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Greenwood continued, "At September 30, 2024 and as previously mentioned, in the presently uncertain economic environment in which we are operating, it has been a challenge to profitably leverage our balance sheet and, accordingly, UBCP has only achieved marginal growth in assets in the current year. As of September 30, 2024, our Company's total average assets were $826.2 million, an increase of $19.0 million, or 2.4%, year-over-year. For this same period, our Company's average loans increased by $20.4 million, or 4.4%, to a level of $480.8 million. Also, as of the most recently ended quarter, our Company saw an increase in its average investment securities of $13.4 million, or 5.5%, over the previous year to a level of $259.3 million. With this marginally higher level of earning assets and our loans outstanding continuing to reprice in a higher interest rate environment, we were able to increase the total level of total interest income that our Company generated by $2.3 million, or 8.5%, for the first nine months of the current year relative to last 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. At September 30, 2024, our Company's total interest expense increased year-over-year by $3.2 million, or 40.7%, even though average total deposits decreased by ($19.6) million, or (3.1%), as of the most recently ended quarter. The increase in our Company's total interest expense can be attributed to both 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 this year. Relating to the change in the mix of our retail funding, lower cost demand and savings balances decreased by ($40.6) million, or (8.3%), while higher cost time balances increased by $28.4 million or 20.4%. Accordingly, year-over-year, the level of net interest income that we achieved declined by ($880,000), or (4.6%), to a level of $18.5 million and our net interest margin declined by 13 basis points from 3.63% to 3.50%. During the third quarter of 2024, our Company was able to better control the level of decline of its net interest margin--- experiencing a decrease on a linked quarter basis of four basis points. We are optimistic that we will be able to overcome this trend in the coming quarters as the monetary policy of the Federal Open Market Committee (FOMC) becomes less restrictive and, hopefully, helps us lower our overall funding costs." Greenwood further stated, "Lastly--- relating to our retail deposit base and of significance--- our Company does not have any brokered deposits and total uninsured deposits as of September 30, 2024 totaled 18.4% 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."

Lastly, Greenwood stated, "Even with the continued heightened inflation levels and related increases in interest rates that may be impacting some of our borrowers with higher operating costs and rate resets to higher interest rate levels on their loans, we have successfully maintained credit-related strength and stability within our loan portfolio. As of September 30, 2024, our Company's total nonaccrual loans and loans past due 30 plus days were $1.0 million, or 0.21% of gross loans, which is up from last year by $295,000… but, down on a linked-quarter basis by $142,000 or 2 basis points. Also, as of the most recently ended quarter, United Bancorp, Inc.'s (UBCP) nonperforming assets to total assets was a very respectable 0.46%, a 1 basis point increase from last year and the same level as last quarter. Further highlighting the overall strength of our loan portfolio, our Company had net loans charged off of (excluding overdrafts of $141,000), which annualized is (0.04%) of average loans and primarily related to a single relationship. With some of the economic uncertainty and macroeconomic trends at present, our Company had a provision for credit loss expense of $69,000 for the quarter and $174,000 year-to-date (versus a negative provision for credit loss expense the previous year for each period), which are respective increases of $223,000 for the quarter and $474,000 year-over-year. For the quarter-end and nine months ended September 30, 2024, this year-over-year increase in the provision for credit loss expense caused a decrease in our Company's diluted earnings per share for the quarter of $0.03 and for the year of approximately $0.07." Greenwood concluded, "With the increased provision for credit loss expense in the current year and continued solid credit quality-related metrics, our Company's total allowance for credit losses to total loans of 0.84% and its total allowance for credit losses to nonaccrual loans 1,053% as of September 30, 2024. Overall, we firmly believe that we are presently well reserved with very strong coverage. In addition, our Company remains very well capitalized by industry standards seeing its tangible shareholders equity increase year-over-year by $13.0 million, or 25.2%, to a level of $64.6 million (up by $4.9, or 8.3%, on a linked-quarter basis) and its tangible book value per share increase by $2.07, or 23.6% (up $0.80, or 7.9%, on a linked-quarter basis), to a level of $10.84 at the most recently ended quarter. Also, as of September 30, 2024, UBCP's equity to assets increased by 1.48% year-over-year to a level of 7.94."

Scott A. Everson, President and CEO stated, "United Bancorp, Inc. (UBCP), like most banking organizations, has felt the pressure of operating in an environment wherein monetary policy has driven interest rates higher for a longer duration than many of us anticipated--- which has created different challenges for us and most banks. Fortunately, we are hopeful that the unwinding of the restrictive monetary policy that began toward the end of this most recent quarter by the Federal Open Market Committee (FOMC) will help alleviate some of this pressure in the coming quarters; especially, relating to our cost of deposit pricing and the impact that it has had on our net interest margin, among other things. Overall, we are very happy with the solid financial performance that our Company achieved during the third quarter and first nine months of 2024. As previously mentioned, even though UBCP experienced solid year-over-year growth in the level of total interest income that it generated for the first nine months ended September 30, 2024, our Company experienced a greater increase in the total interest expense that it incurred, which caused the aforementioned decline in our net interest income. Fortunately for our Company, taking the $75.0 million advance from the Federal Home Loan Bank (FHLB) toward the end of the first quarter of last year, to this point, has helped us to somewhat mitigate this decline in our net interest income by affording us the ability to be more selective in the pricing of our offering rates on our interest-bearing depository products while maintaining adequate levels of liquidity. With a present net interest margin of 3.50% as of September 30, 2024, we believe that this performance metric compares favorably to that of our peer group and industry at present."

Everson continued, "With the current pressure on our net interest margin and net interest income, United Bancorp, Inc. (UBCP) is focused on controlling its net noninterest margin while continuing with a focus of prudently growing our Company and remaining relevant in a very challenging and competitive environment. Regarding the noninterest income-side of the noninterest margin, some fee generating services and lines of business continue to be under attack by both regulatory and political authorities, which has ultimately put pressure on the level of noninterest income that our Company is able to realize. Accordingly (and, instead of dwelling on this negative reality), UBCP is looking to find new alternatives to generate additional levels of both noninterest income and other sources of revenue. One of these new alternatives is our focus on enhancing our mortgage origination function with the development of Unified Mortgage, which is beginning to help our Company generate higher levels of fee income with the heightened production and sale of secondary market mortgage products, along with the enhancement of our interest income levels through the origination of higher levels of portfolio-type mortgage products. In this area, year-over-year, our Company has experienced an increase of $355,000 on the net realized gain on the sale of loans and we anticipate the level of income to grow in this business-line as we further scale this revenue generating function, which has a tremendous level of positive operating leverage at present. Another alternative is our stronger commitment to developing our Treasury Management function, which offers fee-based services to our commercial customers in the areas of cash management and payments that produce noninterest income… in addition to helping to control interest expense by generating a higher level of low or no-cost depository balances for our Company. Lastly, another alternative to enhancing the overall performance of UBCP (and, one that should strongly contribute to our Company attaining its goal of growing its total assets to a level of $1.0 billion or greater) is the development of our newest banking center, which is currently under construction in the highly favorable market of Wheeling, West Virginia and should be completed for opening in the third quarter of 2025. Our Company already has many solid customer relationships in this coveted marketplace and we firmly believe that by finally having a "brick-and-mortar" location therein, we will be able to more fully leverage these already existing relationships, while having the opportunity to build many new relationships within this prime market." Everson further stated, "Obviously, these new alternatives that can lead to additional noninterest income and revenue enhancement opportunities for UBCP do have a cost, which already has and will continue to lead to additional expense or overhead for our Company. But, sometimes you have to take one-step back in order to take several-steps forward and that is what we firmly believe that we are doing by undertaking these new initiatives. With the revenue challenges that both we and the players within our industry are currently facing, we strongly feel that now is the time for our Company to focus on enhancing and expanding existing lines of business and growing new lines of business… thus, achieving the organic growth that will lead to the continued and future relevance of UBCP."

Everson further mentioned, "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. In the first nine months of 2024, we, once again, paid both our regular cash dividend, which increased by $0.03 to a level of $0.5250, and a special cash dividend of $0.15… for a total payout of $0.6750 in the current year. This is an increase for the quarter and the year of $0.01, or 6.0%, and $0.03, or 4.7%, respectively. This total dividend payout level for the current year produces a near-industry leading total dividend yield of 6.4%. This total dividend yield is based on our third quarter cash dividend on a forward basis, plus the special dividend (which combined total $0.86) and our quarter-end fair market value of $13.13. On a year-over-year basis as of September 30, 2024, the fair market value of our Company's stock was up $1.58, or 13.7%, from the prior year and our Company's market price to tangible book value was 121%, which compares favorably to our peer group."

Everson concluded, "Considering that we continue to operate in a concerning economic and challenging industry-related environment, we are very pleased with our current performance and future prospects. Even with the present threats with which our overall industry is exposed, we are very optimistic about the future growth and earnings potential for United Bancorp, Inc. (UBCP). We firmly believe that with the challenges that our industry has experienced over the course of the past few years, our Company has evolved into a more fundamentally sound organization with a focus on evolving and growing in order to achieve greater efficiencies and scales and generate higher levels of revenue--- while prudently managing expenses and controlling overall costs. We have and continue to invest in areas that will lead to our continued and future relevancy within our industry. Although such initiatives can stress the short-term performance of our Company, we firmly believe that they will help us fulfil our intermediate and longer-term goals and produce above industry average earnings and overall performance. As previously mentioned, we still have a vision of growing UBCP to an asset threshold of $1.0 billion or greater in the near term in a prudent and profitable fashion. We are truly excited about our Company's direction and the potential that it brings. With a keen focus on continual process improvement, product development and delivery, we firmly believe the future for our Company is very bright."

As of September 30, 2024, United Bancorp, Inc. has total assets of $825.5 million and total shareholders' equity of $65.5 million. Through its single bank charter, Unified Bank, the Company currently has eighteen banking centers that serve the Ohio Counties of Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas and Marshall County in West Virginia. United Bancorp, Inc. trades on the NASDAQ Capital Market tier of the NASDAQ Stock Market under the symbol UBCP, Cusip #909911109.

_{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 carry forward-looking statements, whether as a result of new information, future events or otherwise.}

United Bancorp, Inc,
"UBCP"

SOURCE: United Bancorp, Inc. (Ohio)

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