UNITED BANCORP INC /OH/
For the period ended Dec 31, 2025. Filed Mar 18, 2026.
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FY2025 · Filed Mar 18, 2026
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EX-13 · Allowance for Credit Losses (ACL) – Qualitative Adjustments
Allowance for Credit Losses (ACL) – Qualitative Adjustments
Description of the Matter
The Company’s loan portfolio totaled $492 million as of December 31, 2025, and the associated ACL was $4.3 million. As discussed in Notes 1 and 4 to the consolidated financial statements, determining the amount of the ACL requires significant judgment about the expected future losses, which is based on a baseline lifetime loss rate, calculated using a weighted-average remaining maturities method, which is then adjusted for current qualitative conditions and reasonable and supportable forecasts. Management applies these qualitative adjustments to the baseline lifetime loss rate to reflect changes in the current and forecasted environment, both internal and external, that are different from the conditions that existed during the historical loss calculation period.
We identified these qualitative adjustments within the ACL as critical audit matters because they involve a high degree of subjectivity. While the determination of these qualitative adjustments includes analysis of observable data over the historical loss period, the judgments required to assess the directionality and magnitude of adjustments is highly subjective. Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the nature of audit evidence and the nature and extent of effort required to address these matters.
How We Addressed the Matter in Our Audit
The primary procedures we performed to address this critical audit matter included:
| ● | Testing the design, implementation, and operating effectiveness of internal controls over the calculation of the allowance for credit losses, including the qualitative factor adjustments. |
| ● | Testing the completeness and accuracy of the significant data points that management uses in their evaluation of the qualitative adjustments. |
| ● | Evaluating the directional consistency and reasonableness of management’s conclusions regarding basis points applied based on the trends identified in the underlying data. |
| ● | Testing the mathematical accuracy of the application of the qualitative adjustments to the loan segments within the ACL calculation |
We have served as the Company’s auditor since 2022.
Cranberry Township, Pennsylvania
March 18, 2026
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