10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT

For the transition period from ____________ to _______________

Commission File Number: 0-16540

UNITED BANCORP, INC.

(Exact name of registrant as specified in its charter)

Ohio	34-1405357
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

201 South Fourth Street, Martins Ferry, Ohio  43935-0010

(Address of principal executive offices)

(740) 633-0445

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

 Yes x              No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x  Yes        ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ¨       No x

Indicate the number of shares outstanding of the issuer’s classes of common stock as of the latest practicable date: As of May 2, 2017, 5,425,304 shares of the Company’s common stock, $1.00 par value, were issued and outstanding.

PART I - FINANCIAL INFORMATION
Item 1	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4	Controls and Procedures	42
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	43
Item 1A	Risk Factors	43
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3	Defaults Upon Senior Securities	43
Item 4	Mine Safety Disclosures	44
Item 5	Other Information	44
Item 6	Exhibits	44
SIGNATURES		45

2

ITEM 1. Financial Statements

United Bancorp, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	March 31,			December 31,
	2017			2016
	(Unaudited)
Assets
Cash and due from banks	$	4,658		$	4,233
Interest-bearing demand deposits		11,725			7,308
Cash and cash equivalents		16,383			11,541
Available-for-sale securities		39,001			39,766
Loans, net of allowance for loan losses of $2,333 and $2,341 at March 31, 2017 and December 31, 2016, respectively		352,422			354,380
Premises and equipment		11,932			11,884
Federal Home Loan Bank stock		4,165			4,164
Foreclosed assets held for sale, net		335			335
Accrued interest receivable		832			840
Deferred income taxes		845			850
Bank-owned life insurance		11,903			11,822
Other assets		3,030			2,436
Total assets	$	440,848		$	438,018
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Demand	$	216,199		$	203,745
Savings		83,299			81,825
Time		60,313			53,233
Total deposits		359,811			338,803
Securities sold under repurchase agreements		15,567			9,393
Federal Home Loan Bank advances		15,317			39,855
Subordinated debentures		4,124			4,124
Interest payable and other liabilities		2,910			3,202
Total liabilities		397,729			395,377
Stockholders’ Equity
Preferred stock, no par value, authorized 2,000,000 shares; no shares issued		—			––
Common stock, $1 par value; authorized 10,000,000 shares; issued 5,425,304 shares at March 31, 2017 and December 31, 2016;  outstanding – 5,220,671 and 5,208,015 shares at March 31, 2017 and December 31, 2016, respectively		5,425			5,425
Additional paid-in capital		18,030			18,024
Retained earnings		22,737			22,483
Stock held by deferred compensation plan; 198,889 and 211,509 shares at March 31, 2017 and December 31, 2016		(1,758	)		(1,880	)
Unearned ESOP compensation		(970	)		(911	)
Accumulated other comprehensive loss		(299	)		(454	)
Treasury stock, at cost 5,744 shares at March 31, 2017 and December 31, 2016		(46	)		(46	)
Total stockholders’ equity		43,119			42,641
Total liabilities and stockholders’ equity	$	440,848		$	438,018

See Notes to Condensed Consolidated Financial Statements

3

United Bancorp, Inc.

Condensed Consolidated Statements of Income

Three Months Ended March 31, 2017 and 2016

(In thousands, except per share data)

(Unaudited)

	2017		2016
Interest and Dividend Income
Loans, including fees	$	4,017	$	3,880
Securities
Taxable		103		81
Non-taxable		6		27
Federal funds sold		11		7
Dividends on Federal Home Loan Bank and other stock		47		43
Total interest and dividend income		4,184		4,038
Interest Expense
Deposits		229		201
Borrowings		209		274
Total interest expense		438		475
Net Interest Income		3,746		3,563
Provision for Loan Losses		25		71
Net Interest Income After Provision for Loan Losses		3,721		3,492
Noninterest Income
Service charges on deposit accounts		597		633
Realized gains on sales of loans		15		16
Other income		220		218
Total noninterest income		832		867
Noninterest Expense
Salaries and employee benefits		1,768		1,650
Occupancy and equipment		523		448
Provision for losses on foreclosed real estate		—		—
Professional services		201		199
FDIC insurance		44		63
Insurance		67		50
Franchise and other taxes		84		84
Advertising		109		85
Stationery and office supplies		36		29
Other expenses		502		533
Total noninterest expense		3,334		3,141
Income Before Federal Income Taxes		1,219		1,218
Provision for Federal Income Taxes		369		373
Net Income	$	850	$	845
Basic Earnings Per Share	$	0.17	$	0.17
Diluted Earnings Per Share	$	0.17	$	0.17
Dividends Per Share	$	0.11	$	0.10

See Notes to Condensed Consolidated Financial Statements

4

United Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended March 31, 2017 and 2016

(In thousands)

(Unaudited)

	2017		2016
Net Income	$	850	$	845
Other comprehensive income, net of related tax effects
Unrealized holding gain on securities during the period, net of taxes of $82 and $16 in 2017 and 2016, respectively		155		31
Comprehensive Income	$	1,005	$	876

See Notes to Condensed Consolidated Financial Statements

5

United Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2017 and 2016

(In thousands)

(Unaudited)

	2017			2016
Operating Activities
Net income	$	850		$	845
Items not requiring (providing) cash
Depreciation and amortization		223			192
Provision for loan losses		25			71
Gain on sale of loans		(15	)		(16	)
Increase in value of bank-owned life insurance		(80	)		(86	)
Amortization of mortgage servicing rights		2			3
Originations of loans held for sale		(653	)		(805	)
Proceeds from sale of loans held for sale		668			821
Loss on sale of foreclosed assets		—			10
Expense related to share-based compensation plans and ESOP		70			88
Net change in accrued interest receivable and other assets		(36	)		(31	)
Net change in accrued expenses and other liabilities		(936	)		(963	)
Net cash provided by operating activities		118			129
Investing Activities
Securities available for sale:
Maturities, prepayments and calls		—			8,000
Purchases		—			(3,000	)
Proceeds from maturity of held-to-maturity securities		999			—
Net change in loans		1,947			(5,966	)
Proceeds from sale of foreclosed and fixed assets		9			70
Purchases of premises and equipment		(280	)		(590	)
Net cash provided by (used in) investing activities		2,675			(1,486	)
Financing Activities
Net change in deposits	$	21,008		$	1,010
Net change in securities sold under repurchase agreements		6,175			6,466
Repayment of Federal Home Loan Bank advances		(24,538	)		(40	)
Cash dividends paid		(596	)		(538	)
Net cash provided by financing activities		2,049			6,898
Increase in Cash and Cash Equivalents		4,842			5,541
Cash and Cash Equivalents, Beginning of Period		11,541			12,701
Cash and Cash Equivalents, End of Period	$	16,383		$	18,242
Supplemental Cash Flows Information
Interest paid on deposits and borrowings	$	449		$	477

See Notes to Condensed Consolidated Financial Statements

6

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1: Summary of Significant Accounting Policies

These interim financial statements are prepared without audit and reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position of United Bancorp, Inc. (“Company”) at March 31, 2017, and its results of operations and cash flows for the interim periods presented. All such adjustments are normal and recurring in nature. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not purport to contain all the necessary financial disclosures required by accounting principles generally accepted in the United States of America that might otherwise be necessary in the circumstances and should be read in conjunction with the Company’s consolidated financial statements and related notes for the year ended December 31, 2016 included in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2017, are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2016 has been derived from the audited consolidated balance sheet of the Company as of that date.

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, The Citizens Savings Bank of Martins Ferry, Ohio (“the Bank” or “Citizens”). The Bank operates two divisions, The Community Bank, a division of The Citizens Savings Bank and The Citizens Bank, a division of The Citizens Savings Bank. 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, Hocking, Jefferson, and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio, and include a wide range of individuals, businesses and other organizations. The Citizens Bank division conducts its business through its main office in Martins Ferry, Ohio and offices in Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Jewett, New Philadelphia, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg, and Tiltonsville, Ohio. The Citizens Bank division also operates a loan production office in Wheeling, West Virginia. The Community Bank division conducts its business through two offices in Lancaster, Ohio and offices in Amesville, Glouster, Lancaster, and Nelsonville, Ohio. 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. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

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 and fiscal policies, that are outside of management’s control.

7

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

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.

8

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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.

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 uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by 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.

9

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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.

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.

10

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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.

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended March 31,
	2017			2016
	(In thousands, except share and per share data)
Basic
Net income	$	850		$	845
Dividends on non-vested restricted stock		(9	)		(14	)
Net earnings allocated to stockholders	$	841		$	831
Weighted average common shares outstanding		4,930,956			4,873,145
Basic earnings per common share	$	0.17		$	0.17
Diluted
Net earnings allocated to stockholders	$	841		$	831
Weighted average common shares outstanding for basic earnings per common share		4,930,956			4,873,145
Add:  Dilutive effects of assumed exercise of restricted stock		120,269			92,926
Average shares and dilutive potential common shares		5,051,225			4,966,071
Diluted earnings per common share	$	0.17		$	0.17

11

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2013.

Recent Accounting Pronouncements

ASU No. 2017-07 was issued in March 2017 and applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in this update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, as defined, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in ASU No. 2017-07 are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this update are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The Company is currently evaluating this ASU to determine the impact on its consolidated financial position, results of operations and cash flows.

ASU 2017-08 was issued by the FASB in March 2017 and applies to all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium. The ASU requires the premium to be amortized to the earliest call date, not the maturity date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017-08 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted and management elected to adopt the update as of January 1, 2017. Adoption did not have a material impact on the Company's results of operations or financial position.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. " ASU 2016-15 provides cash flow statement classification guidance for certain transactions including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company assessed ASU 2016-15 and does not expect a significant impact on its accounting and disclosures.

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 2016-13 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. 

12

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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. 

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. 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 is expecting to begin developing and implementing processes during the next two years to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 3.

ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting"

ASU No. 2016-09 was issued in March 2016 and affects all entities that issue share-based payment awards to their employees. The new guidance involves several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under ASU No. 2016-09, any excess tax benefits or tax deficiencies should be recognized as income tax expense or benefit in the income statement. Excess tax benefits are to be classified as an operating activity in the statement of cash flows. In accruing compensation cost, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as required under current guidance, or account for forfeitures when they occur. For an award to qualify for equity classification, an entity cannot partially settle the award in excess of the employer's maximum statutory withholding requirements. Such cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity in the statement of cash flows. The amendments in ASU No. 2016-09 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company adopted ASU No. 2016.09 without a material impact on the financial statements.

13

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities"

ASU No. 2016-01 was issued in January 2016 and applies to all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instruments specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for annual periods and interim periods within those periods, beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity instruments that exist as of the date of adoption. The Company is currently evaluating the impact of these amendments, but does not expect them to have a material effect on the Company’s financial position or results of operations since it does not have any equity securities or a valuation allowance. However, the amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. At this time the Company cannot quantify the change in the fair value of such disclosures since the Company is currently evaluating the full impact of the Update and is in the planning stages of developing appropriate procedures and processes to comply with the disclosure requirements of such amendments. The current accounting policies and procedures will be modified after the Company has fully evaluated the standard to comply with the accounting changes mentioned above. For additional information on fair value of assets and liabilities, see Note 16.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). This update to the ASC is the culmination of efforts by the FASB and the International Accounting Standards Board (IASB) to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 supersedes Topic 605 – Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. Originally, the amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early application is not allowed. In July 2015, the FASB extended the implementation date to annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Transitional guidance is included in the update. Earlier adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. The Company is in its preliminary stages of evaluating the impact of these amendments, although it doesn’t expect the amendments to have a significant impact to the Company’s financial position or results of operations. The amendments could potentially impact the accounting procedures and processes over the recognition of certain revenue sources, including, but not limited to, non-interest income. The Company is expecting to begin developing processes and procedures during 2017 to ensure it is fully compliant with these amendments at the date of adoption.

14

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On February 25, 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” ASU 2016-02 is intended to improve financial reporting about leasing transactions. This ASU affects all companies and other organization that lease assets such as real estate, airplanes, and manufacturing equipment.

Under the current accounting model, an organization applies a classification test to determine the accounting for the lease arrangement:

(a) Some leases are classified as capital where by the lessee would recognize lease assets and liabilities on the balance sheet.

(b) Other leases are classified as operating leases whereby the lessee would not recognize lease assets and liabilities on the balance sheet.

Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Thus, for a calendar year company, it would be effective January 1, 2019. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements. The Company is currently in the process of fully evaluating the amendments and will subsequently implement new processes to comply with the ASU. In addition, the Company will change its current accounting practice to comply with the amendments and such changes as mentioned above.

Note 2: Securities

The amortized cost and fair values, together with gross unrealized gains and losses of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale Securities:
March 31, 2017:
U.S. government agencies	$	39,000	$	—	$	(249	)	$	38,751
State and political subdivisions		250		—		––			250
	$	39,250	$	—	$	(249	)	$	39,001
Available-for-sale Securities:
December 31, 2016:
U.S. government agencies	$	39,000	$	—	$	(486	)	$	38,514
State and political subdivisions		1,249		3		—			1,252
	$	40,249	$	3	$	(486	)	$	39,766

15

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2017, 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.

	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	250	$	250
One to five years		39,000		38,751
Totals	$	39,250	$	39,001

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $32.1 million and $27.9 million at March 31, 2017 and December 31, 2016, 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 March 31, 2017 was $38.8 million, which represented approximately 99.4% of the Company’s available-for-sale and held-to-maturity investment portfolio.

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, 2016 was $38.5 million, which represented approximately 96.8% of the Company’s available-for-sale and held-to-maturity 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 and are a result on an increase in longer term interest rates.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

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, 2016:

March 31, 2017
	Less than 12 Months					12 Months or More				Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(In thousands)
U.S. Government agencies	$	38,751	$	(249	)	$	—	$	—	$	38,751	$	(249	)

16

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

December 31, 2016
	Less than 12 Months					12 Months or More				Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(In thousands)
U.S. Government agencies	$	38,514	$	(486	)	$	—	$	—	$	38,514	$	(486	)

The unrealized losses on the Company’s investments in U.S. Government agencies were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. 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 March 31, 2017.

There were no sale of investment securities for the three months ended March 31, 2017 and March 31, 2016.

Note 3: Loans and Allowance for Loan Losses

Categories of loans include:

	March 31,			December 31,
	2017			2016
	(In thousands)
Commercial loans	$	73,124		$	74,514
Commercial real estate		192,737			191,686
Residential real estate		75,145			76,154
Installment loans		13,749			14,367
Total gross loans		354,755			356,721
Less allowance for loan losses		(2,333	)		(2,341	)
Total loans	$	352,422		$	354,380

17

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

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 Real Estate and Consumer

Residential real estate and consumer 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.

18

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three month period ended March 31, 2017

	Commercial		Commercial Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	495	$	804		$	591		$	107		$	344		$	2,341
Provision charged to expense		3		(12	)		(13	)		94			(47	)		25
Losses charged off		—		—			—			(50	)		—			(50	)
Recoveries		—		1			5			11			—			17
Balance, end of period	$	498	$	793		$	583		$	162		$	297		$	2,333
Ending balance:  individually evaluated for impairment	$	16	$	95		$	—		$	57		$	—		$	168
Ending balance:  collectively evaluated for impairment	$	482	$	698		$	583		$	105		$	297		$	2,165
Loans:
Ending balance:  individually evaluated for impairment	$	341	$	985		$	—		$	416		$	—		$	1,742
Ending balance:  collectively evaluated for impairment	$	72,783	$	191,752		$	75,145		$	13,333		$	—		$	353,344

19

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three month period ended March 31, 2016

	Commercial			Commercial Real Estate		Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	184		$	597	$	170		$	113		$	1,373		$	2,437
Provision charged to expense		7			101		87			170			(294	)		71
Losses charged off		(2	)		—		(91	)		(71	)		—			(164	)
Recoveries		3			4		—			24			—			31
Balance, end of period	$	192		$	702	$	166		$	236		$	1,079		$	2,375
Ending balance:  individually evaluated for impairment	$	10		$	264	$	—		$	75		$	—		$	349
Ending balance:  collectively evaluated for impairment	$	182		$	438	$	166		$	161		$	1,079		$	2,026
Loans:
Ending balance:  individually evaluated for impairment	$	14		$	1,382	$	—		$	138		$	—		$	1,534
Ending balance:  collectively evaluated for impairment	$	70,172		$	167,135	$	79,795		$	16,828		$	—		$	333,930

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2016

	Commercial		Commercial Real Estate		Residential		Installment		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Ending balance:  individually evaluated for impairment	$	11	$	108	$	––	$	––	$	––	$	119
Ending balance:  collectively evaluated for impairment	$	484	$	696	$	591	$	107	$	344	$	2,222
Loans:
Ending balance:  individually evaluated for impairment	$	3,148	$	1,178	$	––	$	326	$	––	$	4,652
Ending balance:  collectively evaluated for impairment	$	71,366	$	190,508	$	76,154	$	14,041	$	––	$	352,069

20

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

The following tables show the portfolio quality indicators.

	March 31, 2017
Loan Class	Commercial		Commercial Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	69,970	$	188,370	$	75,145	$	13,333	$	346,818
Special Mention		162		3,203		—		—		3,365
Substandard		2,992		1,164		—		416		4,572
Doubtful		—		—		—		—		—
	$	73,124	$	192,737	$	75,145	$	13,749	$	354,755
	December 31, 2016
Loan Class	Commercial		Commercial Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	71,302	$	187,255	$	76,154	$	14,041	$	348,752
Special Mention		64		3,253		––		––		3,317
Substandard		3,148		1,178		––		326		4,652
Doubtful		––		––		––		––		––
	$	74,514	$	191,686	$	76,154	$	14,367	$	356,721

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 ALLL, 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.

21

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the past year to date period.

Loan Portfolio Aging Analysis

As of March 31, 2017

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 90 Days and Accruing		Non Accrual		Total Past Due and Non Accrual		Current		Total Loans Receivable
	(In thousands)
Commercial	$	39	$	187	$	20	$	49	$	295	$	72,829	$	73,124
Commercial real estate		—		33		—		735		768		191,969		192,737
Residential		201		188		160		912		1,461		73,684		75,145
Installment		34		28		—		94		156		13,593		13,749
Total	$	274	$	436	$	180	$	1,790	$	2,680	$	352,075	$	354,755

Loan Portfolio Aging Analysis

As of December 31, 2016 

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 90 Days and Accruing		Non Accrual		Total Past Due and Non Accrual		Current		Total Loans Receivable
	(In thousands)
Commercial	$	153	$	105	$	75	$	49	$	382	$	74,132	$	74,514
Commercial real estate		—		55		—		335		390		191,296		191,686
Residential		805		135		161		922		2,023		74,131		76,154
Installment		213		8		––		55		276		14,091		14,367
Total	$	1,171	$	303	$	236	$	1,361	$	3,071	$	353,650	$	356,721

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.

22

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Impaired Loans

	As of March 31, 2017						Three Months Ended March 31, 2017
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	85	$	85	$	—	$	86	$	1
Commercial real estate		476		476		—		986		2
Residential		—		—		—		—		—
Consumer		325		325		—		325		—
		886		886		—		1,397		3
Loans with a specific valuation allowance:
Commercial		256		256		16		259		3
Commercial  real estate		509		509		95		564		6
Residential		—		—		—		—		—
Consumer		91		91		57		91		—
		856		856		168		914		9
Total:
Commercial	$	341	$	341	$	16	$	345	$	4
Commercial real estate	$	985	$	985	$	95	$	1,550	$	8
Residential	$	—	$	—	$	—	$	—	$	—
Consumer	$	416	$	416	$	57	$	416	$	—

Impaired Loans

	As of December 31, 2016						Three Months Ended March 31, 2016
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	2,975	$	2,975	$	—	$	—	$	—
Commercial real estate		658		766		—		909		8
Residential		—		—		—		—		—
Consumer		326		326		—		18		—
		3,959		4,067		—		927		8
Loans with a specific valuation allowance:
Commercial		173		173		11		49		—
Commercial  real estate		520		520		108		1,074		11
Residential		—		—		—		—		—
Consumer		—		—		—		122		1
		693		693		119		1,245		12
Total:
Commercial	$	3,148	$	3,148	$	11	$	49	$	12
Commercial real estate	$	1,178	$	1,286	$	108	$	1,983	$	19
Residential	$	—	$	—	$	—	$	—	$	—
Consumer	$	326	$	326	$	57	$	130	$	1

Interest income recognized on a cash basis was not materiality different than interest income recognized.

23

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

For the TDRs noted in the tables below, the Company extended the maturity dates and granted interest rate concessions as part of each of those loan restructurings. The loans included in the tables are considered impaired and specific loss calculations are performed on the individual loans. In conjunction with the restructuring there were no amounts charged-off.

	Three Months ended March 31, 2017
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		1	$	17	$	17
Commercial real estate		1		29		29
Residential		—		—		—
Installment		—		—		—

	Three Months ended March 31, 2017
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	17	$	—	$	—	$	17
Commercial real estate		29		—		—		29
Residential		—		—		—		—
Consumer		—		—		—		—

	Three Months ended March 31, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		86		86
Residential		—		—		—
Installment		—		—		—

	Three Months ended March 31, 2016
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		86		—		86
Residential		—		—		—		—
Consumer		—		—		—		—

24

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

During the three months ended March 31, 2017, troubled debt restructurings did not have a reserve allocation. During the three months ended March 31, 2016, troubled debt restructurings described above increased the allowance for loan losses by $9,000. At March 31, 2017 and 2016 and for three month periods 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.

Note 4: Benefit Plans

Pension expense includes the following:

	Three months ended March 31,
	2017			2016
	(In thousands)
Service cost	$	68		$	78
Interest cost		50			50
Expected return on assets		(90	)		(86	)
Amortization of prior service cost and net loss		(6	)		(2	)
Pension expense	$	22		$	40

Note 5: Off-balance-sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contracts are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:

	March 31,		December 31,
	2017		2016
	(In thousands)
Commercial loans unused lines of credit	$	22,731	$	20,942
Commitment to originate loans		13,391		12,349
Consumer open end lines of credit		36,439		35,590

25

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Note 6: Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows:

	March 31, 2017			December 31, 2016
	(In thousands)
Net unrealized loss on securities available-for-sale	$	(250	)	$	(483	)
Net unrealized loss for unfunded status of defined benefit plan liability		(204	)		(205	)
		(454	)		(688	)
Tax effect		155			234
Net-of-tax amount	$	(299	)	$	(454	)

Note 7: Fair Value Measurements

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:

Level 1 Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

26

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such instruments 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. The Company’s equity securities are classified within Level 1 of the 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.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated 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 March 31, 2017 and December 31, 2016:

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2017
U.S. government agencies	$	38,751	$	—	$	38,751	$	—
State and political subdivisions		250		—		250		—
December 31, 2016
U.S. government agencies	$	38,514	$	––	$	38,514	$	––
State and political subdivisions		1,252		––		1,252		––

27

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

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.

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 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.

28

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2017 and December 31, 2016.

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2017
Collateral dependent impaired loans	$	607	$	—	$	—	$	607
December 31, 2016
Collateral dependent impaired loans	$	3,435	$	––	$	––	$	3,435
Foreclosed assets held for sale		249		––		––		249

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

	Fair Value at 3/31/17		Valuation Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	607	Market comparable properties	Comparability adjustments	Not available
	Fair Value at 12/31/16		Valuation Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	3,435	Market comparable properties	Comparability adjustments	Not available
Foreclosed assets held for sale		249	Market comparable properties	Marketability discount	10% – 35%

There were no significant changes in the valuation techniques used during 2016.

29

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

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. 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
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2017:
Financial assets
Cash and cash equivalents	$	16,383	$	16,383	$	—	$	—
Loans, net of allowance		352,422		—		—		354,422
Federal Home Loan Bank stock		4,165		—		4,165		—
Accrued interest receivable		832		—		832		—
Financial liabilities
Deposits		359,811		—		331,387		—
Short term borrowings		15,567		—		15,567		—
Federal Home Loan Bank Advances		15,317		—		15,463		—
Subordinated debentures		4,124		—		3,435		—
Interest payable		100		—		100		—

30

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2016:
Financial assets
Cash and cash equivalents	$	11,541	$	11,541	$	––	$	––
Loans, net of allowance		354,380		––		––		355,753
Federal Home Loan Bank stock		4,164		––		4,164		––
Accrued interest receivable		840		––		840		––
Financial liabilities
Deposits		338,803		––		312,240		––
Short term borrowings		9,393		––		9,393		––
Federal Home Loan Bank Advances		39,855		––		40,120		––
Subordinated debentures		4,124		––		3,435		––
Interest payable		111		––		111		––

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.

31

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Loans

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

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.

Short-term Borrowings, Federal Home Loan Bank Advances 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 March 31, 2017 and December 31, 2016.

32

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements 

(Unaudited)

Note 8: Repurchase Agreements

Securities sold under agreements to repurchase (“repurchase agreements”) with customers represent funds deposited by customers, generally on an overnight basis that are collateralized by investment securities owned by the Company.

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

	Remaining Contractual Maturity of the Agreement
	(In thousands)
March 31, 2017	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies		15,567		––		––		––		15,567
Total	$	15,567	$	––	$	––	$	––	$	15,567

These borrowings were collateralized with U.S. government and agency securities with a carrying value of $16.9 million at March 31, 2017. Declines in the fair value would require the Company to pledge additional securities.

	(In thousands)
December 31, 2016	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies	$	9,393	$	––	$	––	$	––	$	9,393
Total	$	9,393	$	––	$	––	$	––	$	9,393

Securities with an approximate carrying value of $13.0 million at December 31, 2016, were pledged as collateral for repurchase borrowings.

33

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discusses the financial condition of the Company as of March 31, 2017, as compared to December 31, 2016, and the results of operations for the three months ended March 31, 2017, compared to the same period in 2016. This discussion should be read in conjunction with the interim condensed consolidated financial statements and related footnotes included herein.

Introduction

Our Company reported diluted earnings per share of $0.17 and net income of $850,000 for the quarter ended March 31, 2017, as compared to $0.17 and $845,000 respectively for March 31, 2016.

We are very happy to report on the increase of the net interest income of our Company for the quarter ended March 31, 2017. During the first quarter of 2017, the Company’s net interest income increased by $183,000, or 5.1%, from the previous year. The primary driver of this increase of the Company’s net interest income (excluding loan fees) was the increase in interest income on loans, which was up by $177,000, or 4.8%, year-over-year. The increase in the interest income that our Company realized is directly attributed to the focus that we had this past year on our lending platform. For the year, our Company had an increase in its average loans of $23.0 million or 7.0%. Our company was able to achieve this level of growth in its loans outstanding while maintaining its overall stability in credit quality. Year-over-year, the Company maintained very solid credit quality-related metrics by having non-accrual loans and loans past due 30+ days decrease from a level of $3.26 million to $2.68 million, a decrease of $576,000. Further— net loans charged-off, excluding overdrafts, through March 31, 2017, was $12,000, which is a decrease of $98,000 from the previous year. At this present level, total past due and non accrual loans to gross loans is a very solid 0.76% versus 0.97% the prior year. Net charge offs to average loans was 0.04% as of the most recent quarter-end. The net interest income for our Company increased year-over-year even as we focused on growing retail core-deposits to fund our loan growth. Total deposits increased by $35.2 million, or 10.8%, to a level of $359.8 million as of March 31, 2017. Primarily, the Company was able to control its overall interest expense levels by attracting lower cost funding alternatives. Overall, the Company saw its low cost retail funding (consisting of non-interest and interest bearing demand and savings deposits) comprise $30.7 million of its growth in retail deposits year-over-year. In addition, the Company’s time deposits, which consist of certificate of deposit or term funding, increased by $4.5 million for the same period. Even with the significant growth in retail core deposit funding, the Company had a decrease in its overall interest expense to average assets, which decreased on a year-over-year basis from 0.47% to 0.40%. This decrease in the overall cost of funding is attributed to the repricing of the Company’s $10.0 million in fixed rate advances with the Federal Home Loan Bank (FHLB). The Company forecasts additional reductions in the cost of its present wholesale funding, which consists of $15.0 million in fixed rate putable advances with the FHLB, over the remainder of the current year. By year-end, these advances (which presently cost the Company 3.79%) will reprice to floating rate alternatives or be paid off with the current liquidity the company has on its balance sheet. By having these present fixed-rate advances reprice into a lower-costing, floating rate borrowing or be paid off with lower cost funding, the Company should realize additional savings or containment in its overall interest expense levels.

Noninterest income of the Company was down by $35,000 year-over-year. This decrease in the fee-based income of the Company is directly attributed to the service charges on deposit accounts decreasing by a like amount over the same period. On the noninterest expense-side of the net noninterest margin (and, as expected), the Company saw an increase in its overall noninterest expense, or overhead, levels. In anticipation of building its infrastructure for future growth, the Company saw its noninterest expense increase by $193,000 or 6.1%. Most of the increase in our noninterest expense levels was related to personnel-related expenses on the production-side, which should lead to our Company realizing higher levels of revenue in the coming quarters. Considering that most of this expense is “fixed”, we firmly believe that we should be able to drive higher levels of revenue without significantly adding to our overall noninterest expense levels in the short-term; therefore, enhancing our Company’s earnings and returns.

34

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

We are very pleased to report that we have begun to execute upon our growth strategy, Mission 2020, which calls for our Company to grow its assets (in a profitable fashion) to a level of $1.0 billion or greater by the end of 2020. It is extremely gratifying to see the initial growth occur under this vision in an organic-fashion this past year. Even though we realize that we will need to have a compounded annual growth rate of approximately twenty-three percent from the beginning of this year in order to achieve this ambitious growth goal, we firmly believe that it is achievable with the present vision that we have (which includes both organic and acquisition-related growth). From an organic perspective this past year, our Company grew its assets $28.4 million, or 6.9%, to an overall level of $440.8 million as of March 31, 2017. As previously mentioned, most of this growth occurred in our Company’s higher-yielding loan portfolio, which enhanced the overall interest income that we realized. Also, as previously mentioned, the overall net interest income (or, revenue-line) of our Company increased year-over-year. Our Company was able to achieve this growth in net interest income with above peer-level growth in both its loans outstanding and core deposit funding. As expected, we saw marginal growth in the net income that our Company realized year-over-year. After several years of containment, our Company saw its overall noninterest expense levels increase this past year as we continue to build for the future and drive our overall growth. Most of the increase in our noninterest expense levels occurred in the following areas: hiring additional loan origination personnel to drive the revenue of our Company; completing the renovation of our Main Office to support an enhanced loan origination platform; opening a new Loan Production Office in the Wheeling, West Virginia market to increase overall loan production and to introduce our Company to a new, highly desirable market; and, lastly, marketing expense promoting the prime retail deposit pricing that we introduced within the last six months. We firmly believe that with our positioning over the course of the past year, our Company has high operating leverage which should allow us to further drive our revenue, while controlling our noninterest expense levels— thus, leading to higher earning and returns over the course of the next twelve to eighteen months. Our Company has experienced double-digit earnings improvement over the course of the past two years and we expect that this trend will continue if we properly execute upon our plan of growth. We continue to have very solid credit quality metrics, which should have a positive impact on our earnings for the foreseeable future. In addition, we continue to have very robust capital levels, as evidenced by our overall equity to asset ratio of 9.8%, which will support our vision for growth in the intermediate term. Our Company continues to pay a very solid cash dividend, which totals $0.49 on a trailing twelve month (TTM) basis (including the $0.05 special dividend paid this past December), which produces at TTM Yield of 3.98% as of quarter-end. At this level, our Company’s cash dividend yield is significantly higher than that of the average bank in our country. With our recent focus of increasing our operating leverage and driving the revenue of our Company while containing expenses, we firmly believe that we will continue to reward our shareholders by paying higher dividends and seeing appreciation in our market value. On a year-over-year basis, the market value of our Company’s stock increased by $3.23, or 36%, to a level of $12.30. Even though our market value has diminished somewhat from its year-end level, we believe that we are presently trading at a fair valuation, which is eighteen times earnings. Our number one focus continues to be growing our shareholders’ investment in our Company through profitable operations and strategic growth. In addition to driving the market value appreciation of our shareholders’ ownership, we will continue striving to reward our owners by paying a solid cash dividend. Overall, we are very pleased with the performance of our Company and the direction that we are going. We are extremely optimistic about our future potential and look forward to realizing this upside potential in future periods!

35

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Forward-Looking Statements

When used in this document, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected” or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Bank’s market areas, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Bank’s market areas and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any statements expressed with respect to future periods.

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 financial condition, results of operations, liquidity or capital resources except as discussed herein. The Company is not aware of any current recommendation by regulatory authorities that would have such effect if implemented except as discussed herein.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date such statements were made or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

Management makes certain judgments that affect the amounts reported in the financial statements and footnotes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements, and as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The procedures for assessing the adequacy of the allowance for loan losses reflect our evaluation of credit risk after careful consideration of all information available to management. In developing this assessment, management must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown such as economic factors, developments affecting companies in specific industries and issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

The allowance is regularly reviewed by management and the board to determine whether the amount is considered adequate to absorb probable losses. This evaluation includes specific loss estimates on certain individually reviewed loans, statistical loss estimates for loan pools that are based on historical loss experience, and general loss estimates that are based on the size, quality and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay and current economic and industry conditions. Also considered as part of that judgment is a review of the Bank’s trend in delinquencies and loan losses, and economic factors.

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable loan losses inherent in the loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on management’s current judgment about the credit quality of the loan portfolio. While the Company strives to reflect all known risk factors in its evaluation, judgment errors may occur.

36

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Analysis of Financial Condition

Earning Assets – Loans

Our focus as a community bank is to meet the credit needs of the markets we serve. At March 31, 2017, gross loans were $354.8 million, compared to $356.7 million at December 31, 2016, an decrease of $1.9 million after offsetting repayments for the period. The overall decrease in the loan portfolio was comprised of a $339,000 decrease in commercial and commercial real estate loans and a $1.0 million decrease in real estate lending and a $618,000 decrease in installment loans since December 31, 2016.

Commercial and commercial real estate loans comprised 74.9% of total loans at March 31, 2017, compared to 74.6% at December 31, 2016. Commercial and commercial real estate loans have decreased $1.9 million, or 0.5% since December 31, 2016. This segment of the loan portfolio includes originated loans in our market areas and purchased participations in loans from other banks for out-of-area commercial and commercial real estate loans to benefit from consistent economic growth outside the Company’s primary market area.

Installment loans represented 3.9% of total loans at March 31, 2017 and 4.0% at December 31, 2016. Some of the installment loans carry somewhat more risk than real estate lending; however, it also provides for higher yields. Installment loans have decreased $618,000, or 4.3%, since December 31, 2016. The targeted lending areas encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s banking locations.

Residential real estate loans were 21.2% of total loans at March 31, 2017 and 21.4% at December 31, 2016, representing a decrease of $1.0 million, or 1.3% since December 31, 2016. As of March 31, 2017, the Bank has approximately $6.1 million in fixed-rate loans that have been sold in the secondary market but still serviced by the Company as compared to $6.3 million at December 31, 2016. The level of fixed rate mortgages serviced by the Company will continue to decline as the Company will not retain servicing rights on new sales going forward for these types of products. The Company will continue to service these loans for a fee that is typically 25 basis points. At March 31, 2017, the Company did not hold any loans for sale.

The allowance for loan losses totaled $2.3 million at March 31, 2017, which represented 0.66% of total loans, and $2.3 million at December 31, 2016, or 0.66% of total loans. The allowance represents the amount which management and the Board of Directors estimates is adequate to provide for probable losses inherent in the loan portfolio. The allowance balance and the provision charged to expense are reviewed by management and the Board of Directors monthly using a risk evaluation model that considers borrowers’ past due experience, economic conditions and various other circumstances that are subject to change over time. Management believes the current balance of the allowance for loan losses is adequate to absorb probable incurred credit losses associated with the loan portfolio. Net loan charge-offs (exclusive of overdrafts) for the three months ended March 31, 2017 were approximately $12,000. Net loans charged off decreased approximately $98,000 for the three months ended March 31, 2017 as compared to the same period in 2016.

37

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Earning Assets – Securities

The securities portfolio is comprised of U.S. Government agency-backed securities, tax-exempt obligations of state and political subdivisions and certain other investments. Securities available for sale at March 31, 2017 decreased approximately $765,000 from December 31, 2016 totals.

Sources of Funds – Deposits

The Company’s primary source of funds is core deposits from retail and business customers. These core deposits include all categories of interest-bearing and noninterest-bearing deposits, excluding certificates of deposit greater than $250,000. For the period ended March 31, 2016, total core deposits (interest and non interest bearing accounts and savings) increased approximately $30.7 million, or 11.4% from December 31, 2016 totals. The Company’s savings accounts increased $1.5 million or 1.8% from December 31, 2016 totals. The Company’s interest-bearing and non-interest bearing demand deposits increased $12.5 million while certificates of deposit under $250,000 increased by $17.2 million.

The Company has a strong deposit base from public agencies, including local school districts, city and township municipalities, public works facilities and others that may tend to be more seasonal in nature resulting from the receipt and disbursement of state and federal grants. These entities have maintained fairly static 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. At March 31, 2017, certificates of deposit greater than $250,000 increased $1.5 million or 9.8%, from December 31, 2016 totals.

Sources of Funds – Securities Sold under Agreements to Repurchase and Other Borrowings

Other interest-bearing liabilities include securities sold under agreements to repurchase and Federal Home Loan Bank (“FHLB”) advances. The majority of the Company’s repurchase agreements are with local school districts and city and county governments. The Company’s repurchase agreements increased approximately $6.2 million from December 31, 2016 totals.

Results of Operations for the Three Months Ended March 31, 2017 and 2016

Net Income

The reported diluted earnings per share was $0.17 for the quarter ended March 31, 2016 compared to $0.17 for the quarter ended March 31, 2016.

38

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Net Interest Income

Net interest income increased $183,000 or 5.1% for the three months ended March 31, 2017 compared to the same period in 2016. As previously mentioned, the strong growth of loans was the driver for the increase in net interest income.

Provision for Loan Losses

The provision for loan losses was $25,000 for the three months ended March 31, 2017, compared to $71,000 for the same period in 2016. As previously discussed, the decrease in the provision for loan losses was primarily due to and overall improvement in credit quality of the loan portfolio.

Noninterest Income

Noninterest income of the Company was down by $35,000 year-over-year. This decrease in the fee-based income of the Company is directly attributed to the service charges on deposit accounts decreasing by a like amount over the same period.

Noninterest Expense

In anticipation of building its infrastructure for future growth, the Company saw its noninterest expense increase by $193,000 or 6.1% year-over-year. Most of the increase in our noninterest expense levels was related to personnel-related expenses on the production-side, which should lead to our Company realizing higher levels of revenue in the coming quarters. Considering that most of this expense is “fixed”, we firmly believe that we should be able to drive higher levels of revenue without significantly adding to our overall noninterest expense levels in the short-term; therefore, enhancing our Company’s earnings and returns.

Federal Income Taxes

The provision for federal income taxes was $369,000 for the three months ended March 31, 2017, an decrease of $4,000 compared to the same period in 2016. The effective tax rate was approximately 30.3% and 30.6% for the three months ended March 31, 2017 and 2016, respectively.

39

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Capital Resources

Internal capital growth, through the retention of earnings, is the primary means of maintaining capital adequacy for the Company. Stockholders’ equity totaled $43.1 million at March 31, 2017 compared to $42.6 million at December 31, 2016, a $478,000 increase. Total average stockholders’ equity in relation to total assets was 9.78% at March 31, 2017 and 9.73% at December 31, 2016. Our shareholders approved an amendment to the Company’s Articles of Incorporation to create a class of preferred shares with 2,000,000 authorized shares. This enables 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 amendment also provides greater flexibility to the Board of Directors in structuring the terms of equity securities that may be issued by the Company. Although this preferred stock is a financial tool, it has not been utilized to date.

The Company has offered for many years a Dividend Reinvestment Plan (“The Plan”) for shareholders 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 Company’s dividend policy or a guarantee of future dividends.

The Company is subject to the regulatory requirements of The Federal Reserve System as a bank holding company. The Bank is subject to regulations of the FDIC and the State of Ohio, Division of Financial Institutions. The most important of these various regulations address capital adequacy.

On January 1, 2015, the final rules of the Federal Reserve Board went into effect implementing in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under the final rule, minimum requirements increased for both the quality and quantity of capital held by banking organizations. The rule requires a new minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations.

The Company continues to be well-capitalized in accordance with Federal regulatory capital requirements as the capital ratios below show:

Common equity tier 1 capital ratio	13.06	%
Tier 1 capital ratio	11.88	%
Total capital ratio	13.72	%
Leverage ratio	10.65	%

40

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Liquidity

Management’s objective in managing liquidity is maintaining the ability to continue meeting the cash flow needs of its customers, such as borrowings or deposit withdrawals, as well as its own financial commitments. The principal sources of liquidity are net income, loan payments, maturing securities and sales of securities available for sale, federal funds sold and cash and deposits with banks. Along with its liquid assets, the Company has additional sources of liquidity available to ensure that adequate funds are available as needed. These include, but are not limited to, the purchase of federal funds, the ability to borrow funds under line of credit agreements with correspondent banks, a borrowing agreement with the Federal Home Loan Bank of Cincinnati and the adjustment of interest rates to obtain depositors. Management feels that it has the capital adequacy and profitability to meet the current and projected liquidity needs of its customers.

Inflation

Substantially all of the Company’s assets and liabilities relate to banking activities and are monetary in nature. The consolidated financial statements and related financial data are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). U.S. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, with the exception of securities available for sale, certain impaired loans and certain other real estate and loans that may be measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss.

Management’s opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other, but do not always move in correlation with each other. The Company’s ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company’s performance.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change from disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

41

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

ITEM 4. Controls and Procedures

The Company, under the supervision, and with the participation, of its management, including the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to the requirements of Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2017, in timely alerting them to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company's periodic SEC filings.

There was no change in the Company's internal control over financial reporting that occurred during the Company's fiscal quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

42

United Bancorp, Inc.

Part II – Other Information

ITEM 1. Legal Proceedings

None, other than ordinary routine litigation incidental to the Company’s business.

ITEM 1A. Risk Factors

There have been no material changes from risk factors as previously disclosed in Part 1 Item 1A of the Company’s Form 10-K for the year ended December 31, 2016, filed on March 20, 2017.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part Of Publicly Announced Plans Or Programs		(d) Maximum Number or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 1/1/2017 to 1/31/2017		––		––		––		––
Month #2 2/1/2017 to 2/28/2017		––		––		––		––
Month #3 3/1/2017 to 3/31/2017		––		––		––		––

The Company adopted the United Bancorp, Inc. Affiliate Banks Directors and Officers Deferred Compensation Plan (the “Plan”), which is an unfunded deferred compensation plan. Amounts deferred pursuant to the Plan remain unrestricted assets of the Company, and the right to participate in the Plan is limited to members of the Board of Directors and Company officers. Under the Plan, directors or other eligible participants may defer fees and up to 50% of their annual incentive award payable to them by the Company, which are used to acquire common shares which are credited to a participant’s respective account. Except in the event of certain emergencies, no distributions are to be made from any account as long as the participant continues to be an employee or member of the Board of Directors. Upon termination of service, the aggregate number of shares credited to the participant’s account are distributed to him or her along with any cash proceeds credited to the account which have not yet been invested in the Company’s stock. All purchases under this deferred compensation plan are funded with either earned director fees or officer incentive award payments. No underwriting fees, discounts, or commissions are paid in connection with the Plan. The shares allocated to participant accounts have not been registered under the Securities Act of 1933 in reliance upon the exemption provided by Section 4(2) thereof.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

43

 

United Bancorp, Inc.

Part II – Other Information

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

Not applicable.

ITEM 6. Exhibits

EX-3.1	Amended Articles of Incorporation of United Bancorp, Inc. (1)
EX-3.2	Amended and Restated Code of Regulations of United Bancorp, Inc. (2)
EX-4.0	Instruments Defining the Rights of Security Holders (See Exhibits 3.1 and 3.2)
EX 31.1	Rule 13a-14(a) Certification – CEO
EX 31.2	Rule 13a-14(a) Certification – CFO
EX 32.1	Section 1350 Certification – CEO
EX 32.2	Section 1350 Certification – CFO
EX 101.INS	XBRL Instance Document
EX 101.SCH	XBRL Taxonomy Extension Schema Document
EX 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
EX 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
EX 101.LAB	XBRL Taxonomy Extension Label Linkbase Document
EX 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

⁽¹⁾ Incorporated by reference to Appendix B to the registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 14, 2001.

⁽²⁾ Incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 22, 2014.

44

SIGNATURES

Pursuant to the requirements 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.

	United Bancorp, Inc.
Date: May 12, 2017	By:	/s/ Scott A. Everson
		Scott A. Everson
		President and Chief Executive Officer
Date: May 12, 2017	By:	/s/ Randall M. Greenwood
		Randall M. Greenwood
		Senior Vice President, Chief Financial Officer and Treasurer

45

Exhibit Index

Exhibit No.	Description
31.1	Rule 13a-14(a) Certification – Principal Executive Officer
31.2	Rule 13a-14(a) Certification – Principal Financial Officer
32.1	Certification pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of The Sarbanes-Oxley act of 2002.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Scott A. Everson, President and Chief Executive Officer of United Bancorp, Inc., certify that:

1. I have reviewed this Form 10-Q of United Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2017	/s/ Scott A. Everson
	Scott A. Everson, President and CEO

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Randall M. Greenwood, Chief Financial Officer of United Bancorp, Inc., certify that:

1.  I have reviewed this Form 10-Q of United Bancorp, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 12, 2017	/s/ Randall M. Greenwood
	Randall M. Greenwood, CFO

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Bancorp, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott A. Everson, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Scott A. Everson

Scott A. Everson,

President and Chief Executive Officer

May 12, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Bancorp, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Randall M. Greenwood, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Randall M. Greenwood

Randall M. Greenwood,

Chief Financial Officer

May 12, 2017

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 02, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Entity Registrant Name	UNITED BANCORP INC /OH/
Entity Central Index Key	0000731653
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	UBCP
Entity Common Stock, Shares Outstanding		5,425,304

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 4,658	$ 4,233
Interest-bearing demand deposits	11,725	7,308
Cash and cash equivalents	16,383	11,541
Available-for-sale securities	39,001	39,766
Loans, net of allowance for loan losses of $2,333 and $2,341 at March 31, 2017 and December 31, 2016, respectively	352,422	354,380
Premises and equipment	11,932	11,884
Federal Home Loan Bank stock	4,165	4,164
Foreclosed assets held for sale, net	335	335
Accrued interest receivable	832	840
Deferred income taxes	845	850
Bank-owned life insurance	11,903	11,822
Other assets	3,030	2,436
Total assets	440,848	438,018
Deposits
Demand	216,199	203,745
Savings	83,299	81,825
Time	60,313	53,233
Total deposits	359,811	338,803
Securities sold under repurchase agreements	15,567	9,393
Federal Home Loan Bank advances	15,317	39,855
Subordinated debentures	4,124	4,124
Interest payable and other liabilities	2,910	3,202
Total liabilities	397,729	395,377
Stockholders' Equity
Preferred stock, no par value, authorized 2,000,000 shares; no shares issued	0	0
Common stock, $1 par value; authorized 10,000,000 shares; issued 5,425,304 shares at March 31, 2017 and December 31, 2016; outstanding - 5,220,671 and 5,208,015 shares at March 31, 2017 and December 31, 2016, respectively	5,425	5,425
Additional paid-in capital	18,030	18,024
Retained earnings	22,737	22,483
Stock held by deferred compensation plan; 198,889 and 211,509 shares at March 31, 2017 and December 31, 2016	(1,758)	(1,880)
Unearned ESOP compensation	(970)	(911)
Accumulated other comprehensive loss	(299)	(454)
Treasury stock, at cost 5,744 shares at March 31, 2017 and December 31, 2016	(46)	(46)
Total stockholders' equity	43,119	42,641
Total liabilities and stockholders' equity	$ 440,848	$ 438,018

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Loans, allowance for loan losses	$ 2,333	$ 2,341
Preferred stock, no par value	$ 0	$ 0
Preferred stock, authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 1	$ 1
Common stock, authorized	10,000,000	10,000,000
Common stock, issued	5,425,304	5,425,304
Common Stock, Shares, Outstanding	5,220,671	5,208,015
Stock held by deferred compensation plan, shares	198,889	211,509
Treasury stock, shares	5,744	5,744

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest and Dividend Income
Loans, including fees	$ 4,017	$ 3,880
Securities
Taxable	103	81
Non-taxable	6	27
Federal funds sold	11	7
Dividends on Federal Home Loan Bank and other stock	47	43
Total interest and dividend income	4,184	4,038
Interest Expense
Deposits	229	201
Borrowings	209	274
Total interest expense	438	475
Net Interest Income	3,746	3,563
Provision for Loan Losses	25	71
Net Interest Income After Provision for Loan Losses	3,721	3,492
Noninterest Income
Service charges on deposit accounts	597	633
Realized gains on sales of loans	15	16
Other income	220	218
Total noninterest income	832	867
Noninterest Expense
Salaries and employee benefits	1,768	1,650
Occupancy and equipment	523	448
Provision for losses on foreclosed real estate	0	0
Professional services	201	199
FDIC insurance	44	63
Insurance	67	50
Franchise and other taxes	84	84
Advertising	109	85
Stationery and office supplies	36	29
Other expenses	502	533
Total noninterest expense	3,334	3,141
Income Before Federal Income Taxes	1,219	1,218
Provision for Federal Income Taxes	369	373
Net Income	$ 850	$ 845
Basic Earnings Per Share	$ 0.17	$ 0.17
Diluted Earnings Per Share	0.17	0.17
EARNINGS PER COMMON SHARE
Dividends Per Share	$ 0.11	$ 0.10

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net Income	$ 850	$ 845
Other comprehensive income, net of related tax effects
Unrealized holding gain on securities during the period, net of taxes of $82 and $16 in 2017 and 2016, respectively	155	31
Comprehensive Income	$ 1,005	$ 876

XML

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Unrealized holding gain on securities during the period, net of tax benefits	$ 82	$ 16

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating Activities
Net income	$ 850	$ 845
Items not requiring (providing) cash
Depreciation and amortization	223	192
Provision for loan losses	25	71
Gain on sale of loans	(15)	(16)
Increase in value of bank-owned life insurance	(80)	(86)
Amortization of mortgage servicing rights	2	3
Originations of loans held for sale	(653)	(805)
Proceeds from sale of loans held for sale	668	821
Loss on sale of foreclosed assets	0	10
Expense related to share-based compensation plans and ESOP	70	88
Net change in accrued interest receivable and other assets	(36)	(31)
Net change in accrued expenses and other liabilities	(936)	(963)
Net cash provided by operating activities	118	129
Investing Activities
Securities available for sale: Maturities, prepayments and calls	0	8,000
Securities available for sale: Purchases	0	(3,000)
Proceeds from maturity of held-to-maturity securities	999	0
Net change in loans	1,947	(5,966)
Proceeds from sale of foreclosed and fixed assets	9	70
Purchases of premises and equipment	(280)	(590)
Net cash provided by (used in) investing activities	2,675	(1,486)
Financing Activities
Net change in deposits	21,008	1,010
Net change in securities sold under repurchase agreements	6,175	6,466
Repayment of Federal Home Loan Bank advances	(24,538)	(40)
Cash dividends paid	(596)	(538)
Net cash provided by financing activities	2,049	6,898
Increase in Cash and Cash Equivalents	4,842	5,541
Cash and Cash Equivalents, Beginning of Period	11,541	12,701
Cash and Cash Equivalents, End of Period	16,383	18,242
Supplemental Cash Flows Information
Interest paid on deposits and borrowings	$ 449	$ 477

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1: Summary of Significant Accounting Policies

 

These interim financial statements are prepared without audit and reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position of United Bancorp, Inc. (“Company”) at March 31, 2017, and its results of operations and cash flows for the interim periods presented. All such adjustments are normal and recurring in nature. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not purport to contain all the necessary financial disclosures required by accounting principles generally accepted in the United States of America that might otherwise be necessary in the circumstances and should be read in conjunction with the Company’s consolidated financial statements and related notes for the year ended December 31, 2016 included in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2017, are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2016 has been derived from the audited consolidated balance sheet of the Company as of that date.

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, The Citizens Savings Bank of Martins Ferry, Ohio (“the Bank” or “Citizens”). The Bank operates two divisions, The Community Bank, a division of The Citizens Savings Bank and The Citizens Bank, a division of The Citizens Savings Bank. 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, Hocking, Jefferson, and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio, and include a wide range of individuals, businesses and other organizations. The Citizens Bank division conducts its business through its main office in Martins Ferry, Ohio and offices in Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Jewett, New Philadelphia, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg, and Tiltonsville, Ohio. The Citizens Bank division also operates a loan production office in Wheeling, West Virginia. The Community Bank division conducts its business through two offices in Lancaster, Ohio and offices in Amesville, Glouster, Lancaster, and Nelsonville, Ohio. 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. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

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 and fiscal policies, that are outside of management’s control.

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

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.

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 uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by 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.

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.

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.

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended
	March 31,
	2017		2016
	(In thousands, except share and per share data)
Basic
Net income	$	850	$	845
Dividends on non-vested restricted stock		(9)		(14)
Net earnings allocated to stockholders	$	841	$	831
Weighted average common shares outstanding		4,930,956		4,873,145
Basic earnings per common share	$	0.17	$	0.17
Diluted
Net earnings allocated to stockholders	$	841	$	831
Weighted average common shares outstanding for basic earnings per common share		4,930,956		4,873,145
Add: Dilutive effects of assumed exercise of restricted stock		120,269		92,926
Average shares and dilutive potential common shares		5,051,225		4,966,071
Diluted earnings per common share	$	0.17	$	0.17

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2013.

Recent Accounting Pronouncements

ASU No. 2017-07 was issued in March 2017 and applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in this update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, as defined, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in ASU No. 2017-07 are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this update are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The Company is currently evaluating this ASU to determine the impact on its consolidated financial position, results of operations and cash flows.

ASU 2017-08 was issued by the FASB in March 2017 and applies to all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium. The ASU requires the premium to be amortized to the earliest call date, not the maturity date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017-08 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted and management elected to adopt the update as of January 1, 2017. Adoption did not have a material impact on the Company's results of operations or financial position.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. " ASU 2016-15 provides cash flow statement classification guidance for certain transactions including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company assessed ASU 2016-15 and does not expect a significant impact on its accounting and disclosures.

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 2016-13 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. 

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. 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 is expecting to begin developing and implementing processes during the next two years to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 3.

ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting"

ASU No. 2016-09 was issued in March 2016 and affects all entities that issue share-based payment awards to their employees. The new guidance involves several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under ASU No. 2016-09, any excess tax benefits or tax deficiencies should be recognized as income tax expense or benefit in the income statement. Excess tax benefits are to be classified as an operating activity in the statement of cash flows. In accruing compensation cost, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as required under current guidance, or account for forfeitures when they occur. For an award to qualify for equity classification, an entity cannot partially settle the award in excess of the employer's maximum statutory withholding requirements. Such cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity in the statement of cash flows. The amendments in ASU No. 2016-09 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company adopted ASU No. 2016.09 without a material impact on the financial statements.

 ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities"

ASU No. 2016-01 was issued in January 2016 and applies to all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instruments specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for annual periods and interim periods within those periods, beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity instruments that exist as of the date of adoption. The Company is currently evaluating the impact of these amendments, but does not expect them to have a material effect on the Company’s financial position or results of operations since it does not have any equity securities or a valuation allowance. However, the amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. At this time the Company cannot quantify the change in the fair value of such disclosures since the Company is currently evaluating the full impact of the Update and is in the planning stages of developing appropriate procedures and processes to comply with the disclosure requirements of such amendments. The current accounting policies and procedures will be modified after the Company has fully evaluated the standard to comply with the accounting changes mentioned above. For additional information on fair value of assets and liabilities, see Note 16.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). This update to the ASC is the culmination of efforts by the FASB and the International Accounting Standards Board (IASB) to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 supersedes Topic 605 – Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. Originally, the amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early application is not allowed. In July 2015, the FASB extended the implementation date to annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Transitional guidance is included in the update. Earlier adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. The Company is in its preliminary stages of evaluating the impact of these amendments, although it doesn’t expect the amendments to have a significant impact to the Company’s financial position or results of operations. The amendments could potentially impact the accounting procedures and processes over the recognition of certain revenue sources, including, but not limited to, non-interest income. The Company is expecting to begin developing processes and procedures during 2017 to ensure it is fully compliant with these amendments at the date of adoption.

On February 25, 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” ASU 2016-02 is intended to improve financial reporting about leasing transactions. This ASU affects all companies and other organization that lease assets such as real estate, airplanes, and manufacturing equipment.

Under the current accounting model, an organization applies a classification test to determine the accounting for the lease arrangement:

(a) Some leases are classified as capital where by the lessee would recognize lease assets and liabilities on the balance sheet.

(b) Other leases are classified as operating leases whereby the lessee would not recognize lease assets and liabilities on the balance sheet.

Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Thus, for a calendar year company, it would be effective January 1, 2019. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements. The Company is currently in the process of fully evaluating the amendments and will subsequently implement new processes to comply with the ASU. In addition, the Company will change its current accounting practice to comply with the amendments and such changes as mentioned above.

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Securities

3 Months Ended

Mar. 31, 2017

Trading Securities [Abstract]

Securities

Note 2: Securities

 

The amortized cost and fair values, together with gross unrealized gains and losses of securities are as follows:

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In thousands)
Available-for-sale Securities:
March 31, 2017:
U.S. government agencies	$	39,000	$	—	$	(249)	$	38,751
State and political subdivisions		250		—		––		250
	$	39,250	$	—	$	(249)	$	39,001
Available-for-sale Securities:
December 31, 2016:
U.S. government agencies	$	39,000	$	—	$	(486)	$	38,514
State and political subdivisions		1,249		3		—		1,252
	$	40,249	$	3	$	(486)	$	39,766

The amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2017, 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.

	Available-for-sale
	Amortized		Fair
	Cost		Value
	(In thousands)
Within one year	$	250	$	250
One to five years		39,000		38,751
Totals	$	39,250	$	39,001

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $32.1 million and $27.9 million at March 31, 2017 and December 31, 2016, 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 March 31, 2017 was $38.8 million, which represented approximately 99.4% of the Company’s available-for-sale and held-to-maturity investment portfolio.

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, 2016 was $38.5 million, which represented approximately 96.8% of the Company’s available-for-sale and held-to-maturity 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 and are a result on an increase in longer term interest rates.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

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, 2016:

March 31, 2017
	Less than 12 Months				12 Months or More				Total
Description of			Unrealized				Unrealized				Unrealized
Securities	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(In thousands)
U.S. Government agencies	$	38,751	$	(249)	$	—	$	—	$	38,751	$	(249)

December 31, 2016
	Less than 12 Months				12 Months or More				Total
Description of			Unrealized				Unrealized				Unrealized
Securities	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(In thousands)
U.S. Government agencies	$	38,514	$	(486)	$	—	$	—	$	38,514	$	(486)

The unrealized losses on the Company’s investments in U.S. Government agencies were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. 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 March 31, 2017.

There were no sale of investment securities for the three months ended March 31, 2017 and March 31, 2016

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Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2017

Loans and Allowance For Loan Losses [Abstract]

Loans and Allowance for Loan Losses

Note 3: Loans and Allowance for Loan Losses

 

Categories of loans include:

	March 31,		December 31,
	2017		2016
	(In thousands)
Commercial loans	$	73,124	$	74,514
Commercial real estate		192,737		191,686
Residential real estate		75,145		76,154
Installment loans		13,749		14,367
Total gross loans		354,755		356,721
Less allowance for loan losses		(2,333)		(2,341)
Total loans	$	352,422	$	354,380

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 Real Estate and Consumer

Residential real estate and consumer 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.

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three month period ended March 31, 2017

			Commercial
	Commercial		Real Estate		Residential		Installment		Unallocated		Total
			(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	495	$	804	$	591	$	107	$	344	$	2,341
Provision charged to expense		3		(12)		(13)		94		(47)		25
Losses charged off		—		—		—		(50)		—		(50)
Recoveries		—		1		5		11		—		17
Balance, end of period	$	498	$	793	$	583	$	162	$	297	$	2,333
Ending balance:  individually evaluated for impairment	$	16	$	95	$	—	$	57	$	—	$	168
Ending balance:  collectively evaluated for impairment	$	482	$	698	$	583	$	105	$	297	$	2,165
Loans:
Ending balance:  individually evaluated for impairment	$	341	$	985	$	—	$	416	$	—	$	1,742
Ending balance:  collectively evaluated for impairment	$	72,783	$	191,752	$	75,145	$	13,333	$	—	$	353,344

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three month period ended March 31, 2016

			Commercial
	Commercial		Real Estate		Residential		Installment		Unallocated		Total
			(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	184	$	597	$	170	$	113	$	1,373	$	2,437
Provision charged to expense		7		101		87		170		(294)		71
Losses charged off		(2)		—		(91)		(71)		—		(164)
Recoveries		3		4		—		24		—		31
Balance, end of period	$	192	$	702	$	166	$	236	$	1,079	$	2,375
Ending balance:  individually evaluated for impairment	$	10	$	264	$	—	$	75	$	—	$	349
Ending balance:  collectively evaluated for impairment	$	182	$	438	$	166	$	161	$	1,079	$	2,026
Loans:
Ending balance:  individually evaluated for impairment	$	14	$	1,382	$	—	$	138	$	—	$	1,534
Ending balance:  collectively evaluated for impairment	$	70,172	$	167,135	$	79,795	$	16,828	$	—	$	333,930

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2016

			Commercial
	Commercial		Real Estate		Residential		Installment		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Ending balance:  individually evaluated for impairment	$	11	$	108	$	––	$	––	$	––	$	119
Ending balance:  collectively evaluated for impairment	$	484	$	696	$	591	$	107	$	344	$	2,222
Loans:
Ending balance:  individually evaluated for impairment	$	3,148	$	1,178	$	––	$	326	$	––	$	4,652
Ending balance:  collectively evaluated for impairment	$	71,366	$	190,508	$	76,154	$	14,041	$	––	$	352,069

The following tables show the portfolio quality indicators.

	March 31, 2017
			Commercial
Loan Class	Commercial		Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	69,970	$	188,370	$	75,145	$	13,333	$	346,818
Special Mention		162		3,203		—		—		3,365
Substandard		2,992		1,164		—		416		4,572
Doubtful		—		—		—		—		—
	$	73,124	$	192,737	$	75,145	$	13,749	$	354,755

	December 31, 2016
			Commercial
Loan Class	Commercial		Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	71,302	$	187,255	$	76,154	$	14,041	$	348,752
Special Mention		64		3,253		––		––		3,317
Substandard		3,148		1,178		––		326		4,652
Doubtful		––		––		––		––		––
	$	74,514	$	191,686	$	76,154	$	14,367	$	356,721

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 ALLL, 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 Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the past year to date period.

Loan Portfolio Aging Analysis

As of March 31, 2017

	30-59 Days		60-89 Days		Greater
	Past Due		Past Due		Than 90				Total Past
	and		and		Days and		Non		Due and				Total Loans
	Accruing		Accruing		Accruing		Accrual		Non Accrual		Current		Receivable
	(In thousands)
Commercial	$	39	$	187	$	20	$	49	$	295	$	72,829	$	73,124
Commercial real estate		—		33		—		735		768		191,969		192,737
Residential		201		188		160		912		1,461		73,684		75,145
Installment		34		28		—		94		156		13,593		13,749
Total	$	274	$	436	$	180	$	1,790	$	2,680	$	352,075	$	354,755

Loan Portfolio Aging Analysis

As of December 31, 2016

	30-59 Days		60-89 Days		Greater
	Past Due		Past Due		Than 90				Total Past
	and		and		Days and		Non		Due and				Total Loans
	Accruing		Accruing		Accruing		Accrual		Non Accrual		Current		Receivable
	(In thousands)
Commercial	$	153	$	105	$	75	$	49	$	382	$	74,132	$	74,514
Commercial real estate		—		55		—		335		390		191,296		191,686
Residential		805		135		161		922		2,023		74,131		76,154
Installment		213		8		––		55		276		14,091		14,367
Total	$	1,171	$	303	$	236	$	1,361	$	3,071	$	353,650	$	356,721

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.

Impaired Loans

	As of						Three Months Ended
	March 31, 2017						March 31, 2017
							Average
			Unpaid				Investment in		Interest
	Recorded		Principal		Specific		Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	85	$	85	$	—	$	86	$	1
Commercial real estate		476		476		—		986		2
Residential		—		—		—		—		—
Consumer		325		325		—		325		—
		886		886		—		1,397		3
Loans with a specific valuation allowance:
Commercial		256		256		16		259		3
Commercial  real estate		509		509		95		564		6
Residential		—		—		—		—		—
Consumer		91		91		57		91		—
		856		856		168		914		9
Total:
Commercial	$	341	$	341	$	16	$	345	$	4
Commercial real estate	$	985	$	985	$	95	$	1,550	$	8
Residential	$	—	$	—	$	—	$	—	$	—
Consumer	$	416	$	416	$	57	$	416	$	—

Impaired Loans

	As of						Three Months Ended
	December 31, 2016						March 31, 2016
							Average
			Unpaid				Investment in		Interest
	Recorded		Principal		Specific		Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	2,975	$	2,975	$	—	$	—	$	—
Commercial real estate		658		766		—		909		8
Residential		—		—		—		—		—
Consumer		326		326		—		18		—
		3,959		4,067		—		927		8
Loans with a specific valuation allowance:
Commercial		173		173		11		49		—
Commercial  real estate		520		520		108		1,074		11
Residential		—		—		—		—		—
Consumer		—		—		—		122		1
		693		693		119		1,245		12
Total:
Commercial	$	3,148	$	3,148	$	11	$	49	$	12
Commercial real estate	$	1,178	$	1,286	$	108	$	1,983	$	19
Residential	$	—	$	—	$	—	$	—	$	—
Consumer	$	326	$	326	$	57	$	130	$	1

Interest income recognized on a cash basis was not materiality different than interest income recognized.

For the TDRs noted in the tables below, the Company extended the maturity dates and granted interest rate concessions as part of each of those loan restructurings. The loans included in the tables are considered impaired and specific loss calculations are performed on the individual loans. In conjunction with the restructuring there were no amounts charged-off.

		Three Months ended March 31, 2017
				Pre- Modification		Post-Modification
				Outstanding		Outstanding
		Number of		Recorded		Recorded
		Contracts		Investment		Investment
	(In thousands)
Commercial			1	$	17	$	17
Commercial real estate			1		29		29
Residential			—		—		—
Installment			—		—		—

	Three Months ended March 31, 2017
	Interest						Total
	Only		Term		Combination		Modification
			(In thousands)
Commercial	$	17	$	—	$	—	$	17
Commercial real estate		29		—		—		29
Residential		—		—		—		—
Consumer		—		—		—		—

	Three Months ended March 31, 2016
				Pre- Modification		Post-Modification
				Outstanding		Outstanding
		Number of		Recorded		Recorded
		Contracts		Investment		Investment
	(In thousands)
Commercial			—	$	—	$	—
Commercial real estate			2		86		86
Residential			—		—		—
Installment			—		—		—

	Three Months ended March 31, 2016
	Interest						Total
	Only		Term		Combination		Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		86		—		86
Residential		—		—		—		—
Consumer		—		—		—		—

During the three months ended March 31, 2017, troubled debt restructurings did not have a reserve allocation. During the three months ended March 31, 2016, troubled debt restructurings described above increased the allowance for loan losses by $9,000. At March 31, 2017 and 2016 and for three month periods 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.

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Benefit Plans

3 Months Ended

Mar. 31, 2017

Benefit Plans [Abstract]

Benefit Plans

Note 4: Benefit Plans

 

Pension expense includes the following:

	Three months ended
	March 31,
	2017		2016
	(In thousands)
Service cost	$	68	$	78
Interest cost		50		50
Expected return on assets		(90)		(86)
Amortization of prior service cost and net loss		(6)		(2)
Pension expense	$	22	$	40

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Off-balance-sheet Activities

3 Months Ended

Mar. 31, 2017

Off Balance Sheet Activities [Abstract]

Off-balance-sheet Activities

Note 5: Off-balance-sheet Activities

 

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contracts are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:

	March 31,		December 31,
	2017		2016
	(In thousands)
Commercial loans unused lines of credit	$	22,731	$	20,942
Commitment to originate loans		13,391		12,349
Consumer open end lines of credit		36,439		35,590

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income (Loss), Net Of Tax [Abstract]

Accumulated Other Comprehensive Loss

Note 6: Accumulated Other Comprehensive Loss

 

The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows:

	March 31,		December 31,
	2017		2016
	(In thousands)
Net unrealized loss on securities available-for-sale	$	(250)	$	(483)
Net unrealized loss for unfunded status of defined benefit plan liability		(204)		(205)
		(454)		(688)
Tax effect		155		234
Net-of-tax amount	$	(299)	$	(454)

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Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 7: Fair Value Measurements

 

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:

Level 1 Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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 consolidated balance sheets, as well as the general classification of such instruments 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. The Company’s equity securities are classified within Level 1 of the 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.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated 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 March 31, 2017 and December 31, 2016:

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2017
U.S. government agencies	$	38,751	$	—	$	38,751	$	—
State and political subdivisions		250		—		250		—
December 31, 2016
U.S. government agencies	$	38,514	$	––	$	38,514	$	––
State and political subdivisions		1,252		––		1,252		––

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

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.

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 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 table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2017 and December 31, 2016.

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2017
Collateral dependent impaired loans	$	607	$	—	$	—	$	607
December 31, 2016
Collateral dependent impaired loans	$	3,435	$	––	$	––	$	3,435
Foreclosed assets held for sale		249		––		––		249

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

	Fair Value at		Valuation
	3/31/17		Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	607	Market comparable properties	Comparability adjustments	Not available

	Fair Value at 12/31/16		Valuation Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	3,435	Market comparable properties	Comparability adjustments	Not available
Foreclosed assets held for sale		249	Market comparable properties	Marketability discount	10% – 35%

There were no significant changes in the valuation techniques used during 2016.

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. 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		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2017:
Financial assets
Cash and cash equivalents	$	16,383	$	16,383	$	—	$	—
Loans, net of allowance		352,422		—		—		354,422
Federal Home Loan Bank stock		4,165		—		4,165		—
Accrued interest receivable		832		—		832		—
Financial liabilities
Deposits		359,811		—		331,387		—
Short term borrowings		15,567		—		15,567		—
Federal Home Loan Bank Advances		15,317		—		15,463		—
Subordinated debentures		4,124		—		3,435		—
Interest payable		100		—		100		—

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2016:
Financial assets
Cash and cash equivalents	$	11,541	$	11,541	$	––	$	––
Loans, net of allowance		354,380		––		––		355,753
Federal Home Loan Bank stock		4,164		––		4,164		––
Accrued interest receivable		840		––		840		––
Financial liabilities
Deposits		338,803		––		312,240		––
Short term borrowings		9,393		––		9,393		––
Federal Home Loan Bank Advances		39,855		––		40,120		––
Subordinated debentures		4,124		––		3,435		––
Interest payable		111		––		111		––

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

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

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.

Short-term Borrowings, Federal Home Loan Bank Advances 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 March 31, 2017 and December 31, 2016.

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Repurchase Agreements

3 Months Ended

Mar. 31, 2017

Disclosure of Repurchase Agreements [Abstract]

Disclosure of Repurchase Agreements

Note 8: Repurchase Agreements

Securities sold under agreements to repurchase (“repurchase agreements”) with customers represent funds deposited by customers, generally on an overnight basis that are collateralized by investment securities owned by the Company.

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

	Remaining Contractual Maturity of the Agreement
		(In thousands)
March 31, 2017		Overnight and Continuous	Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies		15,567		––		––		––		15,567
Total	$	15,567	$	––	$	––	$	––	$	15,567

These borrowings were collateralized with U.S. government and agency securities with a carrying value of $16.9 million at March 31, 2017. Declines in the fair value would require the Company to pledge additional securities.

	(In thousands)
December 31, 2016	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies	$	9,393	$	––	$	––	$	––	$	9,393
Total	$	9,393	$	––	$	––	$	––	$	9,393

Securities with an approximate carrying value of $13.0 million at December 31, 2016, were pledged as collateral for repurchase borrowings.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, The Citizens Savings Bank of Martins Ferry, Ohio (“the Bank” or “Citizens”). The Bank operates two divisions, The Community Bank, a division of The Citizens Savings Bank and The Citizens Bank, a division of The Citizens Savings Bank. All intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations

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, Hocking, Jefferson, and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio, and include a wide range of individuals, businesses and other organizations. The Citizens Bank division conducts its business through its main office in Martins Ferry, Ohio and offices in Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Jewett, New Philadelphia, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg, and Tiltonsville, Ohio. The Citizens Bank division also operates a loan production office in Wheeling, West Virginia. The Community Bank division conducts its business through two offices in Lancaster, Ohio and offices in Amesville, Glouster, Lancaster, and Nelsonville, Ohio. 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. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

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 and fiscal policies, that are outside of management’s control.

Use of Estimates

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

Loans

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.

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

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 uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by 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.

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.

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.

Earnings Per Share

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended
	March 31,
	2017		2016
	(In thousands, except share and per share data)
Basic
Net income	$	850	$	845
Dividends on non-vested restricted stock		(9)		(14)
Net earnings allocated to stockholders	$	841	$	831
Weighted average common shares outstanding		4,930,956		4,873,145
Basic earnings per common share	$	0.17	$	0.17
Diluted
Net earnings allocated to stockholders	$	841	$	831
Weighted average common shares outstanding for basic earnings per common share		4,930,956		4,873,145
Add: Dilutive effects of assumed exercise of restricted stock		120,269		92,926
Average shares and dilutive potential common shares		5,051,225		4,966,071
Diluted earnings per common share	$	0.17	$	0.17

Comprehensive Income

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2013.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

ASU No. 2017-07 was issued in March 2017 and applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in this update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, as defined, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in ASU No. 2017-07 are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this update are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The Company is currently evaluating this ASU to determine the impact on its consolidated financial position, results of operations and cash flows.

ASU 2017-08 was issued by the FASB in March 2017 and applies to all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium. The ASU requires the premium to be amortized to the earliest call date, not the maturity date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017-08 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted and management elected to adopt the update as of January 1, 2017. Adoption did not have a material impact on the Company's results of operations or financial position.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. " ASU 2016-15 provides cash flow statement classification guidance for certain transactions including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company assessed ASU 2016-15 and does not expect a significant impact on its accounting and disclosures.

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 2016-13 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. 

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. 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 is expecting to begin developing and implementing processes during the next two years to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 3.

ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting"

ASU No. 2016-09 was issued in March 2016 and affects all entities that issue share-based payment awards to their employees. The new guidance involves several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under ASU No. 2016-09, any excess tax benefits or tax deficiencies should be recognized as income tax expense or benefit in the income statement. Excess tax benefits are to be classified as an operating activity in the statement of cash flows. In accruing compensation cost, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as required under current guidance, or account for forfeitures when they occur. For an award to qualify for equity classification, an entity cannot partially settle the award in excess of the employer's maximum statutory withholding requirements. Such cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity in the statement of cash flows. The amendments in ASU No. 2016-09 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company adopted ASU No. 2016.09 without a material impact on the financial statements.

 ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities"

ASU No. 2016-01 was issued in January 2016 and applies to all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instruments specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for annual periods and interim periods within those periods, beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity instruments that exist as of the date of adoption. The Company is currently evaluating the impact of these amendments, but does not expect them to have a material effect on the Company’s financial position or results of operations since it does not have any equity securities or a valuation allowance. However, the amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. At this time the Company cannot quantify the change in the fair value of such disclosures since the Company is currently evaluating the full impact of the Update and is in the planning stages of developing appropriate procedures and processes to comply with the disclosure requirements of such amendments. The current accounting policies and procedures will be modified after the Company has fully evaluated the standard to comply with the accounting changes mentioned above. For additional information on fair value of assets and liabilities, see Note 16.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). This update to the ASC is the culmination of efforts by the FASB and the International Accounting Standards Board (IASB) to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 supersedes Topic 605 – Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. Originally, the amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early application is not allowed. In July 2015, the FASB extended the implementation date to annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Transitional guidance is included in the update. Earlier adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. The Company is in its preliminary stages of evaluating the impact of these amendments, although it doesn’t expect the amendments to have a significant impact to the Company’s financial position or results of operations. The amendments could potentially impact the accounting procedures and processes over the recognition of certain revenue sources, including, but not limited to, non-interest income. The Company is expecting to begin developing processes and procedures during 2017 to ensure it is fully compliant with these amendments at the date of adoption.

On February 25, 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” ASU 2016-02 is intended to improve financial reporting about leasing transactions. This ASU affects all companies and other organization that lease assets such as real estate, airplanes, and manufacturing equipment.

Under the current accounting model, an organization applies a classification test to determine the accounting for the lease arrangement:

(a) Some leases are classified as capital where by the lessee would recognize lease assets and liabilities on the balance sheet.

(b) Other leases are classified as operating leases whereby the lessee would not recognize lease assets and liabilities on the balance sheet.

Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Thus, for a calendar year company, it would be effective January 1, 2019. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements. The Company is currently in the process of fully evaluating the amendments and will subsequently implement new processes to comply with the ASU. In addition, the Company will change its current accounting practice to comply with the amendments and such changes as mentioned above.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended
	March 31,
	2017		2016
	(In thousands, except share and per share data)
Basic
Net income	$	850	$	845
Dividends on non-vested restricted stock		(9)		(14)
Net earnings allocated to stockholders	$	841	$	831
Weighted average common shares outstanding		4,930,956		4,873,145
Basic earnings per common share	$	0.17	$	0.17
Diluted
Net earnings allocated to stockholders	$	841	$	831
Weighted average common shares outstanding for basic earnings per common share		4,930,956		4,873,145
Add: Dilutive effects of assumed exercise of restricted stock		120,269		92,926
Average shares and dilutive potential common shares		5,051,225		4,966,071
Diluted earnings per common share	$	0.17	$	0.17

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Securities (Tables)

3 Months Ended

Mar. 31, 2017

Trading Securities [Abstract]

Amortized Cost and Approximate Fair Values, Together with Gross Unrealized Gains and Losses of Securities

The amortized cost and fair values, together with gross unrealized gains and losses of securities are as follows:

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In thousands)
Available-for-sale Securities:
March 31, 2017:
U.S. government agencies	$	39,000	$	—	$	(249)	$	38,751
State and political subdivisions		250		—		––		250
	$	39,250	$	—	$	(249)	$	39,001
Available-for-sale Securities:
December 31, 2016:
U.S. government agencies	$	39,000	$	—	$	(486)	$	38,514
State and political subdivisions		1,249		3		—		1,252
	$	40,249	$	3	$	(486)	$	39,766

Amortized Cost and Fair Value of Available-for-Sale Securities and Held-to-Maturity Securities, by Contractual Maturity

The amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2017, 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.

	Available-for-sale
	Amortized		Fair
	Cost		Value
	(In thousands)
Within one year	$	250	$	250
One to five years		39,000		38,751
Totals	$	39,250	$	39,001

Investments' Gross Unrealized Losses and Fair Value, Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position

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, 2016:

March 31, 2017
	Less than 12 Months				12 Months or More				Total
Description of			Unrealized				Unrealized				Unrealized
Securities	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(In thousands)
U.S. Government agencies	$	38,751	$	(249)	$	—	$	—	$	38,751	$	(249)

December 31, 2016
	Less than 12 Months				12 Months or More				Total
Description of			Unrealized				Unrealized				Unrealized
Securities	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(In thousands)
U.S. Government agencies	$	38,514	$	(486)	$	—	$	—	$	38,514	$	(486)

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Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2017

Loans and Allowance For Loan Losses [Abstract]

Categories of Loans

Categories of loans include:

	March 31,		December 31,
	2017		2016
	(In thousands)
Commercial loans	$	73,124	$	74,514
Commercial real estate		192,737		191,686
Residential real estate		75,145		76,154
Installment loans		13,749		14,367
Total gross loans		354,755		356,721
Less allowance for loan losses		(2,333)		(2,341)
Total loans	$	352,422	$	354,380

Allowance for Loan Losses and Recorded Investment in Loans

Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three month period ended March 31, 2017

			Commercial
	Commercial		Real Estate		Residential		Installment		Unallocated		Total
			(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	495	$	804	$	591	$	107	$	344	$	2,341
Provision charged to expense		3		(12)		(13)		94		(47)		25
Losses charged off		—		—		—		(50)		—		(50)
Recoveries		—		1		5		11		—		17
Balance, end of period	$	498	$	793	$	583	$	162	$	297	$	2,333
Ending balance:  individually evaluated for impairment	$	16	$	95	$	—	$	57	$	—	$	168
Ending balance:  collectively evaluated for impairment	$	482	$	698	$	583	$	105	$	297	$	2,165
Loans:
Ending balance:  individually evaluated for impairment	$	341	$	985	$	—	$	416	$	—	$	1,742
Ending balance:  collectively evaluated for impairment	$	72,783	$	191,752	$	75,145	$	13,333	$	—	$	353,344

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three month period ended March 31, 2016

			Commercial
	Commercial		Real Estate		Residential		Installment		Unallocated		Total
			(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	184	$	597	$	170	$	113	$	1,373	$	2,437
Provision charged to expense		7		101		87		170		(294)		71
Losses charged off		(2)		—		(91)		(71)		—		(164)
Recoveries		3		4		—		24		—		31
Balance, end of period	$	192	$	702	$	166	$	236	$	1,079	$	2,375
Ending balance:  individually evaluated for impairment	$	10	$	264	$	—	$	75	$	—	$	349
Ending balance:  collectively evaluated for impairment	$	182	$	438	$	166	$	161	$	1,079	$	2,026
Loans:
Ending balance:  individually evaluated for impairment	$	14	$	1,382	$	—	$	138	$	—	$	1,534
Ending balance:  collectively evaluated for impairment	$	70,172	$	167,135	$	79,795	$	16,828	$	—	$	333,930

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2016

			Commercial
	Commercial		Real Estate		Residential		Installment		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Ending balance:  individually evaluated for impairment	$	11	$	108	$	––	$	––	$	––	$	119
Ending balance:  collectively evaluated for impairment	$	484	$	696	$	591	$	107	$	344	$	2,222
Loans:
Ending balance:  individually evaluated for impairment	$	3,148	$	1,178	$	––	$	326	$	––	$	4,652
Ending balance:  collectively evaluated for impairment	$	71,366	$	190,508	$	76,154	$	14,041	$	––	$	352,069

Portfolio Quality Indicators

The following tables show the portfolio quality indicators.

	March 31, 2017
			Commercial
Loan Class	Commercial		Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	69,970	$	188,370	$	75,145	$	13,333	$	346,818
Special Mention		162		3,203		—		—		3,365
Substandard		2,992		1,164		—		416		4,572
Doubtful		—		—		—		—		—
	$	73,124	$	192,737	$	75,145	$	13,749	$	354,755

	December 31, 2016
			Commercial
Loan Class	Commercial		Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	71,302	$	187,255	$	76,154	$	14,041	$	348,752
Special Mention		64		3,253		––		––		3,317
Substandard		3,148		1,178		––		326		4,652
Doubtful		––		––		––		––		––
	$	74,514	$	191,686	$	76,154	$	14,367	$	356,721

Loan Portfolio Aging Analysis

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the past year to date period.

Loan Portfolio Aging Analysis

As of March 31, 2017

	30-59 Days		60-89 Days		Greater
	Past Due		Past Due		Than 90				Total Past
	and		and		Days and		Non		Due and				Total Loans
	Accruing		Accruing		Accruing		Accrual		Non Accrual		Current		Receivable
	(In thousands)
Commercial	$	39	$	187	$	20	$	49	$	295	$	72,829	$	73,124
Commercial real estate		—		33		—		735		768		191,969		192,737
Residential		201		188		160		912		1,461		73,684		75,145
Installment		34		28		—		94		156		13,593		13,749
Total	$	274	$	436	$	180	$	1,790	$	2,680	$	352,075	$	354,755

Loan Portfolio Aging Analysis

As of December 31, 2016

	30-59 Days		60-89 Days		Greater
	Past Due		Past Due		Than 90				Total Past
	and		and		Days and		Non		Due and				Total Loans
	Accruing		Accruing		Accruing		Accrual		Non Accrual		Current		Receivable
	(In thousands)
Commercial	$	153	$	105	$	75	$	49	$	382	$	74,132	$	74,514
Commercial real estate		—		55		—		335		390		191,296		191,686
Residential		805		135		161		922		2,023		74,131		76,154
Installment		213		8		––		55		276		14,091		14,367
Total	$	1,171	$	303	$	236	$	1,361	$	3,071	$	353,650	$	356,721

Impaired Loans

Impaired Loans

	As of						Three Months Ended
	March 31, 2017						March 31, 2017
							Average
			Unpaid				Investment in		Interest
	Recorded		Principal		Specific		Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	85	$	85	$	—	$	86	$	1
Commercial real estate		476		476		—		986		2
Residential		—		—		—		—		—
Consumer		325		325		—		325		—
		886		886		—		1,397		3
Loans with a specific valuation allowance:
Commercial		256		256		16		259		3
Commercial  real estate		509		509		95		564		6
Residential		—		—		—		—		—
Consumer		91		91		57		91		—
		856		856		168		914		9
Total:
Commercial	$	341	$	341	$	16	$	345	$	4
Commercial real estate	$	985	$	985	$	95	$	1,550	$	8
Residential	$	—	$	—	$	—	$	—	$	—
Consumer	$	416	$	416	$	57	$	416	$	—

Impaired Loans

	As of						Three Months Ended
	December 31, 2016						March 31, 2016
							Average
			Unpaid				Investment in		Interest
	Recorded		Principal		Specific		Impaired		Income
	Balance		Balance		Allowance		Loans		Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	2,975	$	2,975	$	—	$	—	$	—
Commercial real estate		658		766		—		909		8
Residential		—		—		—		—		—
Consumer		326		326		—		18		—
		3,959		4,067		—		927		8
Loans with a specific valuation allowance:
Commercial		173		173		11		49		—
Commercial  real estate		520		520		108		1,074		11
Residential		—		—		—		—		—
Consumer		—		—		—		122		1
		693		693		119		1,245		12
Total:
Commercial	$	3,148	$	3,148	$	11	$	49	$	12
Commercial real estate	$	1,178	$	1,286	$	108	$	1,983	$	19
Residential	$	—	$	—	$	—	$	—	$	—
Consumer	$	326	$	326	$	57	$	130	$	1

Troubled Debt Restructurings on Financing Receivables

		Three Months ended March 31, 2017
				Pre- Modification		Post-Modification
				Outstanding		Outstanding
		Number of		Recorded		Recorded
		Contracts		Investment		Investment
	(In thousands)
Commercial			1	$	17	$	17
Commercial real estate			1		29		29
Residential			—		—		—
Installment			—		—		—

	Three Months ended March 31, 2017
	Interest						Total
	Only		Term		Combination		Modification
			(In thousands)
Commercial	$	17	$	—	$	—	$	17
Commercial real estate		29		—		—		29
Residential		—		—		—		—
Consumer		—		—		—		—

	Three Months ended March 31, 2016
				Pre- Modification		Post-Modification
				Outstanding		Outstanding
		Number of		Recorded		Recorded
		Contracts		Investment		Investment
	(In thousands)
Commercial			—	$	—	$	—
Commercial real estate			2		86		86
Residential			—		—		—
Installment			—		—		—

	Three Months ended March 31, 2016
	Interest						Total
	Only		Term		Combination		Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		86		—		86
Residential		—		—		—		—
Consumer		—		—		—		—

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Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2017

Benefit Plans [Abstract]

Pension Expense

Pension expense includes the following:

	Three months ended
	March 31,
	2017		2016
	(In thousands)
Service cost	$	68	$	78
Interest cost		50		50
Expected return on assets		(90)		(86)
Amortization of prior service cost and net loss		(6)		(2)
Pension expense	$	22	$	40

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Off-balance-sheet Activities (Tables)

3 Months Ended

Mar. 31, 2017

Off Balance Sheet Activities [Abstract]

Summary of the Notional or Contractual Amounts of Financial Instruments With Off-Balance-Sheet Risk

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:

	March 31,		December 31,
	2017		2016
	(In thousands)
Commercial loans unused lines of credit	$	22,731	$	20,942
Commitment to originate loans		13,391		12,349
Consumer open end lines of credit		36,439		35,590

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income (Loss), Net Of Tax [Abstract]

Components of Accumulated Other Comprehensive Loss included in Stockholders Equity

The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows:

	March 31,		December 31,
	2017		2016
	(In thousands)
Net unrealized loss on securities available-for-sale	$	(250)	$	(483)
Net unrealized loss for unfunded status of defined benefit plan liability		(204)		(205)
		(454)		(688)
Tax effect		155		234
Net-of-tax amount	$	(299)	$	(454)

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Recurring Basis

The following table presents the fair value measurements of assets recognized in the accompanying consolidated 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 March 31, 2017 and December 31, 2016:

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2017
U.S. government agencies	$	38,751	$	—	$	38,751	$	—
State and political subdivisions		250		—		250		—
December 31, 2016
U.S. government agencies	$	38,514	$	––	$	38,514	$	––
State and political subdivisions		1,252		––		1,252		––

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Nonrecurring Basis

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2017 and December 31, 2016.

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2017
Collateral dependent impaired loans	$	607	$	—	$	—	$	607
December 31, 2016
Collateral dependent impaired loans	$	3,435	$	––	$	––	$	3,435
Foreclosed assets held for sale		249		––		––		249

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

	Fair Value at		Valuation
	3/31/17		Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	607	Market comparable properties	Comparability adjustments	Not available

	Fair Value at 12/31/16		Valuation Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	3,435	Market comparable properties	Comparability adjustments	Not available
Foreclosed assets held for sale		249	Market comparable properties	Marketability discount	10% – 35%

Estimated Fair Values of Company's Financial Instruments

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. 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		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2017:
Financial assets
Cash and cash equivalents	$	16,383	$	16,383	$	—	$	—
Loans, net of allowance		352,422		—		—		354,422
Federal Home Loan Bank stock		4,165		—		4,165		—
Accrued interest receivable		832		—		832		—
Financial liabilities
Deposits		359,811		—		331,387		—
Short term borrowings		15,567		—		15,567		—
Federal Home Loan Bank Advances		15,317		—		15,463		—
Subordinated debentures		4,124		—		3,435		—
Interest payable		100		—		100		—

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2016:
Financial assets
Cash and cash equivalents	$	11,541	$	11,541	$	––	$	––
Loans, net of allowance		354,380		––		––		355,753
Federal Home Loan Bank stock		4,164		––		4,164		––
Accrued interest receivable		840		––		840		––
Financial liabilities
Deposits		338,803		––		312,240		––
Short term borrowings		9,393		––		9,393		––
Federal Home Loan Bank Advances		39,855		––		40,120		––
Subordinated debentures		4,124		––		3,435		––
Interest payable		111		––		111		––

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Repurchase Agreements (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Repurchase Agreements [Abstract]

Schedule of Repurchase Agreements

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

	Remaining Contractual Maturity of the Agreement
		(In thousands)
March 31, 2017		Overnight and Continuous	Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies		15,567		––		––		––		15,567
Total	$	15,567	$	––	$	––	$	––	$	15,567

These borrowings were collateralized with U.S. government and agency securities with a carrying value of $16.9 million at March 31, 2017. Declines in the fair value would require the Company to pledge additional securities.

	(In thousands)
December 31, 2016	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies	$	9,393	$	––	$	––	$	––	$	9,393
Total	$	9,393	$	––	$	––	$	––	$	9,393

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Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017
Summary Of Significant Accounting Policies [Line Items]
Number of operating divisions	2
Number of reportable operating segment	1

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Basic and Diluted Earnings Per Common Share (Detail) (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Basic
Net income	$ 850	$ 845
Dividends on non-vested restricted stock	(9)	(14)
Net earnings allocated to stockholders	$ 841	$ 831
Weighted average common shares outstanding	4,930,956	4,873,145
Basic Earnings Per Share	$ 0.17	$ 0.17
Diluted
Net earnings allocated to stockholders	$ 841	$ 831
Weighted average common shares outstanding for basic earnings per common share	4,930,956	4,873,145
Add: Dilutive effects of assumed exercise of restricted stock	120,269	92,926
Average shares and dilutive potential common shares	5,051,225	4,966,071
Diluted earnings per common share	$ 0.17	$ 0.17

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Securities - Additional Information (Detail) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Schedule Of Marketable Securities [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 32.1	$ 27.9
Fair Value of Investment in debt securities	$ 38.8	$ 38.5
Percentage of fair value of investment in debt	99.40%	96.80%

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Amortized Cost and Approximate Fair Values, Together with Gross Unrealized Gains and Losses of Securities (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Amortized Cost	$ 39,250	$ 40,249
Available-for-sale Securities, Gross Unrealized Gains	0	3
Available-for-sale Securities, Gross Unrealized Losses	(249)	(486)
Available-for-sale securities, Approximate Fair Value	39,001	39,766
U.S. government agencies
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Amortized Cost	39,000	39,000
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	(249)	(486)
Available-for-sale securities, Approximate Fair Value	38,751	38,514
State and political subdivisions
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Amortized Cost	250	1,249
Available-for-sale Securities, Gross Unrealized Gains	0	3
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale securities, Approximate Fair Value	$ 250	$ 1,252

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Amortized Cost and Fair Value of Available-for-Sale Securities and Held-to-Maturity Securities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available-for-sale, Amortized Cost
Within one year	$ 250
One to five years	39,000
Totals	39,250	$ 40,249
Available-for-sale, Fair Value
Within one year	250
One to five years	38,751
Totals	$ 39,001	$ 39,766

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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 (Detail) - U.S. government agencies - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Gain (Loss) on Investments [Line Items]
Less than 12 Months, Fair Value	$ 38,751	$ 38,514
Less than 12 Months, Unrealized Losses	(249)	(486)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total, Fair Value	38,751	38,514
Total, Unrealized Losses	$ (249)	$ (486)

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Loans and Allowance for Loan Losses - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016 USD ($)
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, period increase (decrease)	$ 9,000

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Categories of Loan (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Commercial loans	$ 73,124	$ 74,514
Commercial real estate	192,737	191,686
Residential real estate	75,145	76,154
Installment loans	13,749	14,367
Total gross loans	354,755	356,721
Less allowance for loan losses	(2,333)	(2,341)	$ (2,375)	$ (2,437)
Total loans	$ 352,422	$ 354,380

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Allowance for Loan Losses and Recorded Investment in Loans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Allowance for loan losses:
Balance, beginning of period	$ 2,341	$ 2,437
Provision charged to expense	25	71
Losses charged off	(50)	(164)
Recoveries	17	31
Balance, end of period	2,333	2,375
Ending balance: individually evaluated for impairment	168	349	$ 119
Ending balance: collectively evaluated for impairment	2,165	2,026	2,222
Loans:
Ending balance: individually evaluated for impairment	1,742	1,534	4,652
Ending balance: collectively evaluated for impairment	353,344	333,930	352,069
Commercial
Allowance for loan losses:
Balance, beginning of period	495	184
Provision charged to expense	3	7
Losses charged off	0	(2)
Recoveries	0	3
Balance, end of period	498	192
Ending balance: individually evaluated for impairment	16	10	11
Ending balance: collectively evaluated for impairment	482	182	484
Loans:
Ending balance: individually evaluated for impairment	341	14	3,148
Ending balance: collectively evaluated for impairment	72,783	70,172	71,366
Commercial Real Estate
Allowance for loan losses:
Balance, beginning of period	804	597
Provision charged to expense	(12)	101
Losses charged off	0	0
Recoveries	1	4
Balance, end of period	793	702
Ending balance: individually evaluated for impairment	95	264	108
Ending balance: collectively evaluated for impairment	698	438	696
Loans:
Ending balance: individually evaluated for impairment	985	1,382	1,178
Ending balance: collectively evaluated for impairment	191,752	167,135	190,508
Residential
Allowance for loan losses:
Balance, beginning of period	591	170
Provision charged to expense	(13)	87
Losses charged off	0	(91)
Recoveries	5	0
Balance, end of period	583	166
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	583	166	591
Loans:
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	75,145	79,795	76,154
Installment
Allowance for loan losses:
Balance, beginning of period	107	113
Provision charged to expense	94	170
Losses charged off	(50)	(71)
Recoveries	11	24
Balance, end of period	162	236
Ending balance: individually evaluated for impairment	57	75	0
Ending balance: collectively evaluated for impairment	105	161	107
Loans:
Ending balance: individually evaluated for impairment	416	138	326
Ending balance: collectively evaluated for impairment	13,333	16,828	14,041
Unallocated
Allowance for loan losses:
Balance, beginning of period	344	1,373
Provision charged to expense	(47)	(294)
Losses charged off	0	0
Recoveries	0	0
Balance, end of period	297	1,079
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	297	1,079	344
Loans:
Ending balance: individually evaluated for impairment	0	0	0
Ending balance: collectively evaluated for impairment	$ 0	$ 0	$ 0

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Portfolio Quality Indicators (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Commercial	$ 73,124	$ 74,514
Commercial Real Estate	192,737	191,686
Residential	75,145	76,154
Installment	13,749	14,367
Total	354,755	356,721
Pass Grade
Financing Receivable, Recorded Investment [Line Items]
Commercial	69,970	71,302
Commercial Real Estate	188,370	187,255
Residential	75,145	76,154
Installment	13,333	14,041
Total	346,818	348,752
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Commercial	162	64
Commercial Real Estate	3,203	3,253
Residential	0	0
Installment	0	0
Total	3,365	3,317
Substandard
Financing Receivable, Recorded Investment [Line Items]
Commercial	2,992	3,148
Commercial Real Estate	1,164	1,178
Residential	0	0
Installment	416	326
Total	4,572	4,652
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Commercial	0	0
Commercial Real Estate	0	0
Residential	0	0
Installment	0	0
Total	$ 0	$ 0

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Loan Portfolio Aging Analysis (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	$ 1,790	$ 1,361
Total Past Due and Non Accrual	2,680	3,071
Current	352,075	353,650
Total Loans Receivable	354,755	356,721
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	274	1,171
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	436	303
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	180	236
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	49	49
Total Past Due and Non Accrual	295	382
Current	72,829	74,132
Total Loans Receivable	73,124	74,514
Commercial | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	39	153
Commercial | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	187	105
Commercial | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	20	75
Commercial Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	735	335
Total Past Due and Non Accrual	768	390
Current	191,969	191,296
Total Loans Receivable	192,737	191,686
Commercial Real Estate | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	0	0
Commercial Real Estate | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	33	55
Commercial Real Estate | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	0	0
Residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	912	922
Total Past Due and Non Accrual	1,461	2,023
Current	73,684	74,131
Total Loans Receivable	75,145	76,154
Residential | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	201	805
Residential | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	188	135
Residential | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	160	161
Installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	94	55
Total Past Due and Non Accrual	156	276
Current	13,593	14,091
Total Loans Receivable	13,749	14,367
Installment | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	34	213
Installment | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	28	8
Installment | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Non Accrual	$ 0	$ 0

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Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Commercial
Financing Receivable, Impaired [Line Items]
Recorded Balance	$ 341		$ 3,148
Unpaid Principal Balance	341		3,148
Specific Allowance	16		11
Average Investment in Impaired Loans	345	$ 49
Interest Income Recognized	4	12
Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Balance	985		1,178
Unpaid Principal Balance	985		1,286
Specific Allowance	95		108
Average Investment in Impaired Loans	1,550	1,983
Interest Income Recognized	8	19
Consumer
Financing Receivable, Impaired [Line Items]
Recorded Balance	416		326
Unpaid Principal Balance	416		326
Specific Allowance	57		57
Average Investment in Impaired Loans	416	130
Interest Income Recognized	0	1
Residential
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0
Unpaid Principal Balance	0		0
Specific Allowance	0		0
Average Investment in Impaired Loans	0	0
Interest Income Recognized	0	0
Loans without a specific valuation allowance
Financing Receivable, Impaired [Line Items]
Recorded Balance	886		3,959
Unpaid Principal Balance	886		4,067
Specific Allowance	0		0
Average Investment in Impaired Loans	1,397	927
Interest Income Recognized	3	8
Loans without a specific valuation allowance | Commercial
Financing Receivable, Impaired [Line Items]
Recorded Balance	85		2,975
Unpaid Principal Balance	85		2,975
Specific Allowance	0		0
Average Investment in Impaired Loans	86	0
Interest Income Recognized	1	0
Loans without a specific valuation allowance | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Balance	476		658
Unpaid Principal Balance	476		766
Specific Allowance	0		0
Average Investment in Impaired Loans	986	909
Interest Income Recognized	2	8
Loans without a specific valuation allowance | Consumer
Financing Receivable, Impaired [Line Items]
Recorded Balance	325		326
Unpaid Principal Balance	325		326
Specific Allowance	0		0
Average Investment in Impaired Loans	325	18
Interest Income Recognized	0	0
Loans without a specific valuation allowance | Residential
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0
Unpaid Principal Balance	0		0
Specific Allowance	0		0
Average Investment in Impaired Loans	0	0
Interest Income Recognized	0	0
Loans with a specific valuation allowance
Financing Receivable, Impaired [Line Items]
Recorded Balance	856		693
Unpaid Principal Balance	856		693
Specific Allowance	168		119
Average Investment in Impaired Loans	914	1,245
Interest Income Recognized	9	12
Loans with a specific valuation allowance | Commercial
Financing Receivable, Impaired [Line Items]
Recorded Balance	256		173
Unpaid Principal Balance	256		173
Specific Allowance	16		11
Average Investment in Impaired Loans	259	49
Interest Income Recognized	3	0
Loans with a specific valuation allowance | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Balance	509		520
Unpaid Principal Balance	509		520
Specific Allowance	95		108
Average Investment in Impaired Loans	564	1,074
Interest Income Recognized	6	11
Loans with a specific valuation allowance | Consumer
Financing Receivable, Impaired [Line Items]
Recorded Balance	91		0
Unpaid Principal Balance	91		0
Specific Allowance	57		0
Average Investment in Impaired Loans	91	122
Interest Income Recognized	0	1
Loans with a specific valuation allowance | Residential
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0
Unpaid Principal Balance	0		0
Specific Allowance	0		$ 0
Average Investment in Impaired Loans	0	0
Interest Income Recognized	$ 0	$ 0

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Troubled Debt Restructuring (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) Contracts	Mar. 31, 2016 USD ($) Contracts contracts
Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	0
Pre- Modification Outstanding Recorded Investment	$ 17	$ 0
Post-Modification Outstanding Recorded Investment	17	0
Interest Only	17	0
Term	0	0
Combination	0	0
Total Modification	$ 17	$ 0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contracts	1	2
Pre- Modification Outstanding Recorded Investment	$ 29	$ 86
Post-Modification Outstanding Recorded Investment	29	86
Interest Only	29	0
Term	0	86
Combination	0	0
Total Modification	$ 29	$ 86
Residential
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contracts	0	0
Pre- Modification Outstanding Recorded Investment	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	0	0
Interest Only	0	0
Term	0	0
Combination	0	0
Total Modification	$ 0	$ 0
Installment
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contracts	0	0
Pre- Modification Outstanding Recorded Investment	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	0	0
Consumer
Financing Receivable, Modifications [Line Items]
Interest Only	0	0
Term	0	0
Combination	0	0
Total Modification	$ 0	$ 0

XML

Pension Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Components of net periodic benefit cost
Service cost	$ 68	$ 78
Interest cost	50	50
Expected return on plan assets	(90)	(86)
Amortization of prior service cost and net loss	(6)	(2)
Pension expense	$ 22	$ 40

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Notional or Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Commercial loans unused lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	$ 22,731	$ 20,942
Commitment to originate loans
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	13,391	12,349
Consumer open end lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	$ 36,439	$ 35,590

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Components of Accumulated Other Comprehensive Loss Included in Stockholders' Equity (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Other Comprehensive Income (Loss) [Line Items]
Net unrealized loss on securities available-for-sale	$ (250)	$ (483)
Net unrealized loss for funded status of defined benefit plan liability	(204)	(205)
Accumulated other comprehensive income (Loss), before taxes, total	(454)	(688)
Tax effect	155	234
Net-of-tax amount	$ (299)	$ (454)

XML

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	$ 38,751	$ 38,514
State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	250	1,252
Fair Value, Inputs, Level 1 | U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	0	0
Fair Value, Inputs, Level 1 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	0	0
Fair Value, Inputs, Level 2 | U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	38,751	38,514
Fair Value, Inputs, Level 2 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	250	1,252
Fair Value, Inputs, Level 3 | U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	0	0
Fair Value, Inputs, Level 3 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	$ 0	$ 0

XML

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Nonrecurring Basis (Detail) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 607	$ 3,435
Foreclosed assets held for sale		249
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Foreclosed assets held for sale		0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Foreclosed assets held for sale		0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 607	3,435
Foreclosed assets held for sale		$ 249

XML

Quantitative Information About Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Collateral-dependent impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 607	$ 3,435
Valuation Technique	Market comparable properties	Market comparable properties
Foreclosed assets held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		$ 249
Valuation Technique		Market comparable properties
Unobservable Inputs		Marketability discount
Foreclosed assets held for sale | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range		35.00%
Foreclosed assets held for sale | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range		10.00%

XML

Estimated Fair Values of Company's Financial Instruments (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Financial assets
Cash and cash equivalents	$ 16,383	$ 11,541	$ 18,242	$ 12,701
Loans, net of allowance	352,422	354,380
Federal Home Loan Bank stock	4,165	4,164
Accrued interest receivable	832	840
Financial liabilities
Deposits	359,811	338,803
Short term borrowings	15,567	9,393
Federal Home Loan Bank advances	15,317	39,855
Subordinated debentures	4,124	4,124
Interest payable	100	111
Fair Value, Inputs, Level 1
Financial assets
Cash and cash equivalents	16,383	11,541
Loans, net of allowance	0	0
Federal Home Loan Bank stock	0	0
Accrued interest receivable	0	0
Financial liabilities
Deposits	0	0
Short term borrowings	0	0
Federal Home Loan Bank advances	0	0
Subordinated debentures	0	0
Interest payable	0	0
Fair Value, Inputs, Level 2
Financial assets
Cash and cash equivalents	0	0
Loans, net of allowance	0	0
Federal Home Loan Bank stock	4,165	4,164
Accrued interest receivable	832	840
Financial liabilities
Deposits	331,387	312,240
Short term borrowings	15,567	9,393
Federal Home Loan Bank advances	15,463	40,120
Subordinated debentures	3,435	3,435
Interest payable	100	111
Fair Value, Inputs, Level 3
Financial assets
Cash and cash equivalents	0	0
Loans, net of allowance	354,422	355,753
Federal Home Loan Bank stock	0	0
Accrued interest receivable	0	0
Financial liabilities
Deposits	0	0
Short term borrowings	0	0
Federal Home Loan Bank advances	0	0
Subordinated debentures	0	0
Interest payable	$ 0	$ 0

XML

Repurchase Agreements - Additional Information (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	$ 15,567	$ 9,393

XML

Repurchase Agreements (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	$ 15,567	$ 9,393
US Government Corporations and Agencies Securities [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	15,567	9,393
Maturity Overnight [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	15,567	9,393
Maturity Overnight [Member] | US Government Corporations and Agencies Securities [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	15,567	9,393
Maturity Less than 30 Days [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Maturity Less than 30 Days [Member] | US Government Corporations and Agencies Securities [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Maturity 30 to 90 Days [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Maturity 30 to 90 Days [Member] | US Government Corporations and Agencies Securities [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Maturity Greater than 90 Days [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Maturity Greater than 90 Days [Member] | US Government Corporations and Agencies Securities [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	$ 0	$ 0