UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q




(Mark
One)





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





For the
quarterly period ended March 31,
2009





OR





o
            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
              incorporation
      or organization)
            
            (IRS
      Employer Identification No.)




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)





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 x No  o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted 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 and post such files).


o Yes o No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definition of “accelerated filer”, “large accelerated
filer,” and “small reporting company” in Rule 12b-2 of the Exchange
Act.  (Check one):





Large
      accelerated filer  o
            Accelerated
      filer  o
            Non-accelerated
      filer  o
            Smaller
      Reporting Company x





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




Yes o No  x





Indicate
the number of shares outstanding of the issuer’s classes of common stock as of
the latest practicable date:  As of May 1, 2009, 4,610,731 shares of
the Company’s common stock, $1.00 par value, were issued and
outstanding.









United
Bancorp, Inc.
  Contents


PART
      I - FINANCIAL INFORMATIONItem
      1  Condensed Consolidated Balance Sheets
            
            3Condensed
      Consolidated Statements of Income
            
            4Condensed
      Consolidated Statements of Comprehensive Income
            
            5Condensed
      Consolidated Statements of Cash Flows
            
            6Notes
      to Consolidated Financial Statements
            
            8Item
      2  Management’s Discussion and Analysis of Financial
      Conditionand
      Results of Operations
            
            18Item
      3  Quantitative and Qualitative Disclosures About Market
      Risk
            
            25Item
      4  Controls and Procedures
            
            25PART
      II - OTHER INFORMATIONItem
      1  Legal Proceedings
            
            26Item
      1A  Risk Factors
            
            26Item
      2  Unregistered Sales of Equity Securities and Use of
      Proceeds
            
            26Item
      3  Defaults Upon Senior Securities
            
            27Item
      4  Submission of Matters to a Vote of Security
      Holders
            
            27Item
      5  Other Information
            
            27Item
      6  Exhibits
            
            27SIGNATURES
            
            28





2




ITEM
1.  Financial Statements





United
Bancorp, Inc.




Condensed
Consolidated Balance Sheets


(In
thousands, except share data)


March
      31,
            
            
            December
      31,2009
            
            
            2008(Unaudited)AssetsCash
      and due from banks
            
            $
            4,062
            
            
            $
            5,605Interest-bearing
      demand deposits
            
            
            11,731
            
            
            
            6,684Federal
      funds sold
            
            
            —
            
            
            
            19,180Cash
      and cash equivalents
            
            
            15,793
            
            
            
            31,469Certificates
      of deposit in other financial institutions
            
            
            16,084
            
            
            
            —Available-for-sale
      securities
            
            
            133,100
            
            
            
            129,416Held-to-maturity
      securities
            
            
            15,696
            
            
            
            15,687Loans,
      net of allowance for loan losses of $3,001 and $2,770 at March 31, 2009
      and December 31, 2008, respectively
            
            
            233,415
            
            
            
            235,448Premises
      and equipment
            
            
            8,538
            
            
            
            8,466Federal
      Home Loan Bank stock
            
            
            4,810
            
            
            
            4,810Foreclosed
      assets held for sale, net
            
            
            1,637
            
            
            
            1,407Intangible
      assets
            
            
            737
            
            
            
            775Accrued
      interest receivable
            
            
            2,741
            
            
            
            3,037Bank-owned
      life insurance
            
            
            9,744
            
            
            
            9,653Other
      assets
            
            
            1,924
            
            
            
            1,636Total
      assets
            
            $
            444,219
            
            
            $
            441,804


Liabilities
      and Stockholders’ EquityLiabilitiesDepositsDemand
            
            $
            138,627
            
            
            $
            142,434Savings
            
            
            42,672
            
            
            
            40,309Time
            
            
            165,444
            
            
            
            164,302Total
      deposits
            
            
            346,743
            
            
            
            347,045Short-term
      borrowings
            
            
            12,428
            
            
            
            7,809Federal
      Home Loan Bank advances
            
            
            43,590
            
            
            
            43,745Subordinated
      debentures
            
            
            4,000
            
            
            
            4,000Interest
      payable and other liabilities
            
            
            3,392
            
            
            
            5,301Total
      liabilities
            
            
            410,153
            
            
            
            407,900Commitments
      and Contingencies
            
            
            —
            
            
            
            —Stockholders’
      EquityPreferred
      stock, no par value, authorized 2,000,000 shares; no shares
      issued
            
            
            —
            
            
            
            —Common
      stock, $1 par value; authorized 10,000,000 shares; issued 5,190,304
      shares
            
            
            5,190
            
            
            
            5,190Additional
      paid-in capital
            
            
            25,042
            
            
            
            25,656Retained
      earnings
            
            
            10,657
            
            
            
            9,856Stock
      held by deferred compensation plan; 148,980 and 132,906 shares at March
      31, 2009 and December 31, 2008, respectively
            
            
            (1,429
            )
            
            
            (1,300
            )Unearned
      ESOP compensation
            
            
            (2,704
            )
            
            
            (2,718
            )Accumulated
      other comprehensive loss
            
            
            (1,052
            )
            
            
            (1,094
            )Treasury
      stock, at costMarch
      31, 2009 – 146,954 shares, December 31, 2008 – 164,442
    shares
            
            
            (1,638
            )
            
            
            (1,686
            )Total
      stockholders’ equity
            
            
            34,066
            
            
            
            33,904Total
      liabilities and stockholders’ equity
            
            $
            444,219
            
            
            $
            441,804


See
Notes to Condensed Consolidated Financial Statements
  3
 United
Bancorp, Inc.
  Condensed
Consolidated Statements of Income
 For
the Three Months Ended March 31, 2009 and 2008
 (In
thousands, except per share data)
 (Unaudited)


2009
            
            
            2008Interest
      and Dividend IncomeLoans
            
            $
            4,021
            
            
            $
            4,340SecuritiesTaxable
            
            
            1,311
            
            
            
            1,774Tax-exempt
            
            
            433
            
            
            
            447Federal
      funds sold
            
            
            7
            
            
            
            1Dividends
      on Federal Home Loan Bank and other stock
            
            
            141
            
            
            
            98Total
      interest and dividend income
            
            
            5,913
            
            
            
            6,660Interest
      ExpenseDeposits
            
            
            1,582
            
            
            
            2,416Federal
      funds purchased and repurchase agreements
            
            
            8
            
            
            
            94Borrowings
            
            
            484
            
            
            
            633Total
      interest expense
            
            
            2,074
            
            
            
            3,143Net
      Interest Income
            
            
            3,839
            
            
            
            3,517Provision
      for Loan Losses
            
            
            324
            
            
            
            168Net
      Interest Income After Provision for Loan Losses
            
            
            3,515
            
            
            
            3,349Noninterest
      IncomeCustomer
      service fees
            
            
            512
            
            
            
            491Net
      gains on loan sales
            
            
            13
            
            
            
            14Gain
      on sale of foreclosed real estate
            
            
            43
            
            
            
            3Other
            
            
            221
            
            
            
            248Total
      noninterest income
            
            
            789
            
            
            
            756Noninterest
      ExpenseSalaries
      and employee benefits
            
            
            1,622
            
            
            
            1,479Net
      occupancy expense
            
            
            399
            
            
            
            320Professional
      fees
            
            
            227
            
            
            
            190Insurance
            
            
            133
            
            
            
            103Franchise
      and other taxes
            
            
            124
            
            
            
            120Advertising
            
            
            93
            
            
            
            95Printing
      and office supplies
            
            
            81
            
            
            
            65Amortization
      of intangible asset
            
            
            38
            
            
            
            —Provision
      for losses on foreclosed real estate
            
            
            —
            
            
            
            155Other
            
            
            592
            
            
            
            450Total
      noninterest expense
            
            
            3,309
            
            
            
            2,977Income
      Before Federal Income Taxes
            
            
            995
            
            
            
            1,128Provision
      for Federal Income Taxes
            
            
            194
            
            
            
            225Net
      Income
            
            $
            801
            
            
            $
            903Basic
      Earnings Per Share
            
            $
            0.17
            
            
            $
            0.20Diluted
      Earnings Per Share
            
            $
            0.17
            
            
            $
            0.20Dividends
      per share
            
            $
            0.14
            
            
            $
            0.13




See
Notes to Condensed Consolidated Financial Statements




4


United
Bancorp, Inc.
  Condensed
Consolidated Statements of Comprehensive Income
 For
the Three Months Ended March 31, 2009 and 2008
 (In
thousands)
 (Unaudited)


2009
            
            
            2008Net
      Income
            
            $
            801
            
            
            $
            903Other
      comprehensive income, net of related tax effects:Unrealized
      holding gains on securities during the period, net of taxes of $22 and
      $461 in 2009 and 2008, respectively
            
            
            42
            
            
            
            894Comprehensive
      Income
            
            $
            843
            
            
            $
            1,797Accumulated
      Other Comprehensive (Loss) Income
            
            $
            (1,052
            )
            
            $
            394


See
Notes to Condensed Consolidated Financial Statements
 5
  United
Bancorp, Inc.
  Condensed
Consolidated Statements of Cash Flows
 For
the Three Months Ended March 31, 2009 and 2008
 (In
thousands)
 (Unaudited)


2009
            
            
            2008Operating
      ActivitiesNet
      income
            
            $
            801
            
            
            $
            903Items
      not requiring (providing) cashDepreciation
      and amortization
            
            
            174
            
            
            
            134Amortization
      of intangible asset
            
            
            38
            
            
            
            —Provision
      for loan losses
            
            
            324
            
            
            
            168Provision
      for losses on foreclosed real estate
            
            
            —
            
            
            
            155Amortization
      of premiums and discounts on securities, net
            
            
            23
            
            
            
            20Gain
      on sale of loans
            
            
            (13
            )
            
            
            (14
            )Increase
      in value of bank-owned life insurance
            
            
            (91
            )
            
            
            (55
            )Amortization
      of mortgage servicing rights
            
            
            14
            
            
            
            21Gain
      on sale of foreclosed real estate
            
            
            (43
            )
            
            
            (3
            )Net
      change in accrued interest receivable and other assets
            
            
            405
            
            
            
            (1,095
            )Net
      change in accrued expenses and other liabilities
            
            
            (2,292
            )
            
            
            617Net
      cash (used in) provided by operating activities
            
            
            (660
            )
            
            
            851Investing
      ActivitiesSecurities
      available for sale:Maturities,
      prepayments and calls
            
            
            23,499
            
            
            
            34,149Purchases
            
            
            (27,151
            )
            
            
            (26,453
            )Net
      change in loans
            
            
            1,286
            
            
            
            587Purchase
      of certificates of deposit in other financial institutions
            
            
            (16,084
            )
            
            
            —Proceeds
      from sale of real estate owned
            
            
            163
            
            
            
            3Purchases
      of premises and equipment
            
            
            (210
            )
            
            
            (140
            )Net
      cash (used in) provided by investing activities
            
            
            (18,497
            )
            
            
            8,146




See
Notes to Condensed Consolidated Financial Statements





6


United
Bancorp, Inc.




Condensed
Consolidated Statements of Cash Flows (continued)


For
the Three Months Ended March 31, 2009 and 2008


(In
thousands)


(Unaudited)


2009
            
            
            2008Financing
      ActivitiesNet
      change in deposits
            
            $
            (302
            )
            
            $
            4,778Net
      change in short-term borrowings
            
            
            4,619
            
            
            
            (10,572
            )Net
      change in long-term debt
            
            
            (155
            )
            
            
            324Cash
      dividends paid
            
            
            (704
            )
            
            
            (649
            )Proceeds
      from purchase of shares by Dividend Reinvestment Plan
            
            
            112
            
            
            
            99Shares
      purchased for deferred compensation plan
            
            
            —
            
            
            
            102Treasury
      stock purchases
            
            
            (89
            )
            
            
            (57
            )Net
      cash provided by (used in) financing activities
            
            
            3,481
            
            
            
            (5,975
            )(Decrease)
      Increase in Cash and Cash Equivalents
            
            
            (15,676
            )
            
            
            3,022Cash
      and Cash Equivalents, Beginning of Period
            
            
            31,469
            
            
            
            12,324Cash
      and Cash Equivalents, End of Period
            
            $
            15,793
            
            
            $
            15,346Supplemental
      Cash Flows InformationInterest
      paid on deposits and borrowings
            
            $
            2,112
            
            
            $
            3,289Supplemental
      Disclosure of Non-Cash Investing and Financing ActivitiesTransfers
      from loans to real estate and other repossessed assets
            
            $
            436
            
            
            $
            131Recognition
      of mortgage servicing rights
            
            $
            —
            
            
            $
            26Unrealized
      gains on securities designated as available for sale, net of related tax
      effects
            
            $
            42
            
            
            $
            894Recognition
      of liability related to adoption of EITF Issue 06-4 on split dollar life
      insurance policies
            
            $
            —
            
            
            $
            1,005





See
Notes to Condensed Consolidated Financial Statements




7


United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008




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 March 31, 2009,
and its results of operations and cash flows for the three month 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, 2008 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 ended March 31, 2009, 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, 2008 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, The Citizens
Savings Bank of Martins Ferry, Ohio (“the Bank” or “Citizens”). The Company
operates in two divisions, The Community Bank, a division of The Citizens
Savings Bank and The Citizens Bank, a division of The Citizens Savings
Bank.  All intercompany transactions and balances have been eliminated
in consolidation.




On
September 19, 2008, Citizens acquired from the Federal Deposit Insurance
Corporation (“FDIC”) the deposits of three banking offices of a failed
institution in Belmont County, Ohio.  Deposits acquired totaled
approximately $39.3 million.  These acquired deposits included
approximately $9.0 million of brokered deposits that were originated by the
prior financial institution.  Immediately after the acquisition, the
Company lowered the interest rates on these brokered deposits and as anticipated
these deposit accounts were closed by December 31, 2008.




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, Hocking, 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.  The Citizens Bank division conducts its business
through its main office in Martins Ferry, Ohio and twelve branches in
Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Jewett, New Philadelphia, St.
Clairsville East, Saint Clairsville West, Sherrodsville, Strasburg, and
Tiltonsville, Ohio.  The Community Bank division conducts its business
through its main office in Lancaster, Ohio and seven offices in Amesville,
Glouster, Lancaster, and Nelsonville, Ohio.  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.




8




United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008




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 policy, that
are outside of management’s control.




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.




Allowance
for Loan Losses




The
allowance for loan losses is a valuation allowance for probable incurred credit
losses, increased by the provision for loan losses and decreased by charge-offs
less recoveries.  Management estimates the allowance balance required
based on past loan loss experience, the nature and volume of the portfolio,
information about specific borrower situations and estimated collateral values,
economic conditions and other factors.  Allocations of the allowance
may be made for specific loans, but the entire allowance is available for any
loan that, in management’s judgment, should be charged-off.  Loan
losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed.  The Company accounts
for impaired loans in accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 114, “Accounting for Creditors for Impairment of a
Loan.”  SFAS 114 requires that impaired loans be measured based upon
the present value of expected future cash flows discounted at the loan’s
effective interest rate or, as an alternative, at the loan’s observable market
price or fair value of the collateral.  A loan is defined under SFAS
No. 114 as impaired when, based on current information and events, it is
probable that a creditor will be unable to collect all amounts due according to
the contractual terms of the loan agreement.  In applying the
provisions of SFAS No. 114, the Company considers its investment in one-to-four
family residential loans and consumer installment loans to be homogenous and
therefore excluded from separate identification for evaluation of
impairment.  With respect to the Company’s investment in
nonresidential and multi-family residential real estate loans, and its
evaluation of impairment thereof, such loans are generally collateral dependent
and, as a result, are carried as a practical expedient at the fair value of the
collateral.




Collateral
dependent loans which are more than ninety days delinquent are considered to
constitute more than a minimum delay in repayment and are evaluated for
impairment under SFAS No. 114 at that time.




9
 
 United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008


Earnings
Per Share




Basic
earnings per common share is computed based upon the weighted-average number of
common shares outstanding during the period, less shares in the ESOP which are
unallocated and not committed to be released.  At March 31, 2009 and
2008, the ESOP held 283,635 and 307,274 unallocated shares, respectively, which
were not included in weighted-average common shares
outstanding.  Diluted earnings per common share include the dilutive
effect of additional potential common shares issuable under the Company’s stock
option plans.




Three
      months ended
              March
      31,2009
            
            
            2008BasicNet
      income (In thousands)
            
            $
            801
            
            
            $
            903Weighted
      average common shares outstanding
            
            
            4,600,174
            
            
            
            4,572,057Basic
      earnings per common share
            
            $
            0.17
            
            
            $
            0.20DilutedNet
      income (In thousands)
            
            $
            801
            
            
            $
            903Weighted
      average common shares outstanding for basic earnings per common
      share
            
            
            4,600,174
            
            
            
            4,572,057Add:  Dilutive
      effects of assumed exercise of stock options
            
            
            —
            
            
            
            —Average
      shares and dilutive potential common shares
            
            
            4,600,174
            
            
            
            4,572,057Diluted
      earnings per common share
            
            $
            0.17
            
            
            $
            0.20




Options
to purchase 55,529 shares of common stock at a weighted-average exercise price
of $10.34 per share were outstanding at both March 31, 2009 and 2008, but were
not included in the computation of diluted earnings per share because the
options’ exercise price was greater than the average market price of the common
shares.




10
 
 United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008


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 2005.




Recent
Accounting Pronouncements




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations,” which replaces SFAS No. 141.  The Statement applies to
all transactions or other events in which one entity obtains control of one or
more businesses.  It requires all assets acquired, liabilities assumed
and any noncontrolling interest to be measured at fair value at the acquisition
date.  The Statement requires certain costs such as
acquisition-related costs that were previously recognized as a component of the
purchase price, and expected restructuring costs that were previously recognized
as an assumed liability, to be recognized separately from the acquisition as an
expense when incurred.




SFAS No.
141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008 and may not be applied before that
date.  Management adopted SFAS No. 141(R) effective January 1, 2009,
as required, without material effect on the Company’s financial
statements.




Concurrent
with SFAS No. 141 (revised 2007), the FASB recently issued SFAS No. 160,“Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB
51.”  SFAS No. 160 amends ARB 51 to establish accounting and reporting
standards for the noncontrolling interest (formerly known as minority interest)
in a subsidiary and for the deconsolidation of a subsidiary.  A
subsidiary, as defined by SFAS No. 160, includes a variable interest entity that
is consolidated by a primary beneficiary.




A
noncontrolling interest in a subsidiary, previously reported in the statement of
financial position as a liability or in the mezzanine section outside of
permanent equity, will be included within consolidated equity as a separate line
item upon the adoption of SFAS No. 160.  Further, consolidated net
income will be reported at amounts that include both the parent (or primary
beneficiary) and the noncontrolling interest with separate disclosure on the
face of the consolidated statement of income of the amounts attributable to the
parent and to the noncontrolling interest.




SFAS No.
160 is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.  Management adopted
SFAS No. 160 effective January 1, 2009, as required, without material effect on
the Company’s financial statements.




11
 
  United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008


In April
2009, the Financial Accounting Standards Board (FASB) issued three new FASB
Staff Positions (FSPs) to address:  (1) determining whether a market
is not active and a transaction is not orderly, (2) recognition and presentation
of other-than-temporary impairments and (3) interim disclosures of fair value of
financial instruments, as follows:




FASB
Staff Position (FSP) 157-4 “Determining When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly,” addresses the criteria to be used in the
determination of an active market in determining whether observable transactions
are Level 1 or Level 2 under the framework established by FAS
157.  The FSP reiterates fair value is based on the notion of exit
price in an orderly transaction between willing market participants at the
valuation date.  The FSP is effective for interim and annual periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009.




In
addition, the FASB issued FSP 115-2 and 124-2 “Recognition and Presentation of
Other-Than-Temporary Impairments.”  The FASB has concluded that
changes were necessary to the process for determining whether impairment on debt
securities is other-than-temporary.  The FSP replaces the requirement
that an entity’s management must assert it has both the intent and the ability
to hold an impaired debt security until recovery with a requirement that
management assert:




·
              It
      does not have the intent to sell the security;
  and


·
              It
      is more-likely-than-not it will not have to sell the security before
      recovery of its amortized cost basis less any current period credit
      losses




If those
two assertions are true, only the portion of the impairment due to credit loss
is recorded in income.  Other portions of the impairment (any portions
not related to credit loss) are recorded in other comprehensive
income.  Credit loss is defined in the FSP as the difference between
the present value of the cash flows expected to be collected and the amortized
cost basis.  If the present value of cash flows expected to be
collected is less than the amortized cost basis of the security, the entire
amortized cost basis of the security will not be recovered (that is, a credit
loss exists) and an other-than-temporary impairment shall be considered to have
occurred and the portion of the loss attributable to the credit loss is recorded
in net income.  The FSP is effective for interim and annual periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009.




Finally,
the FASB issued FSB 107-1 and APB 28-1 “Interim Disclosures About Fair Values of
Financial Instruments.”  This FSP requires publicly traded companies
to include disclosures about fair value in interim financial statements for all
financial instruments within the scope of FAS 107.  The specific
disclosures required include the method(s) and significant assumptions used to
estimate the fair value of financial instruments, as well as changes in those
methods and assumptions, and the carrying values of those
instruments.  The disclosures must clearly identify how the carrying
value reported in the disclosures relates to what is reported in the statement
of financial position.  The FSP is effective for interim and annual
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009.




Management
is currently evaluating the provisions of the three FSPs, but does not expect
the adoption to have a material effect on the Company’s financial
statements.




12


United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008




Note
2: Allowance
for Loan Losses




The
activity in the allowance for loan losses was as follows:




Three
      months ended
              March
      31,2009
            
            
            2008(In
      thousands)Beginning
      balance
            
            $
            2,770
            
            
            $
            2,447Provision
      for loan losses
            
            
            324
            
            
            
            168Loans
      charged-off
            
            
            (140
            )
            
            
            (122
            )Recoveries
      of previous charge-offs
            
            
            47
            
            
            
            47Ending
      balance
            
            $
            3,001
            
            
            $
            2,540




The
Company’s impaired loans totaled $7.2 million and $7.5 million at March 31, 2009
and December 31, 2008, respectively.  The Company reviews each
impaired loan to determine whether a specific allowance for loan loss is
necessary.   Based upon this review, an allowance for loan losses
of $1.5 million and $1.5 million relates to impaired loans of $5.2 million and
$5.5 million, at March 31, 2009 and December 31, 2008,
respectively.  At both March 31, 2009 and December 31, 2008, impaired
loans of $2.0 million had no related allowance for loan losses.




Interest
income of $15,700 and $10,000 was recognized on average impaired loans of $7.4
million and $3.9 million for the three months ended March 31, 2009 and 2008,
respectively.  Interest income was recognized on impaired loans on a
cash basis for each of the three months ended March 31, 2009 and
2008.




At March
31, 2009 and December 31, 2008, accruing loans delinquent 90 days or more
(including impaired loans of $1.3 million at March 31, 2009 and $1.1 million at
December 31, 2008) totaled $2.4 million and $1.6 million,
respectively.  Non-accruing loans at March 31, 2009 and December 31,
2008 (including impaired loans of $5.1 million at March 31, 2009 and $4.9
million at December 31, 2008) were $5.8 million and $5.4 million,
respectively.




13


United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008




Note
3: Benefit
Plans




Pension
expense includes the following:




Three
      months endedMarch
      31,2009
            
            
            2008(In
      thousands)Service
      cost
            
            $
            57
            
            
            $
            59Interest
      cost
            
            
            41
            
            
            
            45Expected
      return on assets
            
            
            (38
            )
            
            
            (59
            )Amortization
      of prior service cost, transition liability, net gain and plan
      amendment
            
            
            30
            
            
            
            15Pension
      expense
            
            $
            90
            
            
            $
            60




In
addition to the Company’s normal pension expense in the table above, during the
three months ended March 31, 2008, the Company recorded an additional expense of
approximately $28,000 as certain participants in the Company’s defined benefit
plan were paid lump sum distributions from the plan.  Management does
not anticipate the Company will incur settlement accounting expense under the
provisions of SFAS No. 88, during 2009.





Note
4: 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.




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




March
      31,
            
            
            December
      31,2009
            
            
            2008(Unaudited)(In
      thousands)Commitments
      to extend credit
            
            $
            31,889
            
            
            $
            26,110Credit
      card and ready reserve lines
            
            
            13,737
            
            
            
            12,912Standby
      letters of credit
            
            
            720
            
            
            
            820


14
  United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008
  Note
5: Fair
Value Measurements




The
Company accounts for fair value measurements in accordance with SFAS No. 157,
which defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements.




SFAS No.
157 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.  SFAS No. 157 also establishes 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




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 instruments measured at
fair value on a recurring basis and recognized in the accompanying balance
sheet, 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 pricing
models, quoted prices of securities with similar characteristics or discounted
cash flows.  Level 2 securities include certain collateralized
mortgage and debt obligations and certain municipal securities.  In
certain cases where Level 1 or Level 2 inputs are not available, securities are
classified within Level 3 of the hierarchy and include other less liquid
securities.




15
 
  United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008


The
following table presents the fair value measurements of assets and liabilities
recognized in the accompanying balance sheet measured at fair value on a
recurring basis and the level within the SFAS No. 157 fair value hierarchy in
which the fair value measurements fall at March 31, 2009 and December 31,
2008:




Fair
      Value Measurements UsingFair
      Value
            
            
            Quoted
      Prices
              in
      Active
              Markets
      for
              Identical
      Assets
              (Level
      1)
            
            
            Significant
      Other Observable Inputs
              (Level
      2)
            
            
            Significant
      Unobservable Inputs
              (Level
      3)(In
      thousands)March
      31, 2009Available-for-sale
      securities
            
            $
            133,100
            
            
            $
            ––
            
            
            $
            133,100
            
            
            $
            ––December
      31, 2008Available-for-sale
      securities
            
            $
            129,416
            
            
            $
            ––
            
            
            $
            129,416
            
            
            $
            ––




Impaired
Loans




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.




Mortgage
Servicing Rights




Mortgage
servicing rights do not trade in an active, open market with readily observable
prices.  Accordingly, fair value is estimated using discounted cash
flow models.  Due to the nature of the valuation inputs, mortgage
servicing rights are classified within Level 3 of the hierarchy.




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 for the other real estate under evaluation.




16
 
 United
Bancorp, Inc.
  Notes
to Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2009 and 2008


The
following table presents the fair value measurements of assets and liabilities
measured at fair value on a nonrecurring basis and the level within the SFAS No.
157 fair value hierarchy in which the fair value measurements fall at March 31,
2009.




Fair
      Value Measurements UsingFair
      Value
            
            
            Quoted
      Prices
              in
      Active
              Markets
      for
              Identical
      Assets
              (Level
      1)
            
            
            Significant
      Other Observable Inputs
              (Level
      2)
            
            
            Significant
      Unobservable Inputs
              (Level
      3)(In
      thousands)March
      31, 2009Impaired
      loans
            
            $
            1,522
            
            
            $
            —
            
            
            $
            ––
            
            
            $
            1,522Foreclosed
      assets held for sale
            
            
            436
            
            
            
            —
            
            
            
            —
            
            
            
            436December
      31, 2008Impaired
      loans
            
            $
            4,856
            
            
            $
            —
            
            
            $
            —
            
            
            $
            4,856Mortgage
      servicing rights
            
            
            394
            
            
            
            —
            
            
            
            —
            
            
            
            394Foreclosed
      assets held for sale
            
            
            208
            
            
            
            —
            
            
            
            —
            
            
            
            208




17


United
Bancorp, Inc.
 Management’s
Discussion and Analysis of Financial
 Condition
and Results of Operations
  ITEM 2


The
following discusses the financial condition of the Company as of March 31, 2009,
as compared to December 31, 2008, and the results of operations for the three
months ended March 31, 2009, compared to the same period in
2008.  This discussion should be read in conjunction with the interim
condensed consolidated financial statements and related footnotes included
herein.




Introduction




The
Company’s net interest margin of 4.05% for the three months ended March 31,
2009, generated an increase of approximately $322,000 in net interest income
over the same period in 2008.  This increase is a result of our
interest expense decreasing at a faster pace than our interest
income.  However, as a result of the increased level of loan loss
provision and the additional overhead from the Company’s September 19, 2008
purchase of branches of a failed bank from the Federal Deposit Insurance
Corporation, the Company’s net income decreased 11.3% for the three months ended
March 31, 2009.




We
believe the Company’s strong results of operations, as compared to our peer
group, for the three months ended March 31, 2009 are a result of several
factors, including:  (1) reductions by the Federal Reserve in prior
periods of short term interest rates; (2) enhanced service charge income on
deposit accounts; and (3) the additional low cost of funds from the failed bank
branch acquisition.  As a result of previous reductions in short term
interest rates by the Federal Reserve, we are projecting the Company’s net
interest margin to remain stable in 2009.




As
previously mentioned, with the acquisition of three new offices on September
19thfrom the FDIC as receiver, we added additional staffing at our customer
service and operation levels.  With extremely short notice, our
expanded team worked diligently to convert these three offices to our systems in
just 60 days, adding 6500 new accounts, three new ATM’s and a much needed brick
and mortar branch office with drive thru, safe deposit boxes and night drop to
complement our Riesbeck’s In-Store location in St. Clairsville, in addition to
new locations in Tiltonsville and Dillonvale, Ohio.




Forward-Looking
Statements




When used
in this document, the words or phrases “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimated,” “projected” or similar
expressions are intended to identify “forward looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.  Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the Bank’s market areas, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in the
Bank’s market areas and competition, that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected.  Factors listed above could affect the Company’s financial
performance and could cause the Company’s actual results for future periods to
differ materially from any statements expressed with respect to future
periods.




The
Company is not aware of any trends, events or uncertainties that will have or
are reasonably likely to have a material effect on its financial condition,
results of operations, liquidity or capital resources except as discussed
herein.  The Company is not aware of any current recommendation by
regulatory authorities that would have such effect if implemented except as
discussed herein.




18
 
 United
Bancorp, Inc.
 Management’s
Discussion and Analysis of Financial
 Condition
and Results of Operations


The
Company does not undertake, and specifically disclaims any obligation, to
publicly revise any forward-looking statements to reflect events or
circumstances after the date such statements were made or to reflect the
occurrence of anticipated or unanticipated events.




Current
Economic Conditions




The
current economic environment presents financial institutions with unprecedented
circumstances and challenges which in some cases have resulted in large declines
in the fair values of investments and other assets, constraints on liquidity and
significant credit quality problems, including severe volatility in the
valuation of real estate and other collateral supporting loans.  The
consolidated financial statements have been prepared using values and
information currently available to the Company.




Given the
volatility of current economic conditions, the values of assets and liabilities
recorded in the financial statements could change rapidly, resulting in material
future adjustments in asset values, the allowance for loan losses, capital that
could negatively impact the Company’s ability to meet regulatory capital
requirements and maintain sufficient liquidity.




Legislative
Development




In
February 2009, the Board of Directors of the Federal Deposit Insurance
Corporation (FDIC) voted to amend the restoration plan for the Deposit Insurance
Fund (DIF).  The amended restoration plan extended the period of time
to raise the DIF reserve ratio to 1.15 percent from five to seven
years.  The amended restoration plan also includes a final rule that
sets assessment rates. Under this final rule, beginning on April 1, 2009 the
Company expects the FDIC premium assessed to the Company to
increase.




The Board
of the FDIC also adopted an interim rule imposing a 20 basis point special
assessment on insured institutions as of June 30, 2009 which will be payable on
September 30, 2009.  The interim rule would also allow the assessment
of additional special assessments of up to 10 basis points after June 30, 2009
as deemed necessary.  On March 5, 2009, the FDIC announced its
intention to cut the agency’s planned special emergency assessment in half, from
20 to 10 basis points, provided that Congress clears legislation expanding the
FDIC’s line of credit with Treasury to $100 billion.




While the
Company has not fully evaluated the impact the increased assessment rates and
the pending special assessment will have on the 2009 financial results, it is
anticipated the impact will be material to the 2009 results of
operations.




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 judgment.




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.




19
 
 United
Bancorp, Inc.
 Management’s
Discussion and Analysis of Financial
 Condition
and Results of Operations


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.




Analysis
of Financial Condition




Earning
Assets – Loans




At March
31, 2009, gross loans were $236.4 million, compared to $238.2 million at
December 31, 2008, a decrease of $1.8 million or 0.8%.  The overall
reduction in the loan portfolio was driven by a $1.2 million decrease in
commercial and commercial real estate loans since December 31,
2008.




Installment
loans represented 16.2% of total loans at March 31, 2009, and 16.1% at December
31, 2008.  This indirect lending type of financing carries somewhat
more risk than real estate lending; however, it also provides for higher
yields.  Installment loans have decreased $630,000, or 1.7%, since
December 31, 2008.  The targeted lending areas encompass four separate
metropolitan areas, minimizing the risk to changes in economic conditions in the
communities housing the Company’s 20 branch locations.




Commercial
and commercial real estate loans comprised 58.6% of total loans at March 31,
2009, compared to 58.8% at December 31, 2008.  Commercial and
commercial real estate loans have decreased $1.2 million, or 0.8% since December
31, 2008.  The Company has originated and purchased participations in
loans from other banks for out-of-area commercial and commercial real estate
loans to benefit from consistent economic growth outside the Company’s primary
market area, but all within the state of Ohio.




Real
estate loans were 25.2% of total loans at March 31, 2009 and 25.1% at December
31, 2008.  Real estate loans have increased by $9,000 since December
31, 2008.  Real estate lending for the three months of 2009 has been
slow with respect to the Company’s adjustable-rate mortgage
products.  As of March 31, 2009, the Bank has approximately $32.9
million in fixed-rate loans that have been sold in the secondary
market.  The Company continues to service these loans for a fee that
is typically 25 basis points.  At March 31, 2009, the Company did not
hold any loans for sale.




The
allowance for loan losses 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.  Management believes the current balance of the allowance for
loan losses is adequate to absorb probable incurred credit losses associated
with the loan portfolio.  Net charge-offs for the three months ended
March 31, 2009 were approximately $93,000, or 3.4%, of the beginning balance in
the allowance for loan losses.




20
 
 United
Bancorp, Inc.
 Management’s
Discussion and Analysis of Financial
 Condition
and Results of Operations


Earning
Assets - Securities and Federal Funds Sold




The
securities portfolio is comprised of U.S. Government agency-backed securities,
tax-exempt obligations of states and political subdivisions and certain other
investments.  The Company does not hold any collateralized
mortgage-backed securities or derivative securities other than those issued by
U.S. government agencies. Securities available for sale at March 31, 2009
increased approximately $3.7 million, or 2.8%, from December 31, 2008
totals.  With the overall decreasing interest rate environment, the
Company has experienced a high level of called bond activity during the first
three months of 2009.  While the Company has plans to reinvest a
portion of these funds in other available-for-sale securities, there is lag
between the time when bonds are called and the right investment opportunity is
available to the Company.  Also given the historically low interest
rate environment at present, the Company has implemented a strategy to invest in
short term certificates of deposit (“CD’s”) of other financial
institutions.  These CD’s are fully insured by the Federal Deposit
Insurance Corporation and offer an alternative to investing in longer term U.S
Government agency-backed securities.  As of March 31, 2009, the
Company had approximately $16.1 million of CD’s with an average yield of 2.23%
and an average term to maturity of 179 days.




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 $100,000.  For the period ended March 31, 2009,
total core deposits increased approximately $281,000, or 0.09%.  The
Company’s savings accounts increased $2.4 million, or 5.9%, from December 31,
2008 totals.  The Company’s interest-bearing demand deposits decreased
$3.1 million, or 2.6%, noninterest-bearing demand deposits decreased $1.4
million, or 5.8%, while certificates of deposit under $100,000 increased by $1.7
million, or 1.5%.




The
Companyhas 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 $100,000 are not considered part of core deposits and as
such are used to balance rate sensitivity as a tool of funds
management.  At March 31, 2009, certificates of deposit greater than
$100,000 decreased $581,000, or 1.3%, from December 31, 2008
totals.




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




Other
interest-bearing liabilities include securities sold under agreements to
repurchase, sweep accounts, federal funds purchased, Treasury, Tax and Loan
notes payable 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 $4.6 million from December 31, 2008 totals.




21




United
Bancorp, Inc. Management’s
Discussion and Analysis of Financial Condition
and Results of Operations




Results
of Operations for the Three Months Ended March 31, 2009 and 2008




Net
Income




Basic and
diluted earnings per share for the three months ended March 31, 2009 totaled
$0.17 compared with $0.20 for
the three months ended March 31, 2008, a decrease of 15.0%.  In
dollars, the Company’s net income was $801,000 for the three months ended March
31, 2009, a decrease of $102,000, or 11.3% compared net income of $903,000 for
the same quarter in 2008.




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 increased 9.2%, or $322,000, for the
three months ended March 31, 2009 compared to the same period in 2008, due
primarily to the effects of decreasing interest rates in the economy, which
resulted in a lower cost of funds on depository products during the three months
ended March 31, 2009.




Provision
for Loan Losses




The
provision for loan losses was $324,000 for the three months ended March 31,
2009, compared to $168,000
for the same period in 2008.  The increase in loan loss provision for
the three-month period ended March 31, 2009, was based upon an increase in
nonperforming loans and consideration of the economic challenges facing the
banking industry.




Noninterest
Income




Total
noninterest incomeis made up of bank
related fees and service charges, as well as other income producing services
provided, 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 three months ended March 31, 2009 was $789,000, an increase of
$33,000 or 4.4%, compared to $756,000 for the same three-month period ended
March 31, 2008.  During the three-months ended March 31, 2009, the
increase in noninterest income was primarily driven by an increase in customer
service fees of approximately $21,000 and an increase in gains on sale of
foreclosed real estate of  approximately $40,000.




22


United
Bancorp, Inc. Management’s
Discussion and Analysis of FinancialCondition
and Results of Operations




Noninterest
Expense




Noninterest
expense was $3.3 million for the three months ended March 31, 2009, an increase
of $332,000,
or 11.1%, over the three months ended March 31, 2008.  The Company has
experienced an overall increase in noninterest expense due to the September 2008
acquisition of branches of a failed bank.  With this acquisition the
Company expanded from 17 to 20 offices and and as a result increased staff and
general overhead from this expansion. Salaries and employee benefit expense
increased $143,000, or 9.7%, for the period ended March 31, 2009 over the same
period in 2008.  This increase was primarily due to normal merit
increases, increased incentive award and ESOP expenses.  Professional
fees increased $37,000 for the first quarter of 2009 over the same period in
2008.  It is anticipated this trend will continue for the remainder of
2009 as the Company is working out of several problem credit
situations.  Occupancy and equipment expense increased $79,000, or
24.5% for the first quarter of 2009 over the same period in
2008.  Increased depreciation expense on computer hardware and
software and related service maintenance was the primary reason for the
increase.  Stationary and office supplies increased $16,000 for the
first quarter of 2009 over the same period in 2008.




Federal
Income Taxes




The
provision for federal income taxes was $194,000 for the three months ended March
31, 2009, a decrease of $31,000 compared to the same period in
2008.  The decrease in tax expense was due primarily to a $133,000
decrease in pretax income.  The effective tax rate was 19.5% and 19.9%
for the three months ended March 31, 2009 and 2008, respectively.




Capital
Resources




Internal
capital growth, through the retention of earnings, is the primary means of
maintaining capital adequacy for the Company.  Stockholders’ equity,
totaled $34.1 million at March 31, 2009 compared to $33.9 million at December
31, 2008, a $162,000 increase.  Total stockholders’ equity in relation
to total assets was 7.7% at both March 31, 2009 and December 31,
2008.  In 2001, our shareholders approved an amendment to the
Company’s Articles of Incorporation 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 amendment 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 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.




23




United
Bancorp, Inc. Management’s
Discussion and Analysis of FinancialCondition
and Results of Operations


The
minimums related to such capital requirements are:




TotalCapital
      ToRisk-Weighted
            
            
            Tier
      1Capital ToRisk-Weighted
            
            
            Tier
      1Capital ToAverageAssets
            
            
            Assets
            
            
            AssetsWell
      capitalized
            
            
            10.00
            %
            
            
            6.00
            %
            
            
            5.00
            %Adequately
      capitalized
            
            
            8.00
            %
            
            
            4.00
            %
            
            
            4.00
            %Undercapitalized
            
            
            6.00
            %
            
            
            3.00
            %
            
            
            3.00
            %




The
following table illustrates the Company’s well-capitalized classification at
March 31, 2009.




March
      31,2009(Unaudited)(Dollars
      in thousands)Tier
      1 capital
            
            $
            37,977Total
      risk-based capital
            
            
            40,978Risk-weighted
      assets
            
            
            270,408Average
      total assets
            
            
            446,085Total
      risk-based capital ratio
            
            
            15.15
            %Tier
      1 risk-based capital ratio
            
            
            14.04
            %Tier
      1 capital to average assets
            
            
            8.51
            %




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 purchase of
federal funds, 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.




24


United
Bancorp, Inc. Management’s
Discussion and Analysis of FinancialCondition
and Results of Operations




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.




ITEM
3 Quantitative and Qualitative Disclosures About Market Risk




There has
been no significant change from disclosures included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008.




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 March 31, 2009, 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 March 31, 2009 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.




25




United
Bancorp, Inc. Management’s
Discussion and Analysis of FinancialCondition
and Results of Operations




ITEM
1.  Legal Proceedings




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





ITEM
1A. Risk Factors




There
have been no material changes from risk factors as previously disclosed in Part
1 Item 1A of the Company’s for 10K for the year ended December 31, 2008, filed
on March 27, 2009.





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




ISSUER
PURCHASES OF EQUITY SECURITIES




Period
            
            (a)
              Total
      Number of
              Shares
      (or Units)
              Purchased
            
            
            (b)
              Average
      Price Paid
              Per
      Share (or Unit)
            
            
            (c)
              Total
      Number of
              Shares
      (or Units)
              Purchased
      as Part
              Of
      Publicly
              Announced
      Plans
              Or
      Programs
            
            
            (d)
              Maximum
      Number or
              Approximate
      Dollar Value) of Shares (or
              Units)
      that May Yet Be Purchased Under the Plans or ProgramsMonth
      #11/1/2009
      to1/31/2009
            
            
            9,501
            
            
            $
            9.41
            
            
            
            9,501
            
            
            $
            1,734,810Month
      #22/1/2009
      to2/28/2009
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            $
            1,734,810Month
      #33/1/2009
      to3/31/2009
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            $
            1,734,810





United
Bancorp maintains a stock repurchase program publicly announced by a press
release issued on November 18, 2008, under which its Board of Directors
authorized management to cause the Company to purchase up to $2 million of its
common shares over a two-year period.  Such authorization will expire
on November 18, 2010.




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, 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.  On
January 20, 2009, the Company purchased a total of 10,818 common shares for
participant accounts.  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.




26




United
Bancorp, Inc. Management’s
Discussion and Analysis of FinancialCondition
and Results of Operations




On June
27, 2008 UBCP was added to the Russell Microcap Index after the Russell
Investment Group reconstituted its comprehensive set of U.S. and global equity
indexes.  Russell indexes are widely used by investment managers and
institutional investors for both index funds and as benchmarks for passive and
active investment strategies.  UBCP will hold its membership until
Russell reconstitutes its indexes in June 2009.




ITEM
3. Defaults Upon Senior Securities




Not
applicable.





ITEM
4. Submission of Matters to A Vote of Security Holders




Not
applicable





ITEM
5. Other Information




Not
applicable.





ITEM
6. Exhibits




EX-3.1
              
              Amended
      Articles of Incorporation of United Bancorp, Inc. (1)EX-3.2
              
              Amended
      Code of Regulations of United Bancorp, Inc. (2)EX-4.0
              
              Instruments
      Defining the Rights of Security Holders (See
      Exhibits 3.1 and 3.2)EX
      10.0
              
              Purchase
      and Assumption Agreement dated September 18, 2008(3)EX
      31.1
              
              Rule
      13a-14(a) Certification – CEOEX
      31.2
              
              Rule
      13a-14(a) Certification – CFOEX
      32.1
              
              Section
      1350 Certification – CEOEX
      32.2
              
              Section
      1350 Certification – CFO




(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 Appendix C to the registrant’s Definitive Proxy Statement
      filed with the Securities and Exchange Commission on March 14,
      2001.





(3)
                Incorporated
      by reference to Exhibit 2 to registrant’s Form 8-K filed with the
      Securities and Exchange Commission on September 24,
  2008




27





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.




/s/ United Bancorp,
      Inc.Date:
      May 15, 2009
              By:
              /s/ James
      W. EversonJames
      W. EversonChairman,
      President and Chief  Executive Officer


Date:
      May 15, 2009
            By:
            /s/ Randall
      M. GreenwoodRandall
      M. GreenwoodSenior
      Vice President, Chief Financial Officer and Treasurer




28




Exhibit
Index





Exhibit No.
              
              Description3.1
              
              Amended
      Articles of Incorporation of United Bancorp, Inc.incorporated
      by reference to Appendix B to the registrant’s Definitive Proxy Statement
      filed with the Securities and Exchange Commission on March 14,
      2001.3.2
              
              Amended
      Code of Regulations of United Bancorp, Inc.incorporated
      by reference to Appendix C to the registrant’s Definitive Proxy Statement
      filed with the Securities and Exchange Commission on March 14,
      2001.4.0
              
              Instruments
      Defining the Rights of Security Holders (See Exhibits 3.1 and
      3.2)10.0
              
              Purchase
      and Assumption Agreement dated September 18, 200831.1
              
              Rule
      13a-14(a) Certification – Principal Executive Officer31.2
              
              Rule
      13a-14(a) Certification – Principal Financial Officer32.1
              
              Certification
      pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of
      The Sarbanes-Oxley act of 2002.32.2
              
              Certification
      pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of
      The Sarbanes-Oxley Act of
2002.