ITEM 1 DESCRIPTION OF BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
United Bancorp, Inc. (Company) is a financial holding company headquartered in Martins Ferry, Ohio. The Company has two wholly-owned subsidiary banks, The Citizens Savings Bank, Martins Ferry, Ohio (CITIZENS) and The Community Bank, Lancaster, Ohio (COMMUNITY), collectively "Banks". For additional information about the Company's location and description of business, refer to Pages 6-7 and 10-11, Corporate Profile, in the Annual Report To Shareholders for the year ended December 31, 2000.
(B) FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
Refer to Page 38, Note 1 of the Annual Report To Shareholders.
(C) NARRATIVE DESCRIPTION OF BUSINESS
The Company is a multi-bank holding company as defined under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). The BHC Act regulates acquisitions by the Company of voting shares or assets of any bank or other company. The Company is subject to the reporting requirements of, and examination and regulation by, the Board of Governors of the Federal Reserve System, as well as reporting requirements under the Securities and Exchange Commission Act of 1934.
The Company's Banks are located in northeastern, eastern, and southeastern Ohio and are engaged in the business of commercial and retail banking in Belmont, Harrison, Jefferson, Tuscarawas, Carroll, Athens, Hocking, and Fairfield counties and the surrounding localities. The Banks provide a broad range of banking and financial services, which include accepting demand, savings and time deposits and granting commercial, real estate and consumer loans. CITIZENS conducts its business through its main office in Martins Ferry, Ohio and nine branches located in Bridgeport, Colerain, Dellroy, Dover, Jewett, New Philadelphia, St. Clairsville, Sherrodsville, and Strasburg, Ohio. In 1999, CITIZENS opened a full service brokerage division known as Brokerage United with securities provided through Raymond James Financial Services, Inc. member NASD/SIPC. COMMUNITY conducts its business through its seven offices in Amesville, Glouster, Lancaster, and Nelsonsville, Ohio.
The markets in which the Banks' operate continue to be highly competitive. CITIZENS competes for loans and deposits with other retail commercial banks, savings and loan associations, finance companies, credit unions and other types of financial institutions within the Mid-Ohio valley geographic area along the eastern border of Ohio, extending into the northern panhandle of West Virginia and the Tuscarawas and Carroll County geographic areas of northeastern Ohio. COMMUNITY also encounters similar competition for loans and deposits throughout the Athens, Hocking, and Fairfield County geographic areas of central and southeastern Ohio.
On November 12, 1999, President Clinton signed the Graham-Leach-Bliley Act of 1999 ("GLB Act"), which is intended to modernize the financial services industry. The GLB Act sweeps away large parts of a regulatory framework that had its origins in the Depression Era of the 1930s. Effective March 11, 2000, new opportunities will become available for banks, other depository institutions, insurance companies and securities firms to enter into combinations that permit a single financial service organization to offer customers a more complete array of financial products and services. The GLB Act provides a new regulatory framework for regulation through the financial holding company, which will have as its umbrella regulator the Federal Reserve Board. The functional regulation of the financial holding company's separately regulated subsidiaries will be conducted by their primary functional regulator. The GLB Act makes satisfactory or above Community Reinvestment Act compliance for insured depository institutions and their financial holding companies necessary in order for them to engage in new financial activities. The GLB Act provides a federal right to privacy of non-public personal information of individual customers. The Company and Banks are also subject to certain state laws that deal with the use and distribution of non-public personal information.
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
(C) NARRATIVE DESCRIPTION OF BUSINESS (CONTINUED)
The Company's two subsidiary banks are subject to regulation by the Ohio Division of Financial Institutions and the Federal Deposit Insurance Corporation ("FDIC"). The regulations and restrictions affecting the Banks pertain to, among other things, allowable loans, guidelines for allowance for loan losses, accountability for fair and accurate disclosures to customers and regulatory agencies, permissible investments and limitations of risk and regulation of capital requirements for safe and sound operation of the financial institution.
The Banks have no single customer or related group of customers whose banking activities, whether through deposits or lending, would have a material impact on the continued earnings capabilities if those activities were removed.
The Company itself, as a shell holding company, has no compensated employees. CITIZENS has 84 full time employees, with 25 of these serving in a management capacity and 10 part time employees. COMMUNITY has 36 full time employees, with 13 serving in a management capacity and 6 part time employees. The Company considers employee relations to be good at all subsidiary locations.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
Not applicable.
I DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
A Refer to Page 29 of the Annual Report To Shareholders
B Refer to Page 29 of the Annual Report To Shareholders
C Refer to Page 30 of the Annual Report To Shareholders
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
II INVESTMENT PORTFOLIO A The following table sets forth the carrying amount of securities at December 31, 2000, 1999 and 1998:
B Refer to Page 43, Note 2 of the Annual Report To Shareholders.
C Excluding holdings of U.S. Agency, there were no investments in securities of any one issuer exceeding 10% of the Company's consolidated shareholders' equity at December 31, 2000.
III LOAN PORTFOLIO
A TYPES OF LOANS
The amounts of gross loans outstanding at December 31, 2000, 1999, 1998, 1997, and 1996 are shown in the following table according to types of loans:
Construction loans were not significant for the periods discussed.
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
III LOAN PORTFOLIO (CONTINUED)
B MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES The following is a schedule of commercial and commercial real estate loans at December 31, 2000 maturing within the various time frames indicated:
The following is a schedule of fixed rate and variable rate commercial and commercial real estate loans at December 31, 2000 due to mature after one year:
Variable rate loans are those loans with floating or adjustable interest rates.
C RISK ELEMENTS
1. NONACCRUAL, PAST DUE, RESTRUCTURED AND IMPAIRED LOANS
The following schedule summarizes nonaccrual loans, accruing loans which are contractually 90 days or more past due, troubled debt restructurings and impaired loans at December 31, 2000, 1999, 1998, 1997 and 1996:
(1) Loans considered impaired under the provisions of SFAS No. 114 and interest recognized on a cash received basis were not considered material during any of the periods presented.
The additional amount of interest income that would have been recorded on nonaccrual loans, had they been current, totaled $56,767 for the year-ended December 31, 2000.
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
III LOAN PORTFOLIO (CONTINUED)
1. NONACCRUAL, PAST DUE, RESTRUCTURED AND IMPAIRED LOANS (CONTINUED)
Interest income is not reported when full loan repayment is doubtful, typically when the loan is impaired or payments are past due over 90 days. Payments received on such loans are reported as principal reductions.
A loan is impaired when full payment under the loan terms is not expected. Impairment is evaluated in total for smaller-balance loans of similar nature such as residential mortgage, consumer, and credit card loans, and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral.
2. POTENTIAL PROBLEM LOANS
The Company had no potential problem loans as of December 31, 2000 which have not been disclosed in Table C 1., but where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans into one of the problem loan categories.
3. FOREIGN OUTSTANDING
Not applicable.
4. LOAN CONCENTRATIONS
Refer to Page 50, Note 11 of the Annual Report To Shareholders.
D. OTHER INTEREST-BEARING ASSETS
Not applicable.
IV SUMMARY OF LOAN LOSS EXPERIENCE
For additional explanation of factors which influence management's judgment in determining amounts charged to expense, refer to Pages 23-24, "Management Discussion and Analysis" and Pages 38 - 39, Note 1 of the Annual Report To Shareholders.
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
IV SUMMARY OF LOAN LOSS EXPERIENCE (CONTINUED)
A ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The following schedule presents an analysis of the allowance for loan losses, average loan data and related ratios for the years ended December 31, 2000, 1999, 1998, 1997 and 1996:
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
IV SUMMARY OF LOAN LOSS EXPERIENCE (CONTINUED)
B ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table allocates the allowance for possible loan losses at December 31, 2000, 1999, 1998, 1997 and 1996. The allowance has been allocated according to the amount deemed to be reasonably necessary to provide for the probability of losses being incurred within the following categories of loans at the dates indicated:
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
V DEPOSITS
A SCHEDULE OF AVERAGE DEPOSIT AMOUNTS AND RATES
(1) Refer to Page 29 of the Annual Report To Shareholders. (2) Refer to Page 29 of the Annual Report To Shareholders. (3) Refer to Page 29 of the Annual Report To Shareholders. (4) Refer to Page 29 of the Annual Report To Shareholders. (5)-(8) Not applicable.
B OTHER CATEGORIES
Not applicable.
C FOREIGN DEPOSITS
Not applicable.
D MATURITY ANALYSIS OF TIME DEPOSITS GREATER THAN $100,000.
The following schedule details the maturities of time certificates of deposit in amounts of $100,000 or more for the year ended December 31, 2000:
E TIME DEPOSITS GREATER THAN $100,000 ISSUED BY FOREIGN OFFICES.
Not applicable.
VI RETURN ON EQUITY AND ASSETS
The ratio of net income to daily average total assets and average shareholders' equity, and certain other ratios, were as follows:
(1) Refer to Page 18 of the Annual Report To Shareholders.
UNITED BANCORP, INC. FORM 10-K
ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED)
VII SHORT-TERM BORROWINGS
Information concerning securities sold under agreements to repurchase is summarized as follows:
Securities sold under agreements to repurchase are financing arrangements whereby the Company sells securities and agrees to repurchase the identical securities at the maturities of the agreements at specified prices
Information concerning the cash management line of credit from the Federal Home Loan Bank of Cincinnati, Ohio is summarized as follows:
No other individual component of the borrowed funds total comprised more than 30% of shareholders' equity and accordingly are not disclosed in detail.
ITEM 2
ITEM 2 PROPERTIES
Refer to Pages 6-7 and 10-11, "Corporate Profile" in the Annual Report To Shareholders. Management believes the properties described on Pages 6-7 and 10-11 of the Annual Report to be in good operating condition for the purpose for which it is used. The properties are unencumbered by any mortgage or security interest and is, in management's opinion, adequately insured.
ITEM 3
ITEM 3 LEGAL PROCEEDINGS
Refer to Page 41, Note 1 of the Annual Report To Shareholders.
ITEM 4
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No motions were submitted to shareholders for a vote during the fourth quarter of 2000.
PART II
ITEM 5
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Refer to Page 4, "Shareholder Information" of the Annual Report To Shareholders.
United Bancorp, Inc. Form 10-K
ITEM 6
ITEM 6 SELECTED FINANCIAL DATA
Refer to Page 18, "Five Year Performance Summary" of the Annual Report To Shareholders.
ITEM 7
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Refer to Pages 19 - 32, "Management's Discussion and Analysis" of the Annual Report To Shareholders.
ITEM 7A
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Refer to Pages 26 - 27, "Asset/Liability Management and Sensitivity to Market Risks" of the Annual Report To Shareholders.
ITEM 8
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to Pages 33 - 55 of the Annual Report To Shareholders.
ITEM 9
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There were no changes in or disagreements with accountants.
UNITED BANCORP, INC. FORM 10-K
PART III
ITEM 10
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Refer to Pages 3 - 8 of the Proxy Statement. (b) Executive Officers of the Registrant:
(1) Each individual has held the position noted during the past five years, except for the following:
Randall M. Greenwood served as a Business Assurance Manager of Coopers and Lybrand LLP of Columbus, Ohio from 1993 to November of 1997. He served as a Manager for BankOne Corporation in Columbus, Ohio from February 1991 to August 1993 and as a Supervisor at Coopers and Lybrand LLP in Columbus, Ohio from September 1986 through February 1991. He has served as Vice President -- Chief Financial Officer of United Bancorp, Inc. and as Senior Vice President -- Chief Financial Officer of The Citizens Savings Bank, Martins Ferry, Ohio since December 1997.
Alan M. Hooker served as President of Fairfield National Division of the Park National Bank where he also served on their Advisory Board. He has held senior level banking positions with financial institutions in Washington, D.C., and Baltimore, Maryland. He has served as President and Chief Executive Officer of The Community Bank, Glouster, Ohio and as Executive Vice President -- Administration of United Bancorp, Inc. since October 26, 1998.
ITEM 11
ITEM 11 EXECUTIVE COMPENSATION
Refer to Pages 10 - 12 of the Proxy Statement.
ITEM 12
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Refer to Pages 3 - 8 of the Proxy Statement.
ITEM 13
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable.
UNITED BANCORP, INC. FORM 10-K
PART IV
ITEM 14
ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF FORM 10-K
1. The following consolidated financial statements appear in the 2000 Annual Report To Shareholders and are incorporated by reference:
2. The summary of selected quarterly results of operations appears on Page 55 in the 2000 Annual Report To Shareholders and is incorporated by reference.
3. Exhibits
2 Not Applicable 3 (i)(ii) Articles of Incorporation of United Bancorp, Inc. including amendments and By Laws, previously filed with the Securities and Exchange Commission on November 16, 1983. 4 Not applicable. 9 Not applicable. 10 Reference to special severance agreement on Page 8 of the Proxy Statement 11 Statement regarding computation of per share earnings (included in Note 1 to the consolidated financial statements on page 40 and Note 16 on Page 54 of the Annual Report To Shareholders.) 12 Not applicable. 13 Reference to the Annual Report To Shareholders for the fiscal year ended December 31, 2000. 16 Not applicable. 18 Not applicable. 21.1 Reference to The Citizens Savings Bank, Martins Ferry, Ohio, incorporated on December 31, 1902, previously filed with the Securities and Exchange Commission. 21.2 Reference to The Community Bank, Lancaster, Ohio, incorporated on August 1, 1949, previously filed with the Securities and Exchange Commission. 22 Not applicable. 23 Consents of Experts and Council. 24 Not applicable. 99 Not applicable.
(b) The Company filed no reports on SEC Form 8-K during the last quarter of the covered by this report.
UNITED BANCORP, INC. FORM 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) United Bancorp, Inc.
By: March 24, 2001 ------------------------------------------- James W. Everson, Chairman, President & CEO
By: March 24, 2001 ------------------------------------------- Randall M. Greenwood, CFO
By: March 24, 2001 ------------------------------------------- Michael J. Arciello
By: March 24, 2001 ------------------------------------------- Terry A. McGhee
By: March 24, 2001 ------------------------------------------- John M. Hoopingarner
By: March 24, 2001 ------------------------------------------- Richard L. Riesbeck
By: March 24, 2001 ------------------------------------------- L.E. Richardson, Jr.
By: March 24, 2001 ------------------------------------------- Matthew C. Thomas
UNITED BANCORP, INC. FORM 10-K
EXHIBIT INDEX
Exhibit No. Description SK Item 601 No. ----------- ----------- ---------------
1 Annual Report to Shareholders 13
2 Consents of Experts and Council 23