United Bancorp to pay $10.4 million to redeem remaining TARP preferreds

By Susanna Moon

Chicago, Nov. 21 - United Bancorp, Inc. plans to redeem all of the remaining 10,300 shares of its outstanding fixed-rate cumulative perpetual preferred stock, series A, by the end of the year, according to an 8-K filing with the Securities and Exchange Commission.

The purchase price will be the liquidation preference amount of $1,000 per share plus accrued dividends up to but excluding the redemption date, for a total cost of about $10.4 million, according to a company press release.

Funding for the redemption will come from cash at the holding company and retained earnings at its subsidiary bank, United Bank & Trust. In addition, the company has received regulatory approval to tap the remaining $4 million available under its $10 million revolving line of credit to fund the planned redemption.

The preferreds were issued to the U.S. Department of the Treasury under the Troubled Asset Relief Program Capital Purchase Program. The Treasury sold the preferreds to private investors in June 2012.

After settlement, none of the preferreds will remain outstanding.

The terms of the preferreds include an increase in the dividend rate to 9% in January 2014 from 5%, the release noted.

The redemption of the preferreds will result in an estimated annual savings of $810,000, or $0.06 per common share, due to the elimination of payment of dividends on the redeemed shares.

The financial holding company is based in Ann Arbor, Mich.

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