Shares of United Bancorp (UBCP) fell sharply Thursday after the Martins Ferry, Ohio, company announced that it was cutting its quarterly dividend in half in order to preserve capital.

The $424 million-asset company said that shareholders of record at Sept. 4 will be paid a quarterly dividend of 7 cents per share for at least the next two quarters, compared to 14 cents per share in recent quarters. For the year, its total payout will be 42 cents per share, down from 56 cents last year.

In heavy trading, United's shares were down nearly 7% midday Thursday, to $8.80.

In a news release, James W. Everson, United's chairman, president and chief executive, attributed the decision to reduce the dividend largely to pending Basel III capital requirements that will require banks to hold additional capital against certain assets. The squeeze from continued low interest rates and compliance costs related to the Dodd-Frank Act also factored into the decision, he said.

"Increased government regulation and prolonged low interest rates are getting into all of our wallets," Everson said. "Our board of directors and management team are taking both necessary and prudent action to manage the…risk of banking to assure long-term growth of shareholder value as we travel through these uncharted waters of continuing and impending regulatory reform and unprecedented low interest rate policy."

The company added that it evaluates the "appropriateness" of the dividend payment each quarter and that it could not predict if or when it would raise the dividend in the future.

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