||||||||
Provision for loan losses | 6,870 | 660 | 940.9 | % | |||||||||
Net Interest Income After Provision for Loan Losses | 692 | 6,818 | -89.9 | % | |||||||||
Noninterest Income | |||||||||||||
Service charges on deposit accounts | 683 | 823 | -17.0 | % | |||||||||
Trust & Investment fee income | 996 | 1,169 | -14.8 | % | |||||||||
Gains (losses) on securities transactions | (13 | ) | 53 | -124.5 | % | ||||||||
Income from loan sales and servicing | 1,625 | 608 | 167.3 | % | |||||||||
ATM, debit and credit card fee income | 508 | 529 | -4.0 | % | |||||||||
Income from bank-owned life insurance | 122 | 116 | 5.2 | % | |||||||||
Other income | 162 | 239 | -32.2 | % | |||||||||
Total noninterest income | 4,083 | 3,537 | 15.4 | % | |||||||||
Noninterest Expense | |||||||||||||
Salaries and employee benefits | 4,606 | 4,407 | 4.5 | % | |||||||||
Occupancy and equipment expense | 1,349 | 1,244 | 8.4 | % | |||||||||
External data processing | 408 | 416 | -1.9 | % | |||||||||
Advertising and marketing | 238 | 375 | -36.5 | % | |||||||||
Goodwill impairment | 3,469 | - | 100.0 | % | |||||||||
Other expense | 1,951 | 1,360 | 43.5 | % | |||||||||
Total noninterest expense | 12,021 | 7,802 | 54.1 | % | |||||||||
Income (Loss) Before Federal Income Tax | (7,246 | ) | 2,553 | -383.8 | % | ||||||||
Federal income tax | (2,547 | ) | 665 | -483.0 | % | ||||||||
Net Income (Loss) | $ | (4,699 | ) | $ | 1,888 | -348.9 | % | ||||||
Performance Ratios | |||||||||||||
Return on average assets | -2.20 | % | 0.94 | % | -334.0 | % | |||||||
Return on average equity | -22.14 | % | 10.35 | % | -313.9 | % | |||||||
Net interest margin (FTE) | 3.84 | % | 4.10 | % | -6.4 | % | |||||||
Efficiency ratio | 101.1 | % | 69.3 | % | 45.9 | % | |||||||
Common Stock Performance | |||||||||||||
Basic & diluted earnings (loss) per share | $ | (0.96 | ) | $ | 0.37 | -361.6 | % | ||||||
Dividends per share | 0.02 | 0.20 | -90.0 | % | |||||||||
Dividend payout ratio | NA | 54.5 | % | NA | |||||||||
Book value per share | 12.88 | 14.57 | -11.6 | % | |||||||||
Market value per share (1) | 6.50 | 18.00 | -63.9 | % | |||||||||
Period-end shares outstanding | 5,059 | 5,085 | -0.5 | % | |||||||||
Average shares outstanding | 5,054 | 5,145 | -1.8 | % | |||||||||
(1) | Market value per share is based on the last reported transaction on OTCBB before period end. |
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United Bancorp, Inc. and Subsidiaries | ||||||||||||||||||||
Trends of Selected Consolidated Financial Data (Unaudited) | ||||||||||||||||||||
Dollars in thousands except per share data | ||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||
Balance Sheet Data | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||
Period-end: | ||||||||||||||||||||
Total loans | $ | 690,355 | $ | 697,019 | $ | 683,064 | $ | 662,014 | $ | 654,965 | ||||||||||
Allowance for loan losses | 20,698 | 18,312 | 14,335 | 13,008 | 12,047 | |||||||||||||||
Earning assets | 839,974 | 787,100 | 768,184 | 752,517 | 751,774 | |||||||||||||||
Total assets | 878,338 | 832,393 | 815,347 | 798,922 | 797,874 | |||||||||||||||
Deposits | 741,282 | 709,549 | 686,553 | 669,054 | 667,522 | |||||||||||||||
Shareholders' Equity | 85,254 | 69,451 | 72,766 | 73,452 | 74,093 | |||||||||||||||
Average: | ||||||||||||||||||||
Total loans | $ | 704,412 | $ | 697,865 | $ | 673,548 | $ | 664,895 | $ | 654,940 | ||||||||||
Earning assets | 837,712 | 793,937 | 765,119 | 765,808 | 768,288 | |||||||||||||||
Total assets | 866,243 | 836,741 | 801,175 | 797,715 | 801,301 | |||||||||||||||
Deposits | 727,715 | 706,757 | 668,354 | 655,132 | 677,023 | |||||||||||||||
Shareholders' Equity | 86,081 | 72,343 | 72,890 | 72,890 | 72,757 | |||||||||||||||
Income Statement Summary | ||||||||||||||||||||
Net interest income | $ | 7,562 | $ | 7,342 | $ | 7,538 | $ | 7,387 | $ | 7,478 | ||||||||||
Provision for loan losses | 6,870 | 8,997 | 3,300 | 1,650 | 660 | |||||||||||||||
Non-interest income | 4,083 | 2,538 | 3,667 | 3,766 | 3,538 | |||||||||||||||
Non-interest expense | 12,021 | 7,291 | 7,623 | 7,248 | 7,802 | |||||||||||||||
Federal income tax | (2,547 | ) | (2,392 | ) | (114 | ) | 560 | 665 | ||||||||||||
Net income (loss) | $ | (4,699 | ) | $ | (4,016 | ) | $ | 396 | $ | 1,696 | $ | 1,888 | ||||||||
Basic & diluted earnings (loss) per common share | $ | (0.96 | ) | $ | (0.79 | ) | $ | 0.08 | $ | 0.33 | $ | 0.37 | ||||||||
Performance Ratios and Liquidity | ||||||||||||||||||||
Return on average assets | -2.20 | % | -1.91 | % | 0.20 | % | 0.86 | % | 0.94 | % | ||||||||||
Return on average common equity | -22.14 | % | -22.08 | % | 2.14 | % | 9.29 | % | 10.35 | % | ||||||||||
Net interest margin (FTE) | 3.84 | % | 3.87 | % | 4.16 | % | 4.07 | % | 4.10 | % | ||||||||||
Efficiency ratio | 101.1 | % | 72.0 | % | 66.5 | % | 63.6 | % | 69.3 | % | ||||||||||
Ratio of loans to deposits | 93.1 | % | 98.2 | % | 99.5 | % | 98.9 | % | 98.1 | % | ||||||||||
Asset Quality | ||||||||||||||||||||
Net charge offs | $ | 4,484 | $ | 5,020 | $ | 1,973 | $ | 689 | $ | 919 | ||||||||||
Non-accrual loans | 25,962 | 20,019 | 13,986 | 15,716 | 13,253 | |||||||||||||||
Non-performing loans | 29,181 | 21,522 | 16,717 | 17,528 | 16,235 | |||||||||||||||
Non-performing assets | 32,582 | 24,981 | 20,270 | 20,263 | 18,626 | |||||||||||||||
Nonperforming loans/total loans | 4.23 | % | 3.09 | % | 2.45 | % | 2.65 | % | 2.48 | % | ||||||||||
Allowance for loan loss/total loans | 3.00 | % | 2.63 | % | 2.10 | % | 1.96 | % | 1.84 | % | ||||||||||
Allowance/nonperforming loans | 70.9 | % | 85.1 | % | 85.8 | % | 74.2 | % | 74.2 | % | ||||||||||
Market Data for Common Stock | ||||||||||||||||||||
Book value per share | $ | 12.88 | $ | 13.75 | $ | 14.40 | $ | 14.54 | $ | 14.56 | ||||||||||
Market value per share | ||||||||||||||||||||
High | 10.50 | 12.99 | 14.98 | 20.00 | 22.00 | |||||||||||||||
Low | 5.50 | 7.55 | 9.20 | 14.00 | 17.55 | |||||||||||||||
Period-end | 6.50 | 7.55 | 10.00 | 15.00 | 18.00 | |||||||||||||||
Period-end shares outstanding | 5,059 | 5,053 | 5,052 | 5,052 | 5,085 | |||||||||||||||
Average shares outstanding | 5,054 | 5,053 | 5,053 | 5,110 | 5,145 | |||||||||||||||
Capital and Stock Performance | ||||||||||||||||||||
Tier 1 Leverage Ratio | 9.7 | % | 7.9 | % | 8.7 | % | 8.8 | % | 8.8 | % | ||||||||||
Total capital to risk-weighted assets | 13.3 | % | 10.7 | % | 11.4 | % | 11.6 | % | 11.7 | % | ||||||||||
Dividends per common share | $ | 0.02 | $ | 0.10 | $ | 0.20 | $ | 0.20 | $ | 0.20 | ||||||||||
Dividend payout ratio | NA | NA | 256.4 | % | 60.6 | % | 54.1 | % | ||||||||||||
Price/earnings ratio (TTM) | NA | NA | 15.8 | x | 14.9 | x | 16.3 | x | ||||||||||||
Period-end common stock market price/book value | 50.5 | % | 54.9 | % | 69.4 | % | 103.2 | % | 123.6 | % |
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