-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HUIrYjZ7kwLKxj1XN8FKSqkus0aTmREQ4dDmMoiKXqX2I7fGneQcOqyIcAkPLKEP TUVfwLV81StIkzi7gHosJg== 0000950124-04-000917.txt : 20040315 0000950124-04-000917.hdr.sgml : 20040315 20040315091038 ACCESSION NUMBER: 0000950124-04-000917 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED BANCORP INC /MI/ CENTRAL INDEX KEY: 0000775345 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 382606280 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16640 FILM NUMBER: 04667792 BUSINESS ADDRESS: STREET 1: 205 E CHICAGO BLVD STREET 2: PO BOX 248 CITY: TECUMSEH STATE: MI ZIP: 49286 BUSINESS PHONE: 5174238373 MAIL ADDRESS: STREET 1: 205 E CHICAGO BLVD STREET 2: P O BOX 248 CITY: TECUMSEH STATE: MI ZIP: 49286 10-K 1 k82533e10vk.txt ANNUAL REPORT FOR THE FISCAL YEAR ENDED 12/31/2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 COMMISSION FILE #0-16640 UNITED BANCORP, INC. (Exact name of registrant as specified in its charter) MICHIGAN 38-2606280 (State or other jurisdiction of ( I.R.S. Employer Identification No.) incorporation or organization) 205 E. CHICAGO BOULEVARD, TECUMSEH, MI 49286 (Address of principal executive offices, including Zip code) Registrant's telephone number, including area code: (517) 423-8373 Securities registered pursuant to Section 12(b) of the Act: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, no par value (Title of Class) 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 and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act. Yes [X] No [ ] As of February 10, 2004, the aggregate market value of the voting stock held by non-affiliates of the registrant was $92,312,000 (common stock, no par value.) As of February 10, 2004, there were outstanding 2,235,503 shares of registrant's common stock, no par value. Documents Incorporated By Reference: Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders to be held April 20, 2004, including Management's Discussion and Analysis of Condition and Results of Operations, Reports of Independent Auditors, Consolidated Financial Statements and Notes to Consolidated Financial Statements, are incorporated by reference into Parts I, II, III and IV. Page 1 CROSS REFERENCE TABLE
Page ITEM NO. DESCRIPTION Numbers - ------------------------------------------------------------------------------------------------------ PART I 1. Business 3 I Selected Statistical Information 6 (A) Distribution of Assets, Liabilities and Shareholders' Equity 6 (B) Interest Rates and Interest Differential 6 II Investment Portfolio 7 III Loan Portfolio 7 (A) Types of Loans 7 (B) Maturities and Sensitivities of Loans to Changes in Interest Rates 7 (C) Risk Elements 8 (D) Other Interest Bearing Assets 8 IV Summary of Loan Loss Experience 9 (A) Changes in Allowance for Loan Losses 9 (B) Allocation of Allowance for Loan Losses 9 V Deposits 10 VI Return on Equity and Assets 10 VII Short-Term Borrowings 10 2. Properties 10 3. Legal Proceedings 11 4. Submission of Matters to a Vote of Security Holders 11 PART II 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases 11 of Equity Securities 6. Selected Financial Data 11 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 7A. Quantitative and Qualitative Disclosures About Market Risk 12 8. Financial Statements and Supplementary Data 12 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 13 PART III 10. Directors and Executive Officers of the Registrant 13 11. Executive Compensation 14 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 14 13. Certain Relationships and Related Transactions 14 14. Principal Accounting Fees and Services 14 PART IV 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 14 Signatures 16 Exhibit Index 18
Page 2 PART I ITEM 1 - BUSINESS United Bancorp, Inc. (the "Company") was incorporated on May 31, 1985 as a business corporation under the Michigan Business Corporation Act, pursuant to the authorization and direction of the Directors of United Bank & Trust ("UBT"). The Company is a financial holding company registered with the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") under the Bank Holding Company Act. The Company has corporate power to engage in such activities as permitted to business corporations under the Michigan Business Corporation Act, subject to the limitations of the Bank Holding Company Act and regulations of the Federal Reserve System. In general, the Bank Holding Company Act and regulations restrict the Company with respect to its own activities and activities of any subsidiaries to the business of banking or such other activities which are closely related to the business of banking. United Savings Bank opened in 1933 as a result of a merging of charters of Lilley State Bank and Tecumseh State Savings Bank. The Bank changed its name to United Bank & Trust on January 1, 1992, at the time it acquired Thompson Savings Bank in Hudson, and UBT was acquired by the Company on January 1, 1986. In 2003, UBT sold its three Washtenaw County offices to its sister bank, United Bank & Trust - Washtenaw ("UBTW"). UBT delivers financial services through a system of eleven banking offices plus fourteen automated teller machines, located in Lenawee and Monroe Counties, Michigan. The business base of the area is primarily agricultural and light manufacturing, with its manufacturing sector exhibiting moderate dependence on the automotive and refrigeration and air conditioning industries. In November of 2000, the Company filed applications with its regulators for permission to establish a second bank as a subsidiary of the Company. United Bank & Trust - Washtenaw opened for business on April 2, 2001, and is headquartered in Ann Arbor. UBTW operates with its own local management and board of directors, and targets the Washtenaw County market for its growth. Banking services are delivered by UBTW through four banking offices and five automated teller machines in Washtenaw County, Michigan. The employment base of Washtenaw County is centered around health care, education and automotive high technology. Economic stability is provided to a great extent by the University of Michigan, which is a major employer and is not as economically sensitive to the fluctuations of the automotive industry. The services and public sectors account for a substantial percentage of total industry employment, in a large part due to the University of Michigan and the U of M Medical Center. The Company's subsidiary banks (the "Banks") offer a full range of services to individuals, corporations, fiduciaries and other institutions. Banking services include checking, NOW accounts, savings, time deposit accounts, money market deposit accounts, safe deposit facilities and money transfers. Lending operations provide real estate loans, secured and unsecured business and personal loans, consumer installment loans, credit card and check-credit loans, home equity loans, accounts receivable and inventory financing, equipment lease financing and construction financing. The Banks maintain correspondent bank relationships with a small number of larger banks, which involve check clearing operations, securities safekeeping, transfer of funds, loan participation, and the purchase and sale of federal funds and other similar services. UBTW also maintains a correspondent banking relationship with UBT. Page 3 The Company's Banks offer the sale of nondeposit investment products through licensed representatives in their banking offices, and sell credit and life insurance products. In addition, the Company and/or the Banks are co-owners of Michigan Banker's Title Insurance Company of Mid-Michigan LLC and Michigan Bankers Insurance Center, LLC, and derive income from the sale of various insurance products to banking clients. The following table shows comparative information concerning the Banks as of December 31, 2003, in thousands of dollars:
Assets Loans Deposits --------- --------- --------- United Bank & Trust $ 464,232 $ 329,240 $ 369,688 United Bank & Trust - Washtenaw 150,175 117,580 133,228
UBT operates a trust department, and provides trust services to UBTW on a contract basis. The Trust & Investment Group offers a wide variety of fiduciary services to individuals, corporations and governmental entities, including services as trustee for personal, corporate, pension, profit sharing and other employee benefit trusts. The department provides securities custody services as an agent, acts as the personal representative for estates and as a fiscal, paying and escrow agent for corporate customers and governmental entities, and provides trust services for clients of the Banks. Supervision and Regulation As a bank holding company within the meaning of the Bank Holding Company Act, the Company is required by said Act to file quarterly and annual reports of its operations and such additional information as the Federal Reserve Board may require and is subject, along with its subsidiaries, to examination by the Federal Reserve Board. The Federal Reserve is the primary regulator of the Company. The Bank Holding Company Act requires every bank holding company to obtain prior approval of the Federal Reserve Board before it may merge with or consolidate into another bank holding company, acquire substantially all the assets of any bank, or acquire ownership or control of any voting shares of any bank if after such acquisition it would own or control, directly or indirectly, more than 5% of the voting shares of such bank holding company or bank. The Federal Reserve Board may not approve the acquisition by the Company of voting shares or substantially all the assets of any bank located in any state other than Michigan unless the laws of such other state specifically authorize such an acquisition. The Bank Holding Company Act also prohibits a bank holding company, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. However, holding companies may engage in, and may own shares of companies engaged in, certain businesses found by the Federal Reserve Board to be so closely related to banking or the management or control of banks as to be a proper incident thereto. Under current regulations of the Board of Governors, a holding company and its nonbank subsidiaries are permitted, among other activities, to engage, subject to certain specified limitations, in such banking related business ventures as sales and consumer finance, equipment leasing, computer service bureau and software operations, data processing and services transmission, discount securities brokerage, insurance, mortgage banking and brokerage, sale and leaseback and other forms of real estate banking. The Bank Holding Company Act does not place territorial restrictions on the activities of nonbank subsidiaries of bank holding companies. In addition, federal legislation prohibits acquisition of "control" of a bank or bank holding company without prior notice to certain federal bank regulators. "Control" in certain cases may include the acquisition of as little as 10% of the outstanding shares of capital stock. Page 4 In March of 2000, the Gramm-Leach-Bliley Act of 1999 (the "GLB Act") was enacted. Under the act, new opportunities became available for banks and other depository institutions, insurance companies and securities firms to enter into combinations that permit a single financial services organization to offer customers a more complete array of financial products and services. The GLB Act provided a new regulatory framework for regulation through the "financial holding company," with the Federal Reserve Board as the umbrella regulator. Functional regulation of the separately regulated subsidiaries of a financial holding company are conducted by their primary functional regulator. The Company elected to become a financial holding company during 2000. The Company is a legal entity, separate and distinct from the Banks. Most of the Company's revenue will be received by it in the form of dividends, if any, paid by UBT and UBTW. Thus, the Company's ability to pay dividends to its shareholders will be limited by statutory and regulatory restrictions on UBT and UBTW concerning dividends. Michigan's banking laws restrict the payment of cash dividends by a state bank by providing, subject to certain exceptions, that dividends may be paid only out of net profits then on hand after deducting therefrom its losses and bad debts and no dividends may be paid unless the bank will have a surplus amounting to not less than twenty percent (20%) of its capital after the payment of the dividend. In addition, as a new bank, UBTW was prohibited from paying any dividends during its first three years of operations. Federal law generally prohibits a bank from making any capital distribution (including payment of a dividend) or paying any management fee to its parent company if the depository institution would thereafter be undercapitalized. The Federal Deposit Insurance Corporation ("FDIC") may prevent an insured bank from paying dividends if the Bank is in default of payment of any assessment due to the FDIC. In addition the FDIC may prohibit the payment of dividends by a bank, if such payment is determined, by reason of the financial conditions of the bank, to be an unsafe and unsound banking practice. UBT and UBTW are Michigan banking corporations, and as such are subject to the regulation of, and supervision and regular examination by, the Michigan Office of Financial and Insurance Services ("OFIS") and the FDIC. OFIS is the primary regulator of the Banks. Deposit accounts of the Banks are insured by the FDIC. Requirements and restrictions under the laws of the United States and the State of Michigan include the requirement that banks maintain reserves against certain deposits, restrictions on the nature and amount of loans which may be made by a bank and the interest that may be charged thereon, restrictions on the payment of interest on certain deposits and restrictions relating to investments and other activities of a bank. The Federal Reserve Board and the FDIC have established guidelines for risk-based capital by bank holding companies and banks. These guidelines establish a risk adjusted ratio relating capital to risk-weighted assets and off-balance-sheet exposures. These capital guidelines primarily define the components of capital, categorize assets into different risk classes, and include certain off-balance-sheet items in the calculation of capital requirements. Generally, Tier 1 capital consists of shareholders' equity less intangible assets and unrealized gain or loss on securities available for sale, and Tier 2 capital consists of Tier 1 capital plus qualifying loan loss reserves. The FDIC Improvement Act of 1991 established a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, federal banking regulators have established five capital categories, well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, in which all institutions are placed. The federal banking agencies have also specified by regulation the relevant capital levels for each of the categories. Federal banking regulators are required to take specified mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow Page 5 exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. An institution in any of the undercapitalized categories is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. An undercapitalized institution is also generally prohibited from paying any dividends, increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval. Failure to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and other restrictions on its business. In addition, such a bank would generally not receive regulatory approval of any application that requires the consideration of capital adequacy, such as a branch or merger application, unless the bank could demonstrate a reasonable plan to meet the capital requirement within a reasonable period of time. The capital ratios of the Company and Banks exceed the regulatory guidelines for well capitalized institutions, and in conjunction with regulatory ratings, have qualified the Banks for the lowest FDIC insurance rate available to insured financial institutions. Information in Note 18 on Page A-38 of the Company's 2004 Proxy Statement provides additional information regarding the Company's capital ratios, and is incorporated herein by reference. Information regarding accounting standards adopted by the Company are discussed beginning on Page A-27 of the Company's 2004 Proxy Statement, and is incorporated herein by reference. Competition The banking business in the Company's service area is highly competitive. In its market, the Banks compete with credit unions, savings associations, and various finance companies and loan production offices. This competition is in addition to a number of community banks and subsidiaries of large multi-state, multi-bank holding companies. The Company believes that the market perceives a competitive benefit to an independent, locally controlled commercial bank. Much of the Company's competition comes from affiliates of organizations controlled from outside the area. Against these competitors, the subsidiary banks continue to expand their loan and deposit portfolios. Coupled with the fact that the Company offers the only locally-based trust department in Lenawee County, this local focus has provided a significant competitive advantage. Employees On December 31, 2003, the Company and its subsidiaries employed 191 full-time and 47 part-time employees. This compares to 183 full time and 52 part time employees as of December 31, 2002. The Company has no full time employees. Its operation and business are carried out by officers and employees of the Banks, who are not compensated by the Company. I SELECTED STATISTICAL INFORMATION (A) DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; (B) INTEREST RATES AND INTEREST DIFFERENTIAL: The information required by these sections are contained on Pages A-4, A-5 and A-6 of the Company's 2004 Proxy Statement, and are incorporated herein by reference. Page 6 II INVESTMENT PORTFOLIO The following table reflects the carrying values and yields of the Company's securities portfolio for 2003. Average yields are based on amortized costs and the average yield on tax exempt securities of states and political subdivisions is adjusted to a taxable equivalent basis, assuming a 34% marginal tax rate. Carrying Values and Yields of Investments
In thousands of dollars where applicable 0 - 1 1 - 5 5 - 10 Over 10 Available For Sale Year Years Years Years Total - ------------------------------------------------ -------- -------- ------- ------- -------- U.S. Treasury and government agencies (1) $ 33,662 $ 25,582 $ - $ - $ 59,244 Weighted average yield 3.36% 3.25% - - 3.31% Obligations of states and political subdivisions $ 13,616 $ 21,887 $ 4,439 $ 2,526 $ 42,468 Weighted average yield 3.17% 3.08% 5.21% 4.72% 3.42% Equity and other securities (2) $ 7,022 $ - $ - $ - $ 7,022 Weighted average yield 4.82% - - - 4.82% Total securities $ 54,300 $ 47,469 $ 4,439 $ 2,526 $108,734 Weighted average yield 3.50% 3.17% 5.21% 4.72% 3.45%
(1) Reflects the scheduled amortization and an estimate of future prepayments based on past and current experience of amortizing U.S. agency securities. (2) Reflects the scheduled amortization and an estimate of future prepayments based on past and current experience of the issuer for various collateralized mortgage obligations. As of December 31, 2003, the Company's securities portfolio contains no concentrations by issuer greater than 10% of shareholders' equity. Additional information concerning the Company's securities portfolio is included on Page 9, and in Note 3 on Page A-30 of the Company's 2004 Proxy Statement, and is incorporated herein by reference. III LOAN PORTFOLIO (A) TYPES OF LOANS The tables below show loans outstanding (net of unearned interest) at December 31, and the percentage makeup of the portfolios. All loans are domestic and contain no concentrations by industry or customer. Balances are stated in thousands of dollars.
2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- Personal $ 70,301 $ 71,010 $ 62,792 $ 59,172 $ 59,045 Business and commercial mortgage 256,778 212,611 163,329 115,155 99,832 Tax exempt 1,476 1,417 1,878 2,030 1,710 Residential mortgage (1) 85,156 110,985 117,553 127,768 114,150 Construction 33,109 34,503 33,172 34,382 33,530 ---------- ---------- ---------- ---------- ---------- Total loans (1) $ 446,820 $ 430,526 $ 378,724 $ 338,507 $ 308,267 ========== ========== ========== ========== ========== Personal 15.7% 16.5% 16.6% 17.5% 19.2% Business and commercial mortgage 57.5% 49.4% 43.1% 34.0% 32.4% Tax exempt 0.3% 0.3% 0.5% 0.6% 0.6% Residential mortgage (1) 19.1% 25.8% 31.0% 37.7% 37.0% Construction 7.4% 8.0% 8.8% 10.2% 10.9% ---------- ---------- ---------- ---------- ---------- Total loans (1) 100.0% 100.0% 100.0% 100.0% 100.0% ========== ========== ========== ========== ==========
(1) Includes loans held for sale Page 7 (B) MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES The following table presents the maturity of total loans outstanding, other than residential mortgages and personal loans, as of December 31, 2003, according to scheduled repayments of principal. All figures are stated in thousands of dollars.
0 - 1 1 - 5 After 5 Year Years Years Total -------- -------- -------- -------- Business and commercial mortgage - fixed rate $ 16,390 $ 80,227 $ 13,019 $109,636 Business and commercial mortgage - variable rate 47,965 61,659 37,518 147,142 Tax exempt - fixed rate 447 976 53 1,476 Tax exempt - variable rate - - - - Construction -fixed rate 5,306 2,155 - 7,461 Construction -variable rate 25,299 349 - 25,648 -------- -------- -------- -------- Total fixed rate 22,143 83,358 13,072 118,573 Total variable rate 73,264 62,008 37,518 172,790 -------- -------- -------- -------- Total $ 95,407 $145,366 $ 50,590 $291,363 ======== ======== ======== ========
(C) RISK ELEMENTS Non-Accrual, Past Due and Restructured Loans The following shows the effect on interest revenue of nonaccrual and troubled debt restructured loans as of December 31, 2003, in thousands of dollars: Gross amount of interest that would have been recorded at original rate $ 216 Interest that was included in revenue - ----- Net impact on interest revenue $ 216 =====
Additional information concerning nonperforming loans, the Company's nonaccrual policy, and loan concentrations is provided on Pages A-10 through A-12, in Note 1 on Pages A-27 and A-28 and Notes 5 and 6 on Pages A-31 and A-32 of the Company's 2004 Proxy Statement, and is incorporated herein by reference. At December 31, 2003, the Banks had two loans, other than those disclosed above, for a total of $59,000 which would cause management to have serious doubts as to the ability of the borrowers to comply with the present loan repayment terms. These loans were included on the Banks' "watch lists" and were classified as impaired; however, payments are current. (D) OTHER INTEREST BEARING ASSETS As of December 31, 2003, other than $593,000 in other real estate, there were no other interest bearing assets that would be required to be disclosed under Item III, Parts (C)(1) or (C)(2) of the Loan Portfolio listing if such assets were loans. Page 8 IV SUMMARY OF LOAN LOSS EXPERIENCE (A) CHANGES IN ALLOWANCE FOR LOAN LOSSES The table below summarizes changes in the allowance for loan losses for the years 1999 through 2003, in thousands of dollars. CHANGES IN ALLOWANCE FOR LOAN LOSSES
2003 2002 2001 2000 1999 ------- ------- ------- ------- ------- Balance at beginning of period $ 4,975 $ 4,571 $ 4,032 $ 3,300 $ 2,799 Charge-offs: Business and commercial mortgage 139 338 73 171 166 Residential mortgage 19 - 50 - 10 Personal 512 484 238 314 792 ------- ------- ------- ------- ------- Total charge-offs 670 822 361 485 968 ------- ------- ------- ------- ------- Recoveries: Business and commercial mortgage 20 16 40 4 24 Residential mortgage 3 - - - - Personal 100 105 138 184 185 ------- ------- ------- ------- ------- Total recoveries 123 121 178 188 209 ------- ------- ------- ------- ------- Net charge-offs 547 701 183 297 759 ------- ------- ------- ------- ------- Additions charged to operations 1,069 1,105 722 1,129 1,260 Adjustment for credit cards sold - - - (100) - ------- ------- ------- ------- ------- Balance at end of period $ 5,497 $ 4,975 $ 4,571 $ 4,032 $ 3,300 ======= ======= ======= ======= ======= Ratio of net charge-offs to average loans 0.13% 0.17% 0.05% 0.09% 0.27% Allowance as percent of total loans 1.23% 1.16% 1.21% 1.19% 1.07%
The allowance for loan losses is maintained at a level believed adequate by Management to absorb losses inherent in the loan portfolio. Management's determination of the adequacy of the allowance is based on an evaluation of the portfolio, past loan loss experience, current economic conditions, volume, amount and composition of the loan portfolio, and other factors. The provision charged to earnings was $1,069,000 in 2003, compared to $1,105,000 in 2002 and $722,000 in 2001. The allowance is based on the analysis of the loan portfolio and a four year historical average of net charge offs to average loans of 0.11% of the portfolio. (B) ALLOCATION OF ALLOWANCE FOR LOAN LOSSES The following table presents the portion of the allowance for loan losses applicable to each loan category in thousands of dollars, as of December 31. A table showing the percent of loans in each category to total loans is included in Section III (A), above.
2003 2002 2001 2000 1999 ------ ------ ------ ------ ------ Business and commercial mortgage $4,775 $3,950 $3,060 $2,580 $1,130 Tax exempt - - - - - Residential mortgage 37 15 20 7 22 Personal 685 571 496 638 646 Construction - - - - - Unallocated - 439 995 807 1,502 ------ ------ ------ ------ ------ Total $5,497 $4,975 $4,571 $4,032 $3,300 ====== ====== ====== ====== ======
The allocation method used takes into account specific allocations for identified credits and a four year historical loss average in determining the allocation for the balance of the portfolio. V DEPOSITS Page 9 The information concerning average balances of deposits and the weighted-average rates paid thereon, is included on Page A-5 and maturities of time deposits is provided in Note 9 on Page A-33 of the Company's 2004 Proxy Statement, and is incorporated herein by reference. There were no foreign deposits. As of December 31, 2003, outstanding time certificates of deposit in amounts of $100,000 or more were scheduled to mature as shown below. All amounts are in thousands of dollars.
Time Certificates ------------ Within three months $ 5,121 Over three through six months 2,096 Over six through twelve months 9,869 Over twelve months 13,860 -------- Total $ 30,946 ========
VI RETURN ON EQUITY AND ASSETS Various ratios required by this section and other ratios commonly used in analyzing bank holding company financial statements are included on Page A-3 and A-4 of the Company's 2004 Proxy Statement, and are incorporated herein by reference. VII SHORT-TERM BORROWINGS The information required by this section is contained in Note 10 on Page A-33 of the Company's 2004 Proxy Statement, and is incorporated herein by reference. No additional information is required as for all reporting periods, there were no categories of short-term borrowings for which the average balance outstanding during the period was 30% or more of shareholders' equity at the end of the period. ITEM 2 - PROPERTIES The executive offices of the Company are located at the main office of United Bank & Trust, 205 East Chicago Boulevard, Tecumseh, Michigan. UBT owns and occupies the entire two-story building, which was built in 1980. UBT operates a 12,000 square foot operations and training center in Tecumseh, and also operates three other banking offices in the Tecumseh area, two in the city of Adrian, one each in the cities of Hudson and Morenci, one in the village of Blissfield, and one each in Clinton, Rollin and Raisin Townships, all in Lenawee County. In addition, the bank operates one office in Dundee, Monroe County, Michigan. The bank owns all of the buildings, and leases the land for one office in the city of Adrian. All offices other than Main offer drive-up facilities. United Bank & Trust - Washtenaw operates one banking office in the City of Ann Arbor and one office each in the city of Saline and the villages of Dexter and Manchester, Washtenaw County, Michigan. The bank owns the Saline and Dexter buildings, and leases the land for the Dexter office. UBTW holds a long-term lease on the facilities for its administrative and banking offices, which it moved into in 2003. All offices offer ATM services, and the bank operates one off-site ATM. All offices other than Manchester offer drive-up facilities. Page 10 ITEM 3 - LEGAL PROCEEDINGS The Company and its subsidiaries are not involved in any material legal proceedings. They are involved in ordinary routine litigation incident to its business; however, no such proceedings are expected to result in any material adverse effect on the operations or earnings of the Company. Neither the Company nor it subsidiaries are involved in any proceedings to which any director, principal officer, affiliate thereof, or person who owns of record or beneficially more than five percent (5%) of the outstanding stock of the Company, or any associate of the foregoing, is a party or has a material interest adverse to the Company. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of 2003. PART II ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS PRICE RANGE FOR COMMON STOCK The following table shows the high and low selling prices of common stock of the Company for each quarter of 2003 and 2002 as reported by Raymond James Financial Services. These prices do not reflect private trades not involving Raymond James Financial Services. The common stock of the Company is traded over the counter, and there is no established public trading market for the common stock. Such over-the-counter market quotations reflect inter-dealer prices, without retain mark-up, mark-down or commission and may not necessarily represent actual transactions. The Company had 1,238 shareholders of record as of December 31, 2003. The prices and dividends per share have been adjusted to reflect the 2003 and 2002 stock dividends.
2003 2002 --------------------------------- --------------------------------- Market price Cash Market price Cash -------------------- dividends -------------------- dividends Quarter High Low declared High Low declared - ------- -------------------------------- -------------------------------- 1st $ 53.33 $ 51.43 $ 0.314 $ 48.57 $ 46.27 $ 0.272 2nd 62.00 53.33 0.330 49.52 48.57 0.286 3rd 63.00 62.00 0.340 50.48 49.52 0.286 4th 63.00 63.00 0.340 51.43 50.48 0.429
ITEM 6 - SELECTED FINANCIAL DATA The following tables present five years of financial data for the Company, for the years ended December 31. (In thousands, except per share data).
FINANCIAL CONDITION 2003 2002 2001 2000 1999 - ------------------- -------- -------- -------- -------- -------- ASSETS Cash and demand balances in other banks $ 21,425 $ 16,719 $ 15,980 $ 16,822 $ 17,469 Federal funds sold - 7,700 10,800 21,300 - Securities available for sale 108,734 97,380 90,243 72,679 81,923 Net loans 441,323 425,551 374,153 334,475 304,967 Other assets 38,291 26,549 27,526 23,585 23,162 -------- -------- -------- -------- -------- Total Assets $609,773 $573,899 $518,702 $468,861 $427,521 ======== ======== ======== ======== ========
Page 11
FINANCIAL CONDITION - ------------------- 2003 2002 2001 2000 1999 (continued) -------- -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest bearing deposits $ 78,184 $ 71,976 $ 61,845 $ 52,555 $ 46,829 Interest bearing certificates of deposit of $100,000 or more 30,946 28,439 29,462 46,445 32,445 Other interest bearing deposits 393,453 371,135 359,991 308,957 281,569 -------- -------- -------- -------- -------- Total deposits 502,583 471,550 451,298 407,957 360,843 Short term borrowings 8,076 75 1,019 - 19,300 Other borrowings 35,375 41,867 12,009 12,328 3,624 Other liabilities 6,356 7,027 6,199 3,522 2,790 -------- -------- -------- -------- -------- Total Liabilities 552,390 520,519 470,525 423,807 386,557 Shareholders' Equity 57,383 53,380 48,177 45,054 40,964 -------- -------- -------- -------- -------- Total Liabilities and Shareholders' Equity $609,773 $573,899 $518,702 $468,861 $427,521 ======== ======== ======== ======== ========
RESULTS OF OPERATIONS 2003 2002 2001 2000 1999 - --------------------- -------- -------- -------- -------- -------- Interest income $ 30,835 $ 33,535 $ 34,400 $ 33,549 $ 29,408 Interest expense 8,507 10,716 14,919 15,900 12,254 -------- -------- -------- -------- -------- Net Interest Income 22,328 22,819 19,481 17,649 17,154 Provision for loan losses 1,069 1,105 722 1,129 1,260 Noninterest income 11,822 9,999 8,641 7,396 6,142 Noninterest expense 22,669 21,644 20,537 16,096 15,102 -------- -------- -------- -------- -------- Income before Federal income tax 10,412 10,069 6,863 7,820 6,934 Federal income tax 3,024 2,934 1,857 2,194 1,819 -------- -------- -------- -------- -------- Net Income $ 7,388 $ 7,135 $ 5,006 $ 5,626 $ 5,115 ======== ======== ======== ======== ======== Basic earnings per share (1) (2) $ 3.30 $ 3.20 $ 2.25 $ 2.53 $ 2.31 Diluted earnings per share (1) (2) 3.27 3.19 2.25 2.53 2.31 Cash dividends declared per share (2) 1.32 1.27 1.18 1.13 1.03
(1) Earnings per share data is based on average shares outstanding plus average contingently issuable shares. (2) Adjusted to reflect the stock dividends paid in 2003, 2002, 2001, 2000 and 1999. ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is contained on pages A-2 through A-20 in the Company's 2004 Proxy Statement, and is incorporated herein by reference. ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is contained on pages A-14 through A-16 in the Company's 2004 Proxy Statement, and is incorporated herein by reference. ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is contained on pages A-23 through A-41 in the Company's 2004 Proxy Statement, and is incorporated herein by reference. Page 12 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The information required by this item is contained under the heading "Relationship With Independent Public Accountants" in the Company's 2004 Proxy Statement and is incorporated herein by reference. ITEM 9A - CONTROLS AND PROCEDURES (a) The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within required time periods. Our Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report (the "Evaluation Date"), and have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in providing them with material information relating to the Company known to others within the Company which is required to be included in our periodic reports filed under the Exchange Act. (b) There has been no change in the Company's internal control over financial reporting that occurred during the quarter ended December 31, 2003 that has materially affected, or is reasonably likely to affect, the Company's internal control over financial reporting. PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT On December 9, 2003, the Company adopted a code of ethics (the "Code") that applies to all co-workers, officers and Directors of the Company and its subsidiaries. The Code is designed to deter wrongdoing and to promote: - Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - Full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Commission and in other public communications made by the registrant; - Compliance with applicable governmental laws, rules and regulations; - Prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and - Accountability for adherence to the Code. A copy of the Code is included in this report as Exhibit 14. Page 13 The information required by this item, other than as set forth above, is contained under the heading "Directors and Executive Officers" and "Beneficial Ownership Reporting Compliance" in the Company's 2004 Proxy Statement and is incorporated herein by reference. ITEM 11 - EXECUTIVE COMPENSATION The information required by this item is contained under the heading "Compensation of Directors and Executive Officers" in the Company's 2004 Proxy Statement and is incorporated herein by reference. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is contained under the heading "Equity Compensation Plan Information", "Security Ownership of Certain Beneficial Owners," and "Security Ownership of Management" in the Company's 2004 Proxy Statement and is incorporated herein by reference. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is contained under the heading "Directors, Executive Officers, Principal Shareholders and their Related Interests - Transactions with the Banks" and in Note 14 on Page A-35 of the Company's 2004 Proxy Statement and is incorporated herein by reference. ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item is contained under the heading "Relationship With Independent Public Accountants" in the Company's 2004 Proxy Statement and is incorporated herein by reference. PART IV ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: 1. The following financial statements of the Company and its subsidiaries, included in the Company's 2004 Proxy Statement are incorporated herein by reference:
Pages in Proxy Statement -------------- Report of Independent Accountants, BKD LLP, Dated January 23, 2004 A-22 Consolidated Balance Sheets - December 31, 2003 and 2002 A-23 Consolidated Statements of Income - Years Ended December 31, 2003, 2002 and 2001 A-24 Consolidated Statements of Cash Flows - Years Ended December 31, 2003, 2002 and 2001 A-25
Page 14 Consolidated Statements of Changes in Shareholders' Equity - Years Ended December 31, 2003, 2002 and 2001 A-26 Notes to Consolidated Financial Statements A-27-A-41
2. Financial statement schedules are not applicable. (b) No reports on Form 8-K were filed during the fourth quarter of 2003. (c) Listing of Exhibits (numbered as in Item 601 of Regulation S-K): Exhibit # --------- 3(a) Restated Articles of Incorporation of United Bancorp, Inc., filed as Exhibit (4)(a) to registrant's registration statement on Form S-8 (File Number 333-03305) dated May 8, 1996, and incorporated herein by reference. 3(b) Bylaws of United Bancorp, Inc., filed as Exhibit (4)(b) to registrant's registration statement on Form S-8 (File Number 333-03305) dated May 8, 1996, and incorporated herein by reference. 4(a) Restated Articles of Incorporation of United Bancorp, Inc., filed as Exhibit (4)(a) to registrant's registration statement on Form S-8 (File Number 333-03305) dated May 8, 1996, and incorporated herein by reference. 4(b) Bylaws of United Bancorp, Inc., filed as Exhibit (4)(b) to registrant's registration statement on Form S-8 (File Number 333-03305) dated May 8, 1996, and incorporated herein by reference. 4(c) United Bancorp, Inc. Director Retainer Stock Plan, filed as Appendix A to registrant's proxy statement dated March 25, 1996 (file number 0-16640) and incorporated herein by reference. 4(d) United Bancorp, Inc. Senior Management Bonus Deferral Stock Plan, filed as Appendix B to registrant's proxy statement dated March 25, 1996 (file number 0-16640) and incorporated herein by reference. 4(e) United Bancorp, Inc. 1999 Stock Option Plan, filed as Appendix B to the Company's proxy statement dated March 24, 2000 (file number 0-16640) and incorporated herein by reference. 11 Statement re Computation of Per Share Earnings - this information is incorporated by reference in Note 1 on Page A-29 and Note 19 on Page A-39 of the Company's 2004 Proxy Statement. 13 Registrant's Annual Report to Shareholders for the fiscal year ended December 31, 2003 which incorporates Management's Discussion and Analysis of Financial Condition and Results of Operations, Reports of Independent Accountants, Consolidated Financial Statements and Notes to Consolidated Financial Statements included in the Company's 2004 Proxy Statement (not deemed filed except for those portions which are specifically incorporated herein by reference). 14 Registrant's Code of Business Conduct and Ethics as adopted December 9, 2003 21 Listing of Subsidiaries, filed herewith. Page 15 23(a) Consent of BKD LLP, Independent Accountants, filed herewith. 23(b) Consent of Crowe, Chizek and Company LLP, Independent Accountants, filed herewith. 24 Power of Attorney contained on the signature pages of the 2003 Annual Report on Form 10-K. 31.1 Certification of Principal Executive Officer 31.2 Certification of Principal Accounting Officer 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (d) All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. United Bancorp, Inc. /S/ David S. Hickman March 9, 2004 ---------------------------------- ------------- David S. Hickman, Chairman and Date Chief Executive Officer, Director Page 16 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David S. Hickman and Dale L. Chadderdon, and each of them, his true and lawful attorney(s)-in-fact and agent(s), with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this report and to file the same, with all exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on March 9, 2004. /S/ Joseph D. Butcko /S/ James C. Lawson - ------------------------------------------- ----------------------------- Joseph D. Butcko, Director James C. Lawson, Director /S/ Robert K. Chapman /S/ Donald J. Martin - ------------------------------------------- ----------------------------- Robert K. Chapman, Director, Vice Chairman Donald J. Martin, Director /S/ George H. Cress /S/ David E. Maxwell - ------------------------------------------- ----------------------------- George H. Cress, Director David E. Maxwell, Director /S/ John H. Foss /S/ Chris L. McKenney - ------------------------------------------- ----------------------------- John H. Foss, Director Chris L. McKenney, Director /S/ Patricia M. Garcia /S/ Kathryn M. Mohr - ------------------------------------------- ----------------------------- Patricia M. Garcia, Director Kathryn M. Mohr, Director /S/ David S. Hickman /S/ Dale L. Chadderdon - ------------------------------------------- ----------------------------- David S. Hickman (Principal Executive Officer) Dale L. Chadderdon Director, Chairman and Chief Executive Officer (Principal Financial Officer) Senior Vice President, Secretary and Treasurer Page 17 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO. - ----------- ----------- -------- Exhibit 13 Management's Discussion and Analysis of Financial Condition and Results of Operations, Report of Independent Auditors, Consolidated Financial Statements and Notes to Consolidated Financial Statements of Registrant's Annual Report to Shareholders for the fiscal year ended December 31, 2003 which is incorporated from the Company's 2004 Proxy Statement (not deemed filed except for those portions which are specifically incorporated herein by reference. Exhibit 14 Code of Ethics in accordance with Section 406 of the Sarbanes-Oxley Act as 19 amended. Exhibit 21 Subsidiaries 22 Exhibit 23 Consent of Independent Accountants - BKD LLP 23 Exhibit 24 Power of Attorney contained on the signature pages of the 2003 Annual Report 17 on Form 10-K. Exhibit 31.1 Certification of Principal Executive Officer 24 Exhibit 31.2 Certification of Principal Financial Officer 25 Exhibit 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 26 Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 99.1 Report of Prior Independent Auditors - Crowe Chizek 27
Page 18 EX-14 3 k82533exv14.txt CODE OF ETHICS EXHIBIT 14 UNITED BANCORP, INC. CODE OF BUSINESS CONDUCT AND ETHICS ADOPTED DECEMBER 9, 2003 This Code of Business Conduct and Ethics sets out basic principles and standards of conduct to guide all co-workers, officers and directors of United Bancorp, Inc. and its subsidiaries (the "Company"). All of our co-workers, officers and directors must conduct themselves in accordance with these principles and standards. All claims of violations of this Code will be investigated by appropriate personnel or Company representatives. Those who violate the standards in this Code may be subject to disciplinary action, including dismissal. If you are in a situation which you believe may violate or lead to a violation of this Code, you should consult your manager or the Senior Vice President - Human Resources & Communication, Thomas C. Gannon. 1. DIRECTORS, OFFICERS AND CO-WORKERS SHOULD ACT WITH HONEST AND ETHICAL CONDUCT. The Company's directors, officers and co-workers should act ethically and in good faith, with honesty and integrity, when acting on behalf of the Company or in connection with the Company's business or operations. 2. DIRECTORS, OFFICERS AND CO-WORKERS MUST COMPLY WITH LAWS, RULES AND REGULATIONS. Obeying the law, both in letter and in spirit, is the foundation on which this Company's ethical standards are built. All co-workers, officers and directors must respect and obey the laws of the jurisdictions in which we operate. The Company has an Insider Trading Policy that addresses federal securities laws and trading in the Company's securities which you should review and which is available from the Company's Corporate Secretary, Dale L. Chadderdon. Any co-worker, officer or director who is unsure about any aspect of these laws should seek advice from officers, supervisors, managers or other appropriate personnel. 3. PUBLIC DISCLOSURE SHOULD BE FULL, FAIR, ACCURATE, TIMELY AND UNDERSTANDABLE. Co-workers, officers and directors who are involved in the preparation of reports and documents that the company files with or submits to the Securities and Exchange Commission or that are otherwise public communications have a responsibility to promote full, fair, accurate, timely and understandable disclosure in such reports, documents and communications. 4. DIRECTORS, OFFICERS AND CO-WORKERS MUST AVOID CONFLICTS OF INTEREST. Directors, officers and co-workers must avoid conflicts of interest involving the Company or its business. A "conflict of interest" occurs when an individual's private interest interferes in any way, or even appears to interfere, with the interests of the Company as a whole. A conflict situation can arise when a co-worker, officer or director takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when a co-worker, officer or director, or a member of his or her family, receives improper personal benefits as a result of his or her position in or with the Company. Page 19 Loans to, or guarantees of obligations of, such persons are of special concern, and must comply with all laws. Any co-worker, officer or director who becomes aware of a conflict or potential conflict of interest or any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest should bring it to the attention of the Senior Vice President - Human Resources & Communication. Conflicts of interest may not always be clear, so if you have a question, you should consult with the Senior Vice President - Human Resources & Communication of the Company or other personnel or legal counsel designated by the Company from time to time. 5. CONFIDENTIALITY OF COMPANY INFORMATION MUST BE MAINTAINED. Co-workers, officers and directors of the Company must maintain the confidentiality of information entrusted or made available to them by the Company or its clients, except when disclosure is authorized by the Company or legally mandated, and must not use that information for personal advantage. Confidential information includes all financial and other non-public information and other records and that, if disclosed, might be of use to competitors, or harmful to the Company or its clients. 6. DIRECTORS, OFFICERS AND CO-WORKERS ARE PROHIBITED FROM TAKING THE COMPANY'S CORPORATE OPPORTUNITIES. Co-workers, officers and directors are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of the company's property, information or position, without the consent of a majority of the "qualified directors," (b) using the Company's property, information or position for improper personal gain, or (c) competing with the Company directly or indirectly. Co-workers, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. 7. FAIR DEALING IN ALL ACTIVITIES IS EXPECTED. Each co-worker, officer and director should endeavor to deal fairly with the Company's clients, suppliers, competitors and co-workers. A co-worker, officer or director should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other intentional unfair-dealing practice in connection with the Company's business. 8. DIRECTORS, OFFICERS AND CO-WORKERS SHOULD PROTECT AND PROPERLY USE THE COMPANY'S ASSETS. All co-workers, officers and directors should protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability. All Company assets should be used for legitimate business purposes. Company equipment should not be used for non-Company business, but incidental personal use may be permitted. 9. WAIVERS OF THIS CODE MUST BE APPROVED AND DISCLOSED. Any waiver of this Code for executive officers or directors of the Company may be made only by the Compensation Committee of the Board of Directors and will be promptly disclosed as required by law. Page 20 10. DIRECTORS, OFFICERS AND CO-WORKERS ARE ENCOURAGED TO REPORT ILLEGAL OR UNETHICAL BEHAVIOR OR VIOLATIONS OF THIS CODE. We must all work to ensure prompt and consistent action against violations of this Code. Co-workers are encouraged to contact the Senior Vice President - Human Resources & Communication or to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior or violations of this Code and when in doubt about the best course of action in a particular situation. Any claim of a possible violation may be made anonymously if the claimant so desires, and all claimants shall be provided confidentiality to the extent practicable in the handling of the potential violation. Co-workers, officers and directors are expected to cooperate in internal investigations of misconduct. 11. THE SENIOR VICE PRESIDENT - HUMAN RESOURCES & COMMUNICATION WILL ADMINISTER THIS CODE. This Code shall be administered by the Company's Senior Vice President - Human Resources & Communication. Company co-workers are encouraged to seek guidance regarding the application or interpretation of this Code from the Senior Vice President - Human Resources & Communication and are expected to cooperate fully in any investigation of any potential violation of this Code. Page 21 EX-21 4 k82533exv21.txt SUBSIDIARIES . . . EXHIBIT 21 SUBSIDIARIES
NAME JURISDICTION OF INCORPORATION - ---- ----------------------------- United Bank & Trust Michigan United Bank & Trust - Washtenaw Michigan
Page 22 EX-23 5 k82533exv23.txt CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS BKD LLP We hereby consent to the incorporation by reference in the Registration Statements on Form S-8, File Numbers 333-03305, 333-03317 and 333-55680 of our report dated January 22, 2004, on the consolidated financial statements of United Bancorp Inc., which report is included in the definitive Proxy Statement for the 2004 Annual Meeting of Shareholders of United Bancorp, Inc. /S/ BKD LLP ------------------------- BKD LLP Indianapolis, Indiana March 15, 2004 Page 23 EX-31.1 6 k82533exv31w1.txt CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER EXHIBIT 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER DISCLOSURE PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David S. Hickman, certify that: 1. I have reviewed this annual report on Form 10-K of United Bancorp, Inc. 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report; 4. The registrant's other certifying officers 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)) 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 annual report is being prepared; b) 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 c) Disclosed in this annual 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 officers 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: 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. /S/ David S. Hickman March 9, 2004 - ----------------------------------------------- ------------- David S. Hickman (Principal Executive Officer) Date Chairman and Chief Executive Officer Page 24 EX-31.2 7 k82533exv31w2.txt CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER EXHIBIT 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER DISCLOSURE PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Dale L. Chadderdon, certify that: 1. I have reviewed this annual report on Form 10-K of United Bancorp, Inc. 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report; 4. The registrant's other certifying officers 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)) 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 annual report is being prepared; b) 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 c) Disclosed in this annual 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 officers 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: 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. /S/ Dale L. Chadderdon March 9, 2004 - ------------------------------------------------- ------------- Dale L. Chadderdon (Principal Financial Officer) Date Senior Vice President, Secretary & Treasurer Page 25 EX-32.1 8 k82533exv32w1.txt CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.1 DISCLOSURE PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Annual Report on Form 10-K of United Bancorp, Inc. (the "Company") for the year ended December 31, 2003 (the "Report"), each of the undersigned, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our respective knowledge and belief, 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/ David S. Hickman March 9, 2004 - --------------------------------------------- ------------- David S. Hickman Date Chairman and Chief Executive Officer (Principal Executive Officer) /S/ Dale L. Chadderdon March 9, 2004 - --------------------------------------------- ------------- Dale L. Chadderdon Date Senior Vice President, Secretary & Treasurer (Principal Financial Officer) Page 26 EX-99.1 9 k82533exv99w1.txt REPORT OF PRIOR INDEPENDENT AUDITORS-CROWE CHIZEK EXHIBIT 99.1 REPORT OF PRIOR INDEPENDENT AUDITORS [CROWE CHIZEK LOGO] Shareholders and Board of Directors United Bancorp, Inc. Tecumseh, Michigan We have audited the accompanying consolidated balance sheet of United Bancorp, Inc. and Subsidiaries as of December 31, 2001, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the two years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Bancorp, Inc. and Subsidiaries as of December 31, 2001, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. /s/ CROWE, CHIZEK AND COMPANY LLP --------------------------------- Crowe, Chizek and Company LLP Grand Rapids, Michigan January 16, 2002 Page 27 -----END PRIVACY-ENHANCED MESSAGE-----