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

Forward-Looking Statements

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

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

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

Introduction

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

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

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

Critical Accounting Policies

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

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

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

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

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

Analysis of Financial Condition

Earning Assets - Loans

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

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

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

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

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

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

Earning Assets - Securities and Federal Funds Sold

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, other than those issued by U.S. government agencies, or derivative securities. Generally, the quality rating of obligations of state and political subdivisions is Aaa, Aa or A. Board policy permits the purchase of certain non-rated bonds of local schools, townships and municipalities, based on their estimated levels of credit risk. Securities available for sale at September 30, 2009 decreased approximately $25.5 million, or 19.7%, from year-end 2008 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 2009. 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. Also, given the historically low interest rate environment at present, the Company has implemented a strategy to invest in short term certificates of deposit ("CD's") of other financial institutions. These CD's are fully insured by the Federal Deposit Insurance Corporation and offer an alternative to investing in longer term U.S Government agency securities. As of September 30, 2009, the Company had approximately $22.7 million of CD's with an average yield of 2.12% and an average term to maturity of 159 days.

Sources of Funds - Deposits

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

The 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, 2009, certificates of deposit greater than $100,000 increased $9.4 million, or 20.1%, from year-end 2008 totals.

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

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

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

Net Income

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

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

Net Interest Income

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

Provision for Loan Losses

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

Noninterest Income

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

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

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

Noninterest Expense

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

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

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

Federal Income Taxes

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

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

Net Income

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

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

Net Interest Income

Net interest income, by definition, is the difference between interest income generated on interest-earning assets and the interest expense incurred on interest-bearing liabilities. Various factors contribute to changes in net interest income, including volumes, interest rates and the composition or mix of interest-earning assets in relation to interest-bearing liabilities. Net interest income decreased 3.6%, or

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

Provision for Loan Losses

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

Noninterest Income

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

Noninterest Expense

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

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

Federal Income Taxes

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

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

Capital Resources

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

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

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

The minimums related to such capital requirements are:

                                           Total              Tier 1             Tier 1
                                        Capital To          Capital To         Capital To
                                       Risk-Weighted       Risk-Weighted        Average
                                          Assets              Assets             Assets
. . .