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8-K - UNITED BANCORP, INC. FORM 8-K - UNITED BANCORP INC /MI/form8kearnings.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE:
CONTACT:  
Robert K. Chapman
February 25, 2011
 
United Bancorp, Inc.
   
734-214-3801
 

UNITED BANCORP, INC.
ANNOUNCES REVISION OF FOURTH QUARTER
AND FULL YEAR UNAUDITED 2010 EARNINGS

ANN ARBOR, MI – United Bancorp, Inc. (OTCBB: UBMI) today announced an adjustment to its earnings for the fourth quarter of 2010 and full year ended December 31, 2010. The adjustment relates to the Company's recognition of additional impairment of a loan to one borrower and the Company's corresponding increase in the amount of its Allowance for Loan Losses (ALL) at December 31, 2010 to take into account the additional impairment of the loan. United previously issued a press release on January 28, 2011 in which it announced its earnings for these periods.

During the ongoing finalization of its financial statements and preparation of its Annual Report on Form10-K for the year ended December 31, 2010 and subsequent to its January 28, 2011 earnings press release, the Company received new information concerning one loan to one commercial loan customer. After considering the new information, the Company has determined that the amount of impairment on the loan had increased as of December 31, 2010. As a consequence, management determined that an additional provision of $1.38 million to the Company’s ALL in the fourth quarter of 2010 was warranted.

This change affects the Company’s unaudited financial statements for the three month and one year periods ended December 31, 2010. The change resulted in a net loss for the fourth quarter of $427,000, compared to previously-reported net income of $484,000, for a decrease of $911,000. As a result of this adjustment, the Company’s revised net loss was $3.708 million for the year ended December 31, 2010, compared to the previously-reported net loss of $2.797 million. For the fourth quarter of 2010, basic and diluted loss per share was $0.11, and for the full year ended December 31, 2010, basic and diluted loss per share was $0.89.

Following are revised key asset quality and capital performance measures as of December 31, 2010 as compared to the measures announced in the earnings press release dated January 28, 2011.

Asset Quality
 
As-Reported
   
Revised
   
Change
 
Nonperforming loans/portfolio loans
    4.57 %     4.94 %     0.37 %
Nonperforming assets/total assets
    3.64 %     3.89 %     0.25 %
Allowance for loan loss/total loans
    4.02 %     4.25 %     0.23 %
Allowance/nonperforming loans
    87.8 %     86.0 %     -1.8 %
                         
Capital and Stock Performance
                       
Book value per share
  $ 5.79     $ 5.72     $ (0.07 )
Tangible book value per share
    5.79       5.72       (0.07 )
Tier 1 Leverage Ratio
    10.4 %     10.2 %     -0.2 %
Tangible common equity to total assets
    8.5 %     8.4 %     -0.1 %
Total capital to risk-weighted assets
    16.5 %     16.3 %     -0.2 %

We have set forth below the Company’s unaudited consolidated financial highlights, unaudited consolidated balance sheets and unaudited consolidated statements of income for the fourth quarter of 2010 and full year ended December 31, 2010. This unaudited financial information replaces the

 
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unaudited consolidated financial highlights, unaudited consolidated balance sheets and unaudited consolidated statements of income contained in United Bancorp, Inc.'s previous earnings press release of January 28, 2011.

These changes will be reflected in United Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010, which will be filed on or about the date of this press release. For additional information about our financial condition and results of operations as of and for the three and twelve months ended December 31, 2010, please refer to the 2010 Form 10-K.

About United Bancorp, Inc.

United Bancorp, Inc. is a community based financial services company that strives to provide financial solutions to the markets and clients that we serve based on their unique circumstances and needs. We provide our services through the Bank's system of sixteen banking offices, one trust office, and 20 automated teller machines, located in Washtenaw, Lenawee and Monroe Counties, Michigan. 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.

Management's determination of the provision and allowance for loan losses, the appropriate carrying value of intangible assets (including mortgage servicing rights and deferred tax assets) and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) involves judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. Forward-looking 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. United Bancorp, Inc. undertakes no obligation to update, clarify or revise forward-looking statements to reflect developments that occur or information obtained after the date of this report.

Risk factors include, but are not limited to, the risk factors described in “Item 1A – Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010.These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

Non-GAAP Financial Information

This press release includes disclosures about our pre-tax, pre-provision income and return on average assets. These disclosures are non-GAAP financial measures. For additional information about our pre-tax, pre-provision income and return on average assets, please see the unaudited consolidated financial statements that follow.

Unaudited Consolidated Financial Statements Follow.

 
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United Bancorp, Inc. and Subsidiary
 
Comparative Consolidated Balance Sheet Data (Unaudited)
 
   
Dollars in thousands
 
Dec. 31,
   
Sep. 30,
   
Change
   
Dec. 31,
   
Change
 
Period-end Balance Sheet
 
2010
   
2010
     $       %       2009      $       %  
Assets
                                               
 Cash and due from banks
  $ 10,623     $ 14,761     $ (4,138 )     -28.0 %   $ 10,047     $ 576       5.7 %
 Interest bearing bal. with banks
    95,599       80,053       15,546       19.4 %     115,247       (19,648 )     -17.0 %
 Federal funds sold
    -       -       -       0.0 %     295       (295 )     -100.0 %
 Total cash & cash equivalents
    106,222       94,814       11,408       12.0 %     125,589       (19,367 )     -15.4 %
                                                         
 Securities available for sale
    124,544       109,489       15,055       13.8 %     92,146       32,398       35.2 %
 FHLB Stock
    2,788       2,992       (204 )     -6.8 %     2,992       (204 )     -6.8 %
 Loans held for sale
    10,289       15,674       (5,385 )     -34.4 %     7,979       2,310       29.0 %
                                                         
 Portfolio loans
                                                       
 Personal
    108,544       110,691       (2,147 )     -1.9 %     110,702       (2,158 )     -1.9 %
 Business
    392,577       403,404       (10,827 )     -2.7 %     447,336       (54,759 )     -12.2 %
 Residential mortgage
    90,864       90,189       675       0.7 %     92,015       (1,151 )     -1.3 %
 Total portfolio loans
    591,985       604,284       (12,299 )     -2.0 %     650,053       (58,068 )     -8.9 %
 Allowance for loan losses
    25,163       23,491       1,672       7.1 %     20,020       5,143       25.7 %
 Net loans
    566,822       580,793       (13,971 )     -2.4 %     630,033       (63,211 )     -10.0 %
                                                         
 Premises and equipment, net
    11,241       11,443       (202 )     -1.8 %     12,332       (1,091 )     -8.8 %
 Bank owned life insurance
    13,391       13,279       112       0.8 %     12,939       452       3.5 %
 Other assets
    26,413       24,184       2,229       9.2 %     25,318       1,095       4.3 %
Total Assets
  $ 861,710     $ 852,668     $ 9,042       1.1 %   $ 909,328     $ (47,618 )     -5.2 %
                                                         
Liabilities
                                                       
 Deposits
                                                       
 Non-interest bearing
  $ 113,206     $ 100,381     $ 12,825       12.8 %   $ 99,893     $ 13,313       13.3 %
 Interest bearing
    620,792       640,121       (19,329 )     -3.0 %     682,908       (62,116 )     -9.1 %
 Total deposits
    733,998       740,502       (6,504 )     -0.9 %     782,801       (48,803 )     -6.2 %
 Short term borrowings
    1,234       1,625       (391 )     -24.1 %     -       1,234       100.0 %
 FHLB advances outstanding
    30,321       30,339       (18 )     -0.1 %     42,098       (11,777 )     -28.0 %
 Other liabilities
    3,453       2,807       646       23.0 %     3,562       (109 )     -3.1 %
Total Liabilities
    769,006       775,273       (6,267 )     -0.8 %     828,461       (59,455 )     -7.2 %
                                                         
Shareholders' Equity
    92,704       77,395       15,309       19.8 %     80,867       11,837       14.6 %
Total Liabilities and Equity
  $ 861,710     $ 852,668     $ 9,042       1.1 %   $ 909,328     $ (47,618 )     -5.2 %
                                                         
     
Fourth Quarter
   
Year to Date
 
Average Balance Data
      2010       2009    
% Change
      2010       2009    
% Change
 
Total loans
    $ 612,534     $ 679,090       -9.8 %   $ 634,678     $ 693,066       -8.4 %
Earning assets
      818,646       870,253       -5.9 %     834,642       848,049       -1.6 %
Total assets
      863,555       904,218       -4.5 %     874,768       883,711       -1.0 %
Deposits
      747,188       777,938       -4.0 %     757,236       752,020       0.7 %
Shareholders' Equity
      79,808       81,913       -2.6 %     79,544       84,333       -5.7 %
                                                   
Asset Quality
                                                 
Net charge offs
    $ 3,258     $ 11,282       -71.1 %   $ 16,387     $ 24,061       -31.9 %
Non-accrual loans
      28,661       26,188       9.4 %                        
Non-performing loans
      29,244       31,662       -7.6 %                        
Non-performing assets
      33,548       34,465       -2.7 %                        
Nonperforming loans/portfolio loans
      4.94 %     4.87 %     1.4 %                        
Nonperforming assets/total assets
      3.89 %     3.79 %     2.7 %                        
Allowance for loan loss/total loans
      4.25 %     3.08 %     38.0 %                        
Allowance/nonperforming loans
      86.0 %     63.2 %     36.1 %                        

 
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United Bancorp, Inc. and Subsidiary
 
Comparative Consolidated Income Statement and Performance Data (Unaudited)
 
   
Dollars in thousands except per share data
 
Three months ended Dec. 31,
   
Twelve months ended Dec. 31,
 
Consolidated Income Statement
 
2010
   
2009
   
% Change
   
2010
   
2009
   
% Change
 
 Interest Income
                                   
 Interest and fees on loans
  $ 8,744     $ 10,104       -13.5 %   $ 36,411     $ 40,379       -9.8 %
 Interest on investment securities
    765       790       -3.2 %     3,124       3,234       -3.4 %
 Interest on fed funds sold & bank balances
    58       61       -4.9 %     235       153       53.6 %
 Total interest income
    9,567       10,955       -12.7 %     39,770       43,766       -9.1 %
                                                 
 Interest Expense
                                               
 Interest on deposits
    1,526       2,356       -35.2 %     7,353       10,402       -29.3 %
 Interest on short term borrowings
    21       -       100.0 %     144       -       100.0 %
 Interest on FHLB advances
    285       419       -32.0 %     1,190       1,849       -35.6 %
 Total interest expense
    1,832       2,775       -34.0 %     8,687       12,251       -29.1 %
 Net Interest Income
    7,735       8,180       -5.4 %     31,083       31,515       -1.4 %
 Provision for loan losses
    4,930       5,300       -7.0 %     21,530       25,770       -16.5 %
 Net Interest Income After Provision
    2,805       2,880       -2.6 %     9,553       5,745       66.3 %
                                                 
 Noninterest Income
                                               
 Service charges on deposit accounts
    555       655       -15.3 %     2,191       2,731       -19.8 %
 Trust & Investment fee income
    1,191       1,081       10.2 %     4,518       4,070       11.0 %
 Gains (losses) on securities transactions
    -       (11 )     -100.0 %     31       (24 )     -229.2 %
 Income from loan sales and servicing
    2,081       1,528       36.2 %     6,351       6,689       -5.1 %
 ATM, debit and credit card fee income
    505       475       6.3 %     1,940       2,174       -10.8 %
 Income from bank-owned life insurance
    111       123       -9.8 %     451       493       -8.5 %
 Other income
    110       171       -35.7 %     816       766       6.5 %
 Total noninterest income
    4,553       4,022       13.2 %     16,298       16,899       -3.6 %
                                                 
 Noninterest Expense
                                               
 Salaries and employee benefits
    4,724       4,269       10.7 %     17,217       17,904       -3.8 %
 Occupancy and equipment expense
    1,278       1,276       0.2 %     5,207       5,255       -0.9 %
 External data processing
    307       313       -1.9 %     1,206       1,590       -24.2 %
 Advertising and marketing expenses
    136       33       312.1 %     610       605       0.8 %
 Attorney & other professional fees
    191       346       -44.8 %     1,561       1,183       32.0 %
 Director fees
    60       68       -11.8 %     325       404       -19.6 %
 Expenses relating to ORE property
    450       301       49.5 %     1,698       1,797       -5.5 %
 FDIC Insurance premiums
    401       620       -35.3 %     1,806       1,954       -7.6 %
 Goodwill impairment
    -       -       0.0 %     -       3,469       -100.0 %
 Other expense
    678       727       -6.7 %     2,867       2,955       -3.0 %
 Total noninterest expense
    8,225       7,953       3.4 %     32,497       37,116       -12.4 %
 Loss Before Federal Income Tax
    (867 )     (1,051 )  
NM
      (6,646 )     (14,472 )     -54.1 %
 Federal income tax benefit
    (440 )     (569 )  
NM
      (2,938 )     (5,639 )     -47.9 %
 Net Loss
  $ (427 )   $ (482 )  
NM
    $ (3,708 )   $ (8,833 )     -58.0 %
                                                 
Performance Ratios
                                               
 Return on average assets
    -0.20 %     -0.21 %             -0.42 %     -1.00 %        
 Return on average equity
    -2.12 %     -2.34 %             -4.66 %     -10.47 %        
 Pre-tax, pre-provision ROA (1) (2)
    1.88 %     1.88 %     0.1 %     1.70 %     1.67 %     1.8 %
 Net interest margin (FTE)
    3.81 %     3.81 %     -0.1 %     3.79 %     3.80 %     -0.3 %
 Efficiency ratio
    66.3 %     63.9 %     3.7 %     67.8 %     75.5 %     -10.2 %
                                                 
Common Stock Performance
                                               
 Basic & diluted loss per share (3)
  $ (0.11 )   $ (0.15 )           $ (0.89 )   $ (1.93 )        
 Dividends per share
    0.00       0.00       0.0 %     0.00       0.02       -100.0 %
 Dividend payout ratio
    0.0 %     0.0 %     0.0 %     0.0 %  
NA
      0.0 %
 Book value per share
                          $ 5.72     $ 11.98       -52.3 %
 Tangible book value per share
                            5.72       11.98       -52.3 %
 Market value per share (4)
                            3.50       5.25       -33.3 %

 
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United Bancorp, Inc. and Subsidiary
 
Trends of Selected Consolidated Financial Data (Unaudited)
 
   
Dollars in thousands except per share data
 
2010
   
2009
 
Balance Sheet Data
 
4th Qtr
   
3rd Qtr
   
2nd Qtr
   
1st Qtr
   
4th Qtr
 
 Period-end:
                             
Portfolio loans
  $ 591,985       604,284     $ 622,812     $ 634,014     $ 650,053  
Total loans
    602,274       619,958       641,395       644,245       658,032  
Allowance for loan losses
    25,163       23,491       23,362       21,351       20,020  
Earning assets
    825,205       812,492       808,546       858,667       868,712  
Total assets
    861,710       852,668       849,111       900,790       909,328  
Deposits
    733,998       740,502       730,204       781,936       782,801  
Shareholders' Equity
    92,704       77,395       76,397       79,829       80,867  
 Average:
                                       
Total loans
  $ 612,534       629,067     $ 642,702     $ 654,936     $ 679,090  
Earning assets
    818,646       807,964       832,478       865,738       870,253  
Total assets
    863,555       846,756       878,427       909,196       904,218  
Deposits
    747,188       732,339       763,731       787,294       777,938  
Shareholders' Equity
    79,808       77,597       79,945       81,072       81,913  
                                         
Income Statement Summary
                                       
 Net interest income
  $ 7,735       7,964     $ 7,677     $ 7,708     $ 8,180  
 Non-interest income
    4,553       4,812       3,709       3,224       4,022  
 Non-interest expense
    8,225       8,315       8,298       7,659       7,953  
 Pre-tax, pre-provision income (1) (2)
    4,063       4,461       3,088       3,273       4,249  
 Provision for loan losses
    4,930       3,150       8,650       4,800       5,300  
 Federal income tax
    (440 )     284       (2,063 )     (719 )     (569 )
 Net income (loss)
    (427 )     1,027       (3,499 )     (809 )     (482 )
 Basic & diluted income (loss) per share (3)
  $ (0.11 )   $ 0.14     $ (0.74 )   $ (0.21 )   $ (0.15 )
                                         
Performance Ratios and Liquidity
                                       
 Return on average assets
    -0.20 %     0.47 %     -1.60 %     -0.36 %     -0.21 %
 Return on average common equity
    -2.12 %     5.25 %     -17.56 %     -4.05 %     -2.34 %
 Pre-tax, pre-provision ROA (1) (2)
    1.88 %     2.08 %     1.41 %     1.44 %     1.88 %
 Net interest margin (FTE)
    3.81 %     3.97 %     3.76 %     3.69 %     3.81 %
 Efficiency ratio
    66.3 %     64.5 %     72.1 %     69.0 %     63.9 %
 Ratio of loans to deposits
    80.7 %     81.6 %     85.3 %     81.1 %     83.0 %
                                         
Asset Quality
                                       
 Net charge offs
  $ 3,258       3,021     $ 6,639     $ 3,469     $ 11,282  
 Non-accrual loans
    28,661       27,680       30,319       29,712       26,188  
 Non-performing loans
    29,244       29,606       31,876       31,642       31,662  
 Non-performing assets
    33,548       33,292       34,956       34,995       34,465  
 Nonperforming loans/portfolio loans
    4.94 %     4.90 %     5.12 %     4.99 %     4.87 %
 Nonperforming assets/total assets
    3.89 %     3.90 %     4.12 %     3.88 %     3.79 %
 Allowance for loan loss/portfolio loans
    4.25 %     3.89 %     3.75 %     3.37 %     3.08 %
 Allowance/nonperforming loans
    86.0 %     79.3 %     73.3 %     67.5 %     63.2 %
                                         
Market Data for Common Stock
                                       
 Book value per share
  $ 5.72       11.25     $ 11.05     $ 11.76     $ 11.98  
 Market value per share (4)
                                       
High
    4.00       6.25       7.00       8.50       6.50  
Low
    2.65       3.65       4.50       4.35       5.00  
Period-end
    3.50       3.65       6.25       7.00       5.25  
 Period-end shares outstanding
    12,667       5,083       5,083       5,072       5,066  
 Average shares outstanding
    6,320       5,077       5,078       5,068       5,066  

 
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Quarterly data (continued)
 
2010
   
2009
 
   
4th Qtr
   
3rd Qtr
   
2nd Qtr
   
1st Qtr
   
4th Qtr
 
Capital and Stock Performance
                             
 Tier 1 Leverage Ratio
    10.2 %     8.5 %     8.1 %     8.4 %     8.6 %
 Tangible common equity to total assets
    8.4 %     6.7 %     6.6 %     6.6 %     6.7 %
 Total capital to risk-weighted assets
    16.3 %     13.3 %     12.9 %     13.4 %     13.2 %
 Dividends per common share
  $ -     $ -     $ -     $ -     $ -  
 Dividend payout ratio
    0.0 %     0.0 %     0.0 %     0.0 %     0.0 %
 Price/earnings ratio (TTM)
 
NA
   
NA
   
NA
   
NA
   
NA
 
 Period-end common stock market price/book value
    61.2 %     32.5 %     56.5 %     59.5 %     43.8 %
                                         
(1)
 
 
 
In an attempt to evaluate the trends of net interest income, noninterest income and noninterest expense, the Company's management focuses on pre-tax, pre-provision income and return on average assets as useful and consistent measures of the Company's earning capacity. This calculation adjusts net income before tax by the amount of the Company's provision for loan losses and one-time goodwill impairment charge in 2009. While this information is not consistent with, or intended to replace, presentation under generally accepted accounting principles, it is presented here for comparison.
 
     
 
A reconciliation of pre-tax, pre-provision income for the years ended December 31, 2010 and 2009 follows:
         
                                           
     
For the year ended December 31,
                         
        2010       2009                          
 
Pre-tax, pre-provision income
  $ 14,884     $ 14,767                          
 
Provision for loan losses
    21,530       25,770                          
 
Goodwill impairment charge
    -       3,469                          
 
Loss before income taxes
    (6,646 )     (14,472 )                        
 
Income taxes
    (2,938 )     (5,639 )                        
 
Net loss
  $ (3,708 )   $ (8,833 )                        
                                           
(2)
Net income before provision for loan loss, goodwill impairment charge and income taxes, divided by average total assets.
 
(3)
 
As a result of a large number of shares issued in the fourth quarter of 2010, the sum of the EPS figures for the four quarters of 2010 do not equal the calculation of EPS for the full year 2010.
 
(4)
Market value per share is based on the last reported transaction on OTCBB before period end.
 

 
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