The following discusses the financial condition of the Company as of September 30, 2008, as compared to December 31, 2007, and the results of operations for the nine and three month periods ended September 30, 2008, compared to the same periods in 2007. This discussion should be read in conjunction with the interim condensed consolidated financial statements and related footnotes included herein.

Introduction

The Company's net interest margin of 4.08% for the nine months ended September 30, 2008, generated an increase of approximately $2.6 million in net interest income over the same period in 2007. As a result, the Company has experienced an improvement in earnings per share of 51.2% for the nine months ended September 30, 2008.

We believe the Company's positive results of operations for the nine months ended September 30, 2008 are a result of several factors, including: (1) reductions by the Federal Reserve in prior periods of short term interest rates;
(2) enhanced service charge income on deposit accounts; and (3) the operational efficiencies gained from the full integration of our two subsidiary banks. As a result of previous reductions in short term interest rates by the Federal Reserve, we are projecting the Company's net interest margin to reflect continued improvements in 2008. In addition, the increases in service charge income on deposit accounts for the nine months ended September 30, 2008 reflects the continuing positive impact of the Company's courtesy overdraft and merchant check capture programs, which programs are expected to enhance revenues for the remainder of 2008. Finally, the Company's management team has worked aggressively to fully integrate the operations of the Company's subsidiary commercial banks, which merged under one charter in July 2007. With the operational efficiencies gained from 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, we anticipate a continuation of solid earnings improvement throughout 2008. Also, as of September 19, 2008, Citizens acquired from the FDIC the deposits of three banking offices of a failed institution in Belmont County, Ohio. Total customer deposits acquired were approximately $32 million of low cost core deposits. While this did not materially impact the net operating results of the Company for the nine months ended September 30, 2008, we anticipate this acquisition to be accretive to earnings in the first quarter of 2009.

Forward-Looking Statements

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

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

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

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

Legislative Developments

In response to the financial crises affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions, on October 3, 2008, the Emergency Economic Stabilization Act of 2008 ("EESA") was signed into law. Pursuant to EESA, the U.S. Treasury will have the authority to, among other things, purchase up to $700 billion of mortgages, mortgaged-backed securities and certain other financial instruments from financial institutions for the purpose of stabilizing and providing liquidity to the U.S. financial markets. On October 14, 2008, the Department of the Treasury announced that it would purchase equity stakes in a wide variety of banks and thrifts using $250 billion of capital from the EESA funds under a program known as the Troubled Asset Relief Program Capital Purchase Program (the "TARP Capital Purchase Program"). The TARP Capital Purchase Program involves the purchase by the Treasury of preferred stock in financial institutions with warrants to purchase common stock. Also on October 14, 2008, the FDIC announced the Temporary Liquidity Guarantee Program, which provides for the guarantee of newly-issued senior unsecured debt of banks, thrifts and certain holding companies as well as full deposit insurance coverage for non-interest bearing deposit transaction accounts, regardless of dollar amount. Unlimited coverage for non-interest bearing transaction accounts under the Temporary Liquidity Guarantee Program is available for until December 5, 2008 without charge and thereafter at a cost of 10 basis points per annum. Based upon the known and yet to be determined conditions the Treasury will levy upon participants in this program and our Company's and Banks' positive liquidity and capital adequacy, management does not feel it is prudent to participate in the TARP Capital Purchase Program at this time.

Critical Accounting Policies

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

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

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

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

Analysis of Financial Condition

Earning Assets - Loans

At September 30, 2008, gross loans were $239.8 million, compared to $234.6 million at year-end 2007, an increase of $5.1 million or 2.2%. The overall growth in the loan portfolio was driven by a $8.1 million increase in commercial and commercial real estate loans since December 31, 2007.

Installment loans represented 16.3% of total loans at September 30, 2008, and 17.8% at December 31, 2007. This indirect lending type of financing carries somewhat more risk than real estate lending; however, it also provides for higher yields. Installment loans have decreased $2.3 million, or 5.6%, since December 31, 2007. The targeted lending areas encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company's 20 branch locations.

Commercial and commercial real estate loans comprised 59.5% of total loans at September 30, 2008, compared to 57.3% at December 31, 2007. Commercial and commercial real estate loans have increased $8.1 million, or 6.0% since December 31, 2007. The Company has originated and purchased participations in loans from other banks for out-of-area commercial and commercial real estate loans to benefit from consistent economic growth outside the Company's primary market area, but all within the state of Ohio.

Real estate loans were 24.1% of total loans at September 30, 2008 and 24.9% at year-end 2007. Real estate loans have decreased by 1.1%, or $645,000 since December 31, 2007. Real estate lending for the nine months of 2008 has been slow with respect to the Company's adjustable-rate mortgage products. As of September 30, 2008, the Bank has approximately $35.0 million in fixed-rate loans that have been sold in the secondary market. The Company continues to service these loans for a fee that is typically 25 basis points. At September 30, 2008, the Company did not hold any loans for sale.

The allowance for loan losses represents the amount which management and the Board of Directors estimates is adequate to provide for probable losses inherent in the loan portfolio. The allowance balance and the provision charged to expense are reviewed by management and the Board of Directors monthly using a risk evaluation model that considers borrowers' past due experience, economic conditions and various other circumstances that are subject to change over time. Management believes the current balance of the allowance for loan losses is adequate to absorb probable incurred credit losses associated with the loan portfolio. Net charge-offs for the nine months ended September 30, 2008 were approximately $369,000, or 15.1%, of the beginning balance in the allowance for loan losses.

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

Earning Assets - Securities and Federal Funds Sold

The securities portfolio is comprised of U.S. Government agency-backed securities, tax-exempt obligations of states and political subdivisions and certain other investments. The Company does not hold any collateralized mortgage-backed securities or derivative securities other than those issued by U.S. government agencies. Securities available for sale at September 30, 2008 decreased approximately $36.5 million, or 22.1%, from year-end 2007 totals. With the overall decreasing interest rate environment, the Company has experienced a high level of called bond activity during the first nine months of 2008. While the Company has plans to reinvest a portion of these funds in other available-for-sale securities, there is lag between the time when bonds are called and the right investment opportunity is available to the Company. Proceeds from the called securities were used to repay wholesale borrowings, which decreased approximately $11.5 million from year end 2007 totals. Overall there has been much negative publicity concerning the valuation of investments within government sponsored entities such as Freddie Mac and Fannie Mae. The Company does not own any stock in these two government sponsored entities.

Sources of Funds - Deposits

The Company's primary source of funds is core deposits from retail and business customers. These core deposits include all categories of interest-bearing and noninterest-bearing deposits, excluding certificates of deposit greater than $100,000. For the period ended September 30, 2008, total core deposits increased approximately $15.4 million, or 5.3%. The Company's savings accounts increased $11.5 million or 41.3% from December 31, 2007 totals. The Company's interest-bearing demand deposits decreased $2.6 million, or 2.1%, noninterest-bearing demand deposits increased $6.1 million, or 27.5%, while certificates of deposit under $100,000 increased by $367,000, or 0.3%. The Company acquired approximately $7.2 million of certificates of deposit under $100,000 related to acquisition of a failed bank in Belmont County, Ohio on September 19, 2008. Without these acquired certificate of deposit accounts, the Company would have experienced a decrease in certificate balances. During the third quarter of 2008, the Company has experienced strong competition for certificate of deposit funding in the markets served. Deposit growth for the period ended September 30, 2008 includes approximately $32 million in deposits acquired from the FDIC representing three banking offices of a failed institution in Belmont County, Ohio.

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

Certificates of deposit greater than $100,000 are not considered part of core deposits and as such are used to balance rate sensitivity as a tool of funds management. At September 30, 2008, certificates of deposit greater than $100,000 increased $4.2 million, or 10.8%, from year-end 2007 totals.

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

Other interest-bearing liabilities include securities sold under agreements to repurchase, sweep accounts, federal funds purchased, Treasury, Tax and Loan notes payable and Federal Home Loan Bank ("FHLB") advances. In the first nine months of 2008, the Company continued to utilize the FHLB programs to manage interest rate risk and liquidity positions. The majority of the Company's repurchase agreements are with local school districts and city and county governments. As a result of the Company's cash flow from called available-for-sale securities in 2008, total borrowings, including federal funds purchased, decreased approximately $14.6 million from year-end 2007 totals.

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

Results of Operations for the Nine Months Ended September 30, 2008 and 2007

Net Income

Basic and diluted earnings per share for the nine months ended September 30, 2008 totaled $0.62, compared with $0.41 for the nine months ended September 30, 2007, an increase of 51.2%. In dollars, the Company's net income was $2,825,000 an increase of $951,000, or 50.7%, for the nine months ended September 30, 2008, compared to the same period in 2007.

Net Interest Income

Net interest income, by definition, is the difference between interest income generated on interest-earning assets and the interest expense incurred on interest-bearing liabilities. Various factors contribute to changes in net interest income, including volumes, interest rates and the composition or mix of interest-earning assets in relation to interest-bearing liabilities. Net interest income increased 29.3%, or $2.6 million, for the nine months ended September 30, 2008 compared to the same period in 2007, due primarily to the effects of decreasing interest rates in the economy, which resulted in a lower cost of funds during the nine months ended September 30, 2008. During the nine months ended September 30, 2008, the Company's net interest margin increased 101 basis points over the same period in 2007. The primary reason for the net interest margin increase is the decrease of 95 basis points in the Company's interest expense to average assets from 3.41% for the nine months ended September 30, 2007 to 2.46% for the same period in 2008.

Total interest income for the nine months ended September 30, 2008, was $19.5 million, a decrease of $287,000, or 1.5%, compared to the same period in 2007.

Total interest expense was $8.0 million for the nine months ended September 30, 2008 as compared to $10.9 million for the nine months ended September 30, 2007, a decrease of 26.5%, or $2.9 million. A majority of the Company's cost of funds is tied to the short end of the yield curve and with the short-term rates decreasing rapidly since September 2007, the Company's cost of funds has dramatically decreased in the first nine months of 2008.

Provision for Loan Losses

The provision for loan losses was $887,000 for the nine months ended September 30, 2008, compared to $657,000 for the same period in 2007. The increase in loan loss provision for the nine-month period ended September 30, 2008, was predicated upon the increase in nonperforming loans and consideration of the economic challenges facing the banking industry.

Noninterest Income

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

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

Noninterest income for the nine months ended September 30, 2008 was $2.3 million, an increase of $21,000, or 0.9%, compared to $2.2 million for the nine-month period ended September 30, 2007. With the exclusion of gains and losses on the sale of other real estate and repossessed assets, noninterest income increased $129,000 or 6.1%, for 2008. During the nine-months ended September 30, 2008, the increase in noninterest income was primarily driven by an increase of $66,000 related to our merchant capture program that was introduced in late 2007, a $99,000 increase in customer service fees on deposit accounts and a $21,000 increase in income related to brokerage services.

Noninterest Expense

Noninterest expense was $9.2 million for the nine months ended September 30, 2008, an increase of $892,000, or 10.7%, over the nine months ended September 30, 2007. Salaries and employee benefit expense increased $263,000, or 5.7%, for the period ended September 30, 2008 over the same period in 2007. This increase was primarily due to normal merit increases, increased incentive awards and ESOP expenses. Professional fees increased $185,000 for the first nine months of 2008 over the same period in 2007 primarily related to loan collection efforts. It is anticipated this trend will continue for the remainder of 2008. The provision for losses on foreclosed real estate increased by $155,000 due to management's estimate of net realizable value on a parcel of real estate, requiring the write-down. Occupancy expense increased $75,000, or 8.3% for the period ended September 30, 2008 over the same period in 2007. Increased depreciation expense on computer hardware and software and related service maintenance was the primary reason for the increase. Other noninterest expense increased $75,000, or 5.5%, for the period ended September 30, 2008 over the same period in 2007. No one item accounted for a majority of the increase in other noninterest expense.

Federal Income Taxes

The provision for federal income taxes was $764,000 for the nine months ended September 30, 2008, an increase of $543,000, or 245.7%, over the same period in 2007. The increase was due primarily to the increase in pretax income of $1.5 million or 71.3%. The effective tax rate was 21.3% and 10.5% for the nine months ended September 30, 2008 and 2007, respectively.

Results of Operations for the Three Months Ended September 30, 2008 and 2007

Net Income

Basic and diluted earnings per share for the three months ended September 30, 2008 totaled $0.20 compared with $0.09 for the three months ended September 30, 2007, an increase of 122.2%. In dollars, the Company's net income was $897,000 for the three months ended September 30, 2008, an increase of $505,000, or 128.8% compared to the same quarter in 2007. The dramatic increase in quarter-to-quarter earnings resulted primarily from an increase in net interest income of $1.1 million and the effects of the one time charter consolidation costs in the 2007 quarter as reported last year of approximately $160,000, which were partially offset by an increase in noninterest expenses of $245,000 and an increase in federal income taxes of $268,000.

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

Net Interest Income

Net interest income, by definition, is the difference between interest income generated on interest-earning assets and the interest expense incurred on interest-bearing liabilities. Various factors contribute to changes in net interest income, including volumes, interest rates and the composition or mix of interest-earning assets in relation to interest-bearing liabilities. Net interest income increased 38.6%, or $1.1 million, for the three months ended September 30, 2008 compared to the same period in 2007, due primarily to the effects of decreasing interest rates in the economy, which resulted in a lower cost of funds during the three months ended September 30, 2008. The primary reason for the net interest margin increase is the decrease of 95 basis points in the Company's interest expense to average assets from 3.41% for the three months ended September 30, 2007 to 2.46% for the same period in 2008.

Provision for Loan Losses

The provision for loan losses was $324,000 for the three months ended September 30, 2008, compared to $283,000 for the same period in 2007. The increase in loan loss provision for the three-month period ended September 30, 2008, was based upon an increase in nonperforming loans and consideration of the economic challenges facing the banking industry.

Noninterest Income

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

Noninterest income for the three months ended September 30, 2008 was $738,000, a decrease of $47,000 or 6.0%, compared to $785,000 for the same three-month period ended September 30, 2007. During the three-months ended September 30, 2008, the decrease in noninterest income was primarily driven by a $56,000 gain on the sale of other real estate and repossessed assets in 2007, while the Company recognized only a $9,000 gain on the sale of other real estate and repossessed assets in 2008.

Noninterest Expense

Noninterest expense was $3.3 million for the three months ended September 30, 2008, an increase of $245,000, or 8.2%, over the three months ended September 30, 2007. Salaries and employee benefit expense increased $81,000, or 4.8%, for the period ended September 30, 2008 over the same period in 2007. This increase was primarily due to normal merit increases, increased incentive award and ESOP expenses. Professional fees, mainly collection expenses, increased $117,000 for the third quarter of 2008 over the same period in 2007. It is anticipated this trend will continue for the remainder of 2008. Occupancy and equipment increased $18,000, or 5.9% for the third quarter of 2008 over the same period in 2007. Increased depreciation expense on computer hardware and software and related service maintenance was the primary reason for the increase. Stationary and office supplies increased $19,000 for the third quarter of 2008 over the same period in 2007. This was due to reorganization of the branch offices filing systems.

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

Federal Income Taxes

The provision for federal income taxes was $239,000 for the three months ended September 30, 2008, an increase of $268,000 over the same period in 2007. The increase in tax expense was due primarily to a $773,000 increase in pretax income. The effective tax rate (benefit) was 21.0% and (8.0)% for the three months ended September 30, 2008 and 2007, respectively.

Capital Resources

Internal capital growth, through the retention of earnings, is the primary means of maintaining capital adequacy for the Company. Stockholders' equity, totaled $32.3 million at September 30, 2008 compared to $33.9 million at December 31, 2007, a $1.6 million decrease. This decrease was due primarily to a $1.0 million charge to retained earnings from the adoption of EITF 06-4. See Note 20 of the 2007 Annual Report for a complete discussion on EITF 06-4. Total stockholders' equity in relation to total assets was 7.1% at September 30, 2008 and 7.5% at December 31, 2007. In 2001, our shareholders approved an amendment to the Company's Articles of Incorporation to create a class of preferred shares with 2,000,000 authorized shares. This enables the Company, at the option of the Board of Directors, to issue series of preferred shares in a manner calculated to take advantage of financing techniques which may provide a lower effective cost of capital to the Company. The amendment also provides greater flexibility to the Board of Directors in structuring the terms of equity securities that may be issued by the Company. Although this preferred stock is a financial tool, it has not been utilized to date.

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

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

The minimums related to such capital requirements are:

. . .