UNITED BANCORP INC /OH/ Annual Report: A Strong Performance in 2025

This summary offers a clear and engaging overview of UNITED BANCORP INC /OH/'s performance for the fiscal year ended December 31, 2025, with comparisons to 2024. Designed for retail investors, it highlights key financial achievements, strategic initiatives, and potential risks.

Business Overview

UNITED BANCORP INC /OH/ operates as a financial holding company, primarily through its wholly-owned subsidiary bank. The bank provides a full range of commercial and retail banking services to individuals, small and medium-sized businesses, and local governments within its primary market areas in Ohio and surrounding communities.

Its core offerings include:

• Deposit products: Checking, savings, money market, and certificates of deposit.
• Loan products: Commercial real estate, residential mortgages, commercial & industrial, and consumer loans.
• Other financial services: Online banking, mobile banking, treasury management, and safe deposit boxes.

The company's strategy emphasizes a community-focused approach, fostering strong customer relationships and local decision-making.

Financial Highlights: A Year of Robust Growth and Profitability

UNITED BANCORP INC /OH/ demonstrated robust financial health and growth in 2025.

• Net Income: The company reported $35.2 million in net income for 2025, a significant increase from $28.5 million in 2024, reflecting strong operational performance.
• Earnings Per Share (EPS): Diluted EPS rose to $2.15 in 2025, up from $1.75 in 2024, showing improved per-share profitability.
• Net Interest Income: Net interest income, a primary driver of profitability, grew. This growth reflected an expanding loan portfolio and effective interest rate management, significantly contributing to the overall net income increase.
• Total Assets: Total assets grew by 8% to $3.2 billion at year-end 2025, compared to $2.96 billion in 2024, primarily driven by loan growth.
• Total Loans: The loan portfolio expanded to $2.1 billion in 2025, up from $1.9 billion in 2024, demonstrating robust lending activity.
• Total Deposits: Deposits increased to $2.6 billion in 2025 from $2.4 billion in 2024, reflecting continued customer trust and effective deposit-gathering strategies.
• Shareholder Equity: Shareholder equity strengthened to $350 million at December 31, 2025, from $320 million in 2024. This represents the portion of the company owned by its shareholders after all liabilities are paid, including common stock, retained earnings (profits kept by the company), and other comprehensive income.
• Key Ratios:
  • Return on Average Assets (ROAA): Improved to 1.15% in 2025 from 1.00% in 2024, indicating more efficient asset utilization.
  • Return on Average Equity (ROAE): Increased to 10.5% in 2025 from 9.0% in 2024, delivering better returns for shareholders.
  • Net Interest Margin (NIM): Maintained a healthy 3.60% in 2025 (3.55% in 2024), reflecting effective management of interest-earning assets and interest-bearing liabilities.
• Dividends: The company maintained its commitment to shareholders, declaring quarterly cash dividends totaling $0.80 per share for 2025, consistent with the prior year.

Management's Discussion and Analysis (MD&A) Highlights

Management's discussion and analysis explains the factors influencing the company's financial condition and operating results. The robust financial performance in 2025, characterized by significant increases in net income, EPS, and total assets, primarily stemmed from strong loan growth and effective management of the interest rate environment, evidenced by a healthy Net Interest Margin.

The company's strategic focus on asset quality, reflected in declining non-performing loans and strong allowance coverage, supported overall stability. Deposit growth created a stable funding base, while prudent capital management ensured strong shareholder equity and capital ratios. Management continuously monitors economic conditions, regulatory changes, and competitive pressures to adapt strategies and sustain growth.

Financial Health, Liquidity, and Capital Resources

The company maintains strong financial health, supported by robust liquidity and capital positions.

• Liquidity: The bank manages cash and cash equivalents to meet daily operations and customer withdrawals. Primary liquidity sources include core deposits, cash flow from loan repayments, maturities of investment securities, and access to wholesale funding markets, such as Federal Home Loan Bank (FHLB) advances and Federal Reserve Bank borrowing facilities. The bank also maintains a diversified investment portfolio, which serves as a secondary source of liquidity.
• Capital Resources: Shareholder equity strengthened to $350 million, reflecting retained earnings and building a strong capital base. The company maintains its capital ratios (e.g., Common Equity Tier 1, Tier 1, and Total Capital ratios) well above regulatory minimums for "well-capitalized" institutions, providing a buffer against potential losses and supporting future growth.
• Debt: Beyond deposits, the company utilizes various forms of borrowings, including Federal Reserve Bank advances, and may access other secured or unsecured borrowings like FHLB advances or subordinated debt to manage funding and liquidity. The company's debt management strategy optimizes funding costs and diversifies funding sources.

Loan Portfolio and Asset Quality: Prudent Lending and Stable Performance

UNITED BANCORP INC /OH/'s loan portfolio remains diversified and well-managed.

• Loan Mix (as of Dec 31, 2025):
  • Commercial Real Estate: 40% ($840 million)
  • Residential Mortgages: 30% ($630 million)
  • Commercial & Industrial Loans: 20% ($420 million)
  • Consumer Loans: 10% ($210 million)
• Asset Quality: The bank maintained strong asset quality, with performing loans (those being paid back on time) making up over 98% of the total portfolio.
  • Non-Performing Loans (NPLs): Total NPLs decreased to 0.65% of total loans ($13.65 million) in 2025, down from 0.75% ($14.25 million) in 2024, reflecting improved credit health.
  • Allowance for Loan Losses (ALL): The ALL stood at 1.20% of total loans ($25.2 million) in 2025, adequately covering NPLs at 185% and demonstrating a conservative approach to potential loan losses.
  • Past Due Loans: Loans 30-59 days past due were $4.5 million, 60-89 days past due were $2.1 million, and 90+ days past due were $7.05 million (which are classified as NPLs).
  • Commercial Loan Risk Categories: Management categorized most commercial loans as "pass" (low risk). A small percentage fell into "special mention" (potential weakness) and "substandard" (clear weakness) categories, which management closely monitors.

Deposits and Funding: A Stable Foundation

Deposit growth was a key strength, providing a stable and cost-effective funding base.

• Deposit Mix: The deposit mix included 25% non-interest-bearing demand deposits, 60% interest-bearing checking, savings, and money market accounts, and 15% certificates of deposit (CDs). This mix helps manage funding costs.
• Other Funding: The bank utilized Federal Reserve Bank advances for short-term liquidity management, with an average outstanding balance of $50 million in 2025. Standby letters of credit, which are guarantees of payment, totaled $30 million, supporting client transactions. Foreclosed assets, representing properties acquired through loan defaults, remained minimal at $1.5 million, reflecting effective loan recovery.

Competitive Position

UNITED BANCORP INC /OH/ operates in a highly competitive banking environment. Its strengths include a deep understanding of local market dynamics, personalized customer service, and strong community ties, differentiating it from larger national and regional banks. The bank also leverages digital banking investments to compete with fintech companies and enhance customer convenience, while maintaining its community bank personal touch. Its diversified loan portfolio and stable deposit base further strengthen its market position. The company aims to capture market share through organic growth, strategic marketing, and tailored products and services for its local communities.

Key Risks: Navigating the Banking Landscape

Like all financial institutions, UNITED BANCORP INC /OH/ faces several risks:

• Interest Rate Risk: Interest rate fluctuations can impact the bank's net interest margin and profitability. The bank actively manages this risk through asset-liability strategies.
• Credit Risk: This is the risk that borrowers may not repay loans. While asset quality remains strong, economic downturns or specific industry challenges could increase defaults.
• Regulatory Risk: Changes in banking regulations or increased compliance costs could impact operations and profitability.
• Economic Conditions: Broader economic slowdowns, inflation, or unemployment rates in the bank's operating regions could affect loan demand, deposit levels, and asset quality.
• Competition: Intense competition for loans and deposits from larger national banks, credit unions, and fintech companies.

Future Outlook: Community-Centric Growth

UNITED BANCORP INC /OH/ continues to focus on its core community banking model while embracing innovation.

• Community Engagement: The bank remains committed to serving its local communities through personalized service, local decision-making, and small business support.
• Digital Transformation: Investments in digital banking platforms and mobile capabilities enhance customer experience and operational efficiency, attracting a younger demographic while retaining existing clients.
• Strategic Growth: The company explores opportunities for organic growth within existing markets and selectively evaluates potential expansion into adjacent, underserved areas.
• Outlook: Management expresses cautious optimism for 2026, anticipating continued loan and deposit growth, supported by a stable economic environment in its operating regions. It will continue to focus on maintaining strong asset quality and managing interest rate fluctuations.

Overall, UNITED BANCORP INC /OH/ delivered strong financial performance in 2025, marked by solid earnings growth, expanding assets, and robust asset quality. The bank's strategic focus on community banking, coupled with digital innovation and prudent risk management, positions it well for continued success in the evolving financial landscape.