The following discusses the financial condition of the Company as of March 31, 2012, as compared to December 31, 2011, and the results of operations for the three months ended March 31, 2012, compared to the same period in 2011. This discussion should be read in conjunction with the interim condensed consolidated financial statements and related footnotes included herein.

Introduction

The Company's net income in the first quarter of 2012 generated an annualized 0.71% return on average assets ("ROA") and an 8.41% return on average equity ("ROE"), compared to 0.69% ROA and 8.26% ROE for the same period in 2011. Comparing the quarter ended March 31, 2012 to the first quarter of 2011, the Company's net interest margin was 3.97% compared to 4.18%, a decrease of 21 basis points. This decrease in the margin resulted in a $123,000 decrease in net interest income for the three months ended March 31, 2012 as compared to the same period in 2011. The provision for loan losses decreased approximately $315,000 for the three months ended March 31, 2012 from the same period in 2011. Net loans charged off did decrease for the three months ended March 31, 2012 as compared to the same period in 2011. Also the Company was able to move those charged off credits through the collection process and into Other Real Estate for Sale and begin to market these properties for sale. As credit quality improves the Company may have the opportunity to further decrease the amount of loan loss provision in the upcoming quarters. Comparing the same periods, customer service fees on deposits increased $87,000. While customer service fees for the three months ended March 31, 2012 is above that of 2011, the level of customer service fees is below those projected in the budget by the Company. As the Company has implemented government imposed regulations in 2011 from the Dodd-Frank Act regarding its courtesy overdraft program, we will continue to experience regulatory requirements that may result in a decrease in customer service fees. In anticipation of these challenges and their potential impact on non-interest income, a variety of cost savings initiatives were implemented in 2011 to reduce the non-interest expense of the Company. Non-interest expense for the three months ended March 31, 2012, excluding the reduction in FDIC Insurance Premiums, decreased by $47,000. Our prior year earnings included $370,000 of securities gains recognized during the three months ended March 31, 2011 as the result of the Company selling its government sponsored mortgage-backed securities portfolio to take advantage of the favorable rate environment on these short term investments and to provide liquidity to restructure the Company's balance sheet towards higher yielding loan relationships, increasing our average outstanding loans by $10 million. This year's 3.1% increase in earnings did not have security gains.

Forward-Looking Statements

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

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

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

Current Economic Conditions

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

Given the volatility of current economic conditions, the values of assets and liabilities recorded in the financial statements could change rapidly, resulting in material future adjustments in asset values, the allowance for loan losses and capital that could negatively impact the Company's ability to meet regulatory capital requirements and maintain sufficient liquidity.

Critical Accounting Policies

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

Analysis of Financial Condition

Earning Assets - Loans

Our focus as a community bank is to meet the credit needs of the markets we serve. At March 31, 2012, gross loans were $278.9 million, compared to $284.4 million at December 31, 2011. The overall decrease in the loan portfolio was comprised of a $5.8 million decrease in commercial and commercial real estate loans, a decrease of $2.3 million in installment loans and a $2.6 million increase in residential lending loans since December 31, 2011.

Commercial and commercial real estate loans comprised 63.7% of total loans at March 31, 2012, compared to 64.5% at December 31, 2011. Commercial and commercial real estate loans have decreased $5.8 million, or 3.2% since December 31, 2011. The Company has originated and purchased participations in loans from other banks for out-of-area commercial and commercial real estate loans to benefit from consistent economic growth outside the Company's primary market area, but all within the state of Ohio.

Installment loans represented 13.3% of total loans at March 31, 2012, and 13.8% at December 31, 2011. 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 5.7%, since December 31, 2011. 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 banking locations.

Residential real estate loans were 23.1% of total loans at March 31, 2012 and 21.7% at December 31, 2011. Residential real estate loans have increased by $2.6 million since December 31, 2011. As of March 31, 2012, the Bank has approximately $18.5 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 March 31, 2012, the Company did not hold any loans for sale.

The allowance for loan losses totaled $2.9 million at March 31, 2012, which represented 1.04% of total loans, and $2.9 million at December 31, 2011, or 1.03% of total loans. The allowance represents the amount which management and the Board of Directors estimates is adequate to provide for probable losses inherent in the loan portfolio. The allowance balance and the provision charged to expense are reviewed by management and the Board of Directors monthly using a risk evaluation model that considers borrowers' past due experience, economic conditions and various other circumstances that are subject to change over time. Management believes the current balance of the allowance for loan losses is adequate to absorb probable incurred credit losses associated with the loan portfolio. Net charge-offs for the three months ended March 31, 2012 were approximately $346,000, or 11.8%, of the beginning balance in the allowance for loan losses.

Earning Assets - Securities

The securities portfolio is comprised of U.S. Government agency-backed securities, tax-exempt obligations of state and political subdivisions and certain other investments. Securities available for sale at March 31, 2012 decreased approximately $1.8 million, or 2.2%, from December 31, 2011 totals. With the overall low interest rate environment, the Company has experienced a high level of called bond activity during the first three months of 2012.

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 March 31, 2012, total core deposits increased approximately $16.2 million, or 5.6%. The Company's savings accounts increased $6.5 million, or 11.2%, from December 31, 2011 totals. The Company's interest-bearing demand deposits increased $13.5 million, or 12.1%, noninterest-bearing demand deposits decreased $897,000, or 3.0%, while certificates of deposit under $100,000 decreased by $2.9 million, or 3.2%. During 2012, our deposit growth was favorably affected as certain areas within Ohio have experienced an unusual growth in the natural gas and oil exploration efforts of major energy companies. This growth stems from new extraction techniques and has attracted significant investment from major energy companies in mineral rights for owners of local real estate in markets that we serve.

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 March 31, 2012, certificates of deposit greater than $100,000 decreased $3.5 million, or 8.9%, from December 31, 2011 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, 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 $3.3 million from December 31, 2011 totals.

Results of Operations for the Three Months Ended March 31, 2011 and 2010

Net Income

Basic and diluted earnings per share for the three months ended March 31, 2012 totaled $0.15 compared with
$0.15 for the three months ended March 31, 2011. In dollars, the Company's net income was $761,000 for the three months ended March 31, 2012, an increase of $23,000, or 3.1%, compared with net income of $738,000 for the same quarter in 2011.

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 $123,000, for the three months ended March 31, 2012 compared to the same period in 2011.

Provision for Loan Losses

The provision for loan losses was $333,000 for the three months ended March 31, 2012, compared to
$648,000 for the same period in 2011. The decrease in loan loss provision for the three-month period ended March 31, 2012, was a result of improving credit quality. Also, during the three month ended March 31, 2011, the Company had an increased level of provision for loan losses due to an increased level of loans charged off.

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 March 31, 2012 was $740,000, a decrease of $324,000 or 30.5%, compared to $1.1 million for the three-month period ended March 31, 2011. During the three-months ended March 31, 2012, the decrease in noninterest income was due to a decrease in realized gains on sales of securities of $370,000. Comparing the same periods, customer service fees on deposits increased $87,000, due in part to changes and an increase in the number of customer relationships.

Noninterest Expense

Noninterest expense was $3.2 million for the three months ended March 31, 2012 a decrease of $60,000, or 1.8%, compared to the three months ended March 31, 2011. Salaries and employee benefit expense decreased $82,000, or 4.7%, for the three month period ended March 31, 2012 from the same period in 2011. This decrease was primarily due to our planned cost savings initiatives as a follow up to our newly installed core processing system. Occupancy and equipment expense increased $21,000 for the three months ended March 31, 2012 over the same period in 2011. Increased depreciation expense on premises, computer hardware and software and related service maintenance was the primary reason for the increase.

Federal Income Taxes

The provision for federal income taxes was $71,000 for the three months ended March 31, 2012, a decrease of $95,000 compared to the same period in 2011. During the three months ended March 31, 2012, the Company recognized a tax benefit resulting from the resolution of a tax contingency, which reduced federal income taxes by approximately $110,000.

Capital Resources

Internal capital growth, through the retention of earnings, is the primary means of maintaining capital adequacy for the Company. Stockholders' equity totaled $36.2 million at March 31, 2012 compared to $36.2 million at December 31, 2011. Total stockholders' equity in relation to total assets was 8.4% at March 31, 2011 and 8.7% at December 31, 2011. 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 offered for many years a Dividend Reinvestment Plan ("The Plan") for shareholders under which the Company's common stock will be purchased by the Plan for participants with automatically reinvested dividends. The Plan does not represent a change in the Company's dividend policy or a guarantee of future dividends.

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

             Well capitalized                   10.00 %              6.00 %           5.00 %
             Adequately capitalized              8.00 %              4.00 %           4.00 %
             Undercapitalized                    6.00 %              3.00 %           3.00 %

                              United Bancorp, Inc.

               Management's Discussion and Analysis of Financial

                      Condition and Results of Operations



The following table illustrates the Company's well-capitalized classification at
March 31, 2012.

                                                                 March 31,
                                                                    2012
                                                                (Unaudited)
                                                           (Dollars in thousands)

                       Tier 1 capital                     $                 39,449
                       Total risk-based capital                             42,363
                       Risk-weighted assets                                296,252
                       Average total assets                                427,639

                       Total risk-based capital ratio                        14.30 %
                       Tier 1 risk-based capital ratio                       13.22 %
                       Tier 1 capital to average assets                       9.23 %

Liquidity

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

Inflation

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

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