<PAGE>

                                                                      EXHIBIT 13

                          A LETTER FROM THE PRESIDENT

TO THE SHAREHOLDERS OF UNITED BANCORP, INC....

     We are pleased to report earnings improvement in 2007. Our 27% increase in
earnings per share reflects positively on several initiatives taken which
culminated with our bank charters being consolidated on July lst and the
physical merger being completed in the fourth quarter. Continued double digit
earnings improvement is anticipated in 2008 through the operational efficiencies
gained with the full integration of our two subsidiary banks and the
streamlining of our management and operational support positions which has
reduced time and money spent on duplicated efforts.

                           (PHOTO OF JAMES W. EVERSON)
                             CHAIRMAN, PRESIDENT AND
                             CHIEF EXECUTIVE OFFICER

     As reported earlier, each of our former bank charters continue to operate
under their trade names, "The Citizens Bank" and "The Community Bank", as
Divisions of The Citizens Savings Bank and its proven management structure. We
are now focused on customer service utilizing an expanded $5.6 million lending
authority and offering, as discussed below, an expanded group of products to the
communities we serve.

     Including the Community Board members on the Board of the combined banks
was essential for the Company to realize the full potential of the combination.
Management was pleased to report on the official merger date of July lst that
Samuel J. Jones, Business Owner, Glouster, Ohio; Terry A. McGhee, President and
CEO, Westerman, Inc., Bremen, Ohio; Andrew F. Phillips, President and General
Manager, Miller Brands of South East Ohio, Glouster, Ohio; Robin L. Rhodes,
M.D., Physician, Pediatric Associates of Lancaster, Inc., Lancaster, Ohio; and
L.E. "Dick" Richardson, Jr., Retired President, Southern Ohio Community
Bancorporation, Inc., Glouster, Ohio accepted the Company's invitation to become
members of The Citizens Savings Bank Board of Directors.

     At our August Corporate Board Meeting, having reached the Company's
mandatory retirement age, Mr. Richardson stepped down from his board positions
at both The Citizens Savings Bank and United Bancorp. Dick joined our Bank
Family with The Glouster Community Bank acquisition in 1998. We shall miss his
friendly wise counsel and regional community knowledge. Long term Community
board member Samuel J. Jones, a lifelong resident and businessman in Glouster,
was appointed to fill his vacancy on the United Bancorp Board of Directors.


                                                             ANNUAL REPORT
                                                                 2007
                                                         UNITED BANCORP INC.   1

<PAGE>

     In Retail Banking, we continue to be a leader in the Financial Services
Industry by providing "Small Bank Service with Big Bank Services!" In 2007, we
continued to be ahead of the curve by offering such products as The Freedom ATM
Card, Free Checking with Interest, Remote Merchant Capture, Occasional Overdraft
Privilege Service (OOPS!(TM)), Generations Gold and the Money Market Index
Accounts to name a few. The Freedom Card has allowed our Bank to clearly
differentiate itself from the competition by allowing our customers to make
surcharge free withdrawals from any ATM in the United States. There are not many
banks that can represent that they can serve their customer base nationwide!

     Remote Merchant Capture is an emerging technology that allows our business
customers the luxury of banking beyond traditional hours from the convenience of
their own place of business. Banking on their own schedule, our business
customers can now electronically capture and clear checks accepted in the
ordinary course of business from their own office and transmit this data for
processing from their Personal Computer without ever having to physically come
into one of our banking facilities. The checks processed through Remote Merchant
Capture are cleared typically within one day and posted to the participating
customer's account in the same timeframe. Not only does this cutting-edge
service improve our business customer's cash flow, it also gives them more
timely information regarding returned checks and fraudulent transactions.

     Our Occasional Overdraft Privilege Service (OOPS!(TM)) was introduced to
our customer base in 2007 and has been readily received by our customers. With a
dedicated focus to providing the highest level of service, we are now willing to
pay overdrafts on our customer accounts by prearranged agreement. Recognizing
that our customers sometimes do make a mistake with their checking accounts,
OOPS!(TM) saves our customers from the embarrassment and expense of having an
overdraft item returned to the payee. This convenient service allows our
customers to quickly remedy an overdraft situation by simply making a deposit
into their own checking account.

     2007 was a successful year in lending. Fortunately our bank was not
distracted by the national mortgage situation since we did not originate the
kinds of mortgage loans that are causing the much publicized problems within the
financial services industry. However, some of our customers have been impacted
by problematic mortgage products obtained elsewhere, but this negative
environment has had very little impact on our bank. Our Citizens Bank Division
this past year was notable in that each office in the entire branch network
contributed to its growth in loans. Selective new hires, training and mentoring
over the past three years has resulted in a stronger staff division-wide and we
saw the rewards of that effort. The combining in 2007 of the Citizens and
Community Divisions' loan servicing, loan products, loan pricing, vendors,
systems and government programs has aided both Divisions. At the Community
Division the staff improvement process began in mid 2007. Our objective, which
will continue throughout this


        ANNUAL REPORT
            2007
2   UNITED BANCORP INC.

<PAGE>

     year, is to increase the lenders' capabilities and effectiveness in
     Community's market area. Our Community Division's loan quality has been a
     focus and will continue to be for another year or so. Improved operating
     systems and underwriting training are resulting in higher quality new
     loans. Our stepped up monitoring of the financial condition of existing
     commercial customers has enabled the bank to assist some of those in
     difficulty and a stepped up collection effort is moving the irresolvable
     situations to a resolution.

     Our Company Directors, after much consideration, did not declare a share
dividend in the form of a stock split at its December meeting. Although we are
pleased to report our earnings improvement and the fact that we are not dealing
with issues as they relate to the much reported "sub-prime mortgage market", the
general uncertainties of our economy and the financial services industry did not
warrant such action. We are pleased to report our cash dividend this past year
exceeded the prior year by 8.3% and our dividend payout has increased regularly
since the inception of our company in 1983. This year, many larger financial
sector companies are reducing their cash dividends.

     We are making solid progress in moving toward stronger earnings, yet we
recognize we must continue to do better. Your Board of Directors and Management
Team are committed to stronger earnings which will renew our future growth of
shareholder value and expansion through acquisition and brick and mortar
construction.


/s/ James W. Everson
-------------------------------------
James W. Everson
Chairman, President and
Chief Executive Officer

ceo@unitedbancorp.com

March 3, 2008

                                 CASH DIVIDENDS

                               (PERFORMANCE GRAPH)

<TABLE>
<S>    <C>
2003   $1,717,838
2004   $1,878,788
2005   $2,114,723
2006   $2,415,741
2007   $2,435,317
</TABLE>

This letter contains forward-looking statements that involve risk and
uncertainties, including changes in general economic and financial market
conditions and the Company's ability to execute its business plans. Although
management believes the expectations reflected in such statements are
reasonable, actual results may differ materially.


                                                             ANNUAL REPORT
                                                                 2007
                                                         UNITED BANCORP INC.   3

<PAGE>

                                   DIRECTORS

                      (PHOTO OF                  (PHOTO OF
              MICHAEL J. ARCIELLO(1, 2))   HERMAN E. BORKOSKI(2))


       (PHOTO OF               (PHOTO OF                (PHOTO OF
JAMES W. EVERSON(1, 2))   SCOTT A. EVERSON(2))   LEON F. FAVEDE, O.D.(2))

                     (PHOTO OF                (PHOTO OF
                 JOHN R. HERZIG(2))   JOHN M. HOOPINGARNER(1, 2))


1 = UNITED BANCORP, INC.   2 = THE CITIZENS SAVINGS BANK


        ANNUAL REPORT
            2007
4   UNITED BANCORP INC.

<PAGE>

                                   DIRECTORS

                         (PHOTO OF              (PHOTO OF
                   SAMUEL J. JONES(1, 2))   TERRY A. MCGHEE(1))

        (PHOTO OF                 (PHOTO OF                   (PHOTO OF
 ANDREW F. PHILLIPS(2))   ROBIN L. RHODES, M.D.(2))   RICHARD L. RIESBECK(1, 2))

                       (PHOTO OF                (PHOTO OF
                  ERROL C. SAMBUCO(2))   MATTHEW C. THOMAS(1, 2))

1 = UNITED BANCORP, INC.   2 = THE CITIZENS SAVINGS BANK


                                                             ANNUAL REPORT
                                                                 2007
                                                         UNITED BANCORP INC.   5

<PAGE>

                             DIRECTORS AND OFFICERS

<TABLE>
<S>                                                  <C>
DIRECTORS OF UNITED BANCORP, INC.
   Michael J. Arciello(2)                            Retired Vice President of Finance, Nickles Bakeries, Inc., Navarre, Ohio
   James W. Everson(1)                               Chairman, President & Chief Executive Officer, United Bancorp, Inc.,
                                                     Chairman, The Citizens Savings Bank, Martins Ferry, Ohio
   John M. Hoopingarner(1,3,4)                       General Manager, Muskingum Watershed Conservancy District, New Philadelphia,
                                                        Ohio
   Terry A. McGhee(1,2,3,4)                          President & Chief Executive Officer, Westerman Inc., Bremen, Ohio
   Samual J. Jones                                   Business Owner, Glouster, Ohio
   Richard L. Riesbeck(1,2,4)                        President, Riesbeck Food Markets, Inc., St. Clairsville, Ohio
   Matthew C. Thomas(3)                              President, M.C. Thomas Insurance Agency, Inc., Bridgeport, Ohio
   L.E. Richardson, Jr.                              Director Emeritus1998 - 2007, United Bancorp, Inc.

OFFICERS OF UNITED BANCORP, INC.
   James W. Everson                                  Chairman, President & Chief Executive Officer
   Scott A. Everson                                  Senior Vice President & Chief Operating Officer
   Randall M. Greenwood                              Senior Vice President, Chief Financial Officer, Treasurer & Secretary
   Norman F. Assenza, Jr.                            Vice President - Compliance
   Michael A. Lloyd                                  Vice President - Information Systems
   James A. Lodes                                    Vice President - Lending

DIRECTORS OF THE CITIZENS SAVINGS BANK, MARTINS FERRY, OHIO
   Michael J. Arciello(2)                            Retired Vice President of Finance, Nickles Bakeries, Inc., Navarre, Ohio
   Herman E. Borkoski(2)                             President, Borkoski Funeral Homes, Inc., Tiltonsville, Ohio
   James W. Everson(1)                               Chairman, President & Chief Executive Officer, United Bancorp, Inc.,
                                                     Chairman, The Citizens Savings Bank, Martins Ferry, Ohio
   Scott A. Everson(1)                               Senior Vice President & Chief Operating Officer, United Bancorp, Inc. &

                                                        President & Chief Executive Officer, The Citizens Savings Bank, Martins
                                                        Ferry, Ohio

   Leon F. Favede, O.D.                              Optometrist, Bridgeport, Ohio
   John R. Herzig                                    President, Toland-Herzig Funeral Homes, Strasburg, Ohio
   John M. Hoopingarner(1)                           General Manager, Muskingum Watershed Conservancy District, New Philadelphia,
                                                        Ohio
   Samuel J. Jones                                   Business Owner, Glouster, Ohio
   Andrew F. Phillips                                President & General Manager, Miller Brands of S.E. Ohio, Glouster, Ohio
   Richard L. Riesbeck(1,2)                          President, Riesbeck Food Markets, Inc., St. Clairsville, Ohio
   Robin L. Rhodes, M.D.                             Physician, Pediatric Associates of Lancaster, Inc., Lancaster, Ohio
   Errol C. Sambuco(2)                               Consultant, Martins Ferry, Ohio
   Matthew C. Thomas(1)                              President, M.C. Thomas Insurance Agency, Inc., Bridgeport, Ohio
</TABLE>

   1 = Executive Committee   2 = Audit Committee   3 = Compensation Committee
                     4 = Nominating and Governance Committee


        ANNUAL REPORT
            2007
6   UNITED BANCORP INC.

<PAGE>

                            SHAREHOLDER INFORMATION

United Bancorp, Inc.'s (the Company) common stock trades on The Nasdaq SmallCap
Market tier of The Nasdaq Stock Market under the symbol UBCP, CUSIP #909911109.
At year-end 2007, there were 5,178,869 shares issued, held among approximately
2,000 shareholders of record and in street name. The following table sets forth
the quarterly high and low closing prices of the Company's common stock from
January 1, 2007 to December 31, 2007 compared to the same periods in 2006 as
reported by the NASDAQ.

<TABLE>
<CAPTION>
                                 2007                            2006
                    ------------------------------  ------------------------------
                    31-MAR  30-JUN  30-SEP  31-DEC  31-MAR  30-JUN  30-SEP  31-DEC
                    ------  ------  ------  ------  ------  ------  ------  ------
<S>                 <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Market Price Range
   High ($)         $10.66   10.71   11.39   11.00   11.36   10.79   10.24   11.36
   Low ($)          $ 9.78   10.27   10.50   10.12    9.57    9.44    9.57    9.36

Cash Dividends
   Quarter ($)      $ 0.13    0.13    0.13    0.13   0.118   0.118   0.118   0.124
   Cumulative ($)   $ 0.13    0.26    0.39    0.52   0.118   0.236   0.354   0.478
</TABLE>

INVESTOR RELATIONS:

          A copy of the Company's Annual Report on form 10-K as filed with the
     SEC, will be furnished free of charge upon written or E-mail request to:

          Randall M. Greenwood, CFO
          United Bancorp, Inc.
          201 South 4th Street
          PO Box 10
          Martins Ferry, OH 43935
          or
          cfo@unitedbancorp.com

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN:

          Shareholders may elect to reinvest their dividends in additional
     shares of United Bancorp, Inc.'s common stock through the Company's
     Dividend Reinvestment Plan. Shareholders may also invest optional cash
     payments of up to $5,000 per month in our common stock at market price. To
     arrange automatic purchase of shares with quarterly dividend proceeds,
     please contact:

          American Stock Transfer
          and Trust Company
          Attn: Dividend Reinvestment
          6201 15th Avenue, 3rd Floor
          Brooklyn, NY 11219
          1-800-278-4353

 ANNUAL MEETING:

          The Annual Meeting of Shareholders will be held at 2:00 p.m., April
     16, 2008 at the Corporate Offices in Martins Ferry, Ohio.

INTERNET:

          Please look us up at
          http//:www.unitedbancorp.com

 INDEPENDENT AUDITORS:

          BKD LLP
          312 Walnut Street, Suite 3000
          Cincinnati, Ohio 45202
          (513) 621-8300

 CORPORATE OFFICES:

          The Citizens Savings Bank Building
          201 South 4th Street
          Martins Ferry, Ohio 43935
          (740) 633-0445
          (740) 633-1448 (FAX)

 TRANSFER AGENT AND REGISTRAR:

          For transfers and general correspondence, please contact:
          American Stock Transfer
             and Trust Company 6201
          15th Avenue, 3rd Floor
          Brooklyn, NY 11219
          1-800-937-5449

STOCK TRADING:

          FTN Midwest Research
          2525 West End Avenue
          Suite 330 Nashville, TN 37203
          Michael O'Boyle
          866-344-4880

          Howe Barnes Investments, Inc.
          222 South Riverside Plaza
          7th Floor
          Chicago, Illinois 60606
          Lou Coines
          800-800-4693

          Stifel, Nicolaus & Company Inc.
          655 Metro Place South
          Dublin, Ohio 43017
          Steven Jefferis
          877-875-9352

          Stifel, Nicolaus & Company Inc.
          2000 Oxford Drive - Suite 605
          Bethel Park, PA 15102
          Jason E. Baer
          866-253-0500


                                                             ANNUAL REPORT
                                                                 2007
                                                         UNITED BANCORP INC.   7

<PAGE>

                            THE CITIZENS BANK PROFILE

                     A Division of The Citizens Savings Bank

                A CENTURY OF SERVICE AT THE CITIZENS SAVINGS BANK

     In the year 1902, a group of hometown businessmen in Martins Ferry felt
there was room for another bank in the community in addition to the two already
established and proceeded to organize. On the 27th of January, 1902, a charter
was granted to The German Savings Bank of Martins Ferry, Ohio with authorized
capital of $50,000. Martins Ferry is nestled among the scenic foothills along
the Upper Ohio Valley across the river from the greater metropolitan area of
Wheeling, West Virginia, 60 miles southwest of Pittsburgh, Pennsylvania and 125
miles east of Columbus, Ohio. The area has a strong network of transportation
including easy access to major interstate highway systems, nearby river and
railway transportation and within 45 minutes of the Pittsburgh International
Airport.

     Organization was completed by electing the original Board of Directors:
Attorney Edward E. McCombs, John E. Reynolds, Henry H. Rothermund, William M.
Lupton, Dr. Joseph W. Darrah, Chris A. Heil, Fred K. Dixon, Thomas J. Ball and
Dr. R.H. Wilson. The first officers were Edward E. McCombs, President; John E.
Reynolds, Vice President; William C. Bergundthal, Cashier; and William H. Wood,
Assistant Cashier. A room in the old Henderson Building located at the alley on
Hanover Street between Fourth and Fifth Streets, currently occupied by a local
realtor, was rented. A vault and counters were installed and the new Bank opened
for business on Saturday, April 26, 1902. This was the beginning of The Citizens
Savings Bank.

     Upon Mr. Bergundthal's death in 1918, Harold H. Riethmiller, who began his
banking career at the bank in 1911, was rehired by the Bank as Cashier. He had
previously worked for the Bank and had been working for 6 months at the
Citizens-Peoples Trust Company in Wheeling. Mr. Riethmiller brought with him an
assistant, David W. Thompson, who upon his death in 1966 was Vice President and
Cashier.

                     (PICTURE OF THE CITIZENS BANK PROFILE)

     In 1936 the Bank suffered a loss with the sudden death of Edward E.
McCombs, who had served as President and Attorney for the Bank during the 34
years since its beginning. John E. Reynolds was then elected President with
Attorney David H. James as Vice President. Mr. Reynolds served as the bank's
second President until his death in 1940, at which time Harold H. Riethmiller
was elected President. Upon Harold H. Riethmiller's retirement in January of
1973, James W. Everson, who began his banking career as a student intern with
the Bank in 1959, was elected as the Bank's fourth President and Chief Executive
Officer.

     In May 1999, The Citizens Savings Bank and its affiliate, The
Citizens-State Bank then of Strasburg, Ohio were merged into one Bank under the
leadership of James W. Everson continuing as Chairman and Harold W. Price as the
Bank's fifth President and Chief Executive Officer since its founding in 1902.
Harold W. Price served as President and CEO for five months, suffering a fatal
heart attack on September 12th, 1999, after which James W. Everson was
reappointed Chairman, President and CEO.

     Continuing growth and increased business at The German Savings Bank brought
the need for larger quarters, and in 1917, the Bank relocated into a new banking
building on the corner of Fourth and Walnut streets where they were located
until February 21, 1984 when they moved to their current banking center located
one block south at the corner of Fourth and Hickory Street in Martins Ferry. The
First World War brought the name 'German' into bad repute, making a change in
name necessary. On May 1, 1918, the old German Savings Bank became The Citizens
Savings Bank of Martins Ferry, Ohio.

     In 1957, a total remodeling of the first level was completed at the Fourth
and Walnut location enlarging the


        ANNUAL REPORT
            2007
8   UNITED BANCORP INC.

<PAGE>

banking lobby by taking the adjoining room formerly occupied by the Mear Drug
Store. In 1963, the Bank opened a Consumer Loan Office at the Fourth and Walnut
Street location by expanding into the space occupied by the former Packer
Insurance Agency.

     Upon James W. Everson becoming President in January 1973, the Bank began an
expanded growth program. The Bank's first branch office was opened on November
18, 1974. A banking center was opened in Colerain, Ohio offering full service
banking to that area, including safe deposit boxes and a modern new home for the
Colerain, Ohio Post Office. On June 12, 1978, the Bank opened its second full
service branch at the Corner of Howard and DeKalb Streets in Bridgeport, Ohio.

     Recognizing the continued growth of the Bank, the Board of Directors
authorized the purchase in July 1979 of an .8 acre site formerly occupied by the
vacated Central School, one block south on the Corner of Fourth and Hickory
Streets, for the purpose of future expansion. A Phase I building program was
completed on May 12, 1980 with the opening of a limited-service four-station
auto teller with a two-station lobby and large off-street parking facility.

     In October of 1982, approval was granted by the State Banking Department
and the Federal Deposit Insurance Corporation to relocate the Bank's Main Office
to the corner of Fourth and Hickory streets in Martins Ferry and ground was
immediately broken for a new banking center. As a result of 5 years of strategic
planning, The Citizens Savings Bank introduced a new era of banking to the Ohio
Valley on February 21, 1984 with the opening of their new 21,500 square foot
headquarters office located at the corner of Fourth and Hickory streets. This
new banking center offered state-of-the-art security with high-tech scanning and
alarm equipment, and the latest in electronic data processing programs for
banking. The new Bank building was designed by the architectural firm of Jack H.
Tribbie and Associates of Martins Ferry and was constructed by the Byrum
Construction Company of Martins Ferry. The new building was of colonial design
in keeping with the Bank's Colerain and Bridgeport offices, with the interior of
the Bank tastefully decorated in the Williamsburg period.

     On July 3, 1983, the Bank's Board of Directors positioned itself for
continued growth by forming United Bancorp, Inc. of Martins Ferry, Ohio, the
Citizens Savings Bank holding company. At formation, the shareholders of The
Citizens Savings Bank exchanged their stock on a one-for-four basis for shares
in United Bancorp, Inc. On December 29, 1986, United Bancorp, Inc. became one of
Ohio's then 21 multi-bank holding companies by acquiring the outstanding shares
of stock of the $12.5 million asset based Citizens-State Bank of Strasburg,
Ohio. Under the leadership of James W. Everson as Chairman and Charles E.
Allensworth as President and CEO, The Citizens-State Bank then grew from its one
office in Strasburg by opening a new banking center at 2909 N. Wooster Avenue in
Dover, Ohio in February 1990; the purchase of it's offices in New Philadelphia
and Sherrodsville in April 1992; and the purchase of it's Dellroy Office in June
1994. Harold W. Price was appointed President and CEO of The Citizens-State Bank
of Strasburg in April 1993. The Citizens Savings Bank of Martins Ferry further
expanded into St. Clairsville with an in store location at Riesbeck's Food
Market in July l997 and purchased a full service banking center in Jewett, Ohio
in January 1999. United Bancorp entered Northern Athens County in July 1998 when
the $47.8 million asset based Community Bank of Glouster was purchased,
expanding United Bancorp, Inc. to a three bank holding company. Today, The
Community Bank is headquartered in Lancaster, Ohio with three locations in
Lancaster in addition to its two offices in Glouster and offices in Amesville
and Nelsonville, Ohio.

     As space in the new headquarters became occupied, property across from the
new Main Office on the other corner of Fourth and Hickory Streets was acquired
in 1993 to support the continued growth. It was renovated into a modern
Operations Center now housing the Data and Item Processing Equipment for the
affiliate banks of United Bancorp, Inc. and the offices for United Bancorp,
Inc.'s Accounting Group. With the introduction of 24 x 7 x 365 Automated Call
Center and Internet Banking in 2001, the Accounting and Operations Center was
further expanded through the purchase and renovation of the adjoining property
formerly known as the Fullerton Bakery Building. Today, the Accounting and
Operations Center Building supports the back room operations for the seventeen
banking offices of The Citizens Bank and The Community Bank of Lancaster.

     On April 21, 1999 the $74.1 million asset based Citizens-State Bank of
Strasburg was merged into The Citizens Savings Bank. This expanded customer
service under the charter of The Citizens Savings Bank to 10 locations in
Belmont, Carroll, Harrison and Tuscarawas counties. Harold W. Price, who had
served as President and CEO of The Citizens-State Bank of Strasburg was
appointed The Citizens Savings Bank's fifth President and CEO with James W.
Everson continuing as Chairman, in addition to serving as Chairman of The
Community Bank and Chairman, President and CEO of United Bancorp. Everson was
reappointed Chairman, President and CEO of The Citizens Savings Bank five months
later upon Harold W. Price's sudden death.

     In November 2004, the Citizens Bank Board of Directors completed its senior
management reorganization plans for the beginning of its second century of
service. James W. Everson, will continue as the Bank's Chairman. Furthermore,
the Citizens Bank Board of Directors announced the appointment of Scott A.
Everson as Director, President and Chief Executive Officer, which became
effec-


                                                             ANNUAL REPORT
                                                                 2007
                                                         UNITED BANCORP INC.   9

<PAGE>

tive on November 1, 2004.

     The growth and success of The Citizens Savings Bank and the United Bancorp,
Inc. have been attributed to the association of many dedicated men and women.
Having served on the Board of Directors are Edward E. McCombs, 1902-1936; John
E. Reynolds, 1902-1940; Dr. J.W. Darrah, 1902-1937; J.A. Crossley, 1902-1903;
William M. Lupton, 1902-1902; F.K. Dixon, 1902-1909; Dr. R.H. Wilson, 1902-1905;
C.A. Heil, 1903-1909; David Coss, 1904-1938; L.L. Scheele, 1905-1917; A.T.
Selby, 1906-1954; H.H. Rothermund, 1907-1912; Dr. J.G. Parr, 1912-1930;T.E.
Pugh, 1920-1953; J.J. Weiskircher, 1925-1942; David H. James, 1925-1963; Dr.
C.B. Messerly, 1931-1957; H.H. Riethmiller, 1936-1980; E.M. Nickles, 1938-1968;
L.A. Darrah, 1939-1962; R.L. Heslop, 1941-1983; Joseph E. Weiskircher,
1943-1975; Edward M. Selby, 1953-1976; David W. Thompson, 1954-1966; Dr. Charles
D. Messerly, 1957-1987; James M. Blackford, 1962-1968; John H. Morgan,
1967-1976; Emil F. Snyder, 1968-1975; James H. Cook, 1976-1986; Paul Ochsenbein,
1978-1991; David W. Totterdale, 1981-1995; Albert W. Lash, 1975-1996; Premo R.
Funari, 1976-1997; Donald A. Davison, 1963-1997; Harold W. Price, 1999-1999;
John H. Clark, Jr., 1976-2001; Dwain R. Hicks, 1999-2002; and Michael A. Ley,
1999-2002.

     Today, The Citizens Savings Bank is Martins Ferry's only locally owned
financial institution. The general objective of The Citizens Savings Bank as
outlined in its Mission Statement which was adopted by its Board of Directors on
June 8, 1982 and renewed annually is to remain an independent state-chartered
commercial bank and expand its asset base and market share through acquisitions
and new branch construction where financially feasible.

                           THE COMMUNITY BANK PROFILE

                     A Division of The Citizens Savings Bank

     COMMUNITY was established in August 1945 with corporate offices in downtown
Glouster, Ohio, in Athens County. Its founder was L.E. Richardson, a local
entrepreneur. At that time, Athens County was booming with the industries of
gas, oil and coal mining. COMMUNITY was then known as The Glouster Community
Bank. The Bank played a vital role in the region as it developed, earning a
reputation for friendliness, quality customer service and responsiveness to the
individual financial needs of its customers, as well as the community. More than
25 years later, Richardson turned over the day-to-day management of the bank to
his son, L.E. Richardson, Jr., in 1971.

     With that foundation, COMMUNITY acquired the First National Bank of
Amesville, Ohio in 1976. The Bank's prosperity continued, and, in 1978, a
three-lane Auto Bank drive-up facility was constructed on the west side of
Glouster.

     In 1984, the Bank created a holding company, Southern Ohio Community
Bancorp, Inc., in anticipation of future growth and diversification of products
and services.

     In 1987, the service area was expanded once again. A modular office in
Nelsonville served the village and the surrounding communities. A few years
later, on December 6, 1993 a ribbon cutting ceremony was held for a newly
constructed Nelsonville office. The brick building, which replaced the mobile
bank unit, features four drive-up lanes and a drive-up ATM. Night deposit and
safe deposit box services were also introduced to the Nelsonville area.

                   (PICTURE OF THE THE COMMUNITY BANK PROFILE)

     COMMUNITY has a long and close association with Hocking College. The
two-year college combines academics with hands-on technical learning, and
attracts students from all over the United States and the world. COMMUNITY is
pleased to meet the financial needs of Hocking College's faculty, staff and
students. To enhance customer service, COMMUNITY has two automatic


         ANNUAL REPORT
             2007
10   UNITED BANCORP INC.

<PAGE>

teller machines on the 2,300-acre Nelsonville campus, one at the Student Center
and the other in the School of Nursing building.

     In 1996, COMMUNITY completed an extensive renovation of its downtown
Glouster office, including the addition of a 24-hour access ATM in the
vestibule.

     In 1998, COMMUNITY became affiliated with United Bancorp, Inc. of Martins
Ferry, Ohio, when United Bancorp purchased The Glouster Community Bank and its
holding company, Southern Ohio Community Bancorp, Inc.

     That acquisition led to COMMUNITY establishing a Loan Production Office
(LPO) in 1998 in Lancaster, Ohio. This LPO provided the opportunity for
COMMUNITY to build its franchise along the U.S. Route 33 corridor from Athens
County through Fairfield County.

     Lancaster, the county seat of Fairfield County, is approximately 30 miles
southeast of Columbus, Ohio and is considered a bedroom community to Columbus.
According to the city's Economic Development Office, Fairfield County is the
fourth fastest growing county in Ohio and is ranked among the top six counties
for growth potential.

     COMMUNITY opened its first Fairfield County banking office in December
1999. The East Main Street Banking Office in Lancaster offers full service
banking with extended evening and Saturday hours. The office features a
three-lane drive-up, a drive-up ATM and night depository.

     In January 2000, COMMUNITY relocated its Main Office from Glouster to
downtown Lancaster. This substantial investment significantly strengthened
COMMUNITY'S presence in Fairfield County. Formerly a furniture store, the
historic 1919 building was restored to as near the original appearance as
possible. The building was further enhanced with a Verdin Company clock. The
435-pound timepiece is attached to the southeast corner of the building. The
interior of the building was converted from a furniture store to a modern full
service banking office. Of special note is the historical mural of Fairfield
County landmarks, painted by local stencil artist Cheryl Fey, which graces the
main stairway. The renovation added greatly to the city's business district, as
the Main Office complements the downtown revitalization that also was completed
in 2000.

     COMMUNITY'S Auto Bank, located across the street from the Main Office, also
was opened in January 2000. The structure is unique to the market, because of
its walk-in lobby. It also features a four-lane drive-thru, night depository and
automatic teller machine.

     In July 2000, COMMUNITY opened its Community Room, also unique to the area.
The Community Room has grown quickly into a convenient and frequently used
location for meeting of area civic organizations. It is also a popular gallery
for local artists to display their talents.

     From the rolling hills of Athens County to the bustling commerce of
Fairfield County, COMMUNITY continues to play a vital role in the lives of its
customers and the region it serves. The Bank not only has built upon its
customer base through the years, but upon its reputation for friendliness,
quality customer service and responsiveness to the individual financial needs of
its customers and the communities it proudly serves.

     On July 1, 2007, the Company received regulatory approval for the merger of
its wholly owned subsidiaries, The Glouster Community Bank ("Community"),
Lancaster, Ohio, and The Citizens Savings Bank ("Citizens"), Martins Ferry,
Ohio, under the charter of the latter. The Boards of both Citizens and Community
endorsed this consolidation. The Company continues to capitalize on the
established branding in the market places of each institution. Community
operates under the trade name "The Community Bank, a Division of The Citizens
Savings Bank" and Citizens operates under the trade name "The Citizens Bank, a
Division of The Citizens Savings Bank". A key focus of the consolidation
involved the centralization of executive authority under Citizens' proven
management structure that has been perennially ranked in the upper quartile of
all banks in the United States.

     Including the Community Board members on the Board of the combined
institution was essential for the Company to realize the full potential of the
combination. Management was pleased to report on the merger date of July lst
that Samuel J. Jones, Business Owner, Glouster, Ohio; Terry A. McGhee, President
and CEO, Westerman, Inc., Bremen, Ohio; Andrew F. Phillips, President and
General Manager, Miller Brands of South East Ohio, Glouster, Ohio; Robin L.
Rhodes, M.D., Physician, Pediatric Associates of Lancaster, Inc., Lancaster,
Ohio; and L.E. "Dick" Richardson, Jr., Retired President, Southern Ohio
Community Bancorporation, Inc., Glouster, Ohio accepted the Company's invitation
to become members of The Citizens Savings Bank Board of Directors.

     On October 31, 2007, the Company completed the "physical consolidation" of
its two charters under the management group of The Citizens Savings Bank,
resulting in a 22% reduction in staffing at The Community Bank division. With
this streamlining of management and operational support positions, reducing time
and money spent on duplicated efforts, Management projects a normalization of
earnings to occur over the next eighteen months as a result of enhanced
operating and cost efficiencies to be realized from this consolidation. Merging
all of the Company's bank charters into a single charter and common operating
system now allows each banking office to focus on growing the Company's banking
franchises by providing the highest level of customer service from a common
market basket of products.


                                                            ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   11
<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS

In the following pages, management presents an analysis of United Bancorp,
Inc.'s financial condition and results of operations as of and for the year
ended December 31, 2007 as compared to prior years. This discussion is designed
to provide shareholders with a more comprehensive review of the operating
results and financial position than could be obtained from an examination of the
financial statements alone. This analysis should be read in conjunction with the
Consolidated Financial Statements and related footnotes and the selected
financial data included elsewhere in this report.

When used in this discussion or future filings by the Company with the
Securities and Exchange Commission, or other public or shareholder
communications, or in oral statements made with approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "believe," or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, changes in levels of market interest rates, credit risks of lending
activities and competitive and regulatory factors, could affect the Company's
financial performance and could cause the Company's actual results for future
periods to differ materially from those anticipated or projected.

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 liquidity, capital
resources or operations except as discussed herein. The Company is not aware of
any current recommendations by regulatory authorities that would have such
effect if implemented.

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

                               FINANCIAL CONDITION

OVERVIEW

     After four straight years of managing in a historically low interest rate
environment the Federal Reserve Open Market Committee ("FOMC) raised the
short-term borrowing rate, from 2.25% at December 31, 2005 to 5.25% December 31,
2006. As short-term interest rates continued to increase from 2004 to 2006,
long-term rates were not impacted resulting in a flattening of the yield curve,
eventually leading to an inverted yield curve in December 2005 and continuing
through 2006. As we progressed in 2007, concerns of a stalling economy began to
surface. In July with short term rates holding steady at 5.25% since 2006, the
FOMC began to lower short-term borrowing rates with a series of five decreases
into the first quarter of 2008, where they currently stand at 3.00%. The more
positive slope of the yield curve created an opportunity for the Company to
improve its' net interest margin in latter half of 2007 and continuing into 2008

EARNING ASSETS - LOANS

     Gross loans totaled $234.6 million at year-end 2007, representing a 1.4%
increase from $231.5 million at year-end 2006. However average loans totaled
$228.7 million for 2007, representing a 2.5% decrease compared to average loans
of $234.4 million for 2006.

                           TOTAL ASSETS (In Thousands)

                                   (BAR CHART)

     Total gross loans increased $3.1 million, or 1.4% from December 31, 2006.
The increase primarily came in the commercial portfolio of $19.3 million.
However, this increase was offset by a decrease in the commercial real estate
portfolio of $18.2 million. During 2007, the real estate portfolio increased
approximately $2.4 million while the installment portfolio decreased
approximately $268,000.


        ANNUAL REPORT
             2007
12   UNITED BANCORP INC.

<PAGE>

     The Company's installment lending portfolio represented 17.8% of the total
portfolio at year-end 2007, compared to 18.1% at year-end 2006. The targeted
installment lending areas encompass the four geographic areas serviced by the
Banks, which are diverse, thereby reducing the risk to changes in economic
conditions. Competition for installment loans principally comes from the captive
finance companies offering low to zero percent financing for extended terms.

     The commercial and commercial real estate portfolio represented
approximately 57.3% of the total loan portfolio at December 31, 2007 compared to
57.6% for December 31, 2006. The Company's commercial loan portfolio increased
by $19.3 million, or 47.6%. The commercial real estate loan portfolio decreased
in 2007 by $18.2 million or 19.6%. To protect the Company's net interest margin
in a decreasing interest rate environment, the focus of loan pricing in 2007 was
in intermediate fixed rate loan products with prepayment penalties. While the
initial yield on these loans is slightly below market when originated, the
Company continues to be protected as general market interest rates decrease

     Residential real estate loans are comprised of 1, 3 and 5 year
adjustable-rate mortgages financed to 1-4 family units. The Company also offers
fixed-rate real estate loans through our Secondary Market Real Estate Mortgage
Program. The fixed-rate mortgages are serviced and originated by CITIZENS but
are sold immediately in the secondary market. Therefore, our customers enjoy the
convenience of working with a local bank and are able to obtain long-term
fixed-rate financing for their home. As mentioned, once these loans are
originated they are immediately sold in what is referred to as the secondary
market. Since the loans are sold, without recourse, the Company does not assume
any interest rate risk in this portfolio and does not have any loans held for
sale. This arrangement is quite common in banks and without such an option our
customers may look elsewhere for their home financing needs. The Company's
Secondary Market Program in 2007 did not experience any growth when compared to
2006.

     For 2007, the interest rate environment, although still favorable to the
fixed-rate mortgage loan product, did not result in a high volume of customers
refinancing. With interest rates low for several years, most customers may have
already taken advantage of the refinance options available to them. The Company
recognized a gain on the sale of secondary market loans of $22,000 in 2007 and a
gain of $17,000 in 2006.

                            LOANS-NET (In Thousands)

                                   (BAR CHART)

     The allowance for loan losses represents the amount which management and
the Board of Directors estimates is adequate to provide for probable incurred
losses in the loan portfolio. Accounting for the allowance and the related
provision for loan losses is viewed by management as a critical accounting
policy. The allowance balance and the annual provision charged to expense are
reviewed by management and the Board of Directors on a monthly basis. The
allowance calculation is determined by utilizing a risk grading model that
considers borrowers' past due experience, coverage ratio to industry averages,
economic conditions and various other circumstances that are subject to change
over time. In general, the loan loss policy for installment loans requires a
charge-off if the loan reaches 120-day delinquent status or if notice of
bankruptcy liquidation notice is received. The Company follows lending policies,
with established criteria for determining the repayment capacity of borrowers,
requirements for down payments and current market appraisals or other valuations
of collateral when loans are originated. Installment lending also utilizes
credit scoring to help in the determination of credit quality and pricing.

     The Company generally recognizes interest income on the accrual basis,
except for certain loans which are placed on non-accrual status, when in the
opinion of management, doubt exists as to collection on the loan. The Company's
policy is to generally not allow loans greater


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   13

<PAGE>

than 90 days past due to accrue interest unless the loan is both well secured
and in the process of collection. When a loan is placed on non-accrual status,
interest income may be recognized as cash payment is received.

                   TOTAL AVERAGE EARNING ASSETS (In Thousands)

                                   (BAR CHART)

     Management believes the current balance of the allowance for loan losses is
sufficient to cover probable incurred losses. Net charge-offs to average loans
for the year-ended 2007 was 0.39% compared to 0.83% for 2006. Refer to Provision
for Loan Losses section for further discussion on the Company's credit quality.

EARNING ASSETS - SECURITIES AND FEDERAL FUNDS SOLD

     The securities portfolio is comprised of U.S. Government and agency
obligations, tax-exempt obligations of states and political subdivisions,
mortgage-backed securities and certain other investments. The Company does not
hold any collateralized mortgage-backed securities, other than those issued by
U.S. Government agencies. The Company does not hold any derivative securities.
The quality rating of most obligations of states and political subdivisions
within Ohio is no less than Aaa, Aa, or A, with all out-of-state bonds rated at
AAA. Board policy permits the purchase of certain non-rated bonds of local
schools, townships and municipalities, based on known levels of credit risk.

     Securities available for sale at year-end 2007 increased $31.5 million, or
23.6%, from 2006, while securities held to maturity decreased $1.7 million, or
9.7%.

     In our planning process, management's projection for 2007 was for a
slightly decreasing interest rate environment with a positively sloped yield
curve. The increase in the available for sale portfolio is due to a focus in
2007 to increase the Company's investment portfolio before rates decreased in
the second half of the year. In 2006, the Company focused on increasing the
Company's investment in state and municipal obligations with extended call
protection to protect the net interest margin of the Company.

SOURCES OF FUNDS - DEPOSITS

     The Company's primary source of funds is core deposits from retail
(individuals) and business customers. These core deposits include all categories
of interest-bearing deposits, excluding certificates of deposit greater than
$100,000. During 2007, core deposits increased $8.2 million, or 2.9%. The key to
the increase in core deposits at both bank divisions was the introduction and
promotion of money market accounts that offer competitive interest rates.
CITIZENS promoted their existing money market account in 2007 with a higher
promotional interest rate during the first six months after the account was
opened. COMMUNITY'S money market account "Generation Gold" offers a competitive
interest rate plus perks such as travel discounts and merchant discounts both
nationwide and with local merchants. Management believes the unique feature of
this account is the participation of local merchants who offer discounts for
their services to Generation Gold account holders.

     The Company maintains deposit relationships with public agencies, including
local school districts, city and township municipalities, public works
facilities and others, which may tend to be more seasonal in nature resulting
from the receipt and disbursement of state and federal grants. These entities
have maintained relatively stable 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 as a tool to balance funding needs. At
year-end 2007, certificates of deposit greater than $100,000 decreased $7.7
million or 16.7% from year-end 2006 totals. The decrease in these larger
certificates of deposit was designed by Management to reduce the Company's
reliance on larger depository and public funds relationships.


        ANNUAL REPORT
             2007
14   UNITED BANCORP INC.

<PAGE>

     The attraction of and retention of core deposits continues to be a
challenge to the Company and the overall banking industry. Alternative financial
products are continuously being introduced by our competition whether through a
traditional bank or brokerage services company. As a result of this competition,
the Company does offer full service brokerage services through its affiliate
with UVEST Financial Services(R)

SOURCES OF FUNDS - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER
BORROWED FUNDS

     Other interest-bearing liabilities include securities sold under agreements
to repurchase, federal funds purchased, Treasury, Tax and Loan, notes payable
and Federal Home Loan Bank advances. Securities sold under agreements to
repurchase increased by $4.7 million. The average balance in securities sold
under agreements to repurchase increased $1.3 million, or 12.4%, from 2006 to
2007.

     Advances from the Federal Home Loan Bank (FHLB) increased $14.8 million, or
33.5%, from 2006 to 2007 while federal funds purchased increased $8.7 million
for the same period. As discussed, Management in its strategy to reduce its
reliance on larger depository and public fund relationships, led to the increase
in short-term borrowings with the FHLB and federal funds. In addition, during
2007 Management utilized short term repricing borrowings to purchase fixed-rate
investment securities. It was anticipated by Management that short term rates
would begin to decrease as they did in the latter half of 2007. This strategy
helped to increase the Company's net interest margin during 2007 and into 2008.

OTHER ASSETS

     The Company owns approximately $9.3 million in Bank Owned Life Insurance
(BOLI) with the original investment occurring in 2002. Refer to Performance
Overview, Noninterest Income section for further information.

                            NET INCOME (In Thousands)

                                   (BAR CHART)

                            RETURN ON AVERAGE ASSETS

                                   (BAR CHART)

                        PERFORMANCE OVERVIEW 2007 TO 2006

NET INCOME

     The Company reported net income of $2.6 million in 2007 compared with $2.1
million for 2006, an increase of $517,000, or 25.0%. On a per share basis, the
Company basic earnings per share were $0.57 for 2007, as compared to $0.45 for
2006, an increase of 26.7%. This earnings performance equates to a 0.60% Return
on Average Assets ("ROA") and 8.12% Return on Average Equity ("ROE") for 2007
compared to 0.50% and 6.49%, respectively, for 2006.

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. Tax
equivalent net interest income increased $399,000 in 2007. The net interest
margin increased slightly to 3.31% from 3.28%. While the Company's yield on
earning assets has on average increased 37 basis points from 2006 to 2007, the
cost of funds has increased 30 basis points for the same period.

     Average interest-earning assets increased $13.3 million, or 3.4%, in 2007
while the associated weighted-average yield on these interest-earning assets
increased from 6.56% in 2006 to 6.93% for 2007. Average interest-bearing


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   15

<PAGE>

liabilities increased $15.2 million, or 4.2%, in 2007 while the associated
weighted-average costs on these interest-bearing liabilities increased from
3.58% to 3.88%.

     Refer to the sections on Asset and Liability Management and Sensitivity to
Market Risks and Average Balances, Net Interest Income and Yields Earned and
Rates Paid elsewhere herein for further information.

PROVISION FOR LOAN LOSSES

     The provision for loan losses is a charge to expense recorded to maintain
the related balance sheet allowance for loan losses at an amount considered
adequate to cover probable incurred losses in the portfolio. The provision for
loan losses was $993,000 in 2007 compared to $1.4 million in 2006, a decrease of
$391,000. As previously discussed, the gross loan portfolio increased
approximately $3.1 million, or 1.4%, during 2007. The larger loan loss provision
in 2006 was due primarily to increased charge-offs and credit issues with a
larger commercial customer in 2006.

Net loans charged-off for 2007 were approximately $891,000 compared to $1.9
million for 2006. The large commercial credit charge-off in 2006 accounted for
approximately $1.3 million of the Company's net loans charged off during 2006.
For 2007 and 2006 net loan charge-offs as a percentage of average loans were
0.39% and 0.83%, respectively.

     The allowance for loan losses as a percentage of loans increased to 1.04%
at year-end 2007 from 1.01% at year-end 2006. The Company utilizes a consistent
reserve methodology with detail reserve allocations specific to the individual
loan portfolios.

NONINTEREST INCOME

     Noninterest income is made up of bank-related fees and service charges, as
well as other income-producing services. These include secondary market loan
servicing fees, ATM/interchange income, internet bank fees, early redemption
penalties for certificates of deposit, safe deposit box rental income, net gain
or loss on sales of securities available for sale and loans, leased rental
property, cash management services and other miscellaneous items. In addition,
the Company has invested in Bank Owned Life Insurance (BOLI). The earnings from
this investment are reflected in the Company's noninterest income. Total
non-interest income for 2007 was $3.1 million, an increase of $782,000 or 34.0%
from 2006 totals.

     Customer service fees on deposit accounts increased $369,000 or 24.6% from
2006 to 2007. The increase was mainly the result of the fourth quarter 2006
implementation of a courtesy overdraft program.

     In summary, the increase in noninterest income in 2007 is primarily
attributable to increases in customer service fees of $369.000, gains on sales
of other real estate and repossessions owned of $104,000 and increased income on
BOLI of $55,000. During 2007, the Company did not incur any losses on investment
securities. During 2006 realized losses from the sale of securities and loans
totaled $349,000. Approximately $320,000 of the realized security losses in 2006
related to a repositioning of the COMMUNITY security portfolio in June of 2006.
Management's sale strategy in June 2006 took into consideration the average life
of the bonds sold of approximately 4 years compared to the payback period of
just over 2 years on reinvesting those funds in current market interest rates.

NONINTEREST EXPENSE

     Noninterest expense for 2007 increased $206,000 or 1.9% over 2006.

     Salaries and employee benefits increased $498,000, or 8.8%, from 2006 to
2007. The increase is due to merit increases since 2006 and costs of
approximately $230,000 related to severance packages associated with the
reduction in force due to the consolidation of its banking subsidiaries into one
bank.

                            RETURN ON AVERAGE EQUITY

                                   (BAR CHART)


        ANNUAL REPORT
             2007
16   UNITED BANCORP INC.

<PAGE>

     Occupancy and equipment expense decreased $98,000, or 7.5%. During 2006,
the Company recorded a $90,000 charge against earnings to improve the
profitability and customer service related to Community's ATM and Credit Card
platforms.

     Professional fees increased $40,000 or 6.8% for 2007 as compared to 2006.
Professional fees increased due to additional collection and recovery efforts on
delinquent loans and OREO property.

     Other expenses decreased $208,000, or 10.0%. Merchant fees decreased
approximately $81,000 from 2006 to 2007 as the Company modified and eliminated
certain merchant programs in 2007. Incentives paid to originate new customer
deposit accounts decreased $79,000 from 2006 to 2007 as these programs were not
offered in 2007. In addition, during 2006 the Company incurred losses on the
sale of other real estate owned of approximately $71,500.

     Income tax expense for 2007 was $334,000 compared to $241,000, an increase
of $93,000 or 38.6%. The Company's effective income tax rate of 11.4% in 2007 is
slightly higher than the 10.4% effective income tax rate for 2006. The Company's
effective tax rate is less than the 34% statutory rate due primarily to the
effects of non taxable interest income and earnings on bank owned life insurance
policies.

                        PERFORMANCE OVERVIEW 2006 TO 2005

NET EARNINGS

     The Company reported earnings of $2.1 million in 2006 compared with $3.3
million in 2005. This earnings performance equates to a 0.50% Return on Average
Assets ("ROA") and 6.49% Return on Average Equity ("ROE") for 2006 compared to
0.82% and 10.01%, respectively, for 2005. Basic and Diluted Earnings per share
("EPS") was $0.45 and $0.71, respectively, for 2006 and 2005. Per share amounts
for all periods have been restated to reflect the 10% stock split in the form of
a dividend distributed in December 2006 and 2005.

                               TOTAL ALLOWANCE FOR
                           LOAN LOSSES TO TOTAL LOANS

                                   (BAR CHART)

                           DILUTED EARNINGS PER SHARE

                                   (BAR CHART)

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 $593,000 in 2006. The net interest margin decreased to
3.28% from 3.59%. Overall, due to the flattening to inverted yield curve in
2006, the Company has experienced deposits costs increasing at a more rapid rate
then it's earning assets. While the Company's earnings assets have on average
increased 43 basis points from 2005 to 2006, the cost of deposits have increased
89 basis points for the same period.

     Average interest-earning assets increased $34.3 million, or 3.8%, in 2006
while the associated weighted-average yield on these interest-earning assets
increased from 6.03% in 2005, to 6.46% for 2006. Average interest-bearing
liabilities increased $18.3 million, or 5.4%, in 2006 while the associated
weighted-average costs on these interest-bearing liabilities increased from
2.69% to 3.58%.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   17
<PAGE>

     Refer to the sections on Asset and Liability Management and Sensitivity to
Market Risks and Average Balances, Net Interest Income and Yields Earned and
Rates Paid elsewhere herein for further information.

PROVISION FOR LOAN LOSSES

     The provision for loan losses is a charge to expense recorded to maintain
the related balance sheet allowance for loan losses at an amount considered
adequate to cover probable incurred losses incurred in the portfolio. The total
provision for loan losses was $1.4 million in 2006 compared to $412,000 in 2005,
an increase of $972,000. As previously discussed the loan portfolio decreased
approximately $494,000, or 0.20%, during 2006. The increase in loan loss
provision for 2006 is primarily due to increased charge-offs and credit issues
with a larger commercial customer at the Company's COMMUNITY affiliate.

     Net loans charged-off for 2006 were approximately $1.9 million compared to
$503,000 for 2005. The large commercial credit charge-off at COMMUNITY accounted
for approximately $1.3 million of the Company's net loans charged off during
2006. For 2006 and 2005 net loan charge-offs as a percentage of average loans
were 0.83% and 0.22%, respectively.

     The allowance for loan losses as a percentage of loans decreased to 1.01%
at year-end 2006, from 1.25% at year-end 2005. CITIZENS and COMMUNITY utilize a
consistent reserve methodology with detail reserve allocations specific to the
individual loan portfolios.

                        NET CHARGE-OFFS TO AVERAGE LOANS

                                  (BAR CHART)

NONINTEREST INCOME

     Noninterest income is made up of bank-related fees and service charges, as
well as other income-producing services. These include secondary market loan
servicing fees, ATM/interchange income, internet bank fees, early redemption
penalties for certificates of deposit, safe deposit box rental income, net gain
or loss on sales of securities available for sale and loans, leased rental
property, cash management services and other miscellaneous items. In addition,
both CITIZENS and COMMUNITY have invested in Bank Owned Life Insurance (BOLI).
The earnings from this investment are reflected in the Company's noninterest
income. Total noninterest income for 2006 was $2.3 million, a decrease of
$45,000, or 1.9% from 2005 totals.

     The decrease in noninterest income in 2006 is primarily attributable to an
increases in losses on sales of securities. During 2006, the Company realized
losses from the sale of securities and loans totaling $332,000 compared to

<TABLE>
<CAPTION>
(In thousands)                                        2007      2006      2005
--------------                                      -------   -------   -------
<S>                                                 <C>       <C>       <C>
Noninterest income
   Service charges on deposit accounts ..........   $ 1,866   $ 1,497   $ 1,339
   Loss on sales of securities ..................        --      (349)      (52)
   Gains on sales of loans ......................        22        17        21
   Other income .................................     1,191     1,132     1,034
                                                    -------   -------   -------
      Total noninterest income ..................   $ 3,079   $ 2,297   $ 2,342
                                                    =======   =======   =======
Noninterest expense
   Salaries and employee benefits ...............   $ 6,166   $ 5,668   $ 5,432
   Occupancy and equipment ......................     1,216     1,314     1,320
   Professional services ........................       630       590       559
   Insurance ....................................       362       333       343
   Franchise and other taxes ....................       369       425       412
   Advertising ..................................       357       363       400
   Stationery and office supplies ...............       283       276       273
   Amortization of intangibles ..................        --        16        18
   Other expenses ...............................     1,869     2,061     2,006
                                                    -------   -------   -------
      Total noninterest expense .................   $11,252   $11,046   $10,763
                                                    =======   =======   =======
</TABLE>


        ANNUAL REPORT
             2007
18   UNITED BANCORP INC.

<PAGE>

$31,000 in 2005. Approximately $320,000 of the realized security losses in 2006
related to a repositioning of the COMMUNITY security portfolio in June of 2006.
Management's sale strategy in June 2006 took into consideration the average life
of the bonds sold of approximately 4 years compared to the payback period of
just over 2 years on reinvesting those funds in current market interest rates.

     Service charges on deposit accounts increased $158,000 or 11.8% from 2005
to 2006. The majority of the increase came from fees related to overdrafts on
depository accounts. Management introduced several new products and revenue
enhancement strategies over the past several years and the result has been
increased service charge income.

     Other noninterest income increased $98,000 from 2005 to 2006. The overall
increase in other noninterest income is primarily due to gains on sale of other
real estate owned property of approximately $46,000 and increase sales of life,
accident and health insurance of approximately $24,000. This increase in other
noninterest income was offset by a decrease of approximately $51,000 in fees
related to the Company's secondary market mortgage program.

NONINTEREST EXPENSE

     Noninterest expense for 2006 increased $283,000 or 2.6% over 2005.

     Salaries and employee benefits increased $236,000, or 4.3%, from 2005 to
2006. The increase is mainly due to merit increases since 2005.

     Occupancy and equipment expense decreased $6,000, or 0.5%. Occupancy
expense decreased due to capital expenditures mainly technology
enhancements,becoming fully depreciated in the first quarter of 2006.

     Professional fees increased $31,000 or 5.5% for 2006 as compared to 2005.
Professional fees increased due to additional collection and recovery efforts on
delinquent loans and other real estate owned property.

     Advertising decreased $37,000 or 9.3% mainly due to decreased advertising
expenses by COMMUNITY in 2006.

     Other expenses increased 1.9%, or $59,000. Overall there is not a single
line item that contributes significantly to this decrease. Other noninterest
expense including, insurance, franchise and other taxes, stationary and office
supplies and amortization did not vary much from 2005 to 2006.

ASSET/LIABILITY

MANAGEMENT AND SENSITIVITY TO MARKET RISKS

     In the environment of changing business cycles, interest rate fluctuations
and growing competition, it has become increasingly more difficult for banks to
produce adequate earnings on a consistent basis. Although management can
anticipate changes in interest rates, it is not possible to reliably predict the
magnitude of interest rate changes. As a result, the Company must establish a
sound asset/liability management policy, which will minimize exposure to
interest rate risk while maintaining an acceptable interest rate spread and
insuring adequate liquidity.

     The principal goal of asset/liability management - profit management - can
be accomplished by establishing decision processes and control procedures for
all bank assets and liabilities. Thus, the full scope of asset/liability
management encompasses the entire balance sheet of the Company. The broader
principal components of asset/liability management include, but are not limited
to liquidity planning, capital planning, gap management and spread management.

     By definition, liquidity is measured by the Company's ability to raise cash
at a reasonable cost or with a minimum amount of loss. Liquidity planning is
necessary so the Company will be capable of funding all obligations to its
customers at all times, from meeting their immediate cash withdrawal
requirements to fulfilling their short-term credit needs.

     Capital planning is an essential portion of asset/liability management, as
capital is a limited Bank resource, which, due to minimum capital requirements,
can place possible restraints on Bank growth. Capital planning refers to
maintaining capital standards through effective growth management, dividend
policies and asset/liability strategies.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   19

<PAGE>

     Gap is defined as the dollar difference between rate sensitive assets and
rate sensitive liabilities with respect to a specified time frame. A gap has
three components - the asset component, the liability component, and the time
component. Gap management involves the management of all three components.

     Gap management is defined as those actions taken to measure and match rate
sensitive assets to rate sensitive liabilities. A rate sensitive asset is any
interest-earning asset, which can be repriced to a market rate in a given time
frame. Similarly, a rate sensitive liability is any interest-bearing liability,
which can have its interest rate changed to a market rate during the specified
time period. Caps, collars and prepayment penalties may prevent certain loans
and securities from adjusting to the market rate.

     A negative gap is created when rate sensitive liabilities exceed rate
sensitive assets and conversely a positive gap occurs when rate sensitive assets
exceed rate sensitive liabilities. A negative gap position will cause profits to
decline in a rising interest rate environment while conversely a positive gap
will cause profits to decline in a falling interest rate environment. The
Company's goal is to have acceptable profits under any interest rate
environment. To avoid volatile profits as a result of interest rate
fluctuations, the Company attempts to match interest rate sensitivities, while
pricing both the asset and liability components to yield a sufficient interest
rate spread so that profits will remain relatively consistent across interest
rate cycles.

     Management of the income statement is called spread management and is
defined as managing investments, loans, and liabilities to achieve an acceptable
spread between the Company's return on its earning assets and its cost of funds.
Gap management without consideration of interest spread can cause unacceptable
low profit margins while assuring that the level of profits is steady. Spread
management without consideration of gap positions can cause acceptable profits
in some interest rate environments and unacceptable profits in others. A sound
asset/liability management program combines gap and spread management into a
single cohesive system.

     Management measures the Company's interest rate risk by computing estimated
changes in net interest income and the net portfolio value ("NPV") of its cash
flows from assets, liabilities and off-balance sheet items in the event of a
range of assumed changes in market interest rates. The Bank's senior management
and the Executive Committee of the Board of Directors, comprising the
Asset/Liability Committee ("ALCO") review the exposure to interest rates
monthly. Exposure to interest rate risk is measured with the use of an interest
rate sensitivity analysis to determine the change in NPV in the event of
hypothetical changes in interest rates, while interest rate sensitivity gap
analysis is used to determine the repricing characteristics of the assets and
liabilities.

     NPV represents the market value of portfolio equity and is equal to the
market value of assets minus the market value of liabilities, with adjustments
made for off-balance sheet items.

     Computations of prospective effects of hypothetical interest rate changes
are based on numerous assumptions, including relative levels of market interest
rates, loan prepayments and deposit decay rates, and should not be relied upon
as indicative of actual results. Further, the computations do not contemplate
any actions the Company may undertake in response to changes in interest rates.
The NPV calculation is based on the net present value of discounted cash flows
utilizing market prepayment assumptions and market rates of interest provided by
surveys performed during each quarterly period, with adjustments made to reflect
the shift in the Treasury yield curve between the survey date and quarter-end
date. Certain shortcomings are inherent in this method of analysis presented in
the computation of estimated NPV. Certain assets such as adjustable-rate loans
have features that restrict changes in interest rates on a short-term basis and
over the life of the asset. In addition, the portion of adjustable-rate loans in
the Company's portfolio could decrease in future periods if market interest
rates remain at or decrease below current levels due to refinancing activity.
Further, in the event of a change in interest rates, prepayment and early
withdrawal levels would likely deviate from those assumed in the table. Finally,
the ability of many borrowers to repay their adjustable-rate debt may


        ANNUAL REPORT
             2007
20   UNITED BANCORP INC.

<PAGE>

decrease in the case of an increase in interest rates.

     The following tables present an analysis of the potential sensitivity of
the Company's net present value of its financial instruments to sudden and
sustained changes in the prevailing interest rates.

     The projected volatility of the net present value at both December 31, 2007
and 2006 fall within the general guidelines established by the Board of
Directors. The 2007 NPV table shows that in a falling interest rate environment,
in the event of a 100 basis point change, the NPV would decrease 5%, and with a
200 basis point change the NPV would decrease 9%. This decrease is the result of
fixed rate certificates of deposits not repricing in lock step with an immediate
downward rate adjustment of 100 and 200 basis points. The other component is
that once rates decrease 100 or 200 basis points we tend to reach a floor on how
low depository rates can adjust downward.

     In an upward change in interest rates, the Company's NPV would decrease 6%
with a 100 basis point interest rate increase. In a 200 basis point rate
increase, the Company's NPV would decrease 23%. This decrease is a result of the
Company's available for sale securities portfolio that is invested in fixed-rate
securities. As interest rates increase, the market value of the securities
decrease. However, since the Company currently has the ability to hold these
securities to their final maturity, it would not have to incur any losses.

                             (Dollars in Thousands)

                     Net Portfolio Value - December 31, 2007

<TABLE>
<CAPTION>
Change in Rates   $ Amount   $ Change   % Change
---------------   --------   --------   --------
<S>               <C>        <C>        <C>
      +200         35,141     (9,967)     -22%
      +100         42,607     (2,501)      -6%
      Base         45,108
      -100         42,734     (2,374)      -5%
      -200         41,195     (3,913)      -9%
</TABLE>

                     Net Portfolio Value - December 31, 2006

<TABLE>
<CAPTION>
Change in Rates   $ Amount   $ Change   % Change
---------------   --------   --------   --------
<S>               <C>        <C>        <C>
      +200         32,244    (10,967)     -25%
      +100         37,700     (5,511)     -13%
      Base         43,211
      -100         43,938        727        2%
      -200         42,269       (942)      -2%
</TABLE>


                                                          ANNUAL REPORT
                                                               2007
                                                       UNITED BANCORP INC.   21

<PAGE>

     The following table is a summary of selected quarterly results of
operations for the years ended December 31, 2007 and 2006.

<TABLE>
<CAPTION>
                                 1ST QUARTER   2ND QUARTER   3RD QUARTER   4TH QUARTER
                                 -----------   -----------   -----------   -----------
                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                              <C>           <C>           <C>           <C>
2007
Total interest income               $6,426        $6,648        $6,673        $6,856
Total interest expense               3,481         3,601         3,807         3,629
                                    ------        ------        ------        ------
Net interest income                  2,945         3,047         2,866         3,227
Provision for losses on loans          183           191           283           336
Other income                           668           783           785           843
General, administrative and
   other expense                     2,610         2,727         3,005         2,910
                                    ------        ------        ------        ------
Income before income taxes             820           912           363           824
Federal income taxes                   102           148           (29)          113
                                    ------        ------        ------        ------
Net income                          $  718        $  764        $  392        $  711
                                    ======        ======        ======        ======
Earnings per share
   Basic                            $ 0.16        $ 0.17        $ 0.09        $ 0.15
                                    ======        ======        ======        ======
   Diluted                          $ 0.16        $ 0.17        $ 0.09        $ 0.15
                                    ======        ======        ======        ======
2006
Total interest income               $5,985        $6,319        $6,552        $6,423
Total interest expense               2,855         3,151         3,385         3,466
                                    ------        ------        ------        ------
Net interest income                  3,150         3,168         3,167         2,957
Provision for losses on loans          102           302           652           328
Other income                           641           600           699           706
Loss on sale of available
   for sale securities                 (29)         (320)           --            --
General, administrative and
   other expense                     2,789         2,941         2,773         2,543
                                    ------        ------        ------        ------
Income before income taxes             871           205           441           792
Federal income taxes (credits)         169           (82)           38           116
                                    ------        ------        ------        ------
Net income                          $  702        $  287        $  403        $  676
                                    ======        ======        ======        ======
Earnings per share
   Basic                            $ 0.15        $ 0.06        $ 0.09        $ 0.15
                                    ======        ======        ======        ======
   Diluted                          $ 0.15        $ 0.06        $ 0.09        $ 0.15
                                    ======        ======        ======        ======
</TABLE>


        ANNUAL REPORT
             2007
22   UNITED BANCORP INC.

<PAGE>

AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS EARNED AND RATES PAID

     The following table provides information relating to average balance sheet
information and reflects the taxable equivalent average yield on
interest-earning assets and the average cost of interest-bearing liabilities for
the years ended December 31, 2007, 2006 and 2005. The yields and costs are
calculated by dividing income or expense by the average balance of
interest-earning assets or interest-bearing liabilities.

     The average balance of available for sale securities is computed using the
carrying value of securities while the yield for available for sale securities
has been computed using the average amortized cost. Average balances are derived
from average month-end balances, which include nonaccruing loans in the loan
portfolio, net of the allowance for loan losses. Interest income has been
adjusted to tax- equivalent basis.

<TABLE>
<CAPTION>
                                                    2007                           2006                           2005
                                        ----------------------------   ----------------------------   ----------------------------
                                                   INTEREST                       INTEREST                       INTEREST
                                         AVERAGE    INCOME/   YIELD/    AVERAGE    INCOME/   YIELD/    AVERAGE    INCOME/   YIELD/
(DOLLARS IN THOUSANDS)                   BALANCE    EXPENSE    RATE     BALANCE    EXPENSE    RATE     BALANCE    EXPENSE    RATE
----------------------                  --------   --------   ------   --------   --------   ------   --------   --------   ------
<S>                                     <C>        <C>        <C>      <C>        <C>        <C>      <C>        <C>        <C>
ASSETS
Interest-earning assets
   Loans                                $228,673    $18,330    8.02%   $234,436   $ 17,724    7.56%   $224,945    $15,513    6.90%
   Taxable securities - AFS              119,546      6,307    5.28     113,659      5,737    4.89     113,491      5,163    4.49
   Tax-exempt securities - AFS            29,103      1,741    5.98      12,826        719    5.52      10,059        599    5.80
   Tax-exempt securities - HTM            16,142        943    5.84      19,235      1,076    5.59      20,718      1,078    5.20
   Federal funds sold                      2,907        145    4.99       3,099        170    5.49          --         --      --
   FHLB stock and other                    4,628        315    6.81       4,464        275    6.16       4,230        249    5.89
                                        --------    -------            --------   --------            --------    -------
Total interest-earning assets            400,999     27,781    6.93     387,719     25,701    6.56     373,443     22,602    6.03
Noninterest-earning assets
   Cash and due from banks                 9,555                          9,322                         10,829
   Premises and equipment (net)            7,029                          7,295                          7,436
   Other nonearning assets                15,179                         15,801                         14,509
   Less: allowance for loan losses        (2,324)                        (2,977)                        (3,043)
                                        --------                       --------                       --------
Total noninterest-earning assets          29,439                         29,441                         29,731
                                        --------                       --------                       --------
Total assets                            $430,438                       $417,160                       $403,174
                                        ========                       ========                       ========
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing liabilities
   Demand deposits                      $119,018    $ 3,872    3.25    $ 96,452   $  2,654    2.75    $ 76,991    $ 1,121    1.46
   Savings deposits                       29,384        128    0.44      34,384        121    0.35      42,748        145    0.34
   Time deposits                         172,096      7,956    4.62     167,128      7,068    4.23     165,109      5,919    3.58
   Fed funds purchased & TT&L              3,419        163    4.77       2,794        162    5.80       4,753        228    4.80
   FHLB advances                          34,081      1,629    4.78      43,342      2,132    4.92      40,100      1,450    3.62
   Trust preferred debentures              4,000        250    6.25       4,000        250    6.25         496         31    6.25
   Repurchase agreements                  11,855        520    4.39      10,557        450    4.26      10,129        252    2.49
                                        --------    -------            --------   --------            --------    -------
Total interest-bearing liabilities       373,853     14,518    3.88     358,657     12,837    3.58     340,326      9,146    2.69
                                                    -------    ----               --------    ----                -------    ----
Noninterest-bearing liabilities
   Demand deposits                        22,250                         24,400                         28,213
   Other liabilities                       2,494                          2,237                          1,750
                                        --------                       --------                       --------
Total noninterest-bearing liabilities     24,744                         26,637                         29,963
                                        --------                       --------                       --------
Total liabilities
Total shareholders' equity                31,841                         31,866                         32,885
                                        --------                       --------                       --------
Total liabilities & shareholders'
   equity                               $430,438                       $417,160                       $403,174
                                        ========                       ========                       ========
Net interest income                                 $13,263                       $ 12,864                        $13,456
                                                    =======                       ========                        =======
Net interest spread                                            3.05%                          2.98%                          3.34%
                                                               ====                           ====                           ====
Net yield on interest-earning assets                           3.31%                          3.28%                          3.59%
                                                               ====                           ====                           ====
</TABLE>

-    For purposes of this schedule, nonaccrual loans are included in loans.

-    Fees collected on loans are included in interest on loans.

                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   23
<PAGE>

RATE/VOLUME ANALYSIS

     The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected interest income and expense during the periods indicated. For
purposes of this table, changes in interest due to volume and rate were
determined using the following methods:

-    Volume variance results when the change in volume is multiplied by the
     previous year's rate.

-    Rate variance results when the change in rate is multiplied by the previous
     year's volume.

-    Rate/volume variance results when the change in volume is multiplied by the
     change in rate.

NOTE: The rate/volume variance was allocated to volume variance and rate
variance in proportion to the relationship of the absolute dollar amount of the
change in each. Nonaccrual loans are ignored for purposes of the calculations
due to the nominal amount of the loans.

                              DIVIDENDS PER SHARE

                                   (BAR CHART)

CAPITAL RESOURCES

     Internal capital growth, through the retention of earnings, is the primary
means of maintaining capital adequacy for the Bank. The Company's shareholders'
equity at year-end 2007 was $33.9 million, compared to $32.6 million at year-end
2006, representing an increase of 4.0%. Equity totals include $500,000 in
accumulated other comprehensive loss which is comprised mainly of a net
unrealized loss related to the accumulated benefit obligation in excess of

<TABLE>
<CAPTION>
                                                2007 COMPARED TO 2006      2006 COMPARED TO 2005
                                                 INCREASE/(DECREASE)        INCREASE/(DECREASE)
                                              ------------------------   -------------------------
                                                       CHANGE   CHANGE            CHANGE    CHANGE
                                               TOTAL   DUE TO   DUE TO    TOTAL   DUE TO    DUE TO
(IN THOUSANDS)                                CHANGE   VOLUME    RATE    CHANGE   VOLUME     RATE
--------------                                ------   ------   ------   ------   ------   -------
<S>                                           <C>      <C>      <C>      <C>      <C>      <C>
Interest and dividend income
   Loans                                      $  606   $(443)   $1,049   $2,211   $ 674    $ 1,537
   Taxable securities available for sale         570     297       273      574       8        566
   Tax-exempt securities available for sale    1,022     969        53      120     154        (34)
   Tax-exempt securities held to maturity       (133)   (179)       46       (2)    (80)        78
   Federal funds sold                            (25)    (10)      (15)     170     170         --
   FHLB stock and other                           40      10        30       26      14         12
                                              ------   -----    ------   ------   -----    -------
Total interest and dividend income             2,080     644     1,436    3,099     940      2,159

Interest expense
   Demand deposits                             1,218     684       534    1,533     340      1,193
   Savings deposits                                7     (20)       27      (24)    (34)        10
   Time deposits                                 888     215       673    1,149      73      1,076
   Fed funds purchased                             1      33       (32)     (66)   (107)        41
   FHLB advances                                (503)   (444)      (59)     682     125        557
   Trust Preferred debentures                     --      --        --      219     219         --
   Repurchase agreements                          70      57        13      198      11        187
                                              ------   -----    ------   ------   -----    -------
Total interest expense                         1,681     525     1,156    3,691     408      3,283
                                              ------   -----    ------   ------   -----    -------
Net interest income                           $  399   $ 119    $  280   $ (592)  $ 532    $(1,124)
                                              ======   =====    ======   ======   =====    =======
</TABLE>


        ANNUAL REPORT
             2007
24   UNITED BANCORP INC.

<PAGE>

fair value of plan assets in the Company's defined benefit pension plan, net of
tax, at year-end 2007, compared to a $1.9 million unrealized loss at year-end
2006. Total shareholders' equity in relation to total assets was 7.5% at
December 31, 2007 and 7.7% at December 31, 2006. The decrease is primarily due
to the growth in the Company's assets during 2007.

     The Company has established 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 dividend policy or a guarantee of future dividends.
Shareholders who do not wish to participate in The Plan continue to receive cash
dividends, as declared in the usual and customary manner.

     In 2001, the Company's 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 will enable the Company, at the option of the Board of
Directors, to issue series of preferred shares in a manner calculated to take
advantage of financing techniques which may provide a lower effective cost of
capital to the Company. The amendment also provides greater flexibility to the
Board of Directors in structuring the terms of equity securities that may be
issued by the Company. As of December 31, 2007 the Company has not issued any
preferred shares.

     In 2005, a Delaware statutory business trust owned by the Company, United
Bancorp Statutory Trust I ("Trust I" or the "Trust"), issued $4.0 million of
mandatorily redeemable debt securities. The sale proceeds were utilized to pur-
chase $4.0 million of the Company's subordinated debentures. The Company's
subordinated debentures are the sole asset of Trust I. Pursuant to FIN 46(R),
the Company's investment in Trust I is not consolidated herein as the Company is
not deemed the primary beneficiary of the Trust. However,the $4.0 million of
mandatorily redeemable debt securities issued by the Trust are includible for
regulatory purposes as a component of the Company's Tier 1 Capital. Interest on
the Company's subordinated debentures are fixed at 6.25% and are payable
quarterly.

                          EQUITY CAPITAL (In Thousands)

                                   (BAR CHART)

                              BOOK VALUE PER SHARE

                                   (BAR CHART)

     The $4.0 million of net proceeds received by the Company was primarily
utilized to fund a $3.4 million note receivable from a newly formed Employee
Stock Option Plan (ESOP). The ESOP in turn utilized the note proceeds to
purchase $3.4 million of the Company's treasury stock.

LIQUIDITY

     Liquidity relates primarily to the Company's ability to fund loan demand,
meet deposit customers' withdrawal requirements and provide for operating
expenses. Assets used to satisfy these needs consist of cash and due from banks,
federal funds sold and securities available-for sale. These assets are commonly
referred to as liquid assets. Liquid assets were $177.6 million at December 31,
2007, compared to $148.4 million at December 31, 2006. Management recognizes
securities may need to be sold in the future to help fund loan demand and,
accordingly,as of December 31, 2007, $165.3 million of the securities portfolio
was classified as available for sale. The Company's residential real estate
portfolio can and has been readily used to collateralize borrowings as an
additional source of liquidity. Management believes its current liquidity level
is sufficient to meet the cash requirement.


                                                          ANNUAL REPORT
                                                               2007
                                                       UNITED BANCORP INC.   25

<PAGE>

     The Cash Flow Statements for the periods presented provide an indication of
the Company's sources and uses of cash as well as an indication of the ability
of the Company to maintain an adequate level of liquidity. A discussion of the
cash flow statements for 2007, 2006 and 2005 follows. The Company experienced a
net increase in cash from operating activities in 2007, 2006 and 2005. Net cash
provided by operating activities totaled $3.3 million, $3.9 million and $4.0
million for the years ended December 31, 2007, 2006 and 2005, respectively. The
adjustments to reconcile net earnings to net cash from operating activities
consisted mainly of depreciation and amortization of premises and equipment and
intangibles, gain on sales of loans, securities and other assets, the provision
for loan losses, Federal Home Loan Bank stock dividends, net amortization of
securities and net changes in other assets and liabilities.

     NET CASH USED IN INVESTING ACTIVITIES totaled $31.1 million, $7.2 million
and $10.4 million for the years ended December 31, 2007, 2006 and 2005,
respectively. The changes in net cash from investing activities include loan
growth,as well as normal maturities,security calls and reinvestments of
securities and premises and equipment expenditures. In 2006 and 2005, the
Company received $7.7 million, and $15.9 million, respectively, from sales of
securities available for sale. Proceeds from securities, which matured or were
called totaled $22.2 million, $16.4 million, and $22.8 million in 2007, 2006 and
2005, respectively.

     NET CASH PROVIDED BY FINANCING ACTIVITIES totaled $25.6 million, $4.0
million and $12.8 million for the years ended December 31, 2007, 2006 and
2005,respectively. The net cash from financing activities in 2007 was primarily
attributable to increases in borrowings of $28.2 million offset by cash
dividends paid of $2.4 million and share repurchases of $1.1 million.

     Management feels that it has the capital adequacy, profitability, and
reputation to meet the current and projected financial needs of its customers.

INFLATION

     The majority of assets and liabilities of the Company are monetary in
nature and therefore the Company differs greatly from most commercial and
industrial companies that have significant investments in fixed assets or
inventories. However, inflation does have an important impact on the growth of
total assets in the banking industry and the resulting need to increase equity
capital at higher than normal rates in order to maintain an appropriate equity
to assets ratio. Inflation significantly affects noninterest expense, which
tends to rise during periods of general inflation. Management believes the most
significant impact on financial results is the Company's ability to react to
changes in interest rates. Management seeks to maintain an essentially balanced
position between interest sensitive assets and liabilities and actively manages
the amount of securities available for sale in order to protect against the
effects of wide interest rate fluctuations on net income and shareholders'
equity.


        ANNUAL REPORT
             2007
26   UNITED BANCORP INC.
<PAGE>


(BKD LLP LOGO)

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
United Bancorp, Inc.

We have audited the accompanying consolidated balance sheet of United Bancorp,
Inc. as of December 31, 2007, and the related consolidated statements of income,
comprehensive income, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements for the year ended
December 31, 2006 were audited by other auditors, whose report dated March 23,
2007, expressed an unqualified opinion on those statements

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing auditing procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Bancorp, Inc.
as of December 31, 2007, and the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.

/s/ BKD, LLP

Cincinnati, Ohio
March 12, 2008

                                                              (PRAXITY(TM) LOGO)

      312 Walnut Street, Suite 3000 Cincinnati, OH 45202-4025 513 621-8300
                                Fax 513 621-8345

bkd.com                        BEYOND YOUR NUMBERS



<PAGE>


(GRANT THORNTON LOGO)

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
United Bancorp, Inc.
Martins Ferry, Ohio

We have audited the accompanying consolidated statement of financial condition
of United Bancorp, Inc. (the "Company") as of December 31, 2006 and the related
consolidated statements of earnings, comprehensive income, shareholders' equity
and cash flows for each of the two years in the period ended December 31, 2006.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Bancorp, Inc.
as of December 31, 2006 and the results of its operations, comprehensive income
and cash flows for each of the two years in the period ended December 31, 2006,
in conformity with accounting principles generally accepted in the United States
of America.

As more fully described in Note 1 and 13, the Company changed its methods of
accounting for stock-based compensation and defined benefit plans in accordance
with Statement of Financial Accounting Standards No. 123(R) and Financial
Accounting Standards No. 158.


/s/ Grant Thornton LLP
Cincinnati, Ohio
March 23, 2007

GRANT THORNTON LLP
U.S. member firm of Grant Thornton International Ltd

<PAGE>

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2007 AND 2006
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                2007       2006
                                                                              --------   --------
<S>                                                                           <C>        <C>
ASSETS
   Cash and due from banks                                                    $  4,678   $  6,817
   Interest-bearing demand deposits                                              7,646      7,737
                                                                              --------   --------
            Cash and cash equivalents                                           12,324     14,554
                                                                              --------   --------
   Available-for-sale securities                                               165,324    133,808
   Held-to-maturity securities                                                  16,142     17,870
   Loans, net of allowance for loan losses of $2,447 and $2,345 at
      December 31, 2007 and 2006, respectively                                 232,197    229,172
   Premises and equipment                                                        7,077      7,261
   Federal Home Loan Bank stock                                                  4,624      4,556
   Foreclosed assets held for sale, net                                            525        794
   Accrued interest receivable                                                   3,146      2,578
   Deferred federal income taxes                                                   180        748
   Bank-owned life insurance                                                     9,296      8,927
   Other assets                                                                    535      1,385
                                                                              --------   --------
            Total assets                                                      $451,370   $421,653
                                                                              ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
   LIABILITIES
      Deposits
         Demand                                                               $146,057   $124,152
         Savings, NOW and money market                                          27,816     30,972
         Time                                                                  156,615    174,881
                                                                              --------   --------
            Total deposits                                                     330,488    330,005
                                                                              --------   --------
      Short-term borrowings                                                     19,609      6,218
      Federal Home Loan Bank advances                                           58,926     44,135
      Trade date security purchases                                              3,000      2,886
      Subordinated debentures                                                    4,000      4,000
      Interest payable and other liabilities                                     1,460      1,829
                                                                              --------   --------
            Total liabilities                                                  417,483    389,073
                                                                              --------   --------

   STOCKHOLDERS' EQUITY
      Preferred stock, no par value, authorized 2,000,000 shares; no shares
         issued                                                                     --         --
      Common stock, $1 par value; authorized 10,000,000 shares; issued
         2007 - 5,178,869 shares, 2006 - 5,131,874 shares                        5,179      5,132
      Additional paid-in capital                                                28,048     27,547
      Retained earnings                                                          7,112      6,962
         Stock held by deferred compensation plan; 108,322 and 103,135
         shares at December 31, 2007 and 2006, respectively                     (1,051)    (1,019)
      Unearned ESOP compensation                                                (2,931)    (3,266)
      Accumulated other comprehensive loss                                        (500)    (1,912)
      Treasury stock, at cost
         2007 - 190,266 shares, 2006 - 84,024 shares                            (1,970)      (864)
                                                                              --------   --------
            Total stockholders' equity                                          33,887     32,580
                                                                              --------   --------
            Total liabilities and stockholders' equity                        $451,370   $421,653
                                                                              ========   ========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   29

<PAGE>

                        CONSOLIDATED STATEMENTS OF INCOME

                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                2007      2006      2005
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
INTEREST AND DIVIDEND INCOME
   Loans                                                      $18,000   $17,725   $15,480
   Securities
      Taxable                                                   6,307     5,737     5,179
      Tax-exempt                                                1,836     1,372     1,272
   Federal funds sold                                             145       170        42
   Dividends on Federal Home Loan Bank and other stock            315       275       208
                                                              -------   -------   -------
         Total interest and dividend income                    26,603    25,279    22,181
                                                              -------   -------   -------
INTEREST EXPENSE
   Deposits                                                    11,956     9,836     7,185
   Borrowings                                                   2,562     3,001     1,961
                                                              -------   -------   -------
         Total interest expense                                14,518    12,837     9,146
                                                              -------   -------   -------
NET INTEREST INCOME                                            12,085    12,442    13,035
PROVISION FOR LOAN LOSSES                                         993     1,384       412
                                                              -------   -------   -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES            11,092    11,058    12,623
                                                              -------   -------   -------
NONINTEREST INCOME
   Customer service fees                                        1,866     1,497     1,339
   Net gains on loan sales                                         22        17        21
   Loss on sales of available-for-sale securities - net            --      (349)      (52)
   Earnings on bank-owned life insurance                          412       357       347
   Gain on sale of real estate and other repossessed assets       152        48         2
   Other                                                          627       727       685
                                                              -------   -------   -------
         Total noninterest income                               3,079     2,297     2,342
                                                              -------   -------   -------
NONINTEREST EXPENSE
   Salaries and employee benefits                               6,166     5,668     5,432
   Net occupancy expense                                        1,216     1,314     1,320
   Professional fees                                              630       590       559
   Insurance                                                      362       333       343
   Franchise and other taxes                                      369       425       412
   Marketing expense                                              357       363       400
   Printing and office supplies                                   283       276       273
   Other                                                        1,869     2,077     2,024
                                                              -------   -------   -------
         Total noninterest expense                             11,252    11,046    10,763
                                                              -------   -------   -------
INCOME BEFORE FEDERAL INCOME TAXES                              2,919     2,309     4,202
PROVISION FOR FEDERAL INCOME TAXES                                334       241       909
                                                              -------   -------   -------
NET INCOME                                                    $ 2,585   $ 2,068   $ 3,293
                                                              =======   =======   =======
BASIC EARNINGS PER SHARE                                      $  0.57   $  0.45   $  0.71
                                                              =======   =======   =======
DILUTED EARNINGS PER SHARE                                    $  0.57   $  0.45   $  0.71
                                                              =======   =======   =======
</TABLE>

                                  SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        ANNUAL REPORT
             2007
30   UNITED BANCORP INC.

<PAGE>

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                         TREASURY      SHARES                ACCUMULATED
                                                          ADDITIONAL     STOCK AND    ACQUIRED                  OTHER
                                                 COMMON     PAID-IN      DEFERRED        BY      RETAINED   COMPREHENSIVE
                                                  STOCK     CAPITAL    COMPENSATION     ESOP     EARNINGS        LOSS        TOTAL
                                                 ------   ----------   ------------   --------   --------   -------------   -------
<S>                                              <C>      <C>          <C>            <C>        <C>        <C>             <C>
BALANCE, JANUARY 1, 2005                         $4,127     $25,831      $(3,520)     $    --    $ 7,021       $  (635)     $32,824
   Net income                                        --          --           --           --      3,293            --        3,293
   Stock split in the form of a dividend            419          --           --           --       (419)           --           --
   Cash paid in lieu of fractional
      shares on stock dividend                       --          --           --           --         (4)           --           (4)
   Cash dividends -- $0.44 per share                 --          --           --           --     (2,115)           --       (2,115)
   Shares purchased for deferred compensation
      plan                                           --         147         (147)          --         --            --           --
   Shares distributed from deferred
      compensation plan                              --          (7)           7           --         --            --           --
   Purchase of treasury stock - shares at cost       --          --         (614)          --         --            --         (614)
   Shares acquired by ESOP                           --         364        3,053       (3,417)        --            --           --
   Proceeds from the exercise of stock options       42         254           --           --         --            --          296
   Issuance of shares to Dividend
      Reinvestment Plan                              27         330           --           --         --            --          357
   Unrealized losses on securities designated
      as available for sale, net of tax
      benefits                                       --          --           --           --         --        (1,557)      (1,557)
                                                 ------     -------      -------      -------    -------       -------      -------
BALANCE, DECEMBER 31, 2005                        4,615      26,919       (1,221)      (3,417)     7,776        (2,192)      32,480
   Net income                                        --          --           --           --      2,068            --        2,068
   Stock split in the form of a dividend            465          --           --           --       (465)           --           --
   Cash paid in lieu of fractional
      shares on stock dividend                       --          (4)          --           --         --            --           (4)
   Cash dividends - $0.48 per share                  --          --           --           --     (2,417)           --       (2,417)
   Shares purchased for deferred compensation
      plan                                           --         168         (168)          --         --            --           --
   Shares distributed from deferred
      compensation plan                              --         (41)          41           --         --            --           --
   Purchase of treasury stock - shares at cost       --          --         (535)          --         --            --         (535)
   Stock options exercised                            1           5           --           --         --            --            6
   Issuance of shares to Dividend
      Reinvestment Plan and Director Plan            51         500           --           --         --            --          551
   Adoption of SFAS No. 158                          --          --           --           --         --          (426)        (426)
   ESOP compensation                                 --          --           --          151         --            --          151
   Unrealized gains on securities
      designated as available for sale,
      net of related taxes                           --          --           --           --         --           706          706
                                                 ------     -------      -------      -------    -------       -------      -------
BALANCE, DECEMBER 31, 2006                        5,132      27,547       (1,883)      (3,266)     6,962        (1,912)      32,580
   Net income                                        --          --           --           --      2,585            --        2,585
   Cash dividends - $0.52 per share                  --          --           --           --     (2,435)           --       (2,435)
   Shares purchased for deferred compensation
      plan                                            9         236         (148)          --         --            --           97
   Shares distributed from deferred
      compensation plan                              --        (116)         116           --         --            --           --
   Purchase of treasury stock - shares at cost       --          --       (1,106)          --         --            --       (1,106)
   Defined benefit plan                              --          --           --           --         --          (226)        (226)
   Issuance of shares to Dividend
      Reinvestment Plan                              38         381           --           --         --            --          419
   ESOP compensation                                 --          --           --          335         --            --          335
   Unrealized gains on securities
      designated as available for sale,
      net of related taxes                           --          --           --           --         --         1,638        1,638
                                                 ------     -------      -------      -------    -------       -------      -------
BALANCE, DECEMBER 31, 2007                       $5,179     $28,048      $(3,021)     $(2,931)   $ 7,112       $  (500)     $33,887
                                                 ======     =======      =======      =======    =======       =======      =======
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   31

<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  2007       2006       2005
                                                                --------   --------   --------
<S>                                                             <C>        <C>        <C>
OPERATING ACTIVITIES
   Net income                                                   $  2,585   $  2,068   $  3,293
   Items not requiring (providing) cash
      Depreciation and amortization                                  491        608        621
      Provision for loan losses                                      993      1,384        412
      Amortization of premiums and discounts on securities            74        184        383
      Amortization of loan-servicing rights                           73         69         81
      Deferred income taxes                                         (159)       454        (49)
      Loss on sales of available-for-sale securities                  --        349         52
      Net gains on sales of loans                                    (22)       (17)       (21)
      Gain on sale of premises and equipment                          --         --        (10)
      Amortization of stock benefit plan                             335        151         --
      Gain on sale of real estate owned and other repossessed
         assets                                                     (152)       (48)        (2)
      Federal Home Loan Bank stock dividends                         (68)      (250)      (191)
      Increase in value of bank-owned life insurance                (369)      (357)      (286)
   Changes in
      Accrued interest receivable                                   (569)      (215)      (110)
      Other assets                                                   777       (939)        22
      Interest payable and other liabilities                        (710)       446       (229)
                                                                --------   --------   --------
      Net cash provided by operating activities                    3,279      3,887      3,966
                                                                --------   --------   --------
INVESTING ACTIVITIES
   Purchases of available-for-sale securities                    (51,261)   (32,589)   (25,643)
   Proceeds from maturities of available-for-sale securities      22,233     16,387     22,780
   Proceeds from the sales of available-for-sale securities           --      7,730     15,899
   Purchases of held-to-maturity securities                           --         --     (5,991)
   Proceeds from maturities of held-to-maturity securities         1,761      2,425        710
   Net change in loans                                            (4,727)    (2,197)   (17,644)
   Purchase of premises and equipment                               (312)      (248)      (484)
   Proceeds from sales of premises and equipment                       4         --         44
   Purchase of bank-owned life insurance                              --         --       (382)
   Proceeds from the sale of foreclosed assets                     1,221      1,262        289
   Additions to foreclosed assets                                    (68)        --         --
                                                                --------   --------   --------
         Net cash used in investing activities                   (31,149)    (7,230)   (10,422)
                                                                --------   --------   --------
</TABLE>

                                  SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        ANNUAL REPORT
             2007
32   UNITED BANCORP INC.

<PAGE>

                CONSOLIDATED STATEMENTS OF CASH FLOWS Continued

                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                       2007      2006       2005
                                                                     -------   --------   -------
<S>                                                                  <C>       <C>        <C>
FINANCING ACTIVITIES
   Net increase in deposits                                          $   483   $ 23,091   $ 6,285
   Net change in Federal Home Loan Bank advances                      28,182    (16,668)    4,549
   Issuance of subordinated debentures                                    --         --     4,000
   Cash dividends paid                                                (2,435)    (2,417)   (2,115)
   Cash paid in lieu of fractional shares in stock dividend               --         (4)       (4)
   Proceeds from issuance of shares to Dividend Reinvestment
      Plan                                                               419        547       357
   Proceeds from exercise of stock options                                --          1       146
   Tax benefit on options exercised                                       --          5       150
   Treasury stock purchases                                           (1,106)      (535)     (614)
   Shares purchased for deferred compensation plan                        97         --        --
   Treasury shares acquired by ESOP                                       --         --     3,417
   Funding of note receivable from ESOP                                   --         --    (3,417)
                                                                     -------   --------   -------
         Net cash provided by financing activities                    25,640      4,020    12,754
                                                                     -------   --------   -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      (2,230)       677     6,298
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                          14,554     13,877     7,579
                                                                     -------   --------   -------
CASH AND CASH EQUIVALENTS, END OF YEAR                               $12,324   $ 14,554   $13,877
                                                                     =======   ========   =======
SUPPLEMENTAL CASH FLOWS INFORMATION
   Interest paid on deposits and borrowings                          $14,477   $ 12,825   $ 9,105
                                                                     =======   ========   =======
   Federal income taxes paid                                         $   265   $    395   $   942
                                                                     =======   ========   =======
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES
   Transfers from loans to real estate owned and other
      repossessed assets                                             $   731   $    765   $   517
                                                                     =======   ========   =======
   Unrealized gains (losses) on securities designated as available
      for sale, net of related tax effects                           $ 1,636   $    476   $(1,591)
                                                                     =======   ========   =======
   Change in unfunded status of defined benefit plan liability       $  (340)  $   (645)  $    --
                                                                     =======   ========   =======
   Recognition of mortgage servicing rights in accordance with
      SFAS No. 140                                                   $   109   $    105   $   340
                                                                     =======   ========   =======
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   33

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PRINCIPLES OF CONSOLIDATION

          The consolidated financial statements include the accounts of United
          Bancorp, Inc. ("United" or "the Company") and its wholly-owned
          subsidiaries, The Citizens Savings Bank of Martins Ferry, Ohio (the
          "Bank" or "Citizens") and The Community Bank, Lancaster, Ohio
          (collectively the "Banks"). Effective July 1, 2007, the Company merged
          The Community Bank into The Citizens Savings Bank and now operates
          that market area as The Community Bank, a division of The Citizens
          Savings Bank. All intercompany transactions and balances have been
          eliminated in consolidation.

     NATURE OF OPERATIONS

          The Company's revenues, operating income and assets are almost
          exclusively derived from banking. Accordingly, all of the Company's
          banking operations are considered by management to be aggregated in
          one reportable operating segment. Customers are mainly located in
          Athens, Belmont, Carroll, Fairfield, Harrison, Hocking and Tuscarawas
          Counties and the surrounding localities in northeastern, eastern and
          southeastern Ohio, and include a wide range of individuals, business
          and other organizations. Citizens has historically conducted its
          business through its main office in Martins Ferry, Ohio and nine
          branches in Bridgeport, Colerain, Dellroy, Dover, Jewett, New
          Philadelphia, St. Clairsville, Sherrodsville and Strasburg, Ohio.
          Community has historically conducted its business through its seven
          offices in Amesville, Glouster, Lancaster and Nelsonville, Ohio.
          Effective November 15, 2006, the Company's Board of Directors voted to
          consolidate Community's charter with Citizens, maintaining Community's
          name and operations as a division of Citizens. This reorganization was
          completed in 2007.

          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. 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

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities and disclosure of contingent assets
          and liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.


        ANNUAL REPORT
             2007
34   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

          Material estimates that are particularly susceptible to significant
          change relate to the determination of the allowance for loan losses
          (and the valuation of real estate acquired in connection with
          foreclosures or in satisfaction of loans). In connection with the
          determination of the allowance for loan losses (and the valuation of
          foreclosed assets held for sale), management obtains independent
          appraisals for significant properties.

     CASH EQUIVALENTS

          The Company considers all liquid investments with original maturities
          of three months or less to be cash equivalents.

     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.

     LOANS HELD FOR SALE

          Mortgage loans originated and intended for sale in the secondary
          market are carried at the lower of cost or fair value in the
          aggregate. Net unrealized losses, if any, are recognized through a
          valuation allowance by charges to income. At December 31, 2007 and
          2006, the Company did not have any loans originated and held for sale.

     LOANS

          Loans that management has the intent and ability to hold for the
          foreseeable future or until maturity or payoff are reported at their
          outstanding principal balances adjusted for any charge-offs, the
          allowance for loan losses and any deferred fees or costs on originated
          loans. Interest income is reported on the interest method and includes
          amortization of net deferred loan fees and costs over the loan term.
          Generally, loans are placed on non-accrual status at ninety days past
          due and interest is considered a loss, unless the loan is well-secured
          and in the process of collection.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   35

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

ALLOWANCE FOR LOAN LOSSES

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

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

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

     Large groups of smaller balance homogenous loans are collectively evaluated
     for impairment. Accordingly, the Company does not separately identify
     individual consumer and residential loans for impairment measurements.

PREMISES AND EQUIPMENT

     Depreciable assets are stated at cost less accumulated depreciation.
     Depreciation is charged to expense using the straight-line method over the
     estimated useful lives of the assets. An accelerated method is used for tax
     purposes.


        ANNUAL REPORT
             2007
36   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

FEDERAL HOME LOAN BANK STOCK

     The Company is required as a condition of membership in the Federal Home
     Loan Bank of Cincinnati (FHLB) to maintain an investment in FHLB common
     stock. The required investment in the common stock is based on a
     predetermined formula. The stock is redeemable at par and, therefore, its
     cost is equivalent to its redemption value. The Company's ability to redeem
     FHLB shares is dependent on the redemption practices of the FHLB of
     Cincinnati. At December 31, 2007, the FHLB of Cincinnati placed no
     restrictions on redemption of shares in excess of a member's required
     investment in the stock.

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 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. Revenue and
     expenses from operations and changes in the valuation allowance are
     included in net income or expense from foreclosed assets.

BANK-OWNED LIFE INSURANCE

     The Company and the Banks have purchased life insurance policies on certain
     key executives. Company and bank-owned life insurance is recorded at its
     cash surrender value, or the amount that can be realized.

INTANGIBLE ASSETS

     Intangible assets consisted of core deposits arising from branch
     acquisitions. Such assets were recorded at fair value and were fully
     amortized as of December 31, 2006. Amortization expense related to
     intangible assets totaled $18,000 for each of the years ended December 31,
     2006 and 2005.

MORTGAGE SERVICING RIGHTS

     Beginning January 1, 2007, mortgage servicing rights on originated loans
     that have been sold are initially recorded at fair value. Mortgage
     servicing rights on originated loans that have been sold prior to 2007 are
     capitalized by allocating the total cost of the mortgage loans between the
     mortgage servicing rights and the loans based on their relative fair
     values. Capitalized servicing rights are amortized in proportion to and
     over the period of estimated servicing revenues. Impairment of
     mortgage-servicing rights is assessed based on the fair value of those
     rights. Fair values are estimated using discounted cash flows based on a
     current market interest rate. For purposes of measuring impairment, the
     rights are stratified based on the predominant risk characteristics of the
     underlying loans. The predominant characteristic currently used for
     stratification is type of loan. The amount of impairment recognized is the
     amount by which the capitalized mortgage servicing rights for a stratum
     exceed their fair value.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   37

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

TREASURY STOCK

     Treasury stock is stated at cost. Cost is determined by the first-in,
     first-out method.

STOCK OPTIONS

     At December 31, 2007, the Company has a stock-based employee compensation
     plan, which is described more fully in Note 14. Prior to 2006, the Company
     accounted for this plan under the recognition and measurement principles of
     APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
     Interpretations. Accordingly, in 2005, no stock-based employee compensation
     cost is reflected in net income, as all options granted under this plan had
     an exercise price equal to the market value of the underlying common stock
     at the grant date.

     Effective January 1, 2006 the Company adopted the fair value recognition
     provisions of Statement of Financial Accounting Standards (SFAS) No. 123R,
     Share-Based Payment. The Company selected the modified prospective
     application. Accordingly, after January 1, 2006, the Company began
     expensing the fair value of stock options granted, modified, repurchased or
     cancelled.

     The following table illustrates the effect on net income and earnings per
     share if the Company had applied the fair value provisions of SFAS No. 123,
     Accounting for Stock-Based Compensation, to stock-based employee
     compensation for the year ended December 31, 2005.

<TABLE>
<CAPTION>
                                                            2005
                                                       --------------
                                                       (In thousands)
<S>                                                    <C>
Net income, as reported                                    $3,293
Less: Total stock-based employee compensation cost
   determined under the fair value based method, net
   of income taxes                                             (6)
                                                           ------
Pro forma net income                                       $3,287
                                                           ======

Earnings per share:
   Basic - as reported                                     $ 0.71
                                                           ======
   Basic - pro forma                                       $ 0.70
                                                           ======
   Diluted - as reported                                   $ 0.71
                                                           ======
   Diluted - pro forma                                     $ 0.70
                                                           ======
</TABLE>


        ANNUAL REPORT
             2007
38   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

INCOME TAXES

     Deferred tax assets and liabilities are recognized for the tax effects of
     differences between the financial statement and tax bases of assets and
     liabilities. A valuation allowance is established to reduce deferred tax
     assets if it is more likely than not that a deferred tax asset will not be
     realized. The Company files a consolidated income tax return with its
     subsidiary.

STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS

     The Company has authorized 10,000,000 shares of $1.00 value common stock
     and 2,000,000 shares of preferred stock. Treasury stock is carried at cost.
     A 10% stock split in the form of a dividend was distributed during 2006 and
     2005 to all stockholders of record. All per share data has been
     retroactively adjusted for these stock splits. The purpose of such stock
     splits was to increase the marketability of the Company's common shares.

     Banking regulations require maintaining certain capital levels and may
     limit the dividends paid by the Bank to the Company or by the Company to
     stockholders. Dividend payments to the stockholders may be legally paid
     from additional paid-in capital or retained earnings. At December 31, 2007,
     the Bank has the ability to dividend $4.5 million to the Company.

EARNINGS PER SHARE

     Earnings per share have been computed based upon the weighted-average
     common shares outstanding during each year. Unearned ESOP shares which have
     not vested have been excluded from the computation of average shares
     outstanding. Diluted earnings per common share include the dilutive effect
     of additional potential common shares issuable under the Company's stock
     option plans.

ADVERTISING

     Advertising costs are expensed as incurred.

RECLASSIFICATIONS

     Certain reclassifications have been made to the prior years' financial
     statements to conform to the 2007 financial statement presentation. These
     reclassifications had no effect on net income.

NOTE 2: RESTRICTION ON CASH AND DUE FROM BANKS

     The Company is required to maintain reserve funds in cash and/or on deposit
     with the Federal Reserve Bank. The reserve required at December 31, 2007
     and 2006, was $4.2 million and $2.3 million, respectively.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   39

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 3: SECURITIES

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

<TABLE>
<CAPTION>
                                               GROSS        GROSS
                                AMORTIZED   UNREALIZED   UNREALIZED   APPROXIMATE
                                   COST        GAINS       LOSSES      FAIR VALUE
                                ---------   ----------   ----------   -----------
                                                  (In thousands)
<S>                             <C>         <C>          <C>          <C>
AVAILABLE-FOR-SALE
   SECURITIES:
   December 31, 2007:
      U.S. government
         agencies                $112,470      $606       $   (74)     $113,002
      Mortgage-backed
         securities                23,914         3          (315)       23,602
      State and political
         subdivisions              28,073       106          (109)       28,070
      Equity securities                 4        16            --            20
      Collateralized
         mortgage obligations         635        --            (5)          630
                                 --------      ----       -------      --------
                                 $165,096      $731       $  (503)     $165,324
                                 ========      ====       =======      ========
   December 31, 2006:
      U.S. government
         agencies                $ 81,352      $ 15       $(1,503)     $ 79,864
      Mortgage-backed
         securities                29,009        --          (788)       28,221
      State and political
         subdivisions              24,911       133           (91)       24,953
      Equity securities                 4         1            --             5
      Collateralized
         mortgage
         obligations                  783        --           (18)          765
                                 --------      ----       -------      --------
                                 $136,059      $149       $(2,400)     $133,808
                                 ========      ====       =======      ========
</TABLE>


        ANNUAL REPORT
             2007
40   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                               GROSS        GROSS
                                AMORTIZED   UNREALIZED   UNREALIZED   APPROXIMATE
                                   COST        GAINS       LOSSES      FAIR VALUE
                                ---------   ----------   ----------   -----------
                                                  (In thousand)
<S>                             <C>         <C>          <C>          <C>
HELD-TO-MATURITY
   SECURITIES:
   December 31, 2007:
      State and political
         subdivisions            $16,142       $353         $(14)       $16,481
                                 =======       ====         ====        =======
   December 31, 2006:
      State and political
         subdivisions            $17,870       $373         $(23)       $18,220
                                 =======       ====         ====        =======

</TABLE>

     The amortized cost and fair value of available-for-sale securities and
     held-to-maturity securities at December 31, 2007, 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.

<TABLE>
<CAPTION>
                          AVAILABLE-FOR-SALE      HELD-TO-MATURITY
                         --------------------   -------------------
                         AMORTIZED     FAIR     AMORTIZED     FAIR
                            COST       VALUE       COST      VALUE
                         ---------   --------   ---------   -------
                                     (In thousands)
<S>                      <C>         <C>        <C>         <C>
Within one year           $    274   $    273    $    --    $    --
One to five years           11,772     11,759      2,803      2,894
Five to ten years           27,277     27,295      5,714      5,858
After ten years            125,134    125,347      7,625      7,729
                          --------   --------    -------    -------
                           164,457    164,674     16,142     16,481
                          --------   --------    -------    -------
Other asset-backed and
   equity securities           639        650         --         --
                          --------   --------    -------    -------
   Totals                 $165,096   $165,324    $16,142    $16,481
                          ========   ========    =======    =======
</TABLE>

     The carrying value of securities pledged as collateral, to secure public
     deposits and for other purposes, was $91.3 million and $78.4 million at
     December 31, 2007 and 2006, respectively.

     Gross gains of $1,000 and $44,000 and gross losses of $350,000 and $96,000
     resulting from sales of available-for-sale securities were realized for the
     years ended December 31, 2006 and 2005, respectively.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   41

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Certain investments in debt securities are reported in the financial
     statements at an amount less than their historical cost. The total fair
     value of these investments at December 31, 2007 and 2006, was $56.1 million
     and $115.9 million, which represented approximately 31% and 76%,
     respectively, of the Company's available-for-sale and held-to-maturity
     investment portfolio. These declines resulted primarily from increases in
     market interest rates.

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

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

     The following 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 December 31, 2007 and 2006:

<TABLE>
<CAPTION>
                                            DECEMBER 31, 2007
                            -------------------------------------------------
                              LESS THAN 12 MONTHS        12 MONTHS OR MORE               TOTAL
                            -----------------------   -----------------------   -----------------------
      DESCRIPTION OF                     UNREALIZED                UNREALIZED                UNREALIZED
        SECURITIES          FAIR VALUE     LOSSES     FAIR VALUE     LOSSES     FAIR VALUE     LOSSES
-------------------------   ----------   ----------   ----------   ----------   ----------   ----------
                                             (In  thousands)
<S>                         <C>          <C>          <C>          <C>          <C>          <C>

U.S. government
   agencies                   $   --        $ --        $15,926      $ (74)       $15,926      $ (74)

Mortgage-backed
   securities                     --          --         22,592       (315)        22,592       (315)
State and political
   subdivisions                8,623         (60)         8,370        (63)        16,993       (123)
Other securities                  --          --            630         (5)           630         (5)
                              ------        ----        -------      -----        -------      -----
   Total temporarily
      impaired securities     $8,623        $(60)       $47,518      $(457)       $56,141      $(517)
                              ======        ====        =======      =====        =======      =====
</TABLE>


        ANNUAL REPORT
             2007
42   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                            DECEMBER 31, 2006
                            -------------------------------------------------
                              LESS THAN 12 MONTHS        12 MONTHS OR MORE               TOTAL
                            -----------------------   -----------------------   -----------------------
      DESCRIPTION OF                     UNREALIZED                UNREALIZED                UNREALIZED
        SECURITIES          FAIR VALUE     LOSSES     FAIR VALUE     LOSSES     FAIR VALUE     LOSSES
-------------------------   ----------   ----------   ----------   ----------   ----------   ----------
                                             (In  thousands)
<S>                         <C>          <C>          <C>          <C>          <C>          <C>
U.S. government               $ 9,467       $(32)      $ 67,384     $(1,471)     $ 76,851     $(1,503)
   agencies
Mortgage-backed                    --         --         28,221        (788)       28,221        (788)
   securities
State and political             4,158         (1)         5,949        (113)       10,107        (114)
   subdivisions
Collateralized
   mortgage
   obligations                     --         --            765         (18)          765         (18)
                              -------       ----       --------     -------      --------     -------
   Total temporarily
      impaired securities     $13,625       $(33)      $102,319     $(2,390)     $115,944     $(2,423)
                              =======       ====       ========     =======      ========     =======
</TABLE>

NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES

     Categories of loans at December 31, include:

<TABLE>
<CAPTION>
                                   2007       2006
                                 --------   --------
                                    (In thousands)
<S>                              <C>        <C>
Commercial loans                 $ 59,785   $ 40,512
Commercial real estate             74,660     92,895
Residential real estate            58,524     56,167
Installment loans                  41,675     41,943
                                 --------   --------
   Total gross loans              234,644    231,517
Less allowance for loan losses     (2,447)    (2,345)
                                 --------   --------
   Total loans                   $232,197   $229,172
                                 ========   ========
</TABLE>


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   43

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                                 2007      2006     2005
                               -------   -------   ------
                                     (In thousands)
<S>                            <C>       <C>       <C>
Balance, beginning of year     $ 2,345   $ 2,904   $2,995
Provision charged to expense       993     1,384      412
Losses charged off              (1,138)   (2,147)    (762)
Recoveries                         247       204      259
                               -------   -------   ------
Balance, end of year           $ 2,447   $ 2,345   $2,904
                               =======   =======   ======
</TABLE>

     Impaired loans totaled $3.4 million and $3.1 million at December 31, 2007
     and 2006, respectively. An allowance for loan losses of $673,000 and
     $305,000 relates to impaired loans of $2.3 million and $1.0 million, at
     December 31, 2007 and 2006, respectively. At December 31, 2007 and 2006,
     impaired loans of $1.1 million and $2.1 million, respectively, had no
     related allowance for loan losses.

     Interest income of $84,000 and $309,000 was recognized on average impaired
     loans of $3.0 million and $2.3 million for 2007 and 2006, respectively.
     Interest income was recognized on impaired loans on a cash basis during
     2007 and 2006.

     At December 31, 2007 and 2006, accruing loans delinquent 90 days or more
     (including impaired loans of $1.7 million at December 31, 2007) totaled
     $2.6 million and $55,000, respectively. Non-accruing loans at December 31,
     2007 and 2006 (including impaired loans of $1.7 million and $3.1 million)
     were $1.8 million and $3.4 million, respectively.

NOTE 5: PREMISES AND EQUIPMENT

     Major classifications of premises and equipment, stated at cost, are as
     follows:

<TABLE>
<CAPTION>
                                     2007       2006
                                   --------   --------
                                      (In thousands)
<S>                                <C>        <C>
Land, buildings and improvements   $ 10,213   $ 10,224
Leasehold improvements                  264        264
Furniture and equipment               7,263      6,966
Computer software                     1,264      1,250
                                   --------   --------
                                     19,004     18,704
Less accumulated depreciation       (11,927)   (11,443)
                                   --------   --------
   Net premises and equipment      $  7,077   $  7,261
                                   ========   ========
</TABLE>


        ANNUAL REPORT
             2007
44   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 6: LOAN SERVICING

     The Company has recognized servicing rights for residential mortgage loans
     sold with servicing retained. Residential mortgage loans serviced for
     others are subject to credit, prepayment and interest rate risks.

     Mortgage loans serviced for others are not included in the accompanying
     consolidated balance sheets. The unpaid principal balances of mortgage
     loans serviced for others was $36.9 million and $33.9 million at December
     31, 2007 and 2006, respectively. Contractually specified servicing fees,
     late fees and ancillary fees of approximately $88,000 and $82,000 are
     included in loan servicing fees in the income statement at December 31,
     2007 and 2006, respectively.

     Custodial escrow balances maintained in connection with the foregoing loan
     servicing, and included in demand deposits, were approximately $213,000 and
     $202,000 at December 31, 2007 and 2006, respectively.

     Comparable market values and a valuation model that calculates the present
     value of future cash flows were used to estimate fair value.

     Activity in the balance of servicing assets was as follows:

<TABLE>
<CAPTION>
                                                         2007   2006
                                                         ----   ----
                                                             (In
                                                          thousands)
<S>                                                      <C>    <C>
Carrying amount, beginning of year
Additions                                                $403   $367
   Servicing obligations that result from transfers of
      financial assets                                    109    105
Subtractions
   Amortization                                           (73)   (69)
                                                         ----   ----
Carrying amount, end of year                             $439   $403
                                                         ====   ====
</TABLE>

     The fair value of servicing rights subsequently measured using the
     amortization method was as follows:

<TABLE>
<CAPTION>
                                                             (In
                                                          thousands)
<S>                                                      <C>    <C>
Fair value, beginning of year                            $403   $367
Fair value, end of year                                  $439   $403
</TABLE>


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   45

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 7: INTEREST-BEARING DEPOSITS

     Interest-bearing deposits in denominations of $100,000 or more were $38.5
     million at December 31, 2007, and $46.2 million at December 31, 2006.

     At December 31, 2007, the scheduled maturities of time deposits are as
     follows:

<TABLE>
<CAPTION>
Due during the year ending December 31,   (In thousands)
---------------------------------------   --------------
<S>                                       <C>
   2008                                      $128,223
   2009                                        19,519
   2010                                         7,051
   2011                                         1,287
   2012                                           430
   Thereafter                                     105
                                             --------
                                             $156,615
                                             ========
</TABLE>

NOTE 8: BORROWINGS

     At December 31, advances from the Federal Home Loan Bank were as follows:

<TABLE>
<CAPTION>
                                                       2007      2006
                                                     -------   -------
                                                       (In thousands)
<S>                                                  <C>       <C>
Maturities March 2008 through August 2025,
   primarily at fixed rates ranging from 2.68% to
   7.20%, averaging 4.56%                            $24,426   $    --
Maturities November 2007 through August 2025,
   primarily at fixed rates ranging from 2.68% to
   7.20%, averaging 4.56%                                 --    10,960
Cash Management Lines of Credit, floating rate
   ranging from 4.28% to 5.51%, averaging 4.39% in
   2007 and 4.99% in 2006                             34,500    33,175
                                                     -------   -------
                                                     $58,926   $44,135
                                                     =======   =======
</TABLE>

     At December 31, 2007 required annual principal payments on Federal Home
     Loan Bank advances and lines of credit were as follows:

<TABLE>
<CAPTION>
For the year ended December 31,           (In thousands)
-------------------------------           --------------
<S>                                       <C>
   2008                                       $34,594
   2009                                           122
   2010                                           173
   2011                                            63
   2012                                           385
   Thereafter                                  23,589
                                              -------
                                              $58,926
                                              =======
</TABLE>


        ANNUAL REPORT
             2007
46   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Additionally, as members of the Federal Home Loan Bank system at year-end
     2007, the Bank had the ability to obtain up to $1.2 million in additional
     borrowings based on securities pledged to the FHLB at December 31, 2007. At
     December 31, 2007, the Company and the Bank have approximately $106.3
     million one- to four-family residential real estate loans pledged as
     collateral for borrowings. Also at December 31, 2007, the Company and the
     Bank have cash management lines of credit with various correspondent banks
     (excluding FHLB cash management lines of credit) enabling additional
     borrowings of up to $29 million.

     Short-term borrowings include federal funds purchased totaling $8.7 million
     at December 31, 2007 and securities sold under agreements to repurchase.

     Securities sold under agreements to repurchase are financing arrangements
     whereby the Company sells securities and agrees to repurchase the identical
     securities at the maturities of the agreements at specified prices.
     Physical control is maintained for all securities sold under repurchase
     agreements. Information concerning securities sold under agreements to
     repurchase is summarized as follows:

<TABLE>
<CAPTION>
                                               2007      2006
                                             -------   -------
                                                  (Dollars
                                               in thousands)
<S>                                          <C>       <C>
Balance outstanding at year end              $10,942   $ 6,218
Average daily balance during the year        $11,864   $10,557
Average interest rate during the year           4.47%     4.18%
Maximum month-end balance during the year    $14,967   $22,659
Weighted-average interest rate at year end      3.77%     4.26%
</TABLE>

     Securities with an approximate carrying value of $26.8 million and $16.9
     million at December 31, 2007 and 2006, respectively, were pledged as
     collateral for repurchase borrowings.

NOTE 9: SUBORDINATED DEBENTURES

     In 2005, a Delaware statutory business trust owned by the Company, United
     Bancorp Statutory Trust I ("Trust I" or the "Trust"), issued $4.0 million
     of mandatorily redeemable debt securities. The sale proceeds were utilized
     to purchase $4.0 million of the Company's subordinated debentures which
     mature in 2035. The Company's subordinated debentures are the sole asset of
     Trust I. Pursuant to FIN 46(R), the Company's investment in Trust I is not
     consolidated herein as the Company is not deemed the primary beneficiary of
     the Trust. However, the $4.0 million of mandatorily redeemable debt
     securities issued by the Trust are includible for regulatory purposes as a
     component of the Company's Tier I Capital. Interest on the Company's
     subordinated debentures is fixed at 6.25% and is payable quarterly.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   47

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 10: INCOME TAXES

     The provision for income taxes includes these components:

<TABLE>
<CAPTION>
                           2007    2006    2005
                          -----   -----   -----
                              (In thousands)
<S>                       <C>     <C>     <C>
Taxes currently payable   $ 493   $(213)  $958
Deferred income taxes      (159)    454    (49)
                          -----   -----   ----
   Income tax expense     $ 334   $ 241   $909
                          =====   =====   ====
</TABLE>

     A reconciliation of income tax expense at the statutory rate to the
     Company's actual income tax expense is shown below:

<TABLE>
<CAPTION>
                                            2007    2006    2005
                                           -----   -----   ------
                                               (In thousands)
<S>                                        <C>     <C>     <C>
Computed at the statutory rate (34%)       $ 992   $ 785   $1,429
Decrease resulting from
   Tax exempt interest                      (549)   (431)    (420)
   Earnings on bank-owned life insurance    (107)    (98)     (98)
   Other                                      (2)    (15)      (2)
                                           -----   -----   ------
      Actual tax expense                   $ 334   $ 241   $  909
                                           =====   =====   ======
</TABLE>


        ANNUAL REPORT
             2007
48   UNITED BANCORP INC.

<PAGE>

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

The tax effects of temporary differences related to deferred taxes shown on the
balance sheets were:

<TABLE>
<CAPTION>
                                                          2007      2006
                                                        -------   -------
                                                          (In thousands)
<S>                                                     <C>       <C>
Deferred tax assets
   Allowance for loan losses                            $   534   $   498
   Deferred compensation                                    366       347
   Pension expense                                           29        --
   Accretion                                                 --         5
   Unrealized losses on securities available for sale        --       766
   Alternative minimum taxes                                375       201
                                                        -------   -------
      Total deferred tax assets                           1,304     1,817
                                                        -------   -------
Deferred tax liabilities
   Depreciation                                            (175)     (181)
   Deferred loan costs, net                                (137)     (130)
   Accretion                                                (40)       --
   FHLB stock dividends                                    (546)     (523)
   Mortgage servicing rights                               (149)     (137)
   Pension expense                                           --       (98)
   Unrealized gains on securities available for sale        (77)       --
                                                        -------   -------
      Total deferred tax liabilities                     (1,124)   (1,069)
                                                        -------   -------
      Net deferred tax asset                            $   180   $   748
                                                        =======   =======
</TABLE>


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   49

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 11: OTHER COMPREHENSIVE INCOME (LOSS)

     Other comprehensive income (loss) components and related taxes were as
     follows:

<TABLE>
<CAPTION>
                                                        2007     2006     2005
                                                       ------   -----   -------
                                                            (In thousands)
<S>                                                    <C>      <C>     <C>
Unrealized gains (losses) on available-for-sale
   securities                                          $2,479   $ 721   $(2,411)
Less reclassification adjustment for realized losses
   included in income                                      --     349        52
Change in unfunded status of defined benefit plan
   liability                                             (340)   (645)       --
                                                       ------   -----   -------
      Components of other comprehensive income
         (loss), before tax effect                      2,139     425    (2,359)
Tax (expense) benefit                                    (727)   (145)      802
                                                       ------   -----   -------
      Other comprehensive income (loss)                $1,412   $ 280   $(1,557)
                                                       ======   =====   =======
</TABLE>

     The components of accumulated other comprehensive loss, included in
     stockholders' equity, are as follows:

<TABLE>
<CAPTION>
                                                           2007     2006      2005
                                                          -----   -------   -------
                                                                (In thousands)
<S>                                                       <C>     <C>       <C>
Net unrealized gain (loss) on securities available-for-   $ 227   $(2,251)  $(3,322)
   sale
Net unrealized loss for unfunded status of defined
   benefit plan liability                                  (985)     (645)       --
                                                          -----   -------   -------
                                                           (758)   (2,896)   (3,322)
Tax effect                                                  258       984     1,130
                                                          -----   -------   -------
      Net-of-tax amount                                   $(500)  $(1,912)  $(2,192)
                                                          =====   =======   =======
</TABLE>


        ANNUAL REPORT
             2007
50   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 12: REGULATORY MATTERS

     The Bank is subject to certain restrictions on the amount of dividends that
     it may declare without prior regulatory approval. At December 31, 2007,
     approximately $4.5 million of retained earnings were available for dividend
     declaration without prior regulatory approval.

     The Company and the Bank are subject to various regulatory capital
     requirements administered by the federal banking agencies. Failure to meet
     minimum capital requirements can initiate certain mandatory-and possibly
     additional discretionary-actions by regulators that, if undertaken, could
     have a direct material effect on the Company's and the Bank's financial
     statements. Under capital adequacy guidelines and the regulatory framework
     for prompt corrective action, the Company and the Bank must meet specific
     capital guidelines that involve quantitative measures of assets,
     liabilities and certain off-balance-sheet items as calculated under
     regulatory accounting practices. The capital amounts and classification are
     also subject to qualitative judgments by the regulators about components,
     risk weightings and other factors.

     Quantitative measures established by regulation to ensure capital adequacy
     require the Company and the Bank to maintain minimum amounts and ratios
     (set forth in the table below) of total and Tier I capital (as defined in
     the regulations) to risk-weighted assets (as defined), and of Tier I
     capital (as defined) to average assets (as defined). Management believes,
     as of December 31, 2007, that the Company and the Bank meet all capital
     adequacy requirements to which they are subject.

     As of December 31, 2007, the most recent notification from Federal Reserve
     Bank categorized the Company and the Bank as well capitalized under the
     regulatory framework for prompt corrective action. To be categorized as
     well-capitalized, the Company and the Bank must maintain capital ratios as
     set forth in the table. There are no conditions or events since that
     notification that management believes have changed the Company's and the
     Bank's category.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   51

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     The Company's and Bank's actual capital amounts and ratios are presented in
     the following table.

<TABLE>
<CAPTION>
                                                                         TO BE WELL
                                                                        CAPITALIZED
                                                                        UNDER PROMPT
                                                      FOR CAPITAL        CORRECTIVE
                                                        ADEQUACY           ACTION
                                       ACTUAL           PURPOSES         PROVISIONS
                                  ---------------   ---------------   ---------------
                                   AMOUNT   RATIO    AMOUNT   RATIO    AMOUNT   RATIO
                                  -------   -----   -------   -----   -------   -----
                                                 (Dollars in thousands)
<S>                               <C>       <C>     <C>       <C>     <C>       <C>
As of December 31, 2007
   Total Capital
      (to Risk-Weighted Assets)
      Consolidated                $40,797   15.2%   $21,457    8.0%       N/A    N/A
      Citizens                     37,979   14.1     21,487    8.0    $26,858   10.0%
   Tier I Capital
      (to Risk-Weighted Assets)
      Consolidated                $38,343   14.3%   $10,729    4.0%       N/A    N/A
      Citizens                     35,525   13.2     10,743    4.0    $16,115    6.0%
  Tier I Capital
      (to Average Assets)
      Consolidated                $38,343    8.9%   $17,218    4.0%       N/A    N/A
      Citizens                     35,525    8.1     17,603    4.0    $22,003    5.0%
As of December 31, 2006
   Total Capital
      (to Risk-Weighted Assets)
      Consolidated                $40,797   15.6%   $20,876    8.0%       N/A    N/A
      Citizens                     23,870   13.0     14,633    8.0    $18,291   10.0%
      Community                     7,923   11.0      5,749    8.0      7,186   10.0
   Tier I Capital
      (to Risk-Weighted Assets)
      Consolidated                $38,452   14.7%   $10,438    4.0%       N/A    N/A
      Citizens                     22,266   12.2      7,316    4.0    $10,975    6.0%
      Community                     7,181   10.0      2,875    4.0      4,312    6.0
   Tier I Capital
      (to Average Assets)
      Consolidated                $38,452    9.2%   $16,687    4.0%       N/A    N/A
      Citizens                     22,266    7.3     12,125    4.0    $15,156    5.0%
      Community                     7,181    6.5      4,430    4.0      5,538    5.0
</TABLE>


        ANNUAL REPORT
             2007
52   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 13: RELATED PARTY TRANSACTIONS

     At December 31, 2007 and 2006, the Bank had loans outstanding to executive
     officers, directors, significant stockholders and their affiliates (related
     parties). In management's opinion, such loans and other extensions of
     credit and deposits were made in the ordinary course of business and were
     made on substantially the same terms (including interest rates and
     collateral) as those prevailing at the time for comparable transactions
     with other persons. Further, in management's opinion, these loans did not
     involve more than normal risk of collectibility or present other
     unfavorable features. Such loans are summarized below.

<TABLE>
<CAPTION>
                                    2007     2006
                                  -------   ------
                                   (In thousands)
<S>                               <C>       <C>
Aggregate balance - January 1     $ 6,062   $5,358
New loans                           1,399      966
Repayments                         (2,494)    (262)
                                  -------   ------
Aggregate balance - December 31   $ 4,967   $6,062
                                  =======   ======
</TABLE>

     Deposits from related parties held by the Bank at December 31, 2007 and
     2006 totaled $2.3 and $1.1 million, respectively.

NOTE 14: DEFINED BENEFIT PLAN

     PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

          The Company has a noncontributory defined benefit pension plan
          covering all employees who meet the eligibility requirements. The
          Company's funding policy is to make the minimum annual contribution
          that is required by applicable regulations, plus such amounts as the
          Company may determine to be appropriate from time to time.

          In September 2006, the Financial Accounting Standards Board issued
          Statement No. 158, Employers' Accounting for Defined Benefit Pension
          and Other Postretirement Plans: an amendment of FASB Statements No.
          87, 88, 106 and 132(R). Statement No. 158 requires the Company to
          recognize the funded status of its defined benefit postretirement plan
          in the Company's balance sheet. The funded status was previously
          disclosed in the notes to the Company's financial statements, but
          differed from the amount recognized in the balance sheet.

          The recognition and disclosure provisions of Statement No. 158 were
          effective as to the Company as of December 31, 2006. Retrospective
          application was not permitted. The Company adopted the recognition and
          disclosure provisions of Statement No. 158 effective December 31,
          2006. The effect of the adoption of Statement No. 158 was recognition
          of an after-tax liability and charge to other comprehensive income
          totaling $426,000.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   53

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     The Company expects to contribute approximately $400,000 to the plan in
     2008.

     The Company uses a December 31 measurement date for the plan. Information
     about the plan's funded status and pension cost follows:

<TABLE>
<CAPTION>
                                         PENSION BENEFITS
                                        -----------------
                                          2007      2006
                                        -------   -------
                                          (In thousands)
<S>                                     <C>       <C>
Change in benefit obligation
   Beginning of year                    $(2,766)  $(2,427)
      Service cost                         (259)     (224)
      Interest cost                        (184)     (160)
      Actuarial loss                       (302)      (89)
      Benefits paid                         308       134
                                        -------   -------
   End of year                           (3,203)   (2,766)
                                        -------   -------
Change in fair value of plan assets
   Beginning of year                      2,909     2,368
      Actuarial return on plan assets       136       275
      Employer contribution                 400       400
      Benefits paid                        (308)     (134)
                                        -------   -------
   End of year                            3,137     2,909
                                        -------   -------
Funded status at end of year            $   (66)  $   143
                                        =======   =======
</TABLE>

     Amounts recognized in accumulated other comprehensive income not yet
     recognized as components of net periodic benefit cost consist of:

<TABLE>
<CAPTION>
                     PENSION BENEFITS
                     ----------------
                        2007   2006
                        ----   ----
                      (In thousands)
<S>                  <C>       <C>
Net loss                $895   $539

Prior service cost        90    106
                        ----   ----
                        $985   $645
                        ====   ====
</TABLE>

     The estimated net loss and prior service cost for the defined benefit
     pension plan that will be amortized from accumulated other comprehensive
     income into net periodic benefit cost over the next fiscal year is
     approximately $15,000.

     The accumulated benefit obligation for the defined benefit pension plan was
     $2.4 million and $1.9 million at December 31, 2007 and 2006, respectively.


        ANNUAL REPORT
             2007
54   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Information for pension plans with an accumulated benefit obligation in
     excess of plan assets:

<TABLE>
<CAPTION>
                                   DECEMBER 31,
                                 ---------------
                                  2007     2006
                                 ------   ------
                                 (In thousands)
<S>                              <C>      <C>
Projected benefit obligation     $3,203   $2,766
                                 ======   ======
Accumulated benefit obligation   $2,364   $1,998
                                 ======   ======
Fair value of plan assets        $3,137   $2,909
                                 ======   ======
</TABLE>

<TABLE>
<CAPTION>
                                               DECEMBER 31,
                                          ---------------------
                                           2007    2006    2005
                                          -----   -----   -----
                                              (In thousands)
<S>                                       <C>     <C>     <C>
Components of net periodic benefit cost
   Service cost                           $ 259   $ 225   $ 249
   Interest cost                            184     160     154
   Expected return on plan assets          (214)   (197)   (151)
   Amortization of prior service cost        15      15      57
   Amortization of net loss                  43      15      --
                                          -----   -----   -----
Net periodic benefit cost                 $ 287   $ 218   $ 309
                                          =====   =====   =====
</TABLE>

     Plan assets are held by a bank-administered trust fund, which invests the
     plan assets in accordance with the provisions of the plan agreement. The
     plan agreements permit investment in mutual funds that may invest in common
     stocks, corporate bonds and debentures, U.S. Government securities, certain
     insurance contracts, real estate and other specified investments, based on
     certain target allocation percentages.

     Asset allocation is primarily based on a strategy to provide stable
     earnings while still permitting the plan to recognize potentially higher
     returns through an investment in equity securities. The target asset
     allocation percentages for 2007 are as follows:

<TABLE>
<S>                               <C>
Large-Cap stocks                  Not to exceed 60%
SMID-Cap stocks                   Not to exceed 20%
International equity securities   Not to exceed 15%
Fixed income investments          Not to exceed 40%
Alternative investments           Not to exceed 20%
</TABLE>


                                                          ANNUAL REPORT
                                                               2007
                                                        UNITED BANCORP INC.   55

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     At December 31, 2007 and 2006, the fair value of plan assets as a
     percentage of the total was invested in the following:

<TABLE>
<CAPTION>
                             DECEMBER 31,
                            -------------
                             2007    2006
                            -----   -----
<S>                         <C>     <C>
Equity securities            73.2%   72.1%
Debt securities              24.7    24.8
Real estate                   1.0     2.0
Cash and cash equivalents     1.1     1.1
                            -----   -----
                            100.0%  100.0%
                            =====   =====
</TABLE>

     Benefit payments expected to be paid from the plan as of December 31, 2007
     are as follows:

<TABLE>
<CAPTION>
             (In thousands)
             --------------
<S>          <C>
2008             $  459
2009                 53
2010                217
2011              1,197
2012                258
Thereafter        1,004
                 ------
                 $3,188
                 ======
</TABLE>


        ANNUAL REPORT
             2007
56   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Significant assumptions include:

<TABLE>
<CAPTION>
                                        PENSION BENEFITS
                                       ------------------
                                       2007   2006   2005
                                       ----   ----   ----
<S>                                    <C>    <C>    <C>
Weighted-average assumptions used to
determine benefit obligation:
   Discount rate                       6.50%  6.50%  7.00%
   Rate of compensation increase       4.50%  4.50%  4.50%
Weighted-average assumptions used to
determine benefit cost:
   Discount rate                       6.50%  6.50%  6.50%
   Expected return on plan assets      8.00%  8.00%  7.00%
   Rate of compensation increase       4.50%  4.50%  4.50%
</TABLE>

     The Company has estimated the long-term rate of return on plan assets based
     primarily on historical returns on plan assets, adjusted for changes in
     target portfolio allocations and recent changes in long-term interest rates
     based on publicly available information.

     The Company has an Employee Stock Ownership Plan ("ESOP") with an
     integrated 401(k) plan covering substantially all employees of the Company.
     The ESOP acquired 354,551 shares of Company common stock at $9.64 per share
     in 2005 with funds provided by a loan from the Company. Accordingly, $3.4
     million of common stock acquired by the ESOP was shown as a reduction of
     stockholders' equity. Shares are released to participants proportionately
     as the loan is repaid. Dividends on allocated shares are recorded as
     dividends and charged to retained earnings. Compensation expense is
     recorded equal to the fair market value of the stock when contributions,
     which are determined annually by the Board of Directors of the Company, are
     made to the ESOP. The Company's 401(k) matching percentage was 50% of the
     employees' first 6% of contributions for 2007, 2006 and 2005.

     ESOP and 401(k) expense for the years ended December 31, 2007, 2006 and
     2005 was $339,000, $151,000 and $80,000, respectively.


                                                          ANNUAL REPORT
                                                               2007
                                                        UNITED BANCORP INC.   57

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Share information for the ESOP is as follows at December 31, 2007 and 2006.

<TABLE>
<CAPTION>
                                                  2007         2006
                                               ----------   ----------
<S>                                            <C>          <C>
Allocated shares                                   14,891           --
Shares released for allocation                     32,386       14,891
Unearned shares                                   307,274      339,660
                                               ----------   ----------
   Total ESOP shares                              354,551      354,551
                                               ==========   ==========
Fair value of unearned shares at December 31   $3,221,000   $3,383,000
                                               ==========   ==========
</TABLE>

     The Company is obligated at the option of each beneficiary to repurchase
     shares of the ESOP upon the beneficiary's termination or after retirement.
     At December 31, 2007, the fair value of the 47,277 allocated shares held by
     the ESOP is approximately $495,000.

NOTE 15: STOCK OPTION PLAN

     The Company's Employee Share Option Plan (the Plan), which is stockholder
     approved, permits the grant of share options to its employees. The Company
     believes that such awards better align the interests of its employees with
     those of its stockholders. Option awards are generally granted with an
     exercise price equal to the market price of the Company's stock at the date
     of grant; those option awards generally vest based on ten years of
     continuous service and have ten-year contractual terms. Certain option and
     share awards provide for accelerated vesting if there is a change in
     control (as defined in the Plan).

     The fair value of each option award is estimated on the date of grant using
     the Black-Scholes option valuation model that uses the assumptions noted in
     the following table. Expected volatility is based on historical volatility
     of the Company's stock and other factors. The Company uses historical data
     to estimate option exercise and employee termination within the valuation
     model; separate groups of employees that have similar historical exercise
     behavior are considered separately for valuation purposes. The expected
     term of options granted is derived from the output of the option valuation
     model and represents the period of time that options granted are expected
     to be outstanding. The risk-free rate for periods within the contractual
     life of the option is based on the U.S. Treasury yield curve in effect at
     the time of grant.


        ANNUAL REPORT
             2007
58   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                            2005
                           -----
<S>                        <C>
Expected volatility        30.53%
Expected dividend yield     4.21%
Expected term (in years)     9.5
Risk-free rate              4.54%
</TABLE>

     Total compensation cost recognized in the income statement for share-based
     payment arrangements during the years ended December 31, 2007 and 2006 was
     $11,000 and $14,000, respectively. The recognized tax benefit related
     thereto was $4,000 and $5,000 for the years ended December 31, 2007 and
     2006, respectively.

     A summary of option activity under the Plan as of December 31, 2007, 2006
     and 2005, and changes during the years then ended, is presented below:

<TABLE>
<CAPTION>
                                                 2007
                            ----------------------------------------------
                                                    WEIGHTED-
                                      WEIGHTED-      AVERAGE
                                       AVERAGE      REMAINING    AGGREGATE
                                       EXERCISE    CONTRACTUAL   INTRINSIC
                             SHARES     PRICE     TERM (YEARS)     VALUE
                            -------   ---------   ------------   ---------
<S>                         <C>       <C>         <C>            <C>
Outstanding, beginning of    69,489     $10.73         8.2         $   --
year
   Granted                       --         --
   Exercised                     --         --
   Forfeited or expired     (13,960)     12.00
                             ------     ------
Outstanding, end of year     55,529     $10.34         7.2         $8,000
                             ======     ======         ===         ======
Exercisable, end of year         --     $   --          --         $   --
                             ======     ======         ===         ======
</TABLE>


                                                          ANNUAL REPORT
                                                               2007
                                                        UNITED BANCORP INC.   59

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                              2006
                                 -------------------------------------------------------------
                                                            WEIGHTED-AVERAGE
                                              WEIGHTED-         REMAINING
                                               AVERAGE         CONTRACTUAL        AGGREGATE
                                  SHARES   EXERCISE PRICE     TERM (YEARS)     INTRINSIC VALUE
                                 -------   --------------   ----------------   ---------------
<S>                              <C>       <C>              <C>                <C>
Outstanding, beginning of year   104,069       $10.46             6.65             $61,000
   Granted                            --           --
   Exercised                      (2,650)        6.87                                9,000
   Forfeited or expired          (31,930)       10.20                                   --
                                 -------       ------
Outstanding, end of year          69,489       $10.73             8.20             $    --
                                 =======       ======             ====             =======
Exercisable, end of year           9,737       $11.73             0.25             $ 4,000
                                 =======       ======             ====             =======
</TABLE>

<TABLE>
<CAPTION>
                                                              2005
                                 -------------------------------------------------------------
                                                            WEIGHTED-AVERAGE
                                              WEIGHTED-         REMAINING
                                               AVERAGE         CONTRACTUAL        AGGREGATE
                                  SHARES   EXERCISE PRICE     TERM (YEARS)     INTRINSIC VALUE
                                 -------   --------------   ----------------   ---------------
<S>                              <C>       <C>              <C>                <C>
Outstanding, beginning of year   123,475       $ 7.70             9.0              $568,000
   Granted                        70,589        10.30
   Exercised                     (85,149)        6.55
   Forfeited or expired           (4,846)        6.55
                                 -------       ------
Outstanding, end of year         104,069       $10.46             6.7              $ 61,000
                                 =======       ======             ===              ========
Exercisable, end of year           6,969       $ 9.74             0.8              $  9,000
                                 =======       ======             ===              ========
</TABLE>

     The weighted-average grant-date fair value of options granted during 2005
     was $2.82.


        ANNUAL REPORT
             2007
60   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     A summary of the status of the Company's nonvested shares as of December
     31, 2007, and changes during the year then ended, is presented below:

<TABLE>
<CAPTION>
                                          2007
                               -------------------------
                                        WEIGHTED-AVERAGE
                                           GRANT-DATE
                               SHARES      FAIR VALUE
                               ------   ----------------
<S>                            <C>      <C>
Nonvested, beginning of year   55,529         $2.82
Granted                            --            --
Vested                             --            --
Forfeited                          --            --
                               ------         -----
Nonvested, end of year         55,529         $2.82
                               ======         =====
</TABLE>

     As of December 31, 2007 and 2006, there was $95,000 and $130,000,
     respectively, of total unrecognized compensation cost related to nonvested
     share-based compensation arrangements granted under the Plan. That cost is
     expected to be recognized over a weighted-average period of 7.2 years. The
     total fair value of shares vested during the years ended December 31, 2006
     and 2005 was $9,000 and $395,000, respectively. No shares vested during
     2007.

     Cash received from option exercise under share-based payment arrangements
     for the years ended December 31, 2006 and 2005 was $6,000 and $296,000,
     respectively.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   61

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 16: EARNINGS PER SHARE

     Earnings per share (EPS) were computed as follows:

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31, 2007
                                                                     --------------------------------------
                                                                                      WEIGHTED-
                                                                           NET         AVERAGE    PER SHARE
                                                                         INCOME         SHARES      AMOUNT
                                                                     --------------   ---------   ---------
                                                                     (In thousands)
<S>                                                                  <C>              <C>         <C>
Net income                                                               $2,585
Basic earnings per share
   Income available to common stockholders                                   --       4,562,517     $0.57
                                                                                                    =====
   Effect of dilutive securities Stock options                               --           1,898
                                                                         ------       ---------
Diluted earnings per share
   Income available to common stockholders and assumed conversions       $2,585       4,564,415     $0.57
                                                                         ======       =========     =====
</TABLE>


        ANNUAL REPORT
             2007
62   UNITED BANCORP INC.


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31, 2006
                                                                     --------------------------------------
                                                                                      WEIGHTED-
                                                                           NET         AVERAGE    PER SHARE
                                                                         INCOME         SHARES      AMOUNT
                                                                     --------------   ---------   ---------
                                                                     (In thousands)
<S>                                                                  <C>              <C>         <C>
Net income                                                               $2,068
Basic earnings per share
   Income available to common stockholders                                   --       4,551,256     $0.45
                                                                                                    =====
   Effect of dilutive securities Stock options                               --             798
                                                                         ------       ---------
Diluted earnings per share
   Income available to common stockholders and assumed conversions       $2,068       4,552,054     $0.45
                                                                         ======       =========     =====
</TABLE>

     Options to purchase 43,000 shares of common stock at $11.23 per share were
     outstanding at December 31, 2006, 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.

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31, 2005
                                                                     --------------------------------------
                                                                                      WEIGHTED-
                                                                           NET         AVERAGE    PER SHARE
                                                                         INCOME         SHARES      AMOUNT
                                                                     --------------   ---------   ---------
                                                                     (In thousands)
<S>                                                                  <C>              <C>         <C>
Net income                                                               $3,293
Basic earnings per share
   Income available to common stockholders                                   --       4,608,809     $0.71
                                                                                                    =====
   Effect of dilutive securities Stock options                               --           2,911
                                                                         ------       ---------
Diluted earnings per share
   Income available to common stockholders and assumed conversions       $3,293       4,611,720     $0.71
                                                                         ======       =========     =====
</TABLE>


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   63



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     Options to purchase 24,245 shares of common stock at $12.19 were
     outstanding at December 31, 2005, 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.

NOTE 17: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     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.

<TABLE>
<CAPTION>
                                                        DECEMBER 31, 2007       DECEMBER 31, 2006
                                                      ---------------------   ---------------------
                                                      CARRYING                CARRYING
                                                       AMOUNT    FAIR VALUE    AMOUNT    FAIR VALUE
                                                      --------   ----------   --------   ----------
                                                                      (In thousands)
<S>                                                   <C>        <C>          <C>        <C>
Financial assets
    Cash and cash equivalents                         $ 12,324    $ 12,324    $ 14,554    $ 14,554
    Available-for-sale securities                      165,324     165,324     133,808     133,808
    Held-to-maturity securities                         16,142      16,481      17,870      18,220
    Loans, net of allowance for loan losses            232,197     227,021     229,172     228,042
    Federal Home Loan Bank stock                         4,624       4,624       4,556       4,556
    Interest receivable                                  3,146       3,146       2,578       2,578
Financial liabilities
    Deposits                                           330,488     320,045     330,005     309,541
    Short-term borrowings                               19,609      19,609       6,218       6,218
    Federal Home Loan Bank advances                     58,926      59,469      44,135      43,786
    Subordinated debentures                              4,000       3,746       4,000       4,182
    Advances from borrowers for taxes and insurance        188         188         316         316
    Interest payable                                       704         704         745         745
</TABLE>


        ANNUAL REPORT
             2007
64   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

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

CASH AND CASH EQUIVALENTS AND FEDERAL HOME LOAN BANK STOCK

     The carrying amount approximates fair value.

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. The carrying amount of accrued interest approximates its fair
     value.

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 ADVANCES FROM BORROWERS FOR TAXES
AND INSURANCE

     The carrying amount approximates fair value.

LONG-TERM DEBT 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.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   65


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

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 December 31, 2007 and 2006.

NOTE 18: SIGNIFICANT ESTIMATES AND CONCENTRATIONS

     Accounting principles generally accepted in the United States of America
     require disclosure of certain significant estimates and current
     vulnerabilities due to certain concentrations. Estimates related to the
     allowance for loan losses are reflected in the footnote regarding loans.
     Current vulnerabilities due to certain concentrations of credit risk are
     discussed in the footnote on commitments and credit risk.

NOTE 19: COMMITMENTS AND CREDIT RISK

     At December 31, 2007 and 2006, total commercial and commercial real estate
     loans made up 57.3% and 57.6%, respectively of the loan portfolio with
     14.0% and 8.0%, respectively, of these loans secured by commercial real
     estate and business assets mainly in the Columbus, Ohio area. Installment
     loans account for 17.8% and 18.1% of the loan portfolio and are secured by
     consumer assets including automobiles, which account for 69.8% and 65.1%,
     respectively, of the installment loan portfolio. Real estate loans comprise
     24.9% and 24.3% of the loan portfolio as of December 31, 2007 and 2006,
     respectively, and primarily include first mortgage loans on residential
     properties and home equity lines of credit. Included in cash and due from
     banks as of December 31, 2007 and 2006 is $5.5 million and $6.4 million,
     respectively, of uninsured deposits with J.P. Morgan Chase Bank, NA,
     Detroit, Michigan. Also included in cash and cash equivalents as of
     December 31, 2007 and 2006 is $1.2 million and $2.8 million, respectively,
     of uninsured interest-bearing deposits with First Tennessee Bank.

Commitments to Originate Loans

     Commitments to originate loans are agreements to lend to a customer as long
     as there is no violation of any condition established in the contract.
     Commitments generally have fixed expiration dates or other termination
     clauses and may require payment of a fee. Since a portion of the
     commitments may expire without being drawn upon, the total commitment
     amounts do not necessarily represent future cash requirements. Each
     customer's creditworthiness is evaluated on a


        ANNUAL REPORT
             2007
66   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     case-by-case basis. The amount of collateral obtained, if deemed necessary,
     is based on management's credit evaluation of the counterparty. Collateral
     held varies, but may include accounts receivable, inventory, property,
     plant and equipment, commercial real estate and residential real estate.

     At December 31, 2007 and 2006, the Company had outstanding commitments to
     originate loans aggregating approximately $3.2 million and $1.4 million,
     respectively. The commitments extended over varying periods of time with
     the majority being disbursed within a one-year period.

     Mortgage loans in the process of origination represent amounts that the
     Company plans to fund within a normal period of 60 to 90 days, and which
     are intended for sale to investors in the secondary market. Total mortgage
     loans in the process of origination amounted to approximately $516,000 and
     $685,000 at December 31, 2007 and 2006, respectively.

STANDBY LETTERS OF CREDIT

     Standby letters of credit are irrevocable conditional commitments issued by
     the Company to guarantee the performance of a customer to a third party.
     Financial standby letters of credit are primarily issued to support public
     and private borrowing arrangements, including commercial paper, bond
     financing and similar transactions. Performance standby letters of credit
     are issued to guarantee performance of certain customers under
     non-financial contractual obligations. The credit risk involved in issuing
     standby letters of credit is essentially the same as that involved in
     extending loans to customers. Fees for letters of credit are initially
     recorded by the Company as deferred revenue and are included in earnings at
     the termination of the respective agreements. Should the Company be
     obligated to perform under the standby letters of credit, the Company may
     seek recourse from the customer for reimbursement of amounts paid.

     The Company had total outstanding standby letters of credit amounting to
     $565,000 and $707,000, at December 31, 2007 and 2006, respectively, with
     terms not exceeding nine months. At both December 31, 2007 and 2006, the
     Company had no deferred revenue under standby letter of credit agreements.

LINES OF CREDIT

     Lines of credit are agreements to lend to a customer as long as there is no
     violation of any condition established in the contract. Lines of credit
     generally have fixed expiration dates. Since a portion of the line may
     expire without being drawn upon, the total unused lines do not necessarily
     represent future cash requirements. Each customer's creditworthiness is
     evaluated on a case-by-case basis. The amount of collateral obtained, if
     deemed necessary, is based on management's credit evaluation of the
     counterparty. Collateral held varies but may include accounts receivable,
     inventory, property, plant and equipment, commercial real estate and
     residential real estate. Management uses the same credit policies in
     granting lines of credit as it does for on-balance-sheet instruments.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   67

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     At December 31, 2007, the Company had granted unused lines of credit to
     borrowers aggregating approximately $16.3 million and $24.7 million for
     commercial lines and open-end consumer lines, respectively. At December 31,
     2006, unused lines of credit to borrowers aggregated approximately $22.1
     million for commercial lines and $24.0 million for open-end consumer lines.

NOTE 20: FUTURE CHANGE IN ACCOUNTING PRINCIPLE

     In September 2006, the FASB issued Statement of Financial Accounting
     Standards ("SFAS") No. 157, Fair Value Measurements. This Statement defines
     fair value, establishes a framework for measuring fair value and expands
     disclosures about fair value measurements. This Statement emphasizes that
     fair value is a market-based measurement and should be determined based on
     assumptions that a market participant would use when pricing an asset or
     liability. This Statement clarifies that market participant assumptions
     should include assumptions about risk as well as the effect of a
     restriction on the sale or use of an asset. Additionally, this Statement
     establishes a fair value hierarchy that provides the highest priority to
     quoted prices in active markets and the lowest priority to unobservable
     data. This Statement is effective for fiscal years beginning after November
     15, 2007, or January 1, 2008 as to the Company, and interim periods within
     that fiscal year. The adoption of this Statement is not expected to have a
     material adverse effect on the Company's financial position or results of
     operations.

     In September 2006, the FASB ratified the Emerging Issues Task Force's
     (EITF) Issue 06-4, Accounting for Deferred Compensation and Postretirement
     Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements,
     which requires companies to recognize a liability and related compensation
     costs for endorsement split-dollar life insurance policies that provide a
     benefit to an employee extending to postretirement periods. The liability
     should be recognized based on the substantive agreement with the employee.
     This Issue is effective beginning January 1, 2008. The Issue can be applied
     as either a change in accounting principle through a cumulative-effect
     adjustment to retained earnings as of the beginning of the year of
     adoption, or a change in accounting principle through retrospective
     application to all periods. The Company adopted Issue 06-4 effective
     January 1, 2008, as required. The Company recorded a liability and a
     corresponding charge to retained earnings totaling $974,000 to recognize
     the commitment obligation under its split-dollar life insurance policies.
     The Company will recognize expense in 2008 totaling approximately $133,000
     for these policies.

     In September 2006, the FASB ratified a consensus opinion reached by the
     EITF on EITF Issue 06-5, Accounting for Purchases of Life Insurance -
     Determining the Amount that Could be Realized in Accordance with FASB
     Technical Bulletin No. 85-4. The guidance in EITF Issue 06-5 requires
     policyholders to consider other amounts included in the contractual terms
     of an insurance policy, in addition to cash surrender value, for purposes
     of determining the amount that could be realized under the terms of the
     insurance contract. If it is probable that contractual terms would limit
     the


        ANNUAL REPORT
             2007
68   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

     amount that could be realized under the insurance contract, those
     contractual limitations should be considered when determining the
     realizable amounts. The amount that could be realized under the insurance
     contract should be determined on an individual policy (or certificate)
     level and should include any amount realized on the assumed surrender of
     the last individual policy or certificate in a group policy.

     The Company holds several life insurance policies, however, the policies do
     not contain any provisions that would restrict or reduce the cash surrender
     value of the policies. The consensus in EITF Issue 06-5 is effective for
     fiscal years beginning after December 15, 2006. The Company applied the
     guidance in EITF Issue 06-5 effective January 1, 2007 which did not have
     any effect on the Company's financial statements.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
     Financial Assets and Financial Liabilities - Including an Amendment of FASB
     Statement No. 115. This Statement allows companies the choice to measure
     many financial instruments and certain other items at fair value. The
     objective is to improve financial reporting by providing entities with the
     opportunity to mitigate volatility in reported earnings caused by measuring
     related assets and liabilities differently without having to apply complex
     hedge accounting provisions. This Statement is expected to expand the use
     of fair value measurement, which is consistent with the Board's long-term
     measurement objectives for accounting for financial instruments. This
     Statement is effective as of the beginning of an entity's first fiscal year
     that begins after November 15, 2007, or January 1, 2008 as to the Company,
     and interim periods within that fiscal year. The Company is currently
     evaluating the impact the adoption of SFAS No. 159 will have on the
     financial statements.

NOTE 21: FDIC ONE-TIME ASSESSMENT CREDIT

     Effective November 17, 2006, the FDIC implemented a one-time credit of $4.7
     billion to eligible institutions. The purpose of the credit is to recognize
     contributions made by certain institutions to capitalize the Bank Insurance
     Fund and Savings Association Insurance Fund, which have now been merged
     into the Deposit Insurance Fund. The Bank is an eligible institution and
     has received notice from the FDIC that its remaining share of the credit is
     $162,000 at December 31, 2007. This amount is not reflected in the
     accompanying financial statements as it represents contingent future
     credits against future insurance assessment payments. As such, the timing
     and ultimate recoverability of the one-time credit may change.


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   69

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 22: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

     Presented below is condensed financial information as to financial
     position, results of operations and cash flows of the Company:

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                                   -----------------
                                                     2007      2006
                                                   -------   -------
                                                     (In thousands)
<S>                                                <C>       <C>
ASSETS
   Cash and cash equivalents                       $ 1,286   $ 3,159
   Securities available for sale, at fair value          1         1
   Investment in the Banks                          35,719    28,000
   Office premises                                     171       172
   Corporate owned life insurance                      246     4,828
   Other assets                                        574       778
                                                   -------   -------
      Total assets                                 $37,997   $36,938
                                                   =======   =======
LIABILITIES AND STOCKHOLDERS' EQUITY
   Subordinated debentures                         $ 4,000   $ 4,000
   Other liabilities                                   110       358
   Stockholders' equity                             33,887    32,580
                                                   -------   -------
      Total liabilities and stockholders' equity   $37,997   $36,938
                                                   =======   =======
</TABLE>


        ANNUAL REPORT
             2007
70   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                YEARS ENDED DECEMBER 31,
                                                                                ------------------------
                                                                                 2007     2006     2005
                                                                                ------   ------   ------
                                                                                     (In thousands)
<S>                                                                             <C>      <C>      <C>
OPERATING INCOME
   Dividends from subsidiaries                                                  $2,266   $1,793   $1,952
   Interest and dividend income from securities and federal funds                  121      156       27
   Other income                                                                     --      167       30
                                                                                ------   ------   ------
      Total operating income                                                     2,387    2,116    2,009
GENERAL, ADMINISTRATIVE AND OTHER EXPENSES                                       1,592    1,366    1,030
INCOME BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES      795      750      979
INCOME TAX BENEFITS                                                               (536)    (423)    (336)
                                                                                ------   ------   ------
INCOME BEFORE EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES                     1,331    1,173    1,315
EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES                                   1,254      895    1,978
                                                                                ------   ------   ------
NET INCOME                                                                      $2,585   $2,068   $3,293
                                                                                ======   ======   ======
</TABLE>


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   71

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER  31,
                                                               ---------------------------
                                                                 2007      2006      2005
                                                               -------   -------   -------
                                                                      (In thousands)
<S>                                                            <C>       <C>       <C>
OPERATING ACTIVITIES
   Net income                                                  $ 2,585   $ 2,068   $ 3,293
   Items not requiring (providing) cash
      Depreciation and amortization                                 13        13         4
      Equity in (undistributed income of) excess
         distributions from subsidiaries                        (1,254)     (895)   (1,978)
      ESOP compensation                                            335       151        --
      Net change in other assets and other liabilities            (281)        5       265
                                                               -------   -------   -------
         Net cash provided by operating activities               1,398     1,342     1,584
                                                               -------   -------   -------
INVESTING ACTIVITIES
   Acquisition of Company-owned life insurance                    (246)      (29)       --
                                                               -------   -------   -------
FINANCING ACTIVITIES
   Dividends paid to stockholders                               (2,435)   (2,417)   (2,115)
   Cash paid in lieu of fractional shares                           --        (4)       (4)
   Proceeds from issuance of shares for Dividend
      Reinvestment Plan                                            419       551       357
   Proceeds from exercise of stock options                          --         6       296
   Proceeds from issuance of subordinated debentures                --        --     4,000
   Acquisition of treasury shares by ESOP                           --        --     3,417
   Funding of note receivable to ESOP                               --        --    (3,417)
   Purchases of treasury stock                                  (1,106)     (535)     (614)
   Issuance of shares for deferred compensation plan                97        --        --
                                                               -------   -------   -------
         Net cash provided by (used in) financing activities    (3,025)   (2,399)    1,920
                                                               -------   -------   -------
NET CHANGE IN CASH AND CASH EQUIVALENTS                         (1,873)   (1,086)    3,504
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                   3,159     4,245       741
                                                               -------   -------   -------
CASH AND CASH EQUIVALENTS AT END OF YEAR                       $ 1,286   $ 3,159   $ 4,245
                                                               =======   =======   =======
</TABLE>


        ANNUAL REPORT
             2007
72   UNITED BANCORP INC.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

NOTE 23: QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following table summarizes the Company's quarterly results of
     operations for the years ended December 31, 2007 and 2006.

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                            ---------------------------------------------------
2007:                                       MARCH 31,   JUNE 30,   SEPTEMBER 30,   DECEMBER 31,
                                            ---------   --------   -------------   ------------
                                                   (In thousands, except per share data)
<S>                                         <C>         <C>        <C>             <C>
Total interest income                         $6,426     $6,648       $ 6,673         $6,856
Total interest expense                         3,481      3,601         3,807          3,629
                                              ------     ------       -------         ------
Net interest income                            2,945      3,047         2,866          3,227
Provision for loan losses                        183        191           283            336
Other income                                     668        783           785            843
General, administrative and other expense      2,610      2,727         3,005          2,910
                                              ------     ------       -------         ------
Income before income taxes                       820        912           363            824
Federal income taxes (benefits)                  102        148           (29)           113
                                              ------     ------       -------         ------
Net income                                    $  718     $  764       $   392         $  711
                                              ======     ======       =======         ======
Earnings per share
   Basic                                      $ 0.16     $ 0.17       $  0.09         $ 0.15
                                              ======     ======       =======         ======
   Diluted                                    $ 0.16     $ 0.17       $  0.09         $ 0.15
                                              ======     ======       =======         ======
</TABLE>


                                                           ANNUAL REPORT
                                                                2007
                                                        UNITED BANCORP INC.   73

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                ---------------------------------------------------
2006:                                           MARCH 31,   JUNE 30,   SEPTEMBER 30,   DECEMBER 31,
                                                ---------   --------   -------------   ------------
                                                       (In thousands, except per share data)
<S>                                             <C>         <C>        <C>             <C>
Total interest income                            $5,985      $6,319        $6,552         $6,423
Total interest expense                            2,835       3,151         3,385          3,466
                                                 ------      ------        ------         ------
Net interest income                               3,150       3,168         3,167          2,957
Provision for loan losses                           102         302           652            328
Other income                                        641         600           699            706
Loss on sale of available-for-sale securities       (29)       (320)           --             --
General, administrative and other expense         2,789       2,941         2,773          2,543
                                                 ------      ------        ------         ------
Income before income taxes                          871         205           441            792
Federal income taxes (benefits)                     169         (82)           38            116
                                                 ------      ------        ------         ------
Net income                                       $  702      $  287        $  403         $  676
                                                 ======      ======        ======         ======
Earnings per share
   Basic                                         $ 0.15      $ 0.06        $ 0.09         $ 0.15
                                                 ======      ======        ======         ======
   Diluted                                       $ 0.15      $ 0.06        $ 0.09         $ 0.15
                                                 ======      ======        ======         ======
</TABLE>


        ANNUAL REPORT
             2007
74   UNITED BANCORP INC.