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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A TO N/A
COMMISSION FILE NUMBER 0-16540
UNITED BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its Charter.)
OHIO 34-1405357
- ------------------------------- ----------------------------------
(State or other jurisdiction of (IRS) Employer Identification No.)
incorporation or organization)
201 SOUTH FOURTH STREET, MARTINS FERRY, OHIO 43935
- -------------------------------------------- ----------
(Address of principal executive offices) (ZIP Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (740) 633-0445
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE N/A
---- ---
(Title of class) (Name of each exchange on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $1.00 A SHARE
-------------------------------------
(Title of class)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED TO THE BEST
OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. {X}
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN EXCHANGE ACT RULE 12B-2).
YES [ ] NO [X]
THE AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY HELD BY
NON-AFFILIATES OF THE REGISTRANT AS OF JUNE 30, 2004 WAS $46,327,776.
REGISTRANT HAD 3,780,976 COMMON SHARES OUTSTANDING AS OF MARCH 5, 2005.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE PROXY STATEMENT FOR THE ANNUAL SHAREHOLDERS MEETING TO BE HELD
APRIL 20, 2005 ARE INCORPORATED BY REFERENCE INTO PART III.
PORTIONS OF THE ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31,
2004 ARE INCORPORATED BY REFERENCE INTO PARTS I AND II.
PART I
ITEM 1 BUSINESS
BUSINESS
United Bancorp, Inc. (Company) is a financial holding company
headquartered in Martins Ferry, Ohio. The Company has two wholly
owned subsidiary banks, The Citizens Savings Bank, Martins Ferry,
Ohio (CITIZENS) and The Community Bank, Lancaster, Ohio (COMMUNITY),
collectively "Banks".
The Banks are located in northeastern, eastern, southeastern and
south central Ohio and are engaged in the business of commercial and
retail banking in Belmont, Harrison, Tuscarawas, Carroll, Athens,
Hocking, and Fairfield counties and the surrounding localities. The
Banks provide a broad range of banking and financial services, which
include accepting demand, savings and time deposits and granting
commercial, real estate and consumer loans. CITIZENS conducts its
business through its main office in Martins Ferry, Ohio and nine
branches located in Bridgeport, Colerain, Dellroy, Dover, Jewett,
New Philadelphia, St. Clairsville, Sherrodsville, and Strasburg,
Ohio. COMMUNITY conducts its business through its seven offices in
Amesville, Glouster, Lancaster, and Nelsonsville, Ohio. COMMUNITY
offers full service brokerage service provided through UVEST(R)
member NASD/SIPC.
The markets in which the Banks' operate continue to be highly
competitive. CITIZENS competes for loans and deposits with other
retail commercial banks, savings and loan associations, finance
companies, credit unions and other types of financial institutions
within the Mid-Ohio valley geographic area along the eastern border
of Ohio, extending into the northern panhandle of West Virginia and
the Tuscarawas and Carroll County geographic areas of northeastern
Ohio. COMMUNITY also encounters similar competition for loans and
deposits throughout the Athens, Hocking, and Fairfield County
geographic areas of central and southeastern Ohio.
The Company is regulated under the Bank Holding Company Act of 1956,
as amended (the "BHC Act"), and is subject to the supervision and
examination of the Board of Governors of the Federal Reserve System
(the Federal Reserve Board). The BHC Act requires the prior approval
of the Federal Reserve Board for a bank holding company to acquire
or hold more than a 5% voting interest in any bank. The BHC Act
allows interstate bank acquisitions anywhere in the country and
interstate branching by acquisition and consolidation in those
states that did not opt out by January 1, 1997.
Other than as described more thoroughly below with respect to
activities that are "financial in nature," the Company is generally
prohibited by the Act from acquiring direct or indirect ownership or
control of more than five percent of the voting shares of any
company which is not a bank or bank holding company and from
engaging directly or indirectly in activities other than those of
managing or controlling banks or furnishing services to its
subsidiaries.
On November 12, 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was
enacted into law. The GLB Act made sweeping changes with respect to
the permissible financial services, which various types of financial
institutions may now provide. The Glass-Steagall Act, which had
generally prevented banks from affiliation with securities and
insurance firms, was repealed. Pursuant to the GLB Act, bank holding
companies may elect to become a "financial holding company,"
provided that all of the depository institution subsidiaries of the
bank holding company are "well capitalized" and "well managed" under
applicable regulatory standards. The Company has elected to be a
financial holding company.
Under the GLB Act, a financial holding company may affiliate with
securities firms and insurance companies and engage in other
activities that are financial in nature. Activities that are
"financial in nature" include securities underwriting, dealing and
market-making, sponsoring mutual funds and investment companies,
insurance underwriting and agency, merchant banking, and activities
that the Federal Reserve Board has determined to be closely related
to banking.
The Company's banking subsidiaries are also subject to limitations
with respect to transactions with affiliates.
A substantial portion of the United Bancorp's cash revenues is
derived from dividends paid by its subsidiary banks. The subsidiary
banks' ability to pay dividends is subject to various legal and
regulatory constraints.
2
The Company's banking subsidiaries are subject to primary
supervision, regulation and examination by the Ohio Department of
Financial Institutions and the Federal Deposit Insurance Corporation
(FDIC).
Federal regulators adopted risk-based capital guidelines and
leverage standards for banks and holding companies. A discussion of
the impact of risk-based capital guidelines and leverage standards
is presented in Note L to the audited consolidated financial
statements of United Bancorp, Inc., captioned "Regulatory Capital."
The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA)
provides that a holding company's controlled insured depository
institutions are liable for any loss incurred by the Federal Deposit
Insurance Corporation in connection with the default of, or any
FDIC-assisted transaction involving an affiliated insured bank or
savings association.
Noncompliance with laws and regulations by financial holding
companies and banks can lead to monetary penalties and/or an
increased level of supervision or a combination of these two items.
Management is not aware of any current instances of material
noncompliance with laws and regulations and does not anticipate any
problems maintaining compliance on a prospective basis. Recent
regulatory inspections and examinations of United Bancorp, Inc. and
its subsidiary banks have not disclosed any material instances of
noncompliance.
The earnings and growth of United Bancorp are affected not only by
general economic conditions, but also by the fiscal and monetary
policies of the federal government and its agencies, particularly
the Federal Reserve Board. The Federal Reserve Board's policies
influence the amount of bank loans and deposits and the interest
rates charged and paid thereon, and thus have an effect on earnings.
The nature of future monetary policies and the effect of such
policies on the future business and earnings of United Bancorp and
its subsidiary banks cannot be predicted.
The Banks have no single customer or related group of customers
whose banking activities, whether through deposits or lending, would
have a material impact on the continued earnings capabilities if
those activities were removed.
EMPLOYEES
The Company itself, as a holding company, has no compensated
employees. CITIZENS has 81 full time employees, with 19 of these
serving in a management capacity and 35 part time employees.
COMMUNITY has 32 full time employees, with 7 serving in a management
capacity and 18 part time employees. The Company considers employee
relations to be good at all subsidiary locations.
INDUSTRY SEGMENTS
United Bancorp and its subsidiaries are engaged in one line of
business, banking. Item 8 of this 10-K provides financial
information for United Bancorp's business.
United Bancorp's internet website is www.unitedbancorp.com.
I DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
Refer to Management's Discussion and Analysis "Average Balances, Net
Interest Income and Yields Earned and Rates Paid" set forth at page
25 of our 2004 Annual Report, which is incorporated by reference.
II INVESTMENT PORTFOLIO
A Securities available for sale at year-end 2004 decreased $3,002,000, or
2.1% over 2003, while securities held to maturity increased $647,000,
or 4.2%. In our planning process, management's prediction for 2004 was
for a steady to slightly rising interest rate environment. In the first
half of 2004, interest rates actually decreased to a level that caused
a high volume of investment securities to be called. Management
reinvested the funds into the Company's loan portfolio and a portion
back into investment securities over the course of 2004.
3
The following table sets forth the carrying amount of securities at December 31,
2004, 2003 and 2002:
DECEMBER 31,
----------------------------
(In thousands) 2004 2003 2002
-------- -------- --------
AVAILABLE FOR SALE (AT MARKET)
U.S. Govt. and agency obligations $ 74,192 $ 81,298 $ 93,263
Mortgage-backed securities 42,706 35,872 14,075
Collaterallized mortgage obligations 4,782 2,982 999
State and municipal obligations 16,118 20,642 20,714
Other securities 18 24 21
-------- -------- --------
$137,816 $140,818 $129,072
======== ======== ========
HELD TO MATURITY (AT COST)
State and municipal obligations $ 14,948 $ 15,594 $ 12,926
======== ======== ========
4
B Contractual maturities of securities at year-end 2004 were as follows:
AVERAGE
AMORTIZED ESTIMATED TAX EQUIVALENT
AVAILABLE FOR SALE COST FAIR VALUE YIELD
------------ ------------ --------------
US AGENCY OBLIGATIONS
1 - 5 Years $ 1,499,781 $ 1,496,595 3.73%
5 - 10 Years 25,878,340 25,870,073 4.55%
Over 10 Years 47,466,697 46,825,015 5.32%
------------ ------------ ----
Total 74,844,818 74,191,683 5.02%
------------ ------------ ----
MORTGAGE-BACKED SECURITIES
1 - 5 Years 861,804 860,044 3.62%
5 - 10 Years 11,477,285 11,389,315 3.79%
Over 10 Years 30,639,319 30,456,975 4.24%
------------ ------------ ----
42,978,408 42,706,334 4.22%
------------ ------------ ----
COLLATERIZED MORTGAGE OBLIGATION
1 - 5 Years 490,709 488,929 3.93%
5 - 10 Years 321,170 319,890 3.86%
Over 10 Years 4,004,588 3,973,360 2.97%
------------ ------------ ----
4,816,467 4,782,179 3.13%
------------ ------------ ----
STATE AND MUNICIPAL OBLIGATIONS
Under 1 Year 472,245 473,986 4.93%
1 - 5 Years 730,750 774,423 6.89%
5 - 10 Years 6,443,682 6,506,911 8.05%
Over 10 Years 8,488,748 8,362,713 5.40%
------------ ------------ ----
Total 16,135,425 16,118,033 5.63%
------------ ------------ ----
OTHER SECURITIES
Equity securities 4,000 18,100 0.00%
------------ ------------ ----
TOTAL SECURITIES AVAILABLE FOR SALE $138,779,118 $137,816,329 5.80%
============ ============ ====
HELD TO MATURITY
STATE AND MUNICIPAL OBLIGATIONS
Under 1 Year $ 710,272 $ 722,415 7.62%
1 - 5 Years 2,440,849 2,571,536 7.20%
5 - 10 Years 4,671,363 4,916,720 6.78%
Over 10 Years 7,125,036 7,264,334 6.70%
------------ ------------ ----
TOTAL SECURITIES HELD TO MATURITY $ 14,947,520 $ 15,475,005 6.85%
============ ============ ====
5
C Excluding holdings of U.S. Agency obligations, there were no
investments in securities of any one issuer exceeding 10% of the
Company's consolidated shareholders' equity at December 31, 2004.
III LOAN PORTFOLIO
A TYPES OF LOANS
The amounts of gross loans outstanding at December 31, 2004,
2003, 2002, 2001 and 2000 are shown in the following table
according to types of loans:
DECEMBER 31,
------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- -------- -------- --------
(In thousands)
Commercial loans $ 35,309 $ 28,049 $ 21,060 $ 21,502 $ 20,415
Commercial real estate loans 83,103 68,902 69,287 61,963 64,812
Residential real estate loans 55,062 52,237 52,535 54,153 55,931
Installment loans 41,973 49,421 45,006 45,722 55,339
-------- -------- -------- -------- --------
Total loans $215,447 $198,609 $187,888 $183,340 $196,497
======== ======== ======== ======== ========
Construction loans were not significant for the periods
discussed.
B MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST
RATES
The following is a schedule of commercial and commercial
real estate loans at December 31, 2004 maturing within the
various time frames indicated:
ONE YEAR ONE THROUGH AFTER
(In thousands) OR LESS FIVE YEARS FIVE YEARS TOTAL
-------- ----------- ---------- --------
Commercial loans $ 17,116 $ 7,965 $ 10,228 $ 35,309
Commercial real estate loans 38,948 37,629 6,526 83,103
Total $ 56,064 $ 45,594 $ 16,754 $118,412
The following is a schedule of fixed rate and variable rate
commercial and commercial real estate loans at December 31, 2004
due to mature after one year:
(In thousands) FIXED RATE VARIABLE RATE TOTAL > ONE YEAR
---------- ------------- ----------------
Commercial loans $ 8,301 $ 9,892 $ 18,193
Commercial real estate loans 5,770 38,385 44,155
---------- ------------- ----------------
Total $ 14,071 $ 48,277 $ 62,348
========== ============= ================
Variable rate loans are those loans with floating or adjustable
interest rates.
6
C RISK ELEMENTS
1. NONACCRUAL, PAST DUE, RESTRUCTURED AND IMPAIRED LOANS
The following schedule summarizes nonaccrual loans, accruing
loans which are contractually 90 days or more past due, and
impaired loans at December 31, 2004, 2003 and 2002:
DECEMBER 31,
- ------------------------------------------------------------------
(In thousands) 2004 2003 2002
------ ------ ------
Nonaccrual basis (1) $1,106 $ 101 $ 685
Accruing loans 90 days or greater past due 500 655 85
Impaired loans (2) - - -
(1) There were no restructured loans at any of the dates
indicated above.
(2) Loans considered impaired under the provisions of SFAS No.
114 and interest recognized on a cash received basis were not
considered material during any of the periods presented.
The additional amount of interest income that would have been
recorded on nonaccrual loans, had they been current, totaled
$29,809, $907 and $ 6,270 for the years ended December 31, 2004,
2003 and 2002
Interest income is not reported when full loan repayment is
doubtful, typically when the loan is impaired or payments are
past due over 90 days. Payments received on such loans are
reported as principal reductions.
A loan is impaired when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance
loans of similar nature such as residential mortgage, consumer,
and credit card loans, and on an individual loan basis for other
loans. If a loan is impaired, a portion of the allowance is
allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate or
at the fair value of collateral if repayment is expected solely
from the collateral.
2. POTENTIAL PROBLEM LOANS
The Company had no potential problem loans as of December 31,
2004 which have not been disclosed in Table C 1., but where known
information about possible credit problems of borrowers causes
management to have serious doubts as to the ability of such
borrowers to comply with the present loan repayment terms and
which may result in disclosure of such loans into one of the
problem loan categories.
3. LOAN CONCENTRATIONS
Refer to Page 54, Note K of Notes to Consolidated Financial
Statements set forth in our 2004 Annual Report, which is
incorporated herein by reference.
IV SUMMARY OF LOAN LOSS EXPERIENCE
For additional explanation of factors which influence management's
judgment in determining amounts charged to expense, refer Pages 18
and 19 of the "Management Discussion and Analysis" and Notes to
Consolidated Financial Statements set forth in our 2004 Annual
Report, which is incorporated herein by reference.
7
A ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The following schedule presents an analysis of the allowance for
loan losses, average loan data and related ratios for the years
ended December 31, 2004, 2003, 2002, 2001 and 2000:
(In thousands) 2004 2003 2002 2001 2000
-------- -------- -------- -------- --------
LOANS
Loans outstanding $215,447 $198,608 $187,888 $183,340 $196,497
Average loans outstanding $208,658 $192,725 $184,131 $187,995 $190,386
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of year $ 2,843 $ 2,971 $ 2,879 $ 2,790 $ 3,110
Loan charge-offs:
Commercial 58 250 135 268 125
Commercial real estate - 79 45 - 79
Residential real estate 16 28 84 67 275
Installment 645 459 507 728 716
-------- -------- -------- -------- --------
Total loan charge-offs 719 816 771 1,063 1,195
-------- -------- -------- -------- --------
Loan recoveries
Commercial 4 3 17 27 2
Commercial real estate - - - - 28
Residential real estate 7 3 1 10 4
Installment 242 142 215 335 254
-------- -------- -------- -------- --------
Total loan recoveries 253 148 233 372 288
-------- -------- -------- -------- --------
Net loan charge-offs 466 668 538 691 907
Provision for loan losses 618 540 630 780 587
-------- -------- -------- -------- --------
Balance at end of year $ 2,995 $ 2,843 $ 2,971 $ 2,879 $ 2,790
======== ======== ======== ======== ========
Ratio of net charge-offs to
average
8
B ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table allocates the allowance for possible loan losses
at December 31, 2004, 2003, 2002, 2001 and 2000. Management adjusts
the allowance periodically to account for changes in national trends
and economic conditions in the Banks' service areas. The allowance
has been allocated according to the amount deemed to be reasonably
necessary to provide for the probability of losses being incurred
within the following categories of loans at the dates indicated:
2004
---------------------
% OF LOANS
ALLOWANCE TO TOTAL
(In thousands) AMOUNT LOANS
--------- ----------
Loan type
Commercial $ 530 16.39%
Commercial real estate 1,136 38.57%
Residential real estate 313 25.56%
Installment 532 19.48%
Unallocated 484 N/A
--------- ------
Total $ 2,995 100.00%
========= ======
2003
---------------------
% OF LOANS
ALLOWANCE TO TOTAL
(In thousands) AMOUNT LOANS
--------- ----------
Loan type
Commercial $ 452 14.13%
Commercial real estate 1,005 34.69%
Residential real estate 387 26.30%
Installment 982 24.88%
Unallocated 17 N/A
--------- ------
Total $ 2,843 100.00%
========= ======
2002
---------------------
% OF LOANS
ALLOWANCE TO TOTAL
(In thousands) AMOUNT LOANS
--------- ----------
Loan type
Commercial $ 361 11.21%
Commercial real estate 965 36.88%
Residential real estate 403 27.96%
Installment 879 23.95%
Unallocated 363 N/A
--------- ------
Total $ 2,971 100.00%
========= ======
2001
---------------------
% OF LOANS
ALLOWANCE TO TOTAL
(In thousands) AMOUNT LOANS
--------- ----------
Loan type
Commercial $ 325 11.73%
Commercial real estate 872 33.80%
Residential real estate 381 29.54%
Installment 613 24.93%
Unallocated 688 N/A
--------- ------
Total $ 2,879 100.00%
========= ======
2000
---------------------
% OF LOANS
ALLOWANCE TO TOTAL
(In thousands) AMOUNT LOANS
--------- ----------
Loan type
Commercial $ 263 10.39%
Commercial real estate 835 32.98%
Residential real estate 461 28.46%
Installment 781 28.17%
Unallocated 450 N/A
--------- ------
Total $ 2,790 100.00%
========= ======
9
V DEPOSITS
A SCHEDULE OF AVERAGE DEPOSIT AMOUNTS AND RATES
Refer to Management's Discussion and Analysis and Results of
Operations "Average Balances, Net Interest Income and Yields
Earned and Rates Paid" set forth in our 2004 Annual Report and
incorporated herein by reference.
B MATURITY ANALYSIS OF TIME DEPOSITS GREATER THAN $100,000.
Refer to Note E of Notes to Consolidated Financial Statements set
forth in our 2004 Annual Report and incorporated herein by
reference.
VI RETURN ON EQUITY AND ASSETS
Our dividend payout ratio and equity to assets ratio:
DECEMBER 31,
2004 2003 2002
---- ---- ----
Dividend Payout Ratio 56.47% 45.74% 50.00%
Equity to Assets 8.26% 8.43% 8.89%
For other ratios refer to the inside front cover of our 2004 Annual
Report to Shareholders, incorporated herein by reference.
VII SHORT-TERM BORROWINGS
Information concerning securities sold under agreements to repurchase is
summarized as follows:
(In thousands) 2004 2003 2002
Balance at December 31, $12,612 $ 5,485 $ 7,010
Weighted average interest rate at December 31, 0.92% 0.80% 0.91%
Average daily balance during the year $ 9,013 $ 8,766 $ 8,567
Average interest rate during the year 0.96% 0.83% 1.14%
Maximum month-end balance during the year $12,632 $13,980 $11,659
Securities sold under agreements to repurchase are financing arrangements
whereby the Company sells securities and agrees to repurchase the
identical securities at the maturities of the agreements at specified
prices.
Information concerning the cash management line of credit from the Federal
Home Loan Bank of Cincinnati, Ohio is summarized as follows:
(In thousands) 2004 2003 2002
------- ------- ---------
Balance at December 31, $32,500 $15,283 $ -
Weighted average interest rate at December 31, 2.42% 1.11% 0.00%
Average daily balance during the year $29,466 $ 7,103 $ 1,722
Average interest rate during the year 1.90% 1.45% 1.83%
Maximum month-end balance during the year $36,895 $15,283 $ 6,799
No other individual component of the borrowed funds total comprised more
than 30% of shareholders' equity and accordingly is not disclosed in
detail.
10
SUPPLEMENTAL ITEM - EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following
information on the executive officers of the Company is included as
an additional item in Part I:
Executive Officers Positions held with Company;
Name Age Business Experience
- ---------------------- --- -----------------------------------------------------
James W. Everson 66 Chairman, President and Chief Executive Officer
Alan M. Hooker 53 Executive Vice President - Administration
Scott Everson 37 Senior Vice President and Chief Operating Officer
Randall M. Greenwood 41 Senior Vice President and Chief Financial Officer,
Treasurer
James A. Lodes 58 Vice President - Lending
Norman F. Assenza, Jr. 58 Vice President - Operations and Secretary
Michael A. Lloyd 36 Vice President - Information Systems
Each individual has held the position noted during the past five
years, except for the following:
Scott A. Everson served as President and Chief Operating Officer
from April 2002 to November 2004 and Senior Vice President,
Operations and Retail Banking, of The Citizens Savings Bank from May
1999 to April 2002. Prior to that he served Assistant Vice
President/Branch Manager Bridgeport Office from 1997 to May 1999. In
addition, he is currently President and Chief Executive Office and a
Director of The Citizens Savings Bank. He has held this position
since November 2004.
Michael A. Lloyd served as Senior Vice President Management
Information Systems from October 1999 to April 2002 of the Citizens
Savings Bank and prior to that he served as Vice President
Management Information Systems from April 1999 to October 1999. He
served as Data Processing Manager from 1994 to April 1999 for The
Citizens Savings Bank.
Each of these Executive Officers are serving at-will in their
current positions. The Officers have held the positions for the
following time periods: James W. Everson, 22 years, Alan M. Hooker,
6 years, Norman F. Assenza, Jr., 22 years, James A. Lodes, 9 years,
and Randall M. Greenwood, 7 years.
ITEM 2 PROPERTIES
The Company owns and operates its Main Office in Martins Ferry, Ohio and
the following offices:
Location Location
Bridgeport, Ohio Owned Sherrodsville, Ohio Owned
Colerain, Ohio Owned Glouster, Ohio Owned
Jewett, Ohio Owned Glouster, Ohio Owned
St. Clairsville, Ohio Leased Amesville, Ohio Owned
Dover, Ohio Owned Nelsonville, Ohio Owned
Dellroy, Ohio Owned Lancaster, Ohio Owned
New Philadelphia, Ohio Owned Lancaster, Ohio Owned
Strasburg, Ohio Owned Lancaster, Ohio Owned
Management believes the properties described above to be in good operating
condition for the purpose for which it is used. The properties are
unencumbered by any mortgage or security interest and is, in management's
opinion, adequately insured.
11
ITEM 3 LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to its business, to which the Company or its
subsidiaries is a party or to which any of its property is subject.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to shareholders for a vote during the
fourth quarter of 2004.
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Refer to Page 7, "Shareholder Information" of the 2004 Annual Report
To Shareholders and refer to Page 55, Note N of the 2004 Annual
Report To Shareholders for common stock trading ranges, cash
dividends declared and information relating to dividend
restrictions, which are incorporated herein by reference.
ITEM 6 SELECTED CONSOLIDATED FINANCIAL DATA
Refer to inside front cover, "Decade of Progress" of the 2004 Annual
Report To Shareholders, which is incorporated herein by reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Refer to Pages 14-28, "Management's Discussion and Analysis" of the
2004 Annual Report To Shareholders.
CRITICAL ACCOUNTING POLICY
The consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States
of America and follow general practices within the financial
services industry. The application of these principles requires
management to make certain estimates, assumptions and judgements
that affect the amounts reported in the financial statements and
footnotes. These estimates, assumptions and judgements are based on
information available as of the date of the financial statements,
and as this information changes, the financial statements could
reflect different estimates, assumptions, and judgements.
The procedures for assessing the adequacy of the allowance for loan
losses reflect our evaluations of credit risk after careful
consideration of all information available to management. In
developing this assessment, management must rely on estimates and
exercise judgement regarding matters where the ultimate outcome is
unknown such as economic factors, development affecting companies in
specific industries and issues with respect to single borrowers.
Depending on changes in circumstances, future assessments of credit
risk may yield materially different results, which may require an
increase or a decrease in the allowance for loan losses.
The allowance is regularly reviewed by management to determine
whether the amount is considered adequate to absorb probable losses.
This evaluation includes specific loss estimates on certain
individually reviewed loans, statistical losses, estimates for loan
pools that are based on historical loss experience, and general loss
estimates that are based on the size, quality and concentration
characteristics of the various loan portfolios, adverse situations
that may affect a borrower's ability to repay, and current economic
and industry conditions. Also considered as part of that judgement
is a review of each bank's trend in delinquencies and loan losses,
and economic factors.
The allowance for loan loss is maintained at a level believed
adequate by management to absorb probable losses inherent in the
loan portfolio. Management's evaluation of the adequacy of the
allowance is an estimate based on management's current judgement
about the credit quality of the loan portfolio. While the Company
strives to reflect all known risk factors in its evaluation,
judgement errors may occur.
12
The following table sets forth the Company's contractual obligations at December
31, 2004:
PAYMENT DUE BY PERIOD
LESS THAN MORE THAN
CONTRACTUAL OBLIGATIONS TOTAL 1 YEAR 1-3 YEARS 3-5 YEARS 5 YEARS
Long term debt obligations $46,680,311 $34,640,410 $ 7,844,632 $ 1,244,731 $ 2,950,538
Operating lease obligations 39,452 18,000 21,452 - -
Securities sold under agreements
to repurchase 12,612,270 12,612,270 - - -
Federal funds purchased 3,180,000 3,180,000 - - -
Other borrowed funds 399,283 399,283 - - -
Loan and standby letters
of credit commitments 28,936,689 28,936,689 - - -
----------- ----------- ----------- ----------- -----------
Total $91,848,005 $79,786,652 $ 7,866,084 $ 1,244,731 $ 2,950,538
=========== =========== =========== =========== ===========
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Refer to Page 21-23 "Asset/Liability Management and Sensitivity to
Market Risks" of the 2004 Annual Report to Shareholders, which is
incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to Page 29-58 of the 2004 Annual Report To Shareholders, which
is incorporated herein by reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 9A CONTROLS AND PROCEDURES
The Company, under the supervision, and with the participation, of
its management, including the Company's Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the design
and operation of the Company's disclosure controls and procedures as
of December 31, 2004, pursuant to the requirements of Exchange Act
Rule 13a-15. Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure
controls and procedures were effective as of December 31, 2004, in
timely alerting them to material information relating to the Company
(including its consolidated subsidiaries) required to be included in
the Company's periodic SEC filings. There was no change in the
Company's internal control over financial reporting that occurred
during the Company's fiscal quarter ended December 31, 2004 that has
materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
ITEM 9B OTHER INFORMATION
None.
13
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning executive officers of the Company is set
forth in Part I, "Supplemental Item - Executive Officers of
Registrant." Other information responding to this Item 10 is
included in the Registrant's Proxy Statement for the 2005 Annual
Meeting of Shareholders and is incorporated by reference under the
captions "Proposal 1 - Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance", on pages 6 through 10
and page 17, respectively. Information concerning The Audit
Committee Financial Expert is included in the Registrant's Proxy
Statement for the 2005 Annual Meeting of Shareholders under the
caption "Committees of the Board - Audit Committee", pages 8 through
9 and is incorporated herein by reference.
The Company's Board of Directors has adopted a Code of Ethics that
applies to its Principal Executive, Principal Financial, and
Principal Accounting Officers. A copy of the Company's Code of
Ethics is posted and can be viewed on the Company's internet web
site at http://www.unitedbancorp.com/. In the event the Company
amends or waives any provision of its Code of Ethics which applies
to its Principal Executive, Principal Financial, or Principal
Accounting Officers, and which relates to any element of the code of
ethics definition set forth in Item 406(b) of Regulation S-K, the
Company shall post a description of the nature of such amendment or
waiver on its internet web site. With respect to a waiver of any
relevant provision of the code of ethics, the Company shall also
post the name of the person to whom the waiver was granted and the
date of the waiver grant.
ITEM 11 EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference
from the captions titled "Executive Compensation and Other
Information" and "Compensation Committee Interlocks and Insider
Participation in Compensation Decisions" on pages 10 through 14 and
pages 15 and 16 respectively, of the Registrant's Proxy Statement
for 2005 Annual Meeting of Shareholders.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCK HOLDER MATTERS
The information contained on pages 2 through 3 of the Registrant's
Proxy Statement for the 2005 Annual Meeting of Shareholders relating
to "Ownership of Voting Shares" is incorporated herein by reference.
The following table is a disclosure of securities authorized for
issuance under equity compensation plans:
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN (A))
-------------------------- ------------------------- ----------------------------
EQUITY COMPENSATION
PLANS APPROVED BY
SECURITY HOLDERS 106,845 $9.57 0
EQUITY COMPENSATION
PLANS NOT APPROVED BY
SECURITY HOLDERS
TOTAL 106,845 $9.57 0
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference
from the caption titled "Compensation Committee Interlocks and
Insider Participation in Compensation Decisions" and "Certain
Transactions" on pages 15 and 16 of the Registrant's Proxy Statement
for the 2005 Annual Meeting of Shareholders.
14
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference
from the caption titled "Principal Accounting Firm Fees" on page 10
of the Registrant's Proxy Statement for the 2005 Annual Meeting of
Shareholders.
PART IV
ITEM 15 EXHIBITS AND FINANCIAL STATEMENTS/SCHEDULES
(a) The following Consolidated Financial Statements and related
Notes to Consolidated Financial Statements, together with the
report of Independent Registered Public Accounting Firm dated
January 14, 2005, appear on pages 29 through 58 of the United
Bancorp, Inc. 2004 Annual Report and are incorporated herein
by reference.
1. Financial Statements
Consolidated Statements of Financial Condition December
31, 2004 and 2003
Consolidated Statements of Earnings for the Years Ended
December 31, 2004, 2003 and 2002
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 2004, 2003 and 2002
Consolidated Statements of Cash Flows for the Years
Ended December 31, 2004, 203 and 2002
Notes to Consolidated Financial Statements for the Years
Ended December 31, 2004, 2003 and 2002
Report of Independent Registered Public Accounting Firm
2. Financial Statement Schedules
Financial statement schedules are omitted as they are
not required or are not applicable or because the
required information is included in the consolidated
financial statements or notes thereto.
3. Exhibits required by Item 601 Regulation S-K
Reference is made to the Exhibit Index of this Form
10-K.
(b) Exhibits required by Item 601 Regulation S-K
(c) See Item 15(a) (3) above.
15
UNITED BANCORP INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
(Registrant) United Bancorp, Inc.
By: /s/James W. Everson March 29, 2004
-------------------------------------------------
James W. Everson, Chairman, President & CEO
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/James W. Everson March 29, 2004
-------------------------------------------------
James W. Everson, Chairman, President & CEO
By: /s/Randall M. Greenwood March 29, 2004
-------------------------------------------------
Randall M. Greenwood, Senior Vice President & CFO
By: /s/Michael J. Arciello March 29, 2004
-------------------------------------------------
Michael J. Arciello, Director
By: /s/Terry A. McGhee March 29, 2004
-------------------------------------------------
Terry A. McGhee, Director
By: /s/John M. Hoopingarner March 29, 2004
-------------------------------------------------
John M. Hoopingarner, Director
By: /s/Richard L. Riesbeck March 29, 2004
-------------------------------------------------
Richard L. Riesbeck, Director
By: /s/L.E. Richardson, Jr. March 29, 2004
-------------------------------------------------
L.E. Richardson, Jr. , Director
By: /s/Matthew C. Thomas March 29, 2004
-------------------------------------------------
Matthew C. Thomas, Director
16
EXHIBIT INDEX
Exhibit Number Exhibit Description
3.1 Amended Articles of Incorporation (1)
3.2 Amended Code of Regulations (2)
10.1 James W. Everson Change in Control Agreement (3)
10.2 Randall M. Greenwood Change in Control agreement (3)
10.3 Alan M. Hooker Change in Control Agreement (3)
10.4 Scott A. Everson Change in Control Agreement (3)
10.5 Norman F. Assenza Change in Control Agreement (3)
10.6 James A. Lodes Change in Control Agreement (3)
10.7 Michael A. Lloyd Change in Control Agreement (3)
10.8 United Bancorp, Inc. and Subsidiaries Director Supplemental
Life Insurance Plan, covering Messrs. Hoopingarner, McGehee,
Riesbeck and Thomas. (5)
10.9 United Bancorp, Inc. and Subsidiaries Senior Executive
Supplemental Life Insurance Plan, covering James W. Everson,
Alan M. Hooker, Scott A. Everson, Randall M. Greenwood, Norman
F. Assenza, Michael A. Lloyd and James A. Lodes. (5)
10.10 United Bancorp, Inc. and United Bancorp, Inc. Affiliate Banks
Directors Deferred Compensation Plan. (5)
10.11 United Bancorp, Inc. Stock Option Plan (4)
13 2004 Annual Report
21 Subsidiaries of the Registrant (5)
23 Consent of Grant Thornton, LLP
31.1 Rule 13a-14(a) Certification - CEO
31.2 Rule 13a-14(a) Certification - CFO
32.1 Section 1350 Certification - CEO
32.2 Section 1350 Certification - CFO
(1) Incorporated by reference to Appendix B to the registrant's Definitive
Proxy Statement filed with the Securities and Exchange Commission on March
14, 2001.
(2) Incorporated by reference to Appendix C to the registrant's Definitive
Proxy Statement filed with the Securities and Exchange Commission on March
14, 2001.
(3) Incorporated by reference to the registrant's 10-K filed with the
Securities and Exchange Commission on March 27, 2003.
(4) Incorporated by reference to Exhibit A to the registrant's Definitive
Proxy Statement filed with the Securities and Exchange Commission on March
11, 1996.
(5) Incorporated by reference to the registrant's 10-K filed with the
Securities and Exchange Commission on March 29, 2004.