10-K 1 k74413e10vk.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 OR | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM N/A TO N/A COMMISSION FILE NUMBER 0-16540 UNITED BANCORP, INC. (Exact name of registrant as specified in its Charter.) OHIO 34-1405357 (State or other jurisdiction of (IRS) Employer incorporation or organization) Identification No.) 201 SOUTH FOURTH STREET, MARTINS FERRY, OHIO 43935 (Address of principal executive offices) (ZIP Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (740) 633-0445 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: COMMON STOCK, PAR VALUE $1.00 A SHARE NASDAQ REGULAR MARKET (SMALLCAP) (Title of class) (Name of each exchange on which registered) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR VALUE $1.00 A SHARE (Title of class) INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES |X| NO | | INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. |X| INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN EXCHANGE ACT RULE 12B-2). YES | | NO |X| STATE THE AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY HELD BY NON-AFFILIATES COMPUTED BY REFERENCE TO THE PRICE AT WHICH THE COMMON EQUITY WAS LAST SOLD, OR THE AVERAGE BID AND ASKED PRICE OF SUCH COMMON EQUITY, AS OF THE LAST BUSINESS DAY OF THE REGISTRANT'S MOST RECENTLY COMPLETED SECOND FISCAL QUARTER. $42,631,172. INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN EXCHANGE ACT RULE 12b-2). YES | | NO |X| THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT AS OF MARCH 5, 2003. COMMON STOCK, $1.00 PAR VALUE: $44,123,445 THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S CLASSES OF COMMON STOCK AS OF MARCH 5, 2003. COMMON STOCK, $1.00 PAR VALUE: 3,223,042 SHARES DOCUMENTS INCORPORATED BY REFERENCE PORTIONS OF THE ANNUAL SHAREHOLDERS REPORT FOR THE YEAR ENDED DECEMBER 31, 2002 ARE INCORPORATED BY REFERENCE INTO PARTS I AND II, (INDEX ON PAGE 2) PORTIONS OF THE PROXY STATEMENT FOR THE ANNUAL SHAREHOLDERS MEETING TO BE HELD APRIL 23, 2003 ARE INCORPORATED BY REFERENCE INTO PART III (INDEX ON PAGE 2). UNITED BANCORP, INC. FORM 10-K INDEX OF ITEMS INCORPORATED BY REFERENCE WITHIN FORM 10-K

FORM 10-K PAGE # ITEM DESCRIPTION REFERENCE DESCRIPTION ------ ---------------- ----------------------------------------- 4 Part I, Item 1, (a) Incorporated by reference to Pages 9-13 of the Annual Report To Shareholders. 4 Part I, Item 1, (b) Incorporated by reference to Page 35, Note 1 of the Annual Report To Shareholders. 6 Part I, Item 1, I Incorporated by reference to Pages 26-27 of the Annual Report To Shareholders. 7 Part I, Item 1, II, B Incorporated by reference to Page 39, Note 2 of the Annual Report To Shareholders. 9 Part I, Item 1, III, C, 4 Incorporated by reference to Page 46, Note 12 of the Annual Report To Shareholders. 10 Part I, Item 1, IV Incorporated by reference to Page 20 and Pages 36, Note 1 the Annual Report To Shareholders. 12 Part I, Item 1, V, A Incorporated by reference to Page 26 of the Annual Report To Shareholders. 13 Part I, Item 1, VII, A Incorporated by reference to Page 26 of the Annual Report To Shareholders. 13 Part I, Item 2 Incorporated by reference to Pages 9-13 of the Annual Report To Shareholders. 13 Part I, Item 3 Incorporated by reference to Page 38, Note 1 of the Annual Report To Shareholders. 13 Part II, Item 5 Incorporated by reference to Page 4 of the Annual Report To Shareholders. 14 Part II, Item 6 Incorporated by reference to inside front cover of the Annual Report To Shareholders. 14 Part II, Item 7 Incorporated by reference to Pages 15-29, of the Annual Report To Shareholders. 14 Part II, Item 7A Incorporated by reference to Pages 23-24 of the Annual Report To Shareholders. 14 Part II, Item 8 Incorporated by reference to Pages 30-52 of the Annual Report To Shareholders. 14 Part III, Item 10 Incorporated by reference to Pages 3-9 of the Proxy Statement. 14 Part III, Item 11 Incorporated by reference to Pages 10-12 of the Proxy Statement. 15 Part III, Item 12 Incorporated by reference to Pages 5-6 of the Proxy Statement. 15 Part III, Item 13 Controls and Procedures. 15 Part IV, Item 14, (a), 1 Incorporated by reference to Pages 30-52 of the Annual Report To Shareholders. 15 Part IV, Item 14, (a), 2 Incorporated by reference to Page 52 of the Annual Report To Shareholders. 16 Part IV, Item 14, (a), 3, Incorporated by reference to Pages 9-10 Exhibit 10 of the Proxy Statement. 16 Part IV, Item 14, (a), 3, Incorporated by reference to Page 37 and Exhibit 11 Page 51 of the Annual Report To Shareholders.

2 UNITED BANCORP, INC. FORM 10-K PART I ITEM 1 DESCRIPTION OF BUSINESS (a) GENERAL DEVELOPMENT OF BUSINESS United Bancorp, Inc. (Company) is a financial holding company headquartered in Martins Ferry, Ohio. The Company has two wholly-owned subsidiary banks, The Citizens Savings Bank, Martins Ferry, Ohio (CITIZENS) and The Community Bank, Lancaster, Ohio (COMMUNITY), collectively "Banks". For additional information about the Company's location and description of business, refer to Pages 9-11 and 12-13, Corporate Profile, in the Annual Report To Shareholders for the year ended December 31, 2002. Our annual report is available on line at www.unitedbancorp.com (b) FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS Refer to Page 35, Note 1 of the Annual Report To Shareholders. (c) DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Refer to Pages 3 - 9 of the Proxy Statement. (b) Executive Officers of the Registrant: James W. Everson 64 Chairman, President and Chief Executive Officer Alan M. Hooker 51 Executive Vice President - Administration Scott Everson 34 Senior Vice President and Chief Operating Officer Randall M. Greenwood 38 Senior Vice President - Chief Financial Officer, Treasurer James A. Lodes 56 Vice President - Lending Norman F. Assenza, Jr. 56 Vice President - Operations and Secretary Michael A. Lloyd 34 Vice President - Information Systems Each individual has held the position noted during the past five years, except for the following: Alan M. Hooker served as President of Fairfield National Division of the Park National Bank where he also served on their Advisory Board. He has held senior level banking positions with financial institutions in Washington, D.C., and Baltimore, Maryland. He has served as President and Chief Executive Officer of The Community Bank, Glouster, Ohio and as Executive Vice President - Administration of United Bancorp, Inc. since October 26, 1998. Scott A. Everson served as Senior Vice President, Operations and Retail Banking of The Citizens Savings Bank from May 1999 to April 2002 and prior to that he served Assistant Vice President/Branch Manager Bridgeport Office from 1997 to May 1999. In addition, he is currently President and Chief Operating Office and a Director of The Citizens Savings Bank. He has held this position since April 2002. Michael A. Lloyd served as Senior Vice President Management Information Systems from October 1999 to April 2002 of the Citizens Savings Bank and prior to that he served as Vice President Management Information Systems from April 1999 to October 1999. He served as Data Processing Manager from 1994 to April 1999 for The Citizens Savings Bank. Each of these Executive Officers are serving at-will in their current positions. The Officers have held the positions for the following time periods: James W. Everson, 20 years, Norman F. Assenza, Jr., 20 years, James A. Lodes, 7 years, Randall M. Greenwood, 5 years. 3 UNITED BANCORP, INC. FORM 10-K PART I ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) (d) NARRATIVE DESCRIPTION OF BUSINESS The Company is a financial holding company as defined under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). The BHC Act regulates acquisitions by the Company of voting shares or assets of any bank or other company. The Company is subject to the reporting requirements of, and examination and regulation by, the Board of Governors of the Federal Reserve System, as well as reporting requirements under the Securities and Exchange Commission Act of 1934. The Banks' are located in northeastern, eastern, southeastern and south central Ohio and are engaged in the business of commercial and retail banking in Belmont, Harrison, Tuscarawas, Carroll, Athens, Hocking, and Fairfield counties and the surrounding localities. The Banks provide a broad range of banking and financial services, which include accepting demand, savings and time deposits and granting commercial, real estate and consumer loans. CITIZENS conducts its business through its main office in Martins Ferry, Ohio and nine branches located in Bridgeport, Colerain, Dellroy, Dover, Jewett, New Philadelphia, St. Clairsville, Sherrodsville, and Strasburg, Ohio. CITIZENS offers full service brokerage service with securities provided through UVEST(R) member NASD/SIPC. COMMUNITY conducts its business through its seven offices in Amesville, Glouster, Lancaster, and Nelsonsville, Ohio. The markets in which the Banks' operate continue to be highly competitive. CITIZENS competes for loans and deposits with other retail commercial banks, savings and loan associations, finance companies, credit unions and other types of financial institutions within the Mid-Ohio valley geographic area along the eastern border of Ohio, extending into the northern panhandle of West Virginia and the Tuscarawas and Carroll County geographic areas of northeastern Ohio. COMMUNITY also encounters similar competition for loans and deposits throughout the Athens, Hocking, and Fairfield County geographic areas of central and southeastern Ohio. On November 12, 1999, the Graham-Leach-Bliley Act of 1999 ("GLB Act") was enacted, which is intended to modernize the financial services industry. The GLB Act sweeps away large parts of a regulatory framework that had its origins in the Depression Era of the 1930s. Effective March 11, 2000, new opportunities became available for banks, other depository institutions, insurance companies and securities firms to enter into combinations that permit a single financial service organization to offer customers a more complete array of financial products and services. The GLB Act provides a new regulatory framework for regulation through the financial holding company, which will have as its umbrella regulator the Federal Reserve Board. The functional regulation of the financial holding company's separately regulated subsidiaries will be conducted by their primary functional regulator. The GLB Act makes satisfactory or above Community Reinvestment Act compliance for insured depository institutions and their financial holding companies necessary in order for them to engage in new financial activities. The GLB Act provides a federal right to privacy of non-public personal information of individual customers. The Company and Banks are also subject to certain state laws that deal with the use and distribution of non-public personal information. The Company's two subsidiary banks are subject to regulation by the Ohio Division of Financial Institutions ("ODFI") and the Federal Deposit Insurance Corporation ("FDIC"). The regulations and restrictions affecting the Banks pertain to, among other things, allowable loans, guidelines for allowance for loan losses, accountability for fair and accurate disclosures to customers and regulatory agencies, permissible investments and limitations of risk and regulation of capital requirements for safe and sound operation of the financial institution. The Banks have no single customer or related group of customers whose banking activities, whether through deposits or lending, would have a material impact on the continued earnings capabilities if those activities were removed. 4 UNITED BANCORP, INC. FORM 10-K PART I ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) (d) NARRATIVE DESCRIPTION OF BUSINESS (CONTINUED) The Company itself, as a shell holding company, has no compensated employees. CITIZENS has 83 full time employees, with 24 of these serving in a management capacity and 13 part time employees. COMMUNITY has 34 full time employees, with 11 serving in a management capacity and 9 part time employees. The Company considers employee relations to be good at all subsidiary locations. (e) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS Not applicable. I DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL A Refer to Page 26 of the Annual Report To Shareholders B Refer to Page 26 of the Annual Report To Shareholders C Refer to Page 27 of the Annual Report To Shareholders II INVESTMENT PORTFOLIO A Securities available for sale at year-end 2002 increased $18,825,000, or 16.5% over 2001, while securities held to maturity increased $2,547,000, or 24.5%. In our planning process, Management's projection for 2002 was for a steady to slightly rising interest rate environment. For the first half of 2002, Management maintained an average of $13.8 million in fed funds sold. As the economy continued to weaken, and threat of war surfaced, Management's, posture on interest rates for the remainder of 2002 and heading into 2003 changed from one that interest rates may rise to a position that rates will go basically unchanged for the next twelve months. Therefore, by December 31, 2002, Management invested the Company's excess liquidity in investment securities and in loans. During 2002 the Company recognized gains of $320,485 on the sale of investment securities. Management's strategy in 2002, took into consideration the relative volatility in the bond market. At times during the year Management realized there were opportunities to sell certain bonds in the portfolio when overall interest rates were depressed. Security gains are non recurring income and depending on future interest rate scenarios, the gains on the sale of investment securities may negatively impact the yield on the investment portfolio in future periods, and also negatively impact the Company's net interest margin The following table sets forth the carrying amount of securities at December 31, 2002, 2001 and 2000:

DECEMBER 31, ------------------------------- (In thousands) 2002 2001 2000 -------- -------- ------- AVAILABLE FOR SALE US Agency obligations $ 93,262 $ 99,490 $75,685 Mortgage-backed obligations 14,075 153 1,930 Collaterallized mortgage obligations 998 State and municipal obligations 20,714 10,748 13,434 Other securities 3,820 3,654 3,390 -------- -------- ------- $132,869 $114,045 $94,439 ======== ======== ======= HELD TO MATURITY State and municipal obligations 12,926 10,379 8,306 -------- -------- ------- $ 12,926 $ 10,379 $ 8,306 ======== ======== =======

5 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) II INVESTMENT PORTFOLIO (CONTINUED) B Contractual maturities of securities at year-end 2002 were as follows:

AVERAGE AMORTIZED ESTIMATED TAX EQUIVALENT AVAILABLE FOR SALE COST FAIR VALUE YIELD ------------ ------------ -------------- US AGENCY OBLIGATIONS 1 - 5 Years $ 2,626,210 $ 2,635,307 5.12% 5 - 10 Years 13,295,933 13,384,501 5.12% Over 10 Years 76,172,098 77,241,951 6.16% ------------ ------------ ------------ Total 92,094,241 93,261,759 5.98% ------------ ------------ ------------ MORTGAGE-BACKED SECURITIES 5 - 10 Years 6,254,515 6,288,262 3.82% Over 10 Years 8,796,978 8,785,099 4.63% ------------ ------------ ------------ 15,051,493 15,073,361 4.29% ------------ ------------ ------------ STATE AND MUNICIPAL OBLIGATIONS Under 1 Year 4,771,468 4,852,429 5.94% 1 - 5 Years 928,793 988,856 6.47% 5 - 10 Years 7,057,634 7,164,884 5.79% Over 10 Years 7,703,664 7,707,732 6.65% ------------ ------------ ------------ Total 20,461,559 20,713,901 5.98% ------------ ------------ ------------ OTHER SECURITIES Equity securities 3,803,019 3,820,463 6.55% ------------ ------------ ------------ TOTAL SECURITIES AVAILABLE FOR SALE $131,410,312 $132,869,484 5.80% ============ ============ ============ HELD TO MATURITY STATE AND MUNICIPAL OBLIGATIONS Under 1 Year 151,999 152,762 8.86% 1 - 5 Years 4,501,248 4,800,651 7.36% 5 - 10 Years 3,162,795 3,411,256 7.20% Over 10 Years 5,109,475 5,269,508 7.03% ------------ ------------ ------------ TOTAL SECURITIES HELD TO MATURITY $ 12,925,517 $ 13,634,177 7.21% ============ ============ ============

C Refer to Page 39, Note 2 of the Annual Report To Shareholders. D Excluding holdings of U.S. Agency, there were no investments in securities of any one issuer exceeding 10% of the Company's consolidated shareholders' equity at December 31, 2002. 6 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) III LOAN PORTFOLIO A TYPES OF LOANS The amounts of gross loans outstanding at December 31, 2002, 2001, 2000, 1999 and 1998 are shown in the following table according to types of loans:

DECEMBER 31, -------------------------------------------------------- 2002 2001 2000 1999 1998 -------- -------- -------- -------- -------- (In thousands) Commercial loans $ 21,060 $ 21,502 $ 20,415 $ 15,463 $ 12,912 Commercial real estate loans 69,287 61,963 64,812 60,305 54,195 Real estate loans 52,535 54,153 55,931 51,357 49,438 Installment loans 45,006 45,722 55,339 53,391 47,676 -------- -------- -------- -------- -------- Total loans $187,888 $183,340 $196,497 $180,516 $164,221 ======== ======== ======== ======== ========

Construction loans were not significant for the periods discussed. B MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES The following is a schedule of commercial and commercial real estate loans at December 31, 2002 maturing within the various time frames indicated:

ONE YEAR ONE THROUGH AFTER xx (In thousands) OR LESS FIVE YEARS FIVE YEARS TOTAL ----------- ----------- ----------- ----------- Commercial loans $ 18,965 $ 1,966 $ 129 $ 21,060 Commercial real estate loans 27,086 35,728 6,473 69,287 ----------- ----------- ----------- ----------- Total $ 46,051 $ 37,694 $ 6,602 $ 90,347 =========== =========== =========== ===========

The following is a schedule of fixed rate and variable rate commercial and commercial real estate loans at December 31, 2002 due to mature after one year:

(In thousands) FIXED RATE VARIABLE RATE TOTAL > ONE YEAR ---------- ------------- ---------------- Commercial loans $ 1,812 $ 283 $ 2,095 Commercial real estate loans 7,843 34,358 42,201 ---------- ---------- ---------- Total $ 9,655 $ 34,641 $ 44,296 ========== ========== ==========

Variable rate loans are those loans with floating or adjustable interest rates. 7 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) III LOAN PORTFOLIO (CONTINUED) C RISK ELEMENTS 1. NONACCRUAL, PAST DUE, RESTRUCTURED AND IMPAIRED LOANS The following schedule summarizes nonaccrual loans, accruing loans which are contractually 90 days or more past due, troubled debt restructurings and impaired loans at December 31, 2002, 2001, 2000, 1999 and 1998:

DECEMBER 31, ------------------------------------------------------------ (In thousands) 2002 2001 2000 1999 1998 -------- -------- -------- -------- -------- Nonaccrual basis $ 685 $ 661 $ 793 $ 987 $ 399 Accruing loans 90 days or greater past due 85 157 124 36 150 Troubled debt restructuring N/A N/A N/A N/A N/A Impaired loans (1) (1) (1) (1) (1)

(1) Loans considered impaired under the provisions of SFAS No. 114 and interest recognized on a cash received basis were not considered material during any of the periods presented. The additional amount of interest income that would have been recorded on nonaccrual loans, had they been current, totaled $43,047 for the year-ended December 31, 2002. Interest income is not reported when full loan repayment is doubtful, typically when the loan is impaired or payments are past due over 90 days. Payments received on such loans are reported as principal reductions. A loan is impaired when full payment under the loan terms is not expected. Impairment is evaluated in total for smaller-balance loans of similar nature such as residential mortgage, consumer, and credit card loans, and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. 1. POTENTIAL PROBLEM LOANS The Company had no potential problem loans as of December 31, 2002 which have not been disclosed in Table C 1., but where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans into one of the problem loan categories. 3. FOREIGN OUTSTANDING Not applicable. 4. LOAN CONCENTRATIONS Refer to Page 46, Note 11 of the Annual Report To Shareholders. D. OTHER INTEREST-BEARING ASSETS Not applicable. 8 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) III LOAN PORTFOLIO (CONTINUED) IV SUMMARY OF LOAN LOSS EXPERIENCE For additional explanation of factors which influence management's judgment in determining amounts charged to expense, refer to Page 20, "Management Discussion and Analysis" and Page 36, Note 1 of the Annual Report To Shareholders. A ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES The following schedule presents an analysis of the allowance for loan losses, average loan data and related ratios for the years ended December 31, 2002, 2001, 2000, 1999, and 1998:

(In thousands) 2002 2001 2000 1999 1998 1997 -------- -------- -------- -------- -------- -------- Loans Loans outstanding $187,888 $183,340 $196,497 $180,516 $164,221 $171,477 Average loans outstanding $184,131 $188,114 $190,386 $168,868 $168,626 $169,066 ALLOWANCE FOR LOAN LOSSES Balance at beginning of year $ 2,879 $ 2,790 $ 3,110 $ 3,033 $ 3,039 $ 2,756 Loan charge-offs: Commercial 135 268 125 85 139 125 Commercial real estate 45 79 30 Real estate 84 67 275 21 51 20 Installment 507 728 716 807 861 661 -------- -------- -------- -------- -------- -------- Total loan charge-offs 771 1,063 1,195 943 1,051 806 -------- -------- -------- -------- -------- -------- Loan recoveries Commercial 17 27 2 50 87 32 Commercial real estate 28 12 -- Real estate 1 10 4 3 9 3 Installment 215 335 254 228 151 122 -------- -------- -------- -------- -------- -------- Total loan recoveries 233 372 288 293 247 157 -------- -------- -------- -------- -------- -------- Net loan charge-offs 538 691 907 650 804 649 Provision for loan losses 630 780 587 727 798 932 -------- -------- -------- -------- -------- -------- Balance at end of year $ 2,971 $ 2,879 $ 2,790 $ 3,110 $ 3,033 $ 3,039 ======== ======== ======== ======== ======== ======== Ratio of net charge-offs to average loans outstanding for the year 0.29% 0.37% 0.49% 0.38% 0.48% 0.38% ======== ======== ======== ======== ======== ========

9 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) IV SUMMARY OF LOAN LOSS EXPERIENCE (CONTINUED) B ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES The following table allocates the allowance for possible loan losses at December 31, 2002, 2001, 2000, 1999, and 1998. Management adjusts the allowance periodically to account for changes in national trends and economic conditions in the Banks service areas. The allowance has been allocated according to the amount deemed to be reasonably necessary to provide for the probability of losses being incurred within the following categories of loans at the dates indicated:

2002 2001 ----------------------- ----------------------- % OF LOANS % OF LOANS (In thousands) ALLOWANCE TO TOTAL (In thousands) ALLOWANCE TO TOTAL Loan type AMOUNT LOANS Loan type AMOUNT LOANS ---------- ---------- ---------- ---------- Commercial $ 361 11.73% Commercial $ 325 11.73% Commercial real estate 965 33.80% Commercial real estate 872 33.80% Real estate 403 29.54% Real estate 381 29.54% Installment 879 24.93% Installment 613 24.93% Unallocated 363 N/A Unallocated 688 N/A ---------- ---------- ---------- ---------- Total $ 2,971 100.00% Total $ 2,879 100.00% ========== ========== ========== ==========

2000 1999 ----------------------- ----------------------- % OF LOANS % OF LOANS (In thousands) ALLOWANCE TO TOTAL (In thousands) ALLOWANCE TO TOTAL Loan type AMOUNT LOANS Loan type AMOUNT LOANS ---------- ---------- ---------- ---------- Commercial $ 263 10.39% Commercial $ 195 8.57% Commercial real estate 835 32.98% Commercial real estate 439 33.40% Real estate 461 28.46% Real estate 343 28.45% Installment 781 28.17% Installment 620 29.58% Unallocated 450 N/A Unallocated 1,513 N/A ---------- ---------- ---------- ---------- Total $ 2,790 100.00% Total $ 3,110 100.00% ========== ========== ========== ==========

1998 ----------------------- % OF LOANS (In thousands) ALLOWANCE TO TOTAL Loan type AMOUNT LOANS ---------- ---------- Commercial $ 215 7.87% Commercial real estate 432 33.00% Real estate 567 30.10% Installment 818 29.03% Unallocated 1,001 N/A ---------- ---------- Total $ 3,033 100.00% ========== ==========

10 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) V DEPOSITS A SCHEDULE OF AVERAGE DEPOSIT AMOUNTS AND RATES (1) Refer to Page 26 of the Annual Report To Shareholders. (2) Refer to Page 26 of the Annual Report To Shareholders. (3) Refer to Page 26 of the Annual Report To Shareholders. (4) Refer to Page 26 of the Annual Report To Shareholders. (5)-(8) Not applicable. B OTHER CATEGORIES Not applicable. C FOREIGN DEPOSITS Not applicable. D MATURITY ANALYSIS OF TIME DEPOSITS GREATER THAN $100,000. The following schedule details the maturities of time certificates of deposit in amounts of $100,000 or more for the year ended December 31, 2002:

(In thousands) Three months or less $17,562 Over three through six months 3,722 Over six through twelve months 2,565 Over twelve months 18,991 ------- Total $42,840 =======

Refer to Page 41 for further information concerning certificates of deposit. E TIME DEPOSITS GREATER THAN $100,000 ISSUED BY FOREIGN OFFICES. Not applicable. VI RETURN ON EQUITY AND ASSETS The ratio of net income to daily average total assets and average shareholders' equity, and certain other ratios, were as follows:

DECEMBER 31, 2002 2001 2000 ---------- ---------- ---------- Dividend Payout Ratio 50.51% 56.82% 58.82% Equity to Assets 8.89% 8.93% 8.85%

(1) For other ratios refer to inside of front cover of the Annual Report To Shareholders. 11 UNITED BANCORP, INC. FORM 10-K ITEM 1 DESCRIPTION OF BUSINESS (CONTINUED) VII SHORT-TERM BORROWINGS Information concerning securities sold under agreements to repurchase is summarized as follows:

(In thousands) 2002 2001 2000 ---------- ---------- ---------- Balance at December 31, $ 7,010 $ 7,811 $ 4,861 Weighted average interest rate at December 31, 0.91% 1.39% 5.52% Average daily balance during the year $ 8,567 $ 10,695 $ 5,177 Average interest rate during the year 1.19% 3.59% 5.45% Maximum month-end balance during the year $ 11,659 $ 20,653 $ 6,117

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. Information concerning the cash management line of credit from the Federal Home Loan Bank of Cincinnati, Ohio is summarized as follows:

(In thousands) 2002 2001 2000 ---------- ---------- ---------- Balance at December 31, $ 10,100 $ 14,824 Weighted average interest rate at December 31, 2.05% 6.75% Average daily balance during the year $ 1,722 $ 14,783 $ 13,545 Average interest rate during the year 1.83% 4.01% 6.26% Maximum month-end balance during the year $ 6,799 $ 24,995 $ 20,217

No other individual component of the borrowed funds total comprised more than 30% of shareholders' equity and accordingly are not disclosed in detail. ITEM 2 PROPERTIES Refer to Pages 9-11 and 12-13, "Corporate Profile" in the Annual Report To Shareholders. Management believes the properties described on Pages 9-11 and 12-13 of the Annual Report to be in good operating condition for the purpose for which it is used. The properties are unencumbered by any mortgage or security interest and is, in management's opinion, adequately insured. ITEM 3 LEGAL PROCEEDINGS Refer to Page 38, Note 1 of the Annual Report To Shareholders. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No motions were submitted to shareholders for a vote during the fourth quarter of 2002. PART II ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Refer to Page 4, "Shareholder Information" of the Annual Report To Shareholders and refer to Page 48, Note 14 of the Annual Report To Shareholders for a discussion of dividend restrictions imposed on banking subsidiaries. 12 UNITED BANCORP, INC. FORM 10-K PART II ITEM 6 SELECTED FINANCIAL DATA Refer to inside front cover, "Decade of Progress" of the Annual Report To Shareholders. ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Refer to Pages 15-29, "Management's Discussion and Analysis" of the Annual Report To Shareholders. ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Refer to Pages 23-24, "Asset/Liability Management and Sensitivity to Market Risks" of the Annual Report To Shareholders. ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Refer to Pages 30-52 of the Annual Report To Shareholders. ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS (a) There were no disagreements with accountants. Effective for the fiscal year beginning January 1, 2003, the Company engaged the firm of Grant Thornton, LLP as its new independent public accountant, replacing the firm of Crowe, Chizek and Company, LLP. PART III ITEM 10 EXECUTIVE COMPENSATION Refer to Pages 9 - 12 of the Proxy Statement. The following table is a disclosure of securities authorized for issuance under equity compensation plans: EQUITY COMPENSATION PLAN INFORMATION

NUMBER OF SECURITIES NUMBER OF SECURITIES TO WEIGHTED-AVERAGE REMAINING AVAILABLE FOR BE ISSUED UPON EXERCISE EXERCISE PRICE OF FUTURE ISSUANCE UNDER OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, EQUITY COMPENSATION PLANS WARRANTS AND RIGHTS WARRANTS AND RIGHTS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) ----------------------- -------------------- ------------------------- EQUITY COMPENSATION PLANS APPROVED BY 84,318 $11.39 49,259 SECURITY HOLDERS EQUITY COMPENSATION PLANS NOT APPROVED BY SECURITY HOLDERS TOTAL 84,318 $11.39 49,259

ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Refer to Pages 5-6 of the Proxy Statement. 13 UNITED BANCORP, INC. FORM 10-K ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Regulations of the Securities and Exchange Commission require the disclosure of any related party transactions with members of the Compensation Committee. During the past year, certain directors and officers, including members of the Compensation Committee, and one or more of their associates may have been customers of and had business transactions with one or more of the bank subsidiaries of United Bancorp, Inc. All loans included in such transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other persons, and did not involve more than normal risk of collectability or present other unfavorable features. It is expected that similar transactions will occur in the future. In addition, The Citizens Savings Bank, a wholly-owned subsidiary of the Corporation, pursuant to the terms of a lease entered into on April 1, 1998, paid Riesbeck Food Markets, Inc. $25,128 in 2002, and over the five-year term of the lease, payments will total $130,000 as lease payments for space used in an in-store banking location at St. Clairsville, Ohio. Mr. Riesbeck, Chairman of the Compensation Committee, is an officer, director and shareholder of Riesbeck Food Markets, Inc. Management believes the lease between Riesbeck Food Markets, Inc. and the Corporation was made on an arms-length basis. Management employed a third party consulting firm that specializes in grocery store banking facilities to establish the terms of the lease. ITEM 13 CONTROLS AND PROCEDURES Within the 90-day period prior to the filing date of this report, an evaluation was carried out under the supervision and with the participation of United Bancorp's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are, to the best of their knowledge, effective to ensure that information required to be disclosed, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were no significant changes in United Bancorp's internal controls or in other factors that could significantly affect its internal control, including any corrective actions with regard to significant deficiencies and material weaknesses. PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) DOCUMENTS FILED AS PART OF FORM 10-K 1. The following consolidated financial statements appear in the 2002 Annual Report To Shareholders and are incorporated by reference: Report of Independent Auditors Page 30 Consolidated Balance Sheets Page 31 Consolidated Statements of Income Page 32 Consolidated Statements of Shareholders' Equity Page 33 Consolidated Statements of Cash Flow Page 34 Notes to the Consolidated Financial Statements Pages 35 - 52 2. The summary of selected quarterly results of operations appears on Page 52 in the 2002 Annual Report To Shareholders and is incorporated by reference. 14 UNITED BANCORP, INC. FORM 10-K PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (CONTINUED) (a) DOCUMENTS FILED AS PART OF FORM 10-K (CONTINUED) 3. Exhibits 2 Not Applicable 3(i)(ii) Articles of Incorporation of United Bancorp, Inc. including amendments and By Laws, previously filed with the Securities and Exchange Commission on November 16, 1983. 4 Not applicable. 9 Not applicable. 10 Change-in-Control Arrangements. The Company has entered into change-in-control agreements with Messrs. James W. Everson, Hooker, Scott A. Everson, Greenwood and Assenza. The agreements provide that Mr. James W. Everson, Mr. Hooker, Mr. Scott A. Everson, Mr. Greenwood and Mr. Assenza will be entitled to a lump sum severance benefit in the event of their involuntary termination of employment (other than for cause) following a "change in control" of the Corporation. A change in control is defined to include the acquisition of the Corporation and certain other changes in the voting control of the Corporation. In the event of a change in control and the involuntary termination of employment, the agreements provide that Mr. James W. Everson will receive 2.99 times his annual compensation, Mr. Hooker will receive 2.0 times his annual compensation Mr. Scott A. Everson will receive 2.0 times his annual compensation, Mr. Greenwood will receive 1.0 time his annual compensation and Mr. Assenza will receive 1.0 times his annual compensation in a lump sum cash payment. Each agreement has a term of one year and is automatically extended for one additional year unless, not later than June 30 of the preceding year, the Corporation gives notice of termination of the agreement. The right of the Corporation to terminate the employment of Mr. James W. Everson, Mr. Hooker. Mr. Scott A. Everson, Mr. Greenwood and or Mr. Assenza prior to a change in control is unaffected by these agreements. In the event a change in control had occurred on January 1, 2003, and Mr. James W. Everson's, Mr. Hooker's, Mr Scott A. Everson's, Mr. Greenwood's or Mr. Assenza'a employment had been involuntarily terminated on such date (other than for cause), Mr. James W. Everson, Mr. Hooker, Mr. Scott A. Everson, Mr. Greenwood and Mr. Assenza would have been entitled to receive lump sum severance benefits of $752,448, $248,778, $208,968, $101,868 and $105,841 respectively. In the event a potential change in control is announced, the agreements obligate Mr. James W. Everson, Mr. Hooker, Mr Scott A. Everson, Mr. Greenwood and Mr. Assenza to remain in the employment of the Corporation for not less than one year following the change in control of the Corporation. The Change in control contracts can be found in Exhibits 10.1 through 10.7. 11 Statement regarding computation of per share earnings (included in Note 1 to the consolidated financial statements on page 37 and Note 15 on Page 51 of the Annual Report To Shareholders.) 12 Not applicable. 13 Reference to the Annual Report To Shareholders for the fiscal year ended December 31, 2002. 16 Not applicable. 17 Not applicable. 15 UNITED BANCORP, INC. FORM 10-K PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (CONTINUED) (b) DOCUMENTS FILED AS PART OF FORM 10-K (CONTINUED) 21.1 Reference to The Citizens Savings Bank, Martins Ferry, Ohio, incorporated on December 31, 1902, previously filed with the Securities and Exchange Commission. 21.2 Reference to The Community Bank, Lancaster, Ohio, incorporated on August 1, 1949, previously filed with the Securities and Exchange Commission. 22 Not applicable. 23 Consents of Experts and Council. 24 Not applicable. 99 Not applicable. (c) The Company filed an SEC Form 8-K during the last quarter of the period covered by this report. The SEC Form 8-K was filed on November 19, 2002 for the dismissal of Crowe, Chizek and Company LLP ("Crowe Chizek") as the Corporation's independent public accountant, effective for the fiscal year beginning January 1, 2003, and engaged the firm of Grant Thornton, LLP as its new independent public accountant, effective for the fiscal year beginning January 1, 2003. 16 EXHIBIT INDEX

Exhibit No. Description SK Item 601 No. ----------- ----------- --------------- 1 Annual Report to Shareholders 13 2 Consents of Independent Auditors 23 10 Change in control agreements 10.1 James W. Everson 10.2 Randall M. Greenwood 10.3 Alan M. Hooker 10.4 Scott A. Everson 10.5 Norman F. Assenza 10.6 James A. Lodes 10.7 Michael A. Lloyd Certification pursuant to 18 U.S.C. 99.1 Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002. 99.2 Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

17 UNITED BANCORP INC. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) United Bancorp, Inc. By: /s/ James W. Everson March 15, 2003 ------------------------------------ James W. Everson, Chairman, President & CEO Persuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ James W. Everson March 15, 2003 ------------------------- James W. Everson, Chairman, President & CEO By: /s/ Randall M. Greenwood March 15, 2003 ------------------------- Randall M. Greenwood, Senior Vice President & CFO By: /s/ Michael J. Arciello March 15, 2003 ------------------------- Michael J. Arciello By: /s/ Terry A. McGhee March 15, 2003 ------------------------- Terry A. McGhee By: /s/ John M. Hoopingarner March 15, 2003 ------------------------- John M. Hoopingarner By: /s/ Richard L. Riesbeck March 15, 2003 ------------------------- Richard L. Riesbeck By: /s/ L.E. Richardson, Jr. March 15, 2003 -------------------------- L.E. Richardson, Jr. By: /s/ Matthew C. Thomas March 15, 200 ------------------------- Matthew C. Thomas UNITED BANCORP, INC. CERTIFICATIONS I, James W. Everson, certify that: 1. I have reviewed this annual report on Form 10-K of United Bancorp, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date or our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date March 15, 2003 ___________________________________________________________________ By /s/ James W. Everson ____________________________________________________________________ James W. Everson, Chairman, President and Chief Executive Officer UNITED BANCORP, INC. CERTIFICATIONS I, Randall M. Greenwood, certify that: 1. I have reviewed this annual report on Form 10-K of United Bancorp, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: d) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; e) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and f) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): c) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and d) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date or our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date March 15, 2003 ____________________________________________________________________ By /s/ Randall M. Greenwood _______________________________________________________________________ Randall M. Greenwood, Senior Vice President and Chief Financial Officer