UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT

For the transition period from to

Commission File Number: 0-16540

UNITED BANCORP, INC.

(Exact name of registrant as specified in its charter)

Ohio		34-1405357
(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)

201 South Fourth Street, Martins Ferry, Ohio 43935-0010

(Address of principal executive offices)

(740) 633-0445

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.00	UBCP	NASDQ Capital Market

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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☐			Accelerated filer ☐
Non-accelerated filer ☒
Smaller reporting company ☒			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐ No ☒

Indicate the number of shares outstanding of the issuer’s classes of common stock as of the latest practicable date: As of November 5, 2021, 5,976,351 shares of the Company’s common stock, $1.00 par value, were issued and outstanding.

Table of Contents


PART I - FINANCIAL INFORMATION

Item 1	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Income	4

	Condensed Consolidated Statements of Comprehensive Income	5

	Condensed Consolidated Statements of Shareholders Equity	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4	Controls and Procedures	41

PART II - OTHER INFORMATION

Item 1	Legal Proceedings	42

Item 1A	Risk Factors	42

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3	Defaults Upon Senior Securities	42

Item 4	Mine Safety Disclosures	43

Item 5	Other Information	43

Item 6	Exhibits	43

SIGNATURES		44

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ITEM 1. Financial Statements

United Bancorp, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)


	September 30,		December 31,
	2021		2020
	(Unaudited)
Assets
Cash and due from banks	$	8,336	$	11,637
Interest-bearing demand deposits		83,071		39,955
Cash and cash equivalents		91,407		51,592

Available-for-sale securities		135,540		158,067
Loans, net of allowance for loan losses of $4,123 and $5,113 at September 30, 2020 and December 31, 2020, respectively		457,996		438,378
Premises and equipment		13,397		13,743
Federal Home Loan Bank stock		3,704		4,177
Foreclosed assets held for sale, net		415		721
Core deposit intangible asset		597		710
Goodwill		682		682
Accrued interest receivable		2,206		2,901
Bank-owned life insurance		18,603		18,109
Other assets		5,835		4,322
Total assets	$	730,382	$	693,402

Liabilities and Stockholders’ Equity
Liabilities
Deposits
Demand	$	406,543	$	376,287
Savings		138,346		122,549
Time		63,619		80,699
Total deposits		608,508		579,535

Securities sold under repurchase agreements		18,280		12,705
Subordinated debentures		23,650		23,604
Interest payable and other liabilities		9,890		9,230
Total liabilities		660,328		625,074

Stockholders’ Equity
Preferred stock, no par value, authorized 2,000,000 shares; no shares issued		—		—
Common stock, $1 par value; authorized 10,000,000 shares; issued 2021 -6,056,351 shares, 2020 - 6,046,351 shares; outstanding 2021 - 5,806,840, 2020 - 5,791,853		6,056		6,046
Additional paid-in capital		23,513		23,166
Retained earnings		36,286		32,497
Stock held by deferred compensation plan; 2021 –169,918 shares, 2020 – 174,905 shares		(1,722)		(1,675)
Accumulated other comprehensive gain		6,910		9,283
Treasury stock, at cost 2021 –79,593 shares, 2020 – 79,593 shares		(989)		(989)
Total stockholders’ equity		70,054		68,328
Total liabilities and stockholders’ equity	$	730,382	$	693,402

See Notes to Condensed Consolidated Financial Statements

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United Bancorp, Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Interest and dividend income
Loans, including fees	$	5,171	$	5,379	$	15,175	$	16,646
Taxable securities		19		121		69		537
Non-taxable securities		987		1,164		3,181		3,660
Federal funds sold		37		6		68		39
Dividends on Federal Home Loan Bank stock and other		20		22		62		78
Total interest and dividend income		6,234		6,692		18,555		20,960
Interest expense
Deposits
Demand		73		168		240		1,296
Savings		3		7		14		30
Time		215		403		782		1,352
Borrowings		338		370		1,044		1,382
Total interest expense		629		948		2,080		4,060
Net interest income		5,605		5,744		16,475		16,900
(Credit) Provision for loan losses		(400)		1,333		(855)		3,304
Net interest income after provision for loan losses		6,005		4,411		17,330		13,596
Noninterest income
Service charges on deposit accounts		721		645		2,122		1,975
Realized gains on available-for-sale securities		1,250		1,344		1,250		2,594
Realized gains on sales of loans		54		47		218		93
Other income		262		304		765		878
Total noninterest income		2,287		2,340		4,355		5,540

Noninterest expense
Salaries and employee benefits		2,772		2,293		7,407		6,935
Net occupancy and equipment expense		566		612		1,740		1,827
Professional services		290		330		937		978
Insurance		135		128		394		358
Deposit insurance premiums		48		47		146		137
Franchise and other taxes		144		122		418		369
Advertising		113		119		338		337
Stationery and office supplies		23		35		74		87
Amortization of core deposit premium		38		38		113		113
Other expenses		813		768		2,374		2,340
Total noninterest expense		4,942		4,492		13,941		13,481
Income before federal income taxes		3,350		2,259		7,744		5,655

Federal income taxes		448		200		749		342
Net income	$	2,902	$	2,059	$	6,995	$	5,313

EARNINGS PER COMMON SHARE
Basic	$	0.50	$	0.36	$	1.21	$	0.93
Diluted	$	0.50	$	0.36	$	1.21	$	0.93
DIVIDENDS PER COMMON SHARE	$	0.1475	$	0.1425	$	0.5350	$	0.4275

See Notes to Condensed Consolidated Financial Statements

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United Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income	$	2,902	$	2,059	$	6,995	$	5,313

Reclassification adjustment for realized gains on available-for-sale securities included in net income, net of taxes $263, $282, $263 and $545 for each respective period		(987)		(1,062)		(987)		(2,049)
Unrealized holding (losses) gains on securities during the period, net of tax (benefits) of $(119), $91, $(368), and $1,628 for each respective period		(448)		341		(1,386)		6,126

Comprehensive income	$	1,467	$	1,338	$	4,622	$	9,390

See Notes to Condensed Consolidated Financial Statements

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United Bancorp, Inc.

Consolidated Statements of Stockholders’ Equity

Three and Nine Months Ended September 30, 2021 and 2020

(In thousands except per share data)

(Unaudited)


	Three Months Ended
					Treasury		Shares
			Additional		Stock and		Acquired				Other
	Common		Paid-in		Deferred		By		Retained		Comprehensive
	Stock		Capital		Compensation		ESOP		Earnings		Income (Loss)		Total
Balance, July 1, 2020	$	5,966		22,845		(2,555)		(84)		29,479		10,334		65,985
Net income		—		—		—		—		2,059		—		2,059
Other comprehensive income		—		—		—		—		—		(721)		(721)
Cash dividends - $0.1425 per share		—		—		—		—		(841)		—		(841)
Shares sold for deferred compensation plan		—		41		(41)		—		—		—		—
Expense related to share-based compensation plans		—		146		—		—		—		—		146
Restricted stock activity		10		(13)		—		—		—		—		(3)
Amortization of ESOP		—		41		—		25		—		—		66
Balance, September 30, 2020		5,976	$	23,060	$	(2,596)	$	(59)	$	30,697	$	9,613	$	66,691

Balance July 1, 2021		6,046		23,368		(2,660)				34,277		8,345		69,376
Net income		—		—		—		—		2,902		—		2,902
Other comprehensive (loss)		—		—		—		—		—		(1,435)		(1,435)
Cash dividends - $0.1475 per share		—		—		—		—		(893)		—		(893)
Shares sold for deferred compensation plan		—		51		(51)		—		—		—		—
Expense related to share-based compensation plans		—		104		—		—		—		—		104
Restricted stock activity		10		(10)		—		—		—		—		—

Balance, September 30, 2021	$	6,056	$	23,513	$	(2,711)	$	—	$	36,286	$	6,910	$	70,054


	Nine Months Ended
					Treasury		Shares
			Additional		Stock and		Acquired				Other
	Common		Paid-in		Deferred		By		Retained		Comprehensive
	Stock		Capital		Compensation		ESOP		Earnings		Income (Loss)		Total
Balance January 1, 2020		5,959		22,871		(2,121)		(228)		27,905		5,536		59,922
Net income		—		—		—		—		5,313		—		5,313
Other comprehensive income		—		—		—		—		—		4,077		4,077
Cash dividends - $0.4275 per share		—		—		—		—		(2,521)		—		(2,521)
Shares sold for deferred compensation plan		—		(51)		51		—		—		—		—
Repurchase of common stock		—		—		(526)		—		—		—		(526)
Expense related to share-based compensation plans		—		219		—		—		—		—		219
Restricted stock activity		17		(20)		—		—		—		—		(3)
Amortization of ESOP/Reclass		—		41		—		169		—		—		210
Balance, September 30, 2020	$	5,976	$	23,060	$	(2,596)	$	(59)	$	30,697	$	9,613	$	66,691

Balance January 1, 2021		6,046		23,166		(2,664)		—		32,497		9,283		68,328
Net income		—		—		—		—		6,995		—		6,995
Other comprehensive (loss)		—		—		—		—		—		(2,373)		(2,373)
Cash dividends - $0.5350 per share		—		—		—		—		(3,206)		—		(3,206)
Shares sold for deferred compensation plan		—		47		(47)		—		—		—		—
Expense related to share-based compensation plans		—		310		—		—		—		—		310
Restricted stock activity		10		(10)		—		—		—		—		—

Balance, September 30, 2021	$	6,056	$	23,513	$	(2,711)	$	—	$	36,286	$	6,910	$	70,054

See Notes to Condensed Consolidated Financial Statements

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United Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine months ended
	September 30,
	2021		2020
Operating Activities
Net income	$	6,995	$	5,313
Items not requiring (providing) cash
Accretion of premiums and discounts on securities, net		274		314
Amortization of intangible asset		113		113
Depreciation and amortization		861		875
Expense related to share based compensation plans		310		219
Expense related to ESOP		—		210
(Credit) Provision for loan losses		(855)		3,304
Increase in value of bank-owned life insurance		(334)		(356)
Gain on sale of loans		(218)		(93)
Proceeds from sale of loans held for sale		9,674		4,289
Originations of loans held for sale		(9,456)		(4,196)
Gain on sale or write down of foreclosed assets		(75)		(3)
Gain on sale of available-for-sale securities		(1,250)		(2,594)
Amortization of debt service costs		46		46
Net change in accrued interest receivable and other assets		(1,037)		(735)
Net change in accrued expenses and other liabilities		1,291		(185)

Net cash provided by operating activities		6,339		6,521

Investing Activities
Securities available for sale:
Maturities, prepayments and calls		20,774		28,908
Purchases		(11,400)		(22,602)
Proceeds from sale of available-for-sale securities		11,125		31,675
Net change in loans		(18,615)		(2,051)
(Purchase) redemption of Federal Home Loan Bank Stock		473		(240)
Purchase of Bank Owned Life insurance		(159)		(450)
Purchases of premises and equipment-net		(581)		(2,046)
Proceeds from sale of foreclosed assets		517		185

Net cash provided by investing activities		2,134		33,379

See Notes to Condensed Consolidated Financial Statements

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United Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(In thousands)

(Unaudited)


	Nine months ended
	September 30,
	2021		2020
Financing Activities
Net change in deposits	$	28,973	$	28,787
Net change in securities sold under repurchase agreements		5,575		10,112
Net change in FHLB overnight borrowings		—		(39,800)
Repurchase of common stock		—		(526)
Cash dividends paid on common stock		(3,206)		(2,521)
Net cash (used in) provided by financing activities		31,342		(3,948)

Increase in Cash and Cash Equivalents		39,815		35,952
Cash and Cash Equivalents, Beginning of Period		51,592		14,985

Cash and Cash Equivalents, End of Period	$	91,407	$	50,937

Supplemental Cash Flows Information
Interest paid on deposits and borrowings	$	2,380	$	3,613

Federal income taxes	$	200	$	480

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Transfers from loans to foreclosed assets held for sale	$	70	$	110

See Notes to Condensed Consolidated Financial Statements

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1: Summary of Significant Accounting Policies

These interim financial statements are prepared without audit and reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position of United Bancorp, Inc. (“Company”) at September 30, 2021, and its results of operations and cash flows for the interim periods presented. All such adjustments are normal and recurring in nature. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not purport to contain all the necessary financial disclosures required by accounting principles generally accepted in the United States of America that might otherwise be necessary in the circumstances and should be read in conjunction with the Company’s consolidated financial statements and related notes for the year ended December 31, 2020 included in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K. The results of operations for the three months and nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2020 has been derived from the audited consolidated balance sheet of the Company as of that date.

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, Unified Bank of Martins Ferry, Ohio (“the Bank”). All intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations

The Company’s revenues, operating income and assets are almost exclusively derived from banking. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Customers are mainly located in Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio and include a wide range of individuals, businesses and other organizations. Unified Bank conducts its business through its main office in Martins Ferry, Ohio and branches in Amesville, Bridgeport, Colerain, Dellroy, Dover, Glouster, Jewett, Lancaster Downtown, Lancaster East, Nelsonville, New Philadelphia, Powhatan, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg, Tiltonsville, Ohio and Moudsville, West Virginia.

The Company’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate and are not considered “sub prime” type loans. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Company can be significantly influenced by a number of environmental factors, such as governmental monetary and fiscal policies, that are outside of management’s control.

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, investment securities, as well as revenue related to our mortgage banking activities, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of non-interest income are as follows:

Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except residential and consumer loans, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company charges-off residential and consumer loans when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 120 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost- recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical charge-off experience by segment. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior five years. Management believes the five year historical loss experience methodology is appropriate in the current economic environment. Other adjustments (qualitative/environmental considerations) for each segment may be added to the allowance for each loan segment after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due based on the loan’s current payment status and the borrower’s financial condition including available sources of cash flows. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for non-homogenous type loans such as commercial, non-owner residential and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes the discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense.

The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral. In general, the Company acquires an updated appraisal upon identification of impairment and annually thereafter for commercial, commercial real estate and multi-family loans. If the most recent appraisal is over a year old, and a new appraisal is not performed, due to lack of comparable values or other reasons, the existing appraisal is utilized and discounted generally 10% - 35% based on the age of the appraisal, condition of the subject property, and overall economic conditions. After determining the collateral value as described, the fair value is calculated based on the determined collateral value less selling expenses. The potential for outdated appraisal values is considered in our determination of the allowance for loan losses through our analysis of various trends and conditions including the local economy, trends in charge-offs and delinquencies, etc. and the related qualitative adjustments assigned by the Company.

Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segment’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this scenario, the Company attempts to work-out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.

It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until six months of satisfactory borrower performance at which time management would consider its return to accrual status. If a loan was accruing at the time of restructuring, the Company reviews the loan to determine if it is appropriate to continue the accrual of interest on the restructured loan.

With regard to determination of the amount of the allowance for credit losses, trouble debt restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

Earnings per share (EPS) were computed as follows:


	Three Months Ended September 30, 2021
			Weighted-	Per
	Net		Average	Share
	Income		Shares	Amount
	(In thousands)
Net income	$	2,902
Less allocated earnings on non-vested restricted stock		(114)
Less allocated dividends on non-vested restricted stock		(49)
Net income allocated to common stockholders		2,739
			5,478,496
Basic and diluted earnings per share				$	0.50


	Three Months Ended September 30, 2020
			Weighted-
			Average	Per Share
	Net Income		Shares	Amount
	(In thousands)
Net income	$	2,059
Less allocated earnings on non-vested restricted stock		(52)
Less dividends on non-vested restricted stock		(36)
Net income allocated to common stockholders		1,971
			5,467,745
Basic and diluted earnings per share				$	0.36


	Nine Months Ended September 30, 2021
			Weighted-
			Average	Per Share
	Net Income		Shares	Amount
	(In thousands)
Net income	$	6,995
Less allocated earnings on non-vested restricted stock		(211)
Less allocated dividends on non-vested restricted stock		(173)
Net income allocated to common stockholders		6,612
			5,476,359
Basic and diluted earnings per share				$	1.21

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


	Nine Months Ended September 30, 2020
			Weighted-	Per
	Net		Average	Share
	Income		Shares	Amount
	(In thousands)
Net income	$	5,313
Less allocated earnings on non-vested restricted stock		(119)
Less dividends on non-vested restricted stock		(105)
Net income allocated to common stockholders		5,089
			5,465,854
Basic and diluted earnings per share				$	0.93

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2017.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security.

On October 16, 2019, FASB approved a final ASU delaying the effective date of ASU 2016-13 for small reporting companies to interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the impact of these amendments to the Company’s financial position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the amendments. The Allowance for Loan Losses (ALL) estimate is material to the Company and given the change from an incurred loss model to a methodology that considers the credit loss over the life of the loan, there is the potential for an increase in the ALL at adoption date. The Company is anticipating a significant change in the processes and procedures to calculate the ALL, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the current accounting policy and procedures for the other-than-temporary impairment on available-for-sale securities will be replaced with an allowance approach. The Company continues to run projections and now have multiple scenarios to consider and continues to review segmentation to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 3.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 2: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses of securities are as follows:


			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value

	(In thousands)
Available-for-sale Securities:
September 30, 2021:
Subordinated notes		15,900		76		(46)		15,930
State and municipal obligations		108,084		11,526		—		119,610

Total debt securities	$	123,984	$	11,602	$	(46)	$	135,540

Available-for-sale Securities:
December 31, 2020:
U.S. government agencies	$	10,000	$	53	$	—	$	10,053
Subordinated notes		4,500		6		(1)		4,505
State and municipal obligations	$	129,006	$	14,503	$	—	$	143,509

Total debt securities	$	143,506	$	14,562	$	(1)	$	158,067

The amortized cost and fair value of available-for-sale securities at September 30, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-sale
	Amortized		Fair
	Cost		Value

	(In thousands)
Within one year	$	—	$	—
One to five years		—		—
Five to ten year		13,150		13,185
Due after ten years		110,834		122,355

Totals	$	123,984	$	135,540

The carrying value of securities pledged to secure public deposits and for other purpose, was $63.8 million and $55.8 million at September 30, 2021 and December 31, 2020, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at September 30, 2021 and December 31, 2020, was $8.4 million and $1.0 million, which represented approximately 6% and less than 1%, respectively, of the Company’s available-for-sale investment portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary and are a result on an general increase in longer term interest rates.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2021 and December 31, 2020:


	September 30, 2021
	Less than 12 Months				12 Months or More				Total
Description of			Unrealized				Unrealized				Unrealized
Securities	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(In thousands)
Subordinated notes		8,354		(46)		—		—		8,354		(46)
State and municipal obligations	$	—	$	—	$	—	$	—	$	—	$	—
Total temporarily impaired securities	$	8,354	$	(46)	$	—	$	—	$	8,354	$	(46)


	December 31, 2020
	Less than 12 Months				12 Months or More				Total
Description of	Fair		Unrealized				Unrealized		Fair		Unrealized
Securities	Value		Losses		Fair Value		Losses		Value		Losses

	(In thousands)
Subordinated notes		—		—		1,000		(1)		1,000		(1)
State and municipal obligations	$	—	$	—	$	—	$	—	$	—	$	—
Total temporarily impaired securities	$	—	$	—	$	1,000	$	(1)	$	1,000	$	(1)

The unrealized losses on the Company’s subordinated notes were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2021 and December 31, 2020.

During the nine months ended September 30, 2021 the Company sold $11.1 million of State and Municipal securities for a total gain of approximately $1,250,000. During the nine months ended September 30, 2020 the Company sold $23.7 million of State and Municipal securities for a total gain of approximately $2,525,000 and the Company also sold $8.0 million of US Government Agency bonds for a total gain of approximately $69,000.

Note 3: Loans and Allowance for Loan Losses

Categories of loans include:


	September 30,		December 31,
	2021		2020

	(In thousands)
Commercial loans	$	99,880	$	103,277
Commercial real estate		266,023		246,167
Residential real estate		89,280		85,789
Installment loans		6,936		8,258

Total gross loans		462,119		443,491

Less allowance for loan losses		(4,123)		(5,113)

Total loans	$	457,996	$	438,378

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial Real Estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans.

Residential and Installment

Residential and installment loans consist of two segments - residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles. Some installment personal loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and nine month periods ended September 30, 2021



			Commercial
	Commercial		Real Estate		Residential		Installment		Total

	(In thousands)
Allowance for loan losses:

Balance, July 1, 2021	$	1,140	$	1,710	$	1,353	$	339	$	4,542
Provision (credit) charged to expense		(249)		(155)		(34)		38		(400)
Losses charged off		—						(31)		(31)
Recoveries		3		—		—		9		12

Balance, September 30, 2021	$	894	$	1,555	$	1,319	$	355	$	4,123

Balance, January 1, 2021	$	1,397	$	1,821	$	1,471	$	424	$	5,113
Provision (credit) charged to expense		(428)		(266)		(133)		(28)		(855)
Losses charged off		(78)		—		(26)		(69)		(173)
Recoveries		3		—		7		28		38

Balance, September 30, 2021	$	894	$	1,555	$	1,319	$	355	$	4,123

Allocation:

Ending balance: individually evaluated for impairment	$	—	$	85	$	—	$	—	$	85
Ending balance: collectively evaluated for impairment	$	894	$	1,470	$	1,319	$	355	$	4,038

Loans:

Ending balance: individually evaluated for impairment	$	—	$	2,640	$	—	$	—	$	2,640
Ending balance: collectively evaluated for impairment	$	99,880	$	263,383	$	89,280	$	6,936	$	459,479

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and nine month period ended September 30, 2020


					Residential
			Commercial		Real
	Commercial		Real Estate		Estate		Installment		Total

	(In thousands)
Allowance for loan losses:

Balance, July 1, 2020	$	2,344	$	751	$	600	$	320	$	4,015
Provision charged to expense		(1,031)		1,202		988		174		1,333
Losses charged off		(5)		(63)		(21)		(55)		(144)
Recoveries		13		—		1		10		24

Balance, September 30, 2020	$	1,321	$	1,890	$	1,568	$	449	$	5,228

Balance, January 1, 2020	$	568	$	792	$	572	$	299	$	2,231
Provision charged to expense		777		1,288		1,027		212		3,304
Losses charged off		(47)		(190)		(33)		(115)		(385)
Recoveries		23		—		2		53		78

Balance, September 30, 2020	$	1,321	$	1,890	$	1,568	$	449	$	5,228

Allocation:

Ending balance: individually evaluated for impairment	$	4	$	21	$	—	$	—	$	25
Ending balance: collectively evaluated for impairment	$	1,317	$	1,869	$	1,568	$	449	$	5,203

Loans:

Ending balance: individually evaluated for impairment	$	22	$	614	$	525	$	134	$	1,295
Ending balance: collectively evaluated for impairment	$	100,438	$	244,729	$	88,093	$	8,721	$	441,981

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2020


			Commercial
	Commercial		Real Estate		Residential		Installment		Total

	(In thousands)
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1	$	––	$	––	$	1
Ending balance: collectively evaluated for impairment	$	1,397	$	1,820	$	1,471	$	424	$	5,112

Loans:
Ending balance: individually evaluated for impairment	$	80	$	182	$	114	$	—	$	376
Ending balance: collectively evaluated for impairment	$	103,197	$	245,985	$	85,675	$	8,258	$	443,115

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following tables show the portfolio quality indicators.


	September 30, 2021
			Commercial
Loan Class	Commercial		Real Estate		Residential		Installment		Total

	(In thousands)
Pass Grade	$	99,880	$	263,166	$	89,280	$	6,936	$	459,262
Special Mention		—		217		—		—		217
Substandard		—		2,640		—		—		2,640
Doubtful		—		—		—		—		—

	$	99,880	$	266,023	$	89,280	$	6,936	$	462,119


	December 31, 2020
			Commercial
Loan Class	Commercial		Real Estate		Residential		Installment		Total

	(In thousands)
Pass Grade	$	103,181	$	239,862	$	85,675	$	8,258	$	436,976
Special Mention		15		3,422		—		—		3,437
Substandard		81		2,883		114		—		3,078
Doubtful		—		—		—		—		—

	$	103,277	$	246,167	$	85,789	$	8,258	$	443,491

To facilitate the monitoring of credit quality within the loan portfolio, and for purposes of analyzing historical loss rates used in the determination of the ALLL, the Company utilizes the following categories of credit grades: pass, special mention, substandard, and doubtful. The four categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass ratings, which are assigned to those borrowers that do not have identified potential or well defined weaknesses and for which there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on at least a quarterly basis.

The Company assigns a special mention rating to loans that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or the Company’s credit position.

The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans have well defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies noted are not addressed and corrected.

The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the current and past year to date periods presented.

Loan Portfolio Aging Analysis

As of September 30, 2021


	30-59 Days		60‑89 Days		Greater
	Past Due		Past Due		Than 90				Total Past
	and		and		Days and		Non		Due and				Total Loans
	Accruing		Accruing		Accruing		Accrual		Non Accrual		Current		Receivable

	(In thousands)
Commercial	$	—	$	—	$	—	$	—	$	—	$	99,880	$	99,880
Commercial real estate		—		38		—		2,591		2,629		263,394		266,023
Residential		101		79		—		279		459		88,821		89,280
Installment		4		—		—		—		4		6,932		6,936

Total	$	105	$	117	$	—	$	2,870	$	3,092	$	459,027	$	462,119

Loan Portfolio Aging Analysis

As of December 31, 2020


	30‑59 Days		60‑89 Days		Greater
	Past Due		Past Due		Than 90				Total Past
	and		and		Days and		Non		Due and				Total Loans
	Accruing		Accruing		Accruing		Accrual		Non Accrual		Current		Receivable

	(In thousands)
Commercial	$	—	$	—	$	—	$	83	$	83	$	103,194	$	103,277
Commercial real estate		—		—		—		98		98		246,069		246,167
Residential		120		59		—		445		624		85,165		85,789
Installment		7		20		—		—		27		8,231		8,258

Total	$	127	$	79	$	—	$	626	$	832	$	442,659	$	443,491

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Impaired Loans


							For the three months ended				For the nine months ended
		As of September 30, 2021					September 30, 2021				September 30, 2021
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Specific		Investment in		Income		Investment in		Income
	Balance		Balance		Allowance		Impaired Loans		Recognized		Impaired Loans		Recognized

	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	—	$	—	$	—	$	—	$	2	$	156	$	3
Commercial real estate		151		151		—		158		—		—		—
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		151		151		—		158		2		156		3
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		—
Commercial real estate		2,489		2,489		85		2,489		—		2,489		—
Residential		—		—		—		—		—		—		––
Installment		––		––		––		––		—		—		—
		2,489		2,489		85		2,489		—		2,489		—
Total:
Commercial	$	—	$	—	$	—	$	—	$	2	$	—	$	—
Commercial real estate	$	2,640	$	2,640	$	85	$	85	$	—	$	2,645	$	3
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Impaired Loans


							For the three months ended				For the nine months ended
		As of December 31, 2020					September 30, 2020				September 30, 2020
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Specific		Investment in		Income		Investment in		Income
	Balance		Balance		Allowance		Impaired Loans		Recognized		Impaired Loans		Recognized

	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	80	$	80	$	—	$	—	$	(5)	$	—	$	1
Commercial real estate		110		196		—		593		9		589		14
Residential		114		121		—		525		7		493		21
Installment		—		14		—		150		1		151		5
		304		411		—		1,268		12		1,233		41
Loans with a specific valuation allowance:
Commercial		—		—		—		23		—		24		1
Commercial real estate		72		72		1		92		3		92		3
Residential		––		—		—		—		––		—		—
Installment		––		—		—		––		––		––		—
		72		72		1		115		3		116		4
Total:
Commercial	$	80	$	80	$	—	$	23	$	(5)	$	24	$	2
Commercial real estate	$	182	$	268	$	1	$	685	$	12	$	681	$	17
Residential	$	114	$	121	$	—	$	525	$	7	$	493	$	21
Installment	$	—	$	14	$	—	$	150	$	1	$	151	$	5

Interest income recognized on a cash basis was not materiality different than interest income recognized.

For the TDRs noted in the tables below, the Company extended the maturity dates and granted interest rate concessions as part of each of those loan restructurings. The loans included in the tables are considered impaired and specific loss calculations are performed on the individual loans. In conjunction with the restructuring there were no amounts charged-off.


	Three Months ended September 30, 2021
		Pre- Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Contracts	Investment		Investment

	(In thousands)
Commercial	—	$	—	$	—
Commercial real estate	—		—		—
Residential	—		—		—
Installment	—		—		—

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Three Months Ended September 30, 2021

Interest

Total

Only

Term

Combination

Modification

(In thousands)

Commercial

—

Commercial real estate

—

Residential

—

Consumer

—


	Nine Months ended September 30, 2021
		Pre- Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Contracts	Investment		Investment

	(In thousands)
Commercial	—	$	—	$	—
Commercial real estate	—		—		—
Residential	—		—		—
Installment	—		—		—

Nine Months Ended September 30, 2021

Interest

Total

Only

Term

Combination

Modification

(In thousands)

Commercial

—

Commercial real estate

—

Residential

—

Consumer

—


	Three Months ended September 30, 2020
		Pre- Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Contracts	Investment		Investment

	(In thousands)
Commercial	––	$	––	$	––
Commercial real estate	––		––		––
Residential	––		––		––
Installment	––		––		––

Three Months Ended September 30, 2020

Interest

Total

Only

Term

Combination

Modification

(In thousands)

Commercial

—

––

—

––

Commercial real estate

––

Residential

––

Consumer

––

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


	Nine Months ended September 30, 2020
		Pre- Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
	Contracts	Investment		Investment

	(In thousands)
Commercial	3	$	67	$	67
Commercial real estate	1		86		86
Residential	––		––		––
Installment	––		––		––

Nine Months Ended September 30, 2020

Interest

Total

Only

Term

Combination

Modification

(In thousands)

Commercial

––

Commercial real estate

––

Residential

––

Consumer

––

During the nine months ended September 30, 2021 and 2020 troubled debt restructurings did not have an impact on the allowance for loan losses. At September 30, 2021 and 2020 and for three and nine month periods then ended, there were no defaults of any troubled debt restructurings that were modified in the last 12 months. The Company generally considers TDR’s that become 90 days or more past due under the modified terms as subsequently defaulted.

Note 4: Benefit Plans

Pension expense includes the following:


	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020

	(In thousands)
Service cost	$	132	$	98	$	396	$	294
Interest cost		60		59		180		177
Expected return on assets		(122)		(117)		(366)		(351)
Amortization of prior service cost and net loss		45		13		135		39

Pension expense	$	115	$	53	$	345	$	159

Note 5: Off-balance-sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contracts are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:


	September 30,		December 31,
	2021		2020

	(In thousands)
Commercial loans unused lines of credit	$	58,538	$	49,384
Commitment to originate loans		57,505		49,035
Consumer open end lines of credit		37,311		39,559
Standby lines of credit		127		22

Note 6: Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), included in stockholders’ equity, are as follows:


	September 30,		December 31,
	2021		2020

	(In thousands)
Net unrealized gain on securities available-for-sale	$	11,556	$	14,561
Net unrealized loss for unfunded status of defined benefit plan liability		(2,810)		(2,810)

		8,746		11,751
Tax effect		(1,836)		(2,468)

Net-of-tax amount	$	6,910	$	9,283

Note 7: Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company also utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2021 and December 31, 2020:


			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2021
State and municipal obligations	$	119,610	$	—	$	119,610	$	—
Subordinated notes	$	15,930	$	—	$	15,930	$	—

December 31, 2020
U.S. government agencies	$	10,053	$	—	$	10,053	$	—
State and municipal obligations	$	143,509	$	—	$	143,509	$	—
Subordinated notes	$	4,505	$	—	$	4,505	$	—

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent)

Collateral dependent impaired loans consisted primarily of loans secured by nonresidential real estate. Management has determined fair value measurements on impaired loans primarily through evaluations of appraisals performed. Due to the nature of the valuation inputs, impaired loans are classified within Level 3 of the hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the Company’s Chief Lender by comparison to historical results.

Foreclosed Assets Held for Sale

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value (based on current appraised value) at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Management has determined fair value measurements on other real estate owned primarily through evaluations of appraisals performed, and current and past offers. Due to the nature of the valuation inputs, foreclosed assets held for sale are classified within Level 3 of the hierarchy.

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Appraisals of foreclosed assets held for sale are obtained when the real estate is acquired and subsequently as deemed necessary by the Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender and are selected from the list of approved appraisers maintained by management.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2021 and December 31, 2020.


			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)

	(In thousands)
September 30, 2021
Collateral dependent impaired loans	$	2,404	$	—	$	—	$	2,404
Foreclosed assets held for sale		—		—		—		—

December 31, 2020
Collateral dependent impaired loans	$	71	$	—	$	—	$	71
Foreclosed assets held for sale		—		—		—		—

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.


	Fair Value at		Valuation	Unobservable
	9/30/21		Technique	Inputs	Range

	(In thousands)
Collateral-dependent impaired loans	$	2,404	Market comparable properties	Marketability discount	10% – 25%

Foreclosed assets held for sale	$	—	Market comparable properties	Marketability discount	10% – 35%


	Fair Value at		Valuation	Unobservable
	12/31/20		Technique	Inputs	Range

	(In thousands)
Collateral-dependent impaired loans	$	71	Market comparable properties	Comparability adjustments	5% – 10%

Foreclosed assets held for sale	$	—	Market comparable properties	Marketability discount	10% – 35%

There were no significant changes in the valuation techniques used during 2021 and 2020.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.


			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)

	(In thousands)
September 30, 2021

Financial assets
Cash and cash equivalents	$	91,407	$	91,407	$	—	$	—
Loans, net of allowance		457,996		—		—		463,636
Federal Home Loan Bank stock		3,704		—		3,707		—
Accrued interest receivable		2,206		—		2,206		—

Financial liabilities
Deposits		608,508		—		608,460		—
Short term borrowings		18,280		—		18,280		—
Subordinated debentures		23,650		—		24,211		—
Interest payable		524				524		—

Fair Value Measurements Using

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Carrying

Assets

Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

(In thousands)

December 31, 2020:

Financial assets

Cash and cash equivalents

51,592

––

Loans, net of allowance

438,378

––

436,893

Federal Home Loan Bank stock

4,177

––

4,177

––

Accrued interest receivable

2,901

––

2,901

––

Financial liabilities

Deposits

579,535

––

580,130

––

Short term borrowings

12,705

––

12,705

––

Federal Home Loan Bank Advances

––

Subordinated debentures

23,604

––

21,989

––

Interest payable

224

––

224

––

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

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United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Cash and Cash Equivalents, Accrued Interest Receivable and Federal Home Loan Bank Stock

The carrying amounts approximate fair value.

Loans

Fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Interest Payable

The carrying amount approximates fair value.

Short-term Borrowings, Federal Home Loan Bank Advances and Subordinated Debentures

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Commitments to Originate Loans, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. Fair values of commitments were not material at September 30, 2021 and December 31, 2020.

Note 8: Repurchase Agreements

Securities sold under agreements to repurchase (“repurchase agreements”) with customers represent funds deposited by customers, generally on an overnight basis that are collateralized by investment securities owned by the Company.

At September 30, 2021 and December 31, 2020, repurchase agreement borrowings totaled $18,280,000 and $12,705,000, respectively and are included in short-term borrowings on the consolidated condensed balance sheets. All repurchase agreements are subject to term and conditions of repurchase/security agreements between the Company and the customer and are accounted for as secured borrowings. The Company’s repurchase agreements reflected in short-term borrowings, consist of customer accounts and securities which are pledged on an individual security basis.

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

Remaining Contractual Maturity of the Agreement

(In thousands)


	Overnight and						Greater than
September 30, 2021	Continuous		Up to 30 Days		30‑90 Days		90 Days		Total
Repurchase Agreements
U.S. government agencies	$	18,280	$	—	$	—	$	—	$	18,280
Total	$	18,280	$	—	$	—	$	—	$	18,280


	Overnight and						Greater than
December 31, 2020	Continuous		Up to 30 Days		30‑90 Days		90 Days		Total
Repurchase Agreements
U.S. government agencies	$	12,705	$	—	$	—	$	—	$	12,705
Total	$	12,705	$	—	$	—	$	—	$	12,705

These borrowings were collateralized with U.S. government and agency securities with a carrying value of $37.0 million at September 30, 2021 and $30.1 million at December 31, 2020. Declines in the fair value would require the Company to pledge additional securities.

Note 9: Goodwill and Intangible Assets

The following table shows the changes in the carrying amount of goodwill for September 30, 2021 and December 31, 2020 (in thousands):


	September 30,		December 31,
	2021		2020
Balance beginning of year	$	682	$	682
Additions from acquisition		—		—
Balance, end of period	$	682	$	682

Intangible assets in the consolidated balance sheets at September 30, 2021 and December 31, 2020 were as follows (in thousands):

Nine Months Ended September 30, 2021

Year Ended December 31, 2020

Gross

Intangible

Accumulated

Net Intangible

Intangible

Accumulated

Net Intangible

Assets

Amortization

Assets

Amortization

Assets

Core deposit intangibles

1,041

444

597

1,041

331

710

The estimated aggregate future amortization expense for each of the next five years for intangible assets remaining as of September 30, 2021 is as follows (in thousands):


2021	$	37
2022		150
2023		150
2024		150
2025		110

Table of Contents

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

At each reporting date between annual goodwill impairment tests, the Company considers potential indicators of impairment. Given the current economic uncertainty and volatility surrounding COVID-19, the Company assessed whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered comprised the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting unit; performance of the Company’s stock and other relevant events. The Company further considered the amount by which fair value exceeded book value in the most recent quantitative analysis and sensitivities performed. At the conclusion of the assessment, the Company determined that as of September 30, 2021 it was more likely than not that the fair value exceeded its carrying values. The Company will continue to monitor developments regarding the COVID-19 pandemic and measures implemented in response to the pandemic, market capitalization, overall economic conditions and any other triggering events or circumstances that may indicate an impairment of goodwill in the future.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discusses the financial condition of the Company as of September 30, 2021, as compared to December 31, 2020, and the results of operations for the three and nine months ended September 30, 2021, compared to the same period in 2020. This discussion should be read in conjunction with the interim condensed consolidated financial statements and related footnotes included herein.

Introduction

United Bancorp, Inc. (NASDAQ: UBCP) reported diluted earnings per share of $0.50 for the three months ended September 30, 2021, an increase of $0.14 per share, or 39%, over the previous year. For the first nine months of the current year, UBCP reported diluted earnings per share of $1.21, an increase of 30%, and net income of $6,995,000, an increase of 32%, over the previous year, which are record levels for the Company.

Even though our economy continues on its road to full recovery from the impact of the events that have occurred over the course of the past year and a half, we are extremely pleased to report on our earnings performance for the third quarter and first nine months of 2021. For the quarter ending September 30, 2021, our Company achieved net income of $2,902,000 and diluted earnings per share of $0.50, which was an increase of $843,000, or 41%, and $0.14, or 39%, respectively over the previous year. For the nine months ended September 30, 2021, our Company produced net income of $6,995,000 and diluted earnings per share of $1.21, which was a respective increase of $1,682,000, or 32%, and $0.28, or 30%, over the previous year. We are exceedingly proud to report these earnings levels, which reflect record performance for our Company for the quarter and the first nine months. Our Company achieved this level of earnings performance even though we only saw marginal growth in our loans outstanding and a fairly substantial decline in our securities portfolio balance. As of September 30, 2021, gross loans were $462.1 million, which was an increase of $18.8 million, or 4.3%, over the previous year. In addition, securities and other restricted stock was $139.2 million, which was a decrease of $23.3 million, or 14.3%, from the previous year. The marginal growth of our loan portfolio is highly reflective of the limited lending opportunities with which our industry is confronted due to the lingering effect of and economic challenges created by the COVID-19 pandemic. Our loan growth is in-line with (or, even above) the average loan growth achieved by our peer. The decline in our securities and other restricted stock is primarily related to some calls and prepayments on various securities that we hold within our investment portfolio along with the sale of approximately $32.0 million in agency and municipal investment securities, which produced significant gains for our Company in the first three quarters of last year. Management firmly believes that taking advantage of gain opportunities in our securities portfolio last year was a prudent action to take under the uncertain circumstances in which we operated, which helped to fortify our loan loss reserve and protect our bottom line net income during this most uncertain time. In the most recently ended quarter, we preemptively harvested some additional gains within our securities portfolio to take advantage of the opportunity still available and to better prepare for the potential of rising rates in the near term. Considering our marginal loan growth and the decline in our securities and other restricted stock (along with declining rates that we have experienced within the past eighteen months), our level of both interest income and loan fees generated in the current year have declined from the levels earned the previous year. As of September 30, 2021, total interest income, including loan fees, was down $2.40 million, or 11.5%, from the previous year. We are optimistic that as our economy starts to more fully recover and as rates potentially rise in the near term, we will have better opportunities to leverage our securities portfolio more in-line with our previous level and ramp-up our loan production to levels at which we are more historically accustomed; therefore, increasing our level of higher yielding earning assets and generating more interest and loan fee income.

As we have previously disclosed, our Company was properly positioned from a liability-sensitivity perspective to benefit from the rapid decline in interest rates last year. Even though we saw a significant inflow of retail funding over the course of the past eighteen months, we were able to lower our interest expense levels to help mitigate the decline in the level of net interest income that our Company achieved in this highly volatile environment. As of September 30, 2021, total deposits increased $31.7 million or 5.5%. We saw low cost retail funding, consisting of demand and savings balances, increase by $57.6 million, or 11.8%, while our higher-cost time deposit balances declined by $26.0 million or 29.0%. Even with the overall increase in our total deposits, we were able to reduce total interest expense by $2.0 million, or 48.8%, for the first nine months of the current year as compared to last year. While we were able to substantially reduce total interest expense, our Company still experienced an overall decrease in the level of net interest income that it realized of $425,000, which is a decline of 2.5% from the first nine months of the previous year. Even with this decline in our net interest income, our net interest margin only decreased by one basis point (1bp) on a year-over-year basis to a level of 3.57%, which compares very favorably to peer. We are optimistic that our Company will achieve higher levels of net interest income, as previously mentioned, as our economy more fully recovers; potentially in the near term.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We have successfully maintained overall strength and stability within our loan portfolio over the course of the pandemic and this trend continues for our Company. We have very solid credit quality-related metrics supported by a relatively low level of nonaccrual loans and loans past due 30 plus days, which were $3.1 million, or 0.67% of total loans as of September 30, 2021, compared to $1.7 million, or 0.37%, the previous year. This slight increase in the current year is attributed to one hospitality-related loan that went on non-accrual status during the first quarter of this year with a balance of approximately $2.5 million for which we allocated a portion to specific reserves. We are very happy to report that this loan paid off after the end of the most recently ended quarter and will not be in our totals next quarter. With the exception of this one-off situation, our overall nonaccrual loans and loans past due 30 plus days have declined over the course of the past twelve months. Further, net loans charged off for the nine months ended September 30, 2021, excluding overdrafts, was $91,000, or 0.03% annualized. Giving strong consideration to our overall solid credit quality-related metrics and the improving economy, our Company had credit reserve releases of $400,000 during the third quarter of 2021. Even with this aforementioned release, our total allowance for loan losses to total loans was 0.89% as of the most recently ended quarter. At this level, our total allowance for loan losses to nonaccrual loans was a solid 143.7%. Barring any other credits deteriorating in the current quarter, our coverage ratio should be even stronger next quarter-end with the recent, post-third quarter end payoff of the hospitality-related loan that was previously mentioned. Our Company continues to be very well capitalized with equity to assets as of the most recent quarter end of 9.59% and total shareholders’ equity of $70.1 million, an increase of $3.4 million, or 5.0%, over the previous year.

As our Company continues to operate within an unsettled economic environment, management is extremely proud of the record level of earnings that the Company achieved for the third quarter and over the course of the first nine months of 2021. Even though we achieved record earnings performance, our Company’s growth in quality, higher-yielding assets has been restrained by the ongoing uncertainty that permeates our economy. With this challenge, we continue to experience limited growth in in our loans outstanding and declines in our securities portfolio as well as, a substantial build-up of our cash balances at the Federal Reserve Bank (FRB) due to the inflow of stimulus-related, retail-based funding that came onto our balance sheet over the course of the past eighteen months and continues to largely remain. This dynamic has led to a marginal year-over-year decline in our net interest income. Even with this decline, our net interest margin has remained relatively stable on a year-over-year basis as of September 30, 2021. With this reality, we are exceedingly happy to be performing at a high level and achieving an annualized return on assets of 1.31% and return on equity of 13.31% for the first nine months of the current year. We continue to be relieved to see the ongoing recovery of our economy; albeit, at a slower rate than anticipated during the most recently ended quarter due to a few set-backs that impacted our recovery relative to the first two quarters of this year. Although things remain somewhat uncertain relating to our economy, we are optimistic that the recovery thereof will continue and allow us to leverage some of our lower-yielding, highly liquid overnight investments into higher-yielding, quality loan and securities investments in the coming quarters. Achieving this should stabilize and improve the level of interest income that we generate and our overall “core” earnings. On a “non-core” basis, we anticipate being able to continue releasing tranches of our allowance for loan losses in future periods if our credit quality remains sound. Quite simply, the extraordinary pandemic-related circumstances last year that led to the loan loss reserve build up have, so far, not led to any material deterioration of our credit quality or an increase in loan-related losses. Such action should further enhance our bottom line performance.

As always, our primary focus is protecting the investment of our shareholders in our Company and rewarding them at a high level by growing their value and paying an attractive cash dividend. Accordingly, we remained focused on being an efficient, productive and profitable company that is well capitalized. In these areas, our shareholders have been nicely rewarded with a year-over-year increase in the cash dividends paid of $0.1075, or 25.0%, (inclusive of a special cash dividend of $0.10 paid in the first quarter of this year), and a market value increase of $1.74, or 13.85%, to a level of $14.30 as of September 30, 2021. These past eighteen months have been very challenging ones for our Company. But, these challenges have made us a more fundamentally sound company with a focus on the potential of the future. Focusing internally, we have improved many of our processes over the course of the past year, which has led to (or, will lead to) various efficiency gains and optimization of our delivery. We have eliminated unnecessary expenses while spending money on our technological infrastructure, so that we can more effectively compete within our industry by delivering our services in a manner that is demanded by the markets that we proudly serve. Relating to cost containment, this year we have closed our Loan Production Office in Wheeling, West Virginia. In addition, we just recently effected the closure of our Dillonvale, Ohio banking center, which was consolidated into two other banking centers located within close proximity of this market. Each of these events have had minimal customer impact and will create cost savings that we anticipate seeing more fully in the coming year. Although the pandemic and related economic slowdown took us off our course of growth, we still have our sights set on becoming a $1.0 billion community banking organization in order to be at a scale to achieve additional operating efficiencies, greater profitability and, most importantly, a higher market capitalization which will lead to more opportunities for our Company. We can only realize this vision by having robust organic growth and capitalizing on acquisition-related opportunities for which our Company is strongly positioned at present. With the

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

current rebound that our economy is experiencing, we firmly believe that we will have quality chances in each of these areas on which our Company can capitalize.

Forward-Looking Statements

This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words and phrases such as optimistic that, expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the Ohio Division of Financial Institutions, Federal Reserve, FDIC, and CFPB; potential adverse reactions or changes to business or employee relationships; and other factors that may affect the future results of the Company.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. The Company does not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Critical Accounting Policies

Management makes certain judgments that affect the amounts reported in the financial statements and footnotes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements, and as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The procedures for assessing the adequacy of the allowance for loan losses reflect our evaluation of credit risk after careful consideration of all information available to management. In developing this assessment, management must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown such as economic factors, developments affecting companies in specific industries and issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

The allowance is regularly reviewed by management and the board to determine whether the amount is considered adequate to absorb probable losses. This evaluation includes specific loss estimates on certain individually reviewed loans, statistical loss estimates for loan pools that are based on historical loss experience, and general loss estimates that are based on the size, quality and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay and current economic and industry conditions. Also, considered as part of that judgment, is a review of the Bank’s trend in delinquencies and loan losses, and economic factors.

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable loan losses inherent in the loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on management’s current judgment about the credit quality of the loan portfolio. While the Company strives to reflect all known risk factors in its evaluation, judgment errors may occur.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Analysis of Financial Condition

Earning Assets – Loans

Our focus as a community bank is to meet the credit needs of the markets we serve. At September 30, 2021, gross loans were $462.1 million, compared to $443.5 million at December 31, 2020, an increase of $18.6 million after offsetting repayments for the period. The overall increase in the loan portfolio was comprised of a $16.5 million increase in commercial and commercial real estate loans, a $3.5 million increase in residential loans and a $1.4 million decrease in installment loans since December 31, 2020.

Commercial and commercial real estate loans comprised 79.2% of total loans at September 30, 2021, compared to 78.8% at December 31, 2020. Commercial and commercial real estate loans have increased $16.5 million, or 4.71%, since December 31, 2020. This segment of the loan portfolio includes originated loans in our market areas and purchased participations in loans from other banks.

Installment loans represented 1.5% of total loans at September 30, 2021 and 1.7% at December 31, 2020. Some of the installment loans carry somewhat more risk than real estate lending; however, it also provides for higher yields. Installment loans have decreased $1.4 million, or 16.0%, since December 31, 2020. The targeted lending areas encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s banking locations.

Residential real estate loans were 19.3% of total loans at September 30, 2021 and 19.5% at December 31, 2020, representing an increase of $3.5 million, or 4.1% since December 31, 2020. At September 30, 2021, the Company did not hold any loans for sale.

The allowance for loan losses totaled $4.1 million at September 30, 2021, which represented 0.89% of total loans, and $5.1 million at December 31, 2020, or 1.15% of total loans. The allowance represents the amount which management and the Board of Directors estimates is adequate to provide for probable losses inherent in the loan portfolio. The allowance balance and the provision charged to expense are reviewed by management and the Board of Directors monthly using a risk evaluation model that considers borrowers’ past due experience, economic conditions and various other circumstances that are subject to change over time. For the three and nine months ended September 30, 2021, Management did update its model to account for the recent market conditions brought on by the COVID-19 pandemic. Management believes the current balance of the allowance for loan losses is adequate to absorb probable incurred credit losses associated with the loan portfolio. The Company had (excluding overdrafts) net charge-offs of $91,000 for the nine months ended September 30, 2021 compared to $266,000 for the nine months ended September 30, 2020.

Earning Assets – Securities

The securities portfolio is comprised of tax-exempt obligations of state and political subdivisions and certain other investments. Securities available for sale at September 30, 2021 decreased approximately $22.5 million from December 31, 2020 totals.

Sources of Funds – Deposits

The Company’s primary source of funds is core deposits from retail and business customers. These core deposits include all categories of interest-bearing and noninterest-bearing deposits, excluding certificates of deposit greater than $250,000. For the period ended September 30, 2021, total core deposits increased approximately $31.1 million or 5.4%. The Company’s savings accounts increased $15.8 million, or 12.9%, from December 31, 2020 totals. The Company’s interest-bearing and non-interest bearing demand deposits increased $30.3 million, or 8.0%, while certificates of deposit under $250,000 decreased by $15.0 million, or 20.5%. The Company considers core deposit to be stable; therefore, the amount of funds anticipated to flow out in the next three to six months is not considered material to the overall liquidity position of the Company.

The Company has a strong deposit base from public agencies, including local school districts, city and township municipalities, public works facilities and others that may tend to be more seasonal in nature resulting from the receipt and disbursement of state and federal grants. These entities have maintained fairly static balances with the Company due to various funding and disbursement timeframes.

Certificates of deposit greater than $250,000 are not considered part of core deposits and, as such, are used to balance rate sensitivity as a tool of funds management. At September 30, 2021, certificates of deposit greater than $250,000 decreased $2.1 million or 27.8%, from December 31, 2020 totals.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Sources of Funds – Long Term Debt

During the second quarter of 2019 the Company announced a private placement of $20 million in fixed-to-floating rate subordinated notes due 2029 (the “Notes”). The Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines, and the proceeds from the sale of the Notes are being utilized to support regulatory capital ratios and for general corporate purposes, including growth initiatives at Unified Bank.

Sources of Funds – Securities Sold under Agreements to Repurchase and Other Borrowings

Other interest-bearing liabilities include securities sold under agreements to repurchase and Federal Home Loan Bank (“FHLB”) advances. The majority of the Company’s repurchase agreements are with local school districts and city and county governments. The Company’s short-term borrowings increased approximately $5.6 million from December 31, 2020 totals.

Results of Operations for the Nine Months Ended September 30, 2021 and 2020

Net Income

For the nine months ended September 30, 2021 the Company reported net earnings of $6,995,000, compared to $5,313,000 for the nine months ended September 30, 2020. On a per share basis, the Company’s diluted earnings were $1.21 for the nine months ended September 30, 2021, as compared to $0.93 for the nine months ended September 30, 2020 an increase of 30.1%.

Net Interest Income

Net interest income, by definition, is the difference between interest income generated on interest-earning assets and the interest expense incurred on interest-bearing liabilities. Various factors contribute to changes in net interest income, including volumes, interest rates and the composition or mix of interest-earning assets in relation to interest-bearing liabilities. Net interest income before provision for loan losses decreased 2.5%, or $425,000 for the nine months ended September 30, 2021 compared to the same period in 2020.

Provision for Loan Losses

Net loans charged off, excluding overdrafts, was $91,000, or 0.01% annualized. Giving strong consideration to our overall solid credit related metrics and the improving economy, our Company had a credit reserve releases of $855,000 during the nine months ended September 30, 2021.The overall improvement in the economy also contributed to the credit reserve release. The impact of COVID-19 on the economy will directly impact the Company’s provision (credit) for loan losses for the remainder of the year. The provision for loan losses was $3.3 million for the nine months ended September 30, 2020, at that time, the overall concerns with the COVID-19 pandemic and the negative impact on the economy, additional provisions were prudent for the nine months ended September 30, 2020.

Noninterest Income

Total noninterest income is made up of bank related fees and service charges, as well as other income producing services provided, sales of available-for-sale securities, sales of loans in the secondary market, ATM income, early redemption penalties for certificates of deposit, safe deposit rental income, internet bank service fees, earnings on bank-owned life insurance and other miscellaneous items.

Noninterest income for the nine months ended September 30, 2021 as compared to the same period in 2020 decreased $1.2 million or 21.4%. During the nine months ended September 30, 2020, the Company recognized a $2,594,000 gain on the sale of available-for-sale securities while for the nine months ended September 30, 2021 the Company recognized a gain of $1,250,000, a decrease of $1,344,000.

Noninterest Expense

The Company saw its noninterest expense increase by $460,000 or 3.4% year-over-year. Most of the increase in our noninterest expense levels was related to personnel-related expenses.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Federal Income Taxes

The provision for federal income taxes was $749,000 for the nine months ended September 30, 2021, an increase of $407,000 compared to the same period in 2020. The effective tax rate was 9.7% and 6.0% for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate is higher in 2021 due to the decrease in tax exempt state and political subdivision investments.

Results of Operations for the Three Months Ended September 30, 2021 and 2020

Net Income

For the three months ended September 30, 2021 the Company reported net earnings of $2,902,000, compared to $2,059,000 for the three months ended September 30, 2020. On a per share basis, the Company’s diluted earnings were $0.50 for the three months ended September 30, 2021, as compared to $0.36 for the three months ended September 30, 2020.

Net Interest Income

Net interest income before the provision for loan losses decreased 2.4%, or $139,000 for the three months ended September 30, 2021 compared to the same period in 2020.

Provision for Loan Losses

Giving strong consideration to our overall solid credit related metrics and the improving economy, our Company had a credit reserve releases of $400,000 during the three months ended September 30, 2021.The overall improvement in the economy also contributed to the credit reserve release. The impact of COVID-19 on the economy will directly impact the Company’s provision (credit) for loan losses for the remainder of the year. The provision for loan losses was $1,333,000 for the three months ended September 30, 2020, the overall concerns with the COVID-19 pandemic and the negative impact on the economy, additional provisions are prudent for the three months ended September 30, 2020.

Noninterest Income

Noninterest income for the three months ended September 30, 2020 as compared to the same period in 2019 decreased $56,000 or 2.3%.

Noninterest Expense

The Company saw its noninterest expense increase by $450,000 or 10.0% quarter-over-quarter. Most of the increase in our noninterest expense levels was related to personnel-related expenses.

Federal Income Taxes

The provision for federal income taxes was $448,000 for the three months ended September 30, 2021, an increase of $248,000 compared to the same period in 2020. The effective tax rate was 13.3% and 8.9% for the three months ended September 30, 2021 and 2020, respectively.

Capital Resources

Stockholders’ equity totaled $70.1 million at September 30, 2021 compared to $68.3 million at December 31, 2020, a $1.7 million increase. Total stockholders’ equity in relation to total assets was 9.59% at September 30, 2021 and 9.85% at December 31, 2020. On May 14, 2019 the Company issued $20,000,000 of junior subordinated debentures in denominations of not less than $250,000. To increase the capital level of Unified Bank, $16 million of the proceeds were paid as a dividend during the second quarter of 2019.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s Articles of Incorporation provides flexibility to create a class of preferred shares with 2,000,000 authorized shares. This enables the Company, at the option of the Board of Directors, to issue series of preferred shares in a manner calculated to take advantage of financing techniques which may provide a lower effective cost of capital to the Company. The ability to issue preferred shares also provides greater flexibility to the Board of Directors in structuring the terms of equity securities that may be issued by the Company. Although this preferred stock is a financial tool, it has not been utilized to date.

The Company has offered for many years a Dividend Reinvestment Plan (“The Plan”) for shareholders under which the Company’s common stock will be purchased by the Plan for participants with automatically reinvested dividends. The Plan does not represent a change in the Company’s dividend policy or a guarantee of future dividends.

The Company is subject to the regulatory requirements of The Federal Reserve System as a bank holding company. The Bank is subject to regulations of the FDIC and the State of Ohio, Division of Financial Institutions. The most important of these various regulations address capital adequacy.

On January 1, 2015, the final rules of the Federal Reserve Board went into effect implementing in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The rule requires a new minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets that will apply to all supervised financial institutions. The rule also requires a minimum ratio of tier 1 capital to risk-weighted assets of 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations.

The Company continues to be well-capitalized in accordance with Federal regulatory capital requirements as the capital ratios below show:


Common equity tier 1 capital ratio	13.57	%
Tier 1 capital ratio	14.38	%
Total capital ratio	19.24	%
Leverage ratio	10.09	%

Liquidity

Management’s objective in managing liquidity is maintaining the ability to continue meeting the cash flow needs of its customers, such as borrowings or deposit withdrawals, as well as its own financial commitments. The principal sources of liquidity are net income, loan payments, maturing securities and sales of securities available for sale, federal funds sold and cash and deposits with banks. Along with its liquid assets, the Company has additional sources of liquidity available to ensure that adequate funds are available as needed. These include, but are not limited to the ability to borrow funds under line of credit agreements with correspondent banks, a borrowing agreement with the Federal Home Loan Bank of Cincinnati and the adjustment of interest rates to obtain depositors. Management feels that it has the capital adequacy and profitability to meet the current and projected liquidity needs of its customers.

Inflation

Substantially all of the Company’s assets and liabilities relate to banking activities and are monetary in nature. The consolidated financial statements and related financial data are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). U.S. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, with the exception of securities available for sale, certain impaired loans and certain other real estate and loans that may be measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss.

Management’s opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other, but do not always move in correlation with each other. The Company’s ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company’s performance.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

COVID-19: Update on Company Action and Ongoing Risks

In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment.

Government response to the COVID-19 pandemic was sweeping, including passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act which was signed into law on March 27, 2020. Congress, the Federal Reserve Bank and the other U.S. state and federal financial regulatory agencies have taken actions to mitigate disruptions to economic activity and financial stability resulting from the COVID-19 pandemic. In addition, the federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and passed measures to provide relief from reporting loan classifications due to modifications related to the COVID-19 outbreak.

Lending Assistance

With regard to COVID-19-related loan deferral processing, we currently have interest only payments on 4 total loans with balances totaling approximately $16.8 million or on the commercial portfolio. We also have one commercial loan with a balance of approximately $2.5 million on payment deferral.

Ohio Restrictions and Vaccination Rate

Most of Ohio’s state-wide COVID-19 health orders, including the mask mandate, business and gathering capacity limits and social distancing rules, ended on June 2, 2021. Certain orders continue to remain in place, relating primarily to restrictions at nursing homes and assisted-living facilities. According to information provided by the Ohio Department of Health, as of November 1, 2021, approximately 55.4% of all Ohio residents had received at least one COVID-19 vaccination.

Financial Exposures

Given the timing of the outbreak in the United States of the COVID-19 pandemic, outside of the additional loan loss provision, management does not believe that the Company’s six months performance was significantly impacted. The COVID-19 pandemic continues to represent an unprecedented challenge to the global economy in general and the financial services sector in particular. However, there is still significant uncertainty regarding the overall length of the pandemic and the aggregate impact that it will have on global and regional economies, including uncertainties regarding the potential positive effects of governmental actions taken in response to the pandemic. Our credit administration continues to closely monitor and analyze the higher risk segments within the loan portfolio, tracking loan payment deferrals, customer liquidity and providing timely reports to senior management and the board of directors. Based on the Company’s capital levels, prudent underwriting policies, loan concentration diversification and our geographic footprint, we currently expect to be able to manage the economic risks and uncertainties associated with the pandemic and remain adequately capitalized. However, the Company may be required to make additional loan loss provisions (or credits) as warranted by the fluid COVID-19 situation.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

Smaller Reporting Companies are not required to provide this disclosure.

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United Bancorp, Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 4.Controls and Procedures

The Company, under the supervision, and with the participation, of its management, including the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to the requirements of Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2021, in timely alerting them to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company’s periodic SEC filings.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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United Bancorp, Inc.

Part II – Other Information

ITEM 1. Legal Proceedings

None, other than ordinary routine litigation incidental to the Company’s business.

ITEM 1A. Risk Factors

Smaller Reporting Companies are not required to provide this disclosure.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES


				(c)	(d)
				Total Number of	Maximum Number or
				Shares (or Units)	Approximate Dollar
	(a)			Purchased as Part	Value) of Shares (or
	Total Number of	(b)		Of Publicly	Units) that May Yet
	Shares (or Units)	Average Price Paid		Announced Plans	Be Purchased Under
Period	Purchased	Per Share (or Unit)		Or Programs	the Plans or Programs
Month #1 7/1/2021 to 7/31/2021	––		––	––	––
Month #2 8/1/2021 to 8/31/2021	––		––	––	––
Month #3 9/1/2021 to 9/30/2021	––		––	––	––

The Company adopted the United Bancorp, Inc. Affiliate Banks Directors and Officers Deferred Compensation Plan (the “Plan”), which is an unfunded deferred compensation plan. Amounts deferred pursuant to the Plan remain unrestricted assets of the Company, and the right to participate in the Plan is limited to members of the Board of Directors and Company officers. Under the Plan, directors or other eligible participants may defer fees and up to 50% of their annual incentive award payable to them by the Company, which are used to acquire common shares which are credited to a participant’s respective account. Except in the event of certain emergencies, no distributions are to be made from any account as long as the participant continues to be an employee or member of the Board of Directors. Upon termination of service, the aggregate number of shares credited to the participant’s account are distributed to him or her along with any cash proceeds credited to the account which have not yet been invested in the Company’s stock. All purchases under this deferred compensation plan are funded with either earned director fees or officer incentive award payments. No underwriting fees, discounts, or commissions are paid in connection with the Plan. The shares allocated to participant accounts have not been registered under the Securities Act of 1933 in reliance upon the exemption provided by Section 4(2) thereof.

ITEM 3.Defaults Upon Senior Securities

Not applicable.

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United Bancorp, Inc.

Part II – Other Information

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information.

None.

ITEM 6. Exhibits


	EX 3.1		Amended Articles of Incorporation of United Bancorp, Inc. ⁽¹⁾

	EX 3.2		Amended and Restated Code of Regulations of United Bancorp, Inc. ⁽²⁾

	EX 4.1		Description of Registrant’s Common Stock ⁽⁴⁾

	EX 4.2		Forms of 6.00% Fixed to Floating Rate Subordinated Note due May 15, 2029 ⁽³⁾

	EX 31.1		Rule 13a-14(a) Certification – CEO

	EX 31.2		Rule 13a-14(a) Certification – CFO

	EX 32.1		Section 1350 Certification – CEO

	EX 32.2		Section 1350 Certification – CFO

	EX 101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

	EX 101.SCH		XBRL Taxonomy Extension Schema Document

	EX 101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

	EX 101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

	EX 101.LAB		XBRL Taxonomy Extension Label Linkbase Document

	EX 101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	EX 104		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

(1)

Incorporated by reference to Appendix B to the registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 14, 2001.

(2)

Incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 18, 2016.

(3)

Incorporated by reference to Exhibit 4 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 20, 2020

(4)

Incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 14, 2019

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SIGNATURES

Pursuant to the requirements 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.

Date: November 15, 2021	By:	/s/Scott A. Everson
		Scott A. Everson
		President and Chief Executive Officer

Date: November 15, 2021	By:	/s/Randall M. Greenwood
		Randall M. Greenwood
		Senior Vice President, Chief Financial Officer and Treasurer