UNITED BANCORP INC /OH/

To the shareholders of United Bancorp, Inc**…****.**

As we reflect on another year, it is with great pleasure that I report to you, our valued shareholders, on the solid earnings and, overall, stable performance that United Bancorp, Inc. (UBCP) achieved in 2024. For the year, UBCP produced net income of $7,402,000 and diluted earnings per share of $1.27. Even though these reported earnings metrics were lower than the levels achieved for each the previous year… they are still the fifth highest earnings levels ever achieved in our Company’s 122-year existence. Interestingly, each of the five highest years of earnings achieved by our storied Company, UBCP, has come in the preceding five years, since 2020. Also, of note… over the course of the past ten years… UBCP has not only achieved the highest years of earnings in Company history; but, also, produced other historically-high, growth-related metrics that are somewhat salient. During this “decade of progress” (comparing year-end 2014 to year-end 2024 metrics), your Company has grown its asset base by over $406 million or 99%; its net income level by $4.8 million or 179%; its diluted earnings per share by $0.74 or 140%; its market value per share by $4.95 or 61%; and, lastly, its dividend payout per share by $0.5250 or 159%. Remarkably, relating to the capital returned to our shareholders from January 2015 to year-end 2024, UBCP has paid out a total of $36.0 million in cash dividends to its owners. Your management team is very proud of this level of performance achieved by our great Company over the course of the past ten years and looks forward, with tremendous anticipation, to what the next decade will bring!

As we navigated through the year 2024, United Bancorp, Inc. (UBCP), like most companies operating in the financial services industry, fought the battle of net interest margin compression, an increased provision for credit loss expense and limited balance sheet growth as interest rates remained elevated throughout most of 2024. As we started 2024, the interest rates forecast by most economists and the financial markets indicated that we could expect up to seven rate cuts throughout the year, which, overall, was projected to be favorable for our industry as it would help control funding costs and create stronger demand for our loan products. As we progressed through the year, interest rates ended-up being higher for longer. Although the Federal Open Market Committee of the Federal Reserve (FOMC) did cut the target for the Federal Funds Rate (FFR) by year-end by one hundred basis points--- which began at their September 18, 2024 meeting--- throughout 2024, monetary policy remained more restrictive and interest rates higher than forecast at the beginning of the year. This reality created challenges for both our Company and industry by putting pressure on net interest margins and limiting loan growth, which had an impact on the bottom-line performances of our Company and many financial institutions. Regardless of these challenges and all things considered at present, we are generally satisfied with the overall performance of our Company in 2024. We firmly believe that these challenges will be short-lived and will be overcome as we execute on some of our strategic objectives and get a return on current capital investments--- that began or were committed to this past year--- over the course of the next twelve to twenty four months, which should lead to higher levels of growth and improved performance in future periods.

As mentioned, in 2024, it was somewhat challenging to profitably leverage our balance sheet and, accordingly, United Bancorp, Inc. (UBCP) only achieved marginal growth in assets over the course of the year. At year-end, our Company’s total average assets were $828.1 million, an increase of $26.0 million, or 3.2%, year-over-year. Also, at year-end, our Company’s gross loans increased by $7.7 million, or 1.6%, to a level of $491.0 million. For most of the year 2024, our loans outstanding were relatively stagnant as evidenced by our average loans of $480.8 million. Encouragingly, in the fourth quarter, we saw our gross loans increase by $16.0 million on a linked quarter basis, which is 13.4% annualized. We are optimistic that this most current quarterly trend extends into 2025! Also, in 2024, our Company had a marginal increase in its average investment securities of $5.6 million, or 2.3%, finishing the year at a level of $251.3 million. With this marginally higher level of earning assets and with our loans outstanding continuing to reprice in a higher interest rate environment, we were able to increase the level of total interest income that our Company generated by $2.7 million, or 7.3%, for the year. But, this year-over-year increase in total interest income was more than offset by the increase in total interest expense experienced by UBCP as overall interest rates remained elevated, as previously mentioned, for longer than anticipated. At December 31, 2024, our Company’s total interest expense increased year-over-year by $3.7 million, or 33.7%, even though average total deposits decreased by $16.2 million or 2.6%. Outside of the higher interest rates for longer that we experienced last year, the increase in our Company’s total interest expense can also be attributed to the change in the mix of our retail depository funding from lower cost demand and savings balances to higher cost term funding, along with having a previously disclosed $75.0 million Federal Home Loan Bank (FHLB) Advance--- which we originated in mid-March 2023--- for the entirety of the year. In addition, our Company had a fixed rate subordinated debenture reprice and start floating on a quarterly basis in the mid-second quarter of this past year, which ultimately led to our Company paying a higher rate of interest on this borrowing. Relating to the change in the mix of our retail funding, lower cost demand and savings balances decreased by $24.3 million, or 5.2%, while higher cost time balances increased by $16.3 million or 10.8%. Considering all of these aforementioned factors, the level of net interest income that we achieved in 2024 declined by $1.0 million, or 4.0%, to $24.8 million and our net interest margin declined by fourteen(14) basis points from 3.65% to 3.51%. In the fourth quarter of 2024, our Company was able to slow the rate of decline of its net interest income--- experiencing a decrease of $154,000, or 2.4%, year-over-year. Of note, in the fourth quarter of 2024 and on a linked-quarter-basis, our Company saw its net interest income and net interest margin respectively increase by $206,000, or 3.4%, and one(1) basis point from 3.50% to 3.51%. We are optimistic that this trend will continue in the coming quarters especially, if the monetary policy of the Federal Open Market Committee (FOMC) continues to become less restrictive or, at a minimum, remains stable at present levels. Relating to our retail depository base and of significance--- at the end of 2024, our Company did not have any brokered deposits and total uninsured deposits totaled 17.6% of total deposits, which are both very low compared to industry standards and strongly indicative of our Company’s focus on building strong relationships with long-term, core deposits.