UBOH United Bancshares Inc

On October 20, 2022, United Bancshares, Inc. issued the following release:

United Bancshares, Inc. (OTCQX: UBOH – news), a financial holding company headquartered in Columbus Grove, Ohio with consolidated assets of $1.1 billion today announced operating results for the quarter ended September 30, 2022, unaudited.

Quarterly Results

For the quarter ended September 30, 2022, the Corporation reported net income of $3,086,000, or $0.94 basic earnings per share, a decrease of $1,006,000 (24.6%) compared to the third quarter of 2021 net income of $4,092,000, or $1.25 basic earnings per share. The decrease in operating results for the third quarter of 2022 as compared to the same period in 2021 was primarily attributable to a decrease in non-interest income of $1,889,000 (40.1%) and a decrease in net interest income of $574,000 (5.8%), offset by a decrease in non-interest expenses of $815,000 (8.4%), and a decrease in the provision for income taxes of $642,000 (76.2%). The third quarter results include a $797,000, or $0.24 basic earnings per share, increase in non-interest income due to a BOLI death benefit payment.

Net interest income for the third quarter of 2022 was $9,329,000, compared to $9,903,000 for the third quarter of 2021, a decrease of $574,000. Loan interest income decreased $1,286,000, a result of Paycheck Protection Program (PPP) fees decreasing $2,238,000, offset by an increase in interest income of $952,000 due to rising portfolio rates and loan balances. Interest from the investment portfolio and other interest increased $764,000 and interest expense increased $52,000.

Non-interest income for the third quarter of 2022 was $2,823,000, compared to $4,712,000 for the third quarter of 2021, a decrease of $1,889,000. The decrease was primarily attributable to a decrease in gain on sales of loans of $2,947,000 (77.6%), offset by an increase in other non-interest income of $1,092,000 (119.1%). The significant decrease in gain on sale of loans was attributable to a decrease in loan activity by the residential mortgage operations, along with a decrease in the net gain on sale, expressed as a percentage of loan balances sold. During the quarter ended September 30, 2022, there were 158 loans sold totaling $41.6 million, compared to 328 loans sold totaling $90.4 million during the same period of 2021. The net gain on sale was 1.77% for the third quarter of 2022 compared to 4.06% for the same period of 2021. The increase in other non-interest income was primarily related to and a $794,000 increase in BOLI income due to a death benefit payment, and an increase in income from the Corporation’s loan hedging program of $310,000.

For the quarter ended September 30, 2022, non-interest expenses were $8,865,000, compared to $9,680,000 for the comparable quarter of 2021, a $815,000 decrease.  The significant quarter-over-quarter decreases include salaries and benefits of $604,000 (11.2%), a result of lower mortgage loan commissions, loan origination expenses of $219,000 (46.8%), data processing expense of $125,000 (21.2%), and advertising and promotional expense of $119,000 (21.1%), offset by increases in exam and auditing expense of $61,000 (42.3%), and legal fees of $58,000 (190.9%).

Year to date results

Net income for the nine months ended September 30, 2022 totaled $7,776,000, or $2.37 basic earnings per share, compared to $10,863,000, or $3.31 basic earnings per share for the same period in 2021, a decrease of $3,087,000 (28.4%). The decrease in operating results for the nine month period ended September 30, 2022 as compared to the nine month period ended September 30, 2021 was primarily attributable to a decrease in net interest income of $779,000 (2.9%) and a decrease in non-interest income of $6,101,000 (42.9%), offset by a decrease in non-interest expenses of $2,032,000 (7.3%), a decrease in the provision for loan losses of $300,000, and a decrease in the provision for income taxes of $1,461,000 (66.4%).

Net interest income totaled $26,213,000 for the nine months ended September 30, 2022, compared to $26,992,000 for the same period in 2021, a decrease of $779,000. Loan interest income decreased $3,232,000, due primarily to a reduction in PPP loan fees of $3,722,000 offset by an increase in interest income of $490,000 due to rising portfolio rates and loan balances. Interest on the investment portfolio and other interest income increased $1,990,000 and interest expense decreased $463,000.

Non-interest income for the nine months ended September 30, 2022 totaled $8,129,000, compared to $14,230,000 for the same period in 2021, a decrease of $6,101,000. The decrease in non-interest income was primarily attributable to decreases in gain on sales of loans of $9,722,000 (86.4%), offset by an increase in other non-interest income of $3,730,000 (125.2%). The decrease in gain on sale of loans was attributable to a decrease in loan activity and in the net gain on sale earned. For the nine months ended September 30, 2022, there were 541 loans sold totaling $148.7 million at a net gain on sale of 0.79% compared to the same period of 2021 when there were 1,098 loans sold totaling $286.9 million at a net gain on sale of 3.76%. The increase in other non-interest income was due to an increase in income from the Corporation’s loan hedging program of $2,663,000, a $758,000 increase in BOLI income due to a death benefit payment, and a $149,000 increase in NSF fees.

Non-interest expenses were $25,827,000 for the nine months ended September 30, 2022, compared to $27,859,000 for the same period in 2021, a decrease of $2,032,000. The decrease in non-interest expenses was primarily attributable to decreases in salaries and benefits of $1,480,000 (9.4%), a result of lower mortgage loan commissions, loan origination expenses of $486,000 (39.7%), advertising and promotional expense of $294,000 (17.8%), and data processing expense of $233,000 (13.6%) offset by increases in equipment service expense of $75,000 (8.7%), travel and entertainment expense of $92,000 (133.9%), ATM processing expense of $63,000 (10.1%), and Ohio franchise tax expense of $62,000 (10.6%).

Balance Sheet Fluctuations

Total assets amounted to $1.06 billion at September 30, 2022 compared to $1.08 billion at December 31, 2021, a decrease of $17.3 million (1.6%). The decrease in total assets was primarily the result of decreases of $26.2 million (34.8%) in cash and cash equivalents, and $32.2 million (10.5%) in securities available for sale, offset by a $27.9 million (4.6%) increase in loans, and $13.5 million increase in other assets (136.4%). Deposits totaled $960.8 million at September 30, 2022, compared to $930.4 million at December 31, 2021, an increase of $30.4 million (3.3%).

Shareholders’ equity decreased $45.3 million (38.0%) from $119.1 million at December 31, 2021 to $73.8 million at September 30, 2022. This was the result of an increase in unrealized losses on available for sale securities, net of tax of $50.3 million and dividends paid of $2,067,000 offset by net income of $7,776,000. The increase in unrealized losses on available for sale securities from December 31, 2021 to September 30, 2022 was attributable to increasing long-term treasury yields.  Net unrealized gains and losses on available for sale securities are reported as accumulated other comprehensive income/(loss) in the consolidated balance sheets.

About United Bancshares, Inc.

United Bancshares, Inc. is the holding company of The Union Bank Company which serves Allen, Delaware, Franklin, Hancock, Marion, Paulding, Putnam, Sandusky, Van Wert and Wood Counties in Ohio, with office locations in Bowling Green, Columbus Grove, Delaware, Delphos, Findlay, Gahanna, Gibsonburg, Kalida, Leipsic, Lima, Marion, Ottawa, Paulding, Pemberville, Plymouth and Westerville Ohio.

This release may contain certain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance.  However, such performance involves risk and uncertainties that may cause actual results to differ materially.  Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the strength of the local economies in which operations are conducted, the effects of and changes in policies and laws of regulatory agencies, inflation, and interest rates.  For further discussion of certain factors that may cause such forward-looking statements to differ materially from actual results, refer to the 2021 Form 10-K.

United Bancshares, Inc.

Quarterly ReportSeptember 30, 2022

Shareholders, Clients and Team Members:

I am pleased to report that, as a direct result of the ongoing efforts of the Company’s dedicated team members in implementing our Strategic Plan, your Company reported positive results for the nine months ended September 30, 2022. Those positive results include income before taxes of $8.5 million, return on average assets of 0.96%, and return on average tangible equity of 14.9%.   I am also pleased to report that after a review of your Company’s earnings, capital position, risk profile and strategic plan, your Board of Directors declared a $0.21 per share cash dividend, payable to shareholders on December 15, 2022.

As the result of record inflation, rapidly rising interest rates, and recession fears, the banking industry and our overall economy continues to face significant headwinds.  These headwinds had a negative impact on your Company’s financial performance including considerable reductions in residential mortgage activity, funding costs pressure, and tepid loan demand. Additionally the rapid increase in interest rates has created a $46.3 million unrealized loss position on available-for-sale securities, net of tax, which has contributed to the decrease in your Company’s tangible book value by $13.67 per share since December 31, 2021.  While this decrease has no impact on regulatory capital, it has likely been a noticeable factor in the company’s recent decrease in share price.  Based on the Company’s current liquidity position, I believe it is very unlikely that those losses will be realized. As such, we remain focused on continuing to add value to our shareholders through core revenue growth, strong asset quality, and consistent dividends. 

While the financial performance of your Company continues to be strong, we experienced an incredible and sudden loss of our long-time, beloved Board Secretary and Human Resource Manager, Heather Oatman.  Heather was not only a trusted 25 year team member, she was a dear friend to so many on our team.  While we will miss her immensely, her kindness, care, and love for others, will always be a part of each of us as well as our entire organization.

Thank you for your ongoing support and the trust you have placed in us.

Respectfully,

Brian D. YoungPresident and CEO

United Bancshares, Inc.and Subsidiaries

Financial Information (unaudited)		Nine months endedSeptember 30,2022				Nine months endedSeptember 30,2021
		(dollars in thousands, except per share data)
CONDENSED STATEMENTS OF INCOME
Interest income		$	28,144			$	29,386
Interest expense			1,931				2,394
Net interest income			26,213				26,992
Provision for loan losses			-				300
Net interest income after provision for loan losses			26,213				26,692
Non-interest income			8,129				14,230
Non-interest expense			25,827				27,859
Income before income taxes			8,515				13,063
Provision for income taxes			739				2,200
Net income		$	7,776			$	10,863
Average common shares outstanding (basic)			3,275,673				3,277,919
PER COMMON SHARE
Net income		$	2.37			$	3.31
Book value		$	22.79			$	35.46
Tangible book value (non-GAAP)*		$	13.83			$	26.56
Closing price		$	20.60			$	29.95
FINANCIAL RATIOS
Return on average assets			0.96	%			1.39	%
Return on average tangible equity (non-GAAP)*			14.90	%			17.03	%
Net interest margin, tax equivalent (non-GAAP)*			3.65	%			3.84	%
Efficiency ratio (non-GAAP)*			73.62	%			66.68	%
Loans to deposits			66.35	%			63.58	%

PERIOD END BALANCES

		As ofSeptember 30,2022				As ofDecember 31,2021
Assets		$	1,059,289			$	1,076,556
Loans, gross		$	637,426			$	609,559
Deposits		$	960,769			$	930,413
Shareholders' equity		$	73,820			$	119,095
Common shares outstanding			3,239,859				3,272,585

* Some of the financial measures included in this press release are not measures of financial performance recognized by U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measures include tangible book value, return on average tangible equity, net interest margin (tax-equivalent), and the efficiency ratio. Management uses these non-GAAP financial measures in its analysis of its performance, and believes financial analysts and investors frequently use these measures, and other similar measures, to evaluate capital adequacy. Reconciliations of non-GAAP disclosures used in this press release to the comparable GAAP measures are provided in the accompanying table. Management, as well as regulators, financial analysts and other investors may use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions. 

These non-GAAP financial measures should not be considered in isolation or as a substitute for total shareholders’ equity, total assets, book value per share, return on average assets, return on average equity, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

United Bancshares, Inc. and Subsidiaries

Non-GAAP to GAAP Reconciliations and Calculation of Non-GAAP Financial Measures (unaudited)(dollars and shares in thousands, except per share data)

Shareholders' Equity to Tangible Equity		September 30,2022				September 30,2021
Shareholders' equity		$	73,820			$	116,144
Less goodwill and other intangibles			28,616				29,151
Tangible common equity		$	45,204			$	86,993
Average Shareholders' equity		$	98,637			$	114,244
Less average goodwill and other intangibles			29,057				29,199
Average tangible common equity		$	69,580			$	85,045
Tangible Book Value Per Common Share
Tangible common equity (a)		$	45,204			$	86,993
Total common shares issued and outstanding (b)			3,269,647				3,275,430
Tangible book value per common share (a)/(b)		$	13.83			$	26.56
Return on Average Tangible Equity
Net income, annualized (c)		$	10,368			$	14,484
Average tangible common equity (d)		$	69,580			$	85,045
Return on average tangible common equity (c/d)			14.90	%			17.03	%
Net Interest Margin, Tax-Equivalent
Net interest income, annualized		$	34,951			$	35,989
Tax-equivalent adjustment, annualized			984				745
Tax-equivalent net interest income, annualized (e)		$	35,935			$	36,734
Average earning assets (f)		$	983,763			$	957,815
Net interest margin, tax-equivalent (e)/(f)			3.65	%			3.84	%
Efficiency Ratio, Tax-Equivalent
Non-interest expense, annualized (g)		$	34,436			$	37,145
Tax-equivalent net interest income, annualized			35,935				36,734
Non-interest income, annualized			10,839				18,973
Total revenue, annualized (h)		$	46,773			$	55,707
Efficiency ratio (g)/(h)			73.62	%			66.68	%

UNITED BANCSHARES, INC.

DIRECTORS
Robert L. BenrothHerbert H. HuffmanH. Edward RigelDavid P. Roach	Daniel W. Schutt – ChairmanR. Steven UnverferthBrian D. Young
OFFICERSBrian D. Young - President/CEOKlint D. Manz- CFODenise E. Giesige - Secretary

THE UNION BANK COMPANY

DIRECTORS
Robert L. BenrothAnthony M.V. EramoHerbert H. HuffmanKevin L. LammonWilliam R. PerryH. Edward Rigel	David P. RoachCarol R. Russell    Daniel W. SchuttR. Steven UnverferthDr. Jane M. WoodBrian D. Young - Chairman/President/CEO

INVESTOR MATERIALS:United Bancshares, Inc. has traded its common stock on the OTCQX Market under the symbol “UBOH” since August 2022. Annual and quarterly shareholder reports, regulatory filings, press releases, and articles about United Bancshares, Inc. are available in the Shareholder Information section of our website www.theubank.com or by calling 1-800-837-8111.

Locations

1300 N. Main St.Bowling Green, OH 43402419-353-6088

100 S. High St.Columbus Grove, OH 45830419-659-2141

101 Progressive Dr.Columbus Grove, OH 45830419-659-4250

30 Coal BendDelaware, OH 43015740-549-3400

114 E. 3rd St.Delphos, OH 45833419-692-2010

1500 Bright Rd.Findlay, OH 45840419-424-1400

222 S. Main St., Unit 1Findlay, OH 45840419-659-2141

461 Beecher RoadGahanna, OH 43230614-269-4400

230 W. Madison St.Gibsonburg, OH 43431419-637-2124

110 E. North St.Kalida, OH 45853419-532-3366

318 S. Belmore St.Leipsic, OH 45856419-943-2171

1410 Bellefontaine Ave.Lima, OH 45804419-229-6500

3211 Elida Rd.Lima, OH 45805419-331-3211

701 Shawnee Rd.Lima, OH 45805419-228-2114

111 S. Main St.Marion, OH 43302740-387-2265

220 Richland Rd.Marion, OH 43302740-386-2171 

240 W. Fifth St.Marysville, OH 43040419-659-2141

245 W. Main St.Ottawa, OH 45875419-523-2265

103 E. Perry St.Paulding, OH 45879419-567-1075

132 E. Front St.Pemberville, OH 43450419-287-3211

2660 US Hwy 224, Ste. 3Plymouth, OH 44865419-659-2141

468 Polaris ParkwayWesterville, OH 43082614-269-4402

Contact information:
Brian D. Young, CEO419-659-2141byoung@theubank.com		Klint D. Manz, CFO419-659-2141kmanz@theubank.com