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
                    June 30,
2010





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ANDEXCHANGE
      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 x                      No   ̈





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 August 9, 2010, 5,291,212 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)





June 30,
                                                                                    
                                                                                    
                                                                                    December 31,2010
                                                                                    
                                                                                    
                                                                                    2009(Unaudited)AssetsCash
      and due from banks
                                                                                    
                                                                                    $
                                                                                    4,879
                                                                                    
                                                                                    
                                                                                    $
                                                                                    4,862Interest-bearing
      demand deposits
                                                                                    
                                                                                    
                                                                                    37,049
                                                                                    
                                                                                    
                                                                                    
                                                                                    11,409Federal
      funds sold
                                                                                    
                                                                                    
                                                                                    ––
                                                                                    
                                                                                    
                                                                                    
                                                                                    15,000Cash
      and cash equivalents
                                                                                    
                                                                                    
                                                                                    41,928
                                                                                    
                                                                                    
                                                                                    
                                                                                    31,271Certificates
      of deposit in other financial institutions
                                                                                    
                                                                                    
                                                                                    5,075
                                                                                    
                                                                                    
                                                                                    
                                                                                    17,575Available-for-sale
      securities
                                                                                    
                                                                                    
                                                                                    98,432
                                                                                    
                                                                                    
                                                                                    
                                                                                    96,585Held-to-maturity
      securities
                                                                                    
                                                                                    
                                                                                    10,875
                                                                                    
                                                                                    
                                                                                    
                                                                                    14,277Loans,
      net of allowance for loan losses of $2,729 and $2,390 at June 30, 2010 and
      December 31, 2009, respectively
                                                                                    
                                                                                    
                                                                                    266,041
                                                                                    
                                                                                    
                                                                                    
                                                                                    255,336Premises
      and equipment
                                                                                    
                                                                                    
                                                                                    8,443
                                                                                    
                                                                                    
                                                                                    
                                                                                    8,689Federal
      Home Loan Bank stock
                                                                                    
                                                                                    
                                                                                    4,810
                                                                                    
                                                                                    
                                                                                    
                                                                                    4,810Foreclosed
      assets held for sale, net
                                                                                    
                                                                                    
                                                                                    1,348
                                                                                    
                                                                                    
                                                                                    
                                                                                    1,378Intangible
      assets
                                                                                    
                                                                                    
                                                                                    602
                                                                                    
                                                                                    
                                                                                    
                                                                                    656Accrued
      interest receivable
                                                                                    
                                                                                    
                                                                                    1,660
                                                                                    
                                                                                    
                                                                                    
                                                                                    2,218Deferred
      income taxes
                                                                                    
                                                                                    
                                                                                    ––
                                                                                    
                                                                                    
                                                                                    
                                                                                    333Bank-owned
      life insurance
                                                                                    
                                                                                    
                                                                                    10,217
                                                                                    
                                                                                    
                                                                                    
                                                                                    10,018Other
      assets
                                                                                    
                                                                                    
                                                                                    3,425
                                                                                    
                                                                                    
                                                                                    
                                                                                    2,824Total
      assets
                                                                                    
                                                                                    $
                                                                                    452,856
                                                                                    
                                                                                    
                                                                                    $
                                                                                    445,970Liabilities and Stockholders’ EquityLiabilitiesDepositsDemand
                                                                                    
                                                                                    $
                                                                                    133,762
                                                                                    
                                                                                    
                                                                                    $
                                                                                    130,363Savings
                                                                                    
                                                                                    
                                                                                    50,131
                                                                                    
                                                                                    
                                                                                    
                                                                                    45,497Time
                                                                                    
                                                                                    
                                                                                    160,069
                                                                                    
                                                                                    
                                                                                    
                                                                                    168,683Total
      deposits
                                                                                    
                                                                                    
                                                                                    343,962
                                                                                    
                                                                                    
                                                                                    
                                                                                    344,543Short-term
      borrowings
                                                                                    
                                                                                    
                                                                                    11,213
                                                                                    
                                                                                    
                                                                                    
                                                                                    10,277Federal
      Home Loan Bank advances
                                                                                    
                                                                                    
                                                                                    48,751
                                                                                    
                                                                                    
                                                                                    
                                                                                    49,128Subordinated
      debentures
                                                                                    
                                                                                    
                                                                                    4,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    4,000Deferred
      income taxes
                                                                                    
                                                                                    
                                                                                    197
                                                                                    
                                                                                    
                                                                                    
                                                                                    ––Trade
      date security purchases
                                                                                    
                                                                                    
                                                                                    6,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    ––Interest
      payable and other liabilities
                                                                                    
                                                                                    
                                                                                    2,392
                                                                                    
                                                                                    
                                                                                    
                                                                                    2,811Total
      liabilities
                                                                                    
                                                                                    
                                                                                    416,515
                                                                                    
                                                                                    
                                                                                    
                                                                                    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
                                                                                    
                                                                                    
                                                                                    21,497
                                                                                    
                                                                                    
                                                                                    
                                                                                    22,830Retained
      earnings
                                                                                    
                                                                                    
                                                                                    14,144
                                                                                    
                                                                                    
                                                                                    
                                                                                    12,761Stock
      held by deferred compensation plan; 169,261 and 155,198 shares at June 30,
      2010 and December 31, 2009, respectively
                                                                                    
                                                                                    
                                                                                    (1,601
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (1,478
                                                                                    )Unearned
      ESOP compensation
                                                                                    
                                                                                    
                                                                                    (2,411
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (2,512
                                                                                    )Accumulated
      other comprehensive income (loss)
                                                                                    
                                                                                    
                                                                                    218
                                                                                    
                                                                                    
                                                                                    
                                                                                    (507
                                                                                    )Treasury
      stock, at costJune
      30, 2010 – 79,092 shares, December 31, 2009 – 113,493
    shares
                                                                                    
                                                                                    
                                                                                    (876
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (1,253
                                                                                    )Total
      stockholders’ equity
                                                                                    
                                                                                    
                                                                                    36,341
                                                                                    
                                                                                    
                                                                                    
                                                                                    35,211Total
      liabilities and stockholders’ equity
                                                                                    
                                                                                    $
                                                                                    452,856
                                                                                    
                                                                                    
                                                                                    $
                                                                                    445,970




See
Notes to Condensed Consolidated Financial Statements
 
 3


United
Bancorp, Inc.


Condensed
Consolidated Statements of Income


(In
thousands, except per share data)


(Unaudited)





Three months ended
                                  
                                  
                                  Six months endedJune
      30,
                                  
                                  
                                  June
      30,2010
                                  
                                  
                                  2009
                                  
                                  
                                  2010
                                  
                                  
                                  2009Interest
      and dividend incomeLoans,
      including fees
                                  
                                  $
                                  4,354
                                  
                                  
                                  $
                                  4,168
                                  
                                  
                                  $
                                  8,529
                                  
                                  
                                  $
                                  8,189Taxable
      securities
                                  
                                  
                                  652
                                  
                                  
                                  
                                  1,080
                                  
                                  
                                  
                                  1,461
                                  
                                  
                                  
                                  2,391Non-taxable
      securities
                                  
                                  
                                  391
                                  
                                  
                                  
                                  433
                                  
                                  
                                  
                                  800
                                  
                                  
                                  
                                  866Federal
      funds sold
                                  
                                  
                                  23
                                  
                                  
                                  
                                  10
                                  
                                  
                                  
                                  34
                                  
                                  
                                  
                                  17Dividends
      on Federal Home Loan Bank stock and other
                                  
                                  
                                  93
                                  
                                  
                                  
                                  170
                                  
                                  
                                  
                                  219
                                  
                                  
                                  
                                  311Total
      interest and dividend income
                                  
                                  
                                  5,513
                                  
                                  
                                  
                                  5,861
                                  
                                  
                                  
                                  11,043
                                  
                                  
                                  
                                  11,774Interest
      expenseDepositsDemand
                                  
                                  
                                  47
                                  
                                  
                                  
                                  100
                                  
                                  
                                  
                                  96
                                  
                                  
                                  
                                  294Savings
                                  
                                  
                                  24
                                  
                                  
                                  
                                  42
                                  
                                  
                                  
                                  50
                                  
                                  
                                  
                                  80Time
                                  
                                  
                                  1,109
                                  
                                  
                                  
                                  1,357
                                  
                                  
                                  
                                  2,306
                                  
                                  
                                  
                                  2,707Borrowings
                                  
                                  
                                  535
                                  
                                  
                                  
                                  528
                                  
                                  
                                  
                                  1,067
                                  
                                  
                                  
                                  1,020Total
      interest expense
                                  
                                  
                                  1,715
                                  
                                  
                                  
                                  2,027
                                  
                                  
                                  
                                  3,519
                                  
                                  
                                  
                                  4,101Net
      interest income
                                  
                                  
                                  3,798
                                  
                                  
                                  
                                  3,834
                                  
                                  
                                  
                                  7,524
                                  
                                  
                                  
                                  7,673Provision
      for loan losses
                                  
                                  
                                  370
                                  
                                  
                                  
                                  334
                                  
                                  
                                  
                                  730
                                  
                                  
                                  
                                  658Net
      interest income after provision for loan losses
                                  
                                  
                                  3,428
                                  
                                  
                                  
                                  3,500
                                  
                                  
                                  
                                  6,794
                                  
                                  
                                  
                                  7,015Noninterest
      incomeService
      charges on deposit accounts
                                  
                                  
                                  625
                                  
                                  
                                  
                                  574
                                  
                                  
                                  
                                  1,158
                                  
                                  
                                  
                                  1,086Realized
      gains on sales of securities
                                  
                                  
                                  ––
                                  
                                  
                                  
                                  25
                                  
                                  
                                  
                                  ––
                                  
                                  
                                  
                                  25Realized
      gains on sales of loans
                                  
                                  
                                  31
                                  
                                  
                                  
                                  37
                                  
                                  
                                  
                                  44
                                  
                                  
                                  
                                  50Realized
      gains (losses) on sales of foreclosed assets
                                  
                                  
                                  2
                                  
                                  
                                  
                                  36
                                  
                                  
                                  
                                  (1
                                  )
                                  
                                  
                                  79Other
      income
                                  
                                  
                                  201
                                  
                                  
                                  
                                  141
                                  
                                  
                                  
                                  434
                                  
                                  
                                  
                                  362Total
      noninterest income
                                  
                                  
                                  859
                                  
                                  
                                  
                                  813
                                  
                                  
                                  
                                  1,635
                                  
                                  
                                  
                                  1,602Noninterest
      expenseSalaries
      and employee benefits
                                  
                                  
                                  1,767
                                  
                                  
                                  
                                  1,665
                                  
                                  
                                  
                                  3,522
                                  
                                  
                                  
                                  3,287Net
      occupancy expense
                                  
                                  
                                  422
                                  
                                  
                                  
                                  404
                                  
                                  
                                  
                                  847
                                  
                                  
                                  
                                  803Professional
      services
                                  
                                  
                                  206
                                  
                                  
                                  
                                  200
                                  
                                  
                                  
                                  394
                                  
                                  
                                  
                                  427Insurance
                                  
                                  
                                  92
                                  
                                  
                                  
                                  132
                                  
                                  
                                  
                                  194
                                  
                                  
                                  
                                  230Deposit
      insurance premiums
                                  
                                  
                                  145
                                  
                                  
                                  
                                  406
                                  
                                  
                                  
                                  240
                                  
                                  
                                  
                                  441Franchise
      and other taxes
                                  
                                  
                                  127
                                  
                                  
                                  
                                  122
                                  
                                  
                                  
                                  258
                                  
                                  
                                  
                                  246Advertising
                                  
                                  
                                  54
                                  
                                  
                                  
                                  93
                                  
                                  
                                  
                                  147
                                  
                                  
                                  
                                  186Stationery
      and office supplies
                                  
                                  
                                  80
                                  
                                  
                                  
                                  88
                                  
                                  
                                  
                                  139
                                  
                                  
                                  
                                  169Amortization
      of intangible asset
                                  
                                  
                                  28
                                  
                                  
                                  
                                  30
                                  
                                  
                                  
                                  54
                                  
                                  
                                  
                                  68Other
      expenses
                                  
                                  
                                  550
                                  
                                  
                                  
                                  427
                                  
                                  
                                  
                                  1,047
                                  
                                  
                                  
                                  1,019Total
      noninterest expense
                                  
                                  
                                  3,471
                                  
                                  
                                  
                                  3,567
                                  
                                  
                                  
                                  6,842
                                  
                                  
                                  
                                  6,876Income
      before federal income taxes
                                  
                                  
                                  816
                                  
                                  
                                  
                                  746
                                  
                                  
                                  
                                  1,587
                                  
                                  
                                  
                                  1,741Federal
      income taxes
                                  
                                  
                                  115
                                  
                                  
                                  
                                  74
                                  
                                  
                                  
                                  203
                                  
                                  
                                  
                                  268Net
      income
                                  
                                  $
                                  701
                                  
                                  
                                  $
                                  672
                                  
                                  
                                  $
                                  1,384
                                  
                                  
                                  $
                                  1,473EARNINGS
      PER COMMON SHAREBasic
                                  
                                  $
                                  0.15
                                  
                                  
                                  $
                                  0.15
                                  
                                  
                                  $
                                  0.30
                                  
                                  
                                  $
                                  0.32Diluted
                                  
                                  $
                                  0.15
                                  
                                  
                                  $
                                  0.15
                                  
                                  
                                  $
                                  0.30
                                  
                                  
                                  $
                                  0.32DIVIDENDS
      PER COMMON SHARE
                                  
                                  $
                                  0.14
                                  
                                  
                                  $
                                  0.14
                                  
                                  
                                  $
                                  0.28
                                  
                                  
                                  $
                                  0.28


See
Notes to Condensed Consolidated Financial Statements
 
 4


United
Bancorp, Inc.


Condensed
Consolidated Statements of Comprehensive Income


(In
thousands)


(Unaudited)





Three months ended
                
                
                Six months endedJune
      30,
                
                
                June
      30,2010
                
                
                2009
                
                
                2010
                
                
                2009Net
      income
                
                $
                701
                
                
                $
                672
                
                
                $
                1,384
                
                
                $
                1,473Other
      comprehensive income (loss), net of tax:Unrealized
      holding gains (losses) on securities during the period, net of taxes
      (benefit) of $26, $(279), $372 and $(257) for each respective
      period
                
                
                51
                
                
                
                (541
                )
                
                
                725
                
                
                
                (499
                )Reclassification
      adjustment for realized gains included in income, net of taxes of $9 in
      both 2009 periods
                
                
                ––
                
                
                
                (16
                )
                
                
                ––
                
                
                
                (16
                )Comprehensive
      income
                
                $
                752
                
                
                $
                115
                
                
                $
                2,109
                
                
                $
                958Accumulated
      comprehensive income (loss)
                
                $
                218
                
                
                $
                (1,609
                )
                
                $
                218
                
                
                $
                (1,609
                )




See
Notes to Condensed Consolidated Financial Statements




5




United
Bancorp, Inc.


Condensed
Consolidated Statements of Cash Flows


For
the Six Months Ended June 30, 2010 and 2009


(In
thousands)


(Unaudited)




2010
                
                
                2009Operating
      ActivitiesNet
      income
                
                $
                1,384
                
                
                $
                1,473Items
      not requiring (providing) cashAmortization
      of premiums and discounts on securities, net
                
                
                64
                
                
                
                119Depreciation
      and amortization
                
                
                399
                
                
                
                365Amortization
      of intangible asset
                
                
                54
                
                
                
                68Expense
      related to share based compensation plans
                
                
                107
                
                
                
                6Amortization
      of ESOP
                
                
                104
                
                
                
                102Provision
      for loan losses
                
                
                730
                
                
                
                658Increase
      in value of bank-owned life insurance
                
                
                (199
                )
                
                
                (182
                )Gain
      on sale of securities
                
                
                ––
                
                
                
                (25
                )Gain
      on sale of loans
                
                
                (44
                )
                
                
                (50
                )Proceeds
      from sale of loans
                
                
                2,954
                
                
                
                3,379Loans
      originated for sale
                
                
                (2,910
                )
                
                
                (3,329
                )Loss
      (gain) on sale of foreclosed assets
                
                
                1
                
                
                
                (79
                )Amortization
      of mortgage servicing rights
                
                
                14
                
                
                
                107Net
      change in accrued interest receivable and other assets
                
                
                (62
                )
                
                
                568Net
      change in accrued expenses and other liabilities
                
                
                (262
                )
                
                
                (2,258
                )Net
      cash provided by operating activities
                
                
                2,334
                
                
                
                922Investing
      ActivitiesSecurities
      available for sale:Sales,
      maturities, prepayments and calls
                
                
                46,362
                
                
                
                78,366Purchases
                
                
                (41,197
                )
                
                
                (55,327
                )Securities
      held to maturity:Maturities,
      prepayments and calls
                
                
                3,424
                
                
                
                430Net
      change in loans
                
                
                (11,601
                )
                
                
                (1,543
                )Net
      change in certificates of deposit in other financial
      institutions
                
                
                12,500
                
                
                
                (25,540
                )Proceeds
      from sale of premises and equipment
                
                
                ––
                
                
                
                36Purchases
      of premises and equipment
                
                
                (154
                )
                
                
                (609
                )Proceeds
      from sale of foreclosed assets
                
                
                195
                
                
                
                935Net
      cash provided by (used in) investing activities
                
                
                9,529
                
                
                
                (3,252
                )




See
Notes to Condensed Consolidated Financial Statements




6




United
Bancorp, Inc.


Condensed
Consolidated Statements of Cash Flows (continued)


For
the Six Months Ended June 30, 2010 and 2009


(In
thousands)


(Unaudited)





2010
                      
                      
                      2009Financing
      ActivitiesNet
      change in deposits
                      
                      $
                      (581
                      )
                      
                      $
                      (2,135
                      )Net
      change  in short-term borrowings
                      
                      
                      936
                      
                      
                      
                      3,212Net
      change in long-term borrowings
                      
                      
                      (377
                      )
                      
                      
                      5,702Treasury
      stock sold
                      
                      
                      60
                      
                      
                      
                      138Proceeds
      from purchase of shares by Dividend Reinvestment Plan
                      
                      
                      231
                      
                      
                      
                      ––Cash
      dividends paid on common stock
                      
                      
                      (1,475
                      )
                      
                      
                      (1,410
                      )Net
      cash provided by (used in) financing activities
                      
                      
                      (1,206
                      )
                      
                      
                      5,507Increase
      in Cash and Cash Equivalents
                      
                      
                      10,657
                      
                      
                      
                      3,177Cash
      and Cash Equivalents, Beginning of Period
                      
                      
                      31,271
                      
                      
                      
                      31,469Cash
      and Cash Equivalents, End of Period
                      
                      $
                      41,928
                      
                      
                      $
                      34,646Supplemental
      Cash Flows InformationInterest
      paid on deposits and borrowings
                      
                      $
                      3,575
                      
                      
                      $
                      4,154Federal
      income taxes paid
                      
                      $
                      305
                      
                      
                      $
                      227Supplemental
      Disclosure of Non-Cash Investing and Financing ActivitiesTransfers
      from loans to foreclosed assets held for sale
                      
                      $
                      165
                      
                      
                      $
                      436Unrealized
      gains (losses) on securities designated as available for sale, net of
      related tax effects
                      
                      $
                      725
                      
                      
                      $
                      (499
                      )Trade
      date securities purchases
                      
                      $
                      6,000
                      
                      
                      $
                      ––




See
Notes to Condensed Consolidated Financial Statements




7




United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 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 June 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 six months ended June 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, Saint Clairsville West, Sherrodsville, Strasburg, and
Tiltonsville, Ohio.  The Community Bank division conducts its business
through its main office in Lancaster, Ohio and seven offices in Amesville,
Glouster, Lancaster, and Nelsonville, Ohio.  The Company’s primary
deposit products are checking, savings, and term certificate accounts, and its
primary lending products are residential mortgage, commercial, and installment
loans.  Substantially all loans are secured by specific items of
collateral including business assets, consumer assets and real estate and are
not considered “sub prime” type loans.  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 Six Months Ended June 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 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 Six Months Ended June 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.  At June 30, 2010 and
2009, the ESOP held 248,176 and 283,635 unallocated shares, respectively, which
were not included in weighted-average common shares
outstanding.  Diluted earnings per common share include the dilutive
effect of additional potential common shares issuable under the Company’s stock
compensation plans.




Three months ended
                                                      June 30,
                                                    
                                                    
                                                    Six months ended
                                                      June 30,2010
                                                    
                                                    
                                                    2009
                                                    
                                                    
                                                    2010
                                                    
                                                    
                                                    2009BasicNet
      income (In thousands)
                                                    
                                                    $
                                                    701
                                                    
                                                    
                                                    $
                                                    672
                                                    
                                                    
                                                    $
                                                    1,384
                                                    
                                                    
                                                    $
                                                    1,473Weighted
      average common shares outstanding
                                                    
                                                    
                                                    4,677,145
                                                    
                                                    
                                                    
                                                    4,610,248
                                                    
                                                    
                                                    
                                                    4,671,572
                                                    
                                                    
                                                    
                                                    4,606,728Basic
      earnings per common share
                                                    
                                                    $
                                                    0.15
                                                    
                                                    
                                                    $
                                                    0.15
                                                    
                                                    
                                                    $
                                                    0.30
                                                    
                                                    
                                                    $
                                                    0.32DilutedNet
      income (In thousands)
                                                    
                                                    $
                                                    701
                                                    
                                                    
                                                    $
                                                    672
                                                    
                                                    
                                                    $
                                                    1,384
                                                    
                                                    
                                                    $
                                                    1,473Weighted
      average common shares outstanding for basic earnings per common
      share
                                                    
                                                    
                                                    4,677,145
                                                    
                                                    
                                                    
                                                    4,610,248
                                                    
                                                    
                                                    
                                                    4,671,572
                                                    
                                                    
                                                    
                                                    4,606,728Add:  Dilutive
      effects of assumed exercise of stock options and restricted
      stock
                                                    
                                                    
                                                    17,847
                                                    
                                                    
                                                    
                                                    ––
                                                    
                                                    
                                                    
                                                    17,847
                                                    
                                                    
                                                    
                                                    ––Average
      shares and dilutive potential common shares
                                                    
                                                    
                                                    4,694,992
                                                    
                                                    
                                                    
                                                    4,610,248
                                                    
                                                    
                                                    
                                                    4,689,419
                                                    
                                                    
                                                    
                                                    4,606,728Diluted
      earnings per common share
                                                    
                                                    $
                                                    0.15
                                                    
                                                    
                                                    $
                                                    0.15
                                                    
                                                    
                                                    $
                                                    0.30
                                                    
                                                    
                                                    $
                                                    0.32




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 June 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.




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.




10




United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




Recent
Accounting Pronouncements




FASB ASC
860-10 concerning accounting for transfers of financial assets was issued in
June 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.




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.


11


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




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:June
      30, 2010:U.S.
      government agencies
                
                $
                60,377
                
                
                $
                311
                
                
                $
                —
                
                
                $
                60,688State
      and political subdivisions
                
                
                25,631
                
                
                
                599
                
                
                
                (42
                )
                
                
                26,188Government
      sponsored entities mortgage-backed securities
                
                
                10,872
                
                
                
                672
                
                
                
                —
                
                
                
                11,544Equity
      securities
                
                
                4
                
                
                
                8
                
                
                
                —
                
                
                
                12$
                96,884
                
                
                $
                1,590
                
                
                $
                (42
                )
                
                $
                98,432December
      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




Amortized
                  Cost
                
                
                Gross
                  Unrealized
                  Gains
                
                
                Gross
                  Unrealized
                  Losses
                
                
                Approximate
                  Fair Value(In
      thousands)Held-to-maturity
      Securities:June
      30, 2010:State
      and political subdivisions
                
                $
                10,875
                
                
                $
                308
                
                
                $
                (6
                )
                
                $
                11,177December
      31, 2009:State
      and political subdivisions
                
                $
                14,277
                
                
                $
                391
                
                
                $
                (25
                )
                
                $
                14,643


12


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




The
amortized cost and fair value of available-for-sale securities and
held-to-maturity securities at June 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
                  
                  
                  $
                  132
                  
                  
                  $
                  1,182
                  
                  
                  $
                  1,197One
      to five years
                  
                  
                  11,252
                  
                  
                  
                  11,353
                  
                  
                  
                  2,934
                  
                  
                  
                  3,062Five
      to ten years
                  
                  
                  34,157
                  
                  
                  
                  33,008
                  
                  
                  
                  3,710
                  
                  
                  
                  3,855After
      ten years
                  
                  
                  51,341
                  
                  
                  
                  53,927
                  
                  
                  
                  3,049
                  
                  
                  
                  3,06396,880
                  
                  
                  
                  98,420
                  
                  
                  
                  10,875
                  
                  
                  
                  11,177Equity
      securities
                  
                  
                  4
                  
                  
                  
                  12
                  
                  
                  
                  —
                  
                  
                  
                  —Totals
                  
                  $
                  96,884
                  
                  
                  $
                  98,432
                  
                  
                  $
                  10,875
                  
                  
                  $
                  11,177





The
carrying value of securities pledged as collateral, to secure public deposits
and for other purposes, was $73.5 million and $81.5 million at June 30, 2010 and
December 31, 2009, respectively.




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:




Six months ended June 30,2010
                  
                  
                  2009(In
      thousands, unaudited)Proceeds
                  
                  $
                  —
                  
                  
                  $
                  1,000Gross
      gains
                  
                  
                  —
                  
                  
                  
                  —Gross
      losses
                  
                  
                  —
                  
                  
                  
                  25





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 June 30, 2010 and December 31, 2009, was $4.4 million and $47.8
million, which represented approximately 4.0% 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.


13


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




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 June 30, 2010
and December 31, 2009:




June 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)State
      and political subdivisions
                    
                    $
                    3,199
                    
                    
                    $
                    (30
                    )
                    
                    $
                    1,183
                    
                    
                    $
                    (18
                    )
                    
                    $
                    4,382
                    
                    
                    $
                    (48
                    )Total
      temporarily impaired securities
                    
                    $
                    3,199
                    
                    
                    $
                    (30
                    )
                    
                    $
                    1,183
                    
                    
                    $
                    (18
                    )
                    
                    $
                    4,382
                    
                    
                    $
                    (48
                    )




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
                )




14


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




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 June 30, 2010.




Note
      3:
            Allowance
      for Loan Losses




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




Three months ended
                    June 30,
                  
                  
                  Six months ended
                    June 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009(In
      thousands)Beginning
      balance
                  
                  $
                  2,527
                  
                  
                  $
                  3,001
                  
                  
                  $
                  2,390
                  
                  
                  $
                  2,770Provision
      for loan losses
                  
                  
                  370
                  
                  
                  
                  334
                  
                  
                  
                  730
                  
                  
                  
                  658Loans
      charged-off
                  
                  
                  (268
                  )
                  
                  
                  (114
                  )
                  
                  
                  (579
                  )
                  
                  
                  (254
                  )Recoveries
      of previous charge-offs
                  
                  
                  100
                  
                  
                  
                  70
                  
                  
                  
                  188
                  
                  
                  
                  117Ending
      balance
                  
                  $
                  2,729
                  
                  
                  $
                  3,291
                  
                  
                  $
                  2,729
                  
                  
                  $
                  3,291




The
Company’s impaired loans totaled $7.5 million and $4.7 million at June 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 $1.5 million and $984,000 relates to impaired loans of $5.2 million and $3.3
million, at June 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 June 30, 2010 and December 31, 2009,
respectively.




Interest
income of $167,000 and $59,000 was recognized on average impaired loans of $7.5
million and $7.0 million for the six months ended June 30, 2010 and 2009,
respectively.  Interest income was recognized on impaired loans on a
cash basis for the six months ended June 30, 2010 and 2009.




At June
30, 2010 and December 31, 2009, accruing loans delinquent 90 days or more
(including impaired loans of $749,000 at June 30, 2010 and $477,000 at December
31, 2009) totaled $903,000 and $971,000, respectively.  Non-accruing
loans at June 30, 2010 and December 31, 2009 (including impaired loans of $4.5
million at June 30, 2010 and $4.2 million at December 31, 2009) were $5.4
million and $5.4 million, respectively.


15


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




Note
      4:
            Benefit
      Plans




Pension
expense includes the following:




Three months ended
                    June 30,
                  
                  
                  Six months ended
                    June 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009(In
      thousands)Service
      cost
                  
                  $
                  67
                  
                  
                  $
                  68
                  
                  
                  $
                  134
                  
                  
                  $
                  125Interest
      cost
                  
                  
                  45
                  
                  
                  
                  41
                  
                  
                  
                  90
                  
                  
                  
                  82Expected
      return on assets
                  
                  
                  (58
                  )
                  
                  
                  (37
                  )
                  
                  
                  (116
                  )
                  
                  
                  (75
                  )Amortization
      of prior service cost, transition liability, net gain and plan
      amendment
                  
                  
                  21
                  
                  
                  
                  30
                  
                  
                  
                  42
                  
                  
                  
                  60Pension
      expense
                  
                  $
                  75
                  
                  
                  $
                  102
                  
                  
                  $
                  150
                  
                  
                  $
                  192




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.




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




June 30,
                  
                  
                  December 31,2010
                  
                  
                  2009(Unaudited)(In
      thousands)Commitments
      to extend credit
                  
                  $
                  31,383
                  
                  
                  $
                  41,351Ready
      reserve lines
                  
                  
                  13,717
                  
                  
                  
                  13,477Standby
      letters of credit
                  
                  
                  775
                  
                  
                  
                  676


16


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




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, and state and political
subdivision bonds.  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 Six Months Ended June 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 June 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)June
      30, 2010U.S.
      government agencies
                  
                  $
                  60,688
                  
                  
                  $
                  —
                  
                  
                  $
                  60,688
                  
                  
                  $
                  —State
      and political subdivisions
                  
                  
                  26,188
                  
                  
                  
                  —
                  
                  
                  
                  26,188
                  
                  
                  
                  —Mortgage-backed
      securities
                  
                  
                  11,544
                  
                  
                  
                  —
                  
                  
                  
                  11,544
                  
                  
                  
                  —Equity
      securities
                  
                  
                  12
                  
                  
                  
                  —
                  
                  
                  
                  12
                  
                  
                  
                  —December
      31, 2009U.S.
      government agencies
                  
                  $
                  57,204
                  
                  
                  $
                  —
                  
                  
                  $
                  57,204
                  
                  
                  $
                  —State
      and political subdivisions
                  
                  
                  26,344
                  
                  
                  
                  —
                  
                  
                  
                  26,344
                  
                  
                  
                  —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.




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.


18


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Three and Six Months Ended June 30, 2010 and 2009




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 June 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)June
      30, 2010Impaired
      loans
                  
                  $
                  3,513
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  3,513Foreclosed
      assets held for sale
                  
                  
                  65
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  65December
      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 Six Months Ended June 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.




June 30, 2010
                                                                                                                                
                                                                                                                                
                                                                                                                                December 31, 2009Carrying
                                                                                                                                  Amount
                                                                                                                                
                                                                                                                                
                                                                                                                                Fair
                                                                                                                                  Value
                                                                                                                                
                                                                                                                                
                                                                                                                                Carrying
                                                                                                                                  Amount
                                                                                                                                
                                                                                                                                
                                                                                                                                Fair
                                                                                                                                  Value(In thousands)Financial
      assetsCash
      and cash equivalents
                                                                                                                                
                                                                                                                                $
                                                                                                                                41,928
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                41,928
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                31,271
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                31,271Certificates
      of deposits in other financial institutions
                                                                                                                                
                                                                                                                                
                                                                                                                                5,075
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                5,075
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                17,575
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                17,575Available-for-sale
      securities
                                                                                                                                
                                                                                                                                
                                                                                                                                98,432
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                98,432
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                96,585
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                96,585Held-to-maturity
      securities
                                                                                                                                
                                                                                                                                
                                                                                                                                10,875
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                11,177
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                14,277
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                14,643Loans,
      net of allowance for loan losses
                                                                                                                                
                                                                                                                                
                                                                                                                                266,041
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                258,799
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                255,336
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                248,918Federal
      Home Loan Bank stock
                                                                                                                                
                                                                                                                                
                                                                                                                                4,810
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                4,810
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                4,810
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                4,810Accrued
      interest receivable
                                                                                                                                
                                                                                                                                
                                                                                                                                1,660
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                1,660
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                2,218
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                2,218Financial
      liabilitiesDeposits
                                                                                                                                
                                                                                                                                
                                                                                                                                343,962
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                330,525
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                344,543
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                325,179Short-term
      borrowings
                                                                                                                                
                                                                                                                                
                                                                                                                                11,213
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                11,199
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                10,277
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                10,264Federal
      Home Loan Bank advances
                                                                                                                                
                                                                                                                                
                                                                                                                                48,751
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                50,894
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                49,128
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                49,540Subordinated
      debentures
                                                                                                                                
                                                                                                                                
                                                                                                                                4,000
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                3,093
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                4,000
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                3,093Interest
      payable
                                                                                                                                
                                                                                                                                
                                                                                                                                342
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                342
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                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 Six Months Ended June 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 June 30, 2010 and December 31, 2009.


21




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




The
following discusses the financial condition of the Company as of June 30, 2010,
as compared to December 31, 2009, and the results of operations for the three
and six months ended June 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’s earnings in the six months ended June 30, 2010 generated an annualized
0.61% return on average assets (“ROA”) and an annualized 7.70% return on average
equity (“ROE”), compared to 0.65% ROA and 8.66% ROE for the six months ended
June 30, 2009.  Comparing the six months ended June 30, 2010 to 2009,
the Company’s net interest margin was 3.92% compared to 4.00%, which caused a
decrease in net interest income of approximately $149,000 or 2.0%.  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.  Comparing the same periods, customer service
fees on deposits increased $72,000.




We are
pleased with our earnings performance and risk management of the past
year.  In addition to meeting the FDIC premiums levied upon us, we
were able to focus on improving our risk exposure in our loan
portfolio.  As previously reported, we never were a participant in
sub-prime lending or derivative investing.  This past year, while we
wrote-off $1.7 million in loans impacted by current economic conditions, we
generated sufficient earnings to cover our costs associated with the three
recently acquired banking offices from the FDIC and supported an increase in our
cash dividend payment.  Our 2010 budget process is projecting another
positive year of earnings that supports our recently announced capital
expenditure programs which include the replacement of our core processing
systems and the construction of a new banking center in Tiltonsville, Ohio, both
of which we project to be completed in the third quarter of this
year.  Despite the continuing media reports of trouble within our
economy impacting business, manufacturing and financial sector performance, we
are preparing for our future which we forecast to be exciting and
rewarding.




Forward-Looking
Statements




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




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


22




United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




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




Current
Economic Conditions




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




Given the
volatility of current economic conditions, the values of assets and liabilities
recorded in the financial statements could change rapidly, resulting in material
future adjustments in asset values, the allowance for loan losses 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 judgment.




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




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




At June
30, 2010, gross loans were $268.8 million, compared to $257.7 million at
December 31, 2009, an increase of $11.1 million or 4.3%.  The overall
increase in the loan portfolio was driven by a $6.0 million increase in
commercial and commercial real estate loans and a $4.3 million increase in
installment loans since December 31, 2009.




Commercial
and commercial real estate loans comprised 58.3% of total loans at June 30,
2010, compared to 58.5% at December 31, 2009.  Commercial and
commercial real estate loans have increased $6.0 million, or 4.3%
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 18.3% of total loans at June 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 $4.3 million, or 9.6%, 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 branch locations.




Real
estate loans were 23.4% of total loans at June 30, 2010 and 24.1% at December
31, 2009.  Real estate loans have increased by $721,000 since December
31, 2009.  Real estate lending for the six months ended June 30, 2010
has been slow with respect to the Company’s adjustable-rate mortgage
products.  As of June 30, 2010, the Bank has approximately $28.0
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 June 30, 2010, the Company did not
hold any loans for sale.




The
allowance for loan losses totaled $2.7 million at June 30, 2010, which
represented 1.02% 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
six months ended June 30, 2010 were approximately $391,000, or 16.4%, 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 states and political subdivisions and certain other
investments.  The Company does not hold any collateralized
mortgage-backed securities or derivative securities other than those issued by
U.S. government agencies. Securities available for sale at June 30, 2010
increased approximately $1.8 million, or 1.9%, 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 six months
of 2010.  While the Company has plans to reinvest a portion of these
funds into the 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 June 30, 2010, the Company
had approximately $5.1 million of CD’s with an average yield of 1.73% and an
average term to maturity of approximately 190 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 six 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 June 30, 2010,
total core deposits increased approximately $935,000, or 0.32%.  The
Company’s savings accounts increased $4.6 million, or 10.2%, from December 31,
2009 totals.  The Company’s interest-bearing demand deposits increased
$2.0 million, or 1.82%, noninterest-bearing demand deposits increased $1.5
million,  or 6.6%, while certificates of deposit under $100,000
decreased by $8.8 million, or 5.4%.




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 June 30, 2010, certificates of deposit greater than
$100,000 decreased $1.5 million, or 2.9%, 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 $936,000 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 Six Months Ended June 30, 2010 and 2009




Net
Income




Basic and
diluted earnings per share for the six months ended June 30, 2010 totaled $0.30
compared with $0.32 for
the six months ended June 30, 2009.  In dollars, the Company’s net
income was $1,384,000 for the six months ended June 30, 2010, a decrease of
$89,000, or 6.1% compared with net income of $1,473,000 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 1.9%, or $149,000, for the
six months ended June 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.




Provision
for Loan Losses




The
provision for loan losses was $730,000 for the six months ended June 30, 2010,
compared to $658,000 for the same period in 2009.  The increase in
loan loss provision for the six-month period ended June 30, 2010, was based upon
an increase in nonperforming loans and consideration of the economic challenges
facing the banking industry.




Noninterest
Income




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




Noninterest
income for the six months ended June 30, 2010 was $1,635,000, an increase of
$33,000 or 2.1%,
compared to $1,602,000 for the six-month period ended June 30,
2009.  During the six-months ended June 30, 2010, the increase in
noninterest income was driven by an increase in customer service fees of
approximately $72,000.


26


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations







Noninterest
Expense




Noninterest
expense was $6,842,000 for the six months ended June 30, 2010 a decrease of
$34,000, or 0.5%, compared to the six months ended June 30,
2009.  Salaries and employee benefit expense increased $235,000, or
7.1%, for the period ended June 30, 2010 over the same period in
2009.  This increase was primarily due to the expansion of the
Company’s management group in preparation for the previously announced
management succession plan, normal merit increases, and increases in benefit
costs and restricted stock award expenses.  During the third quarter
of 2009, the Company issued restricted stock to certain officers and
directors.  Professional fees decreased $33,000 for the six month
ended June 30, 2010, as compared to the same period in
2009.  Occupancy and equipment expense increased $44,000, or 5.5% for
the six months ended June 30, 2010 as compared to the same period in
2009.  Increased depreciation expense on premise, computer hardware
and software and related service maintenance was the primary reason for the
increase.  Deposit insurance premiums decreased $201,000 for the six
months ended June 30, 2010, as compared to the same period in
2009.  In the second quarter of June 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.




Federal
Income Taxes




The
provision for federal income taxes was $203,000 for the six months ended June
30, 2010, a decrease of $65,000
compared to the same period in 2009.  The decrease in tax expense was
due primarily to a $154,000
decrease in pretax income.  The effective tax rate was 12.8% and 15.4%
for the six months ended June 30, 2010 and 2009, respectively.





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




Net
Income




Basic and
diluted earnings per share for the six months ended June 30, 2010 totaled $0.15,
unchanged when compared with $0.15 for the three months ended June 30,
2009.  In dollars, the Company’s net income was $701,000 for the three
months ended June 30, 2010, an increase of $29,000, or 4.3%, compared with net
income of $672,000 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 1.0%, or $36,000, for the
three months ended June 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.




Provision
for Loan Losses




The
provision for loan losses was $370,000 for the three months ended June 30, 2010,
compared to $334,000 for the same period in 2009.  The increase in
loan loss provision for the three-month period ended June 30, 2010, was based
upon an increase in nonperforming loans and consideration of the economic
challenges facing the banking industry.


27


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations







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 June 30, 2010 was $859,000, an increase of
$46,000 or 5.7%,
compared to $813,000 for the three-month period ended June 30,
2009.  During the three-months ended June 30, 2010, the increase in
noninterest income was due to an increase in service charge on deposit accounts
of approximately $51,000.




Noninterest
Expense




Noninterest
expense was $3,471,000 for the three months ended June 30, 2010 a decrease of
$96,000, or 2.7%, compared to the three months ended June 30,
2009.  Salaries and employee benefit expense increased $102,000, or
6.1%, for the three month period ended June 30, 2010 over the same period in
2009.  This increase was primarily due to the expansion of the
Company’s management group in preparation for the previously announced
management succession plan, normal merit increases, and increases in benefit
costs and restricted stock award expenses.  During the third quarter
of 2009, the Company issued restricted stock to certain officers and
directors.  Occupancy and equipment expense increased $18,000 for the
three months ended June 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.  Advertising decreased $39,000 for the first quarter of 2010
compared to the same period in 2009.  Deposit insurance premiums
decreased $261,000 for the three months ended June 30, 2010, as compared to the
same period in 2009.  In the second quarter of June 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.




Federal
Income Taxes




The
provision for federal income taxes was $115,000 for the three months ended June
30, 2010, an increase of $41,000
compared to the same period in 2009.  The increase in tax expense was
due primarily to a $70,000 increase in pretax income.  The effective
tax rate was 14.1% and 9.9% for the three months ended June 30, 2010 and 2009,
respectively.




Capital
Resources




Internal
capital growth, through the retention of earnings, is the primary means of
maintaining capital adequacy for the Company.  Stockholders’ equity
totaled $36.3 million at June 30, 2010 compared to $35.2 million at December 31,
2009, a $1.1 million increase.  Total stockholders’ equity in relation
to total assets was 8.0% at both June 30, 2010 and 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.




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.


28


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations




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
June 30, 2010.




June
      30,2010(Unaudited)(Dollars in thousands)Tier
      1 capital
                  
                  $
                  39,496Total
      risk-based capital
                  
                  
                  42,228Risk-weighted
      assets
                  
                  
                  292,274Average
      total assets
                  
                  
                  451,565Total
      risk-based capital ratio
                  
                  
                  14.45
                  %Tier
      1 risk-based capital ratio
                  
                  
                  13.51
                  %Tier
      1 capital to average assets
                  
                  
                  8.75
                  %




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.


29


United
Bancorp, Inc.


Management’s
Discussion and Analysis of Financial


Condition
and Results of Operations






Inflation




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




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




ITEM
3            Quantitative
and Qualitative Disclosures About Market Risk




There has
been no significant change from disclosures included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 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 June 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 June 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 for 10K 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
                  4/1/2010
      to
                  4/30/2010
                
                
                
                
                
                
                
                
                
                
                $
                1,735,810Month
      #2
                  5/1/2010
      to
                  5/31/2010
                
                
                ––
                
                
                
                ––
                
                
                
                ––
                
                
                $
                1,735,810Month
      #3
                  6/1/2010
      to
                  6/30/2010
                
                
                ––
                
                
                
                ––
                
                
                
                ––
                
                
                $
                1,735,810






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




The
Company adopted the United Bancorp, Inc. Affiliate Banks Directors and Officers
Deferred Compensation Plan (the “Plan”), which is an unfunded deferred
compensation plan.  Amounts deferred pursuant to the Plan remain
unrestricted assets of the Company, and the right to participate in the Plan is
limited to members of the Board of Directors and Company
officers.  Under the Plan, eligible participants may defer fees and up
to 50% of their annual incentive award payable to them by the Company, which are
used to acquire common shares which are credited to a participant’s respective
account.  Except in the event of certain emergencies, no distributions
are to be made from any account as long as the participant continues to be an
employee or member of the Board of Directors.  Upon termination of
service, the aggregate number of shares credited to the participant’s account
are distributed to him or her along with any cash proceeds credited to the
account which have not yet been invested in the Company’s stock.  On
June 28, 2010, the Company purchased a total of 2,784 common shares for
participant accounts.  Also on May 18, 2010 the Company purchased a
total of 2,508 common shares for participant accounts.  All purchases
under this deferred compensation plan are funded with either earned director
fees or incentive award payments.  No underwriting fees, discounts, or
commissions are paid in connection with the Plan.  The shares
allocated to participant accounts have not been registered under the Securities
Act of 1933 in reliance upon the exemption provided by Section 4(2)
thereof.


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:  August 10, 2010
                            By:
                            /s/James W. EversonJames
      W. EversonChairman,
      President and Chief
                              Executive
      OfficerDate:  August 10, 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.