UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q


(Mark
One)





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





For the
quarterly period ended September 30,
2009





OR





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


EXCHANGE ACT





For the
transition period from ____________ to _______________





Commission
File Number:   0-16540







UNITED BANCORP, INC.




(Exact
name of registrant as specified in its charter)





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





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


(Address
of principal executive offices)





(740) 633-0445


(Registrant’s
telephone number, including area code)





N/A


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





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.


Yes 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 November 12, 2009, 5,241,071
shares of the Company’s common stock, $1.00 par value, were issued and
outstanding.







United
Bancorp, Inc.
  Contents


PART
      I - FINANCIAL INFORMATIONItem
      1
                            Condensed
      Consolidated Balance Sheets
                            3Condensed
      Consolidated Statements of Income
                            4Condensed
      Consolidated Statements of Comprehensive Income
                            5Condensed
      Consolidated Statements of Cash Flows
                            6Notes
      to Condensed Consolidated Financial Statements
                            8Item
      2
                            Management’s
      Discussion and Analysis of Financial Conditionand
      Results of Operations
                            26Item
      3
                            Quantitative
      and Qualitative Disclosures About Market Risk
                            35Item
      4
                            Controls
      and Procedures
                            35PART
      II - OTHER INFORMATIONItem
      1
                            Legal
      Proceedings
                            36Item
      1A
                            Risk
      Factors
                            36Item
      2
                            Unregistered
      Sales of Equity Securities and Use of Proceeds
                            36Item
      3
                            Defaults
      Upon Senior Securities
                            37Item
      4
                            Submission
      of Matters to a Vote of Security Holders
                            37Item
      5
                            Other
      Information
                            37Item
      6
                            Exhibits
                            37SIGNATURES
                            38


2


ITEM
1.  Financial Statements





United
Bancorp, Inc.


Condensed
Consolidated Balance Sheets


(In
thousands, except share data)





September
      30,
                              
                              
                              December
      31,2009
                              
                              
                              2008(Unaudited)AssetsCash
      and due from banks
                              
                              $
                              4,290
                              
                              
                              $
                              5,605Interest-bearing
      deposits
                              
                              
                              28,007
                              
                              
                              
                              6,684Federal
      funds sold
                              
                              
                              ––
                              
                              
                              
                              19,180Cash
      and cash equivalents
                              
                              
                              32,297
                              
                              
                              
                              31,469Certificates
      of deposit in other financial institutions
                              
                              
                              22,744
                              
                              
                              
                              ––Available-for-sale
      securities
                              
                              
                              103,881
                              
                              
                              
                              129,416Held-to-maturity
      securities
                              
                              
                              15,073
                              
                              
                              
                              15,687Loans,
      net of allowance for loan losses of $2,926 and $2,770 at September 30,
      2009 and December 31, 2008, respectively
                              
                              
                              244,114
                              
                              
                              
                              235,448Premises
      and equipment
                              
                              
                              8,594
                              
                              
                              
                              8,466Federal
      Home Loan Bank stock
                              
                              
                              4,810
                              
                              
                              
                              4,810Foreclosed
      assets held for sale, net
                              
                              
                              1,036
                              
                              
                              
                              1,407Intangible
      assets
                              
                              
                              682
                              
                              
                              
                              775Accrued
      interest receivable
                              
                              
                              2,348
                              
                              
                              
                              3,037Bank-owned
      life insurance
                              
                              
                              9,925
                              
                              
                              
                              9,653Other
      assets
                              
                              
                              2,048
                              
                              
                              
                              1,636Total
      assets
                              
                              $
                              447,552
                              
                              
                              $
                              441,804Liabilities
      and Stockholders’ EquityLiabilitiesDepositsDemand
                              
                              $
                              127,300
                              
                              
                              $
                              142,434Savings
                              
                              
                              44,003
                              
                              
                              
                              40,309Time
                              
                              
                              170,108
                              
                              
                              
                              164,302Total
      deposits
                              
                              
                              341,411
                              
                              
                              
                              347,045Short-term
      borrowings
                              
                              
                              13,231
                              
                              
                              
                              7,809Federal
      Home Loan Bank advances
                              
                              
                              49,245
                              
                              
                              
                              43,745Subordinated
      debentures
                              
                              
                              4,000
                              
                              
                              
                              4,000Interest
      payable and other liabilities
                              
                              
                              4,619
                              
                              
                              
                              5,301Total
      liabilities
                              
                              
                              412,506
                              
                              
                              
                              407,900Commitments
      and Contingencies
                              
                              
                              ––
                              
                              
                              
                              ––Stockholders’
      EquityPreferred
      stock, no par value, authorized 2,000,000 shares; no shares
      issued
                              
                              
                              ––
                              
                              
                              
                              ––Common
      stock, $1 par value; authorized 10,000,000 shares; issued 5,360,304 and
      5,190,304 shares at September 30, 2009 and December 31, 2008,
      respectively
                              
                              
                              5,360
                              
                              
                              
                              5,190Additional
      paid-in capital
                              
                              
                              23,489
                              
                              
                              
                              25,656Retained
      earnings
                              
                              
                              12,086
                              
                              
                              
                              9,856Stock
      held by deferred compensation plan; 149,461 and 132,906 shares at
      September 30, 2009 and December 31, 2008, respectively
                              
                              
                              (1,458
                              )
                              
                              
                              (1,300
                              )Unearned
      ESOP compensation
                              
                              
                              (2,704
                              )
                              
                              
                              (2,718
                              )Accumulated
      other comprehensive loss
                              
                              
                              (302
                              )
                              
                              
                              (1,094
                              )Treasury
      stock, at costSeptember
      30, 2009 –119,233 shares, December 31, 2008 – 164,442
    shares
                              
                              
                              (1,425
                              )
                              
                              
                              (1,686
                              )Total
      stockholders’ equity
                              
                              
                              35,046
                              
                              
                              
                              33,904Total
      liabilities and stockholders’ equity
                              
                              $
                              447,552
                              
                              
                              $
                              441,804




See
Notes to Condensed Consolidated Financial Statements


3


United
Bancorp, Inc.


Condensed
Consolidated Statements of Income


(In
thousands, except per share data)





Three
      months ended
                  
                  
                  Nine
      months endedSeptember
      30,
                  
                  
                  September
      30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008(Unaudited)Interest
      and dividend incomeLoans,
      including fees
                  
                  $
                  4,227
                  
                  
                  $
                  4,363
                  
                  
                  $
                  12,416
                  
                  
                  $
                  13,045Taxable
      securities
                  
                  
                  981
                  
                  
                  
                  1,446
                  
                  
                  
                  3,372
                  
                  
                  
                  4,866Non-taxable
      securities
                  
                  
                  424
                  
                  
                  
                  445
                  
                  
                  
                  1,290
                  
                  
                  
                  1,341Federal
      funds sold
                  
                  
                  17
                  
                  
                  
                  ––
                  
                  
                  
                  34
                  
                  
                  
                  9Dividends
      on Federal Home Loan Bank stock and other
                  
                  
                  192
                  
                  
                  
                  65
                  
                  
                  
                  503
                  
                  
                  
                  199Total
      interest and dividend income
                  
                  
                  5,841
                  
                  
                  
                  6,319
                  
                  
                  
                  17,615
                  
                  
                  
                  19,460Interest
      expenseDepositsDemand
                  
                  
                  93
                  
                  
                  
                  325
                  
                  
                  
                  387
                  
                  
                  
                  1,418Savings
                  
                  
                  44
                  
                  
                  
                  42
                  
                  
                  
                  124
                  
                  
                  
                  107Time
                  
                  
                  1,321
                  
                  
                  
                  1,412
                  
                  
                  
                  4,028
                  
                  
                  
                  4,650Borrowings
                  
                  
                  553
                  
                  
                  
                  568
                  
                  
                  
                  1,573
                  
                  
                  
                  1,832Total
      interest expense
                  
                  
                  2,011
                  
                  
                  
                  2,347
                  
                  
                  
                  6,112
                  
                  
                  
                  8,007Net
      interest income
                  
                  
                  3,830
                  
                  
                  
                  3,972
                  
                  
                  
                  11,503
                  
                  
                  
                  11,453Provision
      for loan losses
                  
                  
                  338
                  
                  
                  
                  324
                  
                  
                  
                  996
                  
                  
                  
                  887Net
      interest income after provision for loan losses
                  
                  
                  3,492
                  
                  
                  
                  3,648
                  
                  
                  
                  10,507
                  
                  
                  
                  10,566Noninterest
      incomeService
      charges on deposit accounts
                  
                  
                  593
                  
                  
                  
                  516
                  
                  
                  
                  1,679
                  
                  
                  
                  1,518Realized
      (losses) gains on sales of securities
                  
                  
                  ––
                  
                  
                  
                  (14
                  )
                  
                  
                  25
                  
                  
                  
                  (14
                  )Realized
      gains on sales of loans
                  
                  
                  56
                  
                  
                  
                  23
                  
                  
                  
                  106
                  
                  
                  
                  82Realized
      gains on sales of other real estate and repossessed assets
                  
                  
                  8
                  
                  
                  
                  9
                  
                  
                  
                  87
                  
                  
                  
                  12Other
      income
                  
                  
                  171
                  
                  
                  
                  204
                  
                  
                  
                  533
                  
                  
                  
                  654Total
      noninterest income
                  
                  
                  828
                  
                  
                  
                  738
                  
                  
                  
                  2,430
                  
                  
                  
                  2,252Noninterest
      expenseSalaries
      and employee benefits
                  
                  
                  1,673
                  
                  
                  
                  1,782
                  
                  
                  
                  4,960
                  
                  
                  
                  4,869Occupancy
      and equipment
                  
                  
                  424
                  
                  
                  
                  323
                  
                  
                  
                  1,227
                  
                  
                  
                  984Professional
      services
                  
                  
                  99
                  
                  
                  
                  270
                  
                  
                  
                  526
                  
                  
                  
                  642Insurance
                  
                  
                  79
                  
                  
                  
                  96
                  
                  
                  
                  291
                  
                  
                  
                  285FDIC
      Insurance
                  
                  
                  224
                  
                  
                  
                  15
                  
                  
                  
                  683
                  
                  
                  
                  34Franchise
      and other taxes
                  
                  
                  129
                  
                  
                  
                  72
                  
                  
                  
                  375
                  
                  
                  
                  310Advertising
                  
                  
                  43
                  
                  
                  
                  106
                  
                  
                  
                  229
                  
                  
                  
                  280Stationery
      and office supplies
                  
                  
                  61
                  
                  
                  
                  91
                  
                  
                  
                  230
                  
                  
                  
                  242Amortization
      of intangibles
                  
                  
                  26
                  
                  
                  
                  ––
                  
                  
                  
                  93
                  
                  
                  
                  ––Provision
      for losses on foreclosed real estate
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  155Other
      expenses
                  
                  
                  662
                  
                  
                  
                  495
                  
                  
                  
                  1,682
                  
                  
                  
                  1,428Total
      noninterest expense
                  
                  
                  3,420
                  
                  
                  
                  3,250
                  
                  
                  
                  10,296
                  
                  
                  
                  9,229Income
      before federal income taxes
                  
                  
                  900
                  
                  
                  
                  1,136
                  
                  
                  
                  2,641
                  
                  
                  
                  3,589Federal
      income taxes
                  
                  
                  143
                  
                  
                  
                  239
                  
                  
                  
                  411
                  
                  
                  
                  764Net
      income
                  
                  $
                  757
                  
                  
                  $
                  897
                  
                  
                  $
                  2,230
                  
                  
                  $
                  2,825EARNINGS
      PER COMMON SHAREBasic
                  
                  $
                  0.16
                  
                  
                  $
                  0.20
                  
                  
                  $
                  0.48
                  
                  
                  $
                  0.62Diluted
                  
                  $
                  0.16
                  
                  
                  $
                  0.20
                  
                  
                  $
                  0.48
                  
                  
                  $
                  0.62DIVIDENDS
      PER COMMON SHARE
                  
                  $
                  0.14
                  
                  
                  $
                  0.14
                  
                  
                  $
                  0.42
                  
                  
                  $
                  0.40





See
Notes to Condensed Consolidated Financial Statements


4


United
Bancorp, Inc.


Condensed
Consolidated Statements of Comprehensive Income


(In
thousands)





Three
      months ended
                
                
                Nine
      months endedSeptember
      30,
                
                
                September
      30,2009
                
                
                2008
                
                
                2009
                
                
                2008(Unaudited)Net
      income
                
                $
                757
                
                
                $
                897
                
                
                $
                2,230
                
                
                $
                2,825Other
      comprehensive income (loss), net of tax:Unrealized
      holding gains (losses) on securities during the period, net of taxes
      (benefits) of $673, $(272), $416 and $(958) for each respective
      period
                
                
                1,307
                
                
                
                (528
                )
                
                
                808
                
                
                
                (1,859
                )Reclassification
      adjustment for realized (gains) losses included in income, net of taxes
      (benefits) of $0, $5, $(9) and $5 for each respective
    period
                
                
                ––
                
                
                
                9
                
                
                
                (16
                )
                
                
                9Comprehensive
      income
                
                $
                2,064
                
                
                $
                378
                
                
                $
                3,022
                
                
                $
                975Accumulated
      other comprehensive loss
                
                $
                (302
                )
                
                $
                (2,350
                )
                
                $
                (302
                )
                
                $
                (2,350
                )




See
Notes to Condensed Consolidated Financial Statements


5


United
Bancorp, Inc.


Condensed
Consolidated Statements of Cash Flows


For
the Nine Months Ended September 30, 2009 and 2008


(In
thousands)


(Unaudited)





2009
                
                
                2008Operating
      ActivitiesNet
      income
                
                $
                2,230
                
                
                $
                2,825Items
      not requiring (providing) cashDepreciation
      and amortization
                
                
                556
                
                
                
                420Amortization
      of intangible assets
                
                
                93
                
                
                
                ––Provision
      for loan losses
                
                
                996
                
                
                
                887Provision
      for losses on foreclosed assets
                
                
                ––
                
                
                
                155Increase
      in value of bank-owned life insurance
                
                
                (272
                )
                
                
                (169
                )Federal
      Home Loan Bank stock dividends
                
                
                ––
                
                
                
                (122
                )Realized
      gain on sales of securities
                
                
                (25
                )
                
                
                ––Losses
      on called securities
                
                
                ––
                
                
                
                14Amortization
      of premiums and discounts on securities, net
                
                
                191
                
                
                
                50Originations
      of loans held for sale
                
                
                (8,599
                )
                
                
                (2,826
                )Proceeds
      from sale of loans held for sale
                
                
                8,705
                
                
                
                2,908Realized
      gains on sales of loans
                
                
                (106
                )
                
                
                (82
                )Realized
      gains on sales of other real estate and  repossessed
      assets
                
                
                (87
                )
                
                
                (12
                )Deferred
      income taxes
                
                
                ––
                
                
                
                510Amortization
      of mortgage servicing rights
                
                
                119
                
                
                
                60Net
      change in accrued interest receivable and other assets
                
                
                909
                
                
                
                (829
                )Net
      change in accrued expenses and other liabilities
                
                
                (1,982
                )
                
                
                (2,025
                )Net
      cash provided by operating activities
                
                
                2,728
                
                
                
                1,764Investing
      ActivitiesSecurities
      available for sale:Sales,
      maturities, prepayments and calls
                
                
                88,328
                
                
                
                76,722Purchases
                
                
                (61,785
                )
                
                
                (42,452
                )Securities
      held to maturity:Maturities,
      prepayments and calls
                
                
                640
                
                
                
                400Net
      change in loans
                
                
                (10,200
                )
                
                
                (5,327
                )Net
      change in certificates of deposit in other financial
      institutions
                
                
                (22,744
                )
                
                
                ––Purchases
      of premises and equipment
                
                
                (686
                )
                
                
                (396
                )Proceeds
      from disposal of premises and equipment
                
                
                38
                
                
                
                ––Net
      cash received from branch acquisition
                
                
                ––
                
                
                
                30,929Proceeds
      from sale of other real estate and repossessed assets
                
                
                1,103
                
                
                
                12Net
      cash provided by (used in) investing activities
                
                
                (5,306
                )
                
                
                59,888





See
Notes to Condensed Consolidated Financial Statements


6


United
Bancorp, Inc.


Condensed
Consolidated Statements of Cash Flows (continued)


For
the Nine Months Ended September 30, 2009 and 2008


(In
thousands)


(Unaudited)





2009
                
                
                2008Financing
      ActivitiesNet
      change in deposits
                
                $
                (5,634
                )
                
                $
                (12,826
                )Net
      change in borrowings
                
                
                10,922
                
                
                
                (15,046
                )Treasury
      stock issued, net of  purchases
                
                
                269
                
                
                
                311Proceeds
      from issuance of common stock
                
                
                ––
                
                
                
                93Cash
      dividends paid on common stock
                
                
                (2,151
                )
                
                
                (2,012
                )Net
      cash provided by (used in) financing activities
                
                
                3,406
                
                
                
                (29,480
                )Increase
      in Cash and Cash Equivalents
                
                
                828
                
                
                
                32,172Cash
      and Cash Equivalents, Beginning of Period
                
                
                31,469
                
                
                
                12,324Cash
      and Cash Equivalents, End of Period
                
                $
                32,297
                
                
                $
                44,496Supplemental
      Cash Flows InformationInterest
      paid on deposits and borrowings
                
                $
                6,180
                
                
                $
                7,715Federal
      income taxes paid
                
                $
                357
                
                
                $
                750Supplemental
      Disclosure of Non-Cash Investing and Financing ActivitiesTransfers
      from loans to real estate and other repossessed assets
                
                $
                644
                
                
                $
                427Unrealized
      gains (losses) on securities designated as available for sale, net of
      related tax effects
                
                $
                808
                
                
                $
                (1,859
                )Recognition
      of mortgage servicing rights
                
                $
                5
                
                
                $
                41





See
Notes to Condensed Consolidated Financial Statements


7


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




Note
      1:
            Summary
      of Significant Accounting Policies




These
interim financial statements are prepared without audit and reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the financial position of United Bancorp, Inc. (“Company”) at September 30,
2009, and its results of operations and cash flows for the nine and three month
periods presented.  All such adjustments are normal and recurring in
nature.  The accompanying condensed consolidated financial statements
have been prepared in accordance with the instructions for Form 10-Q and,
therefore, do not purport to contain all the necessary financial disclosures
required by accounting principles generally accepted in the United States of
America that might otherwise be necessary in the circumstances and should be
read in conjunction with the Company’s consolidated financial statements and
related notes for the year ended December 31, 2008 included in its Annual Report
on Form 10-K.  Reference is made to the accounting policies of the
Company described in the Notes to the Consolidated Financial Statements
contained in its Annual Report on Form 10-K.  The results of
operations for the nine and three months ended September 30, 2009, are not
necessarily indicative of the results to be expected for the full
year.  The condensed consolidated balance sheet of the Company as of
December 31, 2008 has been derived from the audited consolidated balance sheet
of the Company as of that date.




Principles
of Consolidation




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




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




Nature
of Operations




The
Company’s revenues, operating income, and assets are almost exclusively derived
from banking.  Accordingly, all of the Company’s banking operations
are considered by management to be aggregated in one reportable operating
segment.  Customers are mainly located in Athens, Belmont, Carroll,
Fairfield, Harrison, Hocking, Jefferson, and Tuscarawas Counties and the
surrounding localities in northeastern, east-central and southeastern Ohio, and
include a wide range of individuals, businesses and other
organizations.  The Citizens Bank division conducts its business
through its main office in Martins Ferry, Ohio and twelve branches in
Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Jewett, New Philadelphia, St.
Clairsville East, Saint Clairsville West, Sherrodsville, Strasburg, and
Tiltonsville, Ohio.  The Community Bank division conducts its business
through its main office in Lancaster, Ohio and seven offices in Amesville,
Glouster, Lancaster, and Nelsonville, Ohio.  The Company’s primary
deposit products are checking, savings, and term certificate accounts, and its
primary lending products are residential mortgage, commercial, and installment
loans.  Substantially all loans are secured by specific items of
collateral including business assets, consumer assets and real estate and are
not considered “sub prime” type loans.


8


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




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




Use
of Estimates




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




Securities




Available-for-sale
securities, which include any security for which the Company has no immediate
plan to sell but which may be sold in the future, are carried at fair
value.  Unrealized gains and losses are recorded, net of related
income tax effects, in other comprehensive income.




Held-to-maturity
securities, which include any security for which the Company has the positive
intent and ability to hold until maturity, are carried at historical cost
adjusted for amortization of premiums and accretion of discounts.




Amortization
of premiums and accretion of discounts are recorded as interest income from
securities.  Realized gains and losses are recorded as net security
gains (losses).  Gains and losses on sales of securities are
determined on the specific-identification method.




Allowance
for Loan Losses




The
allowance for loan losses is a valuation allowance for probable incurred credit
losses, increased by the provision for loan losses and decreased by charge-offs
less recoveries.  Management estimates the allowance balance required
based on past loan loss experience, the nature and volume of the portfolio,
information about specific borrower situations and estimated collateral values,
economic conditions and other factors.  Allocations of the allowance
may be made for specific loans, but the entire allowance is available for any
loan that, in management’s judgment, should be charged-off.  Loan
losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed.  The Company defines
impaired loans when, based on current information and events, it is probable
that a creditor will be unable to collect all amounts due according to the
contractual terms of the loan agreement.  The Company considers its
investment in one-to-four family residential loans and consumer installment
loans to be homogenous and therefore excluded from separate identification for
evaluation of impairment.  With respect to the Company’s investment in
nonresidential and multi-family residential real estate loans, and its
evaluation of impairment thereof, such loans are generally collateral dependent
and, as a result, are carried as a practical expedient at the fair value of the
collateral.




Collateral
dependent loans which are more than ninety days delinquent are considered to
constitute more than a minimum delay in repayment and are evaluated for
impairment at that time.


9


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




Earnings
Per Share




Basic
earnings per common share is computed based upon the weighted-average number of
common shares outstanding during the period, less shares in the ESOP which are
unallocated and not committed to be released and non-vested restricted
stock.  At September 30, 2009, the ESOP held 283,635 unallocated
shares which were not included in weighted-average common shares outstanding. In
addition, at September 30, 2009, 170,000 shares of non-vested restricted stock
were not included in weighted-average common shares outstanding. Diluted
earnings per common share include the dilutive effect of additional potential
common shares issuable under the Company’s stock compensation
plans.




Three
      months ended
                        September
      30,
                      
                      
                      Nine
      months ended
                        September
      30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008BasicNet
      income (In thousands)
                      
                      $
                      757
                      
                      
                      $
                      897
                      
                      
                      $
                      2,230
                      
                      
                      $
                      2,825Weighted
      average common shares outstanding
                      
                      
                      4,626,354
                      
                      
                      
                      4,593,728
                      
                      
                      
                      4,612,680
                      
                      
                      
                      4,581,958Basic
      earnings per common share
                      
                      $
                      0.16
                      
                      
                      $
                      0.20
                      
                      
                      $
                      0.48
                      
                      
                      $
                      0.62DilutedNet
      income (In thousands)
                      
                      $
                      757
                      
                      
                      $
                      897
                      
                      
                      $
                      2,230
                      
                      
                      $
                      2,825Weighted
      average common shares outstanding for basic earnings per common
      share
                      
                      
                      4,626,354
                      
                      
                      
                      4,593,728
                      
                      
                      
                      4,612,680
                      
                      
                      
                      4,581,958Add:  Dilutive
      effects of assumed exercise of stock options and restricted
      stock
                      
                      
                      ––
                      
                      
                      
                      197
                      
                      
                      
                      390
                      
                      
                      
                      197Average
      shares and dilutive potential common shares
                      
                      
                      4,626,354
                      
                      
                      
                      4,593,925
                      
                      
                      
                      4,613,070
                      
                      
                      
                      4,582,155Diluted
      earnings per common share
                      
                      $
                      0.16
                      
                      
                      $
                      0.20
                      
                      
                      $
                      0.48
                      
                      
                      $
                      0.62Number
      of stock options not considered in computing diluted earnings per share
      due to antidilutive nature
                      
                      
                      55,529
                      
                      
                      
                      29,040
                      
                      
                      
                      55,529
                      
                      
                      
                      29,040


10


United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and 2008


Options
to purchase 55,529 shares of common stock at a weighted-average exercise price
of $10.34 per share were outstanding at September 30, 2009, but were not
included in the computation of diluted EPS because the options’ exercise price
was greater than the average market price of the common
shares.  Options to purchase 55,529 shares of common stock at a
weighted-average exercise price of $10.34 per share were outstanding at
September 30, 2008, but 29,040 options to purchase common stock were not
included in the computation of diluted EPS 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.




Recent
Accounting Pronouncements




FASB ASC
805-10 concerning business combinations seeks to improve the relevance,
representational faithfulness and comparability of the information that a
reporting entity provides in its financial reports about a business combination
and its effects.  This guidance introduces new accounting concepts, and
several of these changes have the potential to generate greater earnings
volatility, in connection with and after an acquisition.  Some of the more
significant changes include:




·
            Transaction
      costs and restructuring charges will now be
  expensed.




·
            The
      accounting for certain assets acquired and liabilities assumed will change
      significantly.  The most significant to the Company being that
      the allowance for loan losses at acquisition date will be
      eliminated.




·
            Contingent
      consideration will be measured at fair value until
  settled.




·
            Equity
      issued in an acquisition will be valued at the closing date, as opposed to
      the announcement date.




·
            Material
      adjustments made to the initial acquisition will be recorded back to the
      acquisition date.





FASB ASC
805-10 applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008, and may not be applied before that
date.  The Company adopted FASB ASC 805-10 effective January
1, 2009, as required, without material effect on the Company’s financial
position or results of operations.


11


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




FASB ASC
810-10 concerning noncontrolling interests in consolidated financial statements
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies
that a noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements.  Before this statement was issued, limited guidance
existed for reporting noncontrolling interests.  As a result, considerable
diversity in practice existed.  So called minority interests were reported
in the consolidated statement of financial position as liabilities or in the
mezzanine section between liabilities and equity.  This guidance improves
comparability by eliminating that diversity.  The FASB ASC 810-10 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008.  The Company adopted FASB ASC
810-10 effective January 1, 2009, as required, without material effect on
the Company’s financial position or results of operations.





FASB ASC
815-10 concerning disclosures about derivative instruments and hedging
activities was issued in March 2008 and amends and expands the disclosure
requirements of previous guidance to provide greater transparency about
(i) how and why an entity uses derivative instruments, (ii) how
derivative instruments and related hedge items are accounted for under FASB ASC
815-10 and its related interpretations and (iii) how derivative instruments
and related hedged items affect an entity’s financial position, results of
operations and cash flows.  To meet those objectives, FASB ASC 815-10
requires qualitative disclosures about objectives and strategies for usingderivatives, quantitative
disclosures about fair value amounts of gains and losses on derivative
instruments and disclosures about credit-risk-related contingent features in
derivative agreements.  FASB ASC 815-10 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged.  The Company adopted FASB
ASC 815-10 effective January 1, 2009, as required, without material effect
on the Company’s financial position or results of operations.





FASB ASC
805-20 concerns accounting for assets acquired and liabilities assumed in a
business combination that arise from contingencies and clarifies previous
guidance regarding the initial recognition and measurement, subsequent
measurement and accounting and disclosure of assets and liabilities arising from
contingencies in a business combination. FASB ASC 805-20 eliminates the
distinction between contractual and noncontractual contingencies discussed in
FASB ASC 805-10, specifies whether contingencies should be measured at fair
value or in accordance with FASB ASC 450-10, provides application guidance on
subsequent accounting for assets acquired and liabilities assumed in a business
combination that arise from contingencies and establishes new disclosure
requirements.  FASB ASC 805-20 is effective for assets or liabilities
arising from contingencies in business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008.  The Company adopted FASB ASC
805-20 effective January 1, 2009, as required, without material effect on the
Company’s financial position or results of operations.




FASB ASC
820-10 concerns determining fair value when the volume and level of activity for
the asset or liability have significantly decreased and identifying transactions
that are not orderly.  The guidance was issued on April 9, 2009
and provides additional guidance for estimating fair value when the volume and
level of activity for the asset or liability have significantly decreased. 
FASB ASC 820-10 also includes guidance on identifying circumstances that
indicate a transaction is not orderly.   Even if there has been a
significant decrease in the volume and level of activity regardless of valuation
technique, the objective of a fair value measurement remains the same. 
Fair value is


12


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction (that is, not a forced liquidation or distressed sale)
between market participants at the measurement date under current market
conditions.  FASB ASC 820-10 is effective for interim reporting periods
ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009, only if FASB ASC 320-10 and FASB ASC 825-10
are adopted concurrently.  FASB ASC 820-10 does not require disclosures for
earlier periods presented for comparative purposes at initial adoption. The
Company adopted FASB ASC 820-10 effective June 30, 2009, as required, without
material effect on the Company’s financial position or results of
operations.





FASB ASC
320-10 concerns recognition and presentation of other-than-temporary impairments
and was issued on April 9, 2009.  The guidance requires
disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies as well as in annual financial
statements.  FASB ASC 320-10 is effective for interim reporting periods
ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009, only if FASB ASC 820-10 and FASB ASC 825-10
are adopted concurrently.  FASB ASC 320-10 does not require disclosures for
earlier periods presented for comparative purposes at initial adoption. The
Company adopted FASB ASC 320-10 effective June 30, 2009, as required, without
material effect on the Company’s financial position or results of
operations.





FASB ASC
825-10 concerning interim disclosures about fair value of financial instruments
was issued on April 9, 2009 and amends the other-than-temporary guidance in
United States generally accepted accounting principles for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in
the financial statements.  FASB ASC 825-10 does not amend existing
recognition and measurement guidance related to other-than-temporary impairments
of equity securities and does not require disclosures for earlier periods
presented for comparative purposes at initial adoption.  Effective for
interim reporting periods ending after June 15, 2009, early adoption is
permitted for periods ending after March 15, 2009, only if FASB ASC 820-10
and FASB ASC 320-10 are adopted concurrently.  The Company adopted
FASB ASC 825-10 effective June 30, 2009, as required, without material effect on
the Company’s financial position or results of operations.





FASB ASC
855-10 concerning subsequent events was issued in May 2009 and established
standards for accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  FASB ASC 855-10 is effective for periods ending after
June 15, 2009.  The Company adopted FASB ASC 855-10 effective June 30,
2009, as required, without material effect on the Company’s financial position
or results of operations.





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.





13


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




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 does not believe that the adoption of
FASB ASC 860-10 will have a significant 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.  The Company does not believe that the adoption of FASB
ASC 860-10 will have a significant effect on its consolidated financial
statements.


14


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




Note
      2:
            Securities




The
amortized cost and approximate fair values of securities are as
follows:




Amortized
                    Cost
                  
                  
                  Gross
                    Unrealized
                    Gains
                  
                  
                  Gross
                    Unrealized
                    Losses
                  
                  
                  Approximate
                    Fair Value(In
      thousands)Available-for-sale
      Securities:September
      30, 2009 (unaudited):U.S.
      government agencies
                  
                  $
                  62,738
                  
                  
                  $
                  243
                  
                  
                  $
                  (136
                  )
                  
                  $
                  62,845State
      and political subdivisions
                  
                  
                  26,687
                  
                  
                  
                  619
                  
                  
                  
                  (52
                  )
                  
                  
                  27,254Mortgage-backed
      securities
                  
                  
                  13,242
                  
                  
                  
                  534
                  
                  
                  
                  ––
                  
                  
                  
                  13,776Equity
      securities
                  
                  
                  4
                  
                  
                  
                  2
                  
                  
                  
                  ––
                  
                  
                  
                  6$
                  102,671
                  
                  
                  $
                  1,398
                  
                  
                  $
                  (188
                  )
                  
                  $
                  103,881December
      31, 2008:U.S.
      government agencies
                  
                  $
                  86,458
                  
                  
                  $
                  928
                  
                  
                  $
                  ––
                  
                  
                  $
                  87,386State
      and political subdivisions
                  
                  
                  26,970
                  
                  
                  
                  18
                  
                  
                  
                  (1,252
                  )
                  
                  
                  25,736Mortgage-backed
      securities
                  
                  
                  15,972
                  
                  
                  
                  319
                  
                  
                  
                  (1
                  )
                  
                  
                  16,290Equity
      securities
                  
                  
                  4
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  4$
                  129,404
                  
                  
                  $
                  1,265
                  
                  
                  $
                  (1,253
                  )
                  
                  $
                  129,416





Amortized
                    Cost
                  
                  
                  Gross
                    Unrealized
                    Gains
                  
                  
                  Gross
                    Unrealized
                    Losses
                  
                  
                  Approximate
                    Fair Value(In
      thousands)Held-to-maturity
      Securities:September
      30, 2009 (unaudited):State
      and political subdivisions
                  
                  $
                  15,073
                  
                  
                  $
                  452
                  
                  
                  $
                  (16
                  )
                  
                  $
                  15,509December
      31, 2008:State
      and political subdivisions
                  
                  $
                  15,687
                  
                  
                  $
                  185
                  
                  
                  $
                  (175
                  )
                  
                  $
                  15,697


15


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




The
amortized cost and fair value of available-for-sale securities and
held-to-maturity securities at September 30, 2009, by contractual maturity, are
shown below.  Expected maturities will differ from contractual
maturities because issuers may have the right to call or prepay obligations with
or without call or prepayment penalties.




Available-for-sale
                  
                  
                  Held-to-maturityAmortized
                    Cost
                  
                  
                  Fair
                    Value
                  
                  
                  Amortized
                    Cost
                  
                  
                  Fair
                    Value(In
      thousands, unaudited)Within
      one year
                  
                  $
                  350
                  
                  
                  $
                  352
                  
                  
                  $
                  280
                  
                  
                  $
                  282One
      to five years
                  
                  
                  3,316
                  
                  
                  
                  3,392
                  
                  
                  
                  3,268
                  
                  
                  
                  3,383Five
      to ten years
                  
                  
                  21,213
                  
                  
                  
                  21,909
                  
                  
                  
                  6,333
                  
                  
                  
                  6,582After
      ten years
                  
                  
                  77,788
                  
                  
                  
                  78,222
                  
                  
                  
                  5,192
                  
                  
                  
                  5,262102,667
                  
                  
                  
                  103,875
                  
                  
                  
                  15,073
                  
                  
                  
                  15,509Equity
      securities
                  
                  
                  4
                  
                  
                  
                  6
                  
                  
                  
                  ––
                  
                  
                  
                  ––Totals
                  
                  $
                  102,671
                  
                  
                  $
                  103,881
                  
                  
                  $
                  15,073
                  
                  
                  $
                  15,509




The
carrying value of securities pledged as collateral, to secure public deposits
and for other purposes, was $87.8 million at September 30, 2009 and $89.7
million at December 31, 2008.




Information
with respect to sales of available for sale securities and resulting gross
realized gains and losses was as follows:




Nine months ended
                    September 30,2009
                  
                  
                  2008(In
      thousands, unaudited)Proceeds
      from sale
                  
                  $
                  1,000
                  
                  
                  $
                  4,046Gross
      gains
                  
                  
                  25
                  
                  
                  
                  ––Gross
      losses
                  
                  
                  ––
                  
                  
                  
                  (14
                  )





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 was $23.8 million at September 30, 2009, and $31.5 million at
December 31, 2008, which represented approximately 20% and 22%, respectively, of
the Company’s available-for-sale and held-to-maturity investment portfolio at
each respective date.




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.


16


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




The
following table shows the Company’s investments’ gross unrealized losses and
fair value, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position at September 30,
2009 and December 31, 2008.




September
      30, 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, unaudited)US
      Government agency securities
                    
                    $
                    16,954
                    
                    
                    $
                    (136
                    )
                    
                    $
                    ––
                    
                    
                    $
                    ––
                    
                    
                    $
                    16,954
                    
                    
                    $
                    (136
                    )State
      and political subdivisions
                    
                    
                    4,394
                    
                    
                    
                    (22
                    )
                    
                    
                    2,463
                    
                    
                    
                    (46
                    )
                    
                    
                    6,857
                    
                    
                    
                    (68
                    )Total
      temporarily impaired securities
                    
                    $
                    21,348
                    
                    
                    $
                    (158
                    )
                    
                    $
                    2,463
                    
                    
                    $
                    (46
                    )
                    
                    $
                    23,811
                    
                    
                    $
                    (204
                    )




December
      31, 2008Less
      than 12 Months
                
                
                12
      Months or More
                
                
                TotalDescription of
                  Securities
                
                Fair Value
                
                
                Unrealized
                  Losses
                
                
                Fair Value
                
                
                Unrealized
                  Losses
                
                
                Fair Value
                
                
                Unrealized
                  Losses(In
      thousands)Mortgage-backed
      securities
                
                $
                ––
                
                
                $
                ––
                
                
                $
                288
                
                
                $
                (1
                )
                
                $
                288
                
                
                $
                (1
                )State
      and political subdivisions
                
                
                31,249
                
                
                
                (1,427
                )
                
                
                ––
                
                
                
                ––
                
                
                
                31,249
                
                
                
                (1,427
                )Total
      temporarily impaired securities
                
                $
                31,249
                
                
                $
                (1,427
                )
                
                $
                288
                
                
                $
                (1
                )
                
                $
                31,537
                
                
                $
                (1,428
                )




U.S.
Government Agencies




The
unrealized losses on the Company’s investments in direct obligations of U.S.
government agencies were primarily caused by changes in interest
rates.  The contractual terms of those investments do not permit the
issuer to settle the securities at a price less than the amortized cost bases of
the investments.  Because the Company does not intend to sell the
investments and it is not more likely than not the Company will be required to
sell the investments before recovery of their amortized cost bases, which may be
maturity, the Company does not consider those investments to be
other-than-temporarily impaired at September 30, 2009.


17


United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and 2008


Mortgage-backed
Securities




The
unrealized losses on the Company’s investment in mortgage-backed securities were
primarily caused by changes in interest rates.  The Company expects to
recover the amortized cost basis over the term of the
securities.  Because the decline in market value is attributable to
changes in interest rates and not credit quality, and because the Company does
not intend to sell the investments and it is not more likely than not the
Company will be required to sell the investments before recovery of their
amortized cost bases, which may be maturity, the Company does not consider those
investments to be other-than-temporarily impaired at September 30,
2009.




State
and Political Subdivisions




The
unrealized losses on the Company’s investments in securities of state and
political subdivisions were primarily caused by changes in interest
rates.  The contractual terms of those investments do not permit the
issuer to settle the securities at a price less than the amortized cost bases of
the investments.  Because the Company does not intend to sell the
investments and it is not more likely than not the Company will be required to
sell the investments before recovery of their amortized cost bases, which may be
maturity, the Company does not consider those investments to be
other-than-temporarily impaired at September 30, 2009.




Note
      3:
            Allowance
      for Loan Losses




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




Three
      months ended
                    September
      30,
                  
                  
                  Nine
      months ended
                    September
      30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008(In
      thousands)Beginning
      balance
                  
                  $
                  3,291
                  
                  
                  $
                  2,870
                  
                  
                  $
                  2,770
                  
                  
                  $
                  2,447Provision
      for loan losses
                  
                  
                  338
                  
                  
                  
                  324
                  
                  
                  
                  996
                  
                  
                  
                  887Loans
      charged-off
                  
                  
                  (768
                  )
                  
                  
                  (270
                  )
                  
                  
                  (1,022
                  )
                  
                  
                  (534
                  )Recoveries
      of previous charge-offs
                  
                  
                  65
                  
                  
                  
                  41
                  
                  
                  
                  182
                  
                  
                  
                  165Ending
      balance
                  
                  $
                  2,926
                  
                  
                  $
                  2,965
                  
                  
                  $
                  2,926
                  
                  
                  $
                  2,965




The
Company’s impaired loans totaled $5.7 million and $7.5 million at September 30,
2009 and December 31, 2008, respectively.  The Company reviews each
impaired loan to determine whether a specific allowance for loan losses is
necessary.  Based upon this review, an allowance for loan losses
of




$1.2
million and $1.5 million relates to impaired loans of $3.9 million and $5.5
million, at September 30, 2009 and December 31, 2008,
respectively.  At September 30, 2009 and December 31, 2008, impaired
loans of $1.8 million and $2.0 million, respectively, had no related allowance
for loan losses.


18


United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and 2008




Interest
income of approximately $109,000 and $167,000 was recognized on average impaired
loans of $7.0
million and $7.5 million for the nine months ended September 30, 2009 and 2008,
respectively.  Interest income was recognized on impaired loans on a
cash basis for each of the nine months ended September 30, 2009 and
2008.




At
September 30, 2009 and December 31, 2008, accruing loans delinquent 90 days
or more (including impaired loans of $614,000 at September 30, 2009 and $1.1
million at December 31, 2008) totaled $1.3million and
$1.6 million, respectively.  Non-accruing loans at September 30, 2009
and December 31, 2008 (including impaired loans of $5.0 million at September 30,
2009 and $4.9 million at December 31, 2008) were $5.9 million and $5.4 million,
respectively.





Note
      4:
            Benefit
      Plans




Pension
expense includes the following:




Three
      months ended
                    September
      30,
                  
                  
                  Nine
      months ended
                    September
      30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008(In
      thousands)Service
      cost
                  
                  $
                  63
                  
                  
                  $
                  59
                  
                  
                  $
                  189
                  
                  
                  $
                  177Interest
      cost
                  
                  
                  41
                  
                  
                  
                  45
                  
                  
                  
                  121
                  
                  
                  
                  135Expected
      return on assets
                  
                  
                  (37
                  )
                  
                  
                  (59
                  )
                  
                  
                  (111
                  )
                  
                  
                  (177
                  )Amortization
      of prior service cost, transition liability, net gain and plan
      amendment
                  
                  
                  30
                  
                  
                  
                  15
                  
                  
                  
                  90
                  
                  
                  
                  45Pension
      expense
                  
                  $
                  97
                  
                  
                  $
                  60
                  
                  
                  $
                  289
                  
                  
                  $
                  180




In
addition to the Company’s normal pension expense in the table above, during the
nine months ended September 30, 2008, the Company recorded an additional expense
of approximately $28,000 as certain participants in the Company’s defined
benefit plan were paid lump sum distributions from the
plan.  Management does not anticipate the Company will incur
settlement accounting expense during 2009.





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.


19


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




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




September
      30,
                    
                    
                    December
      31,2009
                    
                    
                    2008(Unaudited)(In
      thousands)Commitments
      to extend credit
                    
                    $
                    34,741
                    
                    
                    $
                    26,110Credit
      card and ready reserve lines
                    
                    
                    13,646
                    
                    
                    
                    12,912Standby
      letters of credit
                    
                    
                    775
                    
                    
                    
                    820





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 instruments measured at
fair value on a recurring basis and recognized in the accompanying consolidated
balance sheet, as well as the general classification of such instruments
pursuant to the valuation hierarchy.




Available-for-sale
Securities




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


20


United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




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 a fair value hierarchy in which the fair value
measurements fall at September 30, 2009 and December 31, 2008:




Fair Value Measurements UsingFair Value
                  
                  
                  Quoted Prices
                    in Active
                    Markets for
                    Identical
                    Assets
                    (Level 1)
                  
                  
                  Significant
                    Other
                    Observable
                    Inputs
                    (Level 2)
                  
                  
                  Significant
                    Unobservable
                    Inputs
                    (Level 3)(In
      thousands)September
      30, 2009U.S.
      government agencies
                  
                  $
                  62,845
                  
                  
                  $
                  ––
                  
                  
                  $
                  62,845
                  
                  
                  $
                  ––State
      and political subdivisions
                  
                  
                  27,254
                  
                  
                  
                  ––
                  
                  
                  
                  27,254
                  
                  
                  
                  ––Mortgage-backed
      securities
                  
                  
                  13,776
                  
                  
                  
                  ––
                  
                  
                  
                  13,776
                  
                  
                  
                  ––Equity
      securities
                  
                  
                  6
                  
                  
                  
                  ––
                  
                  
                  
                  6
                  
                  
                  
                  ––December
      31, 2008U.S.
      government agencies
                  
                  $
                  87,386
                  
                  
                  $
                  ––
                  
                  
                  $
                  87,386
                  
                  
                  $
                  ––State
      and political subdivisions
                  
                  
                  25,736
                  
                  
                  
                  ––
                  
                  
                  
                  25,736
                  
                  
                  
                  ––Mortgage-backed
      securities
                  
                  
                  16,290
                  
                  
                  
                  ––
                  
                  
                  
                  16,290
                  
                  
                  
                  ––Equity
      securities
                  
                  
                  4
                  
                  
                  
                  ––
                  
                  
                  
                  4
                  
                  
                  
                  ––




Following
is a description of the valuation methodologies used for instruments 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




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 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.


21


United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and 2008


Foreclosed
Assets Held for Sale




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




The
following table presents the fair value measurements of assets recognized in the
accompanying consolidated balance sheets measured at fair value on a
nonrecurring basis and the level within the fair value hierarchy in which the
fair value measurements fall at September 30, 2009 and December 31,
2008.




Fair Value Measurements UsingFair Value
                  
                  
                  Quoted Prices
                    in Active
                    Markets for
                    Identical
                    Assets
                    (Level 1)
                  
                  
                  Significant
                    Other
                    Observable
                    Inputs
                    (Level 2)
                  
                  
                  Significant
                    Unobservable
                    Inputs
                    (Level 3)(In
      thousands)September
      30, 2009Impaired
      loans
                  
                  $
                  1,368
                  
                  
                  $
                  ––
                  
                  
                  $
                  ––
                  
                  
                  $
                  1,368Mortgage
      servicing rights
                  
                  
                  280
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  280Foreclosed
      assets held for sale
                  
                  
                  643
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  643December
      31, 2008Impaired
      loans
                  
                  $
                  4,856
                  
                  
                  $
                  ––
                  
                  
                  $
                  ––
                  
                  
                  $
                  4,856Mortgage
      servicing rights
                  
                  
                  394
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  394Foreclosed
      assets held for sale
                  
                  
                  208
                  
                  
                  
                  ––
                  
                  
                  
                  ––
                  
                  
                  
                  208


22





United
Bancorp, Inc.


Notes
to Condensed Consolidated Financial Statements


For
the Nine and Three Months Ended September 30, 2009 and 2008




The
following table presents estimated fair values of the Company’s financial
instruments.  The fair values of certain of these instruments were
calculated by discounting expected cash flows, which involves significant
judgments by management and uncertainties.  Fair value is the
estimated amount at which financial assets or liabilities could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale.  Because no market exists for certain of these
financial instruments and because management does not intend to sell these
financial instruments, the Company does not know whether the fair values shown
below represent values at which the respective financial instruments could be
sold individually or in the aggregate.




September 30, 2009
                  
                  
                  December 31, 2008Carrying
                    Amount
                  
                  
                  Fair
                    Value
                  
                  
                  Carrying
                    Amount
                  
                  
                  Fair
                    Value(In thousands)Financial
      assetsCash
      and cash equivalents
                  
                  $
                  32,297
                  
                  
                  $
                  32,297
                  
                  
                  $
                  31,469
                  
                  
                  $
                  31,469Certificates
      of deposits in other financial institutions
                  
                  
                  22,744
                  
                  
                  
                  22,814
                  
                  
                  
                  ––
                  
                  
                  
                  ––Held-to-maturity
      securities
                  
                  
                  15,073
                  
                  
                  
                  15,509
                  
                  
                  
                  15,687
                  
                  
                  
                  15,697Loans,
      net of allowance for loan losses
                  
                  
                  244,114
                  
                  
                  
                  239,336
                  
                  
                  
                  235,448
                  
                  
                  
                  235,075Federal
      Home Loan Bank stock
                  
                  
                  4,810
                  
                  
                  
                  4,810
                  
                  
                  
                  4,810
                  
                  
                  
                  4,810Accrued
      interest receivable
                  
                  
                  2,348
                  
                  
                  
                  2,348
                  
                  
                  
                  3,037
                  
                  
                  
                  3,037Financial
      liabilitiesDeposits
                  
                  
                  341,411
                  
                  
                  
                  328,975
                  
                  
                  
                  347,045
                  
                  
                  
                  349,247Short-term
      borrowings
                  
                  
                  13,145
                  
                  
                  
                  13,145
                  
                  
                  
                  6,759
                  
                  
                  
                  6,759Federal
      Home Loan Bank advances
                  
                  
                  49,245
                  
                  
                  
                  50,311
                  
                  
                  
                  43,745
                  
                  
                  
                  44,327Subordinated
      debentures
                  
                  
                  4,000
                  
                  
                  
                  2,819
                  
                  
                  
                  4,000
                  
                  
                  
                  2,763Treasury
      tax and loan
                  
                  
                  86
                  
                  
                  
                  86
                  
                  
                  
                  1,050
                  
                  
                  
                  1,050Interest
      payable
                  
                  
                  401
                  
                  
                  
                  401
                  
                  
                  
                  469
                  
                  
                  
                  469




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 amount approximates fair value.


23




United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and 2008


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.




Short-term
Borrowings, Interest Payable and Treasury Tax and Loan




The
carrying amount approximates fair value.




Subordinated
Debentures and Federal Home Loan Bank Advances




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




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




The fair
value of commitments to originate loans is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the
counterparties.  For fixed-rate loan commitments, fair value also
considers the difference between current levels of interest rates and the
committed rates.  The fair values of letters of credit and lines of
credit are based on fees currently charged for similar agreements or on the
estimated cost to terminate or otherwise settle the obligations with the
counterparties at the reporting date.  Fair values of commitments were
not material at September 30, 2009 and December 31, 2008.


24




United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and
2008


Note
      7:
            Restricted
      Stock Awards




In
accordance with the United Bancorp, Inc. 2008 Incentive award Plan that was
approved by our shareholders, the Company issued 170,000 restricted common stock
awards to certain Officers and Directors of the Company.  The
restricted stock awards will cliff vest at the earliest of the individuals’
normal retirement dates or 9 1⁄2 years from date of grant.  The Company
utilized the stock closing price on the date of grant of $8.40 as the fair value
to record compensation cost.  For the three month period ended
September 30, 2009, the Company recorded approximately $9,000 of compensation
expense related to this restricted stock award.  At September 30,
2009, no shares were vested under this award.  These awards were
considered in the Company’s dilutive earnings per share computation and have a
dilutive effect of approximately 390 shares for the nine month period ended
September 30, 2009.  Under the United Bancorp, Inc. 2008 Incentive
Award Plan the Company has 330,000 shares available for future
grants.




Note
      8:
            Subsequent
      Events




Subsequent
events have been evaluated through November 13, 2009, which is the date the
financial statements were issued.


25




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 September 30,
2009, as compared to December 31, 2008, and the results of operations for the
nine and three month periods ended September 30, 2009, compared to the same
periods in 2008.  This discussion should be read in conjunction with
the interim condensed consolidated financial statements and related footnotes
included herein.




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.




Except as
otherwise discussed herein, 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.  Except as otherwise discussed
herein, the Company is not aware of any current recommendation by regulatory
authorities that would have such effect if implemented.




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.




Introduction




The
Company's net interest margin of 3.83% for the nine months ended September 30,
2009, generated an increase of approximately $50,000 in net interest income over
the same period in 2008.  This increase was primarily driven by an
increase in the earning assets of the Bank and a reduction in the Company's
interest expense as interest rates remain at historical low
levels.  Overall, the composition of the Company's balance sheet has
changed during the past 12 months due to the September 2008 acquisition of
approximately $30 million of net deposits from a failed bank.  In
addition, with interest rates at historical low levels the Company has also
experienced a high volume of called investment securities since December 31,
2008.  For the nine months ended September 30, 2009, the Company
experienced a net $26.5 million in called investment securities.  With
these two items, as of September 30, 2009, the Company had liquidity of
over $55 million being maintained in lower yielding short term investments and
in cash.  Should the economy and interest rates improve over the next
18 months, management expects to be able to deploy this liquidity to meet
projected increased loan demand.  However, in the near term, as
overall interest rates remain low it will become more of a challenge to maintain
the Company's current net interest margin. For the three months ended September
30, 2009, the Company's net interest income decreased $142,000, or 3.6%,
compared to the same period in 2008.


26




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




Service
charge income on deposit accounts for the nine month period ended September 30,
2009 increased $161,000. The Company’s nine month 2009 earnings level was
accomplished despite a period over period increase of $109,000 in the provision
for loan losses, and an impairment loss on the Company’s secondary market loan
servicing asset of approximately $76,000, due to the low interest rate
environment and the related accelerating payoff of loan
balances.  Overall in 2009, the deposit insurance premiums assessed by
the Federal Deposit Insurance Corporation (FDIC) have increased dramatically in
response to a number of bank failures during the past 18 months.  The
FDIC’s insurance premiums increased approximately $649,000 during the first nine
months of 2009 as compared to the same period in 2008.  This level of
assessment is expected to continue for the remainder of 2009 and beyond. In
addition, on May 22, 2009, the FDIC adopted a final rule to impose a special 5
basis point assessment on total assets less Tier 1 capital on all banks as of
September 30, 2009, and authorized the FDIC to impose up to two additional 5
basis point assessments in the third and fourth quarters of 2009. The Company’s
noninterest expense for the first nine months of 2009 increased $1,067,000, or
11.6%, as compared to the same period in 2008.  Excluding the effect
of the FDIC insurance premiums, the majority of this increase relates to
additional staff and operating expenses following our September 19, 2008
acquisition of three new banking offices from the FDIC.




Critical
Accounting Policies




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




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




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




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


27




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


Analysis
of Financial Condition




Earning
Assets – Loans




At
September 30, 2009, gross loans were $247.0 million, compared to $238.2 million
at December 31, 2008, an increase of $8.8 million.  The overall
increase in the loan portfolio was driven by a $7.5 million
increase in consumer loans since December 31, 2008.




Installment
loans represented 18.5% of total loans at September 30, 2009 and 16.1% at
December 31, 2008.  This indirect lending type of financing carries
somewhat more risk than real estate lending, however it also provides for higher
yields.  Installment loans have increased $7.5 million, or 19.5%,
since December 31, 2008. With overall interest rates at historical low levels,
the Company focused on growing the installment loan area since the average life
of these loans is approximately 36 to 40 months.  The Company will
have the opportunity to reinvest the repayment proceeds of these shorter
duration loans into higher yielding assets when the economy strengthens and
overall interest rates increase.  The targeted lending areas encompass
four metropolitan areas, minimizing the risk to changes in economic conditions
in the communities housing the Company’s 20 branch locations.




Commercial
and commercial real estate loans comprised 56.9% of total loans at September 30,
2009 compared to 58.8% at December 31, 2008.  Commercial and
commercial real estate loans have increased $408,000, or 0.3% since December 31,
2008.  The Company has originated and purchased participations in
loans from other banks for out-of-area commercial and commercial real estate
loans to benefit from consistent economic growth outside the Company’s primary
market area, but all within the state of Ohio.




Real
estate loans were 24.6% and 25.1% of total loans at September 30, 2009 and
December 31, 2008, respectively.  Real estate loans increased $958,000
from December 31, 2008.  Real estate lending for the nine months of
2009 has been slow with respect to the Company’s adjustable-rate mortgage
products.  As of September 30, 2009, the Bank has approximately $30.4
million in fixed-rate loans that it services for a fee that is typically 25
basis points.  At September 30, 2009, the Company did not hold any
loans for sale.




The
allowance for loan losses represents the amount which management and the Board
of Directors estimates is adequate to provide for probable losses inherent in
the loan portfolio.  The allowance balance and the provision charged
to expense are reviewed by management and the Board of Directors monthly using a
risk evaluation model that considers borrowers’ past due experience, economic
conditions and various other circumstances that are subject to change over
time.  Management believes the current balance of the allowance for
loan losses is adequate to absorb probable incurred credit losses associated
with the loan portfolio.  Net charge-offs for the nine months ended
September 30, 2009 were approximately $840,000, or 30.3%, of the beginning
balance in the allowance for loan losses.  While the level of net
loans charged off to average loans has increased from 0.16% for the nine months
ended September 30, 2008 to 0.35% for the nine months ended September 30, 2009,
the Company’s net charge-off percentage is well below the June 30, 2009 peer
group average of 0.70%.


28




United
Bancorp, Inc.
 Notes
to Condensed Consolidated Financial Statements
 For
the Nine and Three Months Ended September 30, 2009 and 2008


Earning
Assets - Securities and Federal Funds Sold










Sources
of Funds – Deposits




The
Company’s primary source of funds is core deposits from retail and business
customers.  These core deposits include all categories of
interest-bearing and noninterest-bearing deposits, excluding certificates of
deposit greater than $100,000.  For the period ended September 30,
2009, total core deposits decreased approximately $15.1 million, or
5.0%.  The Company’s interest-bearing demand deposits decreased $12.8
million, or 10.8%, noninterest-bearing demand deposits decreased $2.4 million,
or 9.8%, while certificates of deposit under $100,000 decreased by $3.6 million,
or 3.0%.  The Company’s savings accounts increased $3.7 million, or
9.2%, from December 31, 2008 totals.




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




Certificates
of deposit greater than $100,000 are not considered part of core deposits and as
such are used to balance rate sensitivity as a tool of funds
management.  At September 30, 2009, certificates of deposit greater
than $100,000 increased $9.4 million, or 20.1%, from year-end 2008
totals.




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




Other
interest-bearing liabilities include securities sold under agreements to
repurchase, sweep accounts, federal funds purchased, Treasury, Tax and Loan
notes payable and Federal Home Loan Bank (“FHLB”) advances.  The
majority of the Company’s repurchase agreements are with local school districts
and city and county governments.  The Company’s short-term borrowings
increased approximately $5.4 million from December 31, 2008 totals, while the
Federal Home Loan Bank advances increased  $5.5 million from December
31, 2008.  The Company took advantage of special long term lower rate
advances from the Federal Home Loan Bank.




Results
of Operations for the Nine Months Ended September 30, 2009 and 2008




Net
Income




Basic and
diluted earnings per share for the nine months ended September 30, 2009 totaled
$0.48, compared with $0.62 for the nine months ended September 30, 2008, a
decrease of 22.6%. In dollars, the Company’s net income was $2.2 million for the
nine months ended September 30, 2009, a decrease of $595,000, or 21.0%, compared
to the same period in 2008.


29




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


Net
Interest Income




Net
interest income, by definition, is the difference between interest income
generated on interest-earning assets and the interest expense incurred on
interest-bearing liabilities.  Various factors contribute to changes
in net interest income, including volumes, interest rates and the composition or
mix of interest-earning assets in relation to interest-bearing
liabilities.  Net interest income increased 0.4%, or $50,000, for the
nine months ended September 30, 2009 compared to the same period in 2008. This
increase was primarily driven by an increase in the earning assets of the Bank
and a reduction in the Company's interest expense as interest rates remain at
historical low levels.




Provision
for Loan Losses




The
provision for loan losses was $996,000 for the nine months ended September 30,
2009, compared to $887,000 for the same period in 2008.  The increase
in loan loss provision for the nine-month period ended September 30, 2009, was
predicated upon the increase in nonperforming loans and consideration of the
impact on the loan portfolio of the economic challenges facing the banking
industry.




Noninterest
Income




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




Noninterest
income for the nine months ended September 30, 2009 was $2.4 million, an
increase of $178,000, or 7.9%, compared to $2.3 million for the nine-month
period ended September 30, 2008.  During the nine-months ended
September 30, 2009, the increase in noninterest income was primarily driven by
an increase in customer service fees of $161,000 and an increase in gains on
sale of foreclosed real estate of approximately $75,000. These items were offset
by an impairment charge of approximately $76,000 related to the Company’s
secondary market mortgage servicing asset.  With interest rates at
historical low levels, the overall mortgage industry and the Company have seen
an increase in mortgage refinancing.  As the pace of mortgage
refinancing increases the computed value of the Company’s mortgage servicing
asset has decreased in value and resulted in the impairment charge previously
mentioned.  As of September 30, 2009, the Company’s mortgage servicing
asset was approximately $280,000, and it is currently valued at approximately 92
basis points of the secondary market loans the Company
services.


30




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





Noninterest
Expense




Noninterest
expense was $10.3 million for the nine months ended September 30, 2009 an
increase of




$1.1
million, or 11.6%, over the nine months ended September 30,
2008.  Overall in 2009, the deposit insurance premiums assessed by the
Federal Deposit Insurance Corporation (“FDIC”) have increased dramatically in
response to a record number of bank failures during the past 18
months.  Overall in 2009, the deposit insurance premiums assessed by
the Federal Deposit Insurance Corporation (FDIC) have increased dramatically in
response to a number of bank failures during the past 18 months.  The
FDIC’s insurance premiums increased approximately $649,000 during the first nine
months of 2009 as compared to the same period in 2008.  This level of
assessment is expected to continue for the remainder of 2009 and beyond. In
addition, on May 22, 2009, the FDIC adopted a final rule to impose a special 5
basis point assessment on total assets less Tier 1 capital on all banks as of
September 30, 2009, and authorized the FDIC to impose up to two additional 5
basis point assessments in the third and fourth quarters of 2009.




The
Company has experienced an increase in noninterest expense due to the September
2008 acquisition of three branches of a failed bank.  With this
acquisition the Company expanded from 17 to 20 offices and and as a result
increased staff and general overhead from this expansion. Salaries and employee
benefits expense increased $91,000, or 1.9%, for the period ended September 30,
2009 over the same period in 2008.  This increase was due to the
staffing increase, normal merit increases, and benefit
expenses.  Professional fees decreased $116,000, for the first nine
months of 2009 compared to the same period in 2008 due to a decrease in legal
fees associated with collection efforts.  Occupancy and equipment
expense increased $243,000, or 24.7% for the first nine months of 2009 over the
same period in 2008, due to increased depreciation expense on computer hardware
and software and related service maintenance as well as costs associated with
the three new branch locations.  Amortization expense of intangible
assets was $93,000 for the first nine months of 2009, relating to the intangible
asset recorded in connection with the 2008 acquisition of a failed
bank.




Federal
Income Taxes




The
provision for federal income taxes was $411,000 for the nine months ended
September 30, 2009, a decrease of $353,000, or 46.2%, compared to the same
period in 2008.  The decrease in tax expense was due primarily to a
$948,000, or 26.4%, decrease in pretax income.  The effective tax
rates were 15.6% and 21.3% for the nine months ended September 30, 2009 and
2008, respectively.




Results
of Operations for the Three Months Ended September 30, 2009 and
2008




Net
Income




Basic and
diluted earnings per share for the three months ended September 30, 2009 totaled $0.16
compared with $0.20, for the three months ended September 30, 2008, a decrease
of 20.0%.  In dollars, the Company’s net income was $757,000 for the
three months ended September 30, 2009 a decrease of $140,000, or 15.6% compared
to net income of $897,000 for the same quarter in 2008.


31




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





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 3.6%, or




$142,000,
for the three months ended September 30, 2009 compared to the same period in
2008, due primarily to the effects of decreasing interest rates in the economy
which resulted in decreased interest rates  on the Company’s
adjustable rate loans. The lower interest rate environment which resulted in a
higher rate of called investment securities and the timing of and extent to
which the Company reinvested those funds.




Provision
for Loan Losses




The
provision for loan losses was $338,000 for the three months ended September 30,
2009, compared to $324,000 for the same period in 2008.  The provision
expense for the three months ended September 30, 2009 was predicated upon an
analysis of the level of nonperforming loans and consideration of the economic
challenges applied to the loan portfolio.




Noninterest
Income




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




Noninterest
income for the three months ended September 30, 2009 was $828,000, an increase
of $90,000, or 12.2%, compared to $738,000 for the same three-month period ended
September 30, 2008.  During the three-months ended September 30, 2009,
the increase in noninterest income was primarily driven by an increase in
customer service fees of approximately $77,000 and an increase in gains on sale
of loans of approximately $33,000.




Noninterest
Expense




Noninterest
expense was $3.4 million for the three months ended September 30, 2009 an
increase of $170,000,
or 5.2%, over the three months ended September 30, 2008.  This was
primarily driven by increased FDIC insurance expense of $209,000 for the three
months ended September 30, 2009 over the same period in 2008.  As
previously discussed, this increased level of insurance premiums will continue
into 2010. The Company has also experienced an increase in noninterest expense
due to the September 2008 branch acquisition.  Occupancy and equipment
expense increased $167,000, or 33.7% for the first three months ended September
30, over the same period in 2008, due to increased depreciation expense from the
additional offices from the September 2008 acquisition and on computer hardware
and software and related service maintenance.  Amortization expense of
intangible assets was $26,000 for the three months ended September 30, 2009
versus zero for the same period in 2008, relating to the intangible asset
recorded in connection with the 2008 acquisition of a failed bank. Professional
fees decreased $171,000, for the three months ended September 2009 compared to
the same period in 2008 due to a decrease in legal fees associated with
collection efforts.  Advertising and stationary and office supplies
expenses decreased for the three months ended September 30, 2009 compared to the
higher expenditures for the same period in 2008 due to the branch
acquisition.


32




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





Federal
Income Taxes




The
provision for federal income taxes was $143,000 for the three months ended
September 30, 2009, a decrease of $96,000, or 40.2%, compared to the same period
in 2008.  The decrease in tax expense was due primarily to a $236,000,
or 20.8%, decrease in pretax income. The effective tax rates were




15.9% and
21.0% for the three months ended September 30, 2009 and 2008,
respectively.




Capital
Resources




Internal
capital growth, through the retention of earnings, is the primary means of
maintaining capital adequacy for the Company.  Stockholders’ equity
totaled $35.0 million at September 30, 2009 compared to $33.9 million at
December 31, 2008, a $1.1 million increase.  Total stockholders’
equity in relation to total assets was 7.8% at September 30, 2009 and 7.7% at
December 31, 2008.  In 2001, our shareholders approved an amendment to
the Company’s Articles of Incorporation to create a class of preferred shares
with 2,000,000 authorized shares.  This enables the Company, at the
option of the Board of Directors, to issue a series of preferred shares in a
manner calculated to take advantage of financing techniques which may provide a
lower effective cost of capital to the Company.  The amendment also
provides greater flexibility to the Board of Directors in structuring the terms
of equity securities that may be issued by the Company.  Although this
preferred stock is a financial tool, it has not been utilized to
date.




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




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




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
                  %


33




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





The
following table illustrates the Company’s well-capitalized classification at
September 30, 2009.




September 30,2009(Unaudited)(Dollars in thousands)Tier
      1 capital
                  
                  $
                  38,638Total
      risk-based capital
                  
                  
                  41,564Risk-weighted
      assets
                  
                  
                  273,928Average
      total assets
                  
                  
                  449,374Total
      risk-based capital ratio
                  
                  
                  15.17
                  %Tier
      1 risk-based capital ratio
                  
                  
                  14.11
                  %Tier
      1 capital to average assets
                  
                  
                  8.60
                  %




Liquidity




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




Inflation




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




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


34




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


ITEM
3.             Quantitative
and Qualitative Disclosures About Market Risk




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




ITEM
4.             Controls
and Procedures




The
Company, under the supervision, and with the participation, of its management,
including the Company's Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to the requirements of Exchange Act
Rule 13a-15.  Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures were effective as of September 30, 2009, in timely alerting them to
material information relating to the Company (including its consolidated
subsidiary) required to be included in the Company's periodic SEC
filings.




There was
no change in the Company's internal control over financial reporting that
occurred during the Company's fiscal quarter ended September 30, 2009 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.


35




United
Bancorp, Inc.
 Part
II – Other Information





ITEM
1.             Legal
Proceedings




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





ITEM
1A.          Risk
Factors




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





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




ISSUER
PURCHASES OF EQUITY SECURITIES




Period
                            
                            (a)
                              Total Number of
                              Shares (or Units)
                              Purchased
                            
                            
                            (b)
                              Average Price Paid
                              Per Share (or Unit)
                            
                            
                            (c)
                              Total Number of
                              Shares (or Units)
                              Purchased as Part
                              Of Publicly
                              Announced Plans
                              Or Programs
                            
                            
                            (d)
                              Maximum Number(or
                              Approximate Dollar
                              Value) of Shares (or
                              Units) that May YetBe
                              Purchased Underthe
                              Plans or ProgramsMonth
      #17/1/2009
      to
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            $
                            1,735,8107/31/2009Month
      #28/1/2009
      to
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            $
                            1,735,8108/31/2009Month
      #39/1/2009
      to9/30/2009
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            $
                            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, Directors may defer up to 100% of their
fees and officers may defer 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 in a
lump sum or over a period up to ten years per their prior election along with
any cash proceeds credited to the account which have not yet been invested in
the Company’s stock. 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.


36


United
Bancorp, Inc.
 Part
II – Other Information





As of
September 30, 2009, the Company continues to be included in the Russell Microcap
Index.  Russell indexes are widely used by investment managers and
institutional investors for both index funds and as benchmarks for passive and
active investment strategies.  UBCP will hold its membership until
Russell reconstitutes its indexes in June 2010.




ITEM
3.             Defaults
Upon Senior Securities




Not
applicable.





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




Not
applicable.





ITEM
5.             Other
Information




Not
applicable.





ITEM
6.             Exhibits




EX-3.1
                Amended
      Articles of Incorporation of UnitedBancorp,
      Inc. (1)EX-3.2
                Amended
      and Restated 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 Exhibit 3.2 to the registrant’s Form 10-Q for the fiscal
      period ended June 30. 2009, as filed with the Securities and Exchange
      Commission on August 13, 2009.


37


SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




/s/United
      Bancorp, Inc.Date: November  13 , 2009
                      
                      By:
                      /s/James W. EversonJames W. EversonChairman, President and Chief
                        Executive OfficerDate: November  13 ,
      2009
                      
                      By:
                      /s/Randall M. GreenwoodRandall M. GreenwoodSenior Vice President, Chief Financial
                        Officer and
Treasurer


38


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
      and Restated Code of Regulations of United Bancorp, Inc. incorporated by
      reference to Exhibit 3.2 to the registrant’s Form 10-Q for the fiscal
      period ended June 30, 2009, as filed with the with the Securities and
      Exchange Commission on August 13, 2009.4.0
                        
                        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.