pressrelease.htm

FOR IMMEDIATE RELEASE:	CONTACT:	Robert K. Chapman
April 23, 2010		United Bancorp, Inc.
		734-214-3801

UNITED BANCORP, INC. ANNOUNCES

UNAUDITED FIRST QUARTER 2010 RESULTS

TECUMSEH, MI – United Bancorp, Inc. (UBMI) reported a consolidated net loss of $809,000, or $.21 per share of common stock, compared to a loss of $4.7 million or $.96 per share for the same quarter of 2009. The first quarter of 2009 included a one-time goodwill impairment charge. The loss for the most recent quarter resulted from a substantial provision to the Company's allowance for loan losses, increased FDIC insurance premiums and costs related to other real estate owned properties.

Robert K. Chapman, President and Chief Executive Officer of the Company, reported that net interest income for the quarter improved by 1.9% over the first quarter of 2009, and noninterest expenses excluding the one-time goodwill impairment charge were down 10.4%. The Company's pre-tax, pre-provision income of $3.3 million for the first quarter of 2010 was up from $3.1 million for the same quarter last year, for an improvement of 5.8%. This calculation adjusts net income before tax by the amount of the Company's provision for loan losses and one-time goodwill impairment charge in the first quarter of 2009.

Mr. Chapman commented that the Company’s business includes a diversity of sources of noninterest income which, combined with recent expense reductions, have resulted in core earnings that continue to help reduce the impact of its loan losses. He indicated that the additions to the provision for loan losses for the first quarter of 2010 resulted primarily from further deterioration of previously identified credit issues. He noted that the Company’s provision for loan losses in the first quarter of 2010 was at its lowest level for the most recent six quarters.

Results of Operations

The Company’s total revenues (consisting of net interest income and noninterest income) for the first quarter of 2010 declined by $714,000, or 6.1% compared to the first quarter of 2009. Net interest income, which remained relatively strong, improved by 1.9% for the first quarter of 2010 compared to the first quarter of 2009. At the same time, net interest income levels declined slightly from the fourth quarter of 2009, which represented record levels for the Company.

Total noninterest income, which provided 29.5% of net revenue for the first quarter of 2010, declined by 21.1% from the first quarter of 2009. This decline was primarily a result of lower levels of income from loan sales and servicing. The Company’s volume of rate-driven refinancing of residential mortgages has slowed in the past six months, resulting in a reduction of the volume of mortgage loans sold in the secondary market and a corresponding decline in gains on the sale of those loans.

Total noninterest expenses for the first quarter of 2010 were down 10.4% from the first quarter of 2009, excluding the first quarter 2009 one-time goodwill impairment charge. While FDIC insurance costs and expenses related to nonperforming loans have increased, reductions in compensation costs have more than offset those increases. Chapman commented “Previously-announced cost containment and reduction measures helped to reduce noninterest expenses in the first quarter of 2010 compared to prior quarters. Among those, the Company implemented a number of staff reductions in the fourth quarter of 2009, which along with attrition, should result in annualized savings in excess of $1.0 million in 2010.” Reductions were also made in Director compensation for 2010.

The Company’s provision for loan losses of $4.8 million in the first quarter of 2009 was down from $5.3 million for the prior quarter and $6.9 million for the first quarter of 2009, and was the lowest quarterly level of the most recent six quarters.

Balance Sheet

Consolidated assets of the Company have increased by 2.6% in the past twelve months, reaching $900.8 million at March 31, 2010. The Company has significantly enhanced its liquidity position as federal funds sold and interest bearing balances with banks were $115.0 million at March 31, 2010, compared with $52.6 million at March 31, 2009. The Company expects to continue to maintain these higher levels of liquidity during this period of economic uncertainty.

Gross portfolio loans have declined by $16.0 million from the end of 2009, for a decrease of 2.5% as a result of slowing of loan demand and the Company’s effective use of loan sales and servicing. The Banks generally sell their fixed rate long-term residential mortgages in the secondary market, and retain adjustable rate mortgages for their portfolios. While the Company’s portfolio loans have decreased by $56.3 million or 8.2% during the past twelve months, the balance of loans serviced for others increased by $170.3 million, or 45.0%, during the same time period.

Total deposits were $781.9 million at March 31, 2010, down $865,000 from December 31, 2009, and deposit growth for the past twelve months was $40.7 million, or 5.5%. Chapman noted that the majority of the Banks’ deposits are derived from core client sources, relating to long term relationships with local personal, business and public clients. As a result of its strong core funding, the Company’s cost of deposits was 1.29% in the first quarter of 2010, down from 1.89% for the first quarter of 2009.

Asset Quality

Net charge-offs during the first quarter of 2010 were $3.5 million, down from $11.3 million for the fourth quarter of 2009. Additions to the provision for loan losses for the first quarter of 2010 resulted primarily from further deterioration of previously identified credit issues and to a lesser extent from newly identified credit issues.

The loan portfolios of the Banks continued to be affected by credit issues with loans for real estate construction and development loans, which have been particularly impacted by declines in housing activity and the resultant impact on real estate values. This category of loans has had a disproportionate impact on the credit quality of the Company. While balances of those loans at March 31, 2010 made up just 8.4% of total portfolio loans, they represented 44.3% of the Company’s impaired loans. At the same time, the Company continued to work down its exposure to this category of loans, and balances of construction and land development loans declined by $19.8 million, or 27.2%, over the last twelve months.

Within the Bank’s loan portfolio, $33.5 million of loans were considered nonperforming at March 31, 2010, compared with $32.7 million as of December 31, 2009 and $29.2 million as of March 31, 2009. Total nonperforming loans as a percent of total portfolio loans moved from 5.03% at the end of 2009 to 5.29% at March 31, 2010, while the allowance coverage of nonperforming loans improved to 63.7% at March 31, 2010, up from 61.2% at December 31, 2009.

Capital Position

As announced on April 1, 2010, the Company consolidated and merged its two subsidiary banks into one consolidated bank operating under the charter and name of United Bank & Trust. The consolidated bank continues to operate the same banking offices in the same markets that UBT and UBTW operated prior to the consolidation. The Company expects the merger to allow the Company to more effectively deploy the capital of the Company and the consolidated bank while gaining operating efficiencies and providing service improvements to its customers.

About United Bancorp, Inc.

United Bancorp, Inc. is a bank holding company that is the parent company for United Bank & Trust. The bank operates sixteen banking offices in Lenawee, Washtenaw and Monroe counties, and maintains an active wealth management group that serves the Company’s market area. For more information, visit the company’s website at www.ubat.com.

Forward-Looking Statements

This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and United Bancorp, Inc. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to real estate valuation, future levels of non-performing loans, the rate of asset dispositions, capital raising activities, dividends, future growth and funding sources, future liquidity levels, future profitability levels, our ability to successfully consolidate our subsidiary banks, the benefits of the bank consolidation on our clients, bank co-workers and the local communities in which we operate, the effects on earnings of changes in interest rates and the future level of other revenue sources. All of the information concerning interest rate sensitivity is forward-looking. Accounting estimates, including among others, determination of the provision and allowance for loan losses, the carrying value of goodwill, mortgage servicing rights, deferred tax assets, and investment securities (including whether any impairment is temporary or other than temporary and the amount of any impairment) involves judgments that are inherently forward-looking. Our ability to fully comply with all of the provisions of our memoranda of understanding, improve regulatory capital ratios, successfully implement new programs and initiatives, increase efficiencies, address regulatory issues, respond to declines in collateral values and credit quality, and improve profitability is not entirely within our control and is not assured. The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and on United Bancorp, Inc., specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. United Bancorp, Inc. undertakes no obligation to update, clarify or revise forward-looking statements to reflect developments that occur or information obtained after the date of this report.

Risk factors include, but are not limited to, the risk factors described in "Item 1A – Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2009; the timing and level of asset growth; changes in market interest rates, changes in FDIC assessment rates, changes in banking laws and regulations; changes in property values, asset quality and the financial capability of borrowers; actions of bank regulatory authorities; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; the impact of possible future litigation; governmental and regulatory policy changes; opportunities for acquisitions and the effective completion of acquisitions and integration of acquired entities; changes in value and credit quality of investment securities; the local and global effects of current and future military actions; and current uncertainties and fluctuations in the financial markets and stocks of financial services providers due to concerns about credit availability and concerns about the Michigan economy in particular. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

Unaudited Consolidated Financial Statements Follow.

United Bancorp, Inc. and Subsidiaries
Comparative Consolidated Balance Sheet Data (Unaudited)

Dollars in thousands	Mar. 31,			Dec. 31,			Percent			Mar. 31,		Percent
Period-end Balance Sheet	2010			2009			Change			2009		Change
Assets
Cash and due from banks	$	11,796		$	10,047			17.4	%	$	15,206		-22.4	%
Interest bearing bal. with banks		114,986			115,247			-0.2	%		52,631		118.5	%
Federal funds sold		-			295			-100.0	%		-		0.0	%
Total cash & cash equivalents		126,782			125,589			0.9	%		67,837		86.9	%

Securities available for sale		96,444			92,146			4.7	%		90,303		6.8	%
FHLB Stock		2,992			2,992			0.0	%		2,992		0.0	%
Loans held for sale		10,231			7,979			28.2	%		3,693		177.0	%

Portfolio loans
Personal		111,238			110,702			0.5	%		110,193		0.9	%
Business		431,055			447,336			-3.6	%		482,019		-10.6	%
Residential mortgage		91,721			92,015			-0.3	%		98,143		-6.5	%
Total portfolio loans		634,014			650,053			-2.5	%		690,355		-8.2	%
Allowance for loan losses		21,351			20,020			6.6	%		20,698		3.2	%
Net loans		612,663			630,033			-2.8	%		669,657		-8.5	%

Premises and equipment, net		12,024			12,332			-2.5	%		12,926		-7.0	%
Bank owned life insurance		13,052			12,939			0.9	%		12,569		3.8	%
Other assets		26,602			25,318			5.1	%		18,361		44.9	%
Total Assets	$	900,790		$	909,328			-0.9	%	$	878,338		2.6	%

Liabilities
Deposits
Non-interest bearing	$	101,841		$	99,893			2.0	%	$	105,191		-3.2	%
Interest bearing		680,095			682,908			-0.4	%		636,091		6.9	%
Total deposits		781,936			782,801			-0.1	%		741,282		5.5	%
FHLB advances outstanding		35,598			42,098			-15.4	%		48,126		-26.0	%
Other liabilities		3,427			3,562			-3.8	%		3,676		-6.8	%
Total Liabilities		820,961			828,461			-0.9	%		793,084		3.5	%

Shareholders' Equity		79,829			80,867			-1.3	%		85,254		-6.4	%
Total Liabilities and Equity	$	900,790		$	909,328			-0.9	%	$	878,338		2.6	%

	First Quarter
Average Balance Data		2010			2009		% Change
Total loans	$	654,936		$	704,412			-7.0	%
Earning assets		865,738			837,712			3.3	%
Total assets		909,196			866,243			5.0	%
Deposits		787,294			727,715			8.2	%
Shareholders' Equity		81,072			86,081			-5.8	%

Asset Quality
Net charge offs	$	3,011		$	4,484			-32.8	%
Non-accrual loans		29,712			25,962			14.4	%
Non-performing loans		33,527			29,181			14.9	%
Non-performing assets		36,880			32,582			13.2	%
Nonperforming loans/total loans		5.29	%		4.23	%		25.1	%
Allowance for loan loss/total loans		3.37	%		3.00	%		12.3	%
Allowance/nonperforming loans		63.7	%		70.9	%		-10.2	%

United Bancorp, Inc. and Subsidiaries
Comparative Consolidated Income Statement and Performance Data (Unaudited)

Dollars in thousands except per share data		Three months ended Mar. 31,
Consolidated Income Statement		2010			2009			% Change
Interest Income
	Interest and fees on loans	$	9,406		$	10,141			-7.2	%
	Interest on investment securities		769			871			-11.7	%
	Interest on fed funds sold & bank balances		73			17			329.4	%
	Total interest income		10,248			11,029			-7.1	%

Interest Expense
	Interest on deposits		2,194			2,938			-25.3	%
	Interest on FHLB advances		347			529			-34.4	%
	Total interest expense		2,541			3,467			-26.7	%
Net Interest Income			7,707			7,562			1.9	%
Provision for loan losses			4,800			6,870			-30.1	%
Net Interest Income After Provision			2,907			692			320.1	%

Noninterest Income
	Service charges on deposit accounts		539			683			-21.1	%
	Trust & Investment fee income		1,043			996			4.7	%
	Gains (losses) on securities transactions		-			(13	)		-100.0	%
	Income from loan sales and servicing		892			1,625			-45.1	%
	ATM, debit and credit card fee income		445			508			-12.4	%
	Income from bank-owned life insurance		113			122			-7.4	%
	Other income		192			162			18.5	%
	Total noninterest income		3,224			4,083			-21.0	%

Noninterest Expense
	Salaries and employee benefits		3,938			4,606			-14.5	%
	Occupancy and equipment expense		1,336			1,349			-1.0	%
	External data processing		294			408			-27.9	%
	Advertising and marketing expenses		167			238			-29.8	%
	Attorney & other professional fees		351			263			33.5	%
	Director fees		88			112			-21.4	%
	Expenses relating to ORE property		315			409			-23.0	%
	FDIC Insurance premiums		437			296			47.6	%
	Goodwill impairment		-			3,469			-100.0	%
	Other expense		733			871			-15.8	%
	Total noninterest expense		7,659			12,021			-36.3	%
Loss Before Federal Income Tax			(1,528	)		(7,246	)		-78.9	%
Federal income tax			(719	)		(2,547	)		-71.8	%
Net Loss		$	(809	)	$	(4,699	)		-82.8	%

Performance Ratios
Return on average assets			-0.36	%		-1.06	%
Return on average equity			-4.05	%		-10.65	%
Pre-tax, pre-provision ROA (1)			1.44	%		1.43	%		0.8	%
Net interest margin (FTE)			3.69	%		3.84	%		-3.8	%
Efficiency ratio			69.0	%		101.1	%		-31.8	%

Common Stock Performance
Basic & diluted earnings (loss) per share		$	(0.21	)	$	(0.96	)		-78.1	%
Dividends per share			0.00			0.02			-100.0	%
Dividend payout ratio		NA			NA			NA
Book value per share		$	11.76		$	12.88			-8.7	%
Market value per share (2)			7.00			6.50			7.7	%

(1)	Excludes first quarter 2009 goodwill impairment charge
(2)	Market value per share is based on the last reported transaction on OTCBB before period end.

United Bancorp, Inc. and Subsidiaries
Trends of Selected Consolidated Financial Data (Unaudited)

Dollars in thousands except per share data		2010			2009
Balance Sheet Data		1st Qtr			4th Qtr			3rd Qtr			2nd Qtr			1st Qtr
Period-end:
	Portfolio loans	$	634,014		$	650,053		$	675,306		$	677,571		$	690,355
	Total loans		644,245			658,032			683,204			691,371			694,048
	Allowance for loan losses		21,351			20,020			26,003			21,050			20,698
	Earning assets		858,667			868,712			877,241			844,246			839,974
	Total assets		900,790			909,328			909,848			883,130			878,338
	Deposits		781,936			782,801			783,699			751,284			741,282
	Shareholders' Equity		79,829			80,867			81,965			84,287			85,254
Average:
	Total loans	$	654,936		$	679,090		$	689,959		$	699,115		$	704,412
	Earning assets		865,738			870,253			866,377			845,415			837,712
	Total assets		909,196			904,218			898,426			887,913			866,243
	Deposits		787,294			777,938			760,086			746,346			727,715
	Shareholders' Equity		81,072			81,913			85,066			85,493			86,081

Income Statement Summary
Net interest income		$	7,708		$	8,180		$	7,860		$	7,913		$	7,562
Provision for loan losses			4,800			5,300			8,200			5,400			6,870
Non-interest income			3,224			4,022			4,081			4,713			4,083
Non-interest expense			7,659			7,953			8,443			8,699			8,553
Federal income tax			(719	)		(569	)		(1,812	)		(711	)		(2,547	)
Net loss		$	(809	)	$	(482	)	$	(2,890	)	$	(762	)	$	(4,699	)
Basic & diluted loss per common share		$	(0.21	)	$	(0.15	)	$	(0.62	)	$	(0.20	)	$	(0.96	)

Performance Ratios and Liquidity
Return on average assets			-0.36	%		-0.21	%		-1.28	%		-0.34	%		-2.20	%
Return on average common equity			-4.05	%		-2.34	%		-13.48	%		-3.54	%		-22.14	%
Pre-tax, pre-provision ROA (1)			1.44	%		1.88	%		1.56	%		1.77	%		1.43	%
Net interest margin (FTE)			3.69	%		3.84	%		3.77	%		3.88	%		3.84	%
Efficiency ratio			69.0	%		64.9	%		69.3	%		67.6	%		101.1	%
Ratio of loans to deposits			81.1	%		83.0	%		86.2	%		90.2	%		93.1	%

Asset Quality
Net charge offs		$	3,011		$	11,282		$	3,247		$	5,048		$	4,484
Non-accrual loans			29,712			26,188			30,017			23,889			25,962
Non-performing loans			33,527			32,697			35,366			27,547			29,181
Non-performing assets			36,880			35,500			38,352			31,213			32,582
Nonperforming loans/total loans			5.29	%		5.03	%		5.24	%		4.07	%		4.23	%
Allowance for loan loss/total loans			3.37	%		3.08	%		3.85	%		3.11	%		3.00	%
Allowance/nonperforming loans			63.7	%		61.2	%		73.5	%		76.4	%		70.9	%

Market Data for Common Stock
Book value per share		$	11.76		$	11.98		$	12.22		$	12.68		$	12.88
Market value per share (2)
	High		8.50			6.50			6.90			7.00			10.50
	Low		4.35			5.00			4.74			5.60			5.50
	Period-end		7.00			5.25			6.00			6.10			6.50
Period-end shares outstanding			5,072			5,066			5,059			5,059			5,059
Average shares outstanding			5,068			5,066			5,059			5,059			5,054

Capital and Stock Performance
Tier 1 Leverage Ratio			8.4	%		8.6	%		8.9	%		9.4	%		9.7	%
Total capital to risk-weighted assets			13.4	%		13.2	%		13.1	%		13.4	%		13.3	%
Dividends per common share		$	-		$	-		$	-		$	-		$	0.02
Dividend payout ratio			0.0	%		0.0	%		0.0	%		0.0	%	NA
Price/earnings ratio (TTM)		NA			NA			NA			NA			NA
Period-end common stock market price/book value			59.5	%		43.8	%		49.1	%		48.1	%		50.5	%

(1)	Excludes first quarter 2009 goodwill impairment charge
(2)	Market value per share is based on the last reported transaction on OTCBB before period end.