United Bancorp, Inc. Reports 2023 Fourth Quarter Earnings and Earnings Performance for the Twelve Months Ended December 31, 2023
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Insights
United Bancorp, Inc.'s reported increase in diluted earnings per share (EPS) for both the quarterly and annual periods indicates a positive trajectory in profitability, despite the challenging economic conditions characterized by aggressive monetary policy tightening by the Federal Open Market Committee (FOMC). The company's ability to navigate the rapidly rising interest rate environment and capitalize on higher net interest income is commendable. The increment in net interest income and the marginal decline in net interest margin reflect a strategic adaptation to the inverted yield curve, which is a noteworthy achievement given the broader industry context where many institutions struggle to maintain margins under such conditions.
Furthermore, the growth in the loan portfolio and investment securities, along with a decrease in accumulated other comprehensive loss (AOCI), suggests prudent asset management. The AOCI reduction and the consequent increase in tangible shareholders' equity and tangible book value are particularly significant, as they imply an improvement in the intrinsic value of the company. These financial metrics are essential indicators of the company's health and are likely to influence investor sentiment positively.
Finally, the company's capitalization levels and the quality of its loan portfolio, as evidenced by the low percentage of nonaccrual loans and the negative provision for credit losses, signal a robust risk management framework. This could reassure investors about the company's resilience against potential economic headwinds, thereby potentially impacting the stock's attractiveness.
The reported increase in United Bancorp, Inc.'s earnings and the strategic management of its assets and liabilities in a challenging interest rate environment indicate a strong competitive position in the financial services industry. The company's proactive measures, such as locking in funding through a $75.0 million advance from the Federal Home Loan Bank (FHLB) to hedge against further rate hikes, demonstrate a forward-thinking approach to financial planning. This move, along with the controlled growth of the loan portfolio and investment in higher-yielding securities, suggests that United Bancorp is well-positioned to maintain, if not enhance, its market share in the regional banking sector.
Additionally, the increase in cash dividends and the special cash dividend payout reflect a shareholder-friendly policy that could enhance the company's reputation among investors, particularly in a market environment where yield is highly valued. These actions, coupled with a stable net interest margin and a well-capitalized status, could contribute to investor confidence and make the company a potentially attractive option for dividend-seeking portfolios.
The actions taken by United Bancorp, Inc. in response to the FOMC's monetary policy tightening provide an interesting case study of how regional banks can adapt to macroeconomic changes. The company's experience with the inverted yield curve, where short-term interest rates exceed long-term rates, underscores the challenges and opportunities presented by such an economic anomaly. United Bancorp's strategic positioning to benefit from higher short-term rates through increased investment in cash-equivalents and securities highlights the importance of agility in asset allocation during volatile economic periods.
The bank's stability in its net interest margin amidst rising rates is an indication that it has managed to balance its interest-earning assets and interest-bearing liabilities effectively. This balance is crucial for the banking sector, as it directly impacts profitability. In the long term, the ability of banks like United Bancorp to maintain such equilibrium in a potentially protracted period of high interest rates could determine their fiscal health and competitive edge in the financial industry.
MARTINS FERRY, OH / ACCESSWIRE / February 6, 2024 / United Bancorp, Inc. (NASDAQ:UBCP) reported diluted earnings per share of
Randall M. Greenwood, Senior Vice President, CFO and Treasurer remarked, "We are exceedingly pleased to report on the earnings performance of United Bancorp, Inc. (UBCP) for the fourth quarter and year ended December 31, 2023. For the quarter, our Company achieved solid net income and diluted earnings per share results of
Greenwood continued, "We are grateful to see that our net interest income and net interest margin levels have either increased or remained very stable with only minimal declines in the current, dynamic economic and monetary policy environment in which we are operating. We have achieved this positive result by seeing our overall loan portfolio yield increase in the current rising rate environment, even though from a volume perspective, our average loans were relatively flat, only increasing for the year-ended December 31, 2023 by
Lastly, Greenwood stated, "Even with the continued heightened inflation levels and related increases in interest rates that may be impacting some of our borrowers with higher operating costs and rate resets to higher interest rate levels on their loans, we have successfully maintained credit-related strength and stability within our loan portfolio as of year-end. As of December 31, 2023, our Company's total nonaccrual loans and loans past due 30 plus days were
Scott A. Everson, President and CEO stated, "Considering the exceedingly dynamic economic and monetary policy environments in which we have operated for almost two years and the more recent issues which have impacted our industry since mid-March, we are very happy to report on the very strong earnings performance that United Bancorp, Inc. (UBCP) achieved for the year ending December 31, 2023. Relating to the excessive tightening of our country's monetary policy during this aforementioned timeframe, we are extremely pleased that we have been able to grow the level of interest income that our Company generated while controlling overall interest expense levels; thereby, expanding the level of net interest income that we realized and having a stable net interest margin. This is somewhat of a counter-trend to what occurred within our industry over this same period. With the aforementioned developments that occurred within our industry late in the first quarter of 2023, we transitioned into a more conservative operating position that greatly increased our overall liquidity and locked in a fair portion of our funding as a hedge against further interest rate increases by taking a
Everson continued, "Our primary focus is protecting the investment of our shareholders in our Company and rewarding them in a balanced fashion by growing their value and paying an attractive cash dividend. In the fourth quarter, we paid a regular cash dividend of
Everson concluded, "Considering that we continue to operate in a challenging economic and concerning industry-related environment, we are very pleased with our overall present performance and future prospects. Even with the present threats with which our overall industry is exposed, we are very optimistic about the future growth and earnings potential for United Bancorp, Inc. (UBCP). We firmly believe that with the challenges that our industry has experienced over the course of the past few years, our Company has evolved into a more fundamentally sound organization with a focus of growing to achieve greater efficiencies and scales, while controlling overall costs. We have invested in areas that will lead to our continued and future relevancy within our industry--- along with anticipated higher revenue generation--- while implementing cost control initiatives, where needed, by consolidating delivery channels in markets in which we had low banking center performance and considerable overlap. We still have a vision of growing UBCP to an asset threshold of
As of December 31, 2023, United Bancorp, Inc. has total assets of
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 carry forward-looking statements, whether as a result of new information, future events or otherwise.
United Bancorp, Inc,
"UBCP"
| For the Three Months Ended | ||||||||||||||||
| December 31, 2023 | December 31, 2022 | % Change | $ Change | |||||||||||||
Earnings | ||||||||||||||||
Interest income on loans | $ | 6,491,357 | $ | 5,513,738 | 17.73 | % | $ | 977,619 | ||||||||
Loan fees | 351,182 | 138,553 | 153.46 | % | $ | 212,629 | ||||||||||
Interest income on securities | 2,861,037 | 2,270,137 | 26.03 | % | $ | 590,900 | ||||||||||
Total interest income | 9,703,576 | 7,922,428 | 22.48 | % | $ | 1,781,148 | ||||||||||
Total interest expense | 3,204,176 | 1,381,119 | 132.00 | % | $ | 1,823,057 | ||||||||||
Net interest income | 6,499,400 | 6,541,309 | -0.64 | % | $ | (41,909 | ) | |||||||||
Provision for credit losses | (153,750 | ) | 15,000 | -1125.00 | % | $ | (168,750 | ) | ||||||||
Net interest income after provision for credit losses | 6,653,150 | 6,526,309 | 1.94 | % | $ | 126,841 | ||||||||||
Service charges on deposit accounts | 737,455 | 797,830 | -7.57 | % | $ | (60,375 | ) | |||||||||
Net realized gains on sale of loans | 21,126 | 2,927 | 621.76 | % | $ | 18,199 | ||||||||||
Other noninterest income | 270,736 | 265,318 | 2.04 | % | $ | 5,418 | ||||||||||
Total noninterest income | 1,029,317 | 1,066,075 | -3.45 | % | $ | (36,758 | ) | |||||||||
Total noninterest expense | 5,091,039 | 5,052,709 | 0.76 | % | $ | 38,330 | ||||||||||
Income before income taxes | 2,591,428 | 2,539,675 | 2.04 | % | $ | 51,753 | ||||||||||
Income tax expense | 202,368 | 233,321 | -13.27 | % | $ | (30,953 | ) | |||||||||
Net income | $ | 2,389,060 | $ | 2,306,354 | 3.59 | % | $ | 82,706 | ||||||||
Per share | ||||||||||||||||
Earnings per common share - Basic | $ | 0.42 | $ | 0.40 | 5.00 | % | $ | 0.02 | ||||||||
Earnings per common share - Diluted | 0.42 | 0.40 | 5.00 | % | $ | 0.02 | ||||||||||
Cash Dividends paid | 0.1700 | 0.1600 | 6.25 | % | $ | 0.01 | ||||||||||
Shares Outstanding | ||||||||||||||||
Average - Basic | 5,491,562 | 5,484,610 | -------- | |||||||||||||
Average - Diluted | 5,491,562 | 5,484,610 | -------- | |||||||||||||
| For the Year Ended December 31, | % | |||||||||||||||
| 2023 | 2022 | Change | ||||||||||||||
Earnings | $ | - | ||||||||||||||
Interest income on loans | $ | 24,277,549 | $ | 19,784,486 | 22.71 | % | $ | 4,493,063 | ||||||||
Loan fees | 954,421 | 950,525 | 0.41 | % | $ | 3,896 | ||||||||||
Interest income on securities | 11,617,351 | 6,926,902 | 67.71 | % | $ | 4,690,449 | ||||||||||
Total interest income | 36,849,321 | 27,661,913 | 33.21 | % | $ | 9,187,408 | ||||||||||
Total interest expense | 11,014,181 | 3,273,669 | 236.45 | % | $ | 7,740,512 | ||||||||||
Net interest income | 25,835,140 | 24,388,244 | 5.93 | % | $ | 1,446,896 | ||||||||||
Provision for credit losses | (453,750 | ) | (955,000 | ) | -52.49 | % | $ | 501,250 | ||||||||
Net interest income after provision for credit losses | 26,288,890 | 25,343,244 | 3.73 | % | $ | 945,646 | ||||||||||
Service charges on deposit accounts | 2,939,515 | 2,978,549 | -1.31 | % | $ | (39,034 | ) | |||||||||
Net realized gains on sale of loans | 29,282 | 36,051 | -18.78 | % | $ | (6,769 | ) | |||||||||
Other noninterest income | 1,085,028 | 1,068,841 | 1.51 | % | $ | 16,187 | ||||||||||
Total noninterest income | 4,053,825 | 4,083,441 | -0.73 | % | $ | (29,616 | ) | |||||||||
Total noninterest expense | 20,851,696 | 19,890,293 | 4.83 | % | $ | 961,403 | ||||||||||
Income before income taxes | 9,491,019 | 9,536,392 | -0.48 | % | $ | (45,373 | ) | |||||||||
Income tax expense | 541,467 | 879,380 | -38.43 | % | $ | (337,913 | ) | |||||||||
Net income | $ | 8,949,552 | $ | 8,657,012 | 3.38 | % | $ | 292,540 | ||||||||
Per share | ||||||||||||||||
Earnings per common share - Basic | $ | 1.57 | $ | 1.50 | 4.67 | % | $ | 0.070 | ||||||||
Earnings per common share - Diluted | 1.57 | 1.50 | 4.67 | % | $ | 0.070 | ||||||||||
Cash Dividends paid | 0.8150 | 0.7750 | 5.16 | % | $ | 0.040 | ||||||||||
Book value (end of period) | 10.82 | 9.93 | 8.96 | % | $ | 0.890 | ||||||||||
Shares Outstanding | ||||||||||||||||
Average - Basic | 5,490,488 | 5,483,305 | -------- | |||||||||||||
Average - Diluted | 5,490,488 | 5,483,305 | -------- | |||||||||||||
Common stock, shares issued | 6,063,851 | 6,043,851 | -------- | |||||||||||||
Shares used for Book Value Computation | 5,884,488 | 5,914,488 | ||||||||||||||
Shares held as Treasury Stock | 179,363 | 129,363 | -------- | |||||||||||||
At year end | ||||||||||||||||
Total assets | $ | 819,446,345 | $ | 757,400,221 | 8.19 | % | $ | 62,046,124 | ||||||||
Total assets (average) | 812,650,000 | 735,775,000 | 10.45 | % | $ | 76,875,000 | ||||||||||
Cash and due from Federal Reserve Bank | 40,770,293 | 30,080,141 | 35.54 | % | $ | 10,690,152 | ||||||||||
Average cash and due from Federal Reserve Bank | 64,793,000 | 52,969,000 | 22.32 | % | $ | 11,824,000 | ||||||||||
Securities and other restricted stock | 246,739,625 | 220,123,026 | 12.09 | % | $ | 26,616,599 | ||||||||||
Average Securities and other restricted stock | 245,706,000 | 189,099,000 | 29.94 | % | $ | 56,607,000 | ||||||||||
Other real estate and repossessions ("OREO") | 3,377,414 | 3,518,718 | -4.02 | % | $ | (141,304 | ) | |||||||||
Gross loans | 483,235,931 | 460,874,383 | 4.85 | % | $ | 22,361,548 | ||||||||||
Average loans | 463,612,000 | 462,692,000 | 0.20 | % | $ | 920,000 | ||||||||||
Allowance for loan losses | 3,918,184 | 2,052,053 | 90.94 | % | $ | 1,866,131 | ||||||||||
Net loans | 479,317,747 | 458,822,330 | 4.47 | % | $ | 20,495,417 | ||||||||||
Net loans (Recovered) charged off | (19,990 | ) | 558,047 | -103.58 | % | $ | (578,037 | ) | ||||||||
Net overdrafts charged off | 119,551 | 108,326 | 10.36 | % | $ | 11,225 | ||||||||||
Total net charge offs | 99,561 | 666,373 | -85.06 | % | $ | (566,812 | ) | |||||||||
Non-accrual loans | 487,331 | 182,223 | 167.44 | % | $ | 305,108 | ||||||||||
Loans past due 30+ days (excludes non accrual loans) | 659,276 | 425,365 | 54.99 | % | $ | 233,911 | ||||||||||
Average total deposits | 635,807,000 | 626,736,000 | 1.45 | % | $ | 9,071,000 | ||||||||||
Total Deposits | 621,459,855 | 649,913,209 | -4.38 | % | ||||||||||||
Non interest bearing deposits | 139,519,765 | 153,450,681 | -9.08 | % | ||||||||||||
Interest bearing demand | 199,760,354 | 248,890,992 | -19.74 | % | ||||||||||||
Savings | 130,821,276 | 145,835,783 | -10.30 | % | ||||||||||||
Time | 151,358,460 | 101,735,753 | 48.78 | % | $ | 49,622,707 | ||||||||||
Repurchase Agreements | 26,781,371 | 18,106,432 | 47.91 | % | $ | 8,674,939 | ||||||||||
Shareholders' equity | 63,592,683 | 59,736,633 | 6.46 | % | $ | 3,856,050 | ||||||||||
Common Stock, Additional Paid in Capital | 31,977,036 | 30,858,485 | 3.62 | % | $ | 1,118,551 | ||||||||||
Retained Earnings | 44,017,539 | 41,944,673 | 4.94 | % | $ | 2,072,866 | ||||||||||
Shares held by Deferred Plan and Treasury Stock | (4,924,311 | ) | (3,730,389 | ) | 32.01 | % | $ | (1,193,922 | ) | |||||||
Accumulated other comprehensive loss, net of taxes | (7,477,581 | ) | (9,336,136 | ) | -19.91 | % | $ | 1,858,555 | ||||||||
Goodwill and intangible assets (impact on Shareholders' equity) | 942,296 | 1,092,293 | -13.73 | % | $ | (149,997 | ) | |||||||||
Tangible shareholders' equity | 62,650,387 | 58,644,340 | 6.83 | % | $ | 4,006,047 | ||||||||||
Shareholders' equity (average) | 52,288,000 | 58,716,000 | -10.95 | % | $ | (6,428,000 | ) | |||||||||
Stock data | ||||||||||||||||
Market value - last close (end of period) | $ | 12.84 | $ | 14.72 | -12.77 | % | ||||||||||
Dividend payout ratio | 51.91 | % | 51.67 | % | -0.09 | % | ||||||||||
Price earnings ratio | 8.18 | 9.81 | x | -16.66 | % | |||||||||||
Market Price to Book Value | 119 | % | 148 | % | -29.00 | % | ||||||||||
Tangible book value | $ | 10.66 | $ | 9.92 | 7.46 | % | ||||||||||
Annualized yield based on year end close (excluding special Dividend) | 5.18 | % | 4.25 | % | 0.93 | % | ||||||||||
Key performance ratios | ||||||||||||||||
Return on average assets (ROA) | 1.10 | % | 1.18 | % | -0.07 | % | ||||||||||
Return on average equity (ROE) | 17.12 | % | 14.74 | % | -0.53 | % | ||||||||||
Net interest margin (Federal tax equivalent) | 3.65 | % | 3.67 | % | -0.02 | % | ||||||||||
Interest expense to average assets | 1.36 | % | 0.44 | % | 0.92 | % | ||||||||||
Total allowance for loan losses | ||||||||||||||||
to nonperforming loans | 804.01 | % | 1126.12 | % | -481.90 | % | ||||||||||
Total allowance for loan losses | ||||||||||||||||
to total loans | 0.81 | % | 0.45 | % | 0.36 | % | ||||||||||
Nonaccrual loans to total loans | 0.10 | % | 0.04 | % | 0.06 | % | ||||||||||
Non accrual loans and OREO to total assets | 0.47 | % | 0.49 | % | -0.02 | % | ||||||||||
Net loan charge-offs to average loans (excludes overdraft charge-offs) | 0.00 | % | 0.12 | % | -0.12 | % | ||||||||||
Equity to assets at period end | 7.76 | % | 7.89 | % | 0.03 | % | ||||||||||
Contacts:
Scott A. Everson
President and CEO
(740) 633-0445, ext. 6154
ceo@unitedbancorp.com
Randall M. Greenwood
Senior Vice President, CFO and Treasurer
(740) 633-0445, ext. 6181
cfo@unitedbancorp.com
SOURCE: United Bancorp, Inc. (Ohio)
View the original press release on accesswire.com
FAQ
What is the diluted earnings per share for United Bancorp, Inc. (UBCP) for Q4 2023?
What is the diluted earnings per share for United Bancorp, Inc. (UBCP) for the year ending December 31, 2023?
How did United Bancorp, Inc. (UBCP) capitalize on the tightening of monetary policy by the FOMC?
What was the change in the company's net interest margin for the year ending December 31, 2023?
What was the total allowance for credit losses to total loans for United Bancorp, Inc. (UBCP)?
What was the total cash dividend payout for United Bancorp, Inc. (UBCP) for the year 2023?
