United Bancorp, Inc. Annual Report 2022

FY2022 Annual Report · United Bancorp, Inc.

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We Are UNITED...To Better Serve You!

A N N UA L R E P O R T

A Letter from the President and CEO

To the shareholders of United Bancorp, Inc….

Scott A. Everson
President and CEO

t is with great pleasure that I report to you, our valued shareholders, on the
strong earnings and solid operational performance that United Bancorp, Inc.
(UBCP) achieved in 2022. This past year, UBCP reported diluted earnings per
share of $1.50 and net income of $8,657,000. Even though these reported
earnings metrics were lower than the record levels achieved the previous year for
each… they were still the second highest levels achieved in our storied company’s
history! Worthy of note, this high level of earnings was produced on a more “core”
operating basis, since we did not have the level of non-recurring income that we
achieved the prior year. By achieving this higher, core-levels of earnings performance
in 2022, we are truly grateful considering the dynamic environment in which we
continued to operate this past year. In 2022, our country began to put the effects of the pandemic that dominated
our existence for the previous two years into the rear-view mirror and our economy began to normalize.
Unfortunately, the “corrective actions” necessitated by the pandemic to strengthen our economy during one of the
most extreme shocks in our history--- such as the stimulus funding paid to individuals and businesses within our
country and the very loose, zero interest rate/ quantitative easing monetary policy under which our central bank
operated for the better part of two years--- finally caused our economy to “heat-up.” As a result, we experienced
heightening inflation levels and a tightening of our monetary policy that we had not seen in more than forty years.
Fortunately, UBCP was properly positioned for such a rapid change in our economy and, once again, had very
solid performance with a focus on the future. Going forth, we look forward to confronting the continued challenges
with which we are presented and building a better company in the year ahead.

Operating in A Dynamic Environment--- A Sudden, and Unexpected Change in the Direction of Monetary Policy: At the onset of the
pandemic in the first quarter of 2020, the Federal Open Market Committee (FOMC) took unprecedented and drastic action that, almost
overnight, implemented a Zero Interest Rate Policy (ZIRP) and began increasing large scale asset purchases ((LSAPs) aka: Quantitative
Easing) to a level that more than doubled the Feds balance sheet in a relatively short period of time. In addition to this drastic action, fiscal
policy injected a tremendous level of stimulus into our economy in the form of monetary payouts to both individuals and businesses in
order to counter the negative effect of our economy essentially being shut-down in response to the pandemic. At this unprecedented time,
we all feared that the sudden shuttering of our economy would have a cataclysmic effect that had never been experienced prior thereto.
Fortunately, this quick response of both accommodating monetary policy and stimulating fiscal policy did, indeed, counter the effects of
the shutting down of our economy in response to the pandemic. But, as we all know, too much of a good thing can actually be bad! In
this case, too much fiscal stimulus and a prolonged ZIRP/ LSAPs caused inflation to start rearing its ugly head in 2021. Throughout that
year, the FOMC coined a new term for this inflation… “transitory.” Quite simply, it was believed that as our economy recovered from the
pandemic shutdown, things would normalize as the economy more fully reopened and the supply chain improved. This normalization of
our economy, it was thought, would bring stability back to pricing; especially, as demand for goods diminished and services increased,
as more people went back to work and as the supply chain functioned more closely to pre-pandemic levels. Therefore, the inflation that
we were experiencing in 2021 was initially thought by the FOMC to be temporary or “transitory.”

With the Federal Open Market Committee’s (FOMC) rationale that inflation would come closer to their longer-term target in the near term
and our economy would operate more normally as we entered 2022, it was forecast that large scale asset purchases (LSAPs) would start
to curtail sometime in the first quarter and the target for the Federal Funds Rate would increase two to three times in 2022-- by 25 basis
points each increase--- beginning at mid-year. Quite simply, the FOMC telegraphed that inflation was under control and they would only

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A Letter from the President and CEO - Continued

need to mildly tighten monetary policy as our economy recovered to pre-pandemic levels. Unfortunately, inflation was not under control
and it continued to burn hotter and hotter as we entered 2022 and went into the first quarter. Ultimately, inflation increased to levels that
we had not seen for more than forty years… peaking in June 2022 at 9.1 percent. Of greater concern, inflation expectations were no
longer anchored and started to go higher. At that point, the FOMC realized that inflation was not “transitory” as previously thought; but,
rather, it was a real issue. Getting inflation under control and inflation expectations anchored, once again, became the primary focus of
the FOMC. At their March meeting, the FOMC increased the target for the Federal Funds Rate (FF’s) by 25 basis points and began curtailing
LSAPs at a faster pace than anticipated. As the inflation rate continued to heat-up, the FOMC got more aggressive with the tightening of
monetary policy. At the May meeting, the FOMC increased the target for FF’s by 50 basis points. This action had little impact on taming
inflation and inflation expectations. Accordingly, the FOMC had to get even more aggressive with the tightening of monetary policy at
future meetings. At the June, July, September and November meetings, the FOMC increased the target for the FF’s rate at each meeting
by 75 basis points. Although Inflation was coming down at this point, it was still at levels that caused concern. At the December meeting,
the FOMC increased the target for the FF’s rate by another 50 basis points. Over the course of twelve months in 2022, we went from
operating in a zero interest-rate environment to one where the target for the FF’s rate increased by 425 basis points. At year-end, the FF’s
target rate was a range of 4.25 percent to 4.50 percent. Such aggressive action by the FOMC did start to have an impact on overall
inflation and, by the end of the year 2022, even though inflation was still well-above the desired 2.0 percent target of the FOMC, it came
down from the mid-year peak of 9.1 percent to a level around 6.5 percent.

The Impact of the Dramatic Change in Monetary Policy on United Bancorp: As the Federal Open Market Committee (FOMC) conducted
its all-out assault on inflation in 2022 by raising the target for the federal funds rate (FF’s) at a level that no one anticipated and at a pace
that we had not seen for more than forty years, United Bancorp, Inc. (UBCP) faired very well. This extreme rise in interest rates presented
opportunities for our Company that we had not seen for a couple of years since the beginning of the pandemic. Fortunately for our
Company, we did not purchase any investment securities from the beginning of the pandemic in March 2020 until rates started to increase
this past year; therefore, we did not lock into exceedingly low rates at the bottom of the market. Being patient during the pandemic at
times was uncomfortable as we horded a large percentage of our earning assets in low-yielding, overnight funding. This patience
definitely paid off for our Company in 2022. As the economy more fully recovered and started to heat-up over the course of the past year,
we had opportunities in the increasing rate environment to more fully leverage our capital and change the mix of our balance sheet into
longer-term, higher-yielding assets and, once again, focus on growing our Company.

With the extreme tightening bias of the Federal Open Market Committee (FOMC) with monetary policy--- which began in the first quarter
of 2022--- for the first time in a couple of years we experienced a prime opportunity to invest, once again, in both municipal and agency
securities as both intermediate and longer term yields rose to levels that we had not seen for quite some time. As previously mentioned,
remaining patient and not investing in any municipal or agency securities since the first quarter of 2020 until this year enabled our
Company to change the overall mix of our balance sheet from a more cash-intensive, liquid position to one that is longer-duration and
higher yielding. This allowed our Company to more fully leverage its capital by growing assets to a level of $757.4 million, an increase
over the previous year of $32.9 million or 4.5 percent. This growth in our total assets was primarily driven by the growth that we
experienced in securities, along with minimal growth in our loan portfolio. In 2022, gross loans increased by $6.5 million or 1.4 percent.
Overall, UBCP did have acceptable loan origination volume; but, our Company experienced several large payoffs on loans; whereby, the
borrowers sold the underlying collateral which secured our loans. Ultimately and for the most part, it was not driven by competitive forces
relating to interest rates. Having a higher level of loan payoffs than anticipated was not necessarily a negative occurrence for our
Company, since we were able to redeploy these funds at higher yields rather quickly. We achieved most of our growth by investing in
both municipal and agency securities in the increasing rate environment in which we operated over the course of this past year. In 2022,
UBCP had growth in securities of $71.3 million, or 48.7 percent, over the previous year and finished the year with balances in its securities
portfolio of $217.6 million. As we invested in higher yielding loans and securities this past year, our Company saw a corresponding decline
in its cash and overnight, lower-yielding investments. In 2022, cash and cash equivalents declined by $52.9 million, or 63.8 percent, to
a level of $30.1 million at year-end. With the changing mix of and the added horsepower to our balance sheet in 2022, UBCP saw an
increase in the level of interest income that it generated. Until the final three quarters of this past year, our Company had not experienced
growth in interest income since the first quarter of 2020 (which was the quarter the pandemic-related slowdown and related Zero Interest
Rate Policy (ZIRP) commenced). For the year, interest income increased by $3.0 million or 12 percent.

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UNITEDBANCORP INC.

The rapidly rising interest rate environment in which United Bancorp, Inc. (UBCP) operated in 2022 did, as you would expect, cause
interest expense to also increase. But, fortunately, total interest expense did not increase as rapidly as total interest income. In 2022,
UBCP saw its level of interest expense increase by $677,000 or 26.1 percent. And, contrary to what you might reason, the level of the
increase in interest expense was not entirely driven by UBCP operating in a higher rate environment. It was also driven by a counter-
industry trend achieved by our Company of actually growing deposit totals. In 2022, the total deposits of UBCP increased by $44.8
million, or 7.4 percent, to a level of $649.9 million. Overall, most of this growth occurred in time deposits with lower-cost funding balances
(consisting of demand deposits and savings) remaining relatively flat… decreasing by $717,000. At mid-year, management anticipated
the Federal Open Market Committee’s (FOMC) more extreme tightening of monetary policy and introduced time deposit pricing that was
at the time, above market. Being responsive to the anticipated acceleration of the tightening of monetary policy allowed UBCP to attract
in $45.5 million in time deposit balances over the course of the remainder of 2022 (with a majority of this being attracted in the third
quarter), which helped our Company to produce the growth in total deposits and control interest expense levels by attracting this retail-
based funding when rates were lower earlier in the year.

Although United Bancorp, Inc. (UBCP) experienced higher levels of interest expense in 2022, our Company was able to grow interest
income to a greater degree and higher level. Accordingly, UBCP experienced growth in the net interest income that it generated. For the
year, net interest income increased from the previous year by $2.3 million, or 10.3 percent, to a level of $24.4 million. Over the course of
this past year, UBCP saw its net interest margin go from 3.48 percent to 3.73 percent, an increase of 25 basis points. This increase in
the net interest margin and the corresponding increase in net interest income led to the “core” earnings improvement of our Company and
offset some of the non-recurring income achieved the previous year, which totaled approximately $1.9 million on a gross basis and added
approximately $0.27 to diluted earnings per share in 2021. The major items making-up this non-recurring income the previous year was:
$300,000 more in negative provision credits, $100,000 in bank owned life insurance payouts, $225,000 in gains on the sale of real estate
and, lastly, $1,250,000 in gains on the sale of securities. Management is very pleased that we were able to overcome the non-recurring
income gap in 2022 and generate more earnings on a core operating basis. As previously mentioned, UBCP’s level of net income
generated in 2022 was $8,657,000, which was the second highest level ever achieved by our Company outside of our record earnings in
2021. At this level of earnings, UBCP had a return on average assets (ROA) of 1.18% and a return on average equity of 14.74% in 2022,
which compares very favorably with our peer group of banks and industry. Management was also extremely happy to report that UBCP,
once again, was recognized by American Banker in their annual “Top 200 Publicly Traded Community Banks”, coming in at number 84
which was an improvement of 40 spots over the previous year.

Relating to the noninterest margin of United Bancorp, Inc. (UBCP) in 2022, our Company did feel pressure relating to the noninterest
income that it generated and noninterest expense that it incurred. Each of these metrics were negatively impacted by the fast-paced,
rising-rate and strong inflationary environment in which we operated this past year. In 2022, we saw a decline in some of our fee-income
related lines of business (primarily, relating to mortgage origination) and, as previously mentioned, the non-recurrence of substantial
security gains and other noninterest income realized the previous year. For the year, noninterest income declined by $1.6 million or 28.4
percent. With the rising inflationary pressure under which UBCP operated in 2022, our Company experienced an increase in total
noninterest expense of $1.5 million, an increase of 8.1 percent. Most of this increase in noninterest expense is correlated to a higher level
of employee related expenses tied to more optimum staffing levels throughout our Company, higher IT-related expense due to the
implementation and upgrading of systems to improve our delivery and enhance the overall customer experience, higher wage levels
attributed to the tight labor market and incentive payouts. Even though UBCP saw noninterest expenses increase over the course of 2022,
our Company did have a focus on achieving cost-savings in appropriate areas. A few of the recent cost-containment initiatives
implemented that led to realized savings this past year were… the consolidation of our former banking centers located in both Dillonvale
and Amesville, Ohio into other in-market banking centers and the closure of our Loan Production Office in Wheeling, West Virginia. In the
coming year, UBCP will continue to focus on containing noninterest expense levels--- while selectively investing in our future in order to
more effectively compete and remain relevant--- as the environment in which we operate becomes more challenging.

In 2022, we were able to continue successfully maintaining credit related strength and stability within the loan portfolio of United Bancorp,
Inc. (UBCP) as our economy continued to more fully recover from the pandemic-induced economic downturn and, even as, borrowers
began to feel the pressure of rising interest rates. At year-end, our Company’s total nonaccrual loans were $182,000 or 0.04 percent of

UNITEDBANCORP INC.

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A Letter from the President and CEO - Continued

total loans. This level of nonaccrual loans was a decline of $4.0 million over the previous year and was primarily the result of the resolution
of an issue with a single, non-performing commercial relationship with which our Company had been dealing for the better part of a year.
The resolution of this matter did lead to net loans charged off, excluding overdraft charge offs, of $558,000, which was 0.12 percent of
total loans and a year-over-year increase of $450,000. Further relating to this matter, other real estate and repossessions (OREO)
increased by $3.1 million year-over-year. As of December 31, 2022, nonaccrual loans and OREO to total assets was a very solid 0.49
percent, along with loans past due thirty plus days at a very respectable $425,000 or 0.09 percent of total loans. Regarding accounting
related changes being mandated by the Financial Accounting Standards Board (FASB) relating to our industry’s loan loss reserve
methodology, our Company has spent the better part of the past two years developing a current expected credit loss (CECL) model and
is fully prepared to implement this new loan loss reserve methodology in the first quarter of 2023 in compliance with the new requirements.

At United Bancorp, Inc. (UBCP), our primary focus is protecting the investment of our valued shareholders in our Company and rewarding
you in a balanced fashion by growing your value over time and paying an attractive cash dividend. This past year was a challenging one
for the market values of all financial sector stocks and--- even though we had very solid earnings results--- we did see the market value
of our Company’s stock decline from the previous year. At year-end, UBCP’s stock closed at $14.72. Once again in 2022, our Company
rewarded our shareholders with a very solid dividend payout of $0.775 per share, which was higher than the previous year’s cash dividend
payout of $0.685… an increase of $0.09 per share or 13.1 percent. At this dividend payout level and our year-end market value, our
dividend yield is a very solid 5.26 percent. In looking at the Total Return Performance Chart in this annual report, the five year total return
performance--- which takes into account both market value appreciation and cash dividend payouts--- shows that your investment in
UBCP outpaced all of the other bank related indices, to which our Company compares, listed on this chart. As always, our goal is to
provide the highest level of return to you, our valued shareholders, while growing our company in a safe and sound manner!

As you can see, United Bancorp, Inc. (UBCP) had one of its most historic years in terms of performance in 2022, while operating in a very
dynamic economic and regulatory environment. But… your management team will never be satisfied resting on past performance and
laurels. We are strongly focusing on moving forward and achieving our goal of becoming a $1.0 billion community banking organization
in, hopefully, the not too distant future. While reaching this goal, we will maintain our commitment to and standard of producing stellar,
above peer, performance-related results as we confidently move forward as one of the premier community banks in our industry. UBCP
is truly blessed to have a “Unified and United” team, management, board of directors and shareholder group. As a successful financial
services company, we truly appreciate everyone’s continued support… Together, We Will Accomplish More!

Scott A. Everson
President and Chief Executive Officer
ceo@unitedbancorp.com
February 19, 2023

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the
Securities Exchange Act of 1934. Forward-looking statements, which are based on various assumptions (some of which are beyond the Company's control),
may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate,"
"anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set
forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the
market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in
government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions
and the integration of acquired businesses, credit risk management, asset/liability management, changes in the financial and securities markets, including
changes with respect to the market value of our financial assets, and the availability of and costs associated with sources of liquidity. The Company
undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

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UNITEDBANCORP INC.

D I V I D E N D A N D S T O C K H I S T O R Y
D I V I D E N D A N D S T O C K H I S T O R Y

2023 ANTICIPATED
DIVIDEND PAYABLE DATES

First Quarter
March 20, 2023

Second Quarter*
June 20, 2023

Third Quarter*
September 20, 2023

Fourth Quarter*
December 20, 2023

*Subject to action by
Board of Directors

(1) Adjusted for stock dividends and exchanges.

(2) Formation of United Bancorp, Inc. (UBCP). Unified

Bank (formerly The Citizen's Saving Bank)
shareholders received 4 shares of UBCP stock in
exchange for 1 share of bank stock.

Cash Dividends
Declared (1)
$
0.05
$
0.06
$
0.07
$
0.09
$
0.09
$
0.10
$
0.10
$
0.11
$
0.12
$
0.12
$
0.12
$
0.13
$
0.19
$
0.20
$
0.23
$
0.26
$
0.30
$
0.31
$
0.32
$
0.33
$
0.35
$
0.39
$
0.43
$
0.48
$
0.52
$
0.54
$
0.56
$
0.56
$
0.56
$
0.42
$
0.29
$
0.33
$
0.37
$
0.42
$
0.46
$
0.52
$
0.545
$
0.57
$
0.685
$
0.775

Special Cash Dividends
and Stock Dividends
-
4 for 1 Exchange(2)
-
-
50% Stock Dividend
-
-
-
-
100% Stock Dividend
100% Stock Dividend
10% Stock Dividend
-
10% Stock Dividend
10% Stock Dividend
5% Stock Dividend
5% Stock Dividend
5% Stock Dividend
5% Stock Dividend
5% Stock Dividend
10% Stock Dividend
10% Stock Dividend
10% Stock Dividend
10% Stock Dividend
–
–
–
–
–
–
–
–
5¢ Per Share Special Dividend
5¢ Per Share Special Dividend
5¢ Per Share Special Dividend
5¢ Per Share Special Dividend
–
–
10¢ Per Share Special Dividend
15¢ Per Share Special Dividend

1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

Distribution Date of
Dividends and
Exchanges
-
January 2, 1984
-
-
October 2, 1987
-
-
-
-

September 10, 1992
November 30, 1993
September 9, 1994
-
June 20, 1996
September 19, 1997
December 18, 1998
December 20, 1999
December 20, 2000
December 20, 2001
December 20, 2002
December 19, 2003
December 20, 2004
December 20, 2005
December 20, 2006

–
–
–
–
–
–
–
–

December 29, 2016
December 29, 2017
December 29, 2018
December 28, 2020

–
–
March 19, 2022
March 18, 2023

T O T A L R E T U R N P E R F O R M A N C E

United Bancorp, Inc.
NASDAQ Composite Index
S&P U.S. BMI Banks Index
S&P U.S. SmallCap Banks Index
S&P U.S. BMI Banks - Midwest Region Index
Dow Jones Index

350

300

250

200

150

100

e
u
l
a
V
x
e
d
n
I

12/31/17

12/31/18

12/31/19

12/31/20

12/31/21

12/31/22

Index
United Bancorp, Inc.
NASDAQ Composite Index
S&P U.S. BMI Banks Index
S&P U.S. SmallCap Banks Index
S&P U.S. BMI Banks - Midwest Region Index
Dow Jones Index

12/31/17
100.00
100.00
100.00
100.00
100.00
100.00

12/31/18
90.24
97.16
83.54
83.44
85.39
96.52

12/31/19
118.27
132.81
114.74
104.69
111.10
120.98

12/31/20
113.86
192.47
100.10
95.08
95.52
132.75

12/31/21
150.36
235.15
136.10
132.36
126.19
160.55

12/31/22
139.28
158.65
112.89
116.69
108.91
149.53

Directors

Erin S. Ball

Jonathan C. Clark

Scott A. Everson

Gary W. Glessner

Brian M. Hendershot

John R. Herzig

John M. Hoopingarner

Richard L. Riesbeck

Bethany E. Schunn

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UNITEDBANCORP INC.

Directors and Officers

DIRECTORS OF UNITED BANCORP, INC.

Scott A. Everson1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .President & Chief Executive Officer, United Bancorp, Inc.
Chairman, President & Chief Executive Officer, Unified Bank, Martins Ferry, Ohio

Gary W. Glessner2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CPA & CGMA, Managing Member, Glessner & Associates, PLLC;
Glessner Wharton Andrews Insurance, LLC; Tiffany's, LLC; GWA Realty, LLC,
GW Rentals, LLC; Trustee, Windmill Truckers Center, Inc.

John M. Hoopingarner, Esq.1,2,3,4 . . . . . . . . . . . . . . . . . . . . . . . . . Of Counsel, McMahon, DeGulis LLP, Columbus, Cleveland & Cincinnati, Ohio

Richard L. Riesbeck1,2,3,4 . . . . . . . . . . . . . . . . . Chairman, United Bancorp, Inc.; President, Riesbeck Food Markets, Inc., St. Clairsville, Ohio

James W. Everson ............................................................................................................................................................... Chairman Emeritus 1969 - 2016

OFFICERS OF UNITED BANCORP, INC.

Scott A. Everson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President & Chief Executive Officer

Matthew F. Branstetter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Senior Vice President, Chief Operating Officer

Randall M. Greenwood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Senior Vice President, Chief Financial Officer, Treasurer & Corporate Secretary

DIRECTORS OF UNIFIED BANK

Erin S. Ball . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Carenbauer Distributing Corporation, Wheeling, West Virginia

Jonathan C. Clark, Esq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney at Law, Lancaster, Ohio

Brian M. Hendershot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President, Ohio-West Virginia Excavating, Shadyside, Ohio

John R. Herzig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President, Toland-Herzig Funeral Homes & Crematory, Strasburg and Dover, Ohio

John M. Hoopingarner, Esq.1,2 . . . . . . . . . . . . . . . . . . . . . . . . .Of Counsel, McMahon, DeGulis LLP, Columbus, Cleveland and Cincinnati, Ohio

Richard L. Riesbeck1,2, F . . . . . . . . . . . . . . . . . . Chairman, United Bancorp, Inc.; President, Riesbeck Food Markets, Inc., St. Clairsville, Ohio

Bethany E. Schunn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plant Manager, Cardinal Operating Company, Brilliant, Ohio

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

Bank Past Presidents & Directors

The journey to becoming the institution we are today began in Martins Ferry,
Ohio in 1902. Originally founded as The German Savings Bank and renamed
to The Citizens Savings Bank in 1918, the last 120 years have seen growth
and change that would have been unimaginable at its' founding. The bank
has grown through sound management, the addition of new offices and the
acquisition of others. With the name change from The Citizens Savings Bank to
Unified Bank in 2018, it has and will continue to move forward.

The growth and success of the bank has been attributed to the association of
many dedicated individuals.

PAST PRESIDENTS
Edward E. McCombs, 1902-1936
John E. Reynolds, 1936 – 1940
Harold H. Riethmiller, 1940 – 1973
James W. Everson, 1973 – 2002

Past Board of Directors
Edward E. McCombs, 1902-1936*
John E. Reynolds, 1902-1940
Dr. Joseph 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
Chris 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
Michael A. Ley, 1999-2002
Michael J. Arciello 1992 - 2009
Leon F. Favede, O.D., 1981-2012
Herman E. Borkoski, 1987-2012
James W. Everson, 1969-2014*
Robin L. Rhodes, 2007-2015
Andrew C. Phillips, 2007-2015
Errol C. Sambuco, 1996-2015
Samuel J. Jones, 2007-2015
Matthew C. Thomas, 1988-2016
Terry A. McGhee, 2001-2017
Carl A Novak, D.D.S., 2018-2021

* Past Chairman

2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Shareholder Information

United Bancorp, Inc.’s (the Company) common stock trades on The Nasdaq Capital Market tier of The Nasdaq Stock Market
under the symbol UBCP, CUSIP #909911109. At year-end 2022, there were 6,043,851 shares issued, held among approximately
3,000 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, 2022 to December 31, 2022 compared to the same periods in 2021 as reported
by the NASDAQ.

Market Price Range

High ($)
Low ($)

Cash Dividends
Quarter ($)
Cumulative ($)

2 0 2 2
31-Mar 30-Jun 30-Sep 31-Dec

2 0 2 1

31-Mar 30-Jun 30-Sep

31-Dec

$ 18.38
$ 16.51

20.60
15.40

18.04
14.99

16.70
14.35

$ 15.88
$ 12.75

15.66
14.26

15.79
12.90

16.65
14.75

$ 0.3025
$ 0.3025

0.1550
0.4575

0.1575
0.6150

0.1600
0.7750

$ 0.2425
$ 0.2425

0.1450
0.3875

0.1475
0.5350

0.1500
0.6850

Investor Relations:

Annual Meeting:

Stock Trading:

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

The Annual Meeting of Shareholders
will be held at 2:00 p.m., April 19,
2023 at the Corporate Offices in
Martins Ferry, Ohio.

Internet:

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

Independent Auditors:

S.R. Snodgrass, P.C.
2009 Mackenzie Way, Suite 340
Cranberry Township, PA 16066
(724) 934 0344

Corporate Offices:

Raymond James
222 South Riverside Plaza
7th Floor
Chicago, Illinois 60606
Anthony LanFranco
312-655-2961

Stifel, Nicolaus & Company Inc.
6636 Longshore Street
Dublin, Ohio 43017
Steven Jefferis
877-875-9352

Piper | Sandler
Johathan Rook
1 Greewich Plz
Greewich, CT 06830-6352
212-466-8036

Unified Bank Building
201 South 4th Street, Martins Ferry, Ohio 43935
Randall M. Greenwood
Corporate Secretary
(888) 275-5566 (EXT 6181)
(740) 633-0445 (EXT 6181)
(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

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

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, 2022 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

We are pleased to report on the earnings performance
of our Company for the fourth quarter and for the year
2022. For the quarter ended December 31, 2022, our
Company achieved net income of $2,306,000 and diluted
earnings per share of $0.40, which were respective decreases
of $150,000 and $0.01 over the previous year. For the year
ended December 31, 2022, our Company produced net
income of $8,657,000 and diluted earnings per share of
$1.50, which were both respectively lower than the same
period the previous year by $794,000 and $0.12. Impacting
our Company’s earnings performance for the most recently
ended quarter in comparison to last year is that last year, we
had nonrecurring income which included: a gain of
$225,000 on the sale of real property owned by our
company, a payout on bank owned life insurance of
$100,000 and a negative provision for loan losses (or, credit)
of $400,000. Even with all of this non-recurring income
realized the previous year, which totaled approximately
$600,000 or $0.11 per diluted share, our diluted earnings
per share for the fourth quarter of 2022 was $0.40, a decline
of only $0.01. Similarly, comparing year-ended 2022 to last
year, our Company generated more non-recurring income
the previous year which led to the decrease in earnings in
2022. Specifically--- and, outside of the aforementioned
non-recurring income items--- our Company did not have
gains on sale of available-for-sale securities which totaled

Total Assets (In Thousands)

$760,000

$740,000

$720,000

$700,000

$680,000

$660,000

$640,000

$693,402

$724,456

$757,400

2020

2021

2022

$1,250,000 the previous year, along with a higher level of
negative provisioning from the loan loss reserve of $300,000.
Even with this absence of non-recurring income in the most
recently completed year, our Company was able to produce
its second highest level of both diluted earnings per share
and net income in its history which was only lower than the
record levels that we achieved the previous year. In 2022,
we were able to offset this nonrecurring income realized
last year by more fully leveraging of our capital and
changing of the mix of our Company’s balance sheet from
lower-yielding cash investments into higher-yielding loan
and securities investments. With the extreme tightening
bias of the Federal Open Market Committee (FOMC) with
monetary policy, which began in the first quarter of 2022

10 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

and became much stronger as the year has progressed
(especially over the course of the second six months of the
year), we have experienced a prime opportunity to invest,
once again, in both municipal and agency securities as both
intermediate and longer-term yields have risen to levels
that we have not seen for a couple of years. Remaining
patient and not investing in any municipal or agency
securities since the first quarter of 2020 until this year, we
are pleased to have the opportunity that developed this
past year, which enabled us to change the overall mix of our
balance sheet from a more cash-intensive, liquid position to
one that is longer-duration and higher yielding. This
allowed our Company to more fully leverage capital by
growing total assets as of December 31, 2022 to a level of
$757.4 million, an increase over the previous year of $32.9
million or 4.6%. This growth in our total assets was primarily
driven by the growth that our Company experienced in
securities and other restricted stock, along with minimal
growth in its loan portfolio. As of December 31, 2022, gross
loans increased by $6.5 million, or 1.4%, over the previous
year to a level of $460.9 million. Overall, our Company did
have acceptable origination volume; but, we experienced
several large payoffs on loans whereby the borrowers sold
the underlying collateral securing said loans. This was not
necessarily bad, since it allowed us to redeploy most of
these funds at higher yields. Regarding securities and other
restricted stock, we saw our balances increase year-over-
year by $71.3 million, or 48.7%, to a level of $217.6 million.
Of significance is the quarter-ending balances for securities
and other restricted stock are at higher levels than the
quarterly average by $31.0 million. With the changing mix
of and added horsepower to our balance sheet in 2022, we
saw an increase in the level of interest income that we
generated. Until the final three quarters of 2022, our
Company had not experienced growth in interest income
since the first quarter of 2020 (which was the quarter the
pandemic-related slowdown and related Zero Interest Rate
Policy commenced). For the most recently ended quarter,
interest income increased by $1.8 million, or 28.8%, which
was higher on a percentage basis than the increase in
interest income for the entire year of 2022, which was $3.0
million or 12.0%. We believe that we will continue to see
improvement in the level of interest income that we will
generate in the coming quarters.

Considering the increase in the level of interest income that
we generated and the less significant increase in our total
interest expense in the fourth quarter ended December 31,
2022, our Company experienced an increase in the net
interest income that it realized during the quarter of
$905,000 or 16.2%. For the year 2022, net interest income
increased by $2.3 million or 10.3%. The acceleration of the
net interest income on a percentage basis in this most

Loans-Net (In Thousands)

$460,000

$450,000

$440,000

$430,000

$420,000

$410,000

$400,000

$438,378

$450,699

$458,823

2020

2021

2022

recently ended quarter and the increase thereof that we
achieved this past year are attributable to our overall
success in managing interest expense, even though our
Company experienced growth in total deposits of $44.8
million, or 7.4%, year-over-year and operated in an extreme
rising rate environment. Due to both volume and rate, our
interest expense increased in the most recently ended
quarter by $865,000 from the previous year. As with most
financial institutions, we saw our interest expense levels
accelerate over the course of the year with the FOMC’s
aggressive tightening of monetary policy the most extreme
that we have seen in more than forty years. As we enter the
new year, we believe that the increase in the level of the
interest income that we realize will outpace the degree to
which interest expense rises; thus, continuing the positive
trend relating to the improvement in the level of net
interest income that our Company realizes; although, at
lower levels than achieved in 2022. Contributing to this
anticipated improvement is the level of fixed rate, term
deposits that we successfully attracted early in the third
quarter at reasonably priced levels relative to current rates.
Attracting this fixed rate, term funding very early in the
tightening cycle at reasonable pricing levels should afford
our Company the ability to not be as price competitive for
term funding as rates continue to increase. At year-end
2022, total deposits were $649.9 million.
Of the
aforementioned growth in total deposits year-over-year,
$45.5 million was achieved in term funding, as mentioned,
at very competitive rates compared to the current
environment. As of December 31, 2022, on a year-over-year
basis we saw our net interest margin increase by nineteen
basis points from 3.48% to 3.73%.

Over the course of 2022, our Company’s bottom-line net
income was impacted by the strong inflationary and
corresponding fast-paced, rising-rate environment in which
we operated. As of December 31, 2022, the decline in some
of our fee-income related lines of business (primarily
relating to mortgage origination) and, as previously
mentioned, the nonrecurrence of substantial security gains

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

$710,000

$650,000

$590,000

$530,000

$470,000

$410,000

$350,000

Total Average Earning Assets

(In Thousands)

$643,465

$666,744

$685,476

2020

2021

2022

and other income realized the previous year strongly
influenced the decrease in the level of non-interest income
that our Company realized in 2022. At year-end, non-
interest income declined by $1.6 million or 28.4%. With the
strong inflationary pressures under which we operated this
past year, our Company experienced an increase in total
noninterest expense. In 2022, total noninterest expense
increased by $1.5 million or 8.2%. Most of this increase in
non-interest expense is correlated to a higher level of
employee-related expenses tied to more optimum staffing
levels throughout our company, higher IT-related expense
due to our investment in our future and higher customer
utilization, higher wage levels attributed to the tight labor
market and incentive payouts. Even though our Company
saw non-interest expense increase over the course of the
past twelve months, we did have a focus on achieving cost
savings in appropriate areas. A few of the recent cost
containment initiatives implemented by our Company that
led to cost savings this past year were the consolidation of
our former banking centers located in both Dillonvale and
Amesville, Ohio into other in-market banking centers and
the closure of our Loan Production Office in Wheeling, West
Virginia. We will continue to focus on containing non-
interest expense levels throughout our Company while
selectively investing in our future as the environment in
which we operate becomes more challenging.

We have successfully maintained credit-related strength
and stability within our loan portfolio over the course of the
past two years during the pandemic-induced economic
downturn and this trend continued for our Company this
past year. At December 31, 2022, our total non-accrual
loans were $182,000 or 0.04% of total loans. This level of
non-accrual loans was a decline of $4.0 million over the
previous year as we resolved an issue with a non-performing
commercial relationship that we previously disclosed. The
resolution of this matter did lead to net loans charged off,
excluding overdraft charge offs, of $558,000, which was
0.12% of average loans, a year-over-year increase of

$450,000. In addition, other real estate and repossession
(OREO) increased by $3.1 million year-over-year. At year-
end, nonaccrual loans and OREO to total assets was a very
solid 0.49%, along with loans past due 30+ days at $425,000
or 0.09% of total loans. As of December 31, 2022, our
Company continues to be well capitalized with equity to
assets of 7.9% and total shareholders’ equity of $59.7
million. As with most financial institutions in this time of
rapidly rising rates from a zero-interest rate environment,
our Company did see a reduction in total shareholder’s
equity. This reduction is primarily attributed to an
accumulated other comprehensive
(AOCI)
adjustment related to current losses within our securities
portfolio. At the most recent year-end, total shareholder’s
equity was reduced by an accumulated other accumulated
loss, net of tax benefits of $9.3 million. Accordingly, we saw
our book value decline on a year-over-year basis.

income

As the economy more fully recovered and started to heat-
up over the course of this past year, we saw opportunities to
more fully leverage our capital and change the mix of our
balance sheet into longer-term, higher-yielding assets and,
once again, focus on growing our Company. Even though
the Federal Open Market Committee (FOMC) of the Federal
Reserve aggressively raised the target rate for federal funds
in 2022, we were able to rebalance and grow our balance
sheet which produced positive operating results for our
Company. During each quarter of this past year, we saw an
increase in the level of net interest income that our Company
generated after not experiencing this for several quarters
after the commencement of the economic slowdown
related to the pandemic. With the change in the mix of our
balance sheet into higher yielding assets, we continued to
see our net interest margin increase in a positive fashion
over the course of the year. In addition, by investing in
municipal securities and having higher balances in these
tax-exempt investments for the first time in a couple of
years, we saw greater tax efficiency which should continue
going forward and provide additional benefit to our
bottom-line. Like almost every other financial services
organization
interest rate
in today’s rapidly rising
environment, our Company does have an accumulated
other comprehensive loss primarily attributed to its
investment portfolio, which continued to have an impact
on our reported capital levels. Ultimately, our Company is
considered to be well capitalized and this does not have an
impact on regulatory capital at the bank-level. Our growth
goal for our Company remains to increase our total assets to
a level of $1.0 billion or greater in the short to intermediate
term. This will be a challenge for us as rates are rapidly
increasing and there are signs that our economy is now
slowing as the FOMC fights off heightened inflation. With
the higher costs with which we are presently confronted

2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

due to inflation and expenses related to achieving the
growth that we seek, we have seen some increase in our
overhead expenses. But, we firmly believe that we are
doing the things necessary for us to remain relevant in
these ever-changing times and will see a positive return on
our investments, which will help us to achieve greater
efficiencies and better returns as we execute on our strategy
for growth.

Our primary focus is protecting the investment of our
shareholders in our Company and rewarding them in a
balanced fashion by growing their value and paying an
attractive cash dividend. In these areas, our shareholders
have been nicely rewarded with a year-over-year increase in
cash dividends paid of $0.09, or 13.1%, which is inclusive of
a special cash dividend of $0.15 paid in the first quarter.
Even though our Company and industry have been through
a couple of challenging years from an operating perspective
due to the pandemic, we are now fully looking forward and
focusing on growing and building a better, more profitable
company. In the short-term, there is clearly a threat that the
FOMC could overcorrect by raising rates too quickly and
highly; thus, having a negative impact on our economy by
pushing it into a recessionary state. We are hopeful that this
does not occur and obstruct our vision for growth. As
always, we are highly optimistic about the potential of our
Company. Over the last couple of years, we have become
more efficient and better at delivering our products and
services in a fashion demanded by our evolving markets.
We will continue to build upon our solid foundation and
have a longer-term vision. With a keen focus on continual
process improvement, product development and delivery,
we firmly believe the future for our Company is very bright.
This past year our Company achieved solid performance
and produced the second highest level of net income in our
history, which produced a return on assets (ROA) of 1.18%
and return on equity (ROE) of 14.7%. Once again, this past
year our Company was recognized by American Banker in

Net Income (In Thousands)

$9,500

$8,000

$6,500

$5,000

$3,500

$2,000

$500

$7,953

$9,451

$8,657

2020

2021

2022

their annual “Top 200 Publicly Traded Community Banks”,
coming in at 84. This accomplishment during exceedingly
challenging times makes us extremely proud of what we
are achieving at United Bancorp, Inc.

Earning Assets -Loans
The Company’s gross loans totaled $460.9 million at
December 31, 2022, representing a $6.5 million, or 1.43%,
increase over the $454.4 million at December 31, 2021.
Average loans totaled $462.7 million for 2022, representing
a 2.42% increase compared to average loans of $451.8
million for 2021.

The increase in gross loans from December 31, 2021 to
December 31, 2022 was primarily an increase in commercial
real estate by $3.5 million and residential real estate by $3.9
million.

The Company's commercial and commercial real estate
loan portfolio represents 78.3% of the total portfolio
at December 31, 2022 compared to 78.7% at December 31,
2021. The Company’s commercial and commercial real
estate loans increased approximately $3.2 million from
December 31, 2021 to December 31, 2022. We utilize all the
SBA, Ohio Department of Development and State of Ohio
loan programs as well as local revolving loan funds to best
fit the needs of our customers.

The Company’s installment lending portfolio represented
1.3% of the total portfolio at December 31, 2022, compared
to 1.5% at December 31, 2021. Competition for installment
loans principally comes from the captive finance companies
offering low to zero percent financing for extended terms.

The Company's residential real estate portfolio represents
20.4% of the total portfolio at December 31, 2022, compared
to 19.8% at December 31, 2021. Residential real estate loans
are comprised of 1-, 3-, and 5-year adjustable-rate mortgages
and 15-year fixed rate loans used to finance 1-4 family units.
The Company also offers fixed-rate real estate loans through
our Secondary Market Real Estate Mortgage Program.
Once these fixed-rate loans are originated and immediately
sold without recourse in what is referred to as the secondary
market, the Company does not assume credit risk or interest
rate risk in this portfolio. This arrangement is quite common
in banks and saves our customers from looking elsewhere
for their home financing needs.

The Company did recognize a gain on the sale of secondary
market loans of $36,000 in 2022 and a gain of $272,000 in
2021.

The allowance for loan losses represents the amount which

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

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 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 place loans greater than 90 days past
due on non-accrual status 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 on a cash basis as payment is received if the
loan is well secured. If the loan is not deemed well secured,
payments are credited to principal.

Management and the Board of Directors believe the current
balance of the allowance for loan losses is sufficient to cover
probable incurred losses. Refer to the 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
agency-backed securities, tax-exempt obligations of state
and political subdivisions and certain other investments.
Securities available for sale at December 31, 2022 increased
approximately $71.3 million from December 31, 2021 totals.
To take advantage of a favorable yield curve on state and
municipal obligation, the Company sold certain available-
for-sale securities for a total gain of approximately $1.3
million during 2021.

Sources of Funds – Deposits
The Company’s primary source of funds is retail core

deposits from individuals and business customers. These
core deposits include all categories of time deposits,
excluding certificates of deposit greater than $250,000.
Total deposits increased $44.8 million, or 7.4%, from $605.1
million at December 31, 2021 to $649.9 million at December
31, 2022. Overall total deposit growth was mainly focused
on non-interest and certificate of deposit accounts.

The Company has a strong deposit base from 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 $250,000 are not
considered part of core deposits and, as such, are used to
balance rate sensitivity as a tool of funds management.
Certificates of deposit greater than $250,000 increased $6.9
million, from $4.4 million at December 31, 2021, to $11.3
million at December 31, 2022.

Sources of Funds – Securities Sold Under Agreements to
Repurchase and Other Borrowed Funds

Other interest-bearing liabilities include securities sold
under agreements to repurchase, and Federal Home Loan
Bank (“FHLB”) advances. Securities sold under agreements
to repurchase increased approximately $2.4 million from
December 31, 2021 to December 31, 2022. Securities sold
under agreements to repurchase totaled $18.1 million and
$15.7 million at December 31, 2022 and 2021, respectively.

On May 14, 2019 the Company issued $20,000,000 of junior
subordinated debentures in denominations of not less than

Total Allowance for Loan Losses
to Total Loans

1.20%

1.00%

0.80%

0.60%

0.40%

0.20%

1.15%

0.81%

0.45%

2020

2021

2022

14 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

$250,000. The debentures bear interest at a fixed rate of
6.0% until May 2024, which then becomes a floating interest
rate equal to the three-month LIBOR (or an equivalent
index) plus 3.625%, resetting quarterly. Interest on the
subordinated notes will be payable semiannually through
May 2024 and quarterly thereafter through the maturity
date of May 2029. Principal is due upon maturity. The
debentures are unsecured and payable to various investors.
For purposes of computing regulatory capital, the
debentures are included in Tier 2 Capital. The subordinated
notes may not be repaid in whole or in part prior to the fifth
anniversary of the issue date (May 2019).

Performance Overview 2022 to 2021

Net Income
The Company reported basic and diluted earnings per
share of $1.50 and net income of $8,657,000 for the year
ended December 31, 2022, a decrease of $794,000, or 8.4%,
over net income of $9,451,000 for the year ended December
31, 2021.

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. Comparing the year ended
December 31, 2022 to 2021, the Company’s net interest

margin was 3.73% compared to 3.48%, an increase of 19
basis points.

Average interest-earning assets increased $18.7 million in
2022 as compared to 2021 while the associated weighted-
average yield on these interest-earning assets increased
from 3.87% in 2021 to 4.21% for 2022. Average interest-
bearing liabilities increased $18.0 million in 2022 as
compared to 2021, while the associated weighted-average
costs on these interest-bearing liabilities decreased from
0.52% in 2021 to 0.63% in 2022.

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 or credit for loan losses is a charge or credit
to expense recorded to maintain the related balance sheet
allowance for loan losses at an amount considered adequate
by Management and the Board of Directors to cover
probable incurred losses in the portfolio. In 2022 the
Company released $955,000 in credit reserves as compared
to a $1,255,000 credit release in 2021.

At December 31, 2022, our total non-accrual loans were
$182,000 or 0.04% of total loans. This level of non-accrual
loans was a decline of $4.0 million over the previous year as
we resolved an issue with a non-performing commercial
relationship that we previously disclosed. The resolution of

(In thousands)

2022

2021

Noninterest income
Customer service fees............................................................................................................................................................$
Gains on sales of loans ................................................................................................................................................................
Earnings on bank-owned life insurance .........................................................................................................................
Realized gains on available-for-sale securities .............................................................................................................
Other income ............................................................................................................................................................................

Total noninterest income ..................................................................................................................................................$

Noninterest expense

Salaries and employee benefits .........................................................................................................................................$

Occupancy and equipment.................................................................................................................................................
Professional services ..............................................................................................................................................................
Insurance ....................................................................................................................................................................................
Deposit insurance premiums ..............................................................................................................................................
Franchise and other taxes ....................................................................................................................................................
Marketing expense .................................................................................................................................................................
Printing and office supplies .................................................................................................................................................
Amortization of intangibles ................................................................................................................................................
Other expenses ........................................................................................................................................................................

Total noninterest expense ..............................................................................................................................................$

2,978
36
708
-
361
4,083

10,305
2,217
1,451
568
198
562
346
110
150
3,983
19,890

2,852
272
802
1,250
530
5,706

9,698
2,364
1,217
531
195
551
380
115
150
3,191
18,392

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

this matter did lead to net loans charged off, excluding
overdraft charge offs, of $558,000, which was 0.12% of
average loans, a year-over-year increase of $450,000. In
addition, other real estate and repossession (OREO)
increased by $3.1 million year-over-year. At year-end,
nonaccrual loans and OREO to total assets was a very solid
0.49%, along with loans past due 30+ days at $425,000 or
0.09% of total loans.

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

life

Noninterest income for the year ended December 31, 2022
was $4.1 million, a decrease of $1.6 million, compared to
$5.7 million for the year ended December 31, 2021. The
main driver of this decrease was the $1.3 million gain
recognized on the sale of available-for- sale securities in
2021.

Noninterest Expense
With the strong inflationary pressures under which we
operated this past year, our Company experienced an
increase in total noninterest expense. In 2022, total
noninterest expense increased by $1.5 million or 8.2%.
Most of this increase in non-interest expense is correlated
to a higher level of employee-related expenses tied to more
optimum staffing levels throughout our company, higher
IT-related expense due to our investment in our future and
higher customer utilization, higher wage levels attributed
to the tight labor market and incentive payouts. Even
though our Company saw non-interest expense increase
over the course of the past twelve months, we did have a
focus on achieving cost savings in appropriate areas.

Income tax expense for 2022 was $879,000 compared to
$1,230,000 in 2021, a decrease of $351,000. The Company’s
effective income tax rate was 9.2% in 2022 and 11.5% in
2021. Refer to Note 9 Income Taxes for a reconciliation of
the effective tax rate for the Company.

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 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 – earnings
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.

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. Generally, a negative gap position will cause
profits to decline in a rising interest rate environment and
cause profits to increase in a falling interest rate environment.

16 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Conversely, a positive gap will cause profits to decline in a
falling interest rate environment and increase is a rising
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.
The Company achieves this by 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 unacceptably low profit margins.
Spread management without consideration of gap positions
interest rate
can cause acceptable profits
environments and unacceptable profits in others. A sound
asset/liability management program combines gap and
spread management into a single cohesive system.

in some

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 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.

(Dollars in Thousands)

Net Portfolio Value - December 31, 2022

Change in Rates
+200
+100
Base
-100
-200

$ Amount $ Change % Change
1,133
176,852
1,517
177,236
175,719
-
(5,128)
170,591
(16,358)
159,361

1%
1%
-
-3%
-9%

(Dollars in Thousands)

Net Portfolio Value - December 31, 2021

Change in Rates
+200
+100
Base
-100

$ Amount $ Change % Change
18,563
184,334
10,675
165,771
155,096
-
(16,411)
138,685

12%
7%
-
-11%

The projected volatility of the net present value at both
December 31, 2022 and 2021 fall within the general
guidelines established by the Board of Directors. The 2022
NPV table shows that in a falling interest rate environment,
in the event of a 100 basis point change, the NPV would
decrease 3%. In the event of a 200 basis point change. The
NPV would decrease 9%.

In an upward change in interest rates, the Company’s NPV
would increase 1% with a 100 basis point interest rate
increase. In a 200 basis point rate increase, the Company’s
NPV would also increase 1%.

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

The following table is a summary of selected quarterly results of operations for the years ended December 31, 2022 and 2021.

Three Months Ended

March 31

June 30

September 30

December 31

(In thousands, except per share data)
2022

Total interest income
Total interest expense

Net interest income

(Credit) Provision for losses on loans
Other income
General, administrative and
other expense

Income before income taxes
Federal income taxes

Net income

Earnings per share
Basic
Diluted

$
$

5,997
487

5,510

(500)
987

5,110

1,887
136

1,751

0.30
0.30

$
$

6,445
477

5,968

(485)
988

4,849

2,592
295

2,297

0.40
0.40

$
$

7,297
928

6,369

15
1,043

4,879

2,518
215

2,303

0.40
0.40

$
$

7,922
1,381

6,541

15
1,065

5,052

2,539
233

2,306

0.40
0.40

Three Months Ended

March 31

June 30

September 30

December 31

(In thousands, except per share data)
2021

Total interest income
Total interest expense

Net interest income

(Credit) Provision for losses on loans
Other income
General, administrative and
other expense

Income before income taxes
Federal income taxes

Net income

Earnings per share
Basic
Diluted

$
$

6,088
775

5,313

(205)
926

4,449

1,995
87

1,908

0.33
0.33

$
$

6,233
676

5,557

(250)
1,142

4,550

2,399
214

2,185

0.38
0.38

$
$

6,234
629

5,605

(400)
2,287

4,942

3,350
448

2,902

0.50
0.50

$
$

6,153
516

5,637

(400)
1,351

4,451

2,937
481

2,456

0.41
0.41

2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Average Balances, Net Interest Income and
Yields Earned and Rates Paid
The following table provides 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,
2022 and 2021. 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.

(Dollars In thousands)

2022
Interest
Average
Income/ Yield/
Balance Expense Rate

2021
Interest
Average
Income/ Yield/
Balance Expense Rate

Assets
Interest-earning assets
Loans (1) ..................................................................................................... $ 462,692
Taxable securities - AFS ........................................................................
54,852
Tax-exempt securities - AFS (1) .............................................................. 120,073
44,668
Federal funds sold .......................................................................................
FHLB stock and other.................................................................................
3,191
Total interest-earning assets ................................................................... 685,476

Noninterest-earning assets
Cash and due from banks ...................................................................
8,301
Premises and equipment (net) ..........................................................
12,547
Other nonearning assets .....................................................................
32,471
Less: allowance for loan losses ..........................................................
(3,020)
50,299
Total noninterest-earning assets ...........................................................
Total assets..................................................................................................... $ 735,775

Liabilities & stockholders’ equity
Interest-bearing liabilities
Demand deposits ................................................................................... $ 262,763
Savings deposits ..................................................................................... 144,283
67,848
Time deposits ...............................................................................................
23,726
Subordinated debentures ........................................................................
22,581
Repurchase agreements ...........................................................................
Total interest-bearing liabilities ............................................................. 521,201

Noninterest-bearing liabilities
Demand deposits ................................................................................... 151,842
4,016
Other liabilities ........................................................................................
Total noninterest-bearing liabilities ..................................................... 155,858
Total liabilities ............................................................................................... 677,059
Total stockholders’ equity ........................................................................
58,716
Total liabilities & stockholders’ equity ................................................. $ 735,775
Net interest income ....................................................................................
Net interest spread .....................................................................................

$ 25,571

Net yield on interest-earning assets ....................................................

20,748
1,899
5,565
493
139
28,844

4.48%
3.46
4.63
1.10
4.35
4.21

$ 451,762
13,297
118,062
79,698
3,925
666,744

20,220
467
4,908
101
81
25,777

4.48%
3.51
4.16
0.13
2.06
3.87

845
77
722
1,387
242
3,273

0.32%
0.05
1.06
5.85
1.07
0.63

8,593
13,469
38,170
(4,576)
55,656
$ 722,400

$ 256,638
133,826
69,591
23,665
19,452
503,172

140,555
7,512
148,067
651,239
71,161
$ 722,400

313
17
920
1,323
23
2,596

0.12%
0.01
1.32
5.59
0.12
0.52

3.58%

3.73%

$ 23,181

3.35%

3.48%

• For purposes of this schedule, nonaccrual loans are included in loans.
• Fees collected on loans are included in interest on loans. Not material for comparative purposes.
(1) Shown on a tax equivalent basis. Federal taxes of 21%.

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Diluted Earning Per Share

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 2022. 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

$1.70

$1.50

$1.30

$1.10

$0.90

$0.70

$0.50

1.39

1.62

1.50

2020

2021

2022

is multiplied by the change in rate.

Capital Resources

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.

Internal capital growth, through the retention of
earnings, is the primary means of maintaining capital
adequacy for the Bank. The Company’s stockholders’
equity was $59.7 million and $71.1 million at December 31,
2022 and 2021, respectively. Total stockholders’ equity in
relation to total assets was 7.89% at December 31, 2022 and
9.90% at December 31, 2021. Please refer to the Consolidated

2022 Compared to 2021
Increase/(Decrease)
(In thousands)

Interest and dividend income
Loans ....................................................................................................................................$
Taxable securities available for sale ..........................................................................
Tax-exempt securities available for sale ..................................................................
Federal funds sold ...........................................................................................................
FHLB stock and other .....................................................................................................
Total interest and dividend income ..............................................................................

Interest expense
Demand deposits.............................................................................................................
Savings deposits...............................................................................................................
Time deposits ....................................................................................................................
Subordinated debentures ............................................................................................
Repurchase agreements................................................................................................
Total interest expense ........................................................................................................

Total
Change

528
1,432
657
392
58
3,067

532
60
( 198 )
64
219
677

Change
Due To
Volume

490
1,367
550
( 63 )
( 18 )
2,326

8
1
( 23 )
–
4
( 10 )

Change
Due To
Rate

38
65
107
455
76
741

524
59
( 175 )
64
215
687

Net interest income .............................................................................................................$

2,390

$ 2,336

20 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Statements of Stockholders’ Equity for a detailed roll
forward of stockholders’ equity from 2021 to 2022.

The Company has established a Dividend Reinvestment
Plan (“The Plan”) for stockholders 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. Stockholders who do not
wish to participate in The Plan continue to receive cash
dividends, as declared in the usual and customary manner.

$75,000

$70,000

$65,000

$60,000

$55,000

$50,000

$45,000

Equity Capital (In Thousands)

$68,328

$71,701

$59,737

2020

2021

2022

The Company’s Articles of Incorporation permits the
creation of a class of preferred shares with 2,000,000
authorized shares. If utilized, 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 class of preferred
shares 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, 2022, the
Company has not issued any preferred shares.

On May 14, 2019 the Company issued $20,000,000 of
junior subordinated debentures in denominations of not
less than $250,000. The debentures bear interest at a fixed
rate of 6.0% until May 2024, which then becomes a floating
interest rate equal to the three-month LIBOR (or an
equivalent index) plus 3.625%, resetting quarterly. Interest
on the subordinated notes will be payable semiannually
through May 2024 and quarterly thereafter through the
maturity date of May 2029. Principal is due upon maturity.
The debentures are unsecured and payable to various
investors. For purposes of computing regulatory capital,
the debentures are included in Tier 2 Capital. The
subordinated notes may not be repaid in whole or in part
prior to the fifth anniversary of the issue date (May 2019).

Cash Dividends Per Share

$0.78

$0.63

$0.48

$0.33

$0.18

$0.03

$-0.12

$0.570

$0.685

$0.775

2020

2021

2022

In 2005, a Delaware statutory business trust owned by the
Company, United Bancorp Statutory Trust I (“Trust I” or the
“Trust”), issued $4.1 million of mandatorily redeemable
debt securities which mature in 2035. The sale proceeds
were utilized to purchase $4.1 million of the Company’s
subordinated debentures. The Company’s subordinated
debentures are the sole asset of Trust I. 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 $4.1 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. The interest rate is a variable rate per annum,
reset quarterly, equal to three-month LIBOR plus 1.35% and
is payable quarterly.

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 $247.7 million at December 31, 2022,
compared to $229.3 million at December 31, 2021. 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 cash requirements.

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 2022 and 2021 follows.

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Net cash provided by operating activities totaled $8.4
million and $8.2 million for the years ended December 31,
2022 and 2021, respectively. The adjustments to reconcile
net income 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.

For the year ended December 31, 2022, net cash used in
investing activities totaled $103.3 million. For the year
ended December 31, 2021 net cash used in investing
activities totaled $1.2 million. The changes in net cash from
investing activities include loan growth, security purchases,
as well as normal maturities, security calls/sales and
reinvestments of securities and premises and equipment
expenditures.

Net cash provided by financing activities totaled $41.9
million for the year ended December 31, 2022. For the year
ended December 31, 2021 net cash provided by financing
activities totaled $24.4 million. The net cash provided by
financing activities in 2022 was primarily attributable to a
$44.8 million increase in deposits.

Management feels that it has the capital adequacy,
profitability, liquidity 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

Return On Average Assets

1.35%

1.25%

1.15%

1.05%

0.95%

0.85%

0.75%

1.13%

1.31%

1.18%

2020

2021

2022

investments

in fixed assets or
that have significant
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.

22 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of United Bancorp, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of United Bancorp, Inc. (the
“Company”) as of December 31, 2022; the related consolidated statements of income, comprehensive
income, changes in stockholders’ equity, and cash flows for the year then ended; and the related notes
to the consolidated financial statements (collectively, the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2022, 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.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audit. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent, with respect to the Company, in accordance with U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our
audit, we are required to obtain an understanding of internal control over financial reporting 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.

Our audit included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for our opinion.

PITTSBURGH, PA

PHILADELPHIA, PA

WHEELING, WV

STEUBENVILLE, OH

2009 Mackenzie Way • Suite 340

2100 Renaissance Blvd. • Suite 110

980 National Road

511 N. Fourth Street

Cranberry Township, PA 16066
(724) 934-0344

King of Prussia, PA 19406
(610) 278-9800

Wheeling, WV 26003
(304) 233-5030

Steubenville, OH 43952
(304) 233-5030

S.R. Snodgrass, P.C. d/b/a S.R. Snodgrass, A.C. in West Virginia

Report of Independent Registered Public Accounting Firm

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the
financial statements that were communicated or required to be communicated to the Audit Committee
and that: (1) relate to accounts or disclosures that are material to the financial statements; and (2) involve
our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter, in any way, our opinion on the financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.

Allowance for Loan Losses – Qualitative Factors

Description of the Matter
The Company’s loan portfolio totaled $460.9 million as of December 31, 2022, and the associated
allowance for loan losses was $2.1 million. As discussed in Note 1 and 4 to the consolidated financial
statements, determining the amount of the allowance for loan losses requires significant judgment about
the collectability of loans, which includes an assessment of quantitative factors such as historical loss
experience within each risk category of loans and testing of certain commercial loans for impairment.
Management applies additional qualitative adjustments to reflect the inherent losses that exist in the
loan portfolio at the balance sheet date that are not reflected in the historical loss experience. Qualitative
adjustments are made based upon changes in lending policies and practices, economic conditions,
changes in the loan portfolio mix, trends in loan delinquencies and classified loans, loan review system,
collateral values, and concentrations of credit risk for the commercial loan portfolios.

We identified these qualitative adjustments within the allowance for loan losses as critical audit matters
because they involve a high degree of subjectivity. In turn, auditing management’s judgments regarding
the qualitative factors applied in the allowance for loan losses calculation involved a high degree of
subjectivity.

How We Addressed the Matter in Our Audit
The primary procedures performed to address this critical audit matter included:

 Obtaining an understanding of the design and implementation of controls relating to

management’s calculation of the allowance for loan losses.

 Analytically evaluating the qualitative factors year over year for directional consistency, testing

for reasonableness, and obtaining evidence for significant changes.

 Testing the mathematical accuracy of the allowance for loan losses calculation, including the
calculation of the qualitative factors. This testing included evaluating the completeness,
accuracy, and relevance of the data and inputs utilized in management’s estimate.

 Evaluating the appropriateness of management’s risk-rating processes by utilizing internal
credit review specialists to ensure that the risk ratings applied to the commercial loan portfolio
were appropriate.

 Evaluating the accuracy and completeness of disclosures in the consolidated financial

statements.

Report of Independent Registered Public Accounting Firm

We have served as the Company’s auditor since 2022.

Cranberry Township, Pennsylvania
March 17, 2023

December 31, 2004 and 2003

ASSETS

2004

2003

Cash and due from financial institutions

Securities available for sale - at market
Securities held to maturity – estimated fair value of
$15,475,005 and $16,344,353 at December 31, 2004
and 2003, respectively
Federal Home Loan Bank stock – at cost
Total loans
Allowance for loan losses

Loans – net
Premises and equipment
Assets
Accrued interest receivable
Cash and due from banks
Other real estate and repossessions
Interest-bearing demand deposits
Core deposit and other intangible assets
Cash and cash equivalents
Bank owned life insurance
Other assets

$ 7,580,576

$ 8,386,575

Consolidated Balance Sheets
137,816,329
United Bancorp, Inc.
December 31, 2022 and 2021
Consolidated Balance Sheets
14,947,520
December 31, 2022 and 2021
(In thousands, except share data)
4,115,200
(In thousands, except share data)
215,446,870
(2,995,422 )
212,451,448
7,760,360
2,253,212
1,014,207
34,417
7,517,548
2,030,767

140,818,167

15,594,408
3,954,300
198,608,574
(2,843,484 )
195,765,090
8,152,480
2,373,573
940,015
57,452
7,185,507
2,295,402

Total assets

Available-for-sale securities
Loans, net of allowance for loan losses of $2,052 and $3,673 at December 31, 2022 and 2021,

$397,521,584

$ 385,522,969

LIABILITIES AND SHAREHOLDERS’ EQUITY

respectively

Premises and equipment
Demand deposits
Federal Home Loan Bank stock
Noninterest-bearing
Foreclosed assets held for sale, net
Interest-bearing
Savings deposits
Core deposit intangible assets
Time deposits – under $100,000
Goodwill
Time deposits - $100,000 and over
Accrued interest receivable
Total deposits
Federal funds purchased
Deferred federal income tax
Advances from the Federal Home Loan Bank
Bank-owned life insurance
Securities sold under agreements to repurchase
Other assets
Other borrowed funds
Accrued expenses and other liabilities

Total Assets

Total liabilities
Liabilities and Stockholders’ Equity

Commitments

Liabilities
Deposits
Demand
Shareholders’ equity
Savings
Preferred stock - 2,000,000 shares without par value authorized;
no shares issued
Time
Common stock - $1 par value; 10,000,000 shares authorized;
Total deposits
4,126,970 and 3,752,105 shares issued at December 31,
2004 and 2003, respectively
Additional paid-in capital
Retained earnings
Stock held by deferred compensation plan; 62,977 and 55,825
shares at December 31, 2004 and 2003, respectively – at cost
Treasury stock – 273,017 and 227,803 shares at December 31,
2004 and 2003, respectively - at cost
Accumulated comprehensive loss, unrealized losses on
securities designated as available for sale, net of tax

Securities sold under repurchase agreements
Subordinated debentures
Deferred federal income tax
Interest payable and other liabilities

Total liabilities
Stockholders’ Equity

$ 31,777,495
62,038,985
45,143,133
122,018,788
39,651,142
300,629,543
3,180,000
46,680,311
12,612,270
399,283
1,196,066
364,697,473

$ 30,049,919
61,137,605
48,274,042
128,443,059
36,621,372
304,525,997
9,714,000
30,974,611
5,485,399
159,398
2,149,105
353,008,510

4,126,970
25,831,585
7,021,185

3,752,105
25,712,990
6,047,652

(752,437)

(633,842)

(2,767,751)

(2,115,855)

Preferred stock, no par value, authorized 2,000,000 shares; no shares issued
Common stock, $1 par value; authorized 10,000,000 shares; issued 2022 – 6,043,851 shares,

(635,441)
32,824,111

Total shareholders’ equity

(248,591 )
32,514,459

2021 - 6,053,851 shares; outstanding 2022 – 5,740,251, 2021 – 5,791,853

Total liabilities and shareholders’ equity

Additional paid-in capital
Retained earnings
Stock held by deferred compensation plan; 2022 – 174,237 shares, 2021 – 172,538 shares
Unearned ESOP compensation
Accumulated other comprehensive (loss) income
Treasury stock, at cost 2022 – 129,363 shares, 2021 – 84,363 shares

$397,521,584

$ 385,522,969

Total stockholders’ equity
Total liabilities and stockholders’ equity

See Notes to Consolidated Financial Statements

The accompanying notes are an integral part of these statements.

2022

2021

8,279
21,801
30,080

7,653
75,346
82,999

217,624

146,313

458,823
12,144
2,499
3,519
410
682
3,403
2,423
19,000
6,793
757,400

402,341
145,836
101,736
649,913
18,106
23,726
—
5,918
697,663

450,699
12,757
3,704
415
560
682
2,345
—
18,809
5,173
724,456

408,296
140,598
56,242
605,136
15,701
23,665
1,681
6,572
652,755

––

6,044
24,814
41,945
(1,902)
—
(9,336)
(1,828)
59,737
757,400

6,054
23,635
37,847
(1,738)
—
6,964
(1,061)
71,701
724,456

26 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

See Notes to Consolidated Financial Statements

Consolidated Statements of Income
United Bancorp, Inc.
Years Ended December 31, 2022 and 2021
Consolidated Statements of Income
Years Ended December 31, 2022 and 2021
(In thousands, except per share data)
(In thousands except per share data)

2022

2021

20,734

20,181

1,899
4,396
493
139
27,661

1,643
1,630
3,273
24,388
(955)
25,343

2,978
36
708
—
361
4,083

10,305
2,217
1,451
568
198
562
346
110
150
3,983
19,890
9,536
879
8,657
$
1.50 $
1.50 $

468
3,877
101
81
24,708

1,273
1,323
2,596
22,112
(1,255)
23,367

2,852
272
802
1,250
530
5,706

9,698
2,364
1,217
531
195
551
380
115
150
3,191
18,392
10,681
1,230
9,451
1.62
1.62

$
$
$

Interest and Dividend Income

Loans
Securities
Taxable
Tax-exempt

Federal funds sold
Dividends on Federal Home Loan Bank and other stock

Total interest and dividend income

Interest Expense

Deposits
Borrowings

Total interest expense

Net Interest Income
(Credit) Provision for Loan Losses
Net Interest Income After (Credit) Provision for Loan Losses
Noninterest Income

Customer service fees
Net gains on loan sales
Earnings on bank-owned life insurance
Realized gains on available-for-sale securities
Other

Total noninterest income

Noninterest Expense

Salaries and employee benefits
Net occupancy and equipment expense
Professional fees
Insurance
Deposit insurance premiums
Franchise and other taxes
Advertising expense
Printing and office supplies
Amortization of intangible assets
Other

Total noninterest expense

Income Before Federal Income Taxes
Provision for Federal Income Taxes
Net Income
Basic Earnings Per Share
Diluted Earnings Per Share

See Notes to Consolidated Financial Statements

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2022 and 2021
(In thousands)

United Bancorp, Inc.
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2022 and 2021
(In thousands)

Net income
Other comprehensive income (loss), net of tax

2022
8,657 $

2021
9,451

Reclassification adjustment for realized gains on available-for-sale securities included in net income, net

of taxes $— and $263 for each respective period

Unrealized holding losses on available-for-sale securities during the period, net of benefits of $4,605

and $497 for each respective period

Change in funded status of defined benefit plan, net of taxes of $252 and $104 for each respective period
Amortization of prior service included in net periodic pension expense, net of tax benefits of $19 and

$19 for each respective period

Amortization of net loss included in net periodic pension cost, net of taxes of $38 and $57 for each

—

(987)

(17,322)
947

(1,871)
396

(70)

respective period

Comprehensive (loss) income

See Notes to Consolidated Financial Statements

145
(7,643) $

213
7,132

28 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

See Notes to Consolidated Financial Statements

Consolidated Statements of Stockholders' Equity
United Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity
Years Ended December 31, 2022 and 2021
Years Ended December 31, 2022 and 2021
(In thousands, except per share data)
(In thousands except per share data)

Additional
Paid-in
Capital

Common
Stock
$ 6,046 $ 23,166 $

Treasury
Stock and
Deferred

Accumulated
Other

Retained Comprehensive

Compensation Earnings Income (Loss) Total

Balance, January 1, 2021

Net income
Other comprehensive loss
Cash dividends - $0.685 per share
Shares activity for deferred compensation plan
Shares purchased for treasury stock
Expense related to share-based compensation plans
Restricted stock activity

—
—
—
—
—
—
8

—
—
—
63
—
414
(8)

(2,664) $ 32,497 $

—
—
—
(63)
(72)
—
—

9,451
—
(4,101)
—
—
—
—

Balance, December 31, 2021

6,054 $ 23,635 $

(2,799) $ 37,847 $

Net income
Other comprehensive loss
Cash dividends - $0.775 per share
Shares activity for deferred compensation plan
Shares purchased for treasury stock
Expense related to share-based compensation plans
Restricted stock activity

—
—
—
—
—
—
(10)

—
—
—
164
—
1,005
10

—
—
—
(164)
(767)
—
—

8,657
—
(4,559)
—
—
—
—

—
(2,319)
—
—
—
—
—

9,283 $ 68,328
9,451
(2,319)
(4,101)
—
(72)
414
—
6,964 $ 71,701
8,657
(16,300)
(4,559)
—
(767)
1,005
—

—
(16,300)
—
—
—
—
—

Balance, December 31, 2022

$ 6,044 $ 24,814 $

(3,730) $ 41,945 $

(9,336) $ 59,737

See Notes to Consolidated Financial Statements

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Consolidated Statements of Cash Flows
United Bancorp, Inc.
Years Ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows
(In thousands)
Years Ended December 31, 2022 and 2021
(In thousands)

Operating Activities

Net income
Items not requiring (providing) cash:

Depreciation and amortization
(Credit) provision for loan losses
Gain on sale of available-for-sale securities
Amortization of premiums and discounts on securities-net
Amortization of intangible assets
Deferred income taxes
Originations of loans held for sale
Proceeds from sale of loans held for sale
Net gains on sales of loans
Expense related to share-based compensation plans
Net loss (gain) or on sale or write-down of foreclosed assets and other repossessed assets
Increase in cash surrender value of bank-owned life insurance
Amortization of debt issuance costs

Changes in:

Accrued interest receivable
Other assets
Interest payable and other liabilities

Net cash provided by operating activities

Investing Activities

Purchases of available-for-sale securities
Sale of available-for-sale securities
Maturities, prepayments and calls
Net change in loans
Mandatory redemption (purchase) of Federal Home Loan Bank Stock
Purchases of bank-owned life insurance
Purchases of premises and equipment, net
Proceeds from sale of premises and equipment
Proceeds from sales of foreclosed assets
Net cash (used in) investing activities

See Notes to Consolidated Financial Statements

2022

2021

8,657

9,451

1,013
(955)
—
533
150
342
(1,891)
1,927
(36)
1,005
23
(191)
61

(1,058)
(824)
(275)
8,481

(99,992)
—
6,190
(10,415)
1,205
—
(511)
111
156
(103,256)

1,143
(1,255)
(1,250)
384
150
112
(11,631)
11,903
(272)
414
(75)
(441)
61

556
(1,237)
179
8,192

(24,371)
12,684
20,834
(10,864)
473
(259)
(777)
620
451
(1,209)

30 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

See Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows Continued
United Bancorp, Inc.
Years Ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows (continued)
(In thousands)
December 31, 2022 and 2021
(In thousands)

Financing Activities

Net increase in deposits
Net change in securities sold under repurchase agreements
Repurchase of common stock
Cash dividends paid

Net cash provided by financing activities
(Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Supplemental Cash Flows Information

Interest paid on deposits and borrowings
Federal income taxes paid

Supplemental Disclosure of Non-Cash Investing Activities
Transfers from loans to foreclosed assets held for sale

See Notes to Consolidated Financial Statements

2022

2021

44,777
2,405
(767)
(4,559)
41,856
(52,919)
82,999
30,080

3,150
230

$
$

25,601
2,996
(72)
(4,101)
24,424
31,407
51,592
82,999

2,182
710

3,283

$
$

See Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 1: Nature of Operations and Summary of Significant Accounting Policies

December 31, 2022 and 2021

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its
wholly-owned subsidiary, Unified Bank of Martins Ferry, Ohio (“the Bank” or “Unified”). 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, Jefferson and Tuscarawas Counties in Ohio and
Marshall and Ohio Counties in West Virginia and the surrounding localities in northeastern, east-central and southeastern Ohio
and include a wide range of individuals, businesses and other organizations. Unified Bank conducts its business through its
main office in Martins Ferry, Ohio and branches in Bridgeport, Colerain, Dellroy, Dover, Glouster, Jewett, Lancaster
Downtown, Lancaster East, Nelsonville, New Philadelphia, Powhatan Point, St. Clairsville East, St. Clairsville West,
Sherrodsville, Strasburg, Tiltonsville, Ohio and Moundsville West Virginia.

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.

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles
for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s
contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the
transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in
exchange for those goods or services recognized as performance obligations are satisfied.

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial
instruments, such as our loans, investment securities, as well as revenue related to our mortgage banking activities, as these
activities are subject to other GAAP discussed elsewhere within our disclosures.

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our statements
of income as components of non-interest income are as follows:

Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity- or
transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or
some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is
generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer).
Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

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.

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.

32 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

Cash Equivalents

December 31, 2022 and 2021

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At
December 31, 2022 and 2021, cash equivalents consisted primarily of due from accounts with the Federal Reserve and other
correspondent banks.

Currently, the FDIC’s insurance limits are $250,000. At December 31, 2022 and 2021, the Company’s various cash accounts
did not exceed the federally insured limit of $250,000. At December 31, 2022 and 2021, the Company held $21,541,000 and
$74,752,000 at the Federal Home Loan Bank and the Federal Reserve Bank, respectively, which are not subject to FDIC limits.

Securities

Certain debt securities that management has the positive intent and ability to hold to maturity would be classified as “held to
maturity” and recorded at amortized cost. Securities not classified as held to maturity, including equity securities with readily
determinable fair values, are classified as “available for sale” and recorded at fair value, with unrealized gains and losses
excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in
interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded
on the trade date and are determined using the specific identification method.

For debt securities with fair value below amortized cost, when the Company does not intend to sell a debt security, and it is
more likely than not the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit
component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other
comprehensive income.

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,
2022 and 2021, the Company did not have any loans held for sale.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at
their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized
deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of
certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over
the respective term of the loan.

For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-
secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire
balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the
contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of
principal or interest is considered doubtful.

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of
the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans,
or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the
uncollectible loss is reasonably determined.

For all loan portfolio segments except residential and consumer loans, the Company promptly charges-off loans, or portions
thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not
limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action,
including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are
considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated
appraisal or other appropriate valuation of the collateral.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The Company charges-off residential and consumer loans when the Company reasonably determines the amount of the loss.
The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4
family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 120 days past due, charge-
off of unsecured open-end loans when the loan is 120 days past due, and charge down to the net realizable value when other
secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly
document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of
delinquency status, need not be charged off.

For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against
interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for
return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought
current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of
management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection
of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning
a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income
unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the
principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated
rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated
the ability to perform in accordance with the renegotiated terms for a period of at least six months.

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 monthly basis by Bank management and is based upon management’s periodic
review of the collectability 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.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as
impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or
collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general
component covers non-impaired loans and is based on historical charge-off experience by segment. The historical loss
experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the
prior five years. Management believes the five year historical loss experience methodology is appropriate in the current
economic environment. Other adjustments (qualitative/environmental considerations) for each segment may be added to the
allowance for each loan segment after an assessment of internal or external influences on credit quality that are not fully
reflected in the historical loss or risk rating data.

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 based on the loan’s current payment status and the borrower’s
financial condition including available sources of cash flows. 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 non-homogenous type loans such as commercial, non-owner residential
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. For impaired loans where
the Company utilizes the discounted cash flows to determine the level of impairment, the Company includes the entire change
in the present value of cash flows as bad debt expense.

34 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral. In general, the
Company acquires an updated appraisal upon identification of impairment and annually thereafter for commercial, commercial
real estate and multi-family loans. If the most recent appraisal is over a year old, and a new appraisal is not performed, due to
lack of comparable values or other reasons, the existing appraisal is utilized and discounted generally 10% -35% based on the
age of the appraisal, condition of the subject property, and overall economic conditions. After determining the collateral value
as described, the fair value is calculated based on the determined collateral value less selling expenses. The potential for
outdated appraisal values is considered in our determination of the allowance for loan losses through our analysis of various
trends and conditions including the local economy, trends in charge-offs and delinquencies, etc. and the related qualitative
adjustments assigned by the Company.

Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segment’s historical
loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans.
Accordingly, the Company does not separately identify individual consumer and residential loans for impairment
measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this
scenario, the Company attempts to work-out an alternative payment schedule with the borrower in order to optimize
collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring
(“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company
grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the
borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets
from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company
do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are
initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the
borrower is able to work-out a satisfactory payment plan.

It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on
nonaccrual status until six months of satisfactory borrower performance at which time management would consider its return
to accrual status. If a loan was accruing at the time of restructuring, the Company reviews the loan to determine if it is
appropriate to continue the accrual of interest on the restructured loan.

With regard to determination of the amount of the allowance for credit losses, trouble debt restructured loans are considered to
be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt
restructurings is the same as detailed previously.

Premises and Equipment

Land is carried at cost. Depreciable assets are stated at cost less accumulated depreciation which range from 10-39 years for
Company buildings, 3-7 years for furniture and equipment, and 1-3 years for computer software. 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. Expenditures for maintenance and repairs are charged against income as incurred. Costs of major additions and
improvements are capitalized.

Federal Home Loan Bank Stock

Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank
system. The required investment in the common stock is based on a predetermined formula, carried at cost and evaluated for
impairment.

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, less costs to sell,
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.

Notes to Consolidated Financial Statements

Bank-Owned Life Insurance

December 31, 2022 and 2021

The Company and the Bank 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.

Treasury Stock

Common shares repurchased are recorded at cost. Cost of shares retired or reissued is determined using the weighted average
cost.

Restricted Stock Awards

The Company has a share-based employee compensation plan, which is described more fully in Note 14.

Income Taxes

The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The
income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax
expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the
taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or
balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences
between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period
in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are
reduced by a valuation allowance if based on the weight of evidence available it is more likely than not that some portion or
all of a deferred tax asset will not be realized.

Uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be
realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms
examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that
meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit
that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge
of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition
threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s
judgment. At December 31, 2022, the Company had no uncertain tax positions.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

The Company files consolidated income tax returns with its subsidiary. With a few exceptions, the Company is no longer
subject to the examination by tax authorities for years before 2019.

Deferred Compensation Plan

Directors have the option to defer all or a portion of fees for their services into a deferred stock compensation plan that invests
in common shares of the Company. Officers of the Company have the option to defer up to 50% of their annual incentive award
into this plan. The plan does not permit diversification and must be settled by the delivery of a fixed number of shares of the
Company stock. The stock held in the plan is included in equity as deferred shares and is accounted for in a manner similar to
treasury stock. Subsequent changes in the fair value of the Company’s stock are not recognized. The deferred compensation
obligation is also classified as an equity instrument and changes in the fair value of the amount owed to the participant are not
recognized.

The Company has entered into supplemental income agreements for certain individuals. These agreements call for a fixed
payment over 180 months after the individual reaches normal retirement age.

Stockholders’ Equity and Dividend Restrictions

The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.
Generally, the Bank’s payment of dividends is limited to net income for the current year plus the two preceding calendar years,

36 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

less capital distributions paid over the comparable time period. Dividend payments to the stockholders may be legally paid
from additional paid-in capital or retained earnings.

Earnings Per Share

Basic earnings per share allocated to common stockholders is calculated using the two-class method and is computed by
dividing net income allocated to common stockholders by the weighted average number of commons shares outstanding during
the period. Diluted earnings per share is adjusted for the dilutive effects of stock based compensation and is calculated using
the two-class method or the treasury method. There were no dilutive effects for the years ended December 31, 2022 and 2021.

Comprehensive Income (Loss)

Comprehensive income consists of net income (loss) and other comprehensive (loss) income, net of applicable income taxes.
Other comprehensive (loss) income includes unrealized appreciation (depreciation) on available-for-sale securities and changes
in the funded status of the defined benefit pension plan.

Advertising

Advertising expenses are expensed as incurred.

Note 2: Restriction on Cash and Due From Banks

The Company did not have a reserve requirement at December 31, 2022 and 2021.

Note 3: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses of securities are as follows:

Available-for-sale Securities:

December 31, 2022:

U.S. government agencies
Subordinated notes
State and municipal obligations
Total debt securities

Available-for-sale Securities:

December 31, 2021:

U.S. government agencies
Subordinated notes
State and municipal obligations
Total debt securities

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(In thousands)

Fair Value

45,000 $
31,160
152,447
$ 228,607 $

(968) $

44,032
— $
28,094
(3,066)
—
459
145,498
(7,408)
459 $ (11,442) $ 217,624

— $

28,837
106,533
$ 135,370 $

— $
76
11,015
11,091 $

— $

(148)
—

—
28,765
117,548
(148) $ 146,313

There were no sales of investment securities during 2022. During 2021, the Company sold $11.4 million of State and Municipal
securities for a total gain of approximately $1,250,000.

The amortized cost and fair value of available-for-sale securities at December 31, 2022, 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.

One to five years
Five to ten years
Over ten years

Totals

Amortized

Cost

Fair
Value

(In thousands)

45,651 $
33,440
149,516
228,607 $

44,484
30,414
142,726
217,624

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $68.7 million and
$64.4 million at December 31, 2022 and 2021, respectively.

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, 2022 and 2021, was $166.1 million and $14.2 million, which represented
approximately 76% and approximately 10%, respectively, of the Company’s available-for-sale investment portfolio.

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.

The following tables show 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, 2022
and 2021:

Description of
Securities

US government agencies
Subordinated notes
State and municipal obligations

Total temporarily impaired securities

Description of
Securities

US government agencies
Subordinated notes
State and municipal obligations

Total temporarily impaired securities

Less than 12 Months

December 31, 2022
12 Months or More

Total

Fair
Value

Unrealized Fair
Value
Losses

Unrealized
Losses

Fair
Value

Unrealized

Losses

(In thousands)
— $

(968) $

$ 44,032 $
11,185
100,599

(968)
(3,066)
(7,408)
$ 155,816 $ (9,941) $ 10,300 $ (1,501) $ 166,116 $ (11,442)

21,485
100,599

10,300
—

(1,565)
(7,408)

(1,501)
—

— $ 44,032 $

Less than 12 Months

Fair
Value

Unrealized
Losses

December 31, 2021
12 Months or More
Fair
Value

Unrealized
Losses

Total

Fair
Value

Unrealized

Losses

— $

14,204
—

$ 14,204 $

— $

(148)
—
(148) $

(In thousands)
— $
—
—
— $

— $

— $
—
—
— $ 14,204 $

14,204
—

—
(148)
—
(148)

The unrealized losses on the Company’s investments in US government agencies, state and municipal obligations, and
subordinated notes were caused by interest rate increases. Because the Company does not intend to sell the investments and it
is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases,
which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December
31, 2022.

Note 4: Loans and Allowance for Loan Losses

Categories of loans at December 31, include:

Commercial loans
Commercial real estate
Residential real estate
Installment loans
Total gross loans
Less allowance for loan losses

Total loans

2022

2021

(In thousands)

90,548
270,312
94,012
6,003
460,875
(2,052)
458,823

90,892
266,777
90,132
6,571
454,372
(3,673)
450,699

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral
provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these
loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as

38 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis.
In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be
substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial Real Estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.
Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally
dependent on the successful operation of the property securing the loan or the business conducted on the property securing the
loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general
economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with
geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate
loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects
unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied
commercial real estate versus nonowner-occupied loans.

Residential and Installment

Residential and installment loans consist of two segments - residential mortgage loans and personal loans. For residential
mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes
a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are
typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer
personal assets, such as automobiles or recreational vehicles. Some consumer personal loans are unsecured, such as small
installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the
borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can
also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of
smaller individual amounts and spread over a large number of borrowers.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio
segment and impairment method as of December 31, 2022 and 2021:

Allowance for loan losses:
Balance, beginning of year

(Credit) Provision charged to expense
Losses charged off
Recoveries

Balance, end of year
Ending balance: individually evaluated for

Commercial

2022

Commercial Real Estate

Residential

Installment Unallocated

Total

(In thousands)

1,046 $
(842)
(16)
27

215 $

1,235 $
141
(561)
—

815 $

1,121 $
(303)
(2)
—

816 $

271 $

49
(143)
29

206 $

— $
—
—
—
— $

3,673
(955)
(722)
56
2,052

impairment

— $

—

Ending balance: collectively evaluated for

impairment

215 $

815 $

816 $

206 $

— $

2,052

Loans:
Ending balance: individually evaluated for

impairment

— $

123 $

— $

123

Ending balance: collectively evaluated for

impairment

90,548 $ 270,189 $

94,012 $

6,003 $

— $ 460,875

Allowance for loan losses:
Balance, beginning of year

Provision charged to expense
Losses charged off
Recoveries

Balance, end of year
Ending balance: individually evaluated for

Commercial

2021

Commercial Real Estate

Residential

Installment Unallocated

Total

(In thousands)

1,397 $
(276)
(78)
3
1,046 $

1,821 $
(586)
—
—
1,235 $

1,471 $
(331)
(26)
7
1,121 $

424 $
(62)
(126)
35

271 $

— $
—
—
—
— $

5,113
(1,255)
(230)
45
3,673

impairment

— $

230 $

— $

230

Ending balance: collectively evaluated for

impairment

1,046 $

1,005 $

1,121 $

271 $

— $

3,443

Loans:
Ending balance: individually evaluated for

impairment

— $

3,933 $

— $

3,933

Ending balance: collectively evaluated for

impairment

90,892 $ 262,844 $

90,132 $

6,571 $

— $ 450,439

To facilitate the monitoring of credit quality within the loan portfolio, and for purposes of analyzing historical loss rates used
in the determination of the allowance for loan loss estimate, the Company utilizes the following categories of credit grades:
pass, special mention, substandard, and doubtful. The four categories, which are derived from standard regulatory rating
definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass ratings, which
are assigned to those borrowers that do not have identified potential or well defined weaknesses and for which there is a high
likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other
categories are updated on at least a quarterly basis.

We have successfully maintained credit-related strength and stability within our loan portfolio over the course of the past two
years during the pandemic-induced economic downturn and this trend continued for our Company this past year. For the years
ended December 31, 2022 and 2021 the Company recorded a credit to the loan loss provision of $955,000 and $1,255,000,
respectively.

The Company assigns a special mention rating to loans that have potential weaknesses that deserve management’s close
attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment
prospects for the loan or the Company’s credit position.

40 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying
capacity of the borrower or of the collateral pledged. Substandard loans have well defined weaknesses or weaknesses that could
jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility
that the Company will sustain some loss if the deficiencies noted are not addressed and corrected.

The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic
that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly
questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific
pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an
estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or
acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

The following table shows the portfolio quality indicators as of December 31, 2022:

Pass Grade
Special Mention
Substandard
Doubtful

Loan Class

Commercial

Commercial
Real Estate

Residential
(In thousands)

Installment

Total

90,548 $
—
—
—
90,548 $

262,472 $
4,066
3,774
—
270,312 $

94,012 $
—
—
—
94,012 $

6,003 $
—
—
—
6,003 $

453,035
4,066
3,774
—
460,875

The following table shows the portfolio quality indicators as of December 31, 2021:

Pass Grade
Special Mention
Substandard
Doubtful

Loan Class

Commercial

Commercial
Real Estate

Residential
(In thousands)

Installment

Total

90,892 $
—
—
—
90,892 $

254,760 $
4,115
7,902
—
266,777 $

90,132 $
—
—
—
90,132 $

6,571 $
—
—
—
6,571 $

442,355
7,943
4,074
—
454,372

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing
basis. No significant methodology changes were made during 2022 and 2021.

Notes to Consolidated Financial Statements

The following table shows the loan portfolio aging analysis of the recorded investment in loans as of December 31, 2022:

December 31, 2022 and 2021

59 Days 60
Past
‑‑
Due and
Accruing

89 Days Greater
Than 90
Past
‑‑
Days and
Due and
Accruing
Accruing

Total Past
Due and
Non Accrual

Non
Accrual
(In thousands)

Current

Total Loans
Receivable

Commercial
Commercial real estate
Residential
Installment
Total

126 $
158
102
15
401 $

— $
—
24
—
24 $

— $
—
—
—
— $

— $
9
173
—
182 $

126 $ 90,422 $ 90,548
270,312
167
270,145
94,012
299
93,713
6,003
15
5,988
607 $ 460,268 $ 460,875

The following table shows the loan portfolio aging analysis of the recorded investment in loans as of December 31, 2021:

59 Days 60
Past
‑‑
Due and
Accruing

89 Days Greater
Than 90
Past
‑‑
Days and
Due and
Accruing
Accruing

Total Past
Due and
Non Accrual

Non
Accrual
(In thousands)

Current

Total Loans
Receivable

Commercial
Commercial real estate
Residential
Installment
Total

63 $

220
22
40
345 $

— $
—
—
—
— $

— $

3,818
391
—
4,209 $

4,038
413
40

63 $ 90,829 $ 90,892
266,777
262,739
90,132
89,719
6,571
6,531
4,554 $ 449,818 $ 454,372

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on
current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in
accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include
loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial
difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of
principal, forbearance or other actions intended to maximize collection.

The following table presents impaired loans for the year ended December 31, 2022:

Average

Unpaid
Recorded Principal

Balance

Specific
Allowance
(In thousands)

Investment in
Impaired
Loans

Interest
Income

Recognized

Loans without a specific valuation allowance:

Commercial
Commercial real estate
Real Estate
Installment

Loans with a specific valuation allowance:

Commercial
Commercial real estate
Real Estate

Total:

Commercial
Commercial Real Estate
Real Estate
Installment

$
$
$
$

— $

123
—
—
123 $

— $
—
—
— $

— $

123
—
—
123 $

— $
—
—
— $

— $
—
—
—
— $

— $
—
—
— $

27 $

130
—
—
157 $

— $

3,653
—
3,653 $

— $
123 $
— $
— $

— $
— $
— $
— $

27 $
3,783 $
— $
— $

1
11
—
—
12

—
40
—
40

1
51
—
—

42 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

The following table presents impaired loans for the year ended December 31, 2021:

December 31, 2022 and 2021

Average

Unpaid
Recorded Principal

Balance

Specific
Allowance
(In thousands)

Investment in
Impaired
Loans

Interest
Income

Recognized

Loans without a specific valuation allowance:

Commercial
Commercial real estate
Real Estate
Installment

Loans with a specific valuation allowance:

Commercial
Commercial real estate
Real Estate

Total:

Commercial
Commercial Real Estate
Real Estate
Installment

— $

128
—
—
128

— $
—
—
—
—

— $

128
—
—
128

— $

3,805
—
3,805 $

— $

230
—
230 $

— $

3,822
—
3,822 $

$
$
$
$

— $
3,933 $
— $
— $

— $
230 $
— $
— $

— $
3,950 $
— $
— $

—
6
—
—
6

—
105
—
105

—
111
—
—

At December 31, 2022, the Company had certain loans that were modified in troubled debt restructurings and impaired. The
modification of terms of such loans included one or a combination of the following: an extension of maturity, a reduction of
the stated interest rate.

The following tables present information regarding troubled debt restructurings by class and by type of modification for the year
ended December 31, 2022 and 2021:

Commercial
Commercial Real Estate

Year Ended December 31, 2022

Pre-Modification Post-Modification

Number of
Contracts

Outstanding
Recorded
Investment
(In thousands)

Outstanding
Recorded
Investment

— $
1 $

— $
48 $

—
48

Year Ended December 31, 2022

Interest
Only

$
$

— $
1 $

Total

Term

Combination Modification

(In thousands)
— $
1 $

— $
— $

—
1

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Notes to Consolidated Financial Statements

The Company did not have any loan modifications during 2021.

December 31, 2022 and 2021

Commercial
Commercial Real Estate

Year Ended December 31, 2021

Pre-Modification Post-Modification

Number of
Contracts

Outstanding
Recorded
Investment

(In thousands)

Outstanding
Recorded
Investment

— $
— $

—
—

Year Ended December 31, 2021

Interest
Only

Term

Combination Modification

(In thousands)

Total

$
$

—

$
— $

—

$
— $

—

$
— $

—

During the year ended December 31, 2022 and 2021, troubled debt restructurings did not have an impact on the allowance for
loan losses. At December 31, 2022 and 2021 and for the years then ended, there were no material defaults of any troubled debt
restructurings that were modified in the last 12 months. The Company generally considers TDR’s that become 90 days or more
past due under the modified terms as subsequently defaulted.

Note 5: Premises and Equipment

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

2022

2021

(In thousands)

Land, buildings and improvements
Furniture and equipment
Computer software

Less accumulated depreciation
Net premises and equipment

20,493 $
15,567
2,460
38,520
(26,376)

19,838
15,079
2,284
37,201
(24,444)
12,757

12,144 $

Depreciation and amortization charged to operations was $1,013 in 2022.

Note 6: Time Deposits

Time deposits in denominations of $250,000 or more were $11.3 million at December 31, 2022 and $4.4 million at December
31, 2021. At December 31, 2022, the scheduled maturities of time deposits are as follows:

Due during the year ending December 31,

2023
2024
2025
2026
2027
Thereafter

Note 7: Borrowings

(In thousands)

52,854
19,344
28,084
977
70
407
101,736

At December 31, 2022 and 2021, as a member of the Federal Home Loan Bank system the Bank had the ability to obtain up to
$177.2 million and $154.1 million, respectively, in additional borrowings based on securities and certain loans pledged to the
FHLB. At December 31, 2022 and 2021, the Bank had approximately $248.0 million and $228.2 million, respectively of one-
to four-family residential real estate and commercial real estate loans pledged as collateral for borrowings. Also at December
31, 2022 and 2021, the Company and the Bank have cash management lines of credit with various correspondent banks

44 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

(excluding FHLB cash management lines of credit) enabling additional borrowings of up to $18.0 million. At December 31,
2022 and 2021 the Company had no outstanding borrowings with the FHLB.

Securities sold under repurchase agreements were approximately $18.1 million and $15.7 million at December 31, 2022 and
2021, respectively.

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:

Balance outstanding at year end
Average daily balance during the year
Average interest rate during the year
Maximum month-end balance during the year
Weighted-average interest rate at year end

2022
2021
(Dollars in thousands)

$ 18,106
$ 22,581

$ 15,701
$ 19,452

1.02 %

0.12 %

$ 28,114

$ 26,653

3.04 %

0.12 %

All repurchase agreements are subject to term and conditions of repurchase/security agreements between the Company and the
customer and are accounted for as secured borrowings. The Company’s repurchase agreements reflected in short-term
borrowings consist of customer accounts and securities which are pledged on an individual security basis.

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

Remaining Contractual Maturity of the Agreement
(In thousands)

December 31, 2022

Repurchase Agreements

State and municipal obligations
Total

Overnight and
Continuous

Up to 30 Days 30

Greater than 90
Days

90 Days

Total

$
$

18,106 $
18,106 $

‑‑

— $
— $

— $ 18,106
— $ 18,106

December 31, 2021

Overnight and
Continuous Up to 30 Days 30

Greater than 90
Days

90 Days

Total

Repurchase Agreements

U.S government agencies
Total

$
$

15,701 $
15,701 $

‑‑

— $
— $

— $ 15,701
— $ 15,701

Securities with an approximate carrying value of $38.8 million and $37.5 million at December 31, 2022 and 2021, respectively,
were pledged as collateral for repurchase borrowings.

Note 8: Subordinated Debentures

On May 14, 2019 the Company issued $20,000,000 of junior subordinated debentures. The debentures bear interest at a fixed
rate of 6.0% until May 2024, which then becomes a floating interest rate equal to the three-month LIBOR (or an equivalent
index) plus 3.625%, resetting quarterly. Interest on the subordinated notes is payable semiannually through May 2024 and
quarterly thereafter through the maturity date of May 2029. Principal is due upon maturity. The debentures are unsecured and
payable to various investors. For purposes of computing regulatory capital, the debentures are included in Tier 2 Capital. The
subordinated notes may not be repaid in whole or in part prior to the fifth anniversary of the issue date (May 2019). Unamortized
debt costs were $398,000 and $459,000 as of December 31, 2022 and 2021, respectively.

In 2005, a Delaware statutory business trust owned by the Company, United Bancorp
Statutory Trust I (“Trust I” or the “Trust”), issued $4.1 million of mandatorily redeemable debt securities. The sale proceeds
were utilized to purchase $4.1 million of the Company’s subordinated debentures which mature in 2035. The Company’s
subordinated debentures are the sole asset of Trust I. 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 $4.1 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

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

on the Company’s subordinated debentures is equal to three month LIBOR plus 1.35% and is payable quarterly. Subordinated
debentures, net of unamortized debt costs, totaled $23.7 million and $23.7 million at December 31, 2022 and 2021, respectively.

Note 9: Income Taxes

The provision for income taxes includes these components:

Taxes currently payable
Deferred income taxes
Income tax expense

2022

2021

(In thousands)
537 $
342
879 $

1,118
112
1,230

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

Computed at the statutory rate (21%)
(Decrease) increase resulting from

Tax exempt interest
Earnings on bank-owned life insurance - net
Low income housing credit
Other

Actual tax expense

2022

2021

(In thousands)

2,003 $

2,243

(935)
(149)
(49)
9
879 $

(822)
(168)
(52)
29
1,230

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

Deferred tax assets

Allowance for loan losses
Stock based compensation
Deferred compensation, and other accruals
Employee benefit expense
Non-accrual loan interest
Unrealized loss on securities available for sale
Other

Total deferred tax assets

Deferred tax liabilities

Depreciation
Deferred loan costs, net
FHLB stock dividends
Unrealized gains on securities available for sale
Prepaid expenses
Intangibles
Employee benefit expense

2022

2021

(In thousands)

431 $
310
507
—
1
2,307
10
3,566

771
253
472
—
33
—
7
1,536

(414)
(11)
(182)
—
(68)
(78)
(390)

(407)
(34)
(304)
(2,298)
(49)
(97)
(28)

Total deferred tax liabilities
Net deferred tax asset (liability)

(1,143)
2,423 $

(3,217)
(1,681)

46 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

Note 10: Accumulated Other Comprehensive Income (Loss)

December 31, 2022 and 2021

The components of accumulated other comprehensive income (loss), included in stockholders’ equity, are as follows:

Net unrealized (loss) gain on securities available-for-sale
Net unrealized loss for funded status of defined benefit plan liability

Tax effect

Net-of-tax amount

2022

2021

(In thousands)

(10,984)
(835)
(11,819)
2,483
(9,336)

10,943
(2,127)
8,816
(1,852)
6,964

Reclassifications out of accumulated other comprehensive income during 2021 and the affected line items in the Consolidated
Financial Statements of Income were as follows:

2022

2021

Realized gains on securities available-for-sale
Less provision for federal income taxes
Reclassification adjustment, net of taxes

Note 11: Regulatory Matters

(In thousands)
—
—
—

1,250
263
987

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. Furthermore, the Company and the Bank’s
regulators could require adjustments to regulatory capital not reflected in these financial statements.

In July 2013, the Federal Reserve approved final rules, referred to herein as the Basel III Rules, establishing a new
comprehensive capital framework for U.S. banking organizations. The Basel III Rules generally implement the Basel
Committee on Banking Supervision’s December 2010 final capital framework referred to as “Basel III” for strengthening
international capital standards. The Basel III Rules substantially revise the risk-based capital requirements applicable to bank
holding companies and their depository institution subsidiaries, including the Company and Unified, as compared to the current
U.S. general risk-based capital rules. The Basel III Rules revise the definitions and the components of regulatory capital, as
well as address other issues affecting the computation of regulatory capital ratios. The Basel III rules added another capital
ratio component “Tier 1 Common Capital Ratio” which is a measurement of a bank’s core equity capital compared with its
total risk-weighted assets The Basel III Rules also prescribe a new standardized approach for risk weightings that expand the
risk-weighting categories from the current categories to a larger more risk-sensitive number of categories, depending on the
nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity
exposures, and resulting in higher risk weights for a variety of asset classes.

The Basel III capital rules became effective for the Company and Unified on January 1, 2015, subject to phase-in periods for
certain components. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory
capital.

As of December 31, 2022, the most recent notification from Federal Deposit Insurance Corporation categorized the Bank as
well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, 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 Bank’s category.

Notes to Consolidated Financial Statements

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

December 31, 2022 and 2021

Actual

Amount

Ratio

For Capital Adequacy
Purposes

Ratio
Amount
(Dollars in thousands)

To Be Well Capitalized
Under Prompt Corrective
Action Provisions

Amount

Ratio

$ 103,369
79,551

17.4 % $
14.2

47,579
44,778

8.0 %
8.0

N/A
55,973

N/A
10.0 %

77,317
77,499

13.0 % $
13.9

26,763
25,188

4.5 %
$
4.5

N/A
36,383

N/A
6.5 %

81,317
77,499

13.7 % $
13.9

35,685
33,584

6.0 %
$
6.0

N/A
44,778

N/A
8.0 %

81,317
77,499

11.1 % $
10.1

29,387
30,617

4.0 %
$
4.0

N/A
38,272

N/A
5.0 %

96,785
79,740

19.5 % $
15.0

39,746
42,683

8.0 %
8.0

N/A
53,353

N/A
10.0 %

69,112
76,067

13.9 % $
14.3

22,357
24,009

4.5 %
$
4.5

N/A
34,680

N/A
6.5 %

73,112
76,067

14.7 % $
14.3

29,810
32,012

6.0 %
$
6.0

N/A
42,683

N/A
8.0 %

73,112
76,067

10.3 % $
10.6

28,438
28,594

4.0 %
$
4.0

N/A
35,742

N/A
5.0 %

As of December 31, 2022

Total Capital (to Risk-Weighted Assets)

Consolidated
Unified

Common Equity Tier 1 Capital (to Risk-
Weighted Assets)
Consolidated
Unified

Tier I Capital (to Risk-Weighted Assets)

Consolidated
Unified

Tier I Capital (to Average Assets)

Consolidated
Unified

As of December 31, 2021

Total Capital (to Risk-Weighted Assets)

Consolidated
Unified

Common Equity Tier 1 Capital (to Risk-
Weighted Assets)
Consolidated
Unified

Tier I Capital (to Risk-Weighted Assets)

Consolidated
Unified

Tier I Capital (to Average Assets)

Consolidated
Unified

Note 12: Related Party Transactions

At December 31, 2022 and 2021, the Bank had loan commitments 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 collectability or present other unfavorable features. Such loans are
summarized below.

Aggregate balance – January 1
New loans
Repayments
Aggregate balance – December 31

2022

2021

(In thousands)

20,347 $ 20,984
4,439
(5,076)
20,347

1,726
(2,032)
20,041 $

48 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

Deposits from related parties held by the Bank at December 31, 2022 and 2021, totaled approximately $3.3 million and
$5.6 million, respectively.

Note 13: Benefit Plans

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. The Company expects to contribute $742,000
to the plan in 2023.

The Company has certain agreements which provide for a fixed number of payments once the individual reaches normal
retirement age. At December 31, 2022, the present value of these future payments was approximately $397,000.

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

Change in benefit obligation

Beginning of year

Service cost
Interest cost
Actuarial gain (loss)
Benefits paid

End of year

Change in fair value of plan assets

Beginning of year

Actual return on plan assets
Employer contribution
Benefits paid

End of year

Pension Benefits

2022

2021

(In thousands)

(7,558)
(519)
(274)
2,989
282

(7,215)
(528)
(239)
45
379

(5,078)

(7,558)

7,744
(1,217)
744
(283)

6,522
944
657
(379)

6,988

7,744

Funded (unfunded) status at end of year

1,910

186

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

Unamortized net loss
Unamortized prior service

Pension Benefits

2022

2021

(In thousands)

1,150
(315)

2,531
(403)

835

2,128

The estimated net loss and prior service credit for the defined benefit pension plan that will be amortized from accumulated
other comprehensive income as a credit into net periodic benefit cost over the next fiscal year is approximately $89,000. The

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

accumulated benefit obligation for the defined benefit pension plan was $4.4 million and $6.4 million at December 31, 2022
and 2021, respectively.

Information for the pension plan with respect to accumulated benefit obligation and plan assets is as follows:

Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

Components of net periodic benefit cost

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Amortization of net loss

Net periodic benefit cost

Significant assumptions include:

Weighted-average assumptions used to determine benefit obligation:

Discount rate
Rate of compensation increase

Weighted-average assumptions used to determine benefit cost:

Discount rate
Expected return on plan assets
Rate of compensation increase

$
$
$

December 31,

2022

2021

(In thousands)

5,078
4,421
6,988

$
$
$

7,558
6,405
7,744

December 31,

2022

2021

(In thousands)

519
274
(575)
(89)
183

528
239
(487)
(89)
270

312

461

Pension Benefits

2022

2021

3.75 %
3.50 %

3.75 %
7.00 %
3.50 %

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 following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as of
December 31, 2022:

2023
2024
2025
2026
2027
2028-2032
Total

Pension
Benefits
(In thousands)
285
304
333
318
613
3,795
5,648

Plan assets are held by an outside trustee which invests the plan assets in accordance with the provisions of the plan agreement.
All equity and fixed income investments are held in various mutual funds with quoted market prices. Mutual fund equity
securities primarily include investment funds that are comprised of large-cap, mid-cap and international companies. Fixed
income mutual funds primarily include investments in corporate bonds, mortgage-backed securities and U.S. Treasuries. Other
types of investments include a prime money market fund.

50 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

The asset allocation strategy of the plan is designed to allow flexibility in the determination of the appropriate investment
allocations between equity and fixed income investments. This strategy is designed to help achieve the actuarial long term rate
on plan assets of 7.0%. The target asset allocation percentages for both 2022 and 2021 are as follows:

Large-Cap stocks
Small-Cap stocks
Mid-Cap stocks
International equity securities
Fixed income investments
Alternative investments

Not to exceed 68%
Not to exceed 23%
Not to exceed 23%
Not to exceed 30%
Not to exceed 35%
Not to exceed 19%

At December 31, 2022 and 2021, the fair value of plan assets as a percentage of the total was invested in the following:

Equity securities
Debt securities
Cash and cash equivalents

Pension Plan Assets

December 31,

2022

2021

70.0 %
27.8
2.2

69.5 %
28.0
2.5

100.0 %

Following is a description of the valuation methodologies used for pension plan assets measured at fair value on a recurring
basis, as well as the general classification of pension plan assets pursuant to the valuation hierarchy.

Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the valuation
hierarchy. Level 1 plan assets include investments in mutual funds that involve equity, bond and money market investments.
All of the Plan’s assets are classified as Level 1. If quoted market prices are not available, then fair values are estimated by
using pricing models, quoted prices of plan assets with similar characteristics or discounted cash flows. In certain cases where
Level 1 or Level 2 inputs are not available, plan assets are classified within Level 3 of the hierarchy. At December 31, 2022
and 2021, the Plan did not contain Level 2 or Level 3 investments.

The fair values of Company’s pension plan assets at December 31st, by asset category are as follows:

December 31, 2022

Asset Category

Mutual money market
Mutual funds – equities
ETF mutual funds
Large and small Cap
International

Mutual funds – fixed income

Fixed income
ETF fixed income

Total

Fair Value Measurements Using

Quoted Prices Significant

in Active

Other

Significant

Markets for

Observable Unobservable

Total Fair Identical Assets

Value

(Level 1)

Inputs
(Level 2)

Inputs
(Level 3)

154 $

(In thousands)
154 $

— $

4,445
142
301

1,348
598

4,445
142
301

1,348
598

—
—

6,988 $

— $

—

—
—

—

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

December 31, 2021

Asset Category

Mutual money market
Mutual funds – equities

ETF mutual funds
Large and small Cap
International

Mutual funds – fixed income

Fixed income
ETF fixed income

Total

Fair Value Measurements Using

Quoted Prices Significant

in Active

Other

Significant

Markets for

Observable Unobservable

Total Fair
Value

Identical Assets
(Level 1)

Inputs
(Level 2)

Inputs
(Level 3)

198 $

(In thousands)
198 $

— $

4,964
99
319

1,340
824

4,964
99
319

1,340
824

—
—

7,744 $

— $

—

—
—

—

Employee Stock Ownership and 401(k) Plans

The Company has an Employee Stock Ownership Plan (“ESOP”) with an integrated 401(k) plan covering substantially all
employees of the Company. The Company’s 401(k) matching percentage was 50% of the employees’ first 6% of contributions
for 2022 and 2021.

The Company’s 401(k) expense for the years ended December 31, 2022 and 2021 was approximately $141,000 and $132,000,
respectively.

Share information for the ESOP is as follows at December 31, 2022 and 2021:

Allocated shares at beginning of the year
Net shares distributed due to retirement/diversification

Total ESOP shares

2022
398,104
(13,700)

2021
417,086
(18,982)

384,404

398,104

Fair value of unearned shares at December 31st

—

At December 31, 2022, the fair value of the 384,404 the shares held by the ESOP was approximately $5,658,000. There were
no unearned ESOP shares as of December 31, 2022.

Split Dollar Life Insurance Arrangements

The Company has split-dollar life insurance arrangements with its executive officers and certain directors that provide
certain death benefits to the executive’s beneficiaries upon his or her death. The agreements provide a pre- and post-retirement
death benefit payable to the beneficiaries of the executive in the event of the executive’s death. The Company has purchased
life insurance policies on the lives of all participants covered by these agreements in amounts sufficient to provide the sums
necessary to pay the beneficiaries, and the Company pays all premiums due on the policies. In the case of an early separation
from the Company, the nonvested executive portion of the death benefit is retained by the Company. The accumulated post
retirement benefit obligation was $1.9 million and $1.8 million at December 31, 2022 and 2021, respectively.

Note 14: Restricted Stock Plan

During 2018, the Company’s stockholders authorized the adoption of the United Bancorp, Inc. 2018 Stock Incentive Plan (the
“2018 Plan”). No more than 500,000 shares of the Company’s common stock may be issued under the 2018 Plan. As of
December 31, 2021, 142,500 shares have been issued under this plan. The shares that may be issued can be authorized but
unissued shares or treasury shares. The 2018 Plan permits the grant of incentive awards in the form of options, stock
appreciation rights, restricted share and share unit awards, and performance share awards. The 2018 Plan contains annual limits
on certain types of awards to individual participants. In any calendar year, no participant may be granted awards covering more
than 25,000 shares.

52 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

During 2008, the Company’s stockholders authorized the adoption of the United Bancorp, Inc. 2008 Stock Incentive Plan (the
“2008 Plan”). No more than 500,000 shares of the Company’s common stock may be issued under the 2008 Plan. The shares
that may be issued can be authorized but unissued shares or treasury shares. The 2008 Plan permits the grant of incentive
awards in the form of options, stock appreciation rights, restricted share and share unit awards, and performance share awards.
The 2008 Plan contains annual limits on certain types of awards to individual participants. In any calendar year, no participant
may be granted awards covering more than 25,000 shares. As of December 31, 2018, no additional shares can be awarded
under the 2008 Plan.

The Company believes that such awards better align the interests of its employees with those of its stockholders. Stock options
are generally granted with an exercise price, and restricted stock awards are valued, equal to the market price of the Company’s
stock at the date of grant; stock option awards generally vest within 9.5 years of continuous service and have a 9.5 year
contractual term. Restricted stock awards generally vest over a 9.5 year contractual term, or over the period to retirement,
whichever is shorter. Restricted stock awards have no post-vesting restrictions. Restricted stock awards provide for accelerated
vesting if there is a change in control (as defined in the Plans).

A summary of the status of the Company’s nonvested restricted shares as of December 31, 2022, and changes during the year
then ended, is presented below:

Nonvested, beginning of year

Granted
Vested
Forfeited

Nonvested, end of year

Weighted-
Average
Grant-Date
Fair Value

11.83
—
17.20
9.94
11.86

Shares
317,500
—
(50,000)
(10,000)
257,500

Total compensation cost recognized in the income statement for share-based payment arrangements during the years ended
December 31, 2022 and 2021 was $1,006,000 and $414,000, respectively.

The recognized tax benefits related thereto were $211,000 and $65,000, for the years ended December 31, 2022 and 2021,
respectively.

As of December 31, 2022 and 2021, there was $1,549,000 and $2,890,000, 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 4.1 years.

Note 15: Earnings Per Share

Earnings per share (EPS) were computed as follows:

Net income
Less allocated earnings on non-vested restricted stock
Less allocated dividends on non-vested restricted stock
Net income allocated to common stockholders

Basic and diluted earnings per share

Year Ended December 31, 2022
Weighted-
Average
Shares

Outstanding

Per Share
Amount

Net
Income
(In thousands)
8,657
(185)
(203)
8,269

5,483,305

1.50

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

Net income
Less allocated earnings on non-vested restricted stock
Less allocated dividends on non-vested restricted stock
Net income allocated to common stockholders

Basic and diluted earnings per share

Year Ended December 31, 2021
Weighted-
Average
Shares

Per Share

Outstanding

Amount

Net
Income
(In thousands)
9,451
(348)
(221)
8,882

5,477,266

1.62

Note 16: Disclosures about Fair Value of Financial Instruments and Other Assets and Liabilities

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The Company also utilizes a fair value hierarchy which
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices
in markets that are not active; or other inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of

the assets or liabilities

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and
recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation
hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.
If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar
characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently
sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults,
cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured
at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at
December 31, 2022 and 2021:

December 31, 2022
Fair Value Measurements Using

Quoted Prices in Significant
Active Markets
for Identical
Assets
(Level 1)

Inputs
(Level 2)

Other

Significant

Inputs
(Level 3)

Observable Unobservable

Fair
Value

U.S government agencies
Subordinated notes
State and municipal obligation

$ 44,032 $
28,094
145,498

(In thousands)

— $ 44,032 $
—
—

28,094
145,498

—
—
—

54 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

December 31, 2021
Fair Value Measurements Using

Quoted Prices in Significant
Active Markets
for Identical
Assets
(Level 1)

Inputs
(Level 2)

Other

Significant

Inputs
(Level 3)

Observable Unobservable

Fair
Value

Subordinated notes
State and municipal obligations

$ 28,765 $
117,548

— $ 28,765 $
—

117,548

—
—

(In thousands)

Following is a description of the valuation methodologies used for instruments measured at fair value on a non-recurring basis
and recognized in the accompanying balance sheets, as well as the general classification of such instruments pursuant to the
valuation hierarchy.

Impaired Loans (Collateral Dependent)

Collateral dependent impaired loans consisted primarily of loans secured by nonresidential real estate. Management has
determined fair value measurements on impaired loans primarily through evaluations of appraisals performed. Due to the nature
of the valuation inputs, impaired loans are classified within Level 3 of the hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other
factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent
loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the
Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender. Appraisers
are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to
consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the
collateral. These discounts and estimates are developed by the Company’s Chief Lender by comparison to historical results.

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 (based on current
appraised 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. Management
has determined fair value measurements on other real estate owned primarily through evaluations of appraisals performed, and
current and past offers for the other real estate under evaluation. Due to the nature of the valuation inputs, foreclosed assets
held for sale are classified within Level 3 of the hierarchy.

Appraisals of other real estate owned (OREO) are obtained when the real estate is acquired and subsequently as deemed
necessary by the Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief
Lender and are selected from the list of approved appraisers maintained by management.

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured
at fair value on a non-recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at
December 31, 2022 and 2021:

Collateral dependent impaired loans
Foreclosed assets held for sale

December 31, 2022
Fair Value Measurements Using

Quoted Prices in Significant
Active Markets

Other

Significant

for Identical
Assets
(Level 1)

Observable Unobservable

Inputs
(Level 2)

Inputs
(Level 3)

Fair
Value

9 $

3,519

(In thousands)
— $
—

— $
—

9
3,519

UNITEDBANCORP INC.

2 0 2 2 | A N N UA L R E P O RT

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

December 31, 2021
Fair Value Measurements Using

Quoted Prices in Significant
Active Markets

Other

Significant

for Identical
Assets
(Level 1)

Observable Unobservable

Inputs
(Level 2)

Inputs
(Level 3)

Fair
Value

2,822 $
—

(In thousands)
— $
—

— $
—

2,822
—

Collateral dependent impaired loans
Foreclosed assets held for sale

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value
measurements.

Collateral-dependent impaired loans
Foreclosed assets held for sale

9 Market comparable properties Comparability adjustments 5% – 10%
10% – 35%

3,519 Market comparable properties Marketability discount

Fair Value at
12/31/22
(In thousands)

Valuation
Technique

Unobservable Inputs

Range

Collateral-dependent impaired loans
Foreclosed assets held for sale

2,822 Market comparable properties Comparability adjustments 5% – 10%
10% – 35%

— Market comparable properties Marketability discount

Fair Value at
12/31/21
(In thousands)

Valuation
Technique

Unobservable Inputs

Range

There were no significant changes in the valuation techniques used during 2022.

The following table presents estimated fair values of the Company’s financial instruments not required to be reported at fair
value. 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

56 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

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.

Fair Value Measurements Using

Quoted Prices
in Active

Markets for

Carrying
Amount

Identical
Assets
(Level 1)

Significant
Other

Significant

Unobservable

Observable Inputs

(Level 2)

Inputs
(Level 3)

(In thousands)

December 31, 2022
Financial assets

Cash and cash equivalents
Loans, net of allowance
Federal Home Loan Bank stock
Accrued interest receivable

Financial liabilities

Deposits
Securities sold under repurchase agreements
Subordinated debentures
Interest payable

30,080 $

458,823
2,499
3,403

30,080 $
—
—
—

— $
—
2,499
3,403

—
444,704
—
—

$ 649,913 $
18,106
23,726
304

— $
—
—
—

646,455 $
18,106
24,454
304

—
—
—
—

The fair value has been derived from the December 31, 2021 audited consolidated financial statements.

December 31, 2021
Financial assets

Cash and cash equivalents
Loans, net of allowance
Federal Home Loan Bank stock
Accrued interest receivable

Financial liabilities

Deposits
Securities sold under repurchase agreements
Subordinated debentures
Interest payable

Fair Value Measurements Using

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(In thousands)

Carrying
Amount

Significant
Unobservable
Inputs
(Level 3)

82,999 $

450,699
3,704
2,345

82,999 $
—
—
—

— $
—
3,704
2,345

—
459,031
—
—

$ 605,136 $

15,701
23,665
180

— $
—
—
—

605,855 $

15,701
23,575
180

—
—
—
—

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

Cash and Cash Equivalents, Accrued Interest Receivable and Federal Home Loan Bank Stock

The carrying amounts approximate fair value.

Loans

Fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability
factors.

Notes to Consolidated Financial Statements

Deposits

December 31, 2022 and 2021

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.

Interest Payable

The carrying amount approximates fair value.

Securities Sold Under Repurchase Agreements and Subordinated Debentures

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair
value of existing debt.

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, 2022 and 2021.

Note 17: 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.

The Company invests in various investment securities. Investment securities are exposed to various risks such as interest rate,
market and credit risks. Due to the level of risk associated with certain investment securities, it is possible that changes in the
values of investment securities may occur and that such changes could affect the amounts reported in the accompanying
statements of financial position.

Note 18: Commitments and Credit Risk

At December 31, 2022 and 2021, total commercial and commercial real estate loans made up 78.3% and 78.7%, respectively,
of the loan portfolio. Installment loans account for 1.3% and 1.5%, respectively, of the loan portfolio. Real estate loans comprise
20.4% and 19.8% of the loan portfolio as of December 31, 2022 and 2021, respectively, and primarily include first mortgage
loans on residential properties and home equity lines of credit.

Included in cash and cash and cash equivalents as of December 31, 2022 and 2021 is $21.5 million and $79.6 million,
respectively, of deposits with the Federal Reserve Bank of Cleveland and the Federal Home Loan 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 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, 2022 and 2021, the Company had outstanding commitments to originate variable rate loans aggregating
approximately $77.9 million and $75.8 million, respectively. The commitments extended over varying periods of time with the
majority being disbursed within a one-year period.

58 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

Mortgage loans in the process of origination represent amounts that the Company plans to fund within a normal period of 60
to 90 days, some of which are intended for sale to investors in the secondary market. The Company did not have any mortgage
loans in the process of origination which are intended for sale at December 31, 2022 or 2021.

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 $136,000 and $127,000 at December 31, 2022 and 2021, respectively in outstanding standby letters of credit.
At both December 31, 2022 and 2021, the Company had no deferred revenue under standby letter of credit agreements.

Lines of Credit and Other

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.

At December 31, 2022, the Company had granted unused lines of credit to borrowers aggregating approximately $79.7 million
and $37.6 million for commercial lines and open-end consumer lines, respectively. At December 31, 2021, the Company had
granted unused lines of credit to borrowers aggregating approximately $78.1 million and $39.6 million for commercial lines
and open-end consumer lines, respectively.

Note 19: Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit
Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more
decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value
through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net
investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13
requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an
allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the
probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The
measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable
forecasts that affect the collectability of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”)
that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being
reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through
the statement of income as a credit loss expense.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as
a direct write-down to the security.

On October 16, 2019, FASB approved a final ASU delaying the effective date of ASU 2016-13 for small reporting companies
to interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the impact of these
amendments to the Company’s financial position and results of operations and currently does not know or cannot reasonably
quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the
amendments. The Allowance for Loan Losses (ALL) estimate is material to the Company and given the change from an

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

incurred loss model to a methodology that considers the credit loss over the life of the loan, there is the potential for an increase
in the ALL at adoption date. The Company is anticipating a significant change in the processes and procedures to calculate the
ALL, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the
current accounting practice that utilizes the incurred loss model. In addition, the current accounting policy and procedures for
the other-than-temporary impairment on available-for-sale securities will be replaced with an allowance approach. The
Company continues to run projections and now have multiple scenarios to consider and continues to review segmentation to
ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses,
see Note 4.

As a result of adopting this standard, the Company expects the increase in its allowance during the first quarter of 2023, to be
in the range of $2.3 million to $2.9 million. These estimates are subject to further refinements based on ongoing evaluations of
our model, methodologies, and judgments, as well as prevailing economic conditions and forecasts as of the adoption date. The
adoption of ASU 2016-13 is not expected to have a significant impact on our regulatory capital ratios.

60 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

Note 20: 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

Assets

Cash and cash equivalents
Investment in the Bank
Other assets

Total assets

Liabilities and Stockholders’ Equity

Subordinated debentures
Other liabilities
Stockholders’ equity

Total liabilities and stockholders’ equity

Condensed Statements of Income and Comprehensive Income

Operating Income

Dividends from subsidiary
Interest and dividend income from securities and federal funds

Total operating income

General, Administrative and Other Expenses

Income (Loss) Before Income Taxes and Equity in Undistributed Income of Subsidiary

Income Tax Benefits

Income (Loss) Before Equity in Undistributed Income of Subsidiary

Equity in Undistributed Income of Subsidiary

Net Income

Comprehensive (Loss) Income

December 31,

2022

2021

(In thousands)

11,273
69,914
3,110

9,092
85,954
1,182

84,297

96,228

23,726
834
59,737

23,665
862
71,701

84,297

96,228

Years Ended December 31,
2021
2022

(In thousands)

10,779
—

12,363
—

10,779

12,363

4,498

6,281

1,095

4,210

8,153

773

7,376

8,926

1,281

525

8,657

9,451

(7,643)

7,132

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

Condensed Statements of Cash Flows

Operating Activities

Net income
Items not requiring (providing) cash

Equity in undistributed income of subsidiary
Amortization of share-based compensation plans
Net change in other assets and other liabilities

Net cash provided by operating activities

Investing Activities

Net cash used in investing activities

Financing Activities

Repurchase of common stock
Dividends paid to stockholders

Net cash used in financing activities

Net Change in Cash and Cash Equivalents

Cash and Cash Equivalents at Beginning of Year

Years Ended December 31,
2021
2022

(In thousands)

8,657

9,451

(1,281)
1,005
(874)

(525)
404
251

7,507

9,581

—

(767)
(4,559)

(72)
(4,101)

(5,326)

(4,173)

2,181

9,092

5,408

3,684

Cash and Cash Equivalents at End of Year

11,273

9,092

Note 21: Quarterly Financial Data (Unaudited)

The following tables summarize the Company’s quarterly results of operations for the years ended December 31, 2022 and
2021.

2022:

Total interest income
Total interest expense

Net interest income

Provision (Credit) for loan losses
Noninterest income
Noninterest expense

Income before income taxes
Federal income taxes

Net income

Earnings per share

Basic
Diluted

Three Months Ended

March 31, June 30,

September 30, December 31,

(In thousands, except per share data)

5,997 $
487

6,445 $
477

7,297 $
928

7,922
1,381

5,510

5,968

6,369

6,541

(500)
987
5,110

1,887
136

(485)
988
4,849

2,592
295

15
1,043
4,879

2,518
215

15
1,065
5,052

2,539
233

1,751 $

2,297 $

2,303 $

2,306

$
$

0.30 $
0.30 $

0.40 $
0.40 $

0.40
0.40

62 2 02 2 | A N N UA L R E P O RT

UNITEDBANCORP INC.

Notes to Consolidated Financial Statements

December 31, 2022 and 2021

2021:

Total interest income
Total interest expense

Net interest income

Provision for loan losses
Noninterest income
Noninterest expense

Income before income taxes
Federal income taxes

Net income

Earnings per share

Basic
Diluted

Note 22: Goodwill and Core Deposits

Three Months Ended

March 31, June 30,

September 30, December 31,

(In thousands, except per share data)

6,088 $
775

6,233 $
676

6,234 $
629

6,153
516

5,313

5,557

5,605

5,637

(205)
926
4,449

1,995
87

(250)
1,142
4,550

2,399
214

(400)
2,287
4,942

3,350
448

(400)
1,351
4,451

2,937
481

1,908 $

2,185 $

2,902 $

2,456

$
$

0.33 $
0.33 $

0.38 $
0.38 $

0.50 $
0.50 $

0.41
0.41

The following table shows the changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021
(in thousands):

Balance beginning of year
Additions from acquisition
Balance, end of year

2022

2021

682
—
682

Intangible assets in the consolidated balance sheets at December 31, 2022 and 2021 were as follows (in thousands):

2022

2021

Core deposit intangibles

Gross
Intangible

Assets
$

1,041 $

Accumulated
Amortization

Net Intangible
Assets

Gross
Intangible
Assets

Accumulated
Amortization

Net Intangible
Assets

631 $

410 $

1,041 $

481 $

560

The estimated aggregate future amortization expense for each of the next five years for intangible assets remaining as of
December 31, 2022 is as follows (in thousands):

2023
2024
2025

150
150
110

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