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 September 30,
2010





OR





 ̈
            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)





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  xNo   ̈





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).   ̈  Yes ̈  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   ̈Accelerated
filer   ̈Non-accelerated
filer   ̈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   ̈No  x





Indicate
the number of shares outstanding of the issuer’s classes of common stock as of
the latest practicable date:  As of November 1, 2010, 5,307,744 shares of
the Company’s common stock, $1.00 par value, were issued and
outstanding.







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 Condensed Consolidated Financial Statements
                
                8Item
      2  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                
                22Item
      3  Quantitative and Qualitative Disclosures About Market
      Risk
                
                30Item
      4  Controls and Procedures
                
                30PART
      II - OTHER INFORMATIONItem
      1  Legal Proceedings
                
                31Item
      1A  Risk Factors
                
                31Item
      2  Unregistered Sales of Equity Securities and Use of
      Proceeds
                
                31Item
      3  Defaults Upon Senior Securities
                
                32Item
      4  Other Information
                
                32Item
      5  Exhibits
                
                32SIGNATURES
                
                33


2


ITEM
1.  Financial Statements





United
Bancorp, Inc.


Condensed
Consolidated Balance Sheets


(In
thousands, except share data)





September 30,
                  
                  
                  December 31,2010
                  
                  
                  2009(Unaudited)AssetsCash
      and due from banks
                  
                  $
                  5,568
                  
                  
                  $
                  4,862Interest-bearing
      demand deposits
                  
                  
                  35,400
                  
                  
                  
                  11,409Federal
      funds sold
                  
                  
                  ––
                  
                  
                  
                  15,000Cash
      and cash equivalents
                  
                  
                  40,968
                  
                  
                  
                  31,271Certificates
      of deposit in other financial institutions
                  
                  
                  4,091
                  
                  
                  
                  17,575Available-for-sale
      securities
                  
                  
                  83,052
                  
                  
                  
                  96,585Held-to-maturity
      securities
                  
                  
                  8,382
                  
                  
                  
                  14,277Loans,
      net of allowance for loan losses of $2,755 and $2,390 at September 30,
      2010 and December 31, 2009, respectively
                  
                  
                  274,756
                  
                  
                  
                  255,336Premises
      and equipment
                  
                  
                  8,267
                  
                  
                  
                  8,689Federal
      Home Loan Bank stock
                  
                  
                  4,810
                  
                  
                  
                  4,810Foreclosed
      assets held for sale, net
                  
                  
                  1,741
                  
                  
                  
                  1,378Intangible
      assets
                  
                  
                  572
                  
                  
                  
                  656Accrued
      interest receivable
                  
                  
                  1,845
                  
                  
                  
                  2,218Deferred
      income taxes
                  
                  
                  -
                  
                  
                  
                  333Bank-owned
      life insurance
                  
                  
                  10,309
                  
                  
                  
                  10,018Other
      assets
                  
                  
                  4,065
                  
                  
                  
                  2,824Total
      assets
                  
                  $
                  442,858
                  
                  
                  $
                  445,970Liabilities
      and Stockholders’ EquityLiabilitiesDepositsDemand
                  
                  $
                  137,683
                  
                  
                  $
                  130,363Savings
                  
                  
                  51,885
                  
                  
                  
                  45,497Time
                  
                  
                  150,861
                  
                  
                  
                  168,683Total
      deposits
                  
                  
                  340,429
                  
                  
                  
                  344,543Short-term
      borrowings
                  
                  
                  15,074
                  
                  
                  
                  10,277Federal
      Home Loan Bank advances
                  
                  
                  43,584
                  
                  
                  
                  49,128Subordinated
      debentures
                  
                  
                  4,000
                  
                  
                  
                  4,000Deferred
      income taxes
                  
                  
                  240
                  
                  
                  
                  ––Interest
      payable and other liabilities
                  
                  
                  2,898
                  
                  
                  
                  2,811Total
      liabilities
                  
                  
                  406,225
                  
                  
                  
                  410,759Commitments
      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 5,370,304
      shares
                  
                  
                  5,370
                  
                  
                  
                  5,370Additional
      paid-in capital
                  
                  
                  20,781
                  
                  
                  
                  22,830Retained
      earnings
                  
                  
                  14,855
                  
                  
                  
                  12,761Stock
      held by deferred compensation plan; 170,628 and 155,198 shares at
      September 30, 2010 and December 31, 2009, respectively
                  
                  
                  (1,619
                  )
                  
                  
                  (1,478
                  )Unearned
      ESOP compensation
                  
                  
                  (2,361
                  )
                  
                  
                  (2,512
                  )Accumulated
      other comprehensive income (loss)
                  
                  
                  300
                  
                  
                  
                  (507
                  )Treasury
      stock, at costSeptember
      30, 2010 – 62,560 shares, December 31, 2009 – 113,493
    shares
                  
                  
                  (693
                  )
                  
                  
                  (1,253
                  )Total
      stockholders’ equity
                  
                  
                  36,633
                  
                  
                  
                  35,211Total
      liabilities and stockholders’ equity
                  
                  $
                  442,858
                  
                  
                  $
                  445,970





See
Notes to Condensed Consolidated Financial Statements


3


United
Bancorp, Inc.


Condensed
Consolidated Statements of Income


(In
thousands, except per share data)





Three months ended
                    
                    
                    Nine months endedSeptember 30,
                    
                    
                    September 30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(Unaudited)Interest
      and dividend incomeLoans,
      including fees
                    
                    $
                    4,493
                    
                    
                    $
                    4,227
                    
                    
                    $
                    13,022
                    
                    
                    $
                    12,416Taxable
      securities
                    
                    
                    443
                    
                    
                    
                    981
                    
                    
                    
                    1,906
                    
                    
                    
                    3,372Non-taxable
      securities
                    
                    
                    367
                    
                    
                    
                    424
                    
                    
                    
                    1,166
                    
                    
                    
                    1,290Federal
      funds sold
                    
                    
                    24
                    
                    
                    
                    17
                    
                    
                    
                    57
                    
                    
                    
                    34Dividends
      on Federal Home Loan Bank stock and other
                    
                    
                    76
                    
                    
                    
                    192
                    
                    
                    
                    295
                    
                    
                    
                    503Total
      interest and dividend income
                    
                    
                    5,403
                    
                    
                    
                    5,841
                    
                    
                    
                    16,446
                    
                    
                    
                    17,615Interest
      expenseDepositsDemand
                    
                    
                    34
                    
                    
                    
                    93
                    
                    
                    
                    130
                    
                    
                    
                    387Savings
                    
                    
                    15
                    
                    
                    
                    44
                    
                    
                    
                    65
                    
                    
                    
                    124Time
                    
                    
                    1,018
                    
                    
                    
                    1,321
                    
                    
                    
                    3,324
                    
                    
                    
                    4,028Borrowings
                    
                    
                    515
                    
                    
                    
                    553
                    
                    
                    
                    1,582
                    
                    
                    
                    1,573Total
      interest expense
                    
                    
                    1,582
                    
                    
                    
                    2,011
                    
                    
                    
                    5,101
                    
                    
                    
                    6,112Net
      interest income
                    
                    
                    3,821
                    
                    
                    
                    3,830
                    
                    
                    
                    11,345
                    
                    
                    
                    11,503Provision
      for loan losses
                    
                    
                    321
                    
                    
                    
                    338
                    
                    
                    
                    1,051
                    
                    
                    
                    996Net
      interest income after provision for loan losses
                    
                    
                    3,500
                    
                    
                    
                    3,492
                    
                    
                    
                    10,294
                    
                    
                    
                    10,507Noninterest
      incomeService
      charges on deposit accounts
                    
                    
                    568
                    
                    
                    
                    593
                    
                    
                    
                    1,726
                    
                    
                    
                    1,679Realized
      gains on sales of securities
                    
                    
                    47
                    
                    
                    
                    ––
                    
                    
                    
                    47
                    
                    
                    
                    25Realized
      gains on sales of loans
                    
                    
                    48
                    
                    
                    
                    56
                    
                    
                    
                    92
                    
                    
                    
                    106Realized
      gains on sales of other real estate and repossessed assets
                    
                    
                    37
                    
                    
                    
                    8
                    
                    
                    
                    36
                    
                    
                    
                    87Other
      income
                    
                    
                    196
                    
                    
                    
                    171
                    
                    
                    
                    630
                    
                    
                    
                    533Total
      noninterest income
                    
                    
                    896
                    
                    
                    
                    828
                    
                    
                    
                    2,531
                    
                    
                    
                    2,430Noninterest
      expenseSalaries
      and employee benefits
                    
                    
                    1,747
                    
                    
                    
                    1,673
                    
                    
                    
                    5,269
                    
                    
                    
                    4,960Occupancy
      and equipment
                    
                    
                    433
                    
                    
                    
                    424
                    
                    
                    
                    1,280
                    
                    
                    
                    1,227Professional
      services
                    
                    
                    174
                    
                    
                    
                    99
                    
                    
                    
                    568
                    
                    
                    
                    526Insurance
                    
                    
                    97
                    
                    
                    
                    79
                    
                    
                    
                    292
                    
                    
                    
                    291FDIC
      Insurance
                    
                    
                    137
                    
                    
                    
                    224
                    
                    
                    
                    377
                    
                    
                    
                    683Franchise
      and other taxes
                    
                    
                    126
                    
                    
                    
                    129
                    
                    
                    
                    384
                    
                    
                    
                    375Advertising
                    
                    
                    93
                    
                    
                    
                    43
                    
                    
                    
                    240
                    
                    
                    
                    229Stationery
      and office supplies
                    
                    
                    57
                    
                    
                    
                    61
                    
                    
                    
                    196
                    
                    
                    
                    230Amortization
      of intangibles
                    
                    
                    30
                    
                    
                    
                    26
                    
                    
                    
                    84
                    
                    
                    
                    93Core
      processing conversion expenses
                    
                    
                    184
                    
                    
                    
                    ––
                    
                    
                    
                    184
                    
                    
                    
                    ––Provision
      for losses on foreclosed real estate
                    
                    
                    70
                    
                    
                    
                    ––
                    
                    
                    
                    70
                    
                    
                    
                    ––Other
      expenses
                    
                    
                    539
                    
                    
                    
                    662
                    
                    
                    
                    1,585
                    
                    
                    
                    1,682Total
      noninterest expense
                    
                    
                    3,687
                    
                    
                    
                    3,420
                    
                    
                    
                    10,529
                    
                    
                    
                    10,296Income
      before federal income taxes
                    
                    
                    709
                    
                    
                    
                    900
                    
                    
                    
                    2,296
                    
                    
                    
                    2,641Federal
      income taxes
                    
                    
                    (1
                    )
                    
                    
                    143
                    
                    
                    
                    202
                    
                    
                    
                    411Net
      income
                    
                    $
                    710
                    
                    
                    $
                    757
                    
                    
                    $
                    2,094
                    
                    
                    $
                    2,230EARNINGS
      PER COMMON SHAREBasic
                    
                    $
                    0.15
                    
                    
                    $
                    0.16
                    
                    
                    $
                    0.43
                    
                    
                    $
                    0.48Diluted
                    
                    $
                    0.15
                    
                    
                    $
                    0.16
                    
                    
                    $
                    0.43
                    
                    
                    $
                    0.48DIVIDENDS
      PER COMMON SHARE
                    
                    $
                    0.14
                    
                    
                    $
                    0.14
                    
                    
                    $
                    0.42
                    
                    
                    $
                    0.42




See
Notes to Condensed Consolidated Financial Statements


4


United
Bancorp, Inc.


Condensed
Consolidated Statements of Comprehensive Income


(In
thousands)





Three months ended
                  
                  
                  Nine months endedSeptember 30,
                  
                  
                  September 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009(Unaudited)Net
      income
                  
                  $
                  710
                  
                  
                  $
                  757
                  
                  
                  $
                  2,094
                  
                  
                  $
                  2,230Other
      comprehensive income, net of tax:Unrealized
      holding gains on securities during the period, net of taxes of $58, $673,
      $432 and $416 for each respective period
                  
                  
                  113
                  
                  
                  
                  1,307
                  
                  
                  
                  838
                  
                  
                  
                  808Reclassification
      adjustment for realized gains included in income, net of taxes of $16, $0,
      $16 and $9 for each respective period
                  
                  
                  (31
                  )
                  
                  
                  ––
                  
                  
                  
                  (31
                  )
                  
                  
                  (16
                  )Comprehensive
      income
                  
                  $
                  792
                  
                  
                  $
                  2,064
                  
                  
                  $
                  2,901
                  
                  
                  $
                  3,022Accumulated
      other comprehensive income (loss)
                  
                  $
                  300
                  
                  
                  $
                  (302
                  )
                  
                  $
                  300
                  
                  
                  $
                  (302
                  )




See
Notes to Condensed Consolidated Financial Statements


5


United
Bancorp, Inc.


Condensed
Consolidated Statements of Cash Flows


For
the Nine Months Ended September 30, 2010 and 2009


(In
thousands)


(Unaudited)





2010
                  
                  
                  2009Operating
      ActivitiesNet
      income
                  
                  $
                  2,094
                  
                  
                  $
                  2,230Items
      not requiring (providing) cashDepreciation
      and amortization
                  
                  
                  574
                  
                  
                  
                  556Amortization
      of intangible assets
                  
                  
                  84
                  
                  
                  
                  93Expense
      related to share based compensation plans
                  
                  
                  164
                  
                  
                  
                  17Provision
      for loan losses
                  
                  
                  1,051
                  
                  
                  
                  996Provision
      for losses on foreclosed real estate
                  
                  
                  70
                  
                  
                  
                  ––Increase
      in value of bank-owned life insurance
                  
                  
                  (291
                  )
                  
                  
                  (272
                  )Realized
      gain on sales of securities
                  
                  
                  (47
                  )
                  
                  
                  (25
                  )Amortization
      of premiums and discounts on securities, net
                  
                  
                  84
                  
                  
                  
                  191Originations
      of loans held for sale
                  
                  
                  (5,727
                  )
                  
                  
                  (8,599
                  )Proceeds
      from sale of loans held for sale
                  
                  
                  5,819
                  
                  
                  
                  8,705Realized
      gains on sales of loans
                  
                  
                  (92
                  )
                  
                  
                  (106
                  )Amortization
      of ESOP
                  
                  
                  151
                  
                  
                  
                  147Realized
      gains on sales of other real estate and repossessed assets
                  
                  
                  (36
                  )
                  
                  
                  (87
                  )Amortization
      of mortgage servicing rights
                  
                  
                  28
                  
                  
                  
                  119Net
      change in accrued interest receivable and other assets
                  
                  
                  (1,002
                  )
                  
                  
                  745Net
      change in accrued expenses and other liabilities
                  
                  
                  255
                  
                  
                  
                  (1,982
                  )Net
      cash provided by operating activities
                  
                  
                  3,179
                  
                  
                  
                  2,728Investing
      ActivitiesSecurities
      available for sale:Sales,
      maturities, prepayments and calls
                  
                  
                  58,883
                  
                  
                  
                  88,328Purchases
                  
                  
                  (44,197
                  )
                  
                  
                  (61,785
                  )Securities
      held to maturity:Sales,
      maturities, prepayments and calls
                  
                  
                  5,929
                  
                  
                  
                  640Net
      change in loans
                  
                  
                  (21,356
                  )
                  
                  
                  (10,200
                  )Net
      change in certificates of deposit in other financial
      institutions
                  
                  
                  13,484
                  
                  
                  
                  (22,744
                  )Purchases
      of premises and equipment
                  
                  
                  (152
                  )
                  
                  
                  (686
                  )Proceeds
      from disposal of premises and equipment
                  
                  
                  ––
                  
                  
                  
                  38Proceeds
      from sale of other real estate and repossessed assets
                  
                  
                  580
                  
                  
                  
                  1,103Net
      cash provided by (used in) investing activities
                  
                  
                  13,171
                  
                  
                  
                  (5,306
                  )




See
Notes to Condensed Consolidated Financial Statements


6


United
Bancorp, Inc.


Condensed
Consolidated Statements of Cash Flows (continued)


For
the Nine Months Ended September 30, 2010 and 2009


(In
thousands)


(Unaudited)





2010
                
                
                2009Financing
      ActivitiesNet
      change in deposits
                
                $
                (4,114
                )
                
                $
                (5,634
                )Net
      change in borrowings
                
                
                (747
                )
                
                
                10,922Treasury
      stock issued, net of  purchases
                
                
                425
                
                
                
                269Cash
      dividends paid on common stock
                
                
                (2,217
                )
                
                
                (2,151
                )Net
      cash provided by (used in) financing activities
                
                
                (6,653
                )
                
                
                3,406Increase
      in Cash and Cash Equivalents
                
                
                9,697
                
                
                
                828Cash
      and Cash Equivalents, Beginning of Period
                
                
                31,271
                
                
                
                31,469Cash
      and Cash Equivalents, End of Period
                
                $
                40,968
                
                
                $
                32,297Supplemental
      Cash Flows InformationInterest
      paid on deposits and borrowings
                
                $
                5,169
                
                
                $
                6,180Federal
      income taxes paid
                
                $
                520
                
                
                $
                357Supplemental
      Disclosure of Non-Cash Investing and Financing ActivitiesTransfers
      from loans to real estate and other repossessed assets
                
                $
                977
                
                
                $
                644




See
Notes to Condensed Consolidated Financial Statements


7


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





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,
2010, 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, 2009 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 and nine months ended
September 30, 2010, 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, 2009 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.




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, St.
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.  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 20 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.


8


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





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 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
uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if
any, are credited to the allowance.




The
allowance for loan losses is evaluated on a monthly basis by management and the
Citizens Board of Directors and is based upon management’s periodic review of
the collectibility 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 nonclassified loans and is based on historical charge-off
experience and expected loss given default derived from the Company’s internal
risk rating process.  Other adjustments may be made to the allowance for
pools of loans after an assessment of internal or external influences on credit
quality that are not fully reflected in the historical loss or risking rating
data.




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.  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 commercial 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.




Groups of
loans with similar risk characteristics are collectively evaluated for
impairment based on the group’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.


9


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





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 and non-vested restricted
stock.  At September 30, 2010 and 2009, the ESOP held 242,266 and 283,635
unallocated shares, respectively, which were not included in weighted-average
common shares outstanding.  In addition at September 30, 2010 and 2009, the
Company has 180,000 and 170,000 of non vested restricted stock, 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 compensation plans.




Three months ended
                      September 30,
                    
                    
                    Nine months ended
                      September 30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(In thousands, except share and per share data)BasicNet
      income
                    
                    $
                    710
                    
                    
                    $
                    757
                    
                    
                    $
                    2,094
                    
                    
                    $
                    2,230Dividends
      on non-vested restricted stock
                    
                    
                    (25
                    )
                    
                    
                    (25
                    )
                    
                    
                    (75
                    )
                    
                    
                    (25
                    )Net
      earnings allocated to stockholders
                    
                    $
                    685
                    
                    
                    $
                    732
                    
                    
                    $
                    2,019
                    
                    
                    $
                    2,205Weighted
      average common shares outstanding
                    
                    
                    4,705,278
                    
                    
                    
                    4,626,354
                    
                    
                    
                    4,681,892
                    
                    
                    
                    4,612,680Basic
      earnings per common share
                    
                    $
                    0.15
                    
                    
                    $
                    0.16
                    
                    
                    $
                    0.43
                    
                    
                    $
                    0.48DilutedNet
      earnings allocated to stockholders
                    
                    $
                    685
                    
                    
                    $
                    732
                    
                    
                    $
                    2,019
                    
                    
                    $
                    2,205Weighted
      average common shares outstanding for basic earnings per common
      share
                    
                    
                    4,705,278
                    
                    
                    
                    4,626,354
                    
                    
                    
                    4,681,892
                    
                    
                    
                    4,612,680Add:  Dilutive
      effects of assumed exercise of stock options and restricted
      stock
                    
                    
                    15,905
                    
                    
                    
                    ––
                    
                    
                    
                    20,907
                    
                    
                    
                    390Average
      shares and dilutive potential common shares
                    
                    
                    4,721,183
                    
                    
                    
                    4,626,354
                    
                    
                    
                    4,702,799
                    
                    
                    
                    4,613,070Diluted
      earnings per common share
                    
                    $
                    0.15
                    
                    
                    $
                    0.16
                    
                    
                    $
                    0.43
                    
                    
                    $
                    0.48Number
      of stock options not considered in computing diluted earnings per share
      due to antidilutive nature
                    
                    
                    53,714
                    
                    
                    
                    55,529
                    
                    
                    
                    53,714
                    
                    
                    
                    55,529




Options
to purchase 53,714 and 55,529 shares of common stock, at a weighted-average
exercise price of $10.34 per share, were outstanding at September 30, 2010 and
2009, respectively, 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 and Nine Months Ended September 30, 2010 and 2009




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 2006.




Recent
Accounting Pronouncements




FASB ASC
860-10 concerning accounting for transfers of financial assets was issued in
September 2009 and changes the derecognition guidance for transferors of
financial assets, including entities that sponsor securitizations, to align that
guidance with the original intent of previous guidance.  FASB ASC 860-10
also eliminates the exemption from consolidation for qualifying special-purpose
entities (QSPEs).  As a result, all existing QSPEs need to be evaluated to
determine whether the QSPE should be consolidated in accordance with FASB ASC
860-10.




FASB ASC
860-10 is effective as of the beginning of a reporting entity’s first annual
reporting period beginning after November 15, 2009 (January 1, 2010, as to the
Company), for interim periods within that first annual reporting period, and for
interim and annual reporting periods thereafter. The recognition and measurement
provisions of FASB ASC 860-10 must be applied to transfers that occur on or
after the effective date.  Early application is prohibited.  FASB ASC
860-10 also requires additional disclosures about transfers of financial assets
that occur both before and after the effective date.  The Company adopted
FASB ASC 860-10 effective January 1, 2010, as required, without material effect
on its consolidated financial statements.




FASB ASC
860-10 also improves how enterprises account for and disclose their involvement
with variable interest entities (VIE’s), which are special-purpose entities, and
other entities whose equity at risk is insufficient or lack certain
characteristics.  Among other things, FASB ASC 860-10 changes how an entity
determines whether it is the primary beneficiary of a variable interest entity
(VIE) and whether that VIE should be consolidated.  FASB ASC 860-10
requires an entity to provide significantly more disclosures about its
involvement with VIEs.  As a result, the Company must comprehensively
review its involvements with VIEs and potential VIEs, including entities
previously considered to be qualifying special purpose entities, to determine
the effect on its consolidated financial statements and related
disclosures.  FASB ASC 860-10 is effective as of the beginning of a
reporting entity’s first annual reporting period that begins after November 15,
2009 (January 1, 2010, as to the Company), and for interim periods within the
first annual reporting period.  Earlier application is
prohibited.




Accounting
Standards Update (ASU) No. 2009-16 (formerly SFAS 166) modified the criteria to
qualify a transfer of a portion of a financial asset for sale accounting. 
This guidance eliminated non-prorata participations, such as last-in, first-out
loan participations, being accounted for as loan sales.  Instead, these
types of transactions will be accounted for as secured borrowings, which would
require the legally sold piece of the loan to remain on the books of the seller
and be offset with a liability.  This could also have regulatory
implications, such as issues with lending limits and regulatory capital
levels.  The Company must apply ASU 2009-16 to new transactions and
modifications of existing transactions occurring on or after January 1,
2010.  The Company adopted ASU 2009-16 effective January 1, 2010, as
required, without significant effect on its consolidated financial
statements.


11


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





FASB
Accounting Standards Update (ASU) 2010-20, Receivables:  Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit
Losses (Topic 310), issued on July 21, 2010, concerns improved
disclosures regarding the credit quality in a financial institution’s loan
portfolio.  The guidance requires additional disaggregation of the credit
portfolio by portfolio segment and class of receivable, a revised roll forward
of the allowance for credit losses, presentation of the credit portfolio by
credit quality indicators, an aging schedule of past due receivables, disclosure
of troubled debt restructurings and purchases and sales of receivables by
portfolio segment.  The period-end disclosures are effective for periods
ending on or after December 15, 2010 (December 31, 2010 for the Company). 
The activity disclosures are effective for periods beginning on or after
December 15, 2010 (January 1, 2011 for the Company).  The adoption of FASB
ASU 2010-20 is not expected to have a material effect on the Company’s financial
condition or results of operations.




Note
      2:
            Securities




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




Amortized
                    Cost
                  
                  
                  Gross
                    Unrealized
                    Gains
                  
                  
                  Gross
                    Unrealized
                    Losses
                  
                  
                  Approximate
                    Fair Value(In thousands)Available-for-sale
      Securities:September
      30, 2010:U.S.
      government agencies
                  
                  $
                  46,217
                  
                  
                  $
                  184
                  
                  
                  $
                  (17
                  )
                  
                  $
                  46,384State
      and political subdivisions
                  
                  
                  25,080
                  
                  
                  
                  907
                  
                  
                  
                  ––
                  
                  
                  
                  25,987Government
      sponsored entities mortgage-backed securities
                  
                  
                  10,077
                  
                  
                  
                  596
                  
                  
                  
                  ––
                  
                  
                  
                  10,673Equity
      securities
                  
                  
                  4
                  
                  
                  
                  4
                  
                  
                  
                  ––
                  
                  
                  
                  8$
                  81,378
                  
                  
                  $
                  1,691
                  
                  
                  $
                  (17
                  )
                  
                  $
                  83,052December
      31, 2009:U.S.
      government agencies
                  
                  $
                  57,664
                  
                  
                  $
                  35
                  
                  
                  $
                  (495
                  )
                  
                  $
                  57,204State
      and political subdivisions
                  
                  
                  26,000
                  
                  
                  
                  421
                  
                  
                  
                  (77
                  )
                  
                  
                  26,344Government
      sponsored entities mortgage-backed securities
                  
                  
                  12,466
                  
                  
                  
                  567
                  
                  
                  
                  (2
                  )
                  
                  
                  13,031Equity
      securities
                  
                  
                  4
                  
                  
                  
                  2
                  
                  
                  
                  ––
                  
                  
                  
                  6$
                  96,134
                  
                  
                  $
                  1,025
                  
                  
                  $
                  (574
                  )
                  
                  $
                  96,585


12


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





Amortized
                  Cost
                
                
                Gross
                  Unrealized
                  Gains
                
                
                Gross
                  Unrealized
                  Losses
                
                
                Approximate
                  Fair Value(In thousands)Held-to-maturity
      Securities:September
      30, 2010:State
      and political subdivisions
                
                $
                8,382
                
                
                $
                291
                
                
                $
                ––
                
                
                $
                8,673December
      31, 2009:State
      and political subdivisions
                
                $
                14,277
                
                
                $
                391
                
                
                $
                (25
                )
                
                $
                14,643




The
amortized cost and fair value of available-for-sale securities and
held-to-maturity securities at September 30, 2010, 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. Maturities for mortgage-backed securities are
presented in the table below based on their projected maturities.




Available-for-sale
                    
                    
                    Held-to-maturityAmortized
                      Cost
                    
                    
                    Fair
                      Value
                    
                    
                    Amortized
                      Cost
                    
                    
                    Fair
                      Value(In thousands)Within
      one year
                    
                    $
                    130
                    
                    
                    $
                    131
                    
                    
                    $
                    1,187
                    
                    
                    $
                    1,192One
      to five years
                    
                    
                    17,401
                    
                    
                    
                    17,535
                    
                    
                    
                    3,202
                    
                    
                    
                    3,339Five
      to ten years
                    
                    
                    34,553
                    
                    
                    
                    35,449
                    
                    
                    
                    3,458
                    
                    
                    
                    3,603After
      ten years
                    
                    
                    29,290
                    
                    
                    
                    29,929
                    
                    
                    
                    535
                    
                    
                    
                    53981,374
                    
                    
                    
                    83,044
                    
                    
                    
                    8,382
                    
                    
                    
                    8,673Equity
      securities
                    
                    
                    4
                    
                    
                    
                    8
                    
                    
                    
                    -
                    
                    
                    
                    -Totals
                    
                    $
                    81,378
                    
                    
                    $
                    83,052
                    
                    
                    $
                    8,382
                    
                    
                    $
                    8,673





The
carrying value of securities pledged as collateral, to secure public deposits
and for other purposes, was $83.6 million and $81.5 million at September 30,
2010 and December 31, 2009, respectively.


13


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





Gains and
losses on the sale of securities are recorded on the trade date and are
determined using the specific identification method.  Information with
respect to sales of available-for-sale securities and resulting gross realized
gains and losses was as follows:




Nine months ended
                    September 30,2010
                  
                  
                  2009(In thousands)Proceeds
      from sale
                  
                  $
                  4,460
                  
                  
                  $
                  1,000Gross
      gains
                  
                  
                  104
                  
                  
                  
                  25Gross
      losses
                  
                  
                  (57
                  )
                  
                  
                  ––





During
the three months ended September 30, 2010 the Company sold one security with an
amortized cost of $1.0 million resulting in a realized loss of approximately
$29,000.  This one security was classified on the books as held to maturity
and was sold due to a credit quality down grade of the municipality
issuer.




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, 2010 and December 31, 2009, was $2.0 million and
$47.8 million, which represented approximately 2.2% and 43.0%, respectively, of
the Company’s available-for-sale and held-to-maturity 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.




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.




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,
2010 and December 31, 2009:




September
      30, 2010Less
      than 12 Months
                                                  
                                                  
                                                  12
      Months or More
                                                  
                                                  
                                                  TotalDescription
      of
                                                    Securities
                                                  
                                                  Fair
      Value
                                                  
                                                  
                                                  Unrealized
                                                    Losses
                                                  
                                                  
                                                  Fair
      Value
                                                  
                                                  
                                                  Unrealized
                                                    Losses
                                                  
                                                  
                                                  Fair
      Value
                                                  
                                                  
                                                  Unrealized
                                                    Losses(In
      thousands)US
      Government agencies
                                                  
                                                  $
                                                  2,012
                                                  
                                                  
                                                  $
                                                  (17
                                                  )
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  2,012
                                                  
                                                  
                                                  $
                                                  (17
                                                  )Total
      temporarily impaired securities
                                                  
                                                  $
                                                  2,012
                                                  
                                                  
                                                  $
                                                  (17
                                                  )
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  2,012
                                                  
                                                  
                                                  $
                                                  (17
                                                  )


14


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





December
      31, 2009Less
      than 12 Months
                                                  
                                                  
                                                  12
      Months or More
                                                  
                                                  
                                                  TotalDescription
      of
                                                    Securities
                                                  
                                                  Fair
      Value
                                                  
                                                  
                                                  Unrealized
                                                    Losses
                                                  
                                                  
                                                  Fair
      Value
                                                  
                                                  
                                                  Unrealized
                                                    Losses
                                                  
                                                  
                                                  Fair
      Value
                                                  
                                                  
                                                  Unrealized
                                                    Losses(In
      thousands)US
      Government agencies
                                                  
                                                  $
                                                  40,699
                                                  
                                                  
                                                  $
                                                  (495
                                                  )
                                                  
                                                  $
                                                  ––
                                                  
                                                  
                                                  $
                                                  ––
                                                  
                                                  
                                                  $
                                                  40,699
                                                  
                                                  
                                                  $
                                                  (495
                                                  )Government
      sponsored entities mortgage-backed securities
                                                  
                                                  
                                                  651
                                                  
                                                  
                                                  
                                                  (2
                                                  )
                                                  
                                                  
                                                  ––
                                                  
                                                  
                                                  
                                                  ––
                                                  
                                                  
                                                  
                                                  651
                                                  
                                                  
                                                  
                                                  (2
                                                  )State
      and political subdivisions
                                                  
                                                  
                                                  4,037
                                                  
                                                  
                                                  
                                                  (43
                                                  )
                                                  
                                                  
                                                  2,450
                                                  
                                                  
                                                  
                                                  (59
                                                  )
                                                  
                                                  
                                                  6,487
                                                  
                                                  
                                                  
                                                  (102
                                                  )Total
      temporarily impaired securities
                                                  
                                                  $
                                                  45,387
                                                  
                                                  
                                                  $
                                                  (540
                                                  )
                                                  
                                                  $
                                                  2,450
                                                  
                                                  
                                                  $
                                                  (59
                                                  )
                                                  
                                                  $
                                                  47,837
                                                  
                                                  
                                                  $
                                                  (599
                                                  )




The
unrealized losses on the Company’s investments in U.S. Government agency,
mortgage-backed and municipal securities 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, 2010.




Note
      3:
            Allowance
      for Loan Losses




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




Three months ended
                    September 30,
                  
                  
                  Nine months ended
                    September 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009(In thousands)Beginning
      balance
                  
                  $
                  2,729
                  
                  
                  $
                  3,291
                  
                  
                  $
                  2,390
                  
                  
                  $
                  2,770Provision
      for loan losses
                  
                  
                  321
                  
                  
                  
                  338
                  
                  
                  
                  1,051
                  
                  
                  
                  996Loans
      charged-off
                  
                  
                  (345
                  )
                  
                  
                  (768
                  )
                  
                  
                  (924
                  )
                  
                  
                  (1,022
                  )Recoveries
      of previous charge-offs
                  
                  
                  50
                  
                  
                  
                  65
                  
                  
                  
                  238
                  
                  
                  
                  182Ending
      balance
                  
                  $
                  2,755
                  
                  
                  $
                  2,926
                  
                  
                  $
                  2,755
                  
                  
                  $
                  2,926


15


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





The
Company’s impaired loans totaled $7.0 million and $4.7 million at September 30,
2010 and December 31, 2009, 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 $1.6
million and $984,000 related to impaired loans of $4.7 million and $3.3 million,
at September 30, 2010 and December 31, 2009, respectively.  Impaired loans
of $2.3 million and $1.4 million had no related allowance for loan losses at
September 30, 2010 and December 31, 2009, respectively.




Interest
income of $179,000 and $109,000 was recognized on average impaired loans of $7.2
million and $7.0 million for the nine months ended September 30, 2010 and 2009,
respectively.  Interest income was recognized on impaired loans on a cash
basis for each of the nine months ended September 30, 2010 and
2009.




At
September 30, 2010 and December 31, 2009, accruing loans delinquent 90 days
or more (including impaired loans of $325,000 at September 30, 2010 and $477,000
at December 31, 2009) totaled $521,000
and $971,000, respectively.  Non-accruing loans at September 30, 2010 and
December 31, 2009 (including impaired loans of $4.3 million at September 30,
2010 and $4.2 million at December 31, 2009) were $4.9 million and $5.4 million,
respectively.




Note
      4:
            Benefit
      Plans




Pension
expense includes the following:




Three months ended
                    September 30,
                  
                  
                  Nine months ended
                    September 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009(In thousands)Service
      cost
                  
                  $
                  67
                  
                  
                  $
                  63
                  
                  
                  $
                  201
                  
                  
                  $
                  189Interest
      cost
                  
                  
                  45
                  
                  
                  
                  41
                  
                  
                  
                  135
                  
                  
                  
                  121Expected
      return on assets
                  
                  
                  (58
                  )
                  
                  
                  (37
                  )
                  
                  
                  (174
                  )
                  
                  
                  (111
                  )Amortization
      of prior service cost, transition liability, net gain and plan
      amendment
                  
                  
                  21
                  
                  
                  
                  30
                  
                  
                  
                  63
                  
                  
                  
                  90Pension
      expense
                  
                  $
                  75
                  
                  
                  $
                  97
                  
                  
                  $
                  225
                  
                  
                  $
                  289





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.


16


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





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 31,2010
                  
                  
                  2009(Unaudited)(In thousands)Commitments
      to extend credit
                  
                  $
                  25,916
                  
                  
                  $
                  41,351Ready
      reserve lines
                  
                  
                  13,413
                  
                  
                  
                  13,477Standby
      letters of credit
                  
                  
                  586
                  
                  
                  
                  676




Note
      6:
            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




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.  The Company has
no available for-sale-securities classified as Level 1 of the hierarchy. 
If quoted market prices are not available, the Company generally relies on
prices obtained from independent pricing services or brokers.  Securities
measured with this valuation technique are generally classified as Level 2 of
the hierarchy, and their fair values are estimated by using pricing models,
quoted prices of securities with similar characteristics or discounted cash
flows using significant inputs observable in the market.  Examples of
Level 2 securities include U.S. government agency bonds, mortgage-backed
securities, state and political subdivision bonds and equity securities. 
In certain cases where Level 1 or Level 2 inputs are not available, securities
are classified within Level 3 of the hierarchy.  The Company has no
securities classified as Level 3 of the hierarchy.


17


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





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, 2010 and December 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)September
      30, 2010U.S.
      government agencies
                  
                  $
                  46,384
                  
                  
                  $
                  ––
                  
                  
                  $
                  46,384
                  
                  
                  $
                  ––State
      and political subdivisions
                  
                  
                  25,987
                  
                  
                  
                  ––
                  
                  
                  
                  25,987
                  
                  
                  
                  ––Government
      sponsored entities mortgage-backed securities
                  
                  
                  10,673
                  
                  
                  
                  ––
                  
                  
                  
                  10,673
                  
                  
                  
                  ––Equity
      securities
                  
                  
                  8
                  
                  
                  
                  ––
                  
                  
                  
                  8
                  
                  
                  
                  ––December
      31, 2009U.S.
      government agencies
                  
                  $
                  57,204
                  
                  
                  $
                  ––
                  
                  
                  $
                  57,204
                  
                  
                  $
                  ––State
      and political subdivisions
                  
                  
                  26,344
                  
                  
                  
                  ––
                  
                  
                  
                  26,344
                  
                  
                  
                  ––Government
      sponsored entities mortgage-backed securities
                  
                  
                  13,031
                  
                  
                  
                  ––
                  
                  
                  
                  13,031
                  
                  
                  
                  ––Equity
      securities
                  
                  
                  6
                  
                  
                  
                  ––
                  
                  
                  
                  6
                  
                  
                  
                  ––





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 instruments
pursuant to the valuation hierarchy.




Impaired
Loans




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.


18


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009




Mortgage
Servicing Rights




Mortgage
servicing rights, which are included in other assets, 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.  Due to the nature of
the valuation inputs, foreclosed assets held for sale are classified within
Level 3 of the hierarchy.




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, 2010 and December 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)September
      30, 2010Impaired
      loans
                  
                  $
                  3,010
                  
                  
                  $
                  ––
                  
                  
                  $
                  ––
                  
                  
                  $
                  3,010Foreclosed
      assets held for sale
                  
                  
                  218
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  218December
      31, 2009Impaired
      loans
                  
                  $
                  667
                  
                  
                  $
                  ––
                  
                  
                  $
                  ––
                  
                  
                  $
                  667Mortgage
      servicing rights
                  
                  
                  267
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  267Foreclosed
      assets held for sale
                  
                  
                  1,002
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  1,002


19


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009





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.  Fair value is the estimated
amount at which financial assets or liabilities could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation
sale.  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.




September 30, 2010
                      
                      
                      December 31, 2009Carrying
                        Amount
                      
                      
                      Fair
                        Value
                      
                      
                      Carrying
                        Amount
                      
                      
                      Fair
                        Value(In thousands)Financial
      assetsCash
      and cash equivalents
                      
                      $
                      40,968
                      
                      
                      $
                      40,968
                      
                      
                      $
                      31,271
                      
                      
                      $
                      31,271Certificates
      of deposit in other financial institutions
                      
                      
                      4,091
                      
                      
                      
                      4,091
                      
                      
                      
                      17,575
                      
                      
                      
                      17,575Available-for-sale
      securities
                      
                      
                      83,052
                      
                      
                      
                      83,052
                      
                      
                      
                      96,585
                      
                      
                      
                      96,585Held-to-maturity
      securities
                      
                      
                      8,382
                      
                      
                      
                      8,673
                      
                      
                      
                      14,277
                      
                      
                      
                      14,643Loans,
      net of allowance for loan losses
                      
                      
                      274,756
                      
                      
                      
                      267,283
                      
                      
                      
                      255,336
                      
                      
                      
                      248,918Federal
      Home Loan Bank stock
                      
                      
                      4,810
                      
                      
                      
                      4,810
                      
                      
                      
                      4,810
                      
                      
                      
                      4,810Accrued
      interest receivable
                      
                      
                      1,845
                      
                      
                      
                      1,845
                      
                      
                      
                      2,218
                      
                      
                      
                      2,218Financial
      liabilitiesDeposits
                      
                      
                      340,429
                      
                      
                      
                      327,084
                      
                      
                      
                      344,543
                      
                      
                      
                      325,179Short-term
      borrowings
                      
                      
                      15,074
                      
                      
                      
                      15,074
                      
                      
                      
                      10,277
                      
                      
                      
                      10,264Federal
      Home Loan Bank advances
                      
                      
                      43,584
                      
                      
                      
                      45,532
                      
                      
                      
                      49,128
                      
                      
                      
                      49,540Subordinated
      debentures
                      
                      
                      4,000
                      
                      
                      
                      3,093
                      
                      
                      
                      4,000
                      
                      
                      
                      3,093Interest
      payable
                      
                      
                      330
                      
                      
                      
                      330
                      
                      
                      
                      398
                      
                      
                      
                      398




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




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




The
carrying amounts approximate fair value.


20





United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Nine Months Ended September 30, 2010 and 2009




Certificates
of Deposit in other Financial Institutions




The fair
value of certificates of deposit in other financial institutions is estimated by
discounting the future cash flows using the current rates at which similar
certificates could be acquired from financial institutions with similar credit
ratings and for the same remaining maturities.  Certificates with similar
characteristics were aggregated for purposes of the calculations.




Held-to-maturity
Securities




Fair
values equal quoted market prices, if available.  If quoted market prices
are not available, fair value is estimated based on quoted market prices of
similar securities.




Loans




The fair
value of loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.  Loans with similar
characteristics were aggregated for purposes of the calculations.




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, 2010 and December 31, 2009.




21




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




The
following discusses the financial condition of the Company as of September 30,
2010, as compared to December 31, 2009, and the results of operations for the
three and nine months ended September 30, 2010, compared to the same period in
2009.  This discussion should be read in conjunction with the interim
condensed consolidated financial statements and related footnotes included
herein.




Introduction




The
Company reported net income of $710,000 for the quarter ended September 30,
2010, compared to $757,000 for the quarter ended September 30, 2009, a decrease
of 6.2%.  On a per share basis, the Company’s three months diluted earnings
were $0.15 for the 2010 period, as compared to $0.16 for the same period in
2009.  For the nine months ended September 30, 2010 the Company reported
net income of $2,094,000, compared to $2,230,000 for the nine months ended
September 30, 2009, a decrease of $136,000 or 6.1%.  On a per share basis,
the Company’s nine months diluted earnings were $0.43 for 2010, as compared to
$0.48 for 2009.




The
Company’s earnings in the nine months ended September 30, 2010 generated an
annualized 0.63% return on average assets (“ROA”) and a 7.74% return on average
equity (“ROE”), compared to 0.62% ROA and 8.21% ROE for the nine months ended
September 30, 2009.  Comparing the nine months ended September 30, 2010 to
2009, the Company’s net interest margin was 3.94% compared to 3.83%, an increase
of 11 basis points. Although the net interest margin increased, the Company’s
net interest income decreased by approximately $158,000 or 1.4%, due to a
decrease in the Company’s earning assets.  At September 30, 2010, the
Company had approximately $41 million of liquidity in cash and cash equivalents
to fund our future loan demand.  With this high level of available funding,
the Company has not been aggressive in the retention of higher cost deposit
funding, mainly certificates of deposit.  While this has resulted in a
decrease in the earning assets of the Bank, it increased the net interest margin
of the Company since the cost reduction of the certificates of deposit exceeded
the rate of return on the cash and cash equivalents of the Company. 
Comparing the same periods, customer service charges on deposits increased
$47,000.  On the expense side, total noninterest expense increased $233,000
for the nine months ended September 30, 2010 as compared to 2009.  The
increase in total noninterest expense was primarily due to the third quarter
2010 implementation of our new data processing system.  The Company
incurred approximately $184,000 in direct expenses related to this new system,
which is non-recurring.  In addition, the Company incurred a $70,000
period-over-period increase in losses on foreclosed real estate due to
additional write-downs that were taken and a period-over-period increase of
$55,000 in our provision for loan losses.  The increase in the provision
for loan losses for the nine months ended September 30, 2010 was predicated
primarily upon the economic challenges facing the banking industry.  Asset
quality improved in the current period with an 18.3% reduction in non-performing
loans.  During the third quarter of 2010, the Company recognized a tax
benefit resulting from the resolution of a tax contingency, which reduced
federal income taxes by approximately $120,000.




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.




22


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




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.




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 and capital
that could negatively impact the Company’s ability to meet regulatory capital
requirements and maintain sufficient liquidity.




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.


23


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 the meet the credit needs of the markets we serve. At
September 30, 2010, gross loans were $ 277.5 million, compared to $257.7 million
at December 31, 2009, an increase of $19.8 million or 7.7%.  The overall
increase in the loan portfolio was comprised of a $14.6 million increase in
commercial and commercial real estate loans and a $3.7 million increase in
installment loans since December 31, 2009.




Commercial
and commercial real estate loans comprised 59.6% of total loans at September 30,
2010, compared to 58.5% at December 31, 2009.  Commercial and commercial
real estate loans have increased $14.6 million, or 9.7%
since December 31, 2009.  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.




Installment
loans represented 17.5% of total loans at September 30, 2010, and 17.4% at
December 31, 2009.  This indirect lending type of financing carries
somewhat more risk than real estate lending; however, it also provides for
higher yields.  Installment loans have increased $3.7 million, or 9.0%,
since December 31, 2009.  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 banking
locations.




Real
estate loans were 22.9% of total loans at September 30, 2010 and 24.1% at
December 31, 2009.  Real estate loans have increased by $1.5 million since
December 31, 2009.  Real estate lending for the nine months ended September
30, 2010 has been slow with respect to the Company’s adjustable-rate mortgage
products.  As of September 30, 2010, the Bank has approximately $26.4
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 September 30, 2010, the Company did not hold any loans
for sale.




The
allowance for loan losses totaled $2.8 million at September 30, 2010, which
represented 0.99% of total loans, and $2.4 million at December 31, 2009, or
0.92% of total loans.  The increased 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.  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 nine
months ended September 30, 2010 were approximately $686,000, or 28.5%, of the
beginning balance in the allowance for loan losses.




24


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 state 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 September 30, 2010 decreased
approximately $13.5 million, or 14.0%, from December 31, 2009 totals.  With
the overall low interest rate environment, the Company has experienced a high
level of called bond activity during the first nine months of 2010.  While
the Company has plans to reinvest a portion of these funds into the growing loan
portfolio, the balance will be reinvested in other available-for-sale
securities.  There is lag between the time when bonds are called and the
right investment opportunities are 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”)
in 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 September 30,
2010, the Company held as investment approximately $4.1 million of CD’s with an
average yield of 1.78% and an average term to maturity of approximately
133    days. With the continued low interest rate environment, the
opportunity to invest in short term CD’s in other financial institutions has
become limited during the first nine months of 2010.




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 September 30, 2010, total core deposits
increased approximately $1.3 million, or less than 1.0%.  The Company’s
savings accounts increased $6.4 million, or 14.0%, from December 31, 2009
totals.  The Company’s interest-bearing demand deposits increased $5.1
million, or 4.7%, noninterest-bearing demand deposits increased $2.2 million, or
9.7%, while certificates of deposit under $100,000 decreased by $12.4 million,
or 10.6%.




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 September 30, 2010, certificates of deposit greater than $100,000 decreased
$5.5 million, or 10.6%, from December 31, 2009 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, 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
$4.8 million from December 31, 2009 totals.


25




United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




Results
of Operations for the Nine Months Ended September 30, 2010 and 2009




Net
Income




Basic and
diluted earnings per share for the nine months ended September 30, 2010 totaled
$0.43 compared with $0.48 for the nine months ended September 30, 2009.  In
dollars, the Company’s net income was $2,094,000
for the nine months ended September 30, 2010, a decrease of $136,000, or 6.1%
compared with net income of $2,230,000 for the same period in 2009.




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 decreased 1.4%, or $158,000, for the nine months ended September
30, 2010 compared to the same period in 2009. As the historically low interest
rates continue into the first half of 2011, it will be challenging to continue
spreading the net interest margin by lowering the Company’s cost of funds on an
accelerated basis relative to the income generated by its assets.




Provision
for Loan Losses




The
provision for loan losses was $1,051,000 for the nine months ended September 30,
2010, compared to $996,000
for the same period in 2009.  The increase in loan loss provision for the
nine-month period ended September 30, 2010, was based primarily on 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 nine months ended September 30, 2010 was $2,531,000, an increase
of $101,000, or 4.2%, compared to $2,430,000 for the nine-month period ended
September 30, 2009.  During the nine-months ended September 30, 2010, the
increase in noninterest income was driven by an increase in customer service
charges of approximately $47,000.


26


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




Noninterest
Expense




Noninterest
expense was $10,529,000 for the nine months ended September 30, 2010 an increase
of $233,000, or 2.3%, compared to the nine months ended September 30,
2009.  Salaries and employee benefits expense increased $309,000, or 6.2%,
for the period ended September 30, 2010 over the same period in 2009.  This
increase was primarily due to the expansion of the Company’s management team in
preparation for the previously announced management succession plan, plus normal
merit increases, increase in benefit costs and restricted stock award
expenses.  During the third quarter of 2009, the Company issued restricted
stock awards to certain officers and directors.  Occupancy and equipment
expense increased $53,000, or 4.3% for the nine months ended September 30, 2010
as compared to the same period in 2009.  Increased depreciation expense on
premises, computer hardware and software and related service maintenance was the
primary reason for the increase.  Professional fees increased $42,000 for
the nine month ended September 30, 2010, as compared to the same period in
2009.  Deposit insurance premiums decreased $306,000 for the nine months
ended September 30, 2010, as compared to the same period in 2009.  In the
second quarter of September 2009, the Federal Deposit Insurance Corporation
imposed a 5 basis point assessment on all FDIC insured banks.  This special
assessment was approximately $225,000 and was expensed in the second quarter of
2009.  The Company incurred $184,000 in direct expenses related to the core
processing conversion, which is non-recurring. In addition, the Company incurred
a $70,000 period-over-period increase in losses on foreclosed real estate due to
additional write-downs.




Federal
Income Taxes




The
provision for federal income taxes was $202,000 for the nine months ended
September 30, 2010, a decrease of $209,000 compared to the same period in
2009.  The decrease in tax expense was due primarily to a $345,000decrease in
pretax income.  In addition, during the third quarter of 2010, the Company
recognized a tax benefit resulting from the resolution of a tax contingency,
which reduced federal income taxes by approximately $120,000. The effective tax
rate was 8.8% and 15.6% for the nine months ended September 30, 2010 and 2009,
respectively.





Results
of Operations for the Three Months Ended September 30, 2010 and
2009




Net
Income




Basic and
diluted earnings per share for the three months ended September 30, 2010 totaled
$0.15 compared with $0.16 with for the three months ended September 30,
2009.  In dollars, the Company’s net income was $710,000for the three
months ended September 30, 2010, a decrease of $47,000, or 6.2%, compared with
net income of $757,000 for the same quarter in 2009.




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 decreased $9,000, for the three months ended September 30, 2010
compared to the same period in 2009. As the historically low interest rates
continue into the second half of 2010, it will be challenging to continue
spreading the net interest margin by lowering the Company’s cost of funds on an
accelerated basis relative to the income generated by its
assets.


27


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




Provision
for Loan Losses




The
provision for loan losses was $321,000 for the three months ended September 30,
2010, compared to $338,000 for the same period in 2009.  The decrease in
loan loss provision for the three-month period ended September 30, 2010, was
based primarily on the decrease in non-performing loans.




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 September 30, 2010 was $896,000, an increase
of $68,000 or 8.2%, compared to $828,000 for the three-month period ended
September 30, 2009.  During the three-months ended September 30, 2010, the
increase in noninterest income was due to an increase in realized gains on sales
of securities of $47,000 and an increase of $29,000 in realized gains on the
sale of other real estate and repossessed assets.




Noninterest
Expense




Noninterest
expense was $3,687,000 for the three months ended September 30, 2010 an increase
of $267,000, or 7.8%, compared to the three months ended September 30,
2009.  Salaries and employee benefit expense increased $74,000, or 4.4%,
for the three month period ended September 30, 2010 over the same period in
2009.  This increase was primarily due to the expansion of the Company’s
management team in preparation for the previously announced management
succession plan, plus normal merit increases, increase in benefits costs and
restricted stock award expenses.  During the third quarter of 2009, the
Company issued restricted stock awards to certain officers and directors. 
Occupancy and equipment expense increased $9,000 for the three months ended
September 30, 2010 over the same period in 2009.  Increased depreciation
expense on premises, computer hardware and software and related service
maintenance was the primary reason for the increase.  Deposit insurance
premiums decreased $87,000 for the three months ended September 30, 2010, as
compared to the same period in 2009.  The Company incurred $184,000 in
direct expenses related to the core data processing conversion, which is
non-recurring. In addition, the Company incurred a $70,000 period-over-period
increase in losses on foreclosed real estate due to additional
write-downs.




Federal
Income Taxes




The
provision for federal income taxes (benefit) was $(1,000) for the three months
ended September 30, 2010, a decrease of $144,000 compared to the same period in
2009.  The decrease in tax expense was in part to a $191,000 decrease in
pretax income.  Additionally, during the third quarter of 2010, the Company
recognized a tax benefit resulting from the resolution of a tax contingency,
which reduced federal income taxes by approximately $120,000.




Capital
Resources




Internal
capital growth, through the retention of earnings, is the primary means of
maintaining capital adequacy for the Company.  Stockholders’ equity totaled
$36.6 million at September 30, 2010 compared to $35.2 million at December 31,
2009, a $1.4 million increase.  Total stockholders’ equity in relation to
total assets was 8.3% at September 30, 2010 and 8.0% at December 31, 2009. 
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.


28


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




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.




The
minimums related to such capital requirements are:




Total
                  
                  
                  Tier
      1
                  
                  
                  Tier
      1Capital
      To
                  
                  
                  Capital
      To
                  
                  
                  Capital
      ToRisk-Weighted
                  
                  
                  Risk-Weighted
                  
                  
                  AverageAssets
                  
                  
                  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
September 30, 2010.




September
      30,2010(Unaudited)(Dollars
      in thousands)Tier
      1 capital
                  
                  $
                  38,955Total
      risk-based capital
                  
                  
                  41,712Risk-weighted
      assets
                  
                  
                  298,213Average
      total assets
                  
                  
                  442,710Total
      risk-based capital ratio
                  
                  
                  13.99
                  %Tier
      1 risk-based capital ratio
                  
                  
                  13.06
                  %Tier
      1 capital to average assets
                  
                  
                  8.80
                  %


29


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations






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.




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, 2009.




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, 2010, 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, 2010 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.


30


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




There
have been no material changes from risk factors as previously disclosed in Part
1 Item 1A of the Company’s Form 10-K for the year ended December 31, 2009, filed
on March 23, 2010.




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
      #1
                7/1/2010
      to
                7/31/2010
              
              
              ––
              
              
              
              ––
              
              
              
              ––
              
              
              $
              1,735,810Month
      #2
                8/1/2010
      to
                8/31/2010
              
              
              ––
              
              
              
              ––
              
              
              
              ––
              
              
              $
              1,735,810Month
      #3
                9/1/2010
      to
                9/30/2010
              
              
              2,608
              
              
              
              ––
              
              
              
              ––
              
              
              $
              1,733,202




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, 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.  On September 28,
2010, the Company purchased a total of 2,608 common shares for participant
accounts.  All purchases under this deferred compensation plan are funded
with either earned director fees or officer incentive award payments which
amounted to approximately $20,796 for the quarter.  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.


31




United
Bancorp, Inc.


Part
II – Other Information




ITEM 3.
            Defaults
      Upon Senior Securities




Not
applicable.





ITEM 4.
            Other
      Information




Not
applicable.





ITEM 5.
            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
      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.




32


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:
                          November  12,
2010
                          
                          By:
                          /s/James W. EversonJames
      W. EversonChairman,
      President and Chief
                            Executive
      OfficerDate:
                          November  12,
2010
                          
                          By:
                          /s/Randall M. GreenwoodRandall
      M. GreenwoodSenior
      Vice President, Chief Financial
                            Officer
      and
Treasurer




33


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)31.1
                
                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.