UNITED BANCORP INC /OH/

2026 Annual Report- Letter to Shareholders

As we reflect on another year, I am very pleased to report to you, our valued shareholders, on the increased earnings and, overall, solid performance that United Bancorp, Inc. (UBCP) achieved in 2025. For the year ended December 31, 2025, UBCP produced net income of $7,753,000 and diluted earnings per share of $1.34, which are respective increases of $351,000, or 4.7%, and $0.07, or 5.5%, over the levels achieved in 2024. Considering that, over the course of the past year, we undertook several transformative projects that added to our noninterest expense levels—such as: constructing and staffing our new Wheeling Banking Center; further developing and scaling out both our Unified Mortgage and Treasury Management Programs; investing in technology and digital transformation platforms; and acquiring and developing a property in St. Clairsville, Ohio that will become our Unified Center—we are very pleased with the present performance of our Company. With our dedicated focus on investing in infrastructure, product development, and delivery, we strongly believe that these current undertakings… which are dilutive to current financial performance… will provide a pathway to future growth and lead to increasingly higher performance for our Company over the course of the next twelve to twenty-four months, while helping us maintain our relevance for many years to come.

As we all know, with the high degree of uncertainty that permeated our national and global economies this past year, the economic environment in which we operated in 2025 posed challenges for all businesses. The tariffs announced earlier in the year under the guidance of the new administration—coupled with a perceived slowing of employment and lingering inflation—caused many to question the future direction of our economy and the impact it could have on businesses, including our Company. In addition—further adding to this uncertainty—our federal government experienced its longest shutdown in our country’s history during the fourth quarter of 2025 after Congress failed to pass funding legislation to support its ongoing operation. Regardless of these challenges this past year, our Company responded in a positive fashion to this uncertainty by realizing an increase in net interest income of $1,660,000, or 6.7%, and by seeing its net interest margin increase by nineteen (19) basis points to 3.70% from 3.51%. Of note, on a year-over-year basis in the fourth quarter of 2025, the increase in net interest income accelerated above the year-to-date level by increasing by $544,000 or 8.6%. We remain optimistic that we can continue this current increasing and expansionary trend for both our total interest income and net interest margin as we enter 2026; especially, considering the Federal Open Market Committee (FOMC) loosened monetary policy with three rate cuts over the course of the final four months of 2025.

The primary driver of our growing level of net interest income and expanding net interest margin in 2025 was the continued growth of our balance sheet. On a year-over-year basis, total assets increased by $40.8 million, or 5.0%, to $857.4 million as of December 31, 2025. Throughout this past year, the significant areas of growth within our balance sheet that contributed to our higher level of net interest income and expanding net interest margin were: average loans increasing by $17.0 million, or 3.5%, to $497.9 million; an increased investment in bank owned life insurance (BOLI) during the fourth quarter of $17.5 million (with an average yield of 6.03%); and average cash and due from the Federal Reserve Bank increasing by $6.7 million, or 17.5%, to $45.1 million. In addition, during 2025 we executed on swap strategies within our municipal securities portfolio—selling $30.2 million of municipal securities with an average taxable equivalent yield (TEY) of approximately 4.54% and reinvesting a like amount in new municipal securities with an average TEY of approximately 5.93%. This strategy increased our yield on these securities by approximately 1.39%, producing an additional $419,000 in annualized interest income, and also resulted in a $137,000 gain on sale of securities. We believe these actions were prudent, opportunistic, and aligned with our overall objective of enhancing future earnings capacity—especially if the FOMC continues to lower short-term rates as it did over the final four months of 2025. Interestingly, a significant portion of the municipal securities that we hold have extended call protection, which should benefit our Company in a falling rate environment. Also, we continue to see the average yield of our overall loan portfolio increase as many loans originated in the zero-interest rate environment of 2020 and 2021 continue to reprice in the more normalized and higher interest rate environment in which we operated in 2025. We believe that we will continue to experience this phenomenal situation in 2026.

On the funding side of the balance sheet, our Company’s total deposits increased by $27.9 million, or 4.5%, to $641.4 million this past year, ending December 31, 2025. Importantly, this growth was well balanced between growth in our lower-cost demand and savings balances and growth in time deposits. Demand and savings balances increased by $13.8 million to a level of $459.6 million, representing seventy-two percent (72%) of total deposits, while time balances increased by $14.0 million to $181.7 million. Although our total interest expense increased by $308,000, or 2.1%, this past year, we were encouraged to see that, on a year-over-year basis in the fourth quarter, our total interest expense declined by $22,000, or 0.60%—the first quarterly decline we have seen since the FOMC began tightening monetary policy in March of 2022. We anticipate this favorable trend will continue into 2026, which should further contribute to net interest income expansion and margin accretion.

In 2025, even with borrowers experiencing rate resets to levels that may be double their previous rates in the higher-rate environment in which we operated—and with economic uncertainty continuing—we successfully maintained credit-related strength and stability within our loan portfolio. At year-end 2025, total nonaccrual loans were $2.3 million, which is 0.46% of gross loans. Also, at year-end, nonperforming assets (nonaccrual loans and OREO) to total assets were 0.56%, which continues to compare favorably to our peer group and remains well below historic levels. Further highlighting the strength of our loan portfolio, our Company had net loans charged off (excluding overdrafts) of ($282,000) for 2025, which annualized is (0.06%) of average loans and is in-line with the previous year. In response to economic uncertainty, macroeconomic trends, and loan growth, our Company recorded a provision for credit loss expense of $674,000, an increase of $375,000 year-over-year. With these factors considered, UBCP ended 2025 with an allowance for credit losses to total loans of 0.87% (a five (5) basis point increase from the previous year), and allowance coverage of 188% of nonaccrual loans. Overall, we believe that we remain well reserved with strong coverage and--- as always and going forward--- we will continue to prudently manage credit risk. In addition, our Company remains very well capitalized by regulatory standards with regulatory capital (stockholders’ equity plus accumulated other comprehensive loss (AOCI)) of $75.9 million, or 8.9% of average assets, at year-end.

This past year, we continued to execute on our strategic vision of prudently growing our Company, investing in the infrastructure necessary to support that growth, and remaining relevant in an increasingly competitive and rapidly changing industry. Several major initiatives and “news worthy” milestones from 2025 are important to highlight:

As always, our primary focus is protecting the investment of our shareholders and rewarding them in a balanced fashion by growing their value and paying an attractive cash dividend. In this area, our shareholders were once again nicely rewarded in 2025. This past year, we paid both our regular quarterly cash dividends and a special dividend to our valued shareholders. Our regular cash dividends increased by $0.04 from the previous year to $0.7450, an increase of 5.7%. The special cash dividend paid in the first quarter of 2025 was $0.175, an increase of $0.025, or 16.7%, over the previous year. Overall, in the year-ended December 31, 2025, UBCP paid total cash dividends of $0.92 per share, a year-over-year increase of $0.065, or 7.6%, producing a near-industry leading total dividend yield of 6.4% (based on year-end fair market value of $14.35). On a year-over-year basis, the fair market value of our Company’s stock increased by $1.35, or 10.4%, and our market price to tangible book value was 121%, which compares favorably to industry standards.

Considering that the uncertainty within our economy remained elevated and that we continued to operate in a challenging and highly competitive industry environment in 2025, we were very pleased with the performance of our Company this past year--- and, continue to be extremely optimistic about the future prospects for UBCP. In 2025, we were happy to see the growth trends achieved in both deposits and earning assets, and were pleased with the on-going quality of our credit metrics, which remained relatively stable and low by historic standards. With the stronger demand for our loan products that we are currently experiencing—especially in the relationship-driven, small business oriented commercial portfolio, which accounts for approximately eighty-one percent (81%) of total loans—we can continue our focus on attracting deposits to fund this increased loan demand and support our ongoing goal of growing total assets to $1.0 billion or greater in the near term. We are truly excited about our Company’s direction and the potential that it brings. With an unwavering focus on continual process improvement, product development and enhanced delivery, we firmly believe the future for UBCP is very bright.

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

Chairman, President & Chief Executive Officer

United Bancorp, Inc. (UBCP)