We Are UNITED...To Better Serve You!
A N N UA L R E P O R T
We Are UNITED...To Better Serve You! A Letter from the President and CEO
To the shareholders of United Bancorp, Inc….
s United Bancorp, Inc. (UBCP) continued to operate in an extremely
unsettled economic environment this past year, I am extremely proud to
report on the high performance achieved and level of earnings produced
by our Company in 2021. This past year, UBCP reported diluted earnings
per share of $1.62 and net income of $9,451,000. These levels were $0.23 per share,
or 17%, and $1,497,000, or 19%, greater than the respective levels for each of these
earnings metrics reported the previous year. And, yes… at these levels, our
Company has produced record earnings, once again, for the fifth consecutive year-
-- even though our general economy and overall operations continue to be greatly
impacted by the pandemic. Although our economic recovery may be going more
slowly than we all would like (and, with a few speedbumps as different variants of the virus emerge), we remain
optimistic that the worst is now behind us. In that spirit, we look forward to what the new year will have in store
for us and the opportunity to grow our Company to even greater heights!
Scott A. Everson
President and CEO
The Ongoing Headwinds From the Covid Pandemic on Our Economy (and, Company): Even though our economy continues on its road
to full recovery from the impact of the events that have occurred for the majority of the past two years relating to the Covid pandemic, we
did see steady progress in its recovery therefrom throughout the course of 2021. Accordingly, our economy did perform more closely to
the normalized, pre-pandemic level this past year; especially, as the year progressed. With the rollout of the Covid Vaccine earlier in 2021
and its more widespread distribution throughout the course of the year, we did see our economy begin to reopen and economic activity
pick-up, once again. Although we did have newer variants of Covid-19 emerge, such as Delta and Omicron, our country was in a much
better position to deal with the impacts thereof and continue to make progress in its recovery. Even as our economy operated at a slightly
more optimum level than the previous year, we still had many challenges with which we were confronted and had to overcome. Inflation
reared its ugly head as our supply chains continued to be somewhat disrupted and demand for goods elevated. Additionally, increased
competition to recruit and retain qualified employees drove wage levels higher (while creating some staffing and delivery challenges for
our Company). As the year progressed and to combat general price increases (which proved to be more than simply “transitory”), we
began to see the general tightening of our monetary policy and the threat of higher interest rates emerge. After experiencing Zero Interest
Rate Policy (ZIRP) for the better part of two years, this is actually somewhat of a welcome development and we are hopeful to see interest
rates increase in a steady and predictable fashion as our economy strengthens. Assuming that this tightening cycle is orderly and
controlled, I believe that our Company is well positioned to grow and prosper at levels greater than we have seen the last two years.
Regardless, the continuation of the pandemic-related headwinds this past year continued to make it challenging to grow our Company
toward its $1 billion asset goal and produce stellar bottom line results as demand for loans remained subdued and general costs
increased. Therefore, considering all of these aforementioned challenges… it is very gratifying to report on the record year of
performance for United Bancorp, Inc. in 2021.
Continuing a Trend of Positive Performance this Past Year: As previously mentioned, United Bancorp, Inc. (UBCP) achieved record
earnings in 2021, which is the fifth consecutive year for this accomplishment! For the year ending December 31, 2021, UBCP produced
net income of $9,451,000 and diluted earnings per share of $1.62. Our Company achieved this level of earnings performance even though
we only saw marginal growth in our loans outstanding and a fairly significant decline in our securities portfolio balance. As of December
31, 2021, gross loans were $454.4 million, which was an increase of $10.9 million, or 2.5%, over the previous year. Historically speaking,
this level of loan growth is considered rather low. The marginal growth in our loan portfolio was highly reflective of the limited lending
UNITEDBANCORP INC.
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1
A Letter from the President and CEO - Continued
opportunities which continued to confront our industry over the course of the past year due to the lingering effect of economic challenges
created by the pandemic. Even at this lower level, our Company’s loan growth this past year was in-line with our peers. In addition,
average securities and other restricted stock was $135.3 million at year-end, which was a decrease of $32.1 million, or 19.2%, from the
previous year. With interest rates still relatively low from a historical perspective and the threat of increasing rates in the near term,
Management did not think that the timing was ideal to leverage our securities portfolio. Without the addition of new securities to our
investment portfolio, we experienced a decline in our investment securities balances as many of our revenue bonds had redemptions in
the lower rate environment in which we were operating. Also contributing to a decline in our securities portfolio balance was the sale of
approximately $12 million in municipal securities in the third quarter of 2021. With the heightened probability of increasing rates in the
short term, Management believed that this was a prudent action to take and it produced a gain for our Company of $1,250,000. Unlike
2020, where the sale of investment securities produced gains that greatly helped to fortify our allowance for loan losses during the most
critical and uncertain time of the pandemic, this past year’s gain on the sale of investment securities was harvested to take advantage of
an opportune situation with the prospect of reinvesting the sold balances within a reasonable timeframe.
Considering our marginal loan growth and the decline in our average securities and other restricted stock (along with the near zero percent
interest rate environment in which we have operated for the past twenty-four months), our level of both interest income and loan fees
generated this past year declined from the levels earned the previous year. As of December 31, 2021, total interest income (including loan
fees) was down $2.92 million, or 10.6%, from the level achieved in 2020. We are optimistic that as our economy starts to more fully
recover and as interest rates potentially rise in the near term, we will have better opportunities to leverage our securities portfolio in-line
with our previous level (especially, in tax-exempt securities) and ramp-up our loan production to levels at which we are more historically
accustomed; therefore, increasing our level of higher yielding assets, improving our overall tax efficiency and generating more interest
and loan fee income.
As we have previously disclosed, United Bancorp, Inc. (UBCP) was properly positioned from a sensitivity perspective to benefit from
declining rates over the course of the past two years. Even though we had already experienced a significant reduction in our interest
expense levels in 2020 and saw a tremendous inflow of retail funding into our Company in 2021, this past year we were able to, once
again, lower our total interest expense. This reduction in our interest expense helped to mitigate the decline in the level of net interest
income that UBCP realized in the highly volatile environment in which we continued to operate. For the year, total deposits increased by
$25.6 million or 4.4%. We saw lower-costing retail funding, consisting of demand and savings balances, increase by $50.1 million, or
10.0%, while our higher-costing time deposit balances declined by $24.5 million or 30.3%. While we did experience an increase in our
total deposits this past year, we were able to reduce total interest expense by $2.1 million, or 45.2%, as compared to 2020. Even with
this substantial reduction in total interest expense in 2021, our Company still experienced an overall decrease in the level of net interest
income that it realized of $783,000, which is a decline of 3.4% over the previous year. We are optimistic that UBCP will achieve a higher
level of net interest income as our economy further recovers from the effects of the pandemic and gets back to a more normalized level
of performance--- potentially in the near term.
United Bancorp, Inc. (UBCP) has successfully maintained credit-related strength and stability within its loan portfolio over the course of
the pandemic and this positive trend continued for our Company in 2021. As of December 31, 2021, UBCP’s total nonaccrual loans and
loans past due thirty plus days were $4.6 million or 0.90% of gross loans. Further, net loans charged off for 2021, excluding overdrafts,
was $108,000 or 0.02% annualized. Considering UBCP’s overall sound credit quality and the improving economy, our Company had
credit reserve releases (or, negative provisioning) of $1,225,000 over the course of this past year. This “non-core” income realized in
2021 resulted directly from the substantial build-up of our allowance for loan losses the previous year to prepare for the catastrophic
losses that potentially could have arisen as a result of the (hopefully) once-in-a-lifetime Covid pandemic. Quite simply, the loan loss
reserve build-up that occurred in 2020 due to the risks posed by the onset of the pandemic and ensuing economic slow-down have, so
far, not led to deterioration of our Company’s credit quality nor an increase in loan related losses. Assuming that our trend in solid credit
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2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
quality continues and barring any unforeseen events that would have a negative impact thereon, our Company anticipates being able to
release additional reserves, once again, in 2022.
The challenges with which United Bancorp, Inc. (UBCP) has been confronted over the course of the past two years has challenged our
Company-- more than any other time in our history-- to focus on process improvement and cost containment in order to offset the
pressure on our bottom line. At the same time, we have had to allocate limited resources to and prudently spend money on investments
that will ensure our future relevancy. Focusing internally, we have continued to improve many processes which has led to (or, will lead
to) various efficiency gains and optimization of our delivery. We have eliminated unnecessary expenses while spending money on staffing
optimization and technological infrastructure, so that we can more effectively compete within our industry by having highly skilled team
members and cutting-edge systems deliver our products and services in a manner that is demanded by the markets that we proudly serve.
As a result of this inward focus, this past year our Company formed a Process Improvement Team (Pit Crew) which is comprised of valued
team members from all areas of our operation. The primary vision of this team is to streamline and create more efficient processes,
eliminate unnecessary expenses and perfect a more appealing, customer-centric delivery which we proudly call the Unified Experience.
Customer satisfaction has always been a differentiator for our Company and we are now even more focused on providing the highest
quality service as a top performing community banking organization. We are truly excited about the production of the “Pit Crew” in 2021
and look forward to the innovation and change that they will continue to instigate and inspire in the coming years.
Relating to cost containment matters, this past year we closed our Loan Production Office in Wheeling, West Virginia in the second
quarter. Not being a full-service office, the personnel at this office were reassigned to other work spaces that did not create additional
expense for our Company. In addition, in the fourth quarter we effected the closure of our Dillonvale, Ohio Banking Center which was
consolidated into two other banking centers located within close proximity to this market. Each of these events have had minimal
customer impact and will create cost savings that we anticipate more fully recognizing in 2022. Even though we did keenly focus on
reducing our non-interest expense levels in 2021, total noninterest expense increased by $501,000 or 2.8%. With a focus on the future,
most of this expense was related to our new Moundsville, West Virginia Banking Center which was opened for the entire year in 2021,
overall higher wage and benefit levels, and the additional expense related to our investment in and the higher utilization of our technology.
Our Company is fortunate to have invested in previous years in a digital delivery system that has become better accepted and more highly
utilized by our customer base since the inception of the pandemic. Quite simply, investments such as this will help us grow our company,
develop more solid and well-rounded relationships and ensure our future relevancy.
At United Bancorp, Inc. (UBCP), our primary focus is protecting the investment of our shareholders in our Company and rewarding them
at a high level by growing their value and paying an attractive cash dividend. Presently, our cash dividend produces one of the highest
yields in our industry! Accordingly, this past year we remained focused on being an efficient, productive and profitable Company that is
well capitalized. In 2021, our valued shareholders were nicely rewarded with a year-over-year increase in the cash dividends paid of
$0.115, or 20.2%, which is inclusive of a special cash dividend of $0.10 paid in the first quarter. Also this past year, our shareholders saw
their market value increase by $3.47, or 26.3%, to a level of $16.65 as of December 31, 2021. Relating to our overall levels of capitalization,
UBCP continues to have very sound levels of capital. With our Company producing record earnings and, having a Return on Assets (ROA)
of 1.31% and a Return on Equity (ROE) of 13.28%, capital levels and measurements were further enhanced over the course of this past
year. Overall, UBCP saw its shareholders’ equity grow by $3.4 million, or 4.9%, and its tangible book value increase by 5.4%. Going
forward, we will continue to strive to protect your investment in UBCP at the highest level while producing returns and paying dividends
to which you have grown accustomed. As always, we are truly appreciative of your continued support!
I am extremely proud to report that with our high level of performance and sound operation in 2021, United Bancorp, Inc. (UBCP) was
recognized for its achievements. In the second quarter, UBCP was notified that it had been awarded the Raymond James Community
Bankers Cup on the basis of its superior performance during the previous twelve months. The Raymond James Cup is awarded each year
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
3
A Letter from the President and CEO - Continued
to the top ten percent (10%) of community banks on the basis of various profitability, operational, efficiency, and balance sheet metrics.
Exchange-traded domestic banks with assets between $500 million and $10 billion are evaluated and considered for the award. Also, at
the beginning of the third quarter of 2021, UBCP was notified that it was named to the American Banker’s “Top 200 Community Banks.”
American Banker rated UBCP 124 on its Top 200 Community Banks list--- consisting of banks with assets under $2.0 billion--- based on
an average return on equity for the previous three years as of December 31, 2020. It was very gratifying to be recognized for our
exemplary performance during these very trying times. This recognition truly affirms that there are a lot of good things going on at our
Company. For this, we are truly humbled and proud of what we have accomplished… but, we firmly realize that we cannot rest on our
past laurels and need to perform at this high level each and every year!
These past two years have been very challenging for both our industry and United Bancorp, Inc. (UBCP). But, I firmly believe that the
challenges with which we have been confronted and dealt during this timeframe have made UBCP a more fundamentally sound Company
with a strong focus on the potential of the future. Although the pandemic and related economic slowdown took us off our path of growth
for the past two years, we still have our sights set on becoming a $1.0 billion asset community banking organization in order to be at a
scale to achieve additional operating efficiencies, greater profitability and, most importantly, a higher market capitalization which will lead
to more opportunities for our acquisition-related opportunities for which UBCP is strongly positioned at present. With the current rebound
that our economy is experiencing, I firmly believe that we will have quality chances in each of these areas on which our Company can
capitalize. With our Company’s vision of “creating better lives and futures for the people and communities that we proudly serve” and
having a team that truly lives the “Unified Way,” I have great confidence that UBCP, and its affiliate bank… Unified Bank, can achieve
whatever they seek. Having a “United and Unified” team, management, board of directors and shareholders group is key to our successful
and profitable operations. Together, we will accomplish more!
Scott A. Everson
President and Chief Executive Officer
ceo@unitedbancorp.com
February 19, 2022
Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the
Securities Exchange Act of 1934. Forward-looking statements, which are based on various assumptions (some of which are beyond the Company's control),
may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate,"
"anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set
forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the
market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in
government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions
and the integration of acquired businesses, credit risk management, asset/liability management, changes in the financial and securities markets, including
changes with respect to the market value of our financial assets, and the availability of and costs associated with sources of liquidity. The Company
undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
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2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
D I V I D E N D A N D S T O C K H I S T O R Y
D I V I D E N D A N D S T O C K H I S T O R Y
2022 ANTICIPATED
DIVIDEND PAYABLE DATES
First Quarter
March 18, 2022
Second Quarter*
June 17, 2022
Third Quarter*
September 20, 2022
Fourth Quarter*
December 20, 2022
*Subject to action by
Board of Directors
(1) Adjusted for stock dividends and exchanges.
(2) Formation of United Bancorp, Inc. (UBCP). Unified
Bank (formerly The Citizen's Saving Bank)
shareholders received 4 shares of UBCP stock in
exchange for 1 share of bank stock.
Cash Dividends
Declared (1)
$
0.05
$
0.06
$
0.07
$
0.09
$
0.09
$
0.10
$
0.10
$
0.11
$
0.12
$
0.12
$
0.12
$
0.13
$
0.19
$
0.20
$
0.23
$
0.26
$
0.30
$
0.31
$
0.32
$
0.33
$
0.35
$
0.39
$
0.43
$
0.48
$
0.52
$
0.54
$
0.56
$
0.56
$
0.56
$
0.42
$
0.29
$
0.33
$
0.37
$
0.42
$
0.46
$
0.52
$
0.545
$
0.57
$
0.685
Special Cash Dividends
and Stock Dividends
-
4 for 1 Exchange(2)
-
-
50% Stock Dividend
-
-
-
-
100% Stock Dividend
100% Stock Dividend
10% Stock Dividend
-
10% Stock Dividend
10% Stock Dividend
5% Stock Dividend
5% Stock Dividend
5% Stock Dividend
5% Stock Dividend
5% Stock Dividend
10% Stock Dividend
10% Stock Dividend
10% Stock Dividend
10% Stock Dividend
–
–
–
–
–
–
–
–
5¢ Per Share Special Dividend
5¢ Per Share Special Dividend
5¢ Per Share Special Dividend
5¢ Per Share Special Dividend
–
–
10¢ Per Share Special Dividend
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Distribution Date of
Dividends and
Exchanges
-
January 2, 1984
-
-
October 2, 1987
-
-
-
-
September 10, 1992
November 30, 1993
September 9, 1994
-
June 20, 1996
September 19, 1997
December 18, 1998
December 20, 1999
December 20, 2000
December 20, 2001
December 20, 2002
December 19, 2003
December 20, 2004
December 20, 2005
December 20, 2006
–
–
–
–
–
–
–
–
December 29, 2016
December 29, 2017
December 29, 2018
December 28, 2019
–
–
March 19, 2021
T O T A L R E T U R N P E R F O R M A N C E
United Bancorp, Inc.
NASDAQ Composite Index
S&P U.S. BMI Banks Index
S&P U.S. SmallCap Banks Index
S&P U.S. BMI Banks - Midwest Region Index
Dow Jones Index
350
300
250
200
150
100
50
e
u
l
a
V
x
e
d
n
I
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
Index
United Bancorp, Inc.
NASDAQ Composite Index
S&P U.S. BMI Banks Index
S&P U.S. SmallCap Banks Index
S&P U.S. BMI Banks - Midwest Region Index
Dow Jones Index
12/31/16
100.00
100.00
100.00
100.00
100.00
100.00
12/31/17
102.29
129.64
118.21
104.33
107.46
128.11
12/31/18
92.31
125.96
98.75
87.06
91.76
123.65
12/31/19
120.99
172.18
135.64
109.22
119.38
154.99
12/31/20
116.47
249.51
118.33
99.19
102.64
170.06
12/31/21
153.81
304.85
160.89
138.09
135.60
205.68
5
Directors
Erin S. Ball
Jonathan C. Clark
Scott A. Everson
Gary W. Glessner
Brian M. Hendershot
John R. Herzig
John M. Hoopingarner
Richard L. Riesbeck
Bethany E. Schunn
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UNITEDBANCORP INC.
Directors and Officers
DIRECTORS OF UNITED BANCORP, INC.
Scott A. Everson1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .President & Chief Executive Officer, United Bancorp, Inc.
Chairman, President & Chief Executive Officer, Unified Bank, Martins Ferry, Ohio
Gary W. Glessner2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CPA & CGMA, Managing Member, Glessner & Associates, PLLC;
Glessner Wharton Andrews Insurance, LLC; Tiffany's, LLC; GWA Realty, LLC,
GW Rentals, LLC; Trustee, Windmill Truckers Center, Inc.
John M. Hoopingarner, Esq.1,2,3,4 . . . . . . . . . . . . . . . . . . . . . . . . . Of Counsel, McMahon, DeGulis LLP, Columbus, Cleveland & Cincinnati, Ohio
Richard L. Riesbeck1,2,3,4 . . . . . . . . . . . . . . . . . Chairman, United Bancorp, Inc.; President, Riesbeck Food Markets, Inc., St. Clairsville, Ohio
James W. Everson ............................................................................................................................................................... Chairman Emeritus 1969 - 2016
OFFICERS OF UNITED BANCORP, INC.
Scott A. Everson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President & Chief Executive Officer
Matthew F. Branstetter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Senior Vice President, Chief Operating Officer
Randall M. Greenwood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Senior Vice President, Chief Financial Officer, Treasurer & Corporate Secretary
DIRECTORS OF UNIFIED BANK
Erin S. Ball . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Carenbauer Distributing Corporation, Wheeling, West Virginia
Jonathan C. Clark, Esq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney at Law, Lancaster, Ohio
Scott A. Everson1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .President & Chief Executive Officer, United Bancorp, Inc.
Chairman, President & Chief Executive Officer, Unified Bank, Martins Ferry, Ohio
Gary W. Glessner2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CPA & CGMA, Managing Member, Glessner & Associates, PLLC;
Glessner Wharton Andrews Insurance, LLC; Tiffany's, LLC; GWA Realty, LLC,
GW Rentals, LLC; Trustee, Windmill Truckers Center, Inc.
Brian M. Hendershot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President, Ohio-West Virginia Excavating, Shadyside, Ohio
John R. Herzig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President, Toland-Herzig Funeral Homes & Crematory, Strasburg and Dover, Ohio
John M. Hoopingarner, Esq.1,2 . . . . . . . . . . . . . . . . . . . . . . . . .Of Counsel, McMahon, DeGulis LLP, Columbus, Cleveland and Cincinnati, Ohio
Richard L. Riesbeck1,2, F . . . . . . . . . . . . . . . . . . Chairman, United Bancorp, Inc.; President, Riesbeck Food Markets, Inc., St. Clairsville, Ohio
Bethany E. Schunn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plant Manager, Cardinal Operating Company, Brilliant, Ohio
James W. Everson ............................................................................................................................................................... Chairman Emeritus 1969 - 2016
1 = Executive Committee 2 = Audit Committee 3 = Compensation Committee
4 = Nominating and Governance Committee F = Lead Director
UNITEDBANCORP INC.
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7
Bank Past Presidents & Directors
The journey to becoming the institution we are today began in Martins Ferry,
Ohio in 1902. Originally founded as The German Savings Bank and renamed
to The Citizens Savings Bank in 1918, the last 119 years have seen growth
and change that would have been unimaginable at its' founding. The bank
has grown through sound management, the addition of new offices and the
acquisition of others. With the name change from The Citizens Savings Bank to
Unified Bank in 2018, it has and will continue to move forward.
The growth and success of the bank has been attributed to the association of
many dedicated individuals.
PAST PRESIDENTS
Edward E. McCombs, 1902-1936
John E. Reynolds, 1936 – 1940
Harold H. Riethmiller, 1940 – 1973
James W. Everson, 1973 – 2002
Past Board of Directors
Edward E. McCombs, 1902-1936*
John E. Reynolds, 1902-1940
Dr. Joseph W. Darrah, 1902-1937
J.A. Crossley, 1902-1903
William M. Lupton, 1902-1902
F.K. Dixon, 1902-1909
Dr. R.H. Wilson, 1902-1905
Chris A. Heil, 1903-1909
David Coss, 1904-1938
L.L. Scheele, 1905-1917
A.T. Selby, 1906-1954
H.H. Rothermund, 1907-1912
Dr. J.G. Parr, 1912-1930
T.E. Pugh, 1920-1953
J.J. Weiskircher, 1925-1942
David H. James, 1925-1963
Dr. C.B. Messerly, 1931-1957
H.H. Riethmiller, 1936-1980*
E.M. Nickles, 1938-1968
L.A. Darrah, 1939-1962
R.L. Heslop, 1941-1983
Joseph E. Weiskircher, 1943-1975
Edward M. Selby, 1953-1976
David W. Thompson, 1954-1966
Dr. Charles D. Messerly, 1957-1987
James M. Blackford, 1962-1968
John H. Morgan, 1967-1976
Emil F. Snyder, 1968-1975
James H. Cook, 1976-1986
Paul Ochsenbein, 1978-1991
David W. Totterdale, 1981-1995
Albert W. Lash, 1975-1996
Premo R. Funari, 1976-1997
Donald A. Davison, 1963-1997*
Harold W. Price, 1999-1999
John H. Clark, Jr., 1976-2001
Dwain R. Hicks, 1999-2002
Michael A. Ley, 1999-2002
Michael J. Arciello 1992 - 2009
Leon F. Favede, O.D., 1981-2012
Herman E. Borkoski, 1987-2012
James W. Everson, 1969-2014*
Robin L. Rhodes, 2007-2015
Andrew C. Phillips, 2007-2015
Errol C. Sambuco, 1996-2015
Samuel J. Jones, 2007-2015
Matthew C. Thomas, 1988-2016
Terry A. McGhee, 2001-2017
Carl A Novak, D.D.S., 2018-2020
* Past Chairman
8
2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Shareholder Information
United Bancorp, Inc.’s (the Company) common stock trades on The Nasdaq Capital Market tier of The Nasdaq Stock Market
under the symbol UBCP, CUSIP #909911109. At year-end 2021, there were 6,053,851 shares issued, held among approximately
3,300 shareholders of record and in street name. The following table sets forth the quarterly high and low closing prices of
the Company’s common stock from January 1, 2021 to December 31, 2021 compared to the same periods in 2020 as reported
by the NASDAQ.
Market Price Range
High ($)
Low ($)
Cash Dividends
Quarter ($)
Cumulative ($)
2 0 2 1
31-Mar 30-Jun 30-Sep 31-Dec
2 0 2 0
31-Mar 30-Jun 30-Sep
31-Dec
$ 15.88
$ 12.75
15.66
14.26
15.79
12.90
16.65
14.75
$ 14.75
9.31
$
10.70
9.10
12.67
10.50
13.35
11.80
$ 0.2425
$ 0.2425
0.1450
0.3875
0.1475
0.5350
0.1500
0.6850
$ 0.1425
$ 0.1425
0.1425
0.2850
0.1425
0.4275
0.1425
0.5700
Investor Relations:
Annual Meeting:
Stock Trading:
A copy of the Company’s Annual
Report on form 10-K as filed with
the SEC, will be furnished free of
charge upon written or E-mail
request to:
Randall M. Greenwood, CFO
United Bancorp, Inc.
201 South 4th Street
PO Box 10
Martins Ferry, OH 43935
or
cfo@unitedbancorp.com
Dividend Reinvestment and
Stock Purchase Plan:
Shareholders may elect to reinvest
their dividends in additional shares of
United Bancorp, Inc.’s common stock
through the Company’s Dividend
Reinvestment Plan. Shareholders may
also invest optional cash payments of
up to $5,000 per month in our
common stock at market price. To
arrange automatic purchase of shares
with quarterly dividend proceeds,
please contact:
American Stock Transfer
and Trust Company
Attn: Dividend Reinvestment
6201 15th Avenue, 3rd Floor
Brooklyn, NY 11219
1-800-278-4353
The Annual Meeting of Shareholders
will be held at 2:00 p.m., April 20,
2022 at the Corporate Offices in
Martins Ferry, Ohio.
Internet:
Please look us up at
http//:www.unitedbancorp.com
Independent Auditors:
BKD LLP
312 Walnut Street, Suite 3000
Cincinnati, Ohio 45202
(513) 621-8300
Corporate Offices:
Raymond James
222 South Riverside Plaza
7th Floor
Chicago, Illinois 60606
Anthony LanFranco
312-655-2961
Stifel, Nicolaus & Company Inc.
655 Metro Place South
Dublin, Ohio 43017
Steven Jefferis
877-875-9352
Tom Thurston
Piper Sandler Companies
1251 Avenue of the Americas
New York, NY 10020
212-466-8027
Unified Bank Building
201 South 4th Street, Martins Ferry, Ohio 43935
Randall M. Greenwood
Corporate Secretary
(888) 275-5566 (EXT 6181)
(740) 633-0445 (EXT 6181)
(740) 633-1448 (FAX)
Transfer Agent and Registrar:
For transfers and general correspondence,
please contact:
American Stock Transfer and Trust Company
6201 15th Avenue, 3rd Floor
Brooklyn, NY 11219
1-800-937-5449
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
9
Management’s Discussion and Analysis
In the following pages, management presents an analysis of United Bancorp, Inc.’s financial condition and results of operations as of and for the
year ended December 31, 2021 as compared to prior years. This discussion is designed to provide shareholders with a more comprehensive review of
the operating results and financial position than could be obtained from an examination of the financial statements alone. This analysis should be
read in conjunction with the Consolidated Financial Statements and related footnotes and the selected financial data included elsewhere in this report.
When used in this discussion or future filings by the Company with the Securities and Exchange Commission, or other public or shareholder
communications, or in oral statements made with approval of an authorized executive officer, the words or phrases “will likely result,” “are expected
to,” “will continue,” “is anticipated,” “estimate,” “project,” “believe,” or similar expressions are intended to identify “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and
national economic conditions, changes in levels of market interest rates, credit risks of lending activities and competitive and regulatory factors,
could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from those
anticipated or projected.
The Company is not aware of any trends, events or uncertainties that will have or are reasonably likely to have a material effect on its liquidity, capital
resources or operations except as discussed herein. The Company is not aware of any current recommendations by regulatory authorities that would
have such effect if implemented.
The Company does not undertake, and specifically disclaims, any obligation to publicly release any revisions that may be made to any forward-
looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Financial Condition
Overview
United Bancorp reported diluted earnings per share of
$0.41 for the three months ended December 31, 2021. For
the year ending December 31, 2021, UBCP reported diluted
earnings per share of $1.62, an increase of 17%, and net
income of $9,451,000, an increase of 19%, over the previous
year, which are record levels for the Company.
Even though our economy continues on its road to full
recovery from the impact of the events that have occurred
for the majority of the past two years, we are extremely
pleased to report on our earnings performance for the
fourth quarter and for the year. For the quarter ending
December 31, 2021, our Company achieved solid net income
and diluted earnings per share results of $2,456,000 and
$0.41 as compared to $2,640,000 and $0.46, respectively, in
the fourth quarter of 2020. For the year ending December
31, 2021, our Company produced net income of $9,451,000
and diluted earnings per share of $1.62, which were
respective increases of $1,498,000, or 19%, and $0.23, or
17%, over the previous year. We are exceedingly proud to
report these earnings levels, especially on our record
earnings performance for the year 2021. Our Company
achieved this level of earnings performance even though
we only saw marginal growth in our loans outstanding and
a fairly significant decline in our securities portfolio balance.
As of December 31, 2021, gross loans were $454.4 million,
Total Assets (In Thousands)
$725,000
$700,000
$675,000
$650,000
$625,000
$600,000
$575,000
$685,706
$693,402
$724,456
2019
2020
2021
which was an increase of $10.9 million, or 2.5%, over the
previous year. In addition, average securities and other
restricted stock was $135.3 million, which was a decrease of
$32.1 million, or 19.2%, from the previous year. The marginal
growth of our loan portfolio was highly reflective of the
limited lending opportunities which, once again, confronted
our industry over the course of the past year due to the
lingering effect of economic challenges created by the
pandemic. With that stated, our loan growth was in-line
with the loan growth achieved by our peers. In addition, we
once again experienced a decline in our average securities
and other restricted stock. This decline was the result of
either calls and prepayments of securities held within our
investment portfolio or the sale of select municipal
10 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
investment securities, which produced gains for our
Company. Unlike 2020, where the sale of investment
securities produced gains that greatly helped to fortify our
loan loss reserve during the most critical and uncertain time
of the pandemic, this past year’s gains on the sale of
investment securities were harvested to take advantage of
the opportunity still available and to better prepare for the
potential of rising rates in the near term. Considering our
marginal loan growth and the decline in our average
securities and other required stock (along with declining
rates that we have experienced within the past twenty-one
months), our level of both interest income and loan fees
generated this past year declined from the levels earned
the previous year. As of December 31, 2021, total interest
income, including loan fees, was down $2.92 million, or
10.6%, from the level achieved in 2020. We are optimistic
that as our economy starts to more fully recover and as
rates potentially rise in the near term, we will have better
opportunities to leverage our securities portfolio more
in-line with our previous level (especially, in tax-exempt
securities) and ramp-up our loan production to levels at
which we are more historically accustomed; therefore,
increasing our level of higher yielding earning assets,
improving our overall tax efficiency and generating more
interest and loan fee income.
As we have previously disclosed, our Company was properly
positioned to benefit from declining rates over the course
of the past two years. Even though we saw a significant
inflow of retail funding over that timeframe, we were able
to lower our interest expense levels to help mitigate the
decline in the level of net interest income that our Company
achieved in this highly volatile environment. In 2021, total
deposits increased $25.6 million or 4.4%. We saw lower-
cost retail funding, consisting of demand and savings
balances, increase by $50.1 million, or 10.0%, while our
higher-cost time deposit balances declined by $24.5 million
or 30.3%. Even with the overall increase in our total
deposits, we were able to reduce total interest expense by
$2.1 million, or 45.2%, this past year as compared to 2020.
While we were able to continue to substantially reduce total
interest expense in 2021, our Company still experienced an
overall decrease in the level of net interest income that it
realized of $782,000, which is a decline of 3.4% over the
previous year. We are optimistic that our Company will
achieve higher levels of net interest income, as previously
mentioned, as our economy more fully recovers---
potentially in the near term.
We have successfully maintained credit-related strength
and stability within our loan portfolio over the course of the
pandemic and this trend continued for our Company as of
year-end. As of December 31, 2021, our total nonaccrual
Loans-Net (In Thousands)
$455,000
$445,000
$435,000
$425,000
$415,000
$405,000
$395,000
$439,317
$438,378
$450,699
2019
2020
2021
loans and loans past due 30 plus days were $4.6 million or
0.9% of gross loans. Further, net loans charged off for 2021,
excluding overdrafts, was $108,000 or 0.02% annualized.
Considering our overall sound credit quality and the
improving economy, our Company had credit reserve
releases of $400,000 during the fourth quarter of 2021. We
are pleased that the substantial level of provisioning to our
loan loss reserve in 2020, along with our continued solid
credit performance in 2021, once again, supported a
negative provision for our Company in the most recently
ended quarter. Barring any unforeseen events, we anticipate
being able to release additional reserves in the current year.
As of year-end 2021, our Company continues to be very well
capitalized with equity to assets of 9.90% and total
shareholders’ equity of $71.7 million, which is an increase of
$3.4 million, or 4.90%, over the previous year.
As our Company continued to operate in an unsettled
economic environment this past year, we were able to
achieve a record level of earnings in 2021. Even though we
achieved record earnings performance, our Company’s
growth in quality, higher-yielding assets has been restrained
by the ongoing uncertainty that permeates our economy.
With this challenge, we continued to experience limited
growth in our loans outstanding and shrinkage in our
securities portfolio. In addition, this past year we continued
to experience a substantial build-up of our cash balances at
the Federal Reserve Bank (FRB) due to the ongoing inflow of
stimulus-related, retail-based funding that has flowed onto
our balance sheet and largely remains in lower yielding
overnight investments. These dynamics have led to a
marginal year-over-year decline in our net interest income.
With this reality, we were exceedingly happy to perform at
a high level and achieve a return on assets of 1.31% and
return on equity of 13.28% this past year. Throughout 2021,
we continued to be relieved to see the ongoing recovery of
our economy; albeit, at a slower rate than anticipated in the
last two quarters of the year due to a few set-backs that
impacted our recovery relative to the first two quarters of
the year. Although things remain somewhat uncertain
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
11
$710,000
$650,000
$590,000
$530,000
$470,000
$410,000
$350,000
Total Average Earning Assets
(In Thousands)
$597,260
$643,465
2019
2020
2021
$666,744
relating to our economy, we are optimistic that the
continuing recovery thereof will allow us to leverage some
of our lower-yielding, highly liquid overnight investments
into higher-yielding, quality loan and securities investments
in 2022. Achieving this should stabilize and improve the
level of interest income that we generate, our tax efficiency
and our overall “core” earnings. On a “non-core” basis, we
anticipate being able to continue releasing tranches of our
allowance for loan losses in future periods if our credit
quality remains sound. Quite simply, the loan loss reserve
build-up that occurred in 2020 due to the risks posed by the
onset of the pandemic and ensuing economic slow-down
have, so far, not led to deterioration of our credit quality nor
an increase in loan-related losses. Such action should
further enhance our bottom line performance.
As always, our primary focus is protecting the investment of
our shareholders in our Company and rewarding them at a
high level by growing their value and paying an attractive
cash dividend. Accordingly, we remained focused on being
an efficient, productive and profitable company that is well
capitalized. In these areas, our shareholders have been
nicely rewarded with a year-over-year increase in the cash
dividends paid of $0.115, or 20.2%, (inclusive of a special
cash dividend of $0.10 paid in the first quarter), and a
market value increase of $3.47, or 26.3%, to a level of $16.65
as of December 31, 2021. These past two years have been
very challenging for our Company. But, the challenges with
which we have been confronted and dealt have made us a
more fundamentally sound company with a focus on the
potential of the future. Focusing internally, we have
continued to improve many processes which has led to (or,
will lead to) various efficiency gains and optimization of our
delivery. We have eliminated unnecessary expenses while
spending money on staffing optimization and technological
infrastructure, so that we can more effectively compete
within our industry by having highly skilled team members
and cutting-edge systems deliver our products and services
in a manner that is demanded by the markets that we
proudly serve. Relating to cost containment, this year we
closed our Loan Production Office in Wheeling, West
Virginia. In addition, during the course of the fourth
quarter, we effected the closure of our Dillonvale, Ohio
Banking Center which was consolidated into two other
banking centers located within close proximity of this
market. Each of these events have had minimal customer
impact and will create cost savings that we anticipate
seeing more fully in 2022. Although the pandemic and
related economic slowdown took us off our course of
growth over the past two years, we still have our sights set
on becoming a $1.0 billion community banking organization
in order to be at a scale to achieve additional operating
efficiencies, greater profitability and, most importantly, a
higher market capitalization which will lead to more
opportunities for our Company. We can only realize this
vision by having robust organic growth and capitalizing on
acquisition-related opportunities for which our Company is
strongly positioned at present. With the current rebound
that our economy is experiencing, we firmly believe that we
will have quality chances in each of these areas on which
our Company can capitalize. Accordingly, we are truly
excited about our future.
Earning Assets -Loans
The Company’s gross loans totaled $454.4 million at
December 31, 2021, representing a $10.9 million, or 2.46%,
increase over the $443.5 million at December 31, 2020.
Average loans totaled $451.8 million for 2021, representing
a 1.2% increase compared to average loans of $446.5
million for 2020.
The increase in gross loans from December 31, 2020 to
December 31, 2021 was primarily an increase in commercial
real estate by $20.6 million.
The Company's commercial and commercial real estate
loan portfolio represents 78.7% of the total portfolio
at December 31, 2021 compared to 78.8% at December 31,
2020. The Company’s commercial and commercial real
estate loans increased approximately $8.2 million from
December 31, 2020 to December 31, 2021. We utilize all the
SBA, Ohio Department of Development and State of Ohio
loan programs as well as local revolving loan funds to best
fit the needs of our customers.
The Company’s installment lending portfolio represented
1.5% of the total portfolio at December 31, 2021, compared
to 1.9% at December 31, 2020. Competition for installment
12
2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
loans principally comes from the captive finance companies
offering low to zero percent financing for extended terms.
The Company's residential real estate portfolio represents
19.8% of the total portfolio at December 31, 2021, compared
to 19.3% at December 31, 2020. Residential real estate loans
are comprised of 1-, 3-, and 5-year adjustable-rate mortgages
and 15-year fixed rate loans used to finance 1-4 family units.
The Company also offers fixed-rate real estate loans through
our Secondary Market Real Estate Mortgage Program.
Once these fixed-rate loans are originated and immediately
sold without recourse in what is referred to as the secondary
market, the Company does not assume credit risk or interest
rate risk in this portfolio. This arrangement is quite common
in banks and saves our customers from looking elsewhere
for their home financing needs.
The Company did recognize a gain on the sale of secondary
market loans of $272,000 in 2021 and a gain of $180,000 in
2020.
The allowance for loan losses represents the amount which
management and the Board of Directors estimates is
adequate to provide for probable incurred losses in the
loan portfolio. Accounting for the allowance and the related
provision for loan losses is viewed by management as a
critical accounting policy. The allowance balance and the
annual provision charged to expense are reviewed by
management and the Board of Directors on a monthly
basis. The allowance calculation is determined by utilizing a
risk grading model that considers borrowers’ past due
experience, coverage ratio to industry averages, economic
conditions and various other circumstances that are subject
to change over time. In general, the loan loss policy for
installment loans requires a charge-off if the loan reaches
120-day delinquent status or if notice of bankruptcy
liquidation is received. The Company follows lending
policies, with established criteria for determining the
Net Income (In Thousands)
$9,500
$8,000
$6,500
$5,000
$3,500
$2,000
$500
$6,810
$7,953
$9,451
2019
2020
2021
repayment capacity of borrowers, requirements for down
payments and current market appraisals or other valuations
of collateral when loans are originated. Installment lending
also utilizes credit scoring to help in the determination of
credit quality and pricing.
The Company generally recognizes interest income on the
accrual basis, except for certain loans which are placed on
non-accrual status, when in the opinion of management;
doubt exists as to collection on the loan. The Company’s
policy is to generally place loans greater than 90 days past
due on non-accrual status unless the loan is both well
secured and in the process of collection. When a loan is
placed on non-accrual status, interest income may be
recognized on a cash basis as payment is received if the
loan is well secured. If the loan is not deemed well secured,
payments are credited to principal.
Management and the Board of Directors believe the current
balance of the allowance for loan losses is sufficient to cover
probable incurred losses. Refer to the Provision for Loan
Losses section for further discussion on the Company’s
credit quality.
Earning Assets – Securities and Federal Funds Sold
The securities portfolio is comprised of tax-exempt
obligations of state and political subdivisions and certain
other investments. Securities available for sale at December
31, 2021 decreased approximately $11.7 million from
December 31, 2020 totals. To take advantage of a favorable
yield curve on state and municipal obligation, the Company
sold certain available-for-sale securities for a total gain of
approximately $1.25 million during 2021 and $2.6 million
during 2020. During 2021 the Company purchased $24.1
million of Subordinated notes to take advantage of the
rates offered on securities.
Sources of Funds – Deposits
The Company’s primary source of funds is retail core
deposits from individuals and business customers. These
core deposits include all categories of time deposits,
excluding certificates of deposit greater than $250,000.
Total deposits increased $25.6 million, or 4.4%, from $579.5
million at December 31, 2020 to $605.1 million at December
31, 2021. Overall total deposit growth was mainly focused
on interest bearing money market and savings accounts.
The Company has a strong deposit base from public
agencies, including local school districts, city and township
municipalities, public works facilities and others, which may
tend to be more seasonal in nature resulting from the
receipt and disbursement of state and federal grants. These
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
13
entities have maintained relatively stable balances with the
Company due to various funding and disbursement
timeframes.
Certificates of deposit greater than $250,000 are not
considered part of core deposits and, as such, are used to
balance rate sensitivity as a tool of funds management.
Certificates of deposit greater than $250,000 decreased $3.1
million, from $7.5 million at December 31, 2020, to $4.4
million at December 31, 2021
Sources of Funds – Securities Sold Under Agreements
to Repurchase and Other Borrowed Funds
Other interest-bearing liabilities include securities sold
under agreements to repurchase, and Federal Home Loan
Bank (“FHLB”) advances. Securities sold under agreements
to repurchase increased approximately $3.0 million from
December 31, 2020 to December 31, 2021. Securities sold
under agreements to repurchase totaled $15.7 million and
$12.7 million at December 31, 2021 and 2020, respectively.
On May 14, 2019 the Company issued $20,000,000 of junior
subordinated debentures in denominations of not less than
$250,000. The debentures bear interest at a fixed rate of
6.0% until May 2024, which then becomes a floating interest
rate equal to the three-month LIBOR (or an equivalent
index) plus 3.625%, resetting quarterly. Interest on the
subordinated notes will be payable semiannually through
May 2024 and quarterly thereafter through the maturity
date of May 2029. Principal is due upon maturity. The
debentures are unsecured and payable to various investors.
For purposes of computing regulatory capital, the
debentures are included in Tier 2 Capital. The subordinated
notes may not be repaid in whole or in part prior to the fifth
anniversary of the issue date (May 2019).
Performance Overview 2021 to 2020
composition or mix of interest-earning assets in relation to
interest-bearing liabilities. Comparing the year ended
December 31, 2021 to 2020, the Company’s net interest
margin was 3.48% compared to 3.76%, a decrease of 28
basis points.
Average interest-earning assets increased $23.3 million in
2021 as compared to 2020 while the associated weighted-
average yield on these interest-earning assets decreased
from 4.49% in 2020 to 3.87% for 2021. Average interest-
bearing liabilities increased $8.8 million in 2021 as compared
to 2020, while the associated weighted-average costs on
these interest-bearing liabilities decreased from 0.92% in
2020 to 0.52% in 2021.
Refer to the sections on Asset and Liability Management
and Sensitivity to Market Risks and Average Balances, Net
Interest Income and Yields Earned and Rates Paid elsewhere
herein for further information.
Provision For Loan Losses
The provision or credit for loan losses is a charge or credit
to expense recorded to maintain the related balance sheet
allowance for loan losses at an amount considered adequate
by Management and the Board of Directors to cover
probable incurred losses in the portfolio.
As of December 31, 2021, our total nonaccrual loans and
loans past due 30 plus days were $4.6 million or 0.9% of
gross loans. Further, net loans charged off for 2021,
excluding overdrafts, was $108,000 or 0.02% annualized.
Considering our overall sound credit quality and the
improving economy, our Company had credit reserve
releases of $1,255,000 for 2021. We are pleased that the
substantial level of provisioning to our loan loss reserve in
2020, along with our continued solid credit performance in
Net Income
The Company reported basic and diluted earnings per
share of $1.62 and net income of $9,451,000 for the year
ended December 31, 2021, an increase of $1.5 million, or
18.8%, over net income of $7,953,000 for the year ended
December 31, 2020.
Net Interest Income
Net interest income, by definition, is the difference
between interest income generated on interest-earning
assets and the interest expense incurred on interest-bearing
liabilities. Various factors contribute to changes in net
interest income, including volumes, interest rates and the
1.15%
1.00%
0.85%
0.70%
0.55%
0.40%
0.25%
Total Allowance for Loan Losses
to Total Loans
0.51%
1.15%
0.81%
2019
2020
2021
14 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
2021, once again, supported a negative provision for our
Company in 2021. Barring any unforeseen events, we
anticipate being able to release additional reserves in the
current year. With the concerns around COVID-19 and the
surge in unemployment, the Company increased the
provision for loan losses which was $3.3 million for the year
ended December 31, 2020 compared to $908,000 for the
year ended December 31, 2019, an increase of $2.4 million
year-over-year.
Noninterest Income
Total noninterest income is made up of bank-related fees
and service charges, as well as other income-producing
services, sales of loans in the secondary market, ATM
income, early-redemption penalties for certificates of
deposit, safe deposit rental income, deposit service fees,
earnings on bank-owned
insurance and other
miscellaneous items.
life
Noninterest income for the year ended December 31, 2021
was $5.7 million, a decrease of $1.2 million, compared to
$6.9 million for the year ended December 31, 2020. The
main driver of this decrease was the $1.3 million differential
of gain recognized on the sale of available-for- sale securities
in 2020 as compared to 2021.
Noninterest Expense
In 2021, our Company saw its overall noninterest expense
levels increase at a modest level of 2.8%. Relating to cost
containment, this year we closed our Loan Production
Office in Wheeling, West Virginia. In addition, during the
course of the fourth quarter, we effected the closure of our
Dillonvale, Ohio Banking Center which was consolidated
into two other banking centers located within close
proximity of this market. Each of these events have had
minimal customer impact and will create cost savings that
we anticipate seeing more fully in 2022. Overall noninterest
expense for 2021 increased $502,000, as compared to 2020.
Income tax expense for 2021 was $1,230,000 compared to
$629,000 in 2020, an increase of $601,000. The Company’s
effective income tax rate was 11.5% in 2021 and 7.3% in
2020. Refer to Note 9 Income Taxes for a reconciliation of
the effective tax rate for the Company.
Asset/Liability Management and
Sensitivity to Market Risks
In the environment of changing business cycles, interest
rate fluctuations and growing competition, it has become
increasingly difficult for banks to produce adequate
earnings on a consistent basis. Although management can
anticipate changes in interest rates, it is not possible to
(In thousands)
2021
2020
Noninterest income
Customer service fees............................................................................................................................................................$
Gains on sales of loans ..........................................................................................................................................................
Earnings on bank-owned life insurance .........................................................................................................................
Realized gains on available-for-sale securities .............................................................................................................
Other income ............................................................................................................................................................................
Total noninterest income ..................................................................................................................................................$
Noninterest expense
Salaries and employee benefits .........................................................................................................................................$
Occupancy and equipment.................................................................................................................................................
Professional services ..............................................................................................................................................................
Insurance ....................................................................................................................................................................................
Deposit insurance premiums ..............................................................................................................................................
Franchise and other taxes ....................................................................................................................................................
Marketing expense .................................................................................................................................................................
Printing and office supplies .................................................................................................................................................
Amortization of intangibles ................................................................................................................................................
Other expenses ........................................................................................................................................................................
Total noninterest expense ..............................................................................................................................................$
2,852
272
802
1,250
530
5,706
9,698
2,364
1,217
531
195
551
380
115
150
3,191
18,392
$
$
$
$
2, 580
180
706
2,593
856
6,915
9,311
2,406
1,232
486
184
492
339
122
150
3,168
17,890
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
15
reliably predict the magnitude of interest rate changes. As a
result, the Company must establish a sound asset/liability
management policy, which will minimize exposure to
interest rate risk while maintaining an acceptable interest
rate spread and insuring adequate liquidity.
asset, which can be repriced to a market rate in a given time
frame. Similarly, a rate-sensitive liability is any interest-
bearing liability, which can have its interest rate changed to
a market rate during the specified time period. Caps, collars
and prepayment penalties may prevent certain loans and
securities from adjusting to the market rate.
The principal goal of asset/liability management – earnings
management – can be accomplished by establishing
decision processes and control procedures for all bank
assets and liabilities. Thus, the full scope of asset/liability
management encompasses the entire balance sheet of the
Company. The broader principal components of asset/
liability management include, but are not limited to liquidity
planning, capital planning, gap management and spread
management.
By definition, liquidity is measured by the Company’s ability
to raise cash at a reasonable cost or with a minimum
amount of loss. Liquidity planning is necessary so the
Company will be capable of funding all obligations to its
customers at all times, from meeting their immediate cash
withdrawal requirements to fulfilling their short-term credit
needs.
A negative gap is created when rate-sensitive liabilities
exceed rate-sensitive assets and, conversely, a positive gap
occurs when rate-sensitive assets exceed rate-sensitive
liabilities. Generally, a negative gap position will cause
profits to decline in a rising interest rate environment and
cause profits to increase in a falling interest rate environment.
Conversely, a positive gap will cause profits to decline in a
falling interest rate environment and increase is a rising
interest rate environment. The Company’s goal is to have
acceptable profits under any interest rate environment. To
avoid volatile profits as a result of interest rate fluctuations,
the Company attempts to match interest rate sensitivities.
The Company achieves this by pricing both the asset and
liability components to yield a sufficient interest rate spread,
so that profits will remain relatively consistent across
interest rate cycles.
Capital planning is an essential portion of asset/liability
management, as capital is a limited Bank resource, which,
due to minimum capital requirements, can place possible
restraints on Bank growth. Capital planning refers to
maintaining capital standards through effective growth
management, dividend policies and asset/liability
strategies.
Gap is defined as the dollar difference between rate
sensitive assets and rate sensitive liabilities with respect to
a specified time frame. A gap has three components – the
asset component, the liability component, and the time
component. Gap management involves the management
of all three components.
Gap management is defined as those actions taken to
measure and match rate-sensitive assets to rate-sensitive
liabilities. A rate-sensitive asset is any interest-earning
Management of the income statement is called spread
management and is defined as managing investments,
loans, and liabilities to achieve an acceptable spread
between the Company’s return on its earning assets and its
cost of funds. Gap management without consideration of
interest spread can cause unacceptably low profit margins.
Spread management without consideration of gap positions
can cause acceptable profits
interest rate
environments and unacceptable profits in others. A sound
asset/liability management program combines gap and
spread management into a single cohesive system.
in some
Management measures the Company’s interest rate risk by
computing estimated changes in net interest income and
the Net Portfolio Value (“NPV”) of its cash flows from assets,
liabilities and off-balance-sheet items in the event of a
range of assumed changes in market interest rates. The
Bank’s senior management and the Executive Committee of
16 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
the Board of Directors, comprising the Asset/Liability
Committee (“ALCO”), review the exposure to interest rates
monthly. Exposure to interest rate risk is measured with the
use of an interest rate sensitivity analysis to determine the
change in NPV in the event of hypothetical changes in
interest rates, while interest rate sensitivity gap analysis is
used to determine the repricing characteristics of the assets
and liabilities.
NPV represents the market value of portfolio equity and is
equal to the market value of assets minus the market value
of liabilities, with adjustments made for off-balance-sheet
items.
Computations of prospective effects of hypothetical
interest rate changes are based on numerous assumptions,
including relative levels of market interest rates, loan
prepayments and deposit decay rates, and should not be
relied upon as indicative of actual results. Further, the
computations do not contemplate any actions the Company
may undertake in response to changes in interest rates. The
NPV calculation is based on the net present value of
discounted cash flows utilizing market prepayment
assumptions and market rates of interest provided by
surveys performed during each quarterly period, with
adjustments made to reflect the shift in the Treasury yield
curve between the survey date and quarter-end date.
Certain shortcomings are inherent in this method of analysis
presented in the computation of estimated NPV. Certain
assets such as adjustable-rate loans have features that
restrict changes in interest rates on a short-term basis and
over the life of the asset. In addition, the portion of
adjustable-rate loans in the Company’s portfolio could
decrease in future periods if market interest rates remain at
or decrease below current levels due to refinancing activity.
Further, in the event of a change in interest rates, prepayment
and early withdrawal levels would likely deviate from those
assumed in the table. Finally, the ability of many borrowers
to repay their adjustable-rate debt may decrease in the case
of an increase in interest rates.
(Dollars in Thousands)
Net Portfolio Value - December 31, 2021
Change in Rates
+200
+100
Base
-100
$ Amount $ Change % Change
18,563
184,334
10,675
165,771
-
155,096
(16,411)
138,685
12%
7%
-
-11%
(Dollars in Thousands)
Net Portfolio Value - December 31, 2020
Change in Rates
+200
+100
Base
-100
$ Amount $ Change % Change
13,597
141,208
8,005
127,611
119,606
-
(14,082)
105,524
10%
6%
-
-13%
The following tables present an analysis of the potential
sensitivity of the Company’s net present value of its financial
instruments to sudden and sustained changes in the
prevailing interest rates.
The projected volatility of the net present value at both
December 31, 2021 and 2020 fall within the general
guidelines established by the Board of Directors. The 2021
NPV table shows that in a falling interest rate environment,
in the event of a 100 basis point change, the NPV would
decrease 11%. A consideration is that once rates decrease
100 basis points from current levels, we tend to reach a floor
on how low depository rates can adjust downward.
In an upward change in interest rates, the Company’s NPV
would increase 7% with a 100 basis point interest rate
increase. In a 200 basis point rate increase, the Company’s
NPV would increase 12%.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
17
The following table is a summary of selected quarterly results of operations for the years ended December 31, 2021 and 2020.
Three Months Ended
March 31
June 30
September 30
December 31
(In thousands, except per share data)
2021
Total interest income
Total interest expense
Net interest income
(Credit) Provision for losses on loans
Other income
General, administrative and
other expense
Income before income taxes
Federal income taxes
Net income
Earnings per share
Basic
Diluted
$
$
$
$
6,088
775
5,313
(205)
926
4,449
1,995
87
1,908
0.33
0.33
$
$
$
$
6,233
676
5,557
(250)
1,142
4,550
2,399
214
2,185
0.38
0.38
$
$
$
$
6,234
629
5,605
(400)
2,287
4,942
3,350
448
2,902
0.50
0.50
$
$
$
$
6,153
516
5,637
(400)
1,351
4,451
2,937
481
2,456
0.41
0.41
Three Months Ended
March 31
June 30
September 30
December 31
(In thousands, except per share data)
2020
Total interest income
Total interest expense
Net interest income
Provision for losses on loans
Other income
General, administrative and
other expense
Income before income taxes
Federal income taxes
Net income
Earnings per share
Basic
Diluted
$
$
$
$
7,319
1,685
5,634
563
1,044
4,410
1,705
126
1,579
0.28
0.28
$
$
$
$
6,949
1,427
5,522
1,408
2,156
4,579
1,691
16
1,675
0.29
0.29
$
$
$
$
6,692
948
5,744
1,333
2,340
4,492
2,259
200
2,059
0.36
0.36
$
$
$
$
6,668
674
5,994
33
1,375
4,409
2,927
287
2,640
0.46
0.46
18
2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Average Balances, Net Interest Income
and Yields Earned and Rates Paid
The following table provides average balance sheet
information and reflects the taxable equivalent average
yield on interest-earning assets and the average cost of
interest-bearing liabilities for the years ended December 31,
2021 and 2020. The yields and costs are calculated by
dividing income or expense by the average balance of
interest-earning assets or interest-bearing liabilities.
The average balance of available-for-sale securities is
computed using the carrying value of securities while the
yield for available for sale securities has been computed
using the average amortized cost. Average balances are
derived from average month-end balances, which include
nonaccruing loans in the loan portfolio, net of the allowance
for loan losses. Interest income has been adjusted to tax-
equivalent basis.
(Dollars In thousands)
2021
Interest
Average
Income/ Yield/
Balance Expense Rate
2020
Interest
Average
Income/ Yield/
Balance Expense Rate
Assets
Interest-earning assets
Loans (1) ..................................................................................................... $ 451,762
Taxable securities - AFS ........................................................................
13,297
Tax-exempt securities - AFS (1) .............................................................. 118,062
79,698
Federal funds sold .......................................................................................
FHLB stock and other.................................................................................
3,925
Total interest-earning assets ................................................................... 666,744
Noninterest-earning assets
Cash and due from banks ...................................................................
8,593
Premises and equipment (net) ..........................................................
13,469
Other nonearning assets .....................................................................
38,170
Less: allowance for loan losses ..........................................................
(4,576)
55,656
Total noninterest-earning assets ...........................................................
Total assets..................................................................................................... 722,400
Liabilities & stockholders’ equity
Interest-bearing liabilities
Demand deposits ................................................................................... $ 256,638
Savings deposits ..................................................................................... 133,826
69,591
Time deposits ...............................................................................................
–
FHLB advances .............................................................................................
–
Federal funds purchased ..........................................................................
23,665
Subordinated debentures ........................................................................
Repurchase agreements ...........................................................................
19,452
Total interest-bearing liabilities ............................................................. 503,172
Noninterest-bearing liabilities
Demand deposits ................................................................................... 140,555
Other liabilities ........................................................................................
7,512
Total noninterest-bearing liabilities ..................................................... 148,067
Total liabilities ............................................................................................... 651,239
Total stockholders’ equity ........................................................................
71,161
Total liabilities & stockholders’ equity ................................................. $ 722,400
Net interest income ....................................................................................
Net interest spread .....................................................................................
$ 23,181
Net yield on interest-earning assets ....................................................
20,220
467
4,908
101
81
25,777
4.48%
3.51
4.16
0.13
2.06
3.87
$ 446,256
29,472
137,948
25,522
4,267
643,465
22,106
596
6,057
49
98
28,906
4.95%
2.02
4.39
0.19
2.29
4.49
313
17
920
–
–
1,323
23
2,596
0.12%
0.01
1.32
–
–
5.59
0.12
0.52
7,864
13,164
42,228
(3,794)
59,462
702,927
$ 248,167
114,709
94,168
9,341
9,472
23,604
12,524
511,985
115,340
6,145
121,485
69,457
$ 702,927
1,395
37
1,709
174
60
1,329
30
4,734
0.56%
0.03
1.81
1.86
0.63
5.63
0.24
0.92
3.35%
3.48%
$ 24,172
3.57%
3.76%
• For purposes of this schedule, nonaccrual loans are included in loans.
• Fees collected on loans are included in interest on loans. Not material for comparative purposes.
(1) Shown on a tax equivalent basis. Federal taxes of 21%.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
19
Rate/Volume Analysis
The table below describes the extent to which changes
in interest rates and changes in volume of interest-earning
assets and interest-bearing liabilities have affected interest
income and expense during 2021. For purposes of this
table, changes in interest due to volume and rate were
determined using the following methods:
• Volume variance results when the change in volume
is multiplied by the previous year’s rate.
• Rate variance results when the change in rate is
multiplied by the previous year’s volume.
• Rate/volume variance results when the change in
volume is multiplied by the change in rate.
NOTE: The rate/volume variance was allocated to volume
variance and rate variance in proportion to the relationship
of the absolute dollar amount of the change in each.
Nonaccrual loans are ignored for purposes of the calculations
due to the nominal amount of the loans.
Diluted Earning Per Share
$1.70
$1.50
$1.30
$1.10
$0.90
$0.70
$0.50
1.19
1.39
2019
2020
2021
1.62
Capital Resources
Internal capital growth, through the retention of
earnings, is the primary means of maintaining capital
adequacy for the Bank. The Company’s stockholders’
equity was $71.7 million and $68.3 million at December 31,
2021 and 2020, respectively. Total stockholders’ equity in
relation to total assets was 9.90% at December 31, 2021 and
9.85% at December 31, 2020. Please refer to the Consolidated
2021 Compared to 2020
Increase/(Decrease)
(In thousands)
Total
Change
Change
Due To
Volume
Interest and dividend income
Loans ....................................................................................................................................$
Taxable securities available for sale ..........................................................................
Tax-exempt securities available for sale ..................................................................
Federal funds sold ...........................................................................................................
FHLB stock and other .....................................................................................................
Total interest and dividend income ..............................................................................
Interest expense
Demand deposits.............................................................................................................
Savings deposits...............................................................................................................
Time deposits ....................................................................................................................
FHLB advances ..................................................................................................................
Federal funds purchased ...............................................................................................
Subordinated debentures ............................................................................................
Repurchase agreements................................................................................................
Total interest expense ........................................................................................................
( 1,886 )
( 129 )
( 1,149 )
52
( 17 )
( 3,129 )
( 1,082 )
( 20 )
( 789 )
( 60 )
( 6 )
( 174 )
( 7 )
( 2,138 )
Net interest income .............................................................................................................$
( 991 )
270
( 78 )
( 839 )
74
( 8 )
( 581 )
46
5
( 387 )
( 60 )
–
( 174 )
12
( 558 )
( 23 )
Change
Due To
Rate
( 2,156 )
( 51 )
( 310 )
( 22 )
( 9 )
( 2,548 )
( 1,128 )
( 25 )
( 402 )
–
( 6 )
–
( 19 )
( 1,580 )
( 968 )
20 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Statements of Stockholders’ Equity for a detailed roll
forward of stockholders’ equity from 2020 to 2021.
The Company has established a Dividend Reinvestment
Plan (“The Plan”) for stockholders under which the
Company’s common stock will be purchased by The Plan for
participants with automatically reinvested dividends. The
Plan does not represent a change in the dividend policy or
a guarantee of future dividends. Stockholders who do not
wish to participate in The Plan continue to receive cash
dividends, as declared in the usual and customary manner.
$75,000
$70,000
$65,000
$60,000
$55,000
$50,000
$45,000
Equity Capital (In Thousands)
$59,922
$68,328
$71,701
2019
2020
2021
The Company’s Articles of Incorporation permits the
creation of a class of preferred shares with 2,000,000
authorized shares. If utilized, this will enable the Company,
at the option of the Board of Directors, to issue series of
preferred shares in a manner calculated to take advantage
of financing techniques which may provide a lower effective
cost of capital to the Company. The class of preferred
shares provides greater flexibility to the Board of Directors
in structuring the terms of equity securities that may be
issued by the Company. As of December 31, 2021, the
Company has not issued any preferred shares.
On May 14, 2019 the Company issued $20,000,000 of junior
subordinated debentures in denominations of not less than
$250,000. The debentures bear interest at a fixed rate of
6.0% until May 2024, which then becomes a floating interest
rate equal to the three-month LIBOR (or an equivalent
index) plus 3.625%, resetting quarterly. Interest on the
subordinated notes will be payable semiannually through
May 2024 and quarterly thereafter through the maturity
date of May 2029. Principal is due upon maturity. The
debentures are unsecured and payable to various investors.
For purposes of computing regulatory capital, the
debentures are included in Tier 2 Capital. The subordinated
notes may not be repaid in whole or in part prior to the fifth
anniversary of the issue date (May 2019).
Cash Dividends Per Share
(Without Special Dividend)
$0.70
$0.65
$0.60
$0.55
$0.50
$0.45
$0.40
$0.545
$0.570
$0.685
2019
2020
2021
In 2005, a Delaware statutory business trust owned by the
Company, United Bancorp Statutory Trust I (“Trust I” or the
“Trust”), issued $4.1 million of mandatorily redeemable
debt securities which mature in 2035. The sale proceeds
were utilized to purchase $4.1 million of the Company’s
subordinated debentures. The Company’s subordinated
debentures are the sole asset of Trust I. The Company’s
investment in Trust I is not consolidated herein as the
Company is not deemed the primary beneficiary of the
Trust. However, the $4.1 million of mandatorily redeemable
debt securities issued by the Trust are includible for
regulatory purposes as a component of the Company’s Tier
1 Capital. The interest rate is a variable rate per annum,
reset quarterly, equal to three-month LIBOR plus 1.35% and
is payable quarterly.
Liquidity
Liquidity relates primarily to the Company's ability to
fund loan demand, meet deposit customers' withdrawal
requirements and provide for operating expenses. Assets
used to satisfy these needs consist of cash and due from
banks, federal funds sold and securities available-for-sale.
These assets are commonly referred to as liquid assets.
Liquid assets were $229.3 million at December 31, 2021,
compared to $209.7 million at December 31, 2020.
Management recognizes securities may need to be sold in
the future to help fund loan demand and, accordingly, as of
December 31, 2021, $146.3 million of the securities portfolio
was classified as available for sale. The Company’s residential
real estate portfolio can and has been readily used to
collateralize borrowings as an additional source of liquidity.
Management believes its current liquidity level is sufficient
to meet cash requirements.
The Cash Flow Statements for the periods presented
provide an indication of the Company’s sources and uses of
cash as well as an indication of the ability of the Company
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
21
to maintain an adequate level of liquidity. A discussion of
the cash flow statements for 2021 and 2020 follows.
Net cash provided by operating activities totaled $8.2
million and $9.4 million for the years ended December 31,
2021 and 2020, respectively. The adjustments to reconcile
net income to net cash from operating activities consisted
mainly of depreciation and amortization of premises and
equipment and intangibles, gain on sales of loans, securities
and other assets, the provision for loan losses, Federal
Home Loan Bank stock dividends, net amortization of
securities and net changes in other assets and liabilities.
1.35%
1.25%
1.15%
1.05%
0.95%
0.85%
0.75%
Return On Average Assets
1.07%
1.15%
1.31%
2019
2020
2021
impact on the growth of total assets in the banking industry
and the resulting need to increase equity capital at higher
than normal rates in order to maintain an appropriate
equity to assets ratio.
Inflation significantly affects
noninterest expense, which tends to rise during periods of
general inflation. Management believes the most significant
impact on financial results is the Company’s ability to react
to changes in interest rates. Management seeks to maintain
an essentially balanced position between interest sensitive
assets and liabilities and actively manages the amount of
securities available for sale in order to protect against the
effects of wide interest rate fluctuations on net income and
shareholders' equity.
For the year ended December 31, 2021, net cash used by
investing activities totaled $1.2 million. For the year ended
December 31, 2020 net cash provided by investing activities
totaled $33.7 million. The changes in net cash from investing
activities include loan growth, security purchases, as well as
normal maturities, security calls/sales and reinvestments of
securities and premises and equipment expenditures.
Net cash provided by financing activities totaled $24.4
million for the year ended December 31, 2021. For the year
ended December 31, 2020 net cash used in financing
activities totaled $6.4 million. The net cash provided by
financing activities in 2021 was primarily attributable to a
$25.6 million increase in deposits.
Management feels that it has the capital adequacy,
profitability, liquidity and reputation to meet the current
and projected financial needs of its customers.
Inflation
The majority of assets and liabilities of the Company are
monetary in nature and therefore the Company differs
greatly from most commercial and industrial companies
that have significant
in fixed assets or
inventories. However, inflation does have an important
investments
22 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Report of Independent Registered Public Accounting Firm
To the Shareholders, Board of Directors and Audit Committee
United Bancorp, Inc.
Martins Ferry, Ohio
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of United Bancorp, Inc. (the "Company")
as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income,
stockholders' equity and cash flows for each of the years in the two-year period ended December 31, 2021,
and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the
years in the two-year period ended December 31, 2021, in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we
are required to obtain an understanding of internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
25
Report of Independent Registered Public Accounting Firm
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matters or on the accounts or
disclosures to which it relates.
Allowance for Loan Losses
As described in Note 4 to the consolidated financial statements, the Company’s consolidated allowance
for loan losses (ALL) was $3.7 million at December 31, 2021. The Company also describes in Note 1 of the
consolidated financial statements the "Allowance for Loan Losses" accounting policy around this estimate.
The ALL is an estimate of losses inherent in the loan portfolio. The determination of the reserve requires
significant judgment reflecting the Company’s best estimate of probable loan losses.
The allowance for loan losses is established as losses are estimated to have occurred through a provision for
loan losses charged to income. Loan losses are charged against the allowance when management determines
that an outstanding loan will not be collected. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is evaluated on a monthly basis by Company management and is based upon
management’s periodic review of the collectability of the loans in light of historical experience, the nature and
volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value
of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it
requires estimates that are susceptible to revision as more information becomes available.
The allowance consists of allocated and general components. The allocated component relates to loans that
are classified as impaired. For those loans that are classified as impaired, an allowance is established when
the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than
the carrying value of that loan. The general component covers non-impaired loans and is based on historical
charge-off experience by segment. The historical charge-off experience is determined by portfolio segment and
is based on the actual loss history experienced by the Company over the prior five years. Other adjustments
for each segment, such as qualitative or environmental considerations may be added to the allowance for each
loan segment after an assessment of internal or external influences on credit quality that are not fully reflected
in the historical loss or risk rating data.
The primary reason for our determination that the allowance for loan losses is a critical audit matter is that
auditing the estimated allowance for loan losses involved significant judgment and complex review. There is a
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Audit Committee, Board of Directors and Stockholders
United Bancorp, Inc.
Martins Ferry, Ohio
high degree of subjectivity in evaluating management’s estimate, such as evaluating management's assessment
of economic conditions and other environmental factors including the impact of the COVID-19 pandemic on
the loan portfolio, evaluating the adequacy of specific allowances associated with impaired loans and assessing
the appropriateness of loan grades.
We have audited the accompanying consolidated balance sheets of United Bancorp, Inc. as of December
31, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity and cash
flows for each of the years in the two-year period ended December 31, 2011. The Company's
management is responsible for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audits.
•
•
Testing clerical and computational accuracy of the ALL model.
Testing the completeness and accuracy of the underlying information utilized in the ALL model.
Our audit procedures related to the estimated allowance for loan losses included:
• Computing an independent calculation of an acceptable range and comparing it to the
Company's estimate.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing
auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we
express no such opinion. Our audits also included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
•
•
•
Evaluating the qualitative and environmental adjustments to the historical loss rates, including
assessing the basis for the adjustments and the reasonableness, reliability and relevance of the
significant assumptions and underlying data.
Evaluating the relevance and reliability of data and assumptions.
Testing of the loan review function and the accuracy of loan grades determined. Specifically, utilizing
internal loan review professionals to assist us in evaluating the appropriateness of loan grades and to
assess the reasonableness of specific impairments on loans.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of United Bancorp, Inc. as of December 31, 2011 and 2010, and the results
of its operations and its cash flows for each of the years in the two-year period ended December 31, 2011,
in conformity with accounting principles generally accepted in the United States of America.
We have served as the Company's auditor since 2007.
•
Evaluating the accuracy and completeness of disclosures in the consolidated financial statements.
Cincinnati, Ohio
March 2, 2012
Cincinnati, Ohio
March 18, 2022
December 31, 2004 and 2003
ASSETS
2004
2003
$ 7,580,576
$ 8,386,575
Cash and due from financial institutions
Securities available for sale - at market
Securities held to maturity – estimated fair value of
$15,475,005 and $16,344,353 at December 31, 2004
and 2003, respectively
Federal Home Loan Bank stock – at cost
Total loans
Allowance for loan losses
Assets
Premises and equipment
Accrued interest receivable
Other real estate and repossessions
Core deposit and other intangible assets
Bank owned life insurance
Other assets
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents
Consolidated Balance Sheets
United Bancorp, Inc.
Consolidated Balance Sheets
December 31, 2021 and 2020
December 31, 2021 and 2020
14,947,520
(In thousands, except share data)
(In thousands, except share data)
4,115,200
215,446,870
(2,995,422 )
212,451,448
7,760,360
2,253,212
1,014,207
34,417
7,517,548
2,030,767
137,816,329
Loans – net
140,818,167
15,594,408
3,954,300
198,608,574
(2,843,484 )
2021
195,765,090
8,152,480
$
2,373,573
940,015
57,452
7,185,507
2,295,402
7,653 $
75,346
82,999
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Available-for-sale securities
Loans, net of allowance for loan losses of $3,673 and $5,113 at December 31,
2021 and 2020, respectively
Premises and equipment
Demand deposits
Federal Home Loan Bank stock
Noninterest-bearing
Foreclosed assets held for sale, net
Interest-bearing
Core deposit intangible assets
Savings deposits
Time deposits – under $100,000
Goodwill
Time deposits - $100,000 and over
Accrued interest receivable
Total deposits
Bank-owned life insurance
Other assets
$397,521,584
Federal funds purchased
Advances from the Federal Home Loan Bank
Securities sold under agreements to repurchase
Other borrowed funds
Accrued expenses and other liabilities
Total Assets
Liabilities and Stockholders’ Equity
$ 31,777,495
62,038,985
45,143,133
122,018,788
39,651,142
300,629,543
3,180,000
46,680,311
12,612,270
399,283
1,196,066
364,697,473
146,313
$ 385,522,969
450,699
12,757
3,704
415
560
682
2,345
18,809
5,173
724,456 $
$ 30,049,919
61,137,605
48,274,042
128,443,059
36,621,372
304,525,997
9,714,000
30,974,611
5,485,399
$
159,398
2,149,105
353,008,510
Total liabilities
Liabilities
Deposits
Commitments
Demand
Savings
Time
Shareholders’ equity
Preferred stock - 2,000,000 shares without par value authorized;
Total deposits
no shares issued
Common stock - $1 par value; 10,000,000 shares authorized;
4,126,970 and 3,752,105 shares issued at December 31,
2004 and 2003, respectively
Additional paid-in capital
Retained earnings
Stock held by deferred compensation plan; 62,977 and 55,825
Total liabilities
shares at December 31, 2004 and 2003, respectively – at cost
Stockholders’ Equity
Treasury stock – 273,017 and 227,803 shares at December 31,
2004 and 2003, respectively - at cost
Accumulated comprehensive loss, unrealized losses on
securities designated as available for sale, net of tax
Securities sold under repurchase agreements
Subordinated debentures
Deferred federal income tax
Interest payable and other liabilities
$
-
-
408,296 $
140,598
56,242
605,136
-
15,701
23,665
1,681
6,572
652,755
3,752,105
25,712,990
6,047,652
(633,842)
4,126,970
25,831,585
7,021,185
(752,437)
(2,767,751)
Preferred stock, no par value, authorized 2,000,000 shares; no shares issued
Common stock, $1 par value; authorized 10,000,000 shares; issued 2021 –
(635,441)
32,824,111
6,053,851 shares, 2020 - 6,046,351 shares; outstanding 2021 – 5,791,853, 2020
Total shareholders’ equity
– 5,791,853
Total liabilities and shareholders’ equity
$397,521,584
(248,591 )
32,514,459
$ 385,522,969
(2,115,855)
––
––
Additional paid-in capital
Retained earnings
Stock held by deferred compensation plan; 2021 – 172,538 shares, 2020 –
174,905 shares
Unearned ESOP compensation
Accumulated other comprehensive income
Treasury stock, at cost 2021 – 84,363 shares, 2020 – 79,593 shares
6,054
23,635
37,847
(1,738 )
––
6,964
(1,061 )
71,701
724,456 $
$
6,046
23,166
32,497
(1,675 )
––
9,283
(989 )
68,328
693,402
Total stockholders’ equity
Total liabilities and stockholders’ equity
The accompanying notes are an integral part of these statements.
See Notes to Consolidated Financial Statements
2020
11,637
39,955
51,592
158,067
438,378
13,743
4,177
721
710
682
2,901
18,109
4,322
693,402
376,287
122,549
80,699
579,535
12,705
23,604
2,185
7,045
625,074
26 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
See Notes to Consolidated Financial Statements
Consolidated Statements of Income
United Bancorp, Inc.
Consolidated Statements of Income
Years Ended December 31, 2021 and 2020
Years Ended December 31, 2021 and 2020
(In thousands, except per share data)
(In thousands except per share data)
Interest and Dividend Income
Loans
Securities
Taxable
Tax-exempt
Federal funds sold
Dividends on Federal Home Loan Bank and other stock
Total interest and dividend income
Interest Expense
Deposits
Borrowings
Total interest expense
Net Interest Income
(Credit) Provision for Loan Losses
Net Interest Income After (Credit) Provision for Loan Losses
Noninterest Income
Customer service fees
Net gains on loan sales
Earnings on bank-owned life insurance
Realized gains on available-for-sale securities
Other
Total noninterest income
Noninterest Expense
Salaries and employee benefits
Net occupancy and equipment expense
Professional fees
Insurance
Deposit insurance premiums
Franchise and other taxes
Marketing expense
Printing and office supplies
Amortization of intangible assets
Other
Total noninterest expense
Income Before Federal Income Taxes
Provision for Federal Income Taxes
Net Income
Basic Earnings Per Share
Diluted Earnings Per Share
See Notes to Consolidated Financial Statements
2021
2020
$
20,181 $
22,099
468
3,877
101
81
24,708
1,273
1,323
2,596
22,112
(1,255 )
23,367
2,852
272
802
1,250
530
5,706
9,698
2,364
1,217
531
195
551
380
115
150
3,191
18,392
10,681
1,230
9,451 $
1.62 $
1.62 $
$
$
$
596
4,785
49
99
27,628
3,141
1,593
4,734
22,894
3,337
19,557
2,580
180
706
2,593
856
6,915
9,311
2,406
1,232
486
184
492
339
122
150
3,168
17,890
8,582
629
7,953
1.39
1.39
See Notes to Consolidated Financial Statements
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
27
Consolidated Statements of Comprehensive Income
United Bancorp, Inc.
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2021 and 2020
Years Ended December 31, 2021 and 2020
(In thousands)
(In thousands)
Net income
Other comprehensive income (loss), net of tax
2021
2020
$
9,451 $
7,953
Reclassification adjustment for realized losses (gains) on available-for-sale
securities included in net income, net of taxes $263 and $544 for each
respective period
Unrealized holding (losses) gains on available-for-sale securities during the
period, net of (benefits) taxes of $(497) and $1,841 for each respective period
Change in funded status of defined benefit plan, net of taxes (benefits) of $104
and $(312) for each respective period
Amortization of prior service included in net periodic pension expense, net of tax
benefits of $19 and $19 for each respective period
Amortization of net loss included in net periodic pension cost, net of taxes of $57
and $30 for each respective period
(987 )
(2,049 )
(1,871 )
6,925
396
(1,174 )
(70 )
213
(70 )
115
Comprehensive income
$
7,132 $
11,700
See Notes to Consolidated Financial Statements
28 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
See Notes to Consolidated Financial Statements
Consolidated Statements of Stockholders' Equity
United Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity
Years Ended December 31, 2021 and 2020
Years Ended December 31, 2021 and 2020
(In thousands, except per share data)
(In thousands except per share data)
Treasury
Additional Stock and
Common Paid-in Deferred
Stock
Shares
Acquired
By
Accumulated
Other
Retained Comprehensive
Capital Compensation ESOP Earnings Income (Loss) Total
Balance, January 1,
2020
$ 5,959
22,871
(2,121 )
(228 ) 27,905
5,536 59,922
Net income
Other comprehensive
income
Cash dividends -
$0.57 per share
Shares purchased for
deferred compensation
plan
Shares purchased for
treasury stock
Expense related to
share-based
compensation plans
Restricted stock
activity
Amortization of ESOP
Balance, December 31,
2020
Net income
Other comprehensive
(loss)
Cash dividends -
$0.685 per share
Shares activity for
deferred compensation
plan
Shares purchased for
treasury stock
Expense related to
share-based
compensation plans
Restricted stock
activity
––
––
––
––
––
––
––
––
17
––
––
––
7,953
–– 7,953
––
––
––
3,747 3,747
––
––
(3,361 )
–– (3,361 )
(17 )
––
––
––
––
(526 )
––
––
––
(526 )
––
324
––
––
––
––
324
87
––
(87 )
41
––
––
––
228
––
––
––
––
––
269
6,046 $
23,166 $
(2,664 ) $
–– $ 32,497 $
9,283 $ 68,328
––
––
––
––
––
––
––
––
63
––
––
––
9,451
–– 9,451
––
––
––
(2,319 ) (2,319 )
––
––
(4,101 )
–– (4,101 )
(63 )
––
––
––
––
(72 )
––
––
––
(72 )
––
414
––
––
––
––
414
8
(8 )
––
––
––
––
––
Balance, December 31,
2021
$ 6,054 $
23,635 $
(2,799 ) $
–– $ 37,847 $
6,964 $ 71,701
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
29
Consolidated Statements of Cash Flows
United Bancorp, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, 2021 and 2020
Years Ended December 31, 2021 and 2020
(In thousands)
(In thousands)
Operating Activities
Net income
Items not requiring (providing) cash
Depreciation and amortization
(Credit) Provision for loan losses
Gain on sale of available-for-sale securities
Amortization of premiums and discounts on securities-net
Amortization of intangible assets
Deferred income taxes
Originations of loans held for sale
Proceeds from sale of loans held for sale
Net gains on sales of loans
Amortization of ESOP
Expense related to share-based compensation plans
Gain on sale of real estate and other repossessed assets
Increase in cash surrender value of bank-owned life insurance
Amortization of debt issuance costs
Changes in
Accrued interest receivable
Other assets
Interest payable and other liabilities
2021
2020
$
9,451 $
7,953
1,143
(1,255 )
(1,250 )
384
150
112
(11,631 )
11,903
(272 )
---
414
(75 )
(441 )
61
556
(1,237 )
179
1,157
3,337
(2,593 )
407
150
(547 )
(8,040 )
8,220
(180 )
270
324
(5 )
(463 )
61
(205 )
(1,800 )
1,324
Net cash provided by operating activities
8,192
9,370
Investing Activities
Purchases of available-for-sale securities
Sale of available-for-sale securities
Maturities, prepayments and calls
Net change in loans
Mandatory redemption (Purchase) of Federal Home Loan Bank Stock
Purchases of bank-owned life insurance
Purchases of premises and equipment, net
Proceeds from sale of premises and equipment
Proceeds from sales of foreclosed assets
(24,371 )
12,684
20,834
(10,864 )
473
(259 )
(777 )
620
451
(22,602 )
31,675
30,003
(2,658 )
(165 )
(450 )
(2,519 )
21
363
Net cash (used in) provided by investing activities
(1,209 )
33,668
See Notes to Consolidated Financial Statements
30 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
See Notes to Consolidated Financial Statements
Consolidated Statements of Cash Flows Continued
United Bancorp, Inc.
Years Ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows (continued)
(In thousands)
December 31, 2021 and 2020
(In thousands)
Financing Activities
Net increase in deposits
Repayment of Federal Home Loan Bank advances
Net change in securities sold under repurchase agreements
Repurchase of common stock
Cash dividends paid
Net cash provided by (used in) financing activities
Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
2021
2020
$
25,601 $
---
2,996
(72 )
(4,101 )
31,466
(39,800 )
5,790
(526 )
(3,361 )
24,424
(6,431 )
31,407
36,607
51,592
14,985
Cash and Cash Equivalents, End of Year
$
82,999 $
51,592
Supplemental Cash Flows Information
Interest paid on deposits and borrowings
Federal income taxes paid
Supplemental Disclosure of Non-Cash Investing Activities
Transfers from loans to foreclosed assets held for sale
See Notes to Consolidated Financial Statements
$
2,182 $
4,723
$
710 $
990
$
70 $
260
See Notes to Consolidated Financial Statements
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
31
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the
Company”) and its wholly-owned subsidiary, Unified Bank of Martins Ferry, Ohio (“the Bank” or
“Unified”). All intercompany transactions and balances have been eliminated in consolidation.
Nature of Operations
The Company’s revenues, operating income and assets are almost exclusively derived from banking.
Accordingly, all of the Company’s banking operations are considered by management to be aggregated in
one reportable operating segment. Customers are mainly located in Athens, Belmont, Carroll, Fairfield,
Harrison, Jefferson and Tuscarawas Counties in Ohio and Marshall and Ohio Counties in West Virginia and
the surrounding localities in northeastern, east-central and southeastern Ohio and include a wide range of
individuals, businesses and other organizations. Unified Bank conducts its business through its main office
in Martins Ferry, Ohio and branches in Amesville, Bridgeport, Colerain, Dellroy, Dover, Glouster, Jewett,
Lancaster Downtown, Lancaster East, Nelsonville, New Philadelphia, Powhatan Point, St. Clairsville East,
St. Clairsville West, Sherrodsville, Strasburg, Tiltonsville, Ohio and Moundsville West Virginia.
The Company’s primary deposit products are checking, savings and term certificate accounts and its primary
lending products are residential mortgage, commercial and installment loans. Substantially all loans are
secured by specific items of collateral including business assets, consumer assets and real estate. Commercial
loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured
by both residential and commercial real estate. Net interest income is affected by the relative amount of
interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The
level of interest rates paid or received by the Company can be significantly influenced by a number of
environmental factors, such as governmental monetary policy, that are outside of management’s control.
Revenue Recognition
Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"),
establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue
and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle
requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount
that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services
recognized as performance obligations are satisfied.
The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated
from financial instruments, such as our loans, investment securities, as well as revenue related to our
mortgage banking activities, as these activities are subject to other GAAP discussed elsewhere within our
disclosures.
32 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented
in our statements of income as components of non-interest income are as follows:
Service charges on deposit accounts - these represent general service fees for monthly account
maintenance and activity- or transaction-based fees and consist of transaction-based revenue, time-based
revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue
is recognized when our performance obligation is completed which is generally monthly for account
maintenance services or when a transaction has been completed (such as a wire transfer). Payment for
such performance obligations are generally received at the time the performance obligations are satisfied.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the
allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowance for loan losses and the valuation
of foreclosed assets held for sale, management obtains independent appraisals for significant properties.
Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less to be cash
equivalents. At December 31, 2021 and 2020, cash equivalents consisted primarily of due from accounts with
the Federal Reserve and other correspondent banks.
Currently, the FDIC’s insurance limits are $250,000. At December 31, 2021 and 2020, the Company’s
various cash accounts did not exceed the federally insured limit of $250,000. At December 31, 2021 and
2020, the Company held $74,752,000 and $37,738,000 at the Federal Home Loan Bank and the Federal
Reserve Bank, respectively, which are not subject to FDIC limits.
Securities
Certain debt securities that management has the positive intent and ability to hold to maturity would be
classified as “held to maturity” and recorded at amortized cost. Securities not classified as held to maturity,
including equity securities with readily determinable fair values, are classified as “available for sale” and
recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other
comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest
method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade
date and are determined using the specific identification method.
For debt securities with fair value below amortized cost, when the Company does not intend to sell a debt
security, and it is more likely than not the Company will not have to sell the security before recovery of its
cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in
earnings and the remaining portion in other comprehensive income.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
33
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Loans Held for Sale
Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or
fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by
charges to income. At December 31, 2021 and 2020, the Company did not have any loans held for sale.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs
are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance
for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or
discounts on purchased loans.
For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan
origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and
amortized as a level yield adjustment over the respective term of the loan.
For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the
credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan.
For all loan classes, the entire balance of the loan is considered past due if the minimum payment
contractually required to be paid is not received by the contractual due date. For all loan classes, loans are
placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered
doubtful.
Management’s general practice is to proactively charge down loans individually evaluated for impairment to
the fair value of the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan
segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s
policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.
For all loan portfolio segments except residential and consumer loans, the Company promptly charges-off
loans, or portions thereof, when available information confirms that specific loans are uncollectible based on
information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower,
(2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s
ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral
dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other
appropriate valuation of the collateral.
The Company charges-off residential and consumer loans when the Company reasonably determines the
amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which
provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less
costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 120
days past due, and charge down to the net realizable value when other secured loans are 120 days past due.
Loans at these respective delinquency thresholds for which the Company can clearly document that the loan
is both well-secured and in the process of collection, such that collection will occur regardless of delinquency
status, need not be charged off.
34 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off
are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-
recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the
principal and interest amounts contractually due are brought current and future payments are reasonably
assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial
position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of
interest or principal. The Company requires a period of satisfactory performance of not less than six months
before returning a nonaccrual loan to accrual status.
When cash payments are received on impaired loans in each loan class, the Company records the payment
as interest income unless collection of the remaining recorded principal amount is doubtful, at which time
payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize
interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified
terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in
accordance with the renegotiated terms for a period of at least six months.
Allowance for Loan Losses
The allowance for loan losses is established as losses are estimated to have occurred through a provision for
loan losses charged to income. Loan losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is evaluated on a monthly basis by Bank management and is based upon
management’s periodic review of the collectability of the loans in light of historical experience, the nature
and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated
value of any underlying collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision as more information becomes
available.
The allowance consists of allocated and general components. The allocated component relates to loans that
are classified as impaired. For those loans that are classified as impaired, an allowance is established when
the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than
the carrying value of that loan. The general component covers non-impaired loans and is based on historical
charge-off experience by segment. The historical loss experience is determined by portfolio segment and is
based on the actual loss history experienced by the Company over the prior five years. Management believes
the five year historical loss experience methodology is appropriate in the current economic environment.
Other adjustments (qualitative/environmental considerations) for each segment may be added to the
allowance for each loan segment after an assessment of internal or external influences on credit quality that
are not fully reflected in the historical loss or risk rating data.
UNITEDBANCORP INC.
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35
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
A loan is considered impaired when, based on current information and events, it is probable that the Company
will be unable to collect the scheduled payments of principal or interest when due according to the contractual
terms of the loan agreement. Factors considered by management in determining impairment include payment
status, collateral value and the probability of collecting scheduled principal and interest payments when due
based on the loan’s current payment status and the borrower’s financial condition including available sources
of cash flows. Loans that experience insignificant payment delays and payment shortfalls generally are not
classified as impaired.
Management determines the significance of payment delays and payment shortfalls on a case-by-case basis,
taking into consideration all of the circumstances surrounding the loan and the borrower, including the length
of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall
in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for non-
homogenous type loans such as commercial, non-owner residential and construction loans by either the
present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s
obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired
loans where the Company utilizes the discounted cash flows to determine the level of impairment, the
Company includes the entire change in the present value of cash flows as bad debt expense.
The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral.
In general, the Company acquires an updated appraisal upon identification of impairment and annually
thereafter for commercial, commercial real estate and multi-family loans. If the most recent appraisal is over
a year old, and a new appraisal is not performed, due to lack of comparable values or other reasons, the
existing appraisal is utilized and discounted generally 10% -35% based on the age of the appraisal, condition
of the subject property, and overall economic conditions. After determining the collateral value as described,
the fair value is calculated based on the determined collateral value less selling expenses. The potential for
outdated appraisal values is considered in our determination of the allowance for loan losses through our
analysis of various trends and conditions including the local economy, trends in charge-offs and
delinquencies, etc. and the related qualitative adjustments assigned by the Company.
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the
segment’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that
affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer
and residential loans for impairment measurements, unless such loans are the subject of a restructuring
agreement due to financial difficulties of the borrower.
In the course of working with borrowers, the Company may choose to restructure the contractual terms of
certain loans. In this scenario, the Company attempts to work-out an alternative payment schedule with the
borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the
Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or
legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower
that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line
with its current financial status and the restructuring of the loan may include the transfer of assets from the
borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the
Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time
foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company
may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.
36 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being
restructured remain on nonaccrual status until six months of satisfactory borrower performance at which time
management would consider its return to accrual status. If a loan was accruing at the time of restructuring,
the Company reviews the loan to determine if it is appropriate to continue the accrual of interest on the
restructured loan.
With regard to determination of the amount of the allowance for credit losses, trouble debt restructured loans
are considered to be impaired. As a result, the determination of the amount of impaired loans for each
portfolio segment within troubled debt restructurings is the same as detailed previously.
On March 27, 2020, the President of the United State signed the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”), which provides entities with optional temporary relief from certain
accounting and financial reporting requirements under U.S. GAAP. Section 4013 of the CARES Act allows
financial institutions to suspend application of certain TDR accounting guidance for loan and lease
modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December
31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria are met.
Section 4013 of the CARES Act was amended on December 27, 2020 to extend this relief until January 1,
2022. The relief can be applied to loan and lease modifications for borrowers that were not more than 30
days past due as of December 31, 2019 and to loan and lease modifications that defer or delay the payment
of principal or interest, or change the interest rate on the loan. The Company chose to apply this relief to
eligible loan and lease modifications.
Premises and Equipment
Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using
the straight-line method over the estimated useful lives of the assets. An accelerated method is used for tax
purposes.
Federal Home Loan Bank Stock
Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal
Home Loan Bank system. The required investment in the common stock is based on a predetermined formula,
carried at cost and evaluated for impairment.
Foreclosed Assets Held for Sale
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value,
less costs to sell, at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure,
valuations are periodically performed by management and the assets are carried at the lower of carrying
amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation
allowance are included in net income or expense from foreclosed assets.
Bank-Owned Life Insurance
The Company and the Bank have purchased life insurance policies on certain key executives. Company and
bank-owned life insurance is recorded at its cash surrender value, or the amount that can be realized.
Treasury Stock
Common shares repurchased are recorded at cost. Cost of shares retired or reissued is determined using the
weighted average cost.
Restricted Stock Awards
The Company has a share-based employee compensation plan, which is described more fully in Note 14.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
37
Notes to Consolidated Financial Statements
Income Taxes
December 31, 2021 and 2020
The Company accounts for income taxes in accordance with income tax accounting guidance
(ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax
expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current
period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over
revenues. The Company determines deferred income taxes using the liability (or balance sheet) method.
Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between
the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in
the period in which they occur.
Deferred income tax expense results from changes in deferred tax assets and liabilities between periods.
Deferred tax assets are reduced by a valuation allowance if based on the weight of evidence available it is
more likely than not that some portion or all of a deferred tax asset will not be realized.
Uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax
position will be realized or sustained upon examination. The term more likely than not means a likelihood of
more than 50 percent; the terms examined and upon examination also include resolution of the related appeals
or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is
initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent
likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant
information. The determination of whether or not a tax position has met the more-likely-than-not recognition
threshold considers the facts, circumstances and information available at the reporting date and is subject to
management’s judgment. At December 31, 2021, the Company had no uncertain tax positions.
The Company recognizes interest and penalties on income taxes as a component of income tax expense.
The Company files consolidated income tax returns with its subsidiary. With a few exceptions, the Company
is no longer subject to the examination by tax authorities for years before 2018.
Deferred Compensation Plan
Directors have the option to defer all or a portion of fees for their services into a deferred stock compensation
plan that invests in common shares of the Company. Officers of the Company have the option to defer up to
50% of their annual incentive award into this plan. The plan does not permit diversification and must be
settled by the delivery of a fixed number of shares of the Company stock. The stock held in the plan is
included in equity as deferred shares and is accounted for in a manner similar to treasury stock. Subsequent
changes in the fair value of the Company’s stock are not recognized. The deferred compensation obligation
is also classified as an equity instrument and changes in the fair value of the amount owed to the participant
are not recognized.
The Company has entered into supplemental income agreements for certain individuals. These agreements
call for a fixed payment over 180 months after the individual reaches normal retirement age.
Stockholders’ Equity and Dividend Restrictions
The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior
regulatory approval. Generally, the Bank’s payment of dividends is limited to net income for the current year
plus the two preceding calendar years, less capital distributions paid over the comparable time period.
Dividend payments to the stockholders may be legally paid from additional paid-in capital or retained
earnings.
38 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
Earnings Per Share
December 31, 2021 and 2020
Basic earnings per share allocated to common stockholders is calculated using the two-class method and is
computed by dividing net income allocated to common stockholders by the weighted average number of
commons shares outstanding during the period. Diluted earnings per share is adjusted for the dilutive effects
of stock based compensation and is calculated using the two-class method or the treasury method. There were
no dilutive effects for the years ended December 31, 2021 and 2020.
Comprehensive Income
Comprehensive income consists of net income and other comprehensive (loss) income, net of applicable
income taxes. Other comprehensive (loss) income includes unrealized appreciation (depreciation) on
available-for-sale securities and changes in the funded status of the defined benefit pension plan.
Advertising
Advertising costs are expensed as incurred.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
39
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 2: Restriction on Cash and Due From Banks
The Company did not have a reserve requirement at December 31, 2021 and 2020.
Note 3:
Securities
The amortized cost and approximate fair values, together with gross unrealized gains and losses of securities are
as follows:
Available-for-sale Securities:
December 31, 2021:
U.S. government agencies
Subordinated notes
State and municipal obligations
Total debt securities
Available-for-sale Securities:
December 31, 2020:
U.S. government agencies
Subordinated notes
State and municipal obligations
Total debt securities
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(In thousands)
Fair Value
$
$
$
$
--- $
28,837
106,533 $
135,370 $
--- $
76
11,015
11,091 $
–– $
(148 )
––
(148 ) $
---
28,765
117,548
146,313
10,000 $
4,500
129,006 $
143,506 $
53 $
6
14,503
14,562 $
–– $
(1 )
––
(1 ) $
10,053
4,505
143,509
158,067
During 2021 the Company sold $11.4 million of State and Municipal securities for a total gain of approximately
$1,250,000. During 2020 the Company sold $23.7 million of State and Municipal securities for a total gain of
approximately $2,525,000 and the Company also sold $8.0 million of US Government Agency bonds for a total
gain of approximately $69,000.
The amortized cost and fair value of available-for-sale securities at December 31, 2021, by contractual maturity,
are shown below. Expected maturities will differ from contractual maturities because issuers may have the right
to call or prepay obligations with or without call or prepayment penalties.
40 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
One to five years
Five to ten years
Over ten years
Amortized
Cost
(In thousands)
Fair
Value
$
3,202 $ 3,191
25,634 25,573
106,534 117,549
Totals
$ 135,370 $ 146,313
The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $64.4
million and $55.8 million at December 31, 2021 and 2020, respectively.
Certain investments in debt securities are reported in the financial statements at an amount less than their historical
cost. The total fair value of these investments at December 31, 2021 and 2020, was $14.2 million and $1.0 million,
which represented approximately 10% and less than 1%, respectively, of the Company’s available-for-sale
investment portfolio.
Based on evaluation of available evidence, including recent changes in market interest rates, credit rating
information and information obtained from regulatory filings, management believes the declines in fair value for
these securities are temporary.
The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by
investment category and length of time that individual securities have been in a continuous unrealized loss
position at December 31, 2021 and 2020:
Description of
Securities
US government agencies
Subordinated notes
State and municipal obligations
Total temporarily impaired securities
Less than 12 Months
Fair
Value
Unrealized
Losses
(In thousands)
$
$
$
$
–– $
14,204 $
–– $
14,204 $
–– $
(148) $
–– $
(148) $
December 31, 2021
12 Months or More
Fair
Value
Unrealized
Losses
Total
Fair
Value
Unrealized
Losses
–– $
--- $
–– $
--- $
–– $
--- $
–– $
--- $
–– $
14,204 $
–– $
14,204 $
––
(148 )
––
(148 )
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
41
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Description of
Securities
Less than 12 Months
Fair
Value
Unrealized
Losses
(In thousands)
December 31, 2020
12 Months or More
Fair
Value
Unrealized
Losses
Total
Fair
Value
Unrealized
Losses
US government agencies
Subordinated notes
State and municipal obligations
Total temporarily impaired securities
$
$
$
–– $
–– $
–– $
–– $
–– $
–– $
–– $
–– $
–– $
1,000 $
–– $
1,000 $
–– $
(1 ) $
–– $
(1 ) $
–– $
1,000 $
–– $
1,000 $
––
(1 )
––
(1 )
The unrealized losses on the Company’s investments in subordinated notes were caused by interest rate increases.
Because the Company does not intend to sell the investments and it is not more likely than not the Company will
be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the
Company does not consider those investments to be other-than-temporarily impaired at December 31, 2021.
Note 4:
Loans and Allowance for Loan Losses
Categories of loans at December 31, include:
Commercial loans
Commercial real estate
Residential real estate
Installment loans
Total gross loans
Less allowance for loan losses
Total loans
$
2021
2020
(In thousands)
90,892 $
266,777
90,132
6,571
103,277
246,167
85,789
8,258
454,372
443,491
(3,673 )
(5,113 )
$
450,699 $
438,378
42 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The risk characteristics of each loan portfolio segment are as follows:
Commercial
Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the
underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as
expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured
by the assets being financed or other business assets, such as accounts receivable or inventory, and may
include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans
secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially
dependent on the ability of the borrower to collect amounts due from its customers.
Commercial Real Estate
Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by
real estate. Commercial real estate lending typically involves higher loan principal amounts and the
repayment of these loans is generally dependent on the successful operation of the property securing the loan
or the business conducted on the property securing the loan. Commercial real estate loans may be more
adversely affected by conditions in the real estate markets or in the general economy. The characteristics of
properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location
almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate
loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single
purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management
tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans.
Residential and Installment
Residential and installment loans consist of two segments - residential mortgage loans and personal loans.
For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied,
the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance
if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family
residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or
recreational vehicles. Some consumer personal loans are unsecured, such as small installment loans and
certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the
borrowers, which can be impacted by economic conditions in their market areas, such as unemployment
levels. Repayment can also be impacted by changes in property values on residential properties. Risk is
mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of
borrowers.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
43
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following tables present the balance in the allowance for loan losses and the recorded investment in loans
based on portfolio segment and impairment method as of December 31, 2021 and 2020:
Commercial
Commercial
Real Estate Residential Installment Unallocated Total
(In thousands)
2021
Allowance for loan losses:
Balance, beginning of year
$
(Credit) Provision charged to expense
Losses charged off
Recoveries
Balance, end of year
Ending balance: individually evaluated for
impairment
Ending balance: collectively evaluated for
impairment
Loans:
Ending balance: individually evaluated for
impairment
Ending balance: collectively evaluated for
impairment
$
$
$
$
$
1,397 $
(276 )
(78 )
3
1,046 $
1,821 $
(586 )
---
––
1,235 $
1,471 $
(331 )
(26 )
7
1,121 $
424 $
(62 )
(126 )
35
271 $
–– $
––
––
––
–– $
5,113
(1,255 )
(230 )
45
3,673
–– $
230 $
–– $
–– $
–– $
230
1,046 $
1,005 $
1,121 $
271 $
–– $
3,443
--- $
3,933 $
--- $
–– $
–– $
3,933
90,892 $
262,844 $
90,132 $
6,571 $
–– $ 450,439
Allowance for loan losses:
Balance, beginning of year
Provision charged to expense
Losses charged off
Recoveries
Balance, end of year
Ending balance: individually evaluated for
impairment
Ending balance: collectively evaluated for
impairment
Loans:
Ending balance: individually evaluated for
impairment
Ending balance: collectively evaluated for
impairment
Commercial
Commercial
Real Estate Residential Installment Unallocated Total
(In thousands)
2020
$
$
$
$
$
568 $
875
(69 )
23
1,397 $
792 $
1,254
(225 )
––
1,821 $
572 $
986
(104 )
17
1,471 $
299 $
222
(169 )
72
424 $
–– $
––
––
––
–– $
2,231
3,337
(567 )
112
5,113
–– $
1 $
–– $
–– $
–– $
1
1,397 $
1,820 $
1,471 $
424 $
–– $
5,112
80 $
182 $
114 $
–– $
–– $
376
$
103,197 $
245,985 $
85,675 $
8,258 $
–– $ 443,115
44 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
To facilitate the monitoring of credit quality within the loan portfolio, and for purposes of analyzing historical
loss rates used in the determination of the allowance for loan loss estimate, the Company utilizes the
following categories of credit grades: pass, special mention, substandard, and doubtful. The four categories,
which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to
borrowers and updated periodically thereafter. Pass ratings, which are assigned to those borrowers that do
not have identified potential or well defined weaknesses and for which there is a high likelihood of orderly
repayment, are updated periodically based on the size and credit characteristics of the borrower. All other
categories are updated on at least a quarterly basis.
The Company assigns a special mention rating to loans that have potential weaknesses that deserve
management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result
in the deterioration of the repayment prospects for the loan or the Company’s credit position.
The Company assigns a substandard rating to loans that are inadequately protected by the current sound
worth and paying capacity of the borrower or of the collateral pledged. Substandard loans have well defined
weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this
grade also are characterized by the distinct possibility that the Company will sustain some loss if the
deficiencies noted are not addressed and corrected.
The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating with the
added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently
existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is
extremely high, but because of certain important and reasonable specific pending factors that may work to
the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss
is deferred until its more exact status may be determined. Pending factors may include a proposed merger or
acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing
plans.
The following table shows the portfolio quality indicators as of December 31, 2021:
Loan Class
Commercial
Commercial
Real Estate Residential Installment
Total
Pass Grade
Special Mention
Substandard
Doubtful
(In thousands)
$
90,892 $
---
---
––
254,760 $
4,115
7,902
––
90,132 $
––
---
––
6,571 $
––
––
––
442,355
7,943
4,074
––
$
90,892 $
266,777 $
90,132 $
6,571 $
454,372
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
45
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following table shows the portfolio quality indicators as of December 31, 2020:
Loan Class
Commercial
Commercial
Real Estate Residential Installment
Total
Pass Grade
Special Mention
Substandard
Doubtful
(In thousands)
$
103,181 $
15
81
––
239,862 $
3,422
2,883
––
85,675 $
––
114
––
8,258 $
––
––
––
436,976
3,437
3,078
––
$
103,277 $
246,167 $
85,789 $
8,258 $
443,491
The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology
on an ongoing basis. No significant methodology changes were made during 2021 and 2020.
The following table shows the loan portfolio aging analysis of the recorded investment in loans as of
December 31, 2021:
30-59
Days Past
Due and
Accruing
60-89
Days Past
Due and
Accruing
Greater
Than 90
Days and
Accruing
Total
Past Due
and Non
Accrual Current
Total
Loans
Receivable
Non
Accrual
Commercial
Commercial real estate
Residential
Installment
Total
$
$
63 $
220
22
40
345 $
–– $
––
---
---
--- $
(In thousands)
–– $
––
––
––
–– $
--- $
3,818
391
––
4,209 $
63 $
90,892
90,829 $
4,038 262,739 266,777
90,132
89,719
6,571
6,531
4,554 $ 449,818 $ 454,372
413
40
The following table shows the loan portfolio aging analysis of the recorded investment in loans as of
December 31, 2020:
30-59
Days Past
Due and
Accruing
60-89
Days Past
Due and
Accruing
Greater
Than 90
Days and
Accruing
Total
Past Due
and Non
Accrual Current
Total
Loans
Receivable
Non
Accrual
$
$
–– $
––
120
7
127 $
–– $
––
59
20
79 $
(In thousands)
–– $
––
––
––
–– $
83 $
98
445
––
626 $
83 $ 103,194 $ 103,277
98 246,069 246,167
85,789
85,165
624
27
8,258
8,231
832 $ 442,659 $ 443,491
Commercial
Commercial real estate
Residential
Installment
Total
46 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-
16), when based on current information and events, it is probable the Company will be unable to collect all
amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include
nonperforming commercial loans but also include loans modified in troubled debt restructurings where
concessions have been granted to borrowers experiencing financial difficulties. These concessions could
include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance
or other actions intended to maximize collection.
The following table presents impaired loans for the year ended December 31, 2021:
Loans without a specific valuation allowance:
Commercial
Commercial real estate
Real Estate
Installment
Loans with a specific valuation allowance:
Commercial
Commercial real estate
Real Estate
Total:
Commercial
Commercial Real Estate
Real Estate
Installment
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
(In thousands)
Average
Investment
in
Impaired
Loans
Interest
Income
Recognized
$
--- $
128
---
––
--- $
128
---
---
–– $
––
––
––
--- $
128
---
––
128
128
––
128
$
–– $
3,805
––
–– $
3,805
––
–– $
230
––
--- $
3,822
––
---
6
---
---
6
––
105
––
$
3,805 $
3,805 $
230 $
3,822 $
105
$
$
$
$
--- $
3,933 $
--- $
–– $
--- $
3,933 $
--- $
--- $
–– $
230 $
–– $
–– $
--- $
3,950 $
--- $
–– $
---
111
---
---
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
47
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following table presents impaired loans for the year ended December 31, 2020:
Loans without a specific valuation allowance:
Commercial
Commercial real estate
Real Estate
Installment
Loans with a specific valuation allowance:
Commercial
Commercial real estate
Real Estate
Total:
Commercial
Commercial Real Estate
Real Estate
Installment
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
(In thousands)
Average
Investment
in
Impaired
Loans
Interest
Income
Recognized
$
$
80 $
110
114
––
80 $
196
121
14
–– $
––
––
––
78 $
136
118
––
304
411
––
332
–– $
72
––
–– $
72
––
–– $
1
––
92 $
3
––
$
72 $
72 $
1 $
95 $
$
$
$
$
80 $
182 $
114 $
–– $
80 $
268 $
121 $
14 $
–– $
1 $
–– $
–– $
170 $
139 $
118 $
–– $
11
8
22
5
46
––
3
––
3
11
11
22
5
At December 31, 2021 and 2020, the Company had certain loans that were modified in troubled debt
restructurings and impaired. The modification of terms of such loans included one or a combination of the
following: an extension of maturity, a reduction of the stated interest rate or a permanent reduction of the
recorded investment in the loan.
48 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following tables present information regarding troubled debt restructurings by class and by type of
modification for the year ended December 31, 2021 and 2020:
Year Ended December 31, 2021
Post-
Pre-
Modification
Modification
Outstanding
Outstanding
Recorded
Recorded
Investment
Investment
Number of
Contracts
–– $
--- $
(In thousands)
–– $
--- $
––
---
Year Ended December 31, 2021
Interest
Only
Term
Combination
(In thousands)
Total
Modification
$
$
–– $
–– $
–– $
--- $
–– $
–– $
––
---
Year Ended December 31, 2020
Post-
Pre-
Modification
Modification
Outstanding
Outstanding
Recorded
Recorded
Investment
Investment
Number of
Contracts
–– $
1 $
(In thousands)
–– $
86 $
––
86
Year Ended December 31, 2020
Interest
Only
Term
Combination
(In thousands)
Total
Modification
$
$
–– $
–– $
–– $
86 $
–– $
–– $
––
86
Commercial
Commercial Real Estate
Commercial
Commercial Real Estate
Commercial
Commercial Real Estate
Commercial
Commercial Real Estate
During the year ended December 31, 2021 and 2020, troubled debt restructurings did not have an impact on
the allowance for loan losses. At December 31, 2021 and 2020 and for the years then ended, there were no
material defaults of any troubled debt restructurings that were modified in the last 12 months. The Company
generally considers TDR’s that become 90 days or more past due under the modified terms as subsequently
defaulted.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
49
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 5:
Premises and Equipment
Major classifications of premises and equipment, stated at cost, are as follows:
Land, buildings and improvements
Furniture and equipment
Computer software
Less accumulated depreciation
Net premises and equipment
Note 6:
Time Deposits
$
2021
2020
(In thousands)
19,838 $
15,079
2,284
37,201
(24,444 )
19,956
15,051
2,225
37,232
(23,489 )
13,743
$
12,757 $
Time deposits in denominations of $250,000 or more were $4.4 million at December 31, 2021 and $7.8
million at December 31, 2020. At December 31, 2021, the scheduled maturities of time deposits are as
follows:
Due during the year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Note 7:
Borrowings
(In
thousands)
$ 36,815
11,755
5,430
1,516
366
360
$ 56,242
At December 31, 2021 and 2020, as a member of the Federal Home Loan Bank system the Bank had the
ability to obtain up to $154.1 million and $140.5 million, respectively, in additional borrowings based on
securities and certain loans pledged to the FHLB. At December 31, 2021 and 2020, the Bank had
approximately $228.2 million and $207.9 million, respectively of one- to four-family residential real estate
and commercial real estate loans pledged as collateral for borrowings. Also at December 31, 2020 and 2019,
the Company and the Bank have cash management lines of credit with various correspondent banks
(excluding FHLB cash management lines of credit) enabling additional borrowings of up to $18.0 million.
At December 31, 2021 and 2020 the Company had no outstanding borrowings with the FHLB.
50 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Securities sold under repurchase agreements were approximately $15.7 million and $12.7 million at
December 31, 2021 and 2020.
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. Physical control is maintained for all securities sold under repurchase agreements. Information
concerning securities sold under agreements to repurchase is summarized as follows:
Balance outstanding at year end
Average daily balance during the year
Average interest rate during the year
Maximum month-end balance during the year
Weighted-average interest rate at year end
2021
2020
(Dollars in thousands)
$
$
$
15,701 $
19,452 $
0.12 %
26,653 $
0.12 %
12,705
12,524
0.29 %
16,503
0.29 %
All repurchase agreements are subject to term and conditions of repurchase/security agreements between
the Company and the customer and are accounted for as secured borrowings. The Company’s repurchase
agreements reflected in short-term borrowings consist of customer accounts and securities which are
pledged on an individual security basis.
The following table presents the Company’s repurchase agreements accounted for as secured borrowings:
Remaining Contractual Maturity of the Agreement
(In thousands)
December 31, 2021
Repurchase Agreements
State and municipal obligations
Total
December 31, 2020
Repurchase Agreements
U.S government agencies
Total
Overnight
and
Continuous
Up to 30
Days
30-90
Days
Greater
than 90
Days
Total
$
$
15,701 $
15,701 $
–– $
–– $
–– $
–– $
–– $
–– $
15,701
15,701
Overnight
and
Continuous
Up to 30
Days
30-90
Days
Greater
than 90
Days
Total
$
$
12,705 $
12,705 $
–– $
–– $
–– $
–– $
–– $
–– $
12,705
12,705
Securities with an approximate carrying value of $37.5 million and $30.1 million at December 31, 2021 and
2020, respectively, were pledged as collateral for repurchase borrowings.
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
51
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 8:
Subordinated Debentures
On May 14, 2019 the Company issued $20,000,000 of junior subordinated debentures. The debentures bear
interest at a fixed rate of 6.0% until May 2024, which then becomes a floating interest rate equal to the three-
month LIBOR (or an equivalent index) plus 3.625%, resetting quarterly. Interest on the subordinated notes
is payable semiannually through May 2024 and quarterly thereafter through the maturity date of May 2029.
Principal is due upon maturity. The debentures are unsecured and payable to various investors. For purposes
of computing regulatory capital, the debentures are included in Tier 2 Capital. The subordinated notes may
not be repaid in whole or in part prior to the fifth anniversary of the issue date (May 2019). Unamortized debt
costs were $459,000 and $519,000 as of December 31, 2021 and 2020, respectively.
In 2005, a Delaware statutory business trust owned by the Company, United Bancorp Statutory Trust I (“Trust
I” or the “Trust”), issued $4.1 million of mandatorily redeemable debt securities. The sale proceeds were
utilized to purchase $4.1 million of the Company’s subordinated debentures which mature in 2035. The
Company’s subordinated debentures are the sole asset of Trust I. The Company’s investment in Trust I is not
consolidated herein as the Company is not deemed the primary beneficiary of the Trust. However, the $4.1
million of mandatorily redeemable debt securities issued by the Trust are includible for regulatory purposes
as a component of the Company’s Tier I Capital. Interest on the Company’s subordinated debentures is equal
to three month LIBOR plus 1.35% and is payable quarterly.
Subordinated debentures, net of unamortized debt costs, totaled $23.7 million and $23.6 million at December
31, 2021 and 2020, respectively.
52 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 9:
Income Taxes
The provision for income taxes includes these components:
Taxes currently payable
Deferred income taxes
Income tax expense
2021
2020
(In thousands)
1,118 $
112
1,230 $
1,176
(547 )
629
$
$
A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is
shown below:
Computed at the statutory rate (21%)
(Decrease) increase resulting from
Tax exempt interest
Earnings on bank-owned life insurance - net
Low income housing credit
Other
Actual tax expense
2021
2020
(In thousands)
2,243 $
1,802
$
(822 )
(168 )
(52 )
29
1,230 $
(967 )
(148 )
(131 )
73
629
$
The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:
Deferred tax assets
Allowance for loan losses
Stock based compensation
Deferred compensation, and other accruals
Employee benefit expense
Non-accrual loan interest
Other
Total deferred tax assets
Deferred tax liabilities
Depreciation
Deferred loan costs, net
FHLB stock dividends
Unrealized gains on securities available for sale
Prepaid expenses
Intangibles
Employee benefit expense
Total deferred tax liabilities
Net deferred tax liability
$
2021
2020
(In thousands)
771 $
253
472
---
33
7
1,536
(407 )
(34 )
(304 )
(2,298 )
(49 )
(97 )
(28 )
992
187
456
159
2
10
1,806
(390 )
(51 )
(304 )
(3,058 )
(70 )
(118 )
––
(3,217 )
(3,991 )
$
(1,681 ) $
(2,185 )
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
53
Notes to Consolidated Financial Statements
Note 10:
Accumulated Other Comprehensive Income
December 31, 2021 and 2020
The components of accumulated other comprehensive income, included in stockholders’ equity, are as
follows:
Net unrealized gain on securities available-for-sale
Net unrealized loss for funded status of defined benefit plan liability
Tax effect
Net-of-tax amount
2021
2020
$
(In thousands)
10,943 $
(2,127 )
14,561
(2,810 )
8,816
(1,852 )
11,751
(2,468 )
$
6,964 $
9,283
Reclassifications out of accumulated other comprehensive income during 2021 and 2020 and the affected
line items in the Consolidated Financial Statements of Income were as follows:
Realized gains on securities available-for-sale
Less provision for federal income taxes
Reclassification adjustment, net of taxes
Note 11:
Regulatory Matters
2021
2020
(In thousands)
1,250 $
263
2,593
544
$
$
987 $
2,049
The Company and the Bank are subject to various regulatory capital requirements administered by the federal
banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory–and possibly
additional discretionary–actions by regulators that, if undertaken, could have a direct material effect on the
Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines
that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. The capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company
and the Bank’s regulators could require adjustments to regulatory capital not reflected in these financial
statements.
In July 2013, the Federal Reserve approved final rules, referred to herein as the Basel III Rules, establishing
a new comprehensive capital framework for U.S. banking organizations. The Basel III Rules generally
implement the Basel Committee on Banking Supervision’s December 2010 final capital framework referred
to as “Basel III” for strengthening international capital standards. The Basel III Rules substantially revise the
risk-based capital requirements applicable to bank holding companies and their depository institution
subsidiaries, including the Company and Unified, as compared to the current U.S. general risk-based capital
rules. The Basel III Rules revise the definitions and the components of regulatory capital, as well as address
other issues affecting the computation of regulatory capital ratios. The Basel III rules added another capital
ratio component “Tier 1 Common Capital Ratio” which is a measurement of a bank’s core equity capital
compared with its total risk-weighted assets The Basel III Rules also prescribe a new standardized approach
for risk weightings that expand the risk-weighting categories from the current categories to a larger more
risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for
U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk
weights for a variety of asset classes.
54 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The Basel III capital rules became effective for the Company and Unified on January 1, 2015, subject to
phase-in periods for certain components. The net unrealized gain or loss on available-for-sale securities is
not included in computing regulatory capital.
As of December 31, 2021, the Company exceeded its minimum regulatory capital requirements with a total
risk-based capital ratio of 19.5%, common equity tier 1 ratio of 13.9%, Tier 1 risk-based capital ratio of
14.7% and a Tier 1 leverage ratio of 10.3%.
As of December 31, 2021, the most recent notification from Federal Deposit Insurance Corporation
categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be
categorized as well-capitalized, the Bank must maintain capital ratios as set forth in the table. There are no
conditions or events since that notification that management believes have changed the Bank’s category.
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table.
Actual
For Capital Adequacy
Purposes
Amount Ratio
Amount Ratio
(Dollars in thousands)
To Be Well Capitalized
Under Prompt
Corrective
Action Provisions
Amount Ratio
As of December 31, 2021
Total Capital (to Risk-Weighted Assets)
$
Consolidated
Unified
Common Equity Tier 1 Capital (to Risk-
96,785 19.5 % $
14.95
79,740
39,746
42,683
8.0 %
8.0 $
N/A
53,353
N/A
10.0 %
Weighted Assets)
Consolidated
Unified
$
69,112
76,067
13.9 % $
14.3
22,357
24,009
4.5 %
4.5 $
N/A
34,680
N/A
6.5 %
Tier I Capital (to Risk-Weighted Assets)
$
Consolidated
Unified
73,112
76,067
14.7 % $
14.3
29,810
32,012
6.0 %
6.0 $
N/A
42,683
N/A
8.0 %
Tier I Capital (to Average Assets)
Consolidated
Unified
$
73,112
76,067
10.3 % $
10.6
28,438
28,594
4.0 %
4.0 $
N/A
35,742
N/A
5.0 %
As of December 31, 2020
Total Capital (to Risk-Weighted Assets)
$
Consolidated
Unified
Common Equity Tier 1 Capital (to Risk-
94,085
80,494
18.9 % $
16.2
39,746
39,860
8.0 %
8.0 $
N/A
48,825
N/A
10.0 %
Weighted Assets)
Consolidated
Unified
$
64,972
75,831
13.1 % $
15.2
22,357
22,421
4.5 %
4.5 $
N/A
32,386
N/A
6.5 %
Tier I Capital (to Risk-Weighted Assets)
$
Consolidated
Unified
68,972
75,831
13.9 % $
15.2
29,810
29,895
6.0 %
6.0 $
N/A
39,860
N/A
8.0 %
Tier I Capital (to Average Assets)
Consolidated
Unified
$
68,972
75,831
10.1 % $
11.2
27,572
27,007
4.0 %
4.0 $
N/A
33,759
N/A
5.0 %
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
55
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 12:
Related Party Transactions
At December 31, 2021 and 2020, the Bank had loan commitments outstanding to executive officers, directors,
significant stockholders and their affiliates (related parties). In management’s opinion, such loans and other
extensions of credit and deposits were made in the ordinary course of business and were made on substantially
the same terms (including interest rates and collateral) as those prevailing at the time for comparable
transactions with other persons. Further, in management’s opinion, these loans did not involve more than
normal risk of collectability or present other unfavorable features. Such loans are summarized below.
Aggregate balance – January 1
New loans
Repayments
Aggregate balance – December 31
$
2021
2020
(In thousands)
20,984 $
4,439
(5,076 )
17,768
5,236
(2,020 )
$
20,347 $
20,984
Deposits from related parties held by the Bank at December 31, 2021 and 2020, totaled approximately $5.6
million and $6.1 million, respectively.
Note 13:
Benefit Plans
Pension and Other Postretirement Benefit Plans
The Company has a noncontributory defined benefit pension plan covering all employees who meet the
eligibility requirements. The Company’s funding policy is to make the minimum annual contribution that is
required by applicable regulations, plus such amounts as the Company may determine to be appropriate from
time to time. The Company expects to contribute $744,000 to the plan in 2022.
The Company has certain agreements which provide for a fixed number of payments once the individual
reaches normal retirement age. At December 31, 2021, the present value of these future payments was
approximately $401,000.
56 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The Company uses a December 31st measurement date for the plan. Information about the plan’s funded
status and pension cost follows:
Change in benefit obligation
Beginning of year
Service cost
Interest cost
Actuarial gain (loss)
Benefits paid
End of year
Change in fair value of plan assets
Beginning of year
Actual return on plan assets
Employer contribution
Benefits paid
End of year
Pension Benefits
2020
2021
(In thousands)
$
(7,215 ) $
(528 )
(239 )
45
379
(5,588 )
(389 )
(234 )
(1,534 )
530
(7,558 )
(7,215 )
6,522
944
657
(379 )
6,111
563
378
(530 )
7,744
6,522
Funded (unfunded) status at end of year
$
186 $
(693 )
Amounts recognized in accumulated other comprehensive loss not yet recognized as components of net
periodic benefit cost consist of:
Unamortized net loss
Unamortized prior service
Pension Benefits
2020
2021
$
(In thousands)
2,531 $
(403 )
3,302
(492 )
$
2,128 $
2,810
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
57
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The estimated net loss and prior service credit for the defined benefit pension plan that will be amortized
from accumulated other comprehensive income as a credit into net periodic benefit cost over the next fiscal
year is approximately $95,000. The accumulated benefit obligation for the defined benefit pension plan was
$6.4 million and $6.2 million at December 31, 2021 and 2020, respectively.
Information for the pension plan with respect to accumulated benefit obligation and plan assets is as
follows:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Components of net periodic benefit cost
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Amortization of net loss
Net periodic benefit cost
Significant assumptions include:
Weighted-average assumptions used to determine benefit obligation:
Discount rate
Rate of compensation increase
Weighted-average assumptions used to determine benefit cost:
Discount rate
Expected return on plan assets
Rate of compensation increase
December 31,
2021
2020
(In thousands)
7,558 $
6,405 $
7,744 $
7,215
6,168
6,522
$
$
$
December 31,
2021
2020
(In thousands)
$
528 $
239
(487 )
(89 )
270
389
234
(467 )
(89 )
145
$
461 $
212
Pension Benefits
2020
2021
3.75 %
3.50 %
3.41 %
3.50 %
3.75 %
7.00 %
3.50 %
3.41 %
7.00 %
3.50 %
58 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The Company has estimated the long-term rate of return on plan assets based primarily on historical returns
on plan assets, adjusted for changes in target portfolio allocations and recent changes in long-term interest
rates based on publicly available information.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be
paid as of December 31, 2021:
2022
2023
2024
2025
2026
2027--2031
Total
Pension
Benefits
(In
thousands)
544
$
383
468
428
598
3,336
$
6,301
Plan assets are held by an outside trustee which invests the plan assets in accordance with the provisions of
the plan agreement. All equity and fixed income investments are held in various mutual funds with quoted
market prices. Mutual fund equity securities primarily include investment funds that are comprised of large-
cap, mid-cap and international companies. Fixed income mutual funds primarily include investments in
corporate bonds, mortgage-backed securities and U.S. Treasuries. Other types of investments include a prime
money market fund.
The asset allocation strategy of the plan is designed to allow flexibility in the determination of the appropriate
investment allocations between equity and fixed income investments. This strategy is designed to help
achieve the actuarial long term rate on plan assets of 7.0%. The target asset allocation percentages for both
2021 and 2020 are as follows:
Large-Cap stocks
Small-Cap stocks
Mid-Cap stocks
International equity securities
Fixed income investments
Alternative investments
Not to exceed 68%
Not to exceed 23%
Not to exceed 23%
Not to exceed 30%
Not to exceed 35%
Not to exceed 19%
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
59
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
At December 31, 2021 and 2020, the fair value of plan assets as a percentage of the total was invested in the
following:
Equity securities
Debt securities
Cash and cash equivalents
Pension Plan Assets
December 31,
2021
2020
69.5 %
28.0
2.5
70.3 %
28.1
1.6
100.0 %
100.0 %
Following is a description of the valuation methodologies used for pension plan assets measured at fair value
on a recurring basis, as well as the general classification of pension plan assets pursuant to the valuation
hierarchy.
Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the
valuation hierarchy. Level 1 plan assets include investments in mutual funds that involve equity, bond and
money market investments. All of the Plan’s assets are classified as Level 1. If quoted market prices are not
available, then fair values are estimated by using pricing models, quoted prices of plan assets with similar
characteristics or discounted cash flows. In certain cases where Level 1 or Level 2 inputs are not available,
plan assets are classified within Level 3 of the hierarchy. At December 31, 2021 and 2020, the Plan did not
contain Level 2 or Level 3 investments.
60 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The fair values of Company’s pension plan assets at December 31st, by asset category are as follows:
Total
$
7,744 $
7,744 $
–– $
Asset Category
Mutual money market
Mutual funds – equities
ETF mutual funds
Large and small Cap
International
Commodities
Mutual funds – fixed income
Fixed income
ETF fixed income
Asset Category
Mutual money market
Mutual funds – equities
ETF mutual funds
Large and small Cap
International
Commodities
Mutual funds – fixed income
Fixed income
ETF fixed income
December 31, 2021
Fair Value Measurements Using
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value
$
198 $
(In thousands)
198 $
4,964
99
319
––
1,340
824
4,964
99
319
––
1,340
824
–– $
––
––
––
––
––
December 31, 2020
Fair Value Measurements Using
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value
$
103 $
(In thousands)
103 $
4,190
111
287
––
1,193
638
4,190
111
287
––
1,193
638
–– $
––
––
––
––
––
––
––
––
––
––
––
––
––
––
––
––
––
––
––
Total
$
6,522 $
6,522 $
–– $
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
61
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Employee Stock Ownership Plan
The Company has an Employee Stock Ownership Plan (“ESOP”) with an integrated 401(k) plan covering
substantially all employees of the Company. As of December 31, 2020, the original ESOP loan was repaid
in full and all allocations/expenses were completed by December 31, 2020. Dividends on the allocated shares
are recorded as dividends and charged to retained earnings. ESOP Compensation expense in 2020 was
recorded equal to the fair market value of the stock when contributions, which are determined annually by
the Board of Directors of the Company, are made to the ESOP. The Company’s 401(k) matching percentage
was 50% of the employees’ first 6% of contributions for 2021 and 2020.
ESOP and 401(k) expense for the years ended December 31, 2021 and 2020 was approximately $132,000
and $270,000, respectively.
Share information for the ESOP is as follows at December 31, 2021 and 2020:
Allocated shares at beginning of the year
Shares released for allocation during the year
Net shares distributed due to retirement/diversification
Unearned shares
Total ESOP shares
2021
2020
417,086 411,411
23,635
---
(17,960 )
(18,982 )
––
––
398,104 417,086
Fair value of unearned shares at December 31st
$
–– $
––
At December 31, 2021, the fair value of the 398,104 the shares held by the ESOP was approximately
$6,632,000.
Split Dollar Life Insurance Arrangements
The Company has split-dollar life insurance arrangements with its executive officers and certain directors
that provide certain death benefits to the executive’s beneficiaries upon his or her death. The agreements
provide a pre- and post-retirement death benefit payable to the beneficiaries of the executive in the event of
the executive’s death. The Company has purchased life insurance policies on the lives of all participants
covered by these agreements in amounts sufficient to provide the sums necessary to pay the beneficiaries,
and the Company pays all premiums due on the policies. In the case of an early separation from the Company,
the nonvested executive portion of the death benefit is retained by the Company. The accumulated post
retirement benefit obligation was $1.8 million and $1.7 million at December 31, 2021 and December 31,
2020, respectively.
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UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Note 14:
Restricted Stock Plan
During 2018, the Company’s stockholders authorized the adoption of the United Bancorp, Inc. 2018 Stock
Incentive Plan (the “2018 Plan”). No more than 500,000 shares of the Company’s common stock may be
issued under the 2018 Plan. As of December 31, 2021, 92,500 shares have been issued under this plan. The
shares that may be issued can be authorized but unissued shares or treasury shares. The 2018 Plan permits
the grant of incentive awards in the form of options, stock appreciation rights, restricted share and share unit
awards, and performance share awards. The 2018 Plan contains annual limits on certain types of awards to
individual participants. In any calendar year, no participant may be granted awards covering more than
25,000 shares.
During 2008, the Company’s stockholders authorized the adoption of the United Bancorp, Inc. 2008 Stock
Incentive Plan (the “2008 Plan”). No more than 500,000 shares of the Company’s common stock may be
issued under the 2008 Plan. The shares that may be issued can be authorized but unissued shares or treasury
shares. The 2008 Plan permits the grant of incentive awards in the form of options, stock appreciation rights,
restricted share and share unit awards, and performance share awards. The 2008 Plan contains annual limits
on certain types of awards to individual participants. In any calendar year, no participant may be granted
awards covering more than 25,000 shares. As of December 31, 2018, no additional shares can be awarded
under the 2008 Plan.
The Company believes that such awards better align the interests of its employees with those of its
stockholders. Stock options are generally granted with an exercise price, and restricted stock awards are
valued, equal to the market price of the Company’s stock at the date of grant; stock option awards generally
vest within 9.5 years of continuous service and have a 9.5 year contractual term. Restricted stock awards
generally vest over a 9.5 year contractual term, or over the period to retirement, whichever is shorter.
Restricted stock awards have no post-vesting restrictions. Restricted stock awards provide for accelerated
vesting if there is a change in control (as defined in the Plans).
A summary of the status of the Company’s nonvested restricted shares as of December 31, 2021, and
changes during the year then ended, is presented below:
Nonvested, beginning of year
Granted
Vested
Forfeited
Nonvested, end of year
Weighted-
Average
Grant-
Date
Fair Value
11.73
14.08
10.73
13.00
11.83
Shares
320,000 $
10,000
(10,000 )
(2,500 )
317,500 $
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Total compensation cost recognized in the income statement for share-based payment arrangements during
the years ended December 31, 2021 and 2020 was $414,000 and $324,000, respectively.
The recognized tax benefits related thereto were $65,000 and $68,000, for the years ended December 31,
2021 and 2020, respectively.
As of December 31, 2021 and 2020, there was $2,890,000 and $2,864,000, respectively, of total unrecognized
compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That
cost is expected to be recognized over a weighted-average period of 6.9 years.
Note 15:
Earnings Per Share
Earnings per share (EPS) were computed as follows:
Year Ended December 31, 2021
Net income
Less allocated earnings on non-vested restricted stock
Less allocated dividends on non-vested restricted stock
Net income allocated to common stockholders
Basic and diluted earnings per share
Net income
Less allocated earnings on non-vested restricted stock
Less allocated dividends on non-vested restricted stock
Net income allocated to common stockholders
Basic and diluted earnings per share
Per Share
Amount
Weighted-
Average
Shares
Net
Income
(In
thousands)
9,451
(348 )
(221 )
8,882
$
5,477,266
$
1.62
Year Ended December 31, 2020
Weighted-
Average
Shares
Per Share
Amount
Net
Income
(In
thousands)
7,953
(141 )
(253 )
7,559
$
5,458,365
$
1.39
Note 16:
Disclosures about Fair Value of Financial Instruments and Other Assets and Liabilities
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The Company also
utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that
may be used to measure fair value:
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UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities
Following is a description of the valuation methodologies used for assets measured at fair value on a recurring
basis and recognized in the accompanying balance sheets, as well as the general classification of such assets
pursuant to the valuation hierarchy.
Available-for-sale Securities
Where quoted market prices are available in an active market, securities are classified within Level 1 of the
valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted
prices of securities with similar characteristics or independent asset pricing services and pricing models, the
inputs of which are market-based or independently sourced market parameters, including, but not limited to,
yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash
flows. Such securities are classified in Level 2 of the valuation hierarchy.
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following tables present the fair value measurements of assets recognized in the accompanying balance
sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the
fair value measurements fall at December 31, 2021 and 2020:
December 31, 2021
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Fair
Value
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$ 28,765 $
$ 117,548
(In thousands)
–– $
28,765 $
–– $ 117,548
––
––
December 31, 2020
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Fair
Value
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$ 10,053 $
$ 4,505
$ 143,509
(In thousands)
10,053 $
–– $
4,505
–– $
–– $ 143,509
––
––
––
Subordinated notes
State and municipal obligation
U.S government agencies
Subordinated notes
State and municipal obligations
Following is a description of the valuation methodologies used for instruments measured at fair value on a
non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification
of such instruments pursuant to the valuation hierarchy.
Impaired Loans (Collateral Dependent)
Collateral dependent impaired loans consisted primarily of loans secured by nonresidential real estate.
Management has determined fair value measurements on impaired loans primarily through evaluations of
appraisals performed. Due to the nature of the valuation inputs, impaired loans are classified within Level 3
of the hierarchy.
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UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The Company considers the appraisal or evaluation as the starting point for determining fair value and then
considers other factors and events in the environment that may affect the fair value. Appraisals of the
collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-
dependent and subsequently as deemed necessary by the Company’s Chief Lender. Appraisals are reviewed
for accuracy and consistency by the Company’s Chief Lender. Appraisers are selected from the list of
approved appraisers maintained by management. The appraised values are reduced by discounts to consider
lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the
sale of the collateral. These discounts and estimates are developed by the Company’s Chief Lender by
comparison to historical results.
Foreclosed Assets Held for Sale
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value
(based on current appraised value) at the date of foreclosure, establishing a new cost basis. Subsequent to
foreclosure, valuations are periodically performed by management and the assets are carried at the lower of
carrying amount or fair value less cost to sell. Management has determined fair value measurements on other
real estate owned primarily through evaluations of appraisals performed, and current and past offers for the
other real estate under evaluation. Due to the nature of the valuation inputs, foreclosed assets held for sale
are classified within Level 3 of the hierarchy.
Appraisals of other real estate owned (OREO) are obtained when the real estate is acquired and subsequently
as deemed necessary by the Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency
by the Company’s Chief Lender and are selected from the list of approved appraisers maintained by
management.
The following tables present the fair value measurements of assets recognized in the accompanying balance
sheets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which
the fair value measurements fall at December 31, 2021 and 2020:
December 31, 2021
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair
Value
Collateral dependent impaired loans
Foreclosed assets held for sale
$ 2,822 $
––
(In thousands)
–– $
––
–– $
––
2,822
––
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
December 31, 2021 and 2020
December 31, 2020
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair
Value
Collateral dependent impaired loans
Foreclosed assets held for sale
$
71 $
––
(In thousands)
–– $
––
–– $
––
71
––
Unobservable (Level 3) Inputs
The following tables present quantitative information about unobservable inputs used in recurring and
nonrecurring Level 3 fair value measurements.
Fair Value
at
12/31/21
(In
thousands)
Valuation
Technique
Unobservable
Inputs
Range
Collateral-dependent impaired
loans
$
2,822
Foreclosed assets held for sale
––
Market comparable
properties
Market comparable
properties
Comparability
adjustments
Marketability
discount
5% – 10%
10% – 35%
Fair Value
at
12/31/20
(In
thousands)
Valuation
Technique
Unobservable
Inputs
Range
Collateral-dependent impaired
loans
$
Foreclosed assets held for sale
Market comparable
properties
Market comparable
properties
71
––
Comparability
adjustments
Marketability
discount
5% - 10%
10% – 35%
There were no significant changes in the valuation techniques used during 2021.
68 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain
of these instruments were calculated by discounting expected cash flows, which involves significant judgments by
management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no
market exists for certain of these financial instruments and because management does not intend to sell these financial
instruments, the Company does not know whether the fair values shown below represent values at which the respective
financial instruments could be sold individually or in the aggregate.
Fair Value Measurements Using
Quoted
Prices
in Active
Markets
for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(In thousands)
Carrying
Amount
$
82,999 $
450,699
3,704
2,345
82,999 $
––
––
––
–– $
––
3,704
2,345
––
459,031
––
––
December 31, 2021
Financial assets
Cash and cash equivalents
Loans, net of allowance
Federal Home Loan Bank stock
Accrued interest receivable
Financial liabilities
Deposits
Securities sold under repurchase agreements
Subordinated debentures
Interest payable
605,135
15,701
23,665
180
––
––
––
––
605,855
15,701
23,575
180
––
––
––
––
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The fair value has been derived from the December 31, 2020 audited consolidated financial statements.
Fair Value Measurements Using
Quoted
Prices
in Active
Markets
for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(In thousands)
Carrying
Amount
$
51,592 $
438,378
4,177
2,901
51,592 $
––
––
––
–– $
––
4,177
2,901
––
436,893
––
––
December 31, 2020
Financial assets
Cash and cash equivalents
Loans, net of allowance
Federal Home Loan Bank stock
Accrued interest receivable
Financial liabilities
Deposits
Securities sold under repurchase agreements
Subordinated debentures
Interest payable
579,535
12,705
23,604
224
––
––
––
––
580,130
12,705
21,989
224
––
––
––
––
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UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments.
Cash and Cash Equivalents, Accrued Interest Receivable and Federal Home Loan Bank Stock
The carrying amounts approximate fair value.
Loans
Fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity
and marketability factors.
Deposits
Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The
carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a
discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining
maturities.
Interest Payable
The carrying amount approximates fair value.
Securities Sold Under Repurchase Agreements and Subordinated Debentures
Rates currently available to the Company for debt with similar terms and remaining maturities are used to
estimate the fair value of existing debt.
Commitments to Originate Loans, Letters of Credit and Lines of Credit
The fair value of commitments to originate loans is estimated using the fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the
difference between current levels of interest rates and the committed rates. The fair values of letters of credit
and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to
terminate or otherwise settle the obligations with the counterparties at the reporting date. Fair values of
commitments were not material at December 31, 2021 and 2020.
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
Note 17: Significant Estimates and Concentrations
December 31, 2021 and 2020
Accounting principles generally accepted in the United States of America require disclosure of certain
significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the
allowance for loan losses are reflected in the footnote regarding loans. Current vulnerabilities due to certain
concentrations of credit risk are discussed in the footnote on commitments and credit risk.
The Company invests in various investment securities. Investment securities are exposed to various risks
such as interest rate, market and credit risks. Due to the level of risk associated with certain investment
securities, it is possible that changes in the values of investment securities may occur and that such changes
could affect the amounts reported in the accompanying statements of financial position.
Note 18: Commitments and Credit Risk
At December 31, 2021 and 2020, total commercial and commercial real estate loans made up 78.7% and
78.3%, respectively, of the loan portfolio. Installment loans account for 1.5% and 1.9%, respectively, of the
loan portfolio. Real estate loans comprise 19.8% and 19.8% of the loan portfolio as of December 31, 2021
and 2020, respectively, and primarily include first mortgage loans on residential properties and home equity
lines of credit.
Included in cash and cash and cash equivalents as of December 31, 2021 and 2020 is $79.6 and $39.7 million,
respectively, of deposits with the Federal Reserve Bank of Cleveland.
COVID-19: Update on Company Action and Ongoing Risks
In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World
Health Organization declared it a pandemic. On March 12, 2020, the President of the United States declared
the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused
significant economic dislocation in the United States as many state and local governments have ordered non-
essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented
slow-down in economic activity and a related increase in unemployment. As a result of the spread of COVID-
19, economic uncertainties arose which can ultimately affect the financial position, results of operations and
cash flows of the Company as well as the Company’s customers. The Coronavirus Aid, Relief, and Economic
Security Act passed by Congress in March 2020 (CARES Act) included relief for individual Americans,
health care workers, small businesses and certain industries hit hard by the COVID-19 pandemic. The 2021
Consolidated Appropriations Act, passed by Congress in December 2020, extended certain provisions of the
CARES Act affecting the Company into 2021.
The CARES Act included several provisions designed to help financial institutions like the Bank in working
with their customers. Section 4013 of the CARES Act, as extended, allows a financial institution to elect to
suspend generally accepted accounting principles and regulatory determinations with respect to qualifying
loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring
(TDR) until January 1, 2022. The Bank has taken advantage of this provision to extend certain payment
modifications to loan customers in need. As of December 31, 2021, the Bank has $7.8 million of outstanding
loans that were modified and are paying interest only and a $67,000 loan on total payment deferrals. These
modifications were granted in 2020 under the CARES Act guidance.
Commitments to Originate Loans
Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since a portion of the commitments may expire without being
drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each
customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if
deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies,
72 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and
residential real estate.
December 31, 2021 and 2020
At December 31, 2021 and 2020, the Company had outstanding commitments to originate variable rate loans
aggregating approximately $75.8 million and $39.6 million, respectively. The commitments extended over
varying periods of time with the majority being disbursed within a one-year period.
Mortgage loans in the process of origination represent amounts that the Company plans to fund within a
normal period of 60 to 90 days, some of which are intended for sale to investors in the secondary market.
The Company did not have any mortgage loans in the process of origination which are intended for sale at
December 31, 2021 or 2020.
Standby Letters of Credit
Standby letters of credit are irrevocable conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. Financial standby letters of credit are primarily issued to support
public and private borrowing arrangements, including commercial paper, bond financing and similar
transactions. Performance standby letters of credit are issued to guarantee performance of certain customers
under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is
essentially the same as that involved in extending loans to customers. Fees for letters of credit are initially
recorded by the Company as deferred revenue and are included in earnings at the termination of the respective
agreements. Should the Company be obligated to perform under the standby letters of credit, the Company
may seek recourse from the customer for reimbursement of amounts paid.
The Company had $127,000 and $22,000 at December 31, 2021 and 2020, respectively in outstanding
standby letters of credit. At both December 31, 2021 and 2020, the Company had no deferred revenue under
standby letter of credit agreements.
Lines of Credit and Other
Lines of credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line
may expire without being drawn upon, the total unused lines do not necessarily represent future cash
requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of
collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty.
Collateral held varies but may include accounts receivable, inventory, property, plant and equipment,
commercial real estate and residential real estate. Management uses the same credit policies in granting lines
of credit as it does for on-balance-sheet instruments.
At December 31, 2021, the Company had granted unused lines of credit to borrowers aggregating
approximately $78.1 million and $49.4 million for commercial lines and open-end consumer lines,
respectively. At December 31, 2020, the Company had granted unused lines of credit to borrowers
aggregating approximately $49.4 million and $39.6 million for commercial lines and open-end consumer
lines, respectively.
Note 19: Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) -
Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to
provide financial statement users with more decision-useful information about the expected credit losses on
financial instruments that are not accounted for at fair value through net income, including loans held for
investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other
commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that
financial assets measured at amortized cost be presented at the net amount expected to be collected, through
an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
December 31, 2021 and 2020
13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of
all expected credit losses. The measurement of expected credit losses is based upon historical experience,
current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.
For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination
(“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the
purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for
credit losses on PCD assets are recognized through the statement of income as a credit loss expense.
Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit
losses rather than as a direct write-down to the security.
On October 16, 2019, FASB approved a final ASU delaying the effective date of ASU 2016-13 for small
reporting companies to interim and annual periods beginning after December 15, 2022. The Company is
currently evaluating the impact of these amendments to the Company’s financial position and results of
operations and currently does not know or cannot reasonably quantify the impact of the adoption of the
amendments as a result of the complexity and extensive changes from the amendments. The Allowance for
Loan Losses (ALL) estimate is material to the Company and given the change from an incurred loss model to
a methodology that considers the credit loss over the life of the loan, there is the potential for an increase in the
ALL at adoption date. The Company is anticipating a significant change in the processes and procedures to
calculate the ALL, including changes in assumptions and estimates to consider expected credit losses over the
life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the
current accounting policy and procedures for the other-than-temporary impairment on available-for-sale
securities will be replaced with an allowance approach. The Company continues to run projections and now
have multiple scenarios to consider and continues to review segmentation to ensure it is fully compliant with
the amendments at adoption date. For additional information on the allowance for loan losses, see Note 4.
Note 20: Condensed Financial Information (Parent Company Only)
Presented below is condensed financial information as to financial position, results of operations and cash
flows of the Company:
Condensed Balance Sheets
Assets
Cash and cash equivalents
Investment in the Bank
Other assets
Total assets
Liabilities and Stockholders’ Equity
Subordinated debentures
Other liabilities
Stockholders’ equity
December 31,
2021
2020
(In thousands)
$
9,092 $
85,954
1,182
3,684
88,276
1,564
$
96,228 $
93,524
$
23,665 $
862
71,701
23,603
1,593
68,328
Total liabilities and stockholders’ equity
$
96,228 $
93,524
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UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Condensed Statements of Income and Comprehensive Income
Years Ended
December 31,
2021
2020
(In thousands)
Operating Income
Dividends from subsidiary
Interest and dividend income from securities and federal funds
$
12,363 $
—
2,392
—
Total operating income
General, Administrative and Other Expenses
Income (Loss) Before Income Taxes and Equity in Undistributed Income of
Subsidiary
Income Tax Benefits
Income (Loss) Before Equity in Undistributed Income of Subsidiary
Equity in Undistributed Income of Subsidiary
Net Income
Comprehensive Income
12,363
2,392
4,210
3,733
8,153
(1,341 )
773
785
8,926
(556 )
525
8,509
9,451 $
7,953
7,132 $
11,700
$
$
UNITEDBANCORP INC.
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Notes to Consolidated Financial Statements
December 31, 2021 and 2020
Condensed Statements of Cash Flows
Operating Activities
Net income
Items not requiring (providing) cash
Equity in undistributed income of subsidiary
Amortization of ESOP and share-based compensation plans
Net change in other assets and other liabilities
Net cash provided by operating activities
Investing Activities
Equity infusion into the Bank
Net cash used in investing activities
Financing Activities
Repurchase of Common Stock
Dividends paid to stockholders
Net cash used in financing activities
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Years Ended
December 31,
2021
2020
(In thousands)
$
9,451 $
7,953
(525 )
404
251
(8,509 )
594
687
9,581
725
—
—
—
—
(72 )
(4,101 )
(526 )
(3,361 )
(4,173 )
(3,887 )
5,408
(3,162 )
3,684
6,846
Cash and Cash Equivalents at End of Year
$
9,092 $
3,684
76 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.
Notes to Consolidated Financial Statements
Note 21: Quarterly Financial Data (Unaudited)
December 31, 2021 and 2020
The following tables summarize the Company’s quarterly results of operations for the years ended
December 31, 2021 and 2020.
2021:
Total interest income
Total interest expense
Net interest income
Credit for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Federal income taxes
Net income
Earnings per share
Basic
Diluted
Three Months Ended
March 31, June 30, September 30, December 31,
(In thousands, except per share data)
$
6,088 $
775
6,233 $
676
6,234 $
629
6,153
516
5,313
5,557
5,605
5,637
(205)
926
4,449
(250)
1,142
4,550
1,995
87
2,399
214
(400)
2,287
4,942
3,350
448
(400)
1,351
4,451
2,937
481
$
1,908 $
2,185 $
2,902 $
2,456
$
$
0.33 $
0.33 $
0.38 $
0.38 $
0.50 $
0.50 $
0.41
0.41
UNITEDBANCORP INC.
2 0 2 1 | A N N UA L R E P O RT
77
Notes to Consolidated Financial Statements
December 31, 2021 and 2020
2020:
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Federal income taxes
Net income
Earnings per share
Basic
Diluted
Three Months Ended
March 31, June 30, September 30, December 31,
(In thousands, except per share data)
$
7,319 $
1,685
6,949 $
1,427
6,692 $
948
6,668
674
5,634
5,522
5,744
5,994
563
1,044
4,410
1,408
2,156
4,579
1,705
126
1,691
16
1,333
2,340
4,492
2,259
200
33
1,375
4,409
2,927
287
$
1,579 $
1,675 $
2,059 $
2,640
$
$
0.28 $
0.28 $
0.29 $
0.29 $
0.36 $
0.36 $
0.46
0.46
Note 22: Goodwill and Core Deposits
The following table shows the changes in the carrying amount of goodwill for the years ended
December 31, 2021 and 2020 (in thousands):
Balance beginning of year
Additions from acquisition
Balance, end of year
2021
$
2020
682 $
––
682 $
682
––
682
$
Intangible assets in the consolidated balance sheets at December 31, 2021 and 2020 were as follows (in
thousands):
2021
2020
Core deposit intangibles
$
1,041
Gross
Intangible
Assets
Accumulated
Amortization
481
Net
Intangible
Assets
Gross
Intangible
Assets
560
1,041
Accumulated
Amortization
331
Net
Intangible
Assets
710
The estimated aggregate future amortization expense for each of the next five years for intangible assets
remaining as of December 31, 2021 is as follows (in thousands):
2022
2023
2024
2025
$
150
150
150
110
78 2 02 1 | A N N UA L R E P O RT
UNITEDBANCORP INC.