UBCP

United Bancorp($UBCP) Executives Signal Confidence with Second Cluster Buy - Undervalued with 5.48% Dividend Yield?

05/23/2025 12:46

Regional bank United Bancorp Inc ($UBCP) is drawing attention as its executives and directors recently engaged in a cluster of stock purchases. According to filings dated May 22, 2025, seven insiders, including Chairman Scott Everson, simultaneously bought shares in the company. United Bancorp, headquartered in Ohio, is a regional bank holding company providing commercial and retail banking services through its subsidiary, Unified Bank. With a market capitalization of approximately $78 million, this small-cap stock is currently trading around $13.50. What's particularly noteworthy is that this strong insider buying signal has appeared for the second time in about a year. In this latest round of insider transactions, Director Gary Glessner made the largest purchase, acquiring 3,497 shares for approximately $47,600. Chairman Scott Everson purchased 2,197 shares worth about $30,000, while Director Brian Hendershot bought 2,207 shares for roughly the same amount. Officers Randall Greenwood and Matthew Branstetter also acquired 1,006 and 339 shares, respectively. Significantly, Chairman Everson, Officer Greenwood, and Officer Branstetter executed their purchases under Rule 10b5-1 trading plans. These plans, established when insiders don't possess material non-public information, signal long-term commitment to share ownership while avoiding insider trading suspicions. This insider buying pattern repeats a similar cluster that occurred on June 21, 2024. At that time, the same insiders participated in coordinated purchases, with Director Gary Glessner again leading with approximately $48,000 in share acquisitions. Typically, cluster buying by insiders is considered a strong signal that the company's internal outlook is positive. Examining United Bancorp's financial condition, net income for Q1 2025 was $1.872 million, down 6.1% year-over-year, with diluted earnings per share (EPS) decreasing 8.6% to $0.32. However, net interest income increased 2.2% to $6.25 million, and the net interest margin improved by 14 basis points to 3.60%. Total assets slightly declined by 0.4% to $830.7 million year-over-year. A particularly attractive element for investors is the dividend yield. United Bancorp offers a high dividend yield of approximately 5.48%, having increased its Q3 cash dividend to $0.1775 per share in August 2024. This significantly exceeds the market average of 2-3%. From a valuation perspective, the P/E ratio of 10.90 is substantially lower than the financial sector average (around 22), suggesting potential undervaluation. The company is pursuing expansion by constructing a new regional banking center in Wheeling, West Virginia. This center, scheduled to open by the end of Q3 2025, is part of a strategy to expand geographic reach. Additionally, United Bancorp is scaling up its Unified Mortgage and Treasury Management programs to boost fee income and deposits, while investing in technology for AI-driven customer service improvements. While these investments may temporarily increase noninterest expenses and pressure profitability, they are expected to drive long-term growth and profitability. Management aims to expand the asset base to $1 billion or more. Currently, United Bancorp operates in a relatively challenging macroeconomic environment. Despite inflation concerns and trade policy uncertainties, Federal Reserve monetary easing (a 100 basis point reduction in the Federal Funds Rate since September 2024) has helped reduce interest expense pressures. In terms of stock performance, United Bancorp has gained approximately 6.7% year-to-date, outperforming the S&P 500's flat performance over the same period. However, its three-year performance of approximately -7.8% lags the market average. The stock is trading near the lower end of its recent range ($11.40 - $14.78). The concentrated insider buying suggests that management views the current price level as attractive. Particularly, the planned purchases under Rule 10b5-1 indicate insiders' confidence in long-term value creation. This insider trading pattern could be a positive signal for investors considering small-cap bank investments. However, investors should also consider risk factors including limited liquidity due to United Bancorp's small-cap nature, geographic concentration, and recent decrease in net income. Insider purchases may not necessarily lead to short-term stock price appreciation, and insiders typically have longer investment horizons. In conclusion, United Bancorp's insider cluster buying demonstrates management's positive outlook on the company's long-term prospects, while the high dividend yield and relatively low valuation may appeal to income-focused investors. Future earnings reports and the results of expansion strategies will be key to determining whether these positive signals are substantiated.

You can receive notifications when news is published.