10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                                     June 30, 2018                                    

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT

For the transition period from ____________ to _______________

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 Identification No.)
incorporation or organization)

201 South Fourth Street, Martins Ferry, Ohio 43935-0010

(Address of principal executive offices)

(740) 633-0445

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes   ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b-2 of the Exchange Act).

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller reporting company  x
(Do not check if a smaller reporting company)
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 3(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ¨          No x

Indicate the number of shares outstanding of the issuer’s classes of common stock as of the latest practicable date: As of August 6, 2018, 5,383,938 shares of the Company’s common stock, $1.00 par value, were issued and outstanding.

PART I - FINANCIAL INFORMATION
	Item 1	Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statements of Comprehensive Income	5
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	8
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	46
	Item 4	Controls and Procedures	47
PART II - OTHER INFORMATION
	Item 1	Legal Proceedings	48
	Item 1A	Risk Factors	48
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	48
	Item 3	Defaults Upon Senior Securities	48
	Item 4	Other Information	49
	Item 5	Exhibits	49
SIGNATURES			50

2

ITEM 1. Financial Statements

United Bancorp, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	June 30,			December 31,
	2018			2017
	(Unaudited)
Assets
Cash and due from banks	$	4,611		$	4,662
Interest-bearing demand deposits		11,697			9,653
Cash and cash equivalents		16,308			14,315
Available-for-sale securities		86,212			44,959
Loans, net of allowance for loan losses of $2,080 and $2,122 at June 30, 2018 and December 31, 2017, respectively		377,433			366,467
Premises and equipment		11,817			11,740
Federal Home Loan Bank stock		4,164			4,164
Foreclosed assets held for sale, net		615			397
Accrued interest receivable		1,275			993
Deferred income taxes		495			349
Bank-owned life insurance		12,263			12,114
Other assets		4,219			3,834
Total assets	$	514,801		$	459,332
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Demand	$	262,953		$	237,980
Savings		83,838			82,169
Time		68,843			65,817
Total deposits		415,634			385,966
Securities sold under repurchase agreements		12,346			11,085
Federal Home Loan Bank advances		33,768			10,022
Subordinated debentures		4,124			4,124
Interest payable and other liabilities		3,944			4,240
Total liabilities		469,816			415,437
Stockholders’ Equity
Preferred stock, no par value, authorized 2,000,000 shares; no shares issued		—			—
Common stock, $1 par value; authorized 10,000,000 shares; issued 2018 –5,560,304 shares, 2017 – 5,435,304 shares; outstanding 2018 – 5,383,938, 2017  - 5,244,105		5,560			5,435
Additional paid-in capital		17,927			18,020
Retained earnings		24,177			23,260
Stock held by deferred compensation plan; 2018 –170,622 shares, 2017 – 185,355 shares		(1,579	)		(1,671	)
Unearned ESOP compensation		(543	)		(683	)
Accumulated other comprehensive loss		(511	)		(420	)
Treasury stock, at cost
2018 –5,744 shares, 2017 – 5,744 shares		(46	)		(46	)
Total stockholders’ equity		44,985			43,895
Total liabilities and stockholders’ equity	$	514,801		$	459,332

See Notes to Condensed Consolidated Financial Statements

3

United Bancorp, Inc. 

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Three months ended					Six months ended
	June 30,					June 30,
	2018		2017			2018		2017
Interest and dividend income
Loans, including fees	$	4,562	$	4,095		$	8,893	$	8,112
Taxable securities		181		109			355		212
Non-taxable securities		281		1			313		7
Federal funds sold		24		36			51		47
Dividends on Federal Home Loan Bank stock and other		59		49			120		96
Total interest and dividend income		5,107		4,290			9,732		8,474
Interest expense
Deposits
Demand		302		115			544		187
Savings		9		10			19		19
Time		222		170			427		318
Borrowings		174		143			240		352
Total interest expense		707		438			1,230		876
Net interest income		4,400		3,852			8,502		7,598
Provision for loan losses		72		25			129		50
Net interest income after provision for loan losses		4,328		3,827			8,373		7,548
Noninterest income
Service charges on deposit accounts		650		632			1,281		1,229
Realized gains on sales of loans		23		29			37		44
Other income		215		208			450		428
Total noninterest income		888		869			1,768		1,701
Noninterest expense
Salaries and employee benefits		1,876		1,824			3,708		3,592
Net occupancy and equipment expense		547		510			1,087		1,033
Professional services		297		194			489		395
Insurance		105		72			208		139
Deposit insurance premiums		26		44			75		88
Franchise and other taxes		102		96			198		180
Advertising		125		100			262		209
Stationery and office supplies		38		33			74		69
Net realized (gain) loss on sale of other real estate and repossessions		5		(4	)		5		(4	)
Other expenses		633		496			1,227		998
Total noninterest expense		3,754		3,365			7,333		6,699
Income before federal income taxes		1,462		1,331			2,808		2,550
Federal income taxes		250		415			448		784
Net income	$	1,212	$	916		$	2,360	$	1,766
EARNINGS PER COMMON SHARE
Basic	$	0.24	$	0.18		$	0.46	$	0.35
Diluted	$	0.22	$	0.18		$	0.44	$	0.35
DIVIDENDS PER COMMON SHARE	$	0.13	$	0.11		$	0.26	$	0.22

See Notes to Condensed Consolidated Financial Statements

4

United Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2018		2017		2018			2017
Net income	$	1,212	$	916	$	2,360		$	1,766
Unrealized holding gains (losses) on securities during the period, net of tax (benefits) of $21, $48,  ($26) and $128 for each respective period		79		93		(91	)		248
Comprehensive income	$	1,291	$	1,009	$	2,269		$	2,014

See Notes to Condensed Consolidated Financial Statements

5

United Bancorp, Inc. 

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six months ended
	June 30,
	2018			2017
Operating Activities
Net income	$	2,360		$	1,766
Items not requiring (providing) cash
Accretion of premiums and discounts on securities, net		36			—
Depreciation and amortization		476			453
Expense related to share based compensation plans		124			52
Expense related to ESOP		140			140
Provision for loan losses		129			50
Increase in value of bank-owned life insurance		(149	)		(154	)
Gain on sale of loans		(37	)		(44	)
Proceeds from sale of loans held for sale		1,800			2,050
Originations of loans held for sale		(1,763	)		(2,006	)
(Gain) Loss on sale or write down of foreclosed assets		13			(4	)
Amortization of mortgage servicing rights		15			3
Net change in accrued interest receivable and other assets		(838	)		(1,464	)
Net change in accrued expenses and other liabilities		(296	)		501
Net cash provided by operating activities		2,010			1,343
Investing Activities
Securities available for sale:
Maturities, prepayments and calls		—			1,249
Purchases		(41,403	)		—
Net change in loans		(11,309	)		(866	)
Purchases of premises and equipment		(552	)		(429	)
Proceeds from sale of foreclosed assets		15			—
Net cash used in investing activities		(53,249	)		(46	)

See Notes to Condensed Consolidated Financial Statements

6

United Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(In thousands)

(Unaudited)

	Six months ended
	June 30,
	2018			2017
Financing Activities
Net change in deposits	$	29,668		$	35,112
Net change in securities sold under repurchase agreements		1,261			3,596
Net change in FHLB overnight borrowings		23,800			(19,500	)
Repayments of long-term borrowings		(54	)		(10,068	)
Cash dividends paid on common stock		(1,443	)		(1,194	)
Net cash provided by financing activities		53,232			7,946
Increase in Cash and Cash Equivalents		1,993			9,243
Cash and Cash Equivalents, Beginning of Period		14,315			11,541
Cash and Cash Equivalents, End of Period	$	16,308		$	20,784
Supplemental Cash Flows Information
Interest paid on deposits and borrowings	$	1,176		$	906
Federal income taxes paid	$	65		$	278
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Transfers from loans to foreclosed assets held for sale	$	250		$	41

See Notes to Condensed Consolidated Financial Statements

7

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Note 1: Summary of Significant Accounting Policies

These interim financial statements are prepared without audit and reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position of United Bancorp, Inc. (“Company”) at June 30, 2018, and its results of operations and cash flows for the interim periods presented. All such adjustments are normal and recurring in nature. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not purport to contain all the necessary financial disclosures required by accounting principles generally accepted in the United States of America that might otherwise be necessary in the circumstances and should be read in conjunction with the Company’s consolidated financial statements and related notes for the year ended December 31, 2017 included in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K. The results of operations for the three months and six months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2017 has been derived from the audited consolidated balance sheet of the Company as of that date.

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, Unified Bank of Martins Ferry, Ohio (“the Bank”). All intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations

The Company’s revenues, operating income and assets are almost exclusively derived from banking. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Customers are mainly located in Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio and include a wide range of individuals, businesses and other organizations. Unified Bank conducts its business through its main office in Martins Ferry, Ohio and branches in Amesville, Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Glouster, Jewett, Lancaster Downtown, Lancaster East, Nelsonville, New Philadelphia, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg and Tiltonsville, Ohio. The Bank also operates a Loan Production Office in Wheeling, West Virginia.

The Company’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate and are not considered “sub prime” type loans. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Company can be significantly influenced by a number of environmental factors, such as governmental monetary and fiscal policies, that are outside of management’s control.

Revenue Recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. 

8

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, investment securities, as well as revenue related to our mortgage banking activities, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of non-interest income are as follows:

Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except residential and consumer loans, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

9

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

The Company charges-off residential and consumer loans when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 120 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical charge-off experience by segment. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior three years. Management believes the three year historical loss experience methodology is appropriate in the current economic environment. Other adjustments (qualitative/environmental considerations) for each segment may be added to the allowance for each loan segment after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

10

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due based on the loan’s current payment status and the borrower’s financial condition including available sources of cash flows. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for non-homogenous type loans such as commercial, non-owner residential and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes the discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense.

The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral. In general, the Company acquires an updated appraisal upon identification of impairment and annually thereafter for commercial, commercial real estate and multi-family loans. If the most recent appraisal is over a year old, and a new appraisal is not performed, due to lack of comparable values or other reasons, the existing appraisal is utilized and discounted generally 10% - 35% based on the age of the appraisal, condition of the subject property, and overall economic conditions. After determining the collateral value as described, the fair value is calculated based on the determined collateral value less selling expenses. The potential for outdated appraisal values is considered in our determination of the allowance for loan losses through our analysis of various trends and conditions including the local economy, trends in charge-offs and delinquencies, etc. and the related qualitative adjustments assigned by the Company.

Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segment’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this scenario, the Company attempts to work-out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.

It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until six months of satisfactory borrower performance at which time management would consider its return to accrual status. If a loan was accruing at the time of restructuring, the Company reviews the loan to determine if it is appropriate to continue the accrual of interest on the restructured loan.

11

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

With regard to determination of the amount of the allowance for credit losses, trouble debt restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(In thousands, except share and per share data)
Basic
Net income	$	1,212		$	916		$	2,360		$	1,766
Dividends on non-vested restricted stock		(27	)		(9	)		(53	)		(17	)
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding		4,990,904			4,847,884			4,986,290			4,839,725
Basic earnings per common share	$	0.24		$	0.18		$	0.46		$	0.35
Diluted
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding for basic earnings per common share		4,990,904			4,847,884			4,986,290			4,839,725
Add:  Dilutive effects of assumed exercise of stock options and restricted stock		226,030			119,102			224,998			119,102
Average shares and dilutive potential common shares		5,216,934			4,966,986			5,211,288			4,958,827
Diluted earnings per common share	$	0.22		$	0.18		$	0.44		$	0.35

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2014.

12

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Recently Adopted Accounting Pronouncements

ASU No. 2018-02 was issued in February 2018 to provide guidance to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve usefulness of information reported to financial statement users. The amendments in this ASU will also require certain disclosures about stranded tax effects and is effective for fiscal years beginning after December 31, 2018. The Company early adopted ASU 2018-02 effective January 1, 2018 and reclassified approximately $48,000 in stranded tax effects in the adoption using the portfolio method.

ASU No. 2017-09 was issued in May 2017 and provides guidance about which changes to the terms or condition of a share-based payment award require and entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted ASU 2017-09 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

ASU No. 2017-07 was issued in March 2017 and applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in this update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, as defined, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in ASU No. 2017-07 are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this update are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The Company has adopted ASU 2017-07 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 provides cash flow statement classification guidance for certain transactions including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has adopted ASU 2016-15 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ASU No. 2016-01 was issued in January 2016 and applies to all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instruments specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for annual periods and interim periods within those periods, beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity instruments that exist as of the date of adoption. The amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. The Company has adopted ASU 2016-01 on January 1, 2018 and it did not have a material effect on its fair value disclosures and other disclosure requirements. For additional information on fair value of assets and liabilities, see Note 16.

13

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). This update to the ASC is the culmination of efforts by the FASB and the International Accounting Standards Board (IASB) to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 supersedes Topic 605 – Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. Originally, the amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early application is not allowed. In July 2015, the FASB extended the implementation date to annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Transitional guidance is included in the update. Earlier adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. The Company’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASU 2014-09, and non interest income. The Company has adopted ASU 2014-09 on January 1, 2018 and it did not identify any changes in the timing of revenue recognition when considering the amended accounting guidance. The Company included additional disclosures beginning in the first quarter of 2018 as required by the guidance.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. 

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense. 

14

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. 

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of these amendments to the Company’s financial position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the amendments. The Allowance for Loan Losses (ALL) estimate is material to the Company and given the change from an incurred loss model to a methodology that considers the credit loss over the life of the loan, there is the potential for an increase in the ALL at adoption date. The Company is anticipating a significant change in the processes and procedures to calculate the ALL, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the current accounting policy and procedures for the other-than-temporary impairment on available-for-sale securities will be replaced with an allowance approach. The Company continues to work with an outside vendor on data collection and reviewing segmentation to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 4.

 On February 25, 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” ASU 2016-02 is intended to improve financial reporting about leasing transactions. This ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment.

Under the current accounting model, an organization applies a classification test to determine the accounting for the lease arrangement:

(a) Some leases are classified as capital whereby the lessee would recognize lease assets and liabilities on the balance sheet.

(b) Other leases are classified as operating leases whereby the lessee would not recognize lease assets and liabilities on the balance sheet.

Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Thus, for a calendar year company, it would be effective January 1, 2019. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements.

15

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Future Acquisition

The Company and Powhatan Community Bancshares, Inc. (“Powhatan”), the holding company for First National Bank of Powhatan Point ("First National"), announced on June 14, 2018 they have signed a definitive agreement whereby the Company will acquire Powhatan in a stock and cash transaction.  Upon completion, First National will be merged into the Company’s subsidiary bank, Unified Bank. At that time, the main office of First National will become a full-service branch of Unified Bank. Powhatan operates one full-service office in Belmont County, Ohio and has approximately $62.8 million in assets, $6.7 million in loans, $57.6 million of deposits and $5.1 million in consolidated equity as of June 30, 2018.

The acquisition is expected to close in the fourth quarter of 2018 and is subject to Powhatan shareholder approval, regulatory approval, and other conditions set forth in the merger agreement.  Subject to the terms of the merger agreement, which has been unanimously approved by the Board of Directors of each company, Powhatan shareholders will receive 6.9233 shares of the Company’s common stock plus $38.75 in cash for each outstanding share of Powhatan common stock, subject to adjustment based on closing equity and other factors.  Based on our closing share price prior to the announcement of $13.05 on June 13, 2018, the transaction is valued at $129.10 for each Powhatan share or approximately $6.836 million in aggregate. 

 The acquisition will be accounted for in accordance with applicable accounting guidance. Accordingly, the assets and liabilities of Powhatan will be recorded at their estimated fair values at the acquisition date. The excess of the estimated fair value of the Company’s common shares issued and cash paid over the net fair values of the assets acquired, including identifiable intangible assets and liabilities assumed, will be recorded as goodwill. The results of operations will be included in the consolidated income statement from the date of the acquisition. Goodwill will be subject to an annual test for impairment and the amount impaired, if any, will be charged to expense at the time of impairment. The estimated fair values of the assets and liabilities have not yet been determined. During the six months ended June 30, 2018, the Company incurred $123,000 of merger related expenses.

Note 2: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale Securities:
June 30, 2018:
U.S. government agencies	$	45,250	$	—	$	(669	)	$	44,581
State and political subdivisions		41,366		271		(6	)		41,631
	$	86,616	$	271	$	(675	)	$	86,212
Available-for-sale Securities:
December 31, 2017:
U.S. government agencies	$	45,249	$	—		(290	)	$	44,959
	$	45,249	$	3	$	(290	)	$	44,959

16

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

The amortized cost and fair value of available-for-sale securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	—	$	—
One to five years		45,250		44,580
Five to ten year		—		—
Due after ten years		41,366		41,632
Totals	$	86,616	$	86,212

The carrying value of securities pledged to secure public deposits and for other purpose, was $42.6 million and $41.5 million at June 30, 2018 and December 31, 2017, respectively.

17

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at June 30, 2018 and December 31, 2017, was $47.7 million and $44.9 million, which represented approximately 55.2% and 100.0%, respectively, of the Company’s available-for-sale investment portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary and are a result on an general increase in longer term interest rates.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2018 and December 31, 2017:

June 30, 2018
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(In thousands)
U.S. Government agencies	$	12,094	$	(156	)	$	32,487	$	(513	)	$	44,581	$	(669	)
State and Political Subdivisions		3,081		(6	)		—		—			3,081		(6	)
Total	$	15,175	$	(162	)	$	32,487	$	(513	)	$	47,662	$	(675	)

December 31, 2017
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(In thousands)
U.S. Government agencies	$	12,190	$	(59	)	$	32,769	$	(231	)	$	44,959	$	(290	)

The unrealized losses on the Company’s investments in U.S. Government agencies were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2018 and December 31, 2017.

There were no investment sales for the six months ended June 30, 2018 and 2017.

18

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Note 3: Loans and Allowance for Loan Losses

Categories of loans include:

	June 30,			December 31,
	2018			2017
	(In thousands)
Commercial loans	$	84,772		$	81,327
Commercial real estate		206,795			198,936
Residential real estate		76,476			75,853
Installment loans		11,470			12,473
Total gross loans		379,513			368,589
Less allowance for loan losses		(2,080	)		(2,122	)
Total loans	$	377,433		$	366,467

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial Real Estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans.

19

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Residential and Installment

Residential and installment loans consist of two segments - residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles. Some installment personal loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and six month periods ended June 30, 2018

	Commercial		Commercial Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, April 1, 2018	$	522	$	671		$	446		$	400		$	86		$	2,125
Provision charged to expense		22		(17	)		137			16			(86	)		72
Losses charged off		—		—			(79	)		(55	)		—			(134	)
Recoveries		1		—			1			15			—			17
Balance, June 30, 2018	$	545	$	654		$	505		$	376		$	—		$	2,080
Balance, January 1, 2018	$	537	$	843		$	436		$	218		$	88		$	2,122
Provision charged to expense		6		(190	)		146			255			(88	)		129
Losses charged off		—		—			(79	)		(124	)		—			(203	)
Recoveries		2		1			2			27			—			32
Balance, June 30, 2018	$	545	$	654		$	505		$	376		$	—		$	2,080
Allocation:
Ending balance:  individually evaluated for impairment	$	—	$	75		$	—		$	—		$	—		$	75
Ending balance:  collectively evaluated for impairment	$	545	$	579		$	505		$	376		$	—		$	2,005
Loans:
Ending balance:  individually evaluated for impairment	$	58	$	577		$	—		$	98		$	—		$	733
Ending balance:  collectively evaluated for impairment	$	84,714	$	206,218		$	76,476		$	11,372		$	—		$	378,780

20

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and six month periods ended June 30, 2017

	Commercial		Commercial Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, April 1, 2017	$	498	$	793		$	583		$	162		$	297		$	2,333
Provision charged to expense		33		56			(137	)		193			(120	)		25
Losses charged off		—		(5	)		—			(77	)		—			(82	)
Recoveries		1		1			1			13			—			16
Balance, June 30, 2017	$	532	$	845		$	447		$	291		$	177		$	2,292
Balance, January 1, 2017	$	495	$	804		$	591		$	107		$	344		$	2,341
Provision charged to expense		36		44			(150	)		287			(167	)		50
Losses charged off		—		(5	)		—			(127	)		—			(132	)
Recoveries		1		2			6			24			—			33
Balance, June 30, 2017	$	532	$	845		$	447		$	291		$	177		$	2,292
Loans:
Ending balance:  individually evaluated for impairment	$	129	$	841		$	—		$	462		$	—		$	1,432
Ending balance:  collectively evaluated for impairment	$	51,732	$	216,508		$	75,158		$	12,739		$	—		$	356,137

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2017

	Commercial		Commercial Real Estate		Residential		Installment		Unallocated		Total
(In thousands)
Allowance for loan losses:
Ending balance:  individually evaluated for impairment	$	—	$	73	$	—	$	—	$	—	$	73
Ending balance:  collectively evaluated for impairment	$	537	$	770	$	436	$	218	$	88	$	2,049
Loans:
Ending balance:  individually evaluated for impairment	$	83	$	619	$	—	$	306	$	—	$	1,008
Ending balance:  collectively evaluated for impairment	$	81,244	$	198,317	$	75,853	$	12,167	$	—	$	367,581

21

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

The following tables show the portfolio quality indicators.

	June 30, 2018
Loan Class	Commercial		Commercial Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	84,701	$	203,010	$	76,476	$	11,371	$	375,558
Special Mention		—		2,943		—		—		2,943
Substandard		71		842		—		99		1,012
Doubtful		—		—		—		—		—
	$	84,772	$	206,795	$	76,476	$	11,470	$	379,513

	December 31, 2017
Loan Class	Commercial		Commercial Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	78,652	$	195,063	$	75,853	$	12,167	$	361,735
Special Mention		20		3,066		—		—		3,086
Substandard		2,655		807		—		306		3,768
Doubtful		—		—		—		—		—
	$	81,327	$	198,936	$	75,853	$	12,473	$	368,589

To facilitate the monitoring of credit quality within the loan portfolio, and for purposes of analyzing historical loss rates used in the determination of the ALLL, the Company utilizes the following categories of credit grades: pass, special mention, substandard, and doubtful. The four categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass ratings, which are assigned to those borrowers that do not have identified potential or well defined weaknesses and for which there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on at least a quarterly basis.

The Company assigns a special mention rating to loans that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or the Company’s credit position.

The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans have well defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies noted are not addressed and corrected.

The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

22

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the current and past year to date periods presented.

Loan Portfolio Aging Analysis

As of June 30, 2018

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 90 Days and Accruing		Non Accrual		Total Past Due and Non Accrual		Current		Total Loans Receivable
	(In thousands)
Commercial	$	35	$	—	$	57	$	—	$	92	$	84,680	$	84,772
Commercial real estate		997		—		—		486		1,483		205,312		206,795
Residential		611		18		—		659		1,288		75,188		76,476
Installment		13		—		—		59		72		11,398		11,470
Total	$	1,656	$	18	$	57	$	1,204	$	2,935	$	376,578	$	379,513

Loan Portfolio Aging Analysis

As of December 31, 2017

	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Greater Than 90 Days and Accruing		Non Accrual		Total Past Due and Non Accrual		Current		Total Loans Receivable
	(In thousands)
Commercial	$	56	$	—	$	—	$	83	$	139	$	81,188	$	81,327
Commercial real estate		262		—		—		500		762		198,174		198,936
Residential		559		306		—		760		1,625		74,228		75,853
Installment		61		40		—		52		153		12,320		12,473
Total	$	938	$	346	$	—	$	1,395	$	2,679	$	365,910	$	368,589

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

23

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Impaired Loans

	As of June 30, 2018						For the three months ended June 30, 2018				For the six months ended June 30, 2018
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	58	$	58	$	—	$	59	$	2	$	60	$	2
Commercial real estate		168		168		—		583		1		582		5
Residential		—		—		—		—		—		—		—
Installment		98		98		—		99		1		100		2
		324		324		—		741		4		742		9
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		—
Commercial real estate		409		409		75		421		1		422		1
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		409		409		75		421		1		422		1
Total:
Commercial	$	58	$	58	$	—	$	59	$	2	$	60	$	2
Commercial real estate	$	577	$	577	$	75	$	1,004	$	2	$	1,004	$	6
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	98	$	98	$	—	$	99	$	1	$	100	$	2

24

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Impaired Loans

	As of December 31, 2017						For the three months ended June 30, 2017				For the six months ended June 30, 2017
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income  Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	83	$	83	$	—	$	131	$	1	$	128	$	2
Commercial real estate		209		317		—		808		3		825		5
Residential		—		—		—		—		—		—		—
Installment		306		306		—		463		3		477		3
		598		706		—		1,402		7		1,430		10
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		3
Commercial real estate		410		410		73		489		6		498		12
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		410		410		73		489		6		498		15
Total:
Commercial	$	83	$	83	$	73	$	131	$	1	$	128	$	5
Commercial real estate	$	619	$	727	$	—	$	1,297	$	9	$	1,323	$	17
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	306	$	306	$	—	$	463	$	3	$	477	$	3

Interest income recognized on a cash basis was not materiality different than interest income recognized.

25

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

For the TDRs noted in the tables below, the Company extended the maturity dates and granted interest rate concessions as part of each of those loan restructurings. The loans included in the tables are considered impaired and specific loss calculations are performed on the individual loans. In conjunction with the restructuring there were no amounts charged-off.

	Three Months ended June 30, 2018
	Number of Contracts		Pre- Modification  Outstanding  Recorded Investment		Post-Modification  Outstanding  Recorded  Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		—		—		—
Residential		—		—		—
Installment		—		—		—

	Three Months Ended June 30, 2018
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Consumer		—		—		—		—

	Six Months ended June 30, 2018
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		—		—		—
Residential		—		—		—
Installment		—		—		—

	Six Months Ended June 30, 2018
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Consumer		—		—		—		—

26

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

	Three Months ended June 30, 2017
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		127		103
Residential		—		—		—
Installment		—		—		—

	Three Months Ended June 30, 2017
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		103		—		103
Residential		—		—		—		—
Consumer		—		—		—		—

	Six Months ended June 30, 2017
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		127		103
Residential		—		—		—
Installment		—		—		—

	Six Months Ended June 30, 2017
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		103		—		103
Residential		—		—		—		—
Consumer		—		—		—		—

27

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

During the six months ended June 30, 2018 troubled debt restructurings did not have an impact on the allowance for loan losses. During the six months ended June 30, 2017 troubled debt restructurings described above increased the allowance for loan losses by 24,000. At June 30, 2018 and 2017 and for three and six month periods then ended, there were no material defaults of any troubled debt restructurings that were modified in the last 12 months. The Company generally considers TDR’s that become 90 days or more past due under the modified terms as subsequently defaulted.

Note 4: Benefit Plans

Pension expense includes the following:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(In thousands)
Service cost	$	76		$	68		$	152		$	136
Interest cost		55			50			110			100
Expected return on assets		(111	)		(90	)		(222	)		(180	)
Amortization of prior service cost and net loss		(10	)		(6	)		(20	)		(12	)
Pension expense	$	10		$	22		$	20		$	44

Note 5: Off-balance-sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contracts are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

28

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:

	June 30,		December 31,
	2018		2017
	(In thousands)
Commercial loans unused lines of credit	$	27,089	$	25,814
Commitment to originate loans		15,909		15,350
Consumer open end lines of credit		37,971		36,938
Standby lines of credit		46		—

Note 6: Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows:

	June 30,  2018			December 31, 2017
	(In thousands)
Net unrealized loss on securities available-for-sale	$	(405	)	$	(290	)
Net unrealized loss for unfunded status of defined benefit plan liability		(242	)		(289	)
		(647	)		(579	)
Tax effect		136			159
Net-of-tax amount	$	(511	)	$	(420	)

Note 7: Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company also utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

29

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2018 and December 31, 2017:

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
June 30, 2018
U.S. government agencies	$	44,581	$	—	$	44,581	$	—
State and political subdivisions		41,631		—		41,631		—
December 31, 2017
U.S. government agencies	$	44,959	$	—	$	44,959	$	—

30

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent)

Collateral dependent impaired loans consisted primarily of loans secured by nonresidential real estate. Management has determined fair value measurements on impaired loans primarily through evaluations of appraisals performed. Due to the nature of the valuation inputs, impaired loans are classified within Level 3 of the hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the Company’s Chief Lender by comparison to historical results.

Foreclosed Assets Held for Sale

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value (based on current appraised value) at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Management has determined fair value measurements on other real estate owned primarily through evaluations of appraisals performed, and current and past offers. Due to the nature of the valuation inputs, foreclosed assets held for sale are classified within Level 3 of the hierarchy.

Appraisals of foreclosed assets held for sale are obtained when the real estate is acquired and subsequently as deemed necessary by the Company’s Chief lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender and are selected from the list of approved appraisers maintained by management.

31

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2018 and December 31, 2017.

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
June 30, 2018
Collateral dependent impaired loans	$	334	$	—	$	—	$	334
Foreclosed assets held for sale		250		—		—		250
December 31, 2017
Collateral dependent impaired loans	$	336	$	—	$	—	$	336
Foreclosed assets held for sale		34		—		—		34

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

	Fair Value at 6/30/18		Valuation Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	334	Market comparable properties	Marketability discount	10% - 25%
Foreclosed assets held for sale	$	250	Market comparable properties	Selling costs	10% – 35%

	Fair Value at 12/31/17		Valuation Technique	Unobservable Inputs	Range
	(In thousands)
Collateral-dependent impaired loans	$	336	Market comparable properties	Marketability discount	10% - 25%
Foreclosed assets held for sale	$	34	Market comparable properties	Selling costs	10% – 35%

32

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

There were no significant changes in the valuation techniques used during 2018 and 2017.

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
June 30, 2018
Financial assets
Cash and cash equivalents	$	16,308	$	16,308	$	—	$	—
Loans, net of allowance		377,433		—		—		373,437
Federal Home Loan Bank stock		4,164		—		4,164		—
Accrued interest receivable		1,275		—		1,275		—
Financial liabilities
Deposits		415,634		—		354,553		—
Short term borrowings		12,346		—		12,346		—
Federal Home Loan Bank Advances		33,768		—		33,762		—
Subordinated debentures		4,124		—		3,733		—
Interest payable		122				122		—

33

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2017
Financial assets
Cash and cash equivalents	$	14,315	$	14,315	$	—	$	—
Loans, net of allowance		366,467		—		—		368,033
Federal Home Loan Bank stock		4,164		—		4,164		—
Accrued interest receivable		993		—		993		—
Financial liabilities
Deposits		385,966		—		358,722		—
Short term borrowings		11,085		—		11,085		—
Federal Home Loan Bank Advances		10,022		—		10,012		—
Subordinated debentures		4,124		—		3,590		—
Interest payable		70		—		70		—

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

Cash and Cash Equivalents, Accrued Interest Receivable and Federal Home Loan Bank Stock

The carrying amounts approximate fair value.

34

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

Loans

For June 30, 2018, fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. This is not comparable with the fair values disclosed for December 31, 2017, which were based on an entrance price basis. For that date, fair values of variable rate loans and leases that reprice frequently and with no significant change in credit risk were based on carrying values. The fair values of other loans and leases as of that date were estimated using discounted cash flow analyses which used interest rates then being offered for loans and leases with similar terms to borrowers of similar credit quality.

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Interest Payable

The carrying amount approximates fair value.

Short-term Borrowings, Federal Home Loan Bank Advances and Subordinated Debentures

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Commitments to Originate Loans, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. Fair values of commitments were not material at June 30, 2018 and December 31, 2017.

Note 8: Repurchase Agreements

Securities sold under agreements to repurchase (“repurchase agreements”) with customers represent funds deposited by customers, generally on an overnight basis that are collateralized by investment securities owned by the Company.

35

United Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

At June 30, 2018 and December 31, 2017, repurchase agreement borrowings totaled $12,346,000 and $11,085,000, respectively and are included in short-term borrowings on the consolidated condensed balance sheets. All repurchase agreements are subject to term and conditions of repurchase/security agreements between the Company and the customer and are accounted for as secured borrowings. The Company’s repurchase agreements reflected in short-term borrowings, consist of customer accounts and securities which are pledged on an individual security basis.

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

Remaining Contractual Maturity of the Agreement
(In thousands)
June 30, 2018	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies	$	12,346	$	—	$	—	$	—	$	12,346
Total	$	12,346	$	—	$	—	$	—	$	12,346

December 31, 2017	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
Repurchase Agreements
U.S. government agencies	$	11,085	$	—	$	—	$	—	$	11,085
Total	$	11,085	$	—	$	—	$	—	$	11,085

These borrowings were collateralized with U.S. government and agency securities with a carrying value of $18.2 million at June 30, 2018 and $18.4 million at December 31, 2017. Declines in the fair value would require the Company to pledge additional securities.

36

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discusses the financial condition of the Company as of June 30, 2018, as compared to December 31, 2017, and the results of operations for the three and six months ended June 30, 2018, compared to the same period in 2017. This discussion should be read in conjunction with the interim condensed consolidated financial statements and related footnotes included herein.

Introduction

The Company reported diluted earnings per share of $0.44 and net income of $2,360,000 for the six months ended June 30, 2018, as compared to $0.35 and $1,766,000, respectively, for 2017. The Company’s diluted earnings per share for the three months ended June 30, 2018 was $0.22 as compared to $0.18 to the same period in 2017. These year-over-year improvements in The Company’s earnings are directly related to the lower base corporate tax rate resulting from the passage of the Tax Cuts and Jobs Act (“tax act”) in the fourth quarter of 2017 and the benefit of operational improvements on which the company is starting to see a positive return. Each of these realities should significantly benefit the company in future periods.

We are excited to report on the solid performance that our Company had for the six-month period ended June 30, 2018. Although the tax act has had a positive impact on our net income, this release will mainly focus on the strong growth of net income before taxes from operations. Overall, operational enhancements led to forty-four percent (44%) of the improvement in net income for the six months ended June 30, 2018. Our Company had a solid increase in net income before taxes of $258,000, or 10.1%, for the six months ended June 30, 2018, over the six months ended June 30, 2017. The primary drivers of this year-over-year increase in net income before taxes were the increases in interest income and fees on loans, which were up by $781,000, or 9.6%, and interest income on securities, which was up by $477,000, or 131.6%. Relating to loan growth, our Company had an increase in its gross loans of $21.9 million, or 6.1%, from June 30, 2017 to June 30, 2018. While growing the loan portfolio, our Company was able to maintain its overall stability in credit quality. Year-over-year, we continued to have very solid credit quality-related metrics supported by nonaccrual loans decreasing from a level of $1.6 million to $1.2 million, a decline of $400,000 or 24.9%. Further— net loans charged off, excluding overdrafts, was $121,000 for the six months ended June 30, 2018, which is a relatively modest increase of $67,000 from the six months ended June 30, 2017. Annualized net charge offs to average loans was 0.09% for the six months ended June 30, 2018, as compared to 0.06% for the six months ended June 30, 2017. Due to the rising rate environment in which we are currently operating, we are seeing opportunities in the area of securities investments; whereby, we are finally seeing yields that are at acceptable levels, which is encouraging us to leverage-up to some degree. Since June 30, 2017, our Company saw an increase in securities and other restricted stock of $47.3 million, or 109.9%, from the prior year. With our quarter-ending securities and other restricted stock position of $90.4 million being above the quarterly average of $67.2 million, we strongly anticipate more contribution to interest income from this area in future periods. With the enhanced level of total interest income that we realized in the first six months of 2018, net interest income for the six months ended June 30, 2018 for our Company increased by $904,000, or 11.9%, even as we focused on growing retail core deposits to fund our growth. Total deposits increased by $41.7 million, or 11.2%, to a level of $415.6 million as of June 30, 2018. Even with this significant increase in total deposits, we were able to control our overall interest expense levels by attracting lower-cost retail funding to replace higher-cost wholesale funding advances that matured over the past 12 months. Overall, our Company saw low-cost retail funding (consisting of non-interest and interest bearing demand and savings deposits) comprise $37.4 million of its growth in retail deposits year-over-year. In addition, time deposits, which consist of certificate of deposit or term funding, increased by $4.3 million, or 6.7%, for the same period. This growth in retail core deposit funding (along with increased levels of wholesale borrowing) and the increasing interest rate environment in which we are currently operating led to a slight elevation in our interest expense levels and our interest expense to average assets, which increased from 0.40% for the six months ended June 30, 2017 to 0.51% for the six months ended June 30, 2018. Overall, with the growth in our interest income outpacing the increases that we experienced in our interest expense, we had an increase in our net interest margin, which went from 3.83% in 2017 to 3.90% as of the end of this most recent quarter.

37

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The Company’s total noninterest income increased $67,000, or 4.0%, year over year. A majority of this increase was realized in the area of service charges on deposit accounts, which is the area in which our Company performs at a high level relative to peer. On the noninterest expense-side of the net noninterest margin (and, as budgeted), we experienced an increase in our noninterest expense of $634,000 or 9.5%. Most of the increase in noninterest expense continues to be related to infrastructure enhancement and personnel-related expenses as we prepare for the future growth that we envision. Considering that most of the aforementioned expenses are “fixed,” we firmly believe that we have positive operating leverage, which should allow us to drive higher levels of revenue without significantly adding to our overall noninterest expense levels in the short-term; therefore, enhancing our Company’s earnings and returns. Of material note in the most recent quarter, our Company incurred approximately $123,000 in merger related and other one time expenses with a majority of these expenses relating to the June 14, 2018 announcement of a Definitive Agreement to acquire Powhatan Point Community Bancshares, Inc. These one time expenses decreased the diluted earnings per share for the Company by $0.02 in the most recent quarter. It is anticipated that during the third and fourth quarters of 2018, our Company will incur additional merger-related expenses in connection with this transaction.

Our Company continues to benefit from the enactment of the tax act, which has reduced the overall tax rate for companies, such as ours, from 35% to 21%. Overall, the tax act contributed fifty-six percent (56%) of our increase in net income for the six months ended June 30, 2018. We are also gratified to see that our investment in both the infrastructure and personnel of our Company is producing a positive return for us. On an operating basis, we saw an improvement in our earnings before income taxes, which contributed forty-four percent (44%) of the increase that we had in our bottom line earnings! With our focus on continuing to enhance our lending platforms, we anticipate seeing stronger loan growth in the coming year. In addition, with the implementation of an investment strategy during the course of the first quarter of this year, we anticipate having more investment securities-based leverage on our balance sheet in the coming quarters. Each of these aforementioned items have led to year-over-year growth in earning assets (consisting of both loans and investment securities) of $69.3 million or 17.3%. This realized growth in earning assets during the first half of this year, and the anticipation of additional growth in this area in the second half of 2018, should lead to the continuation of our Company growing its level of earning assets and generating higher levels of interest income. Increasing leverage at an acceptable spread should allow our Company to pay slightly higher rates to attract retail-based core funding to fund our growth, while maintaining our net interest margin and improving our overall level of net interest income. Year-over-year, we saw the net interest margin of our Company improve by seven (7) basis points to a level of 3.90% as of June 30, 2018. Our enhanced net interest margin led to our net interest income improving on a year-over-year basis by $904,000 or 11.9%.

38

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

We have stated for many quarters that our goal is to grow our Company if we can do it in a profitable fashion. We are glad that we are in a position, at present, to accomplish this. At this most recent quarter end, our Company had total assets of $514.8 million, which is an increase of $66.1 million, or 14.7%, over the previous year. This is the highest level of total assets in our Company’s history and, for the first time, we surpassed the $500.0 million total asset threshold during the second quarter. Our viewpoint is that profitable growth will lead to positive opportunities to further grow our Company! In this area, we have very high expectations for our Company over the course of the next three years. Our ultimate goal is to become a “hybrid or omnichannel” bank; whereby, we can serve our present and future customers on “their” terms. By having both exceptional “in-branch” and “virtual” service options for our customers, we believe that our Company will have relevance within our industry for many years to come. In addition, we will be able to deliver on our current vision for growth, which is to have total assets greater than $1.0 billion. As previously announced our Company and Powhatan Point Community Bancshares, Inc. ("Powhatan"), the holding company for First National Bank of Powhatan Point ("First National"), announced on June 14, 2018 that we have signed a definitive merger agreement; whereby, we will acquire Powhatan in a stock and cash transaction.  Upon completion, First National will be merged into our subsidiary bank, Unified Bank. At that time, the main office of First National will become a full-service branch of Unified Bank. Powhatan operates one full-service office in Belmont County, Ohio and has approximately $62.8 million in assets, $6.7 million in loans, $57.6 million of deposits and $5.1 million in consolidated equity as of June 30, 2018.  This transaction will develop a presence for our Company in Southern Belmont County, which has seen nice growth in recent years relating to the oil and gas development in this area. In addition, this area has the potential for much more growth in the near to intermediate term with the expected announcement of the building of a much anticipated ethane cracker plant. This acquisition is expected to close in the fourth quarter of 2018 and is subject to Powhatan shareholder approval, regulatory approval, and other conditions set forth in the merger agreement.

As always, one of our primary focuses is to reward our valued shareholders by paying a solid cash dividend. With our improving earnings in 2018, we increased our cash dividend payout during the first quarter of this year. On a year-over-year basis as of June 30, 2018, our Company paid cash dividends of $0.26, versus $0.22 in 2017, an increase of 18.2%. At our present cash dividend payout level of $0.13, our Company’s stock has a forward dividend yield of 3.85%, which is significantly higher than the average cash dividend yield seen within our industry. Our other primary focus continues to be growing our shareholders’ investment in our Company through profitable operations and strategic growth. As of the most recent quarter end, our market value was $13.50, which is up from the same period in the previous year by $1.30 or 10.7%. We will continue to keenly focus on these two key areas to provide value for our loyal shareholders. Overall, we are pleased with the improving performance of our Company during the first six months of 2018 and the direction that we are going. With the positive growth that we have experienced so far in 2018, and with the anticipated growth that will occur during the remainder of the current year, we are extremely optimistic about our future potential and look forward to realizing this upside potential in future periods!

Forward-Looking Statements

When used in this document, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected” or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Bank’s market areas, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Bank’s market areas and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any statements expressed with respect to future periods.

39

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The Company is not aware of any trends, events or uncertainties that will have or are reasonably likely to have a material effect on its financial condition, results of operations, liquidity or capital resources except as discussed herein. The Company is not aware of any current recommendation by regulatory authorities that would have such effect if implemented except as discussed herein.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date such statements were made or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

Management makes certain judgments that affect the amounts reported in the financial statements and footnotes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements, and as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The procedures for assessing the adequacy of the allowance for loan losses reflect our evaluation of credit risk after careful consideration of all information available to management. In developing this assessment, management must rely on estimates and exercise judgment regarding matters where the ultimate outcome is unknown such as economic factors, developments affecting companies in specific industries and issues with respect to single borrowers. Depending on changes in circumstances, future assessments of credit risk may yield materially different results, which may require an increase or a decrease in the allowance for loan losses.

The allowance is regularly reviewed by management and the board to determine whether the amount is considered adequate to absorb probable losses. This evaluation includes specific loss estimates on certain individually reviewed loans, statistical loss estimates for loan pools that are based on historical loss experience, and general loss estimates that are based on the size, quality and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrower’s ability to repay and current economic and industry conditions. Also, considered as part of that judgment, is a review of the Bank’s trend in delinquencies and loan losses, and economic factors.

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable loan losses inherent in the loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on management’s current judgment about the credit quality of the loan portfolio. While the Company strives to reflect all known risk factors in its evaluation, judgment errors may occur.

40

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Analysis of Financial Condition

Earning Assets – Loans

Our focus as a community bank is to meet the credit needs of the markets we serve. At June 30, 2018, gross loans were $379.5 million, compared to $368.6 million at December 31, 2017, an increase of $10.9 million after offsetting repayments for the period. The overall increase in the loan portfolio was comprised of an $11.3 million increase in commercial and commercial real estate loans, a $623,000 increase in residential loans and a $1.0 million decrease in installment loans since December 31, 2017.

Commercial and commercial real estate loans comprised 76.8% of total loans at June 30, 2018, compared to 76.0% at December 31, 2017. Commercial and commercial real estate loans have increased $11.3 million, or 4.0%, since December 31, 2017. This segment of the loan portfolio includes originated loans in our market areas and purchased participations in loans from other banks.

Installment loans represented 3.0% of total loans at June 30, 2018 and 3.4% at December 31, 2017. Some of the installment loans carry somewhat more risk than real estate lending; however, it also provides for higher yields. Installment loans have decreased $1.0 million, or 8.0%, since December 31, 2017. The targeted lending areas encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s banking locations.

Residential real estate loans were 20.2% of total loans at June 30, 2018 and 20.6% at December 31, 2017, representing an increase of $623,000, or less than 1.0% since December 31, 2017. As of June 30, 2018, the Bank has approximately $4.7 million in fixed-rate loans that have been sold in the secondary market but still serviced by the Company as compared to $5.3 million at December 31, 2017. The level of fixed rate mortgages serviced by the Company will continue to decline as the Company will not retain servicing rights on new sales going forward for these types of products. The Company will continue to service these loans for a fee that is typically 25 basis points. At June 30, 2018, the Company did not hold any loans for sale.

The allowance for loan losses totaled $2.1 million at June 30, 2018, which represented 0.55% of total loans, and $2.1 million at December 31, 2017, or 0.58% of total loans. The allowance represents the amount which management and the Board of Directors estimates is adequate to provide for probable losses inherent in the loan portfolio. The allowance balance and the provision charged to expense are reviewed by management and the Board of Directors monthly using a risk evaluation model that considers borrowers’ past due experience, economic conditions and various other circumstances that are subject to change over time. Management believes the current balance of the allowance for loan losses is adequate to absorb probable incurred credit losses associated with the loan portfolio. The Company had net charge-offs of $171,000 for the six months ended June 30, 2018 compared to $99,000 for the six months ended June 30, 2017.

41

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Earning Assets – Securities

The securities portfolio is comprised of U.S. Government agency-backed securities, tax-exempt obligations of state and political subdivisions and certain other investments. Securities available for sale at June 30, 2018 increased approximately $41.3 from December 31, 2017 totals. Due to the rising rate environment in which we are currently operating, we are seeing opportunities in the area of securities investments; whereby, we are finally seeing yields that are at acceptable levels, which is encouraging us to leverage-up on state and political subdivision investments.

Sources of Funds – Deposits

The Company’s primary source of funds is core deposits from retail and business customers. These core deposits include all categories of interest-bearing and noninterest-bearing deposits, excluding certificates of deposit greater than $250,000. For the period ended June 30, 2018, total core deposits increased approximately $29.2 million or 7.7%. The Company’s savings accounts increased $1.7 million, or 2.0%, from December 31, 2017 totals. The Company’s interest-bearing and non-interest bearing demand deposits increased $25.0 million, or 10.5%, while certificates of deposit under $250,000 increased by $2.5 million, or 4.2%. The Company considers core deposit to be stable; therefore, the amount of funds anticipated to flow out in the next three to six months is not considered material to the overall liquidity position of the Company.

The Company has a strong deposit base from public agencies, including local school districts, city and township municipalities, public works facilities and others that may tend to be more seasonal in nature resulting from the receipt and disbursement of state and federal grants. These entities have maintained fairly static balances with the Company due to various funding and disbursement timeframes.

Certificates of deposit greater than $250,000 are not considered part of core deposits and, as such, are used to balance rate sensitivity as a tool of funds management. At June 30, 2018, certificates of deposit greater than $250,000 increased $483,000 or 9.1%, from December 31, 2017 totals.

Sources of Funds – Securities Sold under Agreements to Repurchase and Other Borrowings

Other interest-bearing liabilities include securities sold under agreements to repurchase and Federal Home Loan Bank (“FHLB”) advances. The majority of the Company’s repurchase agreements are with local school districts and city and county governments. The Company’s short-term borrowings increased approximately $1.3 million from December 31, 2017 totals.

Results of Operations for the Six Months Ended June 30, 2018 and 2017

Net Income

For the six months ended June 30, 2018 the Company reported net earnings of $2,360,000, compared to $1,766,000 for the six months ended June 30, 2017. On a per share basis, the Company’s diluted earnings were $0.44 for the six months ended June 30, 2018, as compared to $0.35 for the six months ended June 30, 2017 an increase of 25.71%.

42

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Net Interest Income

Net interest income, by definition, is the difference between interest income generated on interest-earning assets and the interest expense incurred on interest-bearing liabilities. Various factors contribute to changes in net interest income, including volumes, interest rates and the composition or mix of interest-earning assets in relation to interest-bearing liabilities. Net interest income after provision for loan losses increased 10.9%, or $825,000 for the six months ended June 30, 2018 compared to the same period in 2017. As previously mentioned, the strong growth of loans was the driver for the increase in net interest income.

Provision for Loan Losses

Year-over-year, the Company maintained very solid credit quality-related metrics by having nonaccrual loans and loans past due 30+ days experience a modest increase from a level of $2.59 million to $2.94 million, an increase of $350,000. Net loans charged-off, excluding overdrafts, was $121,000 through June 30, 2018, which is a slight increase over net loans charged-off of $54,000 from the previous year. At this present level, total past due and nonaccrual loans to gross loans is a very solid 0.77% versus 0.72% the prior year. Net charge offs to average loans was 0.09% for the six months ended June 30, 2018. Overall, with the solid loan growth and not much movement in the Company’s credit quality, the Company modestly increased the provision for loan losses which was $50,000 for the six months ended June 30, 2017 to $129,000 for the six months ended June 30, 2017, an increase of $79,000.

Noninterest Income

Total noninterest income is made up of bank related fees and service charges, as well as other income producing services provided, sales of loans in the secondary market, ATM income, early redemption penalties for certificates of deposit, safe deposit rental income, internet bank service fees, earnings on bank-owned life insurance and other miscellaneous items.

The Company’s service charges on deposit accounts increased by $52,000 for the six months ended June 30, 2018 as compared to the same period in 2017.

Noninterest Expense

Noninterest expense increased on a year-over-year basis by $634,000 or 9.5%. Our Company is embarking upon a new period, whereby our exclusive focus is to grow our assets in a profitable fashion that will produce consistent and increasing earnings. As such certain expenses have increased year over year. During the six months ended June 30, 2018, the Company also incurred professional fees mainly related to the announced acquisition with Powhatan and its affiliate of approximately $123,000.

Federal Income Taxes

The provision for federal income taxes was $448,000 for the six months ended June 30, 2018, a decrease of $336,000 compared to the same period in 2017. The effective tax rate was 16.0% and 30.7% for the six months ended June 30, 2018 and 2017, respectively. As previously discussed, the effective tax rate is lower due to the passage of the Tax Act in the fourth quarter of 2017.

43

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Results of Operations for the Three Months Ended June 30, 2018 and 2017

Net Income

For the three months ended June 30, 2018 the Company reported net earnings of $1,212,000, compared to $916,000 for the three months ended June 30, 2017. On a per share basis, the Company’s diluted earnings were $0.22 for the three months ended June 30, 2018, as compared to $0.18 for the three months ended June 30, 2017.

Net Interest Income

Net interest income increased 14.3%, or $548,000 for the three months ended June 30, 2018 compared to the same period in 2017. This increase was mainly driven by an increase in loan interest income and loan fees of $467,000 or 11.4% for the three months ended June 30, 2018 over the same period in 2017.

Provision for Loan Losses

The provision for loan losses was $72,000 for the three months ended June 30, 2018, compared to $25,000 for the same period in 2017. As previously discussed, the increase in the provision for loan losses was primarily due to the solid loan growth.

Noninterest Income

Total noninterest income is made up of bank related fees and service charges, as well as other income producing services provided, sales of loans in the secondary market, ATM income, early redemption penalties for certificates of deposit, safe deposit rental income, internet bank service fees, earnings on bank-owned life insurance and other miscellaneous items.

The Company’s service charges on deposit accounts increased by $18,000 for the three months ended June 30, 2018 as compared to the same period in 2017.

Noninterest Expense

Noninterest expense was $3.8 million for the three months ended June 30, 2018, an increase of $389,000, compared to the three months ended June 30, 2017. During the three months ended June 30, 2018, the Company also incurred professional fees mainly related to our announced pending acquisition with Powhatan of approximately $107,000.

Federal Income Taxes

The provision for federal income taxes was $250,000 for the three months ended June 30, 2018, a decrease of $165,000 compared to the same period in 2017. The effective tax rate was 17.1% and 31.2% for the three months ended June 30, 2018 and 2017, respectively. As previously discussed, the effective tax rate is lower due to the passage of the Tax Act in the fourth quarter of 2017.

44

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Capital Resources

Internal capital growth, through the retention of earnings, is the primary means of maintaining capital adequacy for the Company. Stockholders’ equity totaled $45.0 million at June 30, 2018 compared to $43.9 million at December 31, 2017, a $1,090,000 increase. Total stockholders’ equity in relation to total assets was 8.74% at June 30, 2018 and 9.56% at December 31, 2017. The Company’s Articles of Incorporation provides flexibility to create a class of preferred shares with 2,000,000 authorized shares. This enables the Company, at the option of the Board of Directors, to issue series of preferred shares in a manner calculated to take advantage of financing techniques which may provide a lower effective cost of capital to the Company. The amendment also provides greater flexibility to the Board of Directors in structuring the terms of equity securities that may be issued by the Company. Although this preferred stock is a financial tool, it has not been utilized to date.

The Company has offered for many years a Dividend Reinvestment Plan (“The Plan”) for shareholders under which the Company’s common stock will be purchased by the Plan for participants with automatically reinvested dividends. The Plan does not represent a change in the Company’s dividend policy or a guarantee of future dividends.

The Company is subject to the regulatory requirements of The Federal Reserve System as a bank holding company. The Bank is subject to regulations of the FDIC and the State of Ohio, Division of Financial Institutions. The most important of these various regulations address capital adequacy.

On January 1, 2015, the final rules of the Federal Reserve Board went into effect implementing in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under the final rule, minimum requirements increased for both the quality and quantity of capital held by banking organizations. The rule requires a new minimum ratio of common equity tier 1 capital to risk-weighted assets of 4.5 percent and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets that will apply to all supervised financial institutions. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations.

As of June 30, 2018, the Company continues to be well-capitalized in accordance with Federal regulatory capital requirements as the capital ratios below show:

Common equity tier 1 capital ratio	10.82	%
Tier 1 capital ratio	11.79	%
Total capital ratio	12.30	%
Leverage ratio	10.18	%

45

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Liquidity

Management’s objective in managing liquidity is maintaining the ability to continue meeting the cash flow needs of its customers, such as borrowings or deposit withdrawals, as well as its own financial commitments. The principal sources of liquidity are net income, loan payments, maturing securities and sales of securities available for sale, federal funds sold and cash and deposits with banks. Along with its liquid assets, the Company has additional sources of liquidity available to ensure that adequate funds are available as needed. These include, but are not limited to the ability to borrow funds under line of credit agreements with correspondent banks, a borrowing agreement with the Federal Home Loan Bank of Cincinnati and the adjustment of interest rates to obtain depositors. Management feels that it has the capital adequacy and profitability to meet the current and projected liquidity needs of its customers.

Inflation

Substantially all of the Company’s assets and liabilities relate to banking activities and are monetary in nature. The consolidated financial statements and related financial data are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). U.S. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, with the exception of securities available for sale, certain impaired loans and certain other real estate and loans that may be measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss.

Management’s opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other, but do not always move in correlation with each other. The Company’s ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company’s performance.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change from disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

46

United Bancorp, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

ITEM 4. Controls and Procedures

The Company, under the supervision, and with the participation, of its management, including the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to the requirements of Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2018, in timely alerting them to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company's periodic SEC filings.

There was no change in the Company's internal control over financial reporting that occurred during the Company's fiscal quarter ended June 30, 2018 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

47

United Bancorp, Inc.

Part II – Other Information

ITEM 1. Legal Proceedings

None, other than ordinary routine litigation incidental to the Company’s business.

ITEM 1A. Risk Factors

There have been no material changes from risk factors as previously disclosed in Part 1 Item 1A of the Company’s Form 10-K for the year ended December 31, 2017, filed on March 20, 2018.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part Of Publicly Announced Plans Or Programs		(d) Maximum Number or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 4/1/2018 to 4/30/2018		—		—		—		—
Month #2 5/1/2018 to 5/31/2018		—		—		—		—
Month #3 6/1/2018 to 6/30/2018		—		—		—		—

The Company adopted the United Bancorp, Inc. Affiliate Banks Directors and Officers Deferred Compensation Plan (the “Plan”), which is an unfunded deferred compensation plan. Amounts deferred pursuant to the Plan remain unrestricted assets of the Company, and the right to participate in the Plan is limited to members of the Board of Directors and Company officers. Under the Plan, directors or other eligible participants may defer fees and up to 50% of their annual incentive award payable to them by the Company, which are used to acquire common shares which are credited to a participant’s respective account. Except in the event of certain emergencies, no distributions are to be made from any account as long as the participant continues to be an employee or member of the Board of Directors. Upon termination of service, the aggregate number of shares credited to the participant’s account are distributed to him or her along with any cash proceeds credited to the account which have not yet been invested in the Company’s stock. All purchases under this deferred compensation plan are funded with either earned director fees or officer incentive award payments. No underwriting fees, discounts, or commissions are paid in connection with the Plan. The shares allocated to participant accounts have not been registered under the Securities Act of 1933 in reliance upon the exemption provided by Section 4(2) thereof.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

48

United Bancorp, Inc.

Part II – Other Information

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Exhibits

EX 2.0	Agreement and Plan of Merger dated as of June 14, 2018, by and between United Bancorp, Inc. and Powhatan Point Community Bancshares, Inc. (1)
EX 3.1	Amended Articles of Incorporation of United Bancorp, Inc. (2)
EX 3.2	Amended Code of Regulations of United Bancorp, Inc. (3)
EX 4.0	Instruments Defining the Rights of Security Holders (See Exhibits 3.1 and 3.2)
EX 10.1	United Bancorp, Inc. 2018 Stock Incentive Plan
EX 31.1	Rule 13a-14(a) Certification – CEO
EX 31.2	Rule 13a-14(a) Certification – CFO
EX 32.1	Section 1350 Certification – CEO
EX 32.2	Section 1350 Certification – CFO
EX 101.INS	XBRL Instance Document
EX 101.SCH	XBRL Taxonomy Extension Schema Document (3)
EX 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (3)
EX 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (3)
EX 101.LAB	XBRL Taxonomy Extension Label Linkbase Document (3)
EX 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (3

⁽¹⁾ Incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 14, 2018

⁽²⁾ Incorporated by reference to Appendix B to the registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 14, 2001.

⁽³⁾ Incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 22, 2014.

49

SIGNATURES

Pursuant to the requirements 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.

	/s/United Bancorp, Inc.
Date: August 14, 2018	By:	/s/Scott A. Everson
		Scott A. Everson
		President and Chief Executive Officer
Date: August 14, 2018	By:	/s/Randall M. Greenwood
		Randall M. Greenwood
		Senior Vice President, Chief Financial Officer and Treasurer

50

EX-10.1

Exhibit 10.1

Exhibit A

UNITED BANCORP, INC.

2018 STOCK INCENTIVE PLAN

ARTICLE 1

General Purpose of Plan; Definitions

1.1 Name and Purposes.   The name of this Plan is the United Bancorp, Inc. 2018 Stock Incentive Plan. The purpose of this Plan is to enable United Bancorp, Inc. and its Affiliates to: (i) attract and retain skilled and qualified directors, officers and key employees who are expected to contribute to the Company’s success by providing long-term incentive compensation opportunities competitive with those made available by other companies; (ii) motivate participants to achieve the long-term success and growth of the Company; (iii) facilitate ownership of shares of the Company; and (iv) align the interests of the participants with those of the Company’s shareholders.

1.2 Certain Definitions.   Unless the context otherwise indicates, the following words used herein shall have the following meanings whenever used in this instrument:

(a) “Affiliate” means any corporation, partnership, joint venture or other entity, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company, as determined by the Board of Directors in its discretion.

(b) “Award” means any grant under this Plan of a Stock Option, Stock Appreciation Right, Restricted Share, Restricted Share Unit or Performance Share to any Plan participant.

(c) “Board of Directors” means the Board of Directors of the Company, as constituted from time to time.

(d) “Cause” with respect to an employee of the Company or any affiliate of the Company who had not entered into an employment agreement with the Company or such an affiliate, means and is limited to (i) criminal dishonesty, (ii) refusal to perform duties on an exclusive and substantially full-time basis, (iii) refusal to act in accordance with any specific substantive instructions given by the Company or any affiliate of the Company with respect to performance of duties normally associated with such employee’s position, or (iv) engaging in conduct which could be materially damaging to the Company or any affiliate of the Company without a reasonable good faith belief that such conduct was in the best interest of the Company or any affiliate of the Company. With respect to an employee who is employed pursuant to an employment agreement with the Company or such an affiliate, “Cause” shall mean “cause” as defined in the terms of such employment agreement (as it may be amended from time to time).

A-1

(e) “Change in Control” shall mean a “Change in Ownership,” “Change in Effective Control”, or a “Change in Ownership of a Substantial Portion of Assets” as defined Treasury Regulation 1.409A-3(i)(5).

(f) “Code” means the Internal Revenue Code of 1986, as amended, and any lawful regulations or guidance promulgated thereunder. Whenever reference is made to a specific Internal Revenue Code section, such reference shall be deemed to be a reference to any successor Internal Revenue Code section or sections with the same or similar purpose.

(g) “Committee” means the committee administering this Plan as provided in Section 2.1.

(h) “Common Shares” mean the common shares no par value per share, of the Company.

(i) “Company” means United Bancorp, Inc., a corporation organized under the laws of the State of Ohio and, except for purposes of determining whether a Change in Control has occurred, any corporation or entity that is a successor to United Bancorp, Inc. or substantially all of the assets of United Bancorp, Inc. and that assumes the obligations of United Bancorp, Inc. under this Plan by operation of law or otherwise.

(j) “Date of Grant” means the date on which the Committee grants an Award.

(k) “Director” means a member of the Board of Directors.

(l) “Disability” means the person (i) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan of the Company or an affiliate covering the person, or (ii) has been determined to be totally disabled by the United States Social Security Administration.

(m) “Eligible Participant” is defined in Article 4.

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any lawful regulations or guidance promulgated thereunder.

(o) “Exercise Price” means the purchase price of a Share pursuant to a Stock Option, or the exercise price per Share related to a Stock Appreciation Right.

A-2

(p) “Fair Market Value” means the closing price of a Share as reported on The Nasdaq Stock Market, or, if applicable, on any national securities exchange or automated quotation system on which the Common Shares are principally traded: (i) on the date for which the determination of Fair Market Value is made, or (ii) if the closing price is not yet known as of such date then the date prior to that, or, (iii) if there are no sales of Common Shares on such date, then on the most recent immediately preceding date on which there were any sales of Common Shares. If the Common Shares are not, or cease to be, traded on The Nasdaq Stock Market or any national securities exchange or automated quotation system, the “Fair Market Value” of Common Shares shall be determined pursuant to a reasonable valuation method prescribed by the Committee. Notwithstanding the foregoing, as of any date, the “Fair Market Value” of Common Shares shall be determined in a manner consistent with Code Section 409A and the guidance then-existing thereunder. In addition, “Fair Market Value” with respect to ISOs and related SARs shall be determined in accordance with Section 6.2(f).

(q) “Incentive Stock Option” and “ISO” mean a Stock Option that is identified as such and which is intended to meet the requirements of Section 422 of the Code.

(r) “Non-Qualified Stock Option” and “NQSO” mean a Stock Option that: (i) is governed by Section 83 of the Code; and (ii) is not intended to meet the requirements of Section 422 of the Code.

(s) “Outside Director” means a nonemployee Director. In addition, at all times during which the Company is subject to the reporting requirements of the Exchange Act, “Outside Director means a nonemployee Director who meets the definitions of the terms “independent director” set forth in The Nasdaq Stock Market rules, and “non-employee director” set forth in Rule 16b-3, or any successor definitions adopted by the Internal Revenue Service, The Nasdaq Stock Market and Securities and Exchange Commission, respectively, and similar requirements under any other applicable laws and regulations.

(t) “Parent” means any corporation which qualifies as a “parent corporation” of the Company under Section 424(e) of the Code.

(u) “Performance Shares” is defined in Article 9.

(v) “Performance Period” is defined in Section 9.2.

(w) “Plan” means this United Bancorp, Inc. 2018 Stock Incentive Plan, as amended from time to time.

(x) “Restricted Share Units” is defined in Article 8.

(y) “Restricted Shares” is defined in Article 8.

(z) “Rule 16b-3” is defined in Article 16.

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(aa) “Share” or “Shares” mean one or more of the Common Shares.

(bb) “Shareholder” means an individual or entity that owns one or more Shares.

(cc) “Stock Appreciation Rights” and “SARs” mean any right to receive the appreciation in Fair Market Value of a specified number of Shares over a specified Exercise Price pursuant to an Award granted under Article 7.

(dd) “Stock Option” means any right to purchase a specified number of Shares at a specified price which is granted pursuant to Article 5 and may be an Incentive Stock Option or a Non-Qualified Stock Option.

(ee) “Stock Power” means a power of attorney executed by a participant and delivered to the Company which authorizes the Company to transfer ownership of Restricted Shares, Performance Shares or Common Shares from the participant to the Company or a third party.

(ff) “Subsidiary” means any corporation which qualifies as a “subsidiary corporation” of the Company under Section 424(f) of the Code.

(gg) “Vested” means, with respect to a Stock Option, that the time has been reached when the option to purchase Shares first becomes exercisable; and with respect to a Stock Appreciation Right, when the Stock Appreciation Right first becomes exercisable for payment; with respect to Restricted Shares, when the Shares are no longer subject to forfeiture and restrictions on transferability; with respect to Restricted Share Units and Performance Shares, when the units or Shares are no longer subject to forfeiture and are converted to Shares. The words “Vest” and “Vesting” have meanings correlative to the foregoing.

ARTICLE 2

Administration

2.1 Authority and Duties of the Committee.

(a) The Plan shall be administered by a Committee of at least two Directors who are appointed by the Board of Directors. Unless otherwise determined by the Board of Directors, the Compensation Committee of the Board of Directors (or any subcommittee thereof) shall serve as the Committee, and all of the members of the Committee shall be Outside Directors. Notwithstanding the requirement that the Committee consist exclusively of Outside Directors, no action or determination by the Committee or an individual then considered to be an Outside Director shall be deemed void because a member of the Committee or such individual fails to satisfy the requirements for being an Outside Director, except to the extent required by applicable law.

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(b) The Committee has the power and authority to grant Awards pursuant to the terms of this Plan to Eligible Participants. The Committee may, at any time and from time to time, at the request of a Participant or at the discretion of the Committee, designate that a portion of such Participant’s compensation otherwise payable in cash be payable in Common Shares, Options or SARs. The Committee shall have the sole discretion to determine the value of the Common Shares, Options, or SARs so payable and the terms and conditions under which such Common Shares shall be issued or such Options or SARs shall be granted.

(c) The Committee has the sole and exclusive authority, subject to any limitations specifically set forth in this Plan, to:

(i) select the Eligible Participants to whom Awards are granted;

(ii) determine the types of Awards granted and the timing of such Awards;

(iii) determine the number of Shares to be covered by each Award granted hereunder;

(iv) determine the other terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder; such terms and conditions include, but are not limited to, the Exercise Price, the time or times when Options or Stock Appreciation Rights may be exercised (which may be based on performance objectives), any Vesting, acceleration or waiver of forfeiture restrictions, any performance criteria applicable to an Award, and any restriction or limitation regarding any Option or Stock Appreciation Right or the Common Shares relating thereto, based in each case on such factors as the Committee, in its sole discretion, shall determine;

(v) determine whether any conditions or objectives related to Awards have been met, including but not limited to any determination of whether the performance objectives for Performance Shares or other performance-based awards have been satisfied, as required for compliance with Article 9 of this Plan;

(vi) subsequently modify or waive any terms and conditions of Awards, not inconsistent with the terms of this Plan;

(vii) adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan as it deems advisable from time to time;

(viii) promulgate such administrative forms as it from time to time deems necessary or appropriate for administration of the Plan;

(ix) construe, interpret, administer and implement the terms and provisions of this Plan, any Award and any related agreements;

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(x) correct any defect, supply any omission and reconcile any inconsistency in or between the Plan, any Award and any related agreements;

(xi) prescribe any legends to be affixed to certificates representing Shares or other interests granted or issued under the Plan; and

(xii) otherwise supervise the administration of this Plan.

(d) All decisions made by the Committee pursuant to the provisions of this Plan are final and binding on all persons, including the Company, its shareholders and participants, but may be made by their terms subject to ratification or approval by, the Board of Directors, another committee of the Board of Directors or shareholders.

(e) The Company shall furnish the Committee with such clerical and other assistance as is necessary for the performance of the Committee’s duties under the Plan.

2.2 Delegation of Duties.   The Committee may delegate ministerial duties to any other person or persons, and it may employ attorneys, consultants, accountants or other professional advisers for purposes of plan administration at the expense of the Company. The power to delegate provided for herein does not include the power to grant an Award.

2.3 Limitation of Liability.   Members of the Board of Directors, members of the Committee and Company employees who are their designees acting under this Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties hereunder.

ARTICLE 3

Stock Subject to Plan

3.1 Total Shares Limitation.   Subject to the provisions of this Article, the maximum number of Shares that may be issued or transferred under this Plan shall not exceed in the aggregate 500,000 Common Shares, which may be treasury or authorized but unissued Shares.

3.2 Participant Limitation.   The aggregate number of Shares underlying Awards granted under this Plan to any participant in any fiscal year (including but not limited to Awards of Stock Options and SARs), regardless of whether such Awards are thereafter canceled, forfeited or terminated, shall not exceed 25,000 Shares.

3.3 Awards Not Exercised; Effect of Receipt of Shares.   If any outstanding Award, or portion thereof, expires, or is terminated, canceled or forfeited, the Shares that would otherwise be issuable or released from restrictions with respect to the unexercised or non-Vested portion of such expired, terminated, canceled or forfeited Award shall be available for subsequent Awards under this Plan. If the Exercise Price of an Award is paid in Shares, or if Shares are withheld or sold to cover tax withholding obligations pursuant to Sections 15.1 and 15.2 of this Plan, the Shares received by the Company in connection therewith shall not be added to the maximum aggregate number of Shares which may be issued under Section 3.1.

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3.4 Dilution and Other Adjustments.   In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, redesignation, reclassification, merger, consolidation, liquidation, split-up, reverse split, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then the Committee shall, in such manner as it deems equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) which thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the limitations set forth above and (iv) the purchase or exercise price or any performance objective with respect to any Award; provided, however, that the number of Shares or other securities covered by any Award or to which such Award relates is always a whole number. Notwithstanding the foregoing, the foregoing adjustments shall be made in compliance with: (i) Sections 422 and 424 of the Code with respect to ISOs; (ii) Treasury Department Regulation Section 1.424-1 (and any successor) with respect to NQSOs, applied as if the NQSOs were ISOs; and (iii) Section 409 A of the Code, to the extent necessary to avoid its application or avoid adverse tax consequences thereunder. In applying the provisions of this Section 3.4, the Committee shall lack discretion with respect to any adjustment which is required to prevent enlargement or dilution of rights under any Award and shall promptly make such adjustments as are required to prevent an enlargement or dilution of rights.

ARTICLE 4

Participants

4.1 Eligibility.   Directors, Officers and all other key employees of the Company or any of its Affiliates (each an “Eligible Participant”) who are selected by the Committee in its sole discretion are eligible to participate in this Plan.

4.2 Award Agreements.   Awards shall be evidenced by a written agreement in a form prescribed by the Committee (hereinafter “Award Agreement”). Execution of an Award Agreement shall constitute the participant’s irrevocable agreement to, and acceptance of, the terms and conditions of the Award set forth in such agreement and of the terms and conditions of the Plan applicable to such Award. Award Agreements may differ from time to time and from participant to participant.

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ARTICLE 5

Stock Option Awards

5.1 Option Grant.   Each Stock Option granted under this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the Committee and by an Award Agreement dated as of the Date of Grant and executed by the Company and by the appropriate participant.

5.2 Terms and Conditions of Grants.   Stock Options granted under this Plan are subject to the following terms and conditions and may contain such additional terms, conditions, restrictions and contingencies with respect to exercisability and/or with respect to the Shares acquired upon exercise as may be provided in the relevant agreement evidencing the Stock Options, so long as such terms and conditions are not inconsistent with the terms of this Plan, as the Committee deems desirable:

(a) Exercise Price.   Subject to Section 3.4, the Exercise Price shall never be less than 100% of the Fair Market Value of the Shares on the Date of Grant. If a variable Exercise Price is specified at the time of grant, the Exercise Price may vary pursuant to a formula or other method established by the Committee; provided, however, that such formula or method will provide for a minimum Exercise Price equal to the Fair Market Value of the Shares on the Date of Grant. Except as otherwise provided in Section 3.4, no subsequent amendment of an outstanding Stock Option may reduce the Exercise Price to less than 100% of the Fair Market Value of the Shares on the Date of Grant. Nothing in this Section 5.2(a) shall be construed as limiting the Committee’s authority to grant premium price Stock Options which do not become exercisable until the Fair Market Value of the underlying Shares exceeds a specified percentage (e.g. , 110%) of the Exercise Price; provided, however, that such percentage will never be less than 100%.

(b) Option Term.   Any unexercised portion of a Stock Option granted hereunder shall expire at the end of the stated term of the Stock Option. The Committee shall determine the term of each Stock Option at the time of grant, which term shall not exceed 10 years from the Date of Grant. The Committee may extend the term of a Stock Option, in its discretion, but not beyond the date immediately prior to the tenth anniversary of the original Date of Grant. If a definite term is not specified by the Committee at the time of grant, then the term is deemed to be 10 years. Nothing in this Section 5.2(b) shall be construed as limiting the Committee’s authority to grant Stock Options with a term shorter than 10 years.

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(c) Vesting.   Stock Options, or portions thereof, are exercisable at such time or times as determined by the Committee in its discretion at or after grant. The Committee may provide that a vesting schedule shall be specified in an Award Agreement. If the Committee provides that any Stock Option becomes Vested over a period of time or upon performance events, in full or in installments, the Committee may waive or accelerate such Vesting provisions at any time. Unless otherwise determined by the Committee in connection with the grant and set forth in the Award Agreement, all unvested Stock Options shall immediately vest upon the Death or Disability of the holder.

(d) Method of Exercise.   Vested portions of any Stock Option may be exercised in whole or in part at any time during the option term by giving written notice of exercise to the Company specifying the number of Shares to be purchased. The notice must be given by or on behalf of a person entitled to exercise the Stock Option, accompanied by payment in full of the Exercise Price, along with any tax withholding pursuant to Article 15. Subject to the approval of the Committee, the Exercise Price may be paid:

(i) in cash in any manner satisfactory to the Committee;

(ii) by tendering (by either actual delivery of Shares or by attestation) unrestricted Shares owned by the person entitled to exercise the Stock Option having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price applicable to such Stock Option exercise, and, with respect to the exercise of NQSOs, including restricted Shares;

(iii) by a combination of cash and unrestricted Shares that are owned on the date of exercise by the person entitled to exercise the Stock Option; and

(iv) by another method permitted by law and affirmatively approved by the Committee which assures full and immediate payment or satisfaction of the Exercise Price, which may include broker assisted cashless exercise.

The Committee may withhold its approval for any method of payment for any reason, in its sole discretion, including but not limited to concerns that the proposed method of payment will result in adverse financial accounting treatment, adverse tax treatment for the Company or a participant or a violation of any law applicable to the Company from time to time, and related regulations and guidance.

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If the Exercise Price of an NQSO is paid by tendering Restricted Shares, then the Shares received upon the exercise will contain restrictions that are no less restrictive then the Restricted Shares so tendered.

(e) Form.   Unless the grant of a Stock Option is expressly designated at the time of grant as an ISO, it is deemed to be an NQSO. ISOs are subject to the additional terms and conditions in Article 6.

(f) Special Limitations on Stock Option Awards.   Unless an Award Agreement approved by the Committee provides otherwise, Stock Options awarded under this Plan are intended to meet the requirements for exclusion from coverage under Code Section 409A and applicable Treasury regulations and all Stock Option Awards shall be construed and administered accordingly.

5.3 Termination of Grants Prior to Expiration.   Subject to Article 6 with respect to ISOs, if the employment of an optionee with the Company or its Affiliates terminates for any reason, all unexercised Stock Options may be exercised only in accordance with rules established by the Committee or as specified in the relevant agreement evidencing the Stock Options. Such rules may provide, as the Committee deems appropriate, for the expiration, continuation (but only to the originally scheduled expiration date), or acceleration of the vesting of all or part of the Stock Options.

ARTICLE 6

Special Rules Applicable to Incentive Stock Options

6.1 Eligibility.   Notwithstanding any other provision of this Plan to the contrary, an ISO may only be granted to full or part-time employees (including officers) of the Company or of an Affiliate, provided that the Affiliate is a Parent or Subsidiary.

6.2 Special ISO Rules.

(a) Term.   No ISO may be exercisable on or after the tenth anniversary of the Date of Grant, and no ISO may be granted under this Plan on or after the tenth anniversary of the effective date of this Plan.

(b) Ten Percent Shareholder.   No grantee may receive an ISO under this Plan if such grantee, at the time the Award is granted, owns (after application of the rules contained in Section 424(d) of the Code) equity securities possessing more than 10% of the total combined voting power of all classes of equity securities of the Company, its Parent or any Subsidiary, unless (i) the option price for such ISO is at least 110% of the Fair Market Value of the Shares as of the Date of Grant, and (ii) such ISO is not exercisable on or after the fifth anniversary of the Date of Grant.

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(c) Limitation on Grants.   The aggregate Fair Market Value (determined with respect to each ISO at the time of grant) of the Shares with respect to which ISOs are exercisable for the first time by a grantee during any calendar year (under this Plan or any other plan adopted by the Company or its Parent or its Subsidiary) shall not exceed $100,000. Unless otherwise set forth in an Award Agreement, if such aggregate Fair Market Value shall exceed $100,000, such number of ISOs as shall have an aggregate Fair Market Value equal to the amount in excess of $100,000 shall be treated as NQSOs.

(d) Non-Transferability.   Notwithstanding any other provision herein to the contrary, no ISO granted hereunder (and, if applicable, related Stock Appreciation Right) may be transferred except by will or by the laws of descent and distribution, nor may such ISO (or related Stock Appreciation Right) be exercisable during a grantee’s lifetime other than by him (or his guardian or legal representative to the extent permitted by applicable law).

(e) Termination of Employment.   No ISO may be exercised more than three months following termination of employment for any reason (including retirement) other than death or Disability, nor more than one year following termination of employment for the reason of death or Disability (as defined in Section 422 of the Code). If the Award Agreement for an ISO permits exercise after such date such option will no longer qualify as an ISO and shall thereafter be, and receive the tax treatment applicable to, an NQSO. For this purpose, a termination of employment is cessation of employment such that no employment relationship exists between the participant and the Company, a Parent or a Subsidiary.

(f) Fair Market Value.   For purposes of any ISO granted hereunder (or, if applicable, related Stock Appreciation Right), the Fair Market Value of Shares shall be determined in the manner required by Section 422 of the Code and any Treasury regulations thereunder.

6.3 Subject to Code Amendments.   The foregoing limitations are designed to comply with the requirements of Section 422 of the Code and shall be automatically amended or modified to comply with amendments or modifications to Section 422 of the Code. Any ISO which fails to comply with Section 422 of the Code is automatically treated as an NQSO appropriately granted under this Plan provided it otherwise meets the Plan’s requirements for NQSOs.

ARTICLE 7

Stock Appreciation Rights

7.1 SAR Grant and Agreement.   Stock Appreciation Rights (including SOSARs with the meaning set forth below) may be granted under this Plan and each SAR granted under this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the Committee and by an Award Agreement dated as of the Date of Grant and executed by the Company and by the appropriate participant.

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(a) Term.   Any unexercised portion of a Stock Appreciation Right granted hereunder shall expire at the end of the stated term of the Stock Appreciation Right. The Committee shall determine the term of each Stock Appreciation Right at the time of grant, which term shall not exceed ten years from the Date of Grant. The Committee may extend the term of a Stock Appreciation Right, in its discretion, but not beyond the date immediately prior to the tenth anniversary of the original Date of Grant. If a definite term is not specified by the Committee at the time of grant, then the term is deemed to be ten years.

(b) Vesting.   A Stock Appreciation Right is exercisable, in whole or in part, at such time or times as determined by the Committee at or after the time of grant. Unless otherwise determined by the Committee in connection with the grant and set forth in the Award Agreement, all unvested Stock Appreciation Rights shall immediately vest upon the Death or Disability of the holder.

(c) Exercise Price.   Subject to Section 3.4, the Exercise Price of a Stock Appreciation Right will never be less than 100% of the Fair Market Value of the related Shares on the Date of Grant. If a variable Exercise Price is specified at the time of grant, the Exercise Price may vary pursuant to a formula or other method established by the Committee; provided, however, that such formula or method will provide for a minimum Exercise Price equal to the Fair Market Value of the Shares on the Date of Grant. Except as otherwise provided in Section 3.4, no subsequent amendment of an outstanding Stock Appreciation Right may reduce the Exercise Price to less than 100% of the Fair Market Value of the Shares on the Date of Grant. Nothing in this Section 7.3(c) shall be construed as limiting the Committee’s authority to grant premium price Stock Appreciation Rights which do not become exercisable until the Fair Market Value of the related Shares exceeds a specified percentage (e.g., 110%) of the Exercise Price; provided, however, that such percentage will never be less than 100%.

(d) Method of Exercise.   A Stock Appreciation Right may be exercised in whole or in part during the term by giving written notice of exercise to the Company specifying the number of Shares in respect of which the Stock Appreciation Right is being exercised. The notice must be given by or on behalf of a person entitled to exercise the Stock Appreciation Right. Upon the exercise of a Stock Appreciation Right, subject to satisfaction of the tax withholding requirements pursuant to Article 15, the holder of the Stock Appreciation Right is entitled to receive Shares or cash as specified in the original Award Agreement (as set forth below) equal in value to the excess of the Fair Market Value of a Share on the exercise date over the Exercise Price of the SAR multiplied by the number of Stock Appreciation Rights being exercised. At any time the Fair Market Value of a Share on a proposed exercise date does not exceed the Exercise Price of the SAR, the holder of the Stock Appreciation Right shall not be permitted to exercise such right.

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(i) Stock Appreciation Right designated as a Stock Only Stock Appreciation Right (“SOSAR”) in the original Award Agreement.   With respect to an Award designated by the Company in the original Award Agreement as a SOSAR, the holder shall be entitled to receive only Shares of the Company upon exercise.

(ii) All Other Stock Appreciation Rights.   With respect to all other Awards the holder shall be entitled to the cash or other property set forth in the Award Agreement.

(e) Early Termination Prior to Expiration.   If the employment of an optionee with the Company or its Affiliates terminates for any reason, all unexercised Stock Appreciation Rights may be exercised only in accordance with rules established by the Committee or as specified in the relevant agreement evidencing such Stock Appreciation Rights. Such rules may provide, as the Committee deems appropriate, for the expiration, continuation (but only to the originally scheduled expiration date), or acceleration of the vesting of all or part of such Stock Appreciation Rights.

7.2 Other Terms and Conditions of SAR Grants.   Stock Appreciation Rights are subject to such other terms and conditions, not inconsistent with the provisions of this Plan, as are determined from time to time by the Committee.

7.3 Special Limitations on SAR Awards.   Unless an Award Agreement approved by the Committee provides otherwise, Stock Appreciation Rights awarded under this Plan are intended to meet the requirements for exclusion from coverage under Code Section 409A and applicable Treasury regulations and all Stock Appreciation Rights Awards shall be construed and administered accordingly.

ARTICLE 8

Restricted Share and Restricted Share Unit Awards

8.1 Restricted Share Grants and Agreements.   Restricted Share Awards consist of Shares which are issued by the Company to a participant at no cost or at a purchase price determined by the Committee which may be below their Fair Market Value but which are subject to forfeiture and restrictions on their sale or other transfer by the participant. Each Restricted Share Award granted under this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the Committee and by an Award Agreement dated as of the Date of Grant and executed by the Company and by the participant. The timing of Restricted Share Awards and the number of Shares to be issued (subject to Section 3.2) are to be determined by the Committee in its discretion. By accepting a grant of Restricted Shares, the participant consents to any tax withholding as provided in Article 15.

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8.2 Terms and Conditions of Restricted Share Grants.   Restricted Shares granted under this Plan are subject to the following terms and conditions, which, except as otherwise provided herein, need not be the same for each participant, and may contain such additional terms, conditions, restrictions and contingencies not inconsistent with the terms of this Plan and any operative employment or other agreement, as the Committee deems desirable:

(a) Purchase Price.   The Committee shall determine the prices, if any, at which Restricted Shares are to be issued to a participant, which may vary from time to time and from participant to participant and which may be below the Fair Market Value of such Restricted Shares at the Date of Grant.

(b) Restrictions.   All Restricted Shares issued under this Plan will be subject to such restrictions as the Committee may determine, which may include, without limitation, a requirement that the participant forfeit such Restricted Shares in the event of termination of the participant’s employment with the Company or its Affiliates prior to vesting. The Committee may at any time waive any such restrictions or accelerate the date or dates on which the restrictions will lapse.

(c) Performance-Based Restrictions.   The Committee may, in its sole discretion, provide restrictions that lapse upon the attainment of specified performance objectives. In such case, the provisions of Sections 9.2 and 9.3 will apply (including, but not limited to, the enumerated performance objectives). If the Award Agreement governing an Award provides that such Award is intended to be “performance-based compensation,” the provisions of Article 9 will also apply.

(d) Delivery of Shares.   Restricted Shares will be registered in the name of the participant and deposited, together with a Stock Power, with the Company or its designated officer or escrow agent. Each such certificate will bear a legend in substantially the following form:

“The transferability of this certificate and the Common Shares represented by it are subject to the terms and conditions (including conditions of forfeiture) contained in the United Bancorp, Inc. 2018 Stock Incentive Plan and an agreement entered into between the registered owner and the Company. A copy of this Plan and agreement are on file in the office of the Secretary of the Company.”

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At the end of any time period during which the Restricted Shares are subject to forfeiture and restrictions on transfer, and after any tax withholding, such Shares will be delivered free of all restrictions (except for any pursuant to Article 14) to the participant or other appropriate person and with the foregoing legend removed from the stock certificate.

(e) Forfeiture of Shares.   If a participant who holds Restricted Shares fails to satisfy the restrictions, vesting requirements and other conditions relating to the Restricted Shares prior to the lapse, satisfaction or waiver of such restrictions and conditions, except as may otherwise be determined by the Committee, the participant shall forfeit the Shares and transfer them back to the Company in exchange for a refund of any consideration paid by the participant or such other amount which may be specifically set forth in the Award Agreement. A participant shall execute and deliver to the Company one or more Stock Powers with respect to Restricted Shares granted to such participant.

(f) Voting and Other Rights.   Except as otherwise required by the terms of the applicable Restricted Share Agreement, during any period in which Restricted Shares are subject to forfeiture and restrictions on transfer, the participant holding such Restricted Shares shall have all the rights of a Shareholder with respect to such Shares, including, without limitation, the right to vote such Shares and the right to receive any dividends paid with respect to such Shares.

8.3 Restricted Share Unit Awards and Agreements.   Restricted Share Unit Awards consist of Shares that will be issued to a participant at a future time or times at no cost, or at a purchase price determined by the Committee which purchase price may be below their Fair Market Value if continued employment and/or other terms and conditions specified by the Committee are satisfied. Each Restricted Share Unit Award granted under this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the Committee and by an Award Agreement dated as of the Date of Grant and executed by the Company and the Plan participant. The timing of Restricted Share Unit Awards and the number of Restricted Share Units to be awarded (subject to Section 3.2) are to be determined by the Committee in its sole discretion. By accepting a Restricted Share Unit Award, the participant agrees to remit to the Company when due any tax withholding as provided in Article 15.

8.4 Terms and Conditions of Restricted Share Unit Awards.   Restricted Share Unit Awards are subject to the following terms and conditions, which, except as otherwise provided herein, need not be the same for each participant, and may contain such additional terms, conditions, restrictions and contingencies not inconsistent with the terms of this Plan and any operative employment or other agreement, as the Committee deems desirable:

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(a) Restrictions.   All Restricted Share Units awarded under this Plan will be subject to such restrictions as the Committee may determine, which may include, without limitation, a requirement that the participant forfeit such Restricted Share Unit in the event of termination of the participant’s employment with the Company or its Affiliates prior to Vesting. The Committee may at any time waive such restrictions or accelerate the date or dates on which the restrictions will lapse.

(b) Performance-Based Restrictions.   The Committee may, in its sole discretion, provide restrictions that lapse upon the attainment of specified performance objectives. In such case, the provisions of Sections 9.2 and 9.3 will apply (including, but not limited to, the enumerated performance objectives). If the Award Agreement governing an Award provides that such Award is intended to be “performance-based compensation,” the provisions of Article 9 will also apply.

(c) Voting and Other Rights.  A participant holding Restricted Share Units shall not be deemed to be a Shareholder solely because of such units. Such participant shall have no rights of a Shareholder with respect to such units; provided, however, that an Award Agreement may provide for payment of an amount of money (or Shares with a Fair Market Value equivalent to such amount) equal to the dividends paid from time to time on the number of Common Shares that would become payable upon vesting of a Restricted Share Unit Award.

(d) Lapse of Restrictions.   If a participant who holds Restricted Share Units satisfies the restrictions and other conditions relating to the Restricted Share Units prior to the lapse or waiver of such restrictions and conditions, the Restricted Share Units shall be converted to, or replaced with, Shares which are free of all restrictions except for any restrictions pursuant to Article 14.

(e) Forfeiture of Restricted Share Units.   If a participant who holds Restricted Share Units fails to satisfy the restrictions, Vesting requirements and other conditions relating to the Restricted Share Units (prior to the lapse, satisfaction or waiver of such restrictions and conditions), except as may otherwise be determined by the Committee, the participant shall forfeit the Restricted Share Units.

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(f) Termination.   A Restricted Share Unit Award or unearned portion thereof will terminate without the issuance of Shares on the termination date specified on the Date of Grant or upon the termination of employment of the participant during the time period or periods specified by the Committee during which any performance objectives must be met (the “Performance Period”). If a participant’s employment with the Company or its Affiliates terminates by reason of his or her death, disability or retirement, the Committee in its discretion at or after the Date of Grant may determine that the participant (or the heir, legatee or legal representative of the participant’s estate) will receive a distribution of Shares in an amount which is not more than the number of Shares which would have been earned by the participant if 100% of the performance objectives for the current Performance Period had been achieved prorated based on the ratio of the number of months of active employment in the Performance Period to the total number of months in the Performance Period. However, with respect to Awards intended to be performance-based compensation (as described in Section 9.4(d)), distribution of the Shares shall not be made prior to attainment of the relevant performance objectives.

(g) Special Limitations on Restricted Share Unit Awards.   Unless an Award Agreement approved by the Committee provides otherwise, Restricted Share Units awarded under this Plan are intended to meet the requirements for exclusion from coverage under Code Section 409A and all Restricted Share Unit Awards shall be construed and administered accordingly.

8.5 Time Vesting of Restricted Share and Restricted Share Unit Awards.   Restricted Shares or Restricted Share Units, or portions thereof, are exercisable at such time or times as determined by the Committee in its discretion at or after grant, subject to the restrictions on time Vesting set forth in this Section. If the Committee provides that any Restricted Shares or Restricted Share Unit Awards become Vested over time (with or without a performance component), the Committee may waive or accelerate such Vesting provisions at any time, subject to the restrictions on time Vesting set forth in this Section. Unless otherwise determined by the Committee in connection with the grant and set forth in the Award Agreement, all unvested Restricted Share and Restricted Share Unit Awards shall immediately Vest with respect to any required time vesting upon the Death or Disability of the holder.

8.6 Special Limitations on Restricted Share and Restricted Stock Unit Awards.   Unless an Award Agreement approved by the Committee provides otherwise, Restricted Share and Restricted Stock Units awarded under this Plan are intended to meet the requirements for exclusion from coverage under Code Section 409A and applicable Treasury regulations and all Awards shall be construed and administered accordingly.

ARTICLE 9

Performance Share Awards

9.1 Performance Share Awards and Agreements.   A Performance Share Award is a right to receive Shares in the future conditioned upon the attainment of specified performance objectives and such other conditions, restrictions and contingencies as the Committee may determine. Each Performance Share Award granted under this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the Committee and by an Award Agreement dated as of the Date of Grant and executed by the Company and by the Plan participant. The timing of Performance Share Awards and the number of Shares covered by each Award (subject to Section 3.2) are to be determined by the Committee in its discretion. By accepting a grant of Performance Shares, the participant agrees to remit to the Company when due any tax withholding as provided in Article 15.

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9.2 Performance Objectives.   At the time of grant of a Performance Share Award, the Committee will specify the performance objectives which, depending on the extent to which they are met, will determine the number of Shares that will be distributed to the participant. The Committee will also specify the time period or periods (the “Performance Period”) during which the performance objectives must be met. The Committee may designate a single goal criterion or multiple goal criteria for performance measurement purposes. Performance measurement may be described in terms of objectives that are related to the performance by the Company, by any Subsidiary, or by any employee or group of employees in connection with services performed by that employee or those employees for the Company, a Subsidiary, or one or more subunits of the Company or of any Subsidiary. The performance objectives may be made relative to the performance of other companies. The performance objectives and periods need not be the same for each participant nor for each Award.

9.3 Adjustment of Performance Objectives.   The Committee may modify, amend or otherwise adjust the performance objectives specified for outstanding Performance Share Awards if it determines that an adjustment would be consistent with the objectives of this Plan and taking into account the interests of the participants and the public Shareholders of the Company and such adjustment complies with any applicable legal requirements, to the extent applicable, unless the Committee indicates a contrary intention. The types of events which could cause an adjustment in the performance objectives include, without limitation, accounting changes which substantially affect the determination of performance objectives, changes in applicable laws or regulations which affect the performance objectives, and divisive corporate reorganizations, including spin-offs and other distributions of property or stock.

9.4 Other Terms and Conditions.   Performance Share Awards granted under this Plan are subject to the following terms and conditions and may contain such additional terms, conditions, restrictions and contingencies not inconsistent with the terms of this Plan and any operative employment or other agreement as the Committee deems desirable:

(a) Delivery of Shares.   As soon as practicable after the applicable Performance Period has ended, the participant will receive a distribution of the number of Shares earned during the Performance Period, depending upon the extent to which the applicable performance objectives were achieved. Such Shares will be registered in the name of the participant and will be free of all restrictions except for any restrictions pursuant to Article 14. Notwithstanding the forgoing, the distribution of Shares provided for herein shall occur not later than two and one-half months following the end of the calendar year in which the Performance Period has ended.

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(b) Termination.   A Performance Share Award or unearned portion thereof will terminate without the issuance of Shares on the termination date specified at the time of grant or upon the termination of employment of the participant during the Performance Period. If a participant’s employment with the Company or its Affiliates terminates by reason of his or her death, disability or retirement, the Committee in its discretion at or after the time of grant may determine, notwithstanding any Vesting requirements, that the participant (or the heir, legatee or legal representative of the participant’s estate) will receive a distribution of a portion of the participant’s then-outstanding Performance Share Awards in an amount which is not more than the number of shares which would have been earned by the participant if 100% of the performance objectives for the current Performance Period had been achieved prorated based on the ratio of the number of months of active employment in the Performance Period to the total number of months in the Performance Period.

(c) Voting and Other Rights.   Awards of Performance Shares do not provide the participant with voting rights or rights to dividends prior to the participant becoming the holder of record of Shares issued pursuant to an Award; provided, however, that an Award Agreement may provide for payment of an amount of money (or Shares with a Fair Market Value equivalent to such amount) equal to the dividends paid from time to time on the number of Common Shares that would become payable upon vesting of a Performance Share Award. Prior to the issuance of Shares, Performance Share Awards may not be sold, transferred, pledged, assigned or otherwise encumbered.

9.5 Special Limitations on Performance Share Awards.   Unless an Award Agreement approved by the Committee provides otherwise, Performance Shares awarded under this Plan are intended to meet the requirements for exclusion from coverage under Code Section 409A and all Performance Share Awards shall be construed and administered accordingly.

ARTICLE 10

Transfers and Leaves of Absence

10.1 Transfer of Participant.   For purposes of this Plan, the transfer of a participant among the Company and its Affiliates is deemed not to be a termination of employment.

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10.2 Effect of Leaves of Absence.   For purposes of this Plan, the following leaves of absence are deemed not to be a termination of employment:

(a) a leave of absence, approved in writing by the Company, for military service, sickness or any other purpose approved by the Company, if the period of such leave does not exceed 90 days;

(b) a leave of absence in excess of 90 days, approved in writing by the Company, but only if the employee’s right to reemployment is guaranteed either by a statute or by contract, and provided that, in the case of any such leave of absence, the employee returns to work within 30 days after the end of such leave; and

(c) any other absence determined by the Committee in its discretion not to constitute a termination of employment.

ARTICLE 11

Effect of Change in Control

11.1 Change in Control Defined.   “Change in Control” shall mean a “Change in Ownership” as defined in Article 1 of this Plan.

11.2 Effect of Ch ange in Control.   Unless otherwise determined by the Committee in connection with the grant and set forth in the Award Agreement, in the event of a Change in Control of the Company:

(a) all Stock Options or SARs, notwithstanding any limitations set forth in the Plan or Award Agreement shall become fully Vested;

(b) all Restricted Shares, notwithstanding any limitations set forth in the Plan or Award Agreement shall become fully Vested; and

(c) all Restricted Share Units and Performance Shares, notwithstanding any limitations set forth in the Plan or Award Agreement shall become fully Vested.

In addition, in connection with a Change in Control the Committee shall have the right, in its sole discretion, to:

(d) cancel any or all outstanding Stock Options, SARs, Restricted Share Units and Performance Shares in exchange for the kind and amount of shares of the surviving or new corporation, cash, securities, evidences of indebtedness, other property or any combination thereof receivable in respect of one Share upon consummation of the transaction in question (the “Acquisition Consideration”) that the holder of the Stock Option, SAR, Restricted Share Unit or Performance Share would have received had the Stock Option, SAR, Restricted Share Unit or Performance Share been exercised or converted into Shares, as applicable, prior to such transaction, less the applicable exercise or purchase price therefor;

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(e) cause the holders of any or all Stock Options, SARs, Restricted Share Units and Performance Shares to have the right thereafter and during the term of the Stock Option, SAR, Restricted Share Unit or Performance Share to receive upon exercise thereof the Acquisition Consideration receivable upon the consummation of such transaction by a holder of the number of Common Shares which might have been obtained upon exercise or conversion of all or any portion thereof, less the applicable exercise or purchase price therefor, or to convert such Stock Option, SAR, Restricted Share Unit or Performance Share into a stock option, appreciation right, restricted share unit or performance share relating to the surviving or new corporation in the transaction; or

(f) take such other action as it deems appropriate to preserve the value of the Award to the Participant, including the cancellation of such Award and the payment of the value of the Acquisition Consideration attributable to the Award, net of payments due from the holder thereof upon exercise if any, in cash.

The Committee may provide for any of the foregoing in an Award Agreement governing an Award in advance, may provide for any of the foregoing in connection with a Change in Control, or do both. Alternatively, the Committee shall also have the right to require any purchaser of the Company’s assets or stock, as the case may be, to take any of the actions set forth in the preceding sentence.

The manner of application and interpretation of the foregoing provisions of this Section 11.2 shall be determined by the Committee in its sole and absolute discretion.

11.3 Code Section 409A.   Unless an Award Agreement approved by the Committee provides otherwise, each Award granted under this Plan is intended to meet the requirements for exclusion from coverage under Code Section 409A. If the Committee provides than an Award shall be subject to Code Section 409A, then, notwithstanding the other provisions of this Article 11, the Committee may provide in the Award Agreement for such changes to the definition of Change in Control from the definition set forth in this Article 11, and for such changes to the Committee’s rights upon a Change in Control, as the Committee may deem necessary in order for such Award to comply with Code Section 409A.

ARTICLE 12

Transferability of Awards

12.1 Awards Are Non-Transferable.   Except as provided in Sections 12.2 and 12.3, Awards are non-transferable and any attempts to assign, pledge, hypothecate or otherwise alienate or encumber (whether by operation of law or otherwise) any Award shall be null and void.

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12.2 Inter-Vivos Exercise of Awards.   During a participant’s lifetime, Awards are exercisable only by the participant or, as permitted by applicable law and notwithstanding Section 12.1 to the contrary, the participant’s guardian or other legal representative.

12.3 Limited Transferability of Certain Awards.   Notwithstanding Section 12.1 to the contrary, Awards may be transferred by will and by the laws of descent and distribution. Moreover, the Committee, in its discretion, may allow at or after the time of grant the transferability of Awards which are Vested, provided that the permitted transfer is made (a) if the Award is an Incentive Stock Option, the transfer is consistent with Section 422 of the Code; (b) to the Company (for example in the case of forfeiture of Restricted Shares), an Affiliate or a person acting as the agent of the foregoing or which is otherwise determined by the Committee to be in the interests of the Company; or (c) by the participant for no consideration to Immediate Family Members (as defined below) or to a bona fide trust, partnership or other entity controlled by and for the benefit of one or more Immediate Family Members. “Immediate Family Members” means the participant’s spouse, children, stepchildren, parents, stepparents, siblings (including half brothers and sisters), in-laws and other individuals who have a relationship to the participant arising because of a legal adoption. No transfer may be made to the extent that transferability would cause Form S-8 or any successor form thereto not to be available to register Shares related to an Award. The Committee in its discretion may impose additional terms and conditions upon transferability.

ARTICLE 13

Amendment and Discontinuation

13.1 Amendment or Discontinuation of this Plan.   The Board of Directors may amend, alter, or discontinue this Plan at any time, provided that no amendment, alteration, or discontinuance may be made:

(a) which would materially and adversely affect the rights of a participant under any Award granted prior to the date such action is adopted by the Board of Directors without the participant’s written consent thereto; and

(b) without shareholder approval, if shareholder approval is required under applicable laws, regulations or exchange requirements (including Section 422 of the Code with respect to ISOs).

Notwithstanding the foregoing, this Plan may be amended without participants’ consent to: (i) comply with any law; (ii) preserve any intended favorable tax effects for the Company, the Plan or participants; or (iii) avoid any unintended unfavorable tax effects for the Company, the Plan or participants.

13.2 Amendment of Grants.   The Committee may amend, prospectively or retroactively, the terms of any outstanding Award, provided that no such amendment may be inconsistent with the terms of this Plan (specifically including the prohibition on granting Stock Options or SARs with an Exercise Price less than 100% of the Fair Market Value of the Common Shares on the Date of Grant) or would materially and adversely affect the rights of any holder without his or her written consent.

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ARTICLE 14

Issuance of Shares and Share Certificates

14.1 Issuance of Shares.   The Company will issue or cause to be issued Shares as soon as practicable upon exercise or conversion of an Award that is payable in Shares. No certificates for Shares will be issued until full payment has been made, to the extent payment is required. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares, notwithstanding the exercise or conversion of the Award payable in shares.

14.2 Delivery of Share Certificates.   The Company is not required to issue or deliver any certificates for Shares issuable with respect to Awards under this Plan prior to the fulfillment of all of the following conditions:

(a) payment in full for the Shares and for any tax withholding (See Article 15);

(b) completion of any registration or other qualification of such Shares under any Federal or state laws or under the rulings or regulations of the Securities and Exchange Commission or any other regulating body which the Committee in its discretion deems necessary or advisable;

(c) admission of such Shares to listing on The Nasdaq Stock Market or any stock exchange on which the Shares are listed;

(d) in the event the Shares are not registered under the Securities Act of 1933, qualification as a private placement under said Act;

(e) obtaining of any approval or other clearance from any Federal or state governmental agency which the Committee in its discretion determines to be necessary or advisable; and

(f) the Committee is fully satisfied that the issuance and delivery of Shares under this Plan is in compliance with applicable Federal, state or local law, rule, regulation or ordinance or any rule or regulation of any other regulating body, for which the Committee may seek approval of counsel for the Company.

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14.3 Applicable Restrictions on Shares.   Shares issued with respect to Awards may be subject to such stock transfer orders and other restrictions as the Committee may determine necessary or advisable under any applicable Federal or state securities law rules, regulations and other requirements, the rules, regulations and other requirements of The Nasdaq Stock Market or any stock exchange upon which the Shares are then-listed, and any other applicable Federal or state law and will include any restrictive legends on stock certificates that the Committee may deem appropriate to include.

14.4 Book Entry.   In lieu of the issuance of stock certificates evidencing Shares, the Company may use a “book entry” system in which a computerized or manual entry is made in the records of the Company to evidence the issuance of such Shares. Such Company records are, absent manifest error, binding on all parties.

ARTICLE 15

Satisfaction of Tax Liabilities

15.1 In General.   The Company shall withhold any taxes which the Committee determines the Company is required by law or required by the terms of this Plan to withhold in connection with any payments incident to this Plan. The participant or other recipient shall provide the Committee with such additional information or documentation as may be necessary for the Company to discharge its obligations under this Section. The Company may withhold: (a) cash, (b) subject to any limitations under Rule 16b-3, Common Shares to be issued, or (c) any combination thereof, in an amount equal to the amount which the Committee determines is necessary to satisfy the obligation of the Company, a Subsidiary or a Parent to withhold federal, state and local income taxes or other amounts incurred by reason of the grant or exercise of an Award, its disposition, or the disposition of the underlying Common Shares. Alternatively, the Company may require the holder to pay to the Company such amounts, in cash, promptly upon demand.

15.2 Withholding from Share Distributions.   With respect to a distribution in Shares pursuant to Restricted Share, Restricted Share Unit or Performance Share Awards under the Plan, the Committee may cause the Company to sell the number of such Shares with a value (net proceeds of such sale) equal to (or exceeded by not more than the actual sale price of a single Share) the Company’s required tax withholding relating to such distribution. The Committee may withhold the proceeds of such sale for purposes of satisfying such tax withholding obligation.

15.3 Section 83(b) Election.   The Committee may, where applicable, provide in an Award Agreement the right of the participant to make an election pursuant to Section 83(b) of the Code, or comparable provisions of any state tax law, to include in the participant’s gross income the fair market value as of the Award as of the Date of Grant. The participant may make such an election only if, prior to making any such election, the participant (a) notifies the Company of participant’s intention to make such election in accordance with any notice requirements set forth in the Award Agreement, and (b) pays to the Company an amount sufficient to satisfy any taxes or other amounts required by any governmental authority to be withheld or paid over to such authority for participant’s account, or otherwise makes arrangements satisfactory to the Company for the payment of such amounts through withholding or otherwise.

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ARTICLE 16

General Provisions

16.1 No Implied Rights to Awards or Employment.   No potential participant has any claim or right to be granted an Award under this Plan, and there is no obligation of uniformity of treatment of participants under this Plan. Neither this Plan nor any Award thereunder shall be construed as giving any individual any right to continued employment with the Company or any Affiliate. The Plan does not constitute a contract of employment, and the Company and each Affiliate expressly reserve the right at any time to terminate employees free from liability, or any claim, under this Plan, except as may be specifically provided in this Plan or in an Award Agreement.

16.2 Other Compensation Plans.   Nothing contained in this Plan prevents the Board of Directors from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

16.3 Rule 16b-3 Compliance.   The Plan is intended to comply with all applicable conditions of Rule 16b-3 of the Exchange Act, as such rule may be amended from time to time (“Rule 16b-3”). All transactions involving any participant subject to Section 16(a) of the Exchange Act shall be subject to the conditions set forth in Rule 16b-3, regardless of whether such conditions are expressly set forth in this Plan. Any provision of this Plan that is contrary to Rule 16b-3 does not apply to such participants.

16.4 Successors.   All obligations of the Company with respect to Awards granted under this Plan are binding on any successor to the Company, whether as a result of a direct or indirect purchase, merger, consolidation or otherwise of all or substantially all of the business and/or assets of the Company.

16.5 Severability.   In the event any provision of this Plan, or the application thereof to any person or circumstances, is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, or other applications, and this Plan is to be construed and enforced as if the illegal or invalid provision had not been included.

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16.6 Governing Law.   To the extent not preempted by Federal law, this Plan and all Award Agreements pursuant thereto are construed in accordance with and governed by the laws of the State of Ohio. This Plan is not intended to be governed by the Employee Retirement Income Security Act and shall be so construed and administered.

16.7 Legal Requirements .  No Awards shall be granted and the Company shall have no obligation to make any payment under the Plan, whether in Shares, cash, or a combination thereof, unless such payment is, without further action by the Committee, in compliance with all applicable Federal and state laws and regulations, including, without limitation, the Code and Federal and state securities laws.

16.8 Forfeiture by Employees in Connection with Termination for Cause.    Notwithstanding any other provision of this Plan, subject to the provisions of the Award Agreement to which such Award relates, upon the termination of employment of an employee Participant for Cause such employee Participant shall forfeit all benefits associated with any Award as provided for herein. Pursuant to this provision, an employee shall forfeit all unexercised Options whether or not previously vested, all unexercised SARs whether or not previously vested and all Restricted Shares, Restricted Share Units and Performance Shares for which the delivery of Shares has not yet occurred.

ARTICLE 17

Effective Date and Term

17.1 Effective Date.   The effective date of this United Bancorp, Inc. 2018 Stock Incentive Plan is the date on which the shareholders of the Company approve it at a duly held shareholders’ meeting.

17.2 Termination Date.   This Plan will continue in effect until midnight on the day before the tenth anniversary of the effective date specified in Section 17.1; provided, however, that Awards granted on or before that date may extend beyond that date.

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Scott A. Everson, President and Chief Executive Officer of United Bancorp, Inc., certify that:

1. I have reviewed this Form 10-Q of United Bancorp, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2018	/s/Scott A. Everson
	Scott A. Everson, President and CEO

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Randall M. Greenwood, Chief Financial Officer of United Bancorp, Inc., certify that:

1. I have reviewed this Form 10-Q of United Bancorp, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c )     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 14, 2018	/s/Randall M. Greenwood
	Randall M. Greenwood, CFO

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Bancorp, Inc. (the "Company") on Form 10-Q for the period ending June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott A. Everson, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Scott A. Everson

Scott A. Everson,

President and Chief Executive Officer

August 14, 2018

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Bancorp, Inc. (the "Company") on Form 10-Q for the period ending June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Randall M. Greenwood, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Randall M. Greenwood

Randall M. Greenwood,

Chief Financial Officer

August 14, 2018

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 06, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Entity Registrant Name	UNITED BANCORP INC /OH/
Entity Central Index Key	0000731653
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	UBCP
Entity Common Stock, Shares Outstanding		5,383,938

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Cash and due from banks	$ 4,611	$ 4,662
Interest-bearing demand deposits	11,697	9,653
Cash and cash equivalents	16,308	14,315
Available-for-sale securities	86,212	44,959
Loans, net of allowance for loan losses of $2,080 and $2,122 at June 30, 2018 and December 31, 2017, respectively	377,433	366,467
Premises and equipment	11,817	11,740
Federal Home Loan Bank stock	4,164	4,164
Foreclosed assets held for sale, net	615	397
Accrued interest receivable	1,275	993
Deferred income taxes	495	349
Bank-owned life insurance	12,263	12,114
Other assets	4,219	3,834
Total assets	514,801	459,332
Deposits
Demand	262,953	237,980
Savings	83,838	82,169
Time	68,843	65,817
Total deposits	415,634	385,966
Securities sold under repurchase agreements	12,346	11,085
Federal Home Loan Bank advances	33,768	10,022
Subordinated debentures	4,124	4,124
Interest payable and other liabilities	3,944	4,240
Total liabilities	469,816	415,437
Stockholders' Equity
Preferred stock, no par value, authorized 2,000,000 shares; no shares issued	0	0
Common stock, $1 par value; authorized 10,000,000 shares; issued 2018 –5,560,304 shares, 2017 – 5,435,304 shares; outstanding 2018 – 5,383,938, 2017 - 5,244,105	5,560	5,435
Additional paid-in capital	17,927	18,020
Retained earnings	24,177	23,260
Stock held by deferred compensation plan; 2018 –170,622 shares, 2017 – 185,355 shares	(1,579)	(1,671)
Unearned ESOP compensation	(543)	(683)
Accumulated other comprehensive loss	(511)	(420)
Treasury stock, at cost 2018 –5,744 shares, 2017 – 5,744 shares	(46)	(46)
Total stockholders' equity	44,985	43,895
Total liabilities and stockholders' equity	$ 514,801	$ 459,332

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Loans, allowance for loan losses	$ 2,080	$ 2,122
Preferred stock, no par value	$ 0	$ 0
Preferred stock, authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 1	$ 1
Common stock, authorized	10,000,000	10,000,000
Common stock, issued	5,560,304	5,435,304
Common Stock, Shares, Outstanding	5,383,938	5,244,105
Stock held by deferred compensation plan, shares	170,622	185,355
Treasury stock, shares	5,744	5,744

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Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest and dividend income
Loans, including fees	$ 4,562	$ 4,095	$ 8,893	$ 8,112
Taxable securities	181	109	355	212
Non-taxable securities	281	1	313	7
Federal funds sold	24	36	51	47
Dividends on Federal Home Loan Bank stock and other	59	49	120	96
Total interest and dividend income	5,107	4,290	9,732	8,474
Deposits
Demand	302	115	544	187
Savings	9	10	19	19
Time	222	170	427	318
Borrowings	174	143	240	352
Total interest expense	707	438	1,230	876
Net interest income	4,400	3,852	8,502	7,598
Provision for loan losses	72	25	129	50
Net interest income after provision for loan losses	4,328	3,827	8,373	7,548
Noninterest income
Service charges on deposit accounts	650	632	1,281	1,229
Realized gains on sales of loans	23	29	37	44
Other income	215	208	450	428
Total noninterest income	888	869	1,768	1,701
Noninterest expense
Salaries and employee benefits	1,876	1,824	3,708	3,592
Net occupancy and equipment expense	547	510	1,087	1,033
Professional services	297	194	489	395
Insurance	105	72	208	139
Deposit insurance premiums	26	44	75	88
Franchise and other taxes	102	96	198	180
Advertising	125	100	262	209
Stationery and office supplies	38	33	74	69
Net realized (gain) loss on sale of other real estate and repossessions	5	(4)	5	(4)
Other expenses	633	496	1,227	998
Total noninterest expense	3,754	3,365	7,333	6,699
Income before federal income taxes	1,462	1,331	2,808	2,550
Federal income taxes	250	415	448	784
Net income	$ 1,212	$ 916	$ 2,360	$ 1,766
EARNINGS PER COMMON SHARE
Basic	$ 0.24	$ 0.18	$ 0.46	$ 0.35
Diluted	0.22	0.18	0.44	0.35
DIVIDENDS PER COMMON SHARE	$ 0.13	$ 0.11	$ 0.26	$ 0.22

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net income	$ 1,212	$ 916	$ 2,360	$ 1,766
Unrealized holding gains (losses) on securities during the period, net of tax (benefits) of $21, $48, ($26) and $128 for each respective period	79	93	(91)	248
Comprehensive income	$ 1,291	$ 1,009	$ 2,269	$ 2,014

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Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Unrealized holding (losses) gains on securities during the period, net of taxes (benefits)	$ 21	$ 48	$ (26)	$ 128

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating Activities
Net income	$ 2,360	$ 1,766
Items not requiring (providing) cash
Accretion of premiums and discounts on securities, net	36	0
Depreciation and amortization	476	453
Expense related to share based compensation plans	124	52
Expense related to ESOP	140	140
Provision for loan losses	129	50
Increase in value of bank-owned life insurance	(149)	(154)
Gain on sale of loans	(37)	(44)
Proceeds from sale of loans held for sale	1,800	2,050
Originations of loans held for sale	(1,763)	(2,006)
(Gain) Loss on sale or write down of foreclosed assets	13	(4)
Amortization of mortgage servicing rights	15	3
Net change in accrued interest receivable and other assets	(838)	(1,464)
Net change in accrued expenses and other liabilities	(296)	501
Net cash provided by operating activities	2,010	1,343
Securities available for sale:
Maturities, prepayments and calls	0	1,249
Purchases	(41,403)	0
Net change in loans	(11,309)	(866)
Purchases of premises and equipment	(552)	(429)
Proceeds from sale of foreclosed assets	15	0
Net cash used in investing activities	(53,249)	(46)
Financing Activities
Net change in deposits	29,668	35,112
Net change in securities sold under repurchase agreements	1,261	3,596
Net change in FHLB overnight borrowings	23,800	(19,500)
Repayments of long-term borrowings	(54)	(10,068)
Cash dividends paid on common stock	(1,443)	(1,194)
Net cash provided by financing activities	53,232	7,946
Increase in Cash and Cash Equivalents	1,993	9,243
Cash and Cash Equivalents, Beginning of Period	14,315	11,541
Cash and Cash Equivalents, End of Period	16,308	20,784
Supplemental Cash Flows Information
Interest paid on deposits and borrowings	1,176	906
Federal income taxes paid	65	278
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Transfers from loans to foreclosed assets held for sale	$ 250	$ 41

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1: Summary of Significant Accounting Policies

These interim financial statements are prepared without audit and reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position of United Bancorp, Inc. (“Company”) at June 30, 2018, and its results of operations and cash flows for the interim periods presented. All such adjustments are normal and recurring in nature. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not purport to contain all the necessary financial disclosures required by accounting principles generally accepted in the United States of America that might otherwise be necessary in the circumstances and should be read in conjunction with the Company’s consolidated financial statements and related notes for the year ended December 31, 2017 included in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K. The results of operations for the three months and six months ended June 30, 2018, are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2017 has been derived from the audited consolidated balance sheet of the Company as of that date.

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, Unified Bank of Martins Ferry, Ohio (“the Bank”). All intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations

The Company’s revenues, operating income and assets are almost exclusively derived from banking. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Customers are mainly located in Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio and include a wide range of individuals, businesses and other organizations. Unified Bank conducts its business through its main office in Martins Ferry, Ohio and branches in Amesville, Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Glouster, Jewett, Lancaster Downtown, Lancaster East, Nelsonville, New Philadelphia, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg and Tiltonsville, Ohio. The Bank also operates a Loan Production Office in Wheeling, West Virginia.

The Company’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate and are not considered “sub prime” type loans. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Company can be significantly influenced by a number of environmental factors, such as governmental monetary and fiscal policies, that are outside of management’s control.

Revenue Recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. 

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, investment securities, as well as revenue related to our mortgage banking activities, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of non-interest income are as follows:

Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except residential and consumer loans, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off residential and consumer loans when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 120 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical charge-off experience by segment. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior three years. Management believes the three year historical loss experience methodology is appropriate in the current economic environment. Other adjustments (qualitative/environmental considerations) for each segment may be added to the allowance for each loan segment after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due based on the loan’s current payment status and the borrower’s financial condition including available sources of cash flows. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for non-homogenous type loans such as commercial, non-owner residential and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes the discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense.

The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral. In general, the Company acquires an updated appraisal upon identification of impairment and annually thereafter for commercial, commercial real estate and multi-family loans. If the most recent appraisal is over a year old, and a new appraisal is not performed, due to lack of comparable values or other reasons, the existing appraisal is utilized and discounted generally 10% - 35% based on the age of the appraisal, condition of the subject property, and overall economic conditions. After determining the collateral value as described, the fair value is calculated based on the determined collateral value less selling expenses. The potential for outdated appraisal values is considered in our determination of the allowance for loan losses through our analysis of various trends and conditions including the local economy, trends in charge-offs and delinquencies, etc. and the related qualitative adjustments assigned by the Company.

Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segment’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this scenario, the Company attempts to work-out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.

It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until six months of satisfactory borrower performance at which time management would consider its return to accrual status. If a loan was accruing at the time of restructuring, the Company reviews the loan to determine if it is appropriate to continue the accrual of interest on the restructured loan.

With regard to determination of the amount of the allowance for credit losses, trouble debt restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended ‎June 30,						Six months ended ‎June 30,
	2018			2017			2018			2017
	(In thousands, except share and per share data)
Basic
Net income	$	1,212		$	916		$	2,360		$	1,766
Dividends on non-vested restricted stock		(27	)		(9	)		(53	)		(17	)
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding		4,990,904			4,847,884			4,986,290			4,839,725
Basic earnings per common share	$	0.24		$	0.18		$	0.46		$	0.35
Diluted
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding for basic earnings per common share		4,990,904			4,847,884			4,986,290			4,839,725
Add:  Dilutive effects of assumed exercise of stock options and restricted stock		226,030			119,102			224,998			119,102
Average shares and dilutive potential common shares		5,216,934			4,966,986			5,211,288			4,958,827
Diluted earnings per common share	$	0.22		$	0.18		$	0.44		$	0.35

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2014.

Recently Adopted Accounting Pronouncements

ASU No. 2018-02 was issued in February 2018 to provide guidance to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve usefulness of information reported to financial statement users. The amendments in this ASU will also require certain disclosures about stranded tax effects and is effective for fiscal years beginning after December 31, 2018. The Company early adopted ASU 2018-02 effective January 1, 2018 and reclassified approximately $48,000 in stranded tax effects in the adoption using the portfolio method.

ASU No. 2017-09 was issued in May 2017 and provides guidance about which changes to the terms or condition of a share-based payment award require and entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted ASU 2017-09 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

ASU No. 2017-07 was issued in March 2017 and applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in this update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, as defined, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in ASU No. 2017-07 are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this update are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The Company has adopted ASU 2017-07 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 provides cash flow statement classification guidance for certain transactions including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has adopted ASU 2016-15 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ASU No. 2016-01 was issued in January 2016 and applies to all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instruments specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for annual periods and interim periods within those periods, beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity instruments that exist as of the date of adoption. The amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. The Company has adopted ASU 2016-01 on January 1, 2018 and it did not have a material effect on its fair value disclosures and other disclosure requirements. For additional information on fair value of assets and liabilities, see Note 16.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). This update to the ASC is the culmination of efforts by the FASB and the International Accounting Standards Board (IASB) to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 supersedes Topic 605 – Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. Originally, the amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early application is not allowed. In July 2015, the FASB extended the implementation date to annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Transitional guidance is included in the update. Earlier adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. The Company’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASU 2014-09, and non interest income. The Company has adopted ASU 2014-09 on January 1, 2018 and it did not identify any changes in the timing of revenue recognition when considering the amended accounting guidance. The Company included additional disclosures beginning in the first quarter of 2018 as required by the guidance.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. 

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense. 

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. 

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of these amendments to the Company’s financial position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the amendments. The Allowance for Loan Losses (ALL) estimate is material to the Company and given the change from an incurred loss model to a methodology that considers the credit loss over the life of the loan, there is the potential for an increase in the ALL at adoption date. The Company is anticipating a significant change in the processes and procedures to calculate the ALL, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the current accounting policy and procedures for the other-than-temporary impairment on available-for-sale securities will be replaced with an allowance approach. The Company continues to work with an outside vendor on data collection and reviewing segmentation to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 4.

 On February 25, 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” ASU 2016-02 is intended to improve financial reporting about leasing transactions. This ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment.

Under the current accounting model, an organization applies a classification test to determine the accounting for the lease arrangement:

(a) Some leases are classified as capital whereby the lessee would recognize lease assets and liabilities on the balance sheet.

(b) Other leases are classified as operating leases whereby the lessee would not recognize lease assets and liabilities on the balance sheet.

Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Thus, for a calendar year company, it would be effective January 1, 2019. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements.

Future Acquisition

The Company and Powhatan Community Bancshares, Inc. (“Powhatan”), the holding company for First National Bank of Powhatan Point ("First National"), announced on June 14, 2018 they have signed a definitive agreement whereby the Company will acquire Powhatan in a stock and cash transaction.  Upon completion, First National will be merged into the Company’s subsidiary bank, Unified Bank. At that time, the main office of First National will become a full-service branch of Unified Bank. Powhatan operates one full-service office in Belmont County, Ohio and has approximately $62.8 million in assets, $6.7 million in loans, $57.6 million of deposits and $5.1 million in consolidated equity as of June 30, 2018.

The acquisition is expected to close in the fourth quarter of 2018 and is subject to Powhatan shareholder approval, regulatory approval, and other conditions set forth in the merger agreement.  Subject to the terms of the merger agreement, which has been unanimously approved by the Board of Directors of each company, Powhatan shareholders will receive 6.9233 shares of the Company’s common stock plus $38.75 in cash for each outstanding share of Powhatan common stock, subject to adjustment based on closing equity and other factors.  Based on our closing share price prior to the announcement of $13.05 on June 13, 2018, the transaction is valued at $129.10 for each Powhatan share or approximately $6.836 million in aggregate. 

 The acquisition will be accounted for in accordance with applicable accounting guidance. Accordingly, the assets and liabilities of Powhatan will be recorded at their estimated fair values at the acquisition date. The excess of the estimated fair value of the Company’s common shares issued and cash paid over the net fair values of the assets acquired, including identifiable intangible assets and liabilities assumed, will be recorded as goodwill. The results of operations will be included in the consolidated income statement from the date of the acquisition. Goodwill will be subject to an annual test for impairment and the amount impaired, if any, will be charged to expense at the time of impairment. The estimated fair values of the assets and liabilities have not yet been determined. During the six months ended June 30, 2018, the Company incurred $123,000 of merger related expenses.

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Securities

6 Months Ended

Jun. 30, 2018

Securities [Abstract]

Securities

Note 2: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses of securities are as follows:

	Amortized Cost		Gross ‎Unrealized ‎Gains		Gross ‎Unrealized ‎Losses			Fair Value
	(In thousands)
Available-for-sale Securities:
June 30, 2018:
U.S. government agencies	$	45,250	$	—	$	(669	)	$	44,581
State and political subdivisions		41,366		271		(6	)		41,631
	$	86,616	$	271	$	(675	)	$	86,212
Available-for-sale Securities:
December 31, 2017:
U.S. government agencies	$	45,249	$	—		(290	)	$	44,959
	$	45,249	$	3	$	(290	)	$	44,959

The amortized cost and fair value of available-for-sale securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	—	$	—
One to five years		45,250		44,580
Five to ten year		—		—
Due after ten years		41,366		41,632
Totals	$	86,616	$	86,212

The carrying value of securities pledged to secure public deposits and for other purpose, was $42.6 million and $41.5 million at June 30, 2018 and December 31, 2017, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at June 30, 2018 and December 31, 2017, was $47.7 million and $44.9 million, which represented approximately 55.2% and 100.0%, respectively, of the Company’s available-for-sale investment portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary and are a result on an general increase in longer term interest rates.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2018 and December 31, 2017:

June 30, 2018
	Less than 12 Months					12 Months or More					Total
Description of ‎Securities	Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses
(In thousands)
U.S. Government agencies	$	12,094	$	(156	)	$	32,487	$	(513	)	$	44,581	$	(669	)
State and Political Subdivisions		3,081		(6	)		—		—			3,081		(6	)
Total	$	15,175	$	(162	)	$	32,487	$	(513	)	$	47,662	$	(675	)

December 31, 2017
	Less than 12 Months					12 Months or More					Total
Description of ‎Securities	Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses
(In thousands)
U.S. Government agencies	$	12,190	$	(59	)	$	32,769	$	(231	)	$	44,959	$	(290	)

The unrealized losses on the Company’s investments in U.S. Government agencies were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2018 and December 31, 2017.

There were no investment sales for the six months ended June 30, 2018 and 2017.

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2018

Loans and Allowance For Loan Losses [Abstract]

Loans and Allowance for Loan Losses

Note 3: Loans and Allowance for Loan Losses

Categories of loans include:

	June 30,			December 31,
	2018			2017
	(In thousands)
Commercial loans	$	84,772		$	81,327
Commercial real estate		206,795			198,936
Residential real estate		76,476			75,853
Installment loans		11,470			12,473
Total gross loans		379,513			368,589
Less allowance for loan losses		(2,080	)		(2,122	)
Total loans	$	377,433		$	366,467

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial Real Estate

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate versus nonowner-occupied loans.

Residential and Installment

Residential and installment loans consist of two segments - residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles. Some installment personal loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and six month periods ended June 30, 2018

	Commercial		Commercial ‎Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, April 1, 2018	$	522	$	671		$	446		$	400		$	86		$	2,125
Provision charged to expense		22		(17	)		137			16			(86	)		72
Losses charged off		—		—			(79	)		(55	)		—			(134	)
Recoveries		1		—			1			15			—			17
Balance, June 30, 2018	$	545	$	654		$	505		$	376		$	—		$	2,080
Balance, January 1, 2018	$	537	$	843		$	436		$	218		$	88		$	2,122
Provision charged to expense		6		(190	)		146			255			(88	)		129
Losses charged off		—		—			(79	)		(124	)		—			(203	)
Recoveries		2		1			2			27			—			32
Balance, June 30, 2018	$	545	$	654		$	505		$	376		$	—		$	2,080
Allocation:
Ending balance:  individually evaluated for impairment	$	—	$	75		$	—		$	—		$	—		$	75
Ending balance:  collectively evaluated for impairment	$	545	$	579		$	505		$	376		$	—		$	2,005
Loans:
Ending balance:  individually evaluated for impairment	$	58	$	577		$	—		$	98		$	—		$	733
Ending balance:  collectively evaluated for impairment	$	84,714	$	206,218		$	76,476		$	11,372		$	—		$	378,780

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and six month periods ended June 30, 2017

	Commercial		Commercial ‎Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, April 1, 2017	$	498	$	793		$	583		$	162		$	297		$	2,333
Provision charged to expense		33		56			(137	)		193			(120	)		25
Losses charged off		—		(5	)		—			(77	)		—			(82	)
Recoveries		1		1			1			13			—			16
Balance, June 30, 2017	$	532	$	845		$	447		$	291		$	177		$	2,292
Balance, January 1, 2017	$	495	$	804		$	591		$	107		$	344		$	2,341
Provision charged to expense		36		44			(150	)		287			(167	)		50
Losses charged off		—		(5	)		—			(127	)		—			(132	)
Recoveries		1		2			6			24			—			33
Balance, June 30, 2017	$	532	$	845		$	447		$	291		$	177		$	2,292
Loans:
Ending balance:  individually evaluated for impairment	$	129	$	841		$	—		$	462		$	—		$	1,432
Ending balance: collectively evaluated for impairment	$	51,732	$	216,508		$	75,158		$	12,739		$	—		$	356,137

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2017

	Commercial		Commercial ‎Real Estate		Residential		Installment		Unallocated		Total
(In thousands)
Allowance for loan losses:
Ending balance:  individually evaluated for impairment	$	—	$	73	$	—	$	—	$	—	$	73
Ending balance:  collectively evaluated for impairment	$	537	$	770	$	436	$	218	$	88	$	2,049
Loans:
Ending balance:  individually evaluated for impairment	$	83	$	619	$	—	$	306	$	—	$	1,008
Ending balance:  collectively evaluated for impairment	$	81,244	$	198,317	$	75,853	$	12,167	$	—	$	367,581

The following tables show the portfolio quality indicators.

	June 30, 2018
Loan Class	Commercial		Commercial ‎Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	84,701	$	203,010	$	76,476	$	11,371	$	375,558
Special Mention		—		2,943		—		—		2,943
Substandard		71		842		—		99		1,012
Doubtful		—		—		—		—		—
	$	84,772	$	206,795	$	76,476	$	11,470	$	379,513

	December 31, 2017
Loan Class	Commercial		Commercial ‎Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	78,652	$	195,063	$	75,853	$	12,167	$	361,735
Special Mention		20		3,066		—		—		3,086
Substandard		2,655		807		—		306		3,768
Doubtful		—		—		—		—		—
	$	81,327	$	198,936	$	75,853	$	12,473	$	368,589

To facilitate the monitoring of credit quality within the loan portfolio, and for purposes of analyzing historical loss rates used in the determination of the ALLL, the Company utilizes the following categories of credit grades: pass, special mention, substandard, and doubtful. The four categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass ratings, which are assigned to those borrowers that do not have identified potential or well defined weaknesses and for which there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on at least a quarterly basis.

The Company assigns a special mention rating to loans that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or the Company’s credit position.

The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans have well defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies noted are not addressed and corrected.

The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the current and past year to date periods presented.

Loan Portfolio Aging Analysis

As of June 30, 2018

	30-59 Days ‎Past Due ‎and ‎Accruing		60-89 Days ‎Past Due ‎and ‎Accruing		Greater ‎Than 90 ‎Days and ‎Accruing		Non ‎Accrual		Total Past ‎Due and ‎Non Accrual		Current		Total Loans ‎Receivable
	(In thousands)
Commercial	$	35	$	—	$	57	$	—	$	92	$	84,680	$	84,772
Commercial real estate		997		—		—		486		1,483		205,312		206,795
Residential		611		18		—		659		1,288		75,188		76,476
Installment		13		—		—		59		72		11,398		11,470
Total	$	1,656	$	18	$	57	$	1,204	$	2,935	$	376,578	$	379,513

Loan Portfolio Aging Analysis

As of December 31, 2017

	30-59 Days ‎Past Due ‎and ‎Accruing		60-89 Days ‎Past Due ‎and ‎Accruing		Greater ‎Than 90 ‎Days and ‎Accruing		Non ‎Accrual		Total Past ‎Due and ‎Non Accrual		Current		Total Loans ‎Receivable
	(In thousands)
Commercial	$	56	$	—	$	—	$	83	$	139	$	81,188	$	81,327
Commercial real estate		262		—		—		500		762		198,174		198,936
Residential		559		306		—		760		1,625		74,228		75,853
Installment		61		40		—		52		153		12,320		12,473
Total	$	938	$	346	$	—	$	1,395	$	2,679	$	365,910	$	368,589

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

Impaired Loans

	As of June 30, 2018						For the three months ended ‎June 30, 2018				For the six months ended ‎June 30, 2018
	Recorded ‎Balance		Unpaid ‎Principal ‎Balance		Specific ‎Allowance		Average ‎Investment in ‎Impaired Loans		Interest ‎Income Recognized		Average ‎Investment in ‎Impaired Loans		Interest ‎Income ‎Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	58	$	58	$	—	$	59	$	2	$	60	$	2
Commercial real estate		168		168		—		583		1		582		5
Residential		—		—		—		—		—		—		—
Installment		98		98		—		99		1		100		2
		324		324		—		741		4		742		9
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		—
Commercial real estate		409		409		75		421		1		422		1
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		409		409		75		421		1		422		1
Total:
Commercial	$	58	$	58	$	—	$	59	$	2	$	60	$	2
Commercial real estate	$	577	$	577	$	75	$	1,004	$	2	$	1,004	$	6
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	98	$	98	$	—	$	99	$	1	$	100	$	2

Impaired Loans

	As of December 31, 2017						For the three months ended ‎June 30, 2017				For the six months ended ‎June 30, 2017
	Recorded ‎Balance		Unpaid ‎Principal ‎Balance		Specific ‎Allowance		Average ‎Investment in ‎Impaired Loans		Interest ‎Income Recognized		Average ‎Investment in ‎Impaired Loans		Interest ‎Income ‎Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	83	$	83	$	—	$	131	$	1	$	128	$	2
Commercial real estate		209		317		—		808		3		825		5
Residential		—		—		—		—		—		—		—
Installment		306		306		—		463		3		477		3
		598		706		—		1,402		7		1,430		10
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		3
Commercial real estate		410		410		73		489		6		498		12
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		410		410		73		489		6		498		15
Total:
Commercial	$	83	$	83	$	73	$	131	$	1	$	128	$	5
Commercial real estate	$	619	$	727	$	—	$	1,297	$	9	$	1,323	$	17
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	306	$	306	$	—	$	463	$	3	$	477	$	3

Interest income recognized on a cash basis was not materiality different than interest income recognized.

For the TDRs noted in the tables below, the Company extended the maturity dates and granted interest rate concessions as part of each of those loan restructurings. The loans included in the tables are considered impaired and specific loss calculations are performed on the individual loans. In conjunction with the restructuring there were no amounts charged-off.

	Three Months ended June 30, 2018
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		—		—		—
Residential		—		—		—
Installment		—		—		—

	Three Months Ended June 30, 2018
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Consumer		—		—		—		—

	Six Months ended June 30, 2018
	Number of ‎Contracts		Pre- Modification ‎Outstanding  ‎Recorded ‎Investment		Post-Modification ‎Outstanding  ‎Recorded  ‎Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		—		—		—
Residential		—		—		—
Installment		—		—		—

	Six Months Ended June 30, 2018
	Interest ‎Only		Term		Combination		Total ‎Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Consumer		—		—		—		—

	Three Months ended June 30, 2017
	Number of ‎Contracts		Pre- Modification ‎Outstanding ‎Recorded ‎Investment		Post-Modification ‎Outstanding ‎Recorded ‎Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		127		103
Residential		—		—		—
Installment		—		—		—

	Three Months Ended June 30, 2017
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		103		—		103
Residential		—		—		—		—
Consumer		—		—		—		—

	Six Months ended June 30, 2017
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		127		103
Residential		—		—		—
Installment		—		—		—

	Six Months Ended June 30, 2017
	Interest ‎Only		Term		Combination		Total ‎Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		103		—		103
Residential		—		—		—		—
Consumer		—		—		—		—

During the six months ended June 30, 2018 troubled debt restructurings did not have an impact on the allowance for loan losses. During the six months ended June 30, 2017 troubled debt restructurings described above increased the allowance for loan losses by 24,000. At June 30, 2018 and 2017 and for three and six month periods then ended, there were no material defaults of any troubled debt restructurings that were modified in the last 12 months. The Company generally considers TDR’s that become 90 days or more past due under the modified terms as subsequently defaulted.

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Benefit Plans

6 Months Ended

Jun. 30, 2018

Benefit Plans [Abstract]

Benefit Plans

Note 4: Benefit Plans

Pension expense includes the following:

	Three months ended ‎June 30,						Six months ended ‎June 30,
	2018			2017			2018			2017
	(In thousands)
Service cost	$	76		$	68		$	152		$	136
Interest cost		55			50			110			100
Expected return on assets		(111	)		(90	)		(222	)		(180	)
Amortization of prior service cost and net loss		(10	)		(6	)		(20	)		(12	)
Pension expense	$	10		$	22		$	20		$	44

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Off-balance-sheet Activities

6 Months Ended

Jun. 30, 2018

Off Balance Sheet Activities [Abstract]

Off-balance-sheet Activities

Note 5: Off-balance-sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contracts are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:

	June 30,		December 31,
	2018		2017
	(In thousands)
Commercial loans unused lines of credit	$	27,089	$	25,814
Commitment to originate loans		15,909		15,350
Consumer open end lines of credit		37,971		36,938
Standby lines of credit		46		—

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Note 6: Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows:

	June 30, ‎2018			December 31, ‎2017
	(In thousands)
Net unrealized loss on securities available-for-sale	$	(405	)	$	(290	)
Net unrealized loss for unfunded status of defined benefit plan liability		(242	)		(289	)
		(647	)		(579	)
Tax effect		136			159
Net-of-tax amount	$	(511	)	$	(420	)

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 7: Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company also utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2018 and December 31, 2017:

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
June 30, 2018
U.S. government agencies	$	44,581	$	—	$	44,581	$	—
State and political subdivisions		41,631		—		41,631		—
December 31, 2017
U.S. government agencies	$	44,959	$	—	$	44,959	$	—

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent) 

Collateral dependent impaired loans consisted primarily of loans secured by nonresidential real estate. Management has determined fair value measurements on impaired loans primarily through evaluations of appraisals performed. Due to the nature of the valuation inputs, impaired loans are classified within Level 3 of the hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Company’s Chief Lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the Company’s Chief Lender by comparison to historical results.

Foreclosed Assets Held for Sale 

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value (based on current appraised value) at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Management has determined fair value measurements on other real estate owned primarily through evaluations of appraisals performed, and current and past offers. Due to the nature of the valuation inputs, foreclosed assets held for sale are classified within Level 3 of the hierarchy.

Appraisals of foreclosed assets held for sale are obtained when the real estate is acquired and subsequently as deemed necessary by the Company’s Chief lender. Appraisals are reviewed for accuracy and consistency by the Company’s Chief Lender and are selected from the list of approved appraisers maintained by management.

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2018 and December 31, 2017.

			Fair Value Measurements Using
	Fair ‎Value		Quoted Prices ‎in Active ‎Markets for ‎Identical ‎Assets (Level 1)		Significant ‎Other ‎Observable ‎Inputs (Level 2)		Significant ‎Unobservable ‎Inputs (Level 3)
	(In thousands)
June 30, 2018
Collateral dependent impaired loans	$	334	$	—	$	—	$	334
Foreclosed assets held for sale		250		—		—		250
December 31, 2017
Collateral dependent impaired loans	$	336	$	—	$	—	$	336
Foreclosed assets held for sale		34		—		—		34

Unobservable (Level 3) Inputs 

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

	Fair Value at 6/30/18		Valuation Technique		Unobservable Inputs		Range
	(In thousands)
Collateral-dependent impaired loans	$	334		Market comparable properties		Marketability discount		10% - 25%
Foreclosed assets held for sale	$	250		Market comparable properties		Selling costs		10% – 35%

	Fair Value at ‎12/31/17		Valuation ‎Technique		Unobservable Inputs		Range
	(In thousands)
Collateral-dependent impaired loans	$	336		Market comparable properties		Marketability discount		10% - 25%
Foreclosed assets held for sale	$	34		Market comparable properties		Selling costs		10% – 35%

There were no significant changes in the valuation techniques used during 2018 and 2017. 

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

			Fair Value Measurements Using
	Carrying ‎Amount		Quoted Prices ‎in Active ‎Markets for ‎Identical ‎Assets (Level 1)		Significant ‎Other ‎Observable ‎Inputs (Level 2)		Significant ‎Unobservable ‎Inputs (Level 3)
	(In thousands)
June 30, 2018
Financial assets
Cash and cash equivalents	$	16,308	$	16,308	$	—	$	—
Loans, net of allowance		377,433		—		—		373,437
Federal Home Loan Bank stock		4,164		—		4,164		—
Accrued interest receivable		1,275		—		1,275		—
Financial liabilities
Deposits		415,634		—		354,553		—
Short term borrowings		12,346		—		12,346		—
Federal Home Loan Bank Advances		33,768		—		33,762		—
Subordinated debentures		4,124		—		3,733		—
Interest payable		122				122		—

			Fair Value Measurements Using
	Carrying ‎Amount		Quoted Prices ‎in Active ‎Markets for ‎Identical ‎Assets (Level 1)		Significant ‎Other ‎Observable ‎Inputs (Level 2)		Significant ‎Unobservable ‎Inputs (Level 3)
	(In thousands)
December 31, 2017
Financial assets
Cash and cash equivalents	$	14,315	$	14,315	$	—	$	—
Loans, net of allowance		366,467		—		—		368,033
Federal Home Loan Bank stock		4,164		—		4,164		—
Accrued interest receivable		993		—		993		—
Financial liabilities
Deposits		385,966		—		358,722		—
Short term borrowings		11,085		—		11,085		—
Federal Home Loan Bank Advances		10,022		—		10,012		—
Subordinated debentures		4,124		—		3,590		—
Interest payable		70		—		70		—

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

Cash and Cash Equivalents, Accrued Interest Receivable and Federal Home Loan Bank Stock

The carrying amounts approximate fair value.

Loans

For June 30, 2018, fair values of loans and leases are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. This is not comparable with the fair values disclosed for December 31, 2017, which were based on an entrance price basis. For that date, fair values of variable rate loans and leases that reprice frequently and with no significant change in credit risk were based on carrying values. The fair values of other loans and leases as of that date were estimated using discounted cash flow analyses which used interest rates then being offered for loans and leases with similar terms to borrowers of similar credit quality.

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Interest Payable

The carrying amount approximates fair value.

Short-term Borrowings, Federal Home Loan Bank Advances and Subordinated Debentures

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Commitments to Originate Loans, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. Fair values of commitments were not material at June 30, 2018 and December 31, 2017.

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Repurchase Agreements

6 Months Ended

Jun. 30, 2018

Disclosure of Repurchase Agreements [Abstract]

Disclosure of Repurchase Agreements

Note 8: Repurchase Agreements

Securities sold under agreements to repurchase (“repurchase agreements”) with customers represent funds deposited by customers, generally on an overnight basis that are collateralized by investment securities owned by the Company.

At June 30, 2018 and December 31, 2017, repurchase agreement borrowings totaled $12,346,000 and $11,085,000, respectively and are included in short-term borrowings on the consolidated condensed balance sheets. All repurchase agreements are subject to term and conditions of repurchase/security agreements between the Company and the customer and are accounted for as secured borrowings. The Company’s repurchase agreements reflected in short-term borrowings, consist of customer accounts and securities which are pledged on an individual security basis.

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

Remaining Contractual Maturity of the Agreement

(In thousands)

June 30, 2018	Overnight and ‎Continuous		Up to 30 Days		30-90 Days		Greater than 90 ‎Days		Total
Repurchase Agreements
U.S. government agencies	$	12,346	$	—	$	—	$	—	$	12,346
Total	$	12,346	$	—	$	—	$	—	$	12,346

December 31, 2017	Overnight and ‎Continuous		Up to 30 Days		30-90 Days		Greater than 90 ‎Days		Total
Repurchase Agreements
U.S. government agencies	$	11,085	$	—	$	—	$	—	$	11,085
Total	$	11,085	$	—	$	—	$	—	$	11,085

These borrowings were collateralized with U.S. government and agency securities with a carrying value of $18.2 million at June 30, 2018 and $18.4 million at December 31, 2017. Declines in the fair value would require the Company to pledge additional securities.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of United Bancorp, Inc. (“United” or “the Company”) and its wholly-owned subsidiary, Unified Bank of Martins Ferry, Ohio (“the Bank”). All intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations

Nature of Operations

The Company’s revenues, operating income and assets are almost exclusively derived from banking. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Customers are mainly located in Athens, Belmont, Carroll, Fairfield, Harrison, Jefferson and Tuscarawas Counties and the surrounding localities in northeastern, east-central and southeastern Ohio and include a wide range of individuals, businesses and other organizations. Unified Bank conducts its business through its main office in Martins Ferry, Ohio and branches in Amesville, Bridgeport, Colerain, Dellroy, Dillonvale, Dover, Glouster, Jewett, Lancaster Downtown, Lancaster East, Nelsonville, New Philadelphia, St. Clairsville East, St. Clairsville West, Sherrodsville, Strasburg and Tiltonsville, Ohio. The Bank also operates a Loan Production Office in Wheeling, West Virginia.

The Company’s primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate and are not considered “sub prime” type loans. The targeted lending areas of our Bank operations encompass four separate metropolitan areas, minimizing the risk to changes in economic conditions in the communities housing the Company’s branch locations.

Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Company can be significantly influenced by a number of environmental factors, such as governmental monetary and fiscal policies, that are outside of management’s control.

Revenue Recognition

Revenue Recognition

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. 

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, investment securities, as well as revenue related to our mortgage banking activities, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of non-interest income are as follows:

Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

Use of Estimates

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided and future results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

Loans

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except residential and consumer loans, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off residential and consumer loans when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 120 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical charge-off experience by segment. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior three years. Management believes the three year historical loss experience methodology is appropriate in the current economic environment. Other adjustments (qualitative/environmental considerations) for each segment may be added to the allowance for each loan segment after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due based on the loan’s current payment status and the borrower’s financial condition including available sources of cash flows. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for non-homogenous type loans such as commercial, non-owner residential and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes the discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense.

The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral. In general, the Company acquires an updated appraisal upon identification of impairment and annually thereafter for commercial, commercial real estate and multi-family loans. If the most recent appraisal is over a year old, and a new appraisal is not performed, due to lack of comparable values or other reasons, the existing appraisal is utilized and discounted generally 10% - 35% based on the age of the appraisal, condition of the subject property, and overall economic conditions. After determining the collateral value as described, the fair value is calculated based on the determined collateral value less selling expenses. The potential for outdated appraisal values is considered in our determination of the allowance for loan losses through our analysis of various trends and conditions including the local economy, trends in charge-offs and delinquencies, etc. and the related qualitative adjustments assigned by the Company.

Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segment’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this scenario, the Company attempts to work-out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.

It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until six months of satisfactory borrower performance at which time management would consider its return to accrual status. If a loan was accruing at the time of restructuring, the Company reviews the loan to determine if it is appropriate to continue the accrual of interest on the restructured loan.

With regard to determination of the amount of the allowance for credit losses, trouble debt restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

Earnings Per Share

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during each period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method.

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended ‎June 30,						Six months ended ‎June 30,
	2018			2017			2018			2017
	(In thousands, except share and per share data)
Basic
Net income	$	1,212		$	916		$	2,360		$	1,766
Dividends on non-vested restricted stock		(27	)		(9	)		(53	)		(17	)
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding		4,990,904			4,847,884			4,986,290			4,839,725
Basic earnings per common share	$	0.24		$	0.18		$	0.46		$	0.35
Diluted
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding for basic earnings per common share		4,990,904			4,847,884			4,986,290			4,839,725
Add:  Dilutive effects of assumed exercise of stock options and restricted stock		226,030			119,102			224,998			119,102
Average shares and dilutive potential common shares		5,216,934			4,966,986			5,211,288			4,958,827
Diluted earnings per common share	$	0.22		$	0.18		$	0.44		$	0.35

Income Taxes

Income Taxes

The Company is subject to income taxes in the U.S. federal jurisdiction, as well as various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before 2014.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU No. 2018-02 was issued in February 2018 to provide guidance to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve usefulness of information reported to financial statement users. The amendments in this ASU will also require certain disclosures about stranded tax effects and is effective for fiscal years beginning after December 31, 2018. The Company early adopted ASU 2018-02 effective January 1, 2018 and reclassified approximately $48,000 in stranded tax effects in the adoption using the portfolio method.

ASU No. 2017-09 was issued in May 2017 and provides guidance about which changes to the terms or condition of a share-based payment award require and entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted ASU 2017-09 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

ASU No. 2017-07 was issued in March 2017 and applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in this update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, as defined, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The amendments in ASU No. 2017-07 are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this update are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. The Company has adopted ASU 2017-07 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 provides cash flow statement classification guidance for certain transactions including how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has adopted ASU 2016-15 on January 1, 2018 and it did not have a significant impact on its accounting and disclosures.

ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ASU No. 2016-01 was issued in January 2016 and applies to all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is intended to improve the recognition and measurement of financial instruments by requiring equity investments to be measured at fair value with changes in fair value recognized in net income; requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured and amortized at cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instruments specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 is effective for annual periods and interim periods within those periods, beginning after December 15, 2017. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity instruments that exist as of the date of adoption. The amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. The Company has adopted ASU 2016-01 on January 1, 2018 and it did not have a material effect on its fair value disclosures and other disclosure requirements. For additional information on fair value of assets and liabilities, see Note 16.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09). This update to the ASC is the culmination of efforts by the FASB and the International Accounting Standards Board (IASB) to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 supersedes Topic 605 – Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. Originally, the amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early application is not allowed. In July 2015, the FASB extended the implementation date to annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Transitional guidance is included in the update. Earlier adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim periods within that reporting period. The Company’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASU 2014-09, and non interest income. The Company has adopted ASU 2014-09 on January 1, 2018 and it did not identify any changes in the timing of revenue recognition when considering the amended accounting guidance. The Company included additional disclosures beginning in the first quarter of 2018 as required by the guidance.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. 

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense. 

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. 

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of these amendments to the Company’s financial position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the amendments. The Allowance for Loan Losses (ALL) estimate is material to the Company and given the change from an incurred loss model to a methodology that considers the credit loss over the life of the loan, there is the potential for an increase in the ALL at adoption date. The Company is anticipating a significant change in the processes and procedures to calculate the ALL, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the current accounting policy and procedures for the other-than-temporary impairment on available-for-sale securities will be replaced with an allowance approach. The Company continues to work with an outside vendor on data collection and reviewing segmentation to ensure it is fully compliant with the amendments at adoption date. For additional information on the allowance for loan losses, see Note 4.

 On February 25, 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” ASU 2016-02 is intended to improve financial reporting about leasing transactions. This ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment.

Under the current accounting model, an organization applies a classification test to determine the accounting for the lease arrangement:

(a) Some leases are classified as capital whereby the lessee would recognize lease assets and liabilities on the balance sheet.

(b) Other leases are classified as operating leases whereby the lessee would not recognize lease assets and liabilities on the balance sheet.

Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Thus, for a calendar year company, it would be effective January 1, 2019. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements.

Future Acquisition

The Company and Powhatan Community Bancshares, Inc. (“Powhatan”), the holding company for First National Bank of Powhatan Point ("First National"), announced on June 14, 2018 they have signed a definitive agreement whereby the Company will acquire Powhatan in a stock and cash transaction.  Upon completion, First National will be merged into the Company’s subsidiary bank, Unified Bank. At that time, the main office of First National will become a full-service branch of Unified Bank. Powhatan operates one full-service office in Belmont County, Ohio and has approximately $62.8 million in assets, $6.7 million in loans, $57.6 million of deposits and $5.1 million in consolidated equity as of June 30, 2018.

The acquisition is expected to close in the fourth quarter of 2018 and is subject to Powhatan shareholder approval, regulatory approval, and other conditions set forth in the merger agreement.  Subject to the terms of the merger agreement, which has been unanimously approved by the Board of Directors of each company, Powhatan shareholders will receive 6.9233 shares of the Company’s common stock plus $38.75 in cash for each outstanding share of Powhatan common stock, subject to adjustment based on closing equity and other factors.  Based on our closing share price prior to the announcement of $13.05 on June 13, 2018, the transaction is valued at $129.10 for each Powhatan share or approximately $6.836 million in aggregate. 

 The acquisition will be accounted for in accordance with applicable accounting guidance. Accordingly, the assets and liabilities of Powhatan will be recorded at their estimated fair values at the acquisition date. The excess of the estimated fair value of the Company’s common shares issued and cash paid over the net fair values of the assets acquired, including identifiable intangible assets and liabilities assumed, will be recorded as goodwill. The results of operations will be included in the consolidated income statement from the date of the acquisition. Goodwill will be subject to an annual test for impairment and the amount impaired, if any, will be charged to expense at the time of impairment. The estimated fair values of the assets and liabilities have not yet been determined. During the six months ended June 30, 2018, the Company incurred $123,000 of merger related expenses.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

Treasury stock shares, deferred compensation shares and unearned ESOP shares are not deemed outstanding for earnings per share calculations.

	Three months ended ‎June 30,						Six months ended ‎June 30,
	2018			2017			2018			2017
	(In thousands, except share and per share data)
Basic
Net income	$	1,212		$	916		$	2,360		$	1,766
Dividends on non-vested restricted stock		(27	)		(9	)		(53	)		(17	)
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding		4,990,904			4,847,884			4,986,290			4,839,725
Basic earnings per common share	$	0.24		$	0.18		$	0.46		$	0.35
Diluted
Net income allocated to stockholders	$	1,185		$	907		$	2,307		$	1,749
Weighted average common shares outstanding for basic earnings per common share		4,990,904			4,847,884			4,986,290			4,839,725
Add:  Dilutive effects of assumed exercise of stock options and restricted stock		226,030			119,102			224,998			119,102
Average shares and dilutive potential common shares		5,216,934			4,966,986			5,211,288			4,958,827
Diluted earnings per common share	$	0.22		$	0.18		$	0.44		$	0.35

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Securities (Tables)

6 Months Ended

Jun. 30, 2018

Securities [Abstract]

Amortized Cost and Approximate Fair Values, Together with Gross Unrealized Gains and Losses of Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses of securities are as follows:

	Amortized Cost		Gross ‎Unrealized ‎Gains		Gross ‎Unrealized ‎Losses			Fair Value
	(In thousands)
Available-for-sale Securities:
June 30, 2018:
U.S. government agencies	$	45,250	$	—	$	(669	)	$	44,581
State and political subdivisions		41,366		271		(6	)		41,631
	$	86,616	$	271	$	(675	)	$	86,212
Available-for-sale Securities:
December 31, 2017:
U.S. government agencies	$	45,249	$	—		(290	)	$	44,959
	$	45,249	$	3	$	(290	)	$	44,959

Amortized Cost and Fair Value of Available-for-Sale Securities and Held-to-Maturity Securities, by Contractual Maturity

The amortized cost and fair value of available-for-sale securities at June 30, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	—	$	—
One to five years		45,250		44,580
Five to ten year		—		—
Due after ten years		41,366		41,632
Totals	$	86,616	$	86,212

Investments' Gross Unrealized Losses and Fair Value, Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2018 and December 31, 2017:

June 30, 2018
	Less than 12 Months					12 Months or More					Total
Description of ‎Securities	Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses
(In thousands)
U.S. Government agencies	$	12,094	$	(156	)	$	32,487	$	(513	)	$	44,581	$	(669	)
State and Political Subdivisions		3,081		(6	)		—		—			3,081		(6	)
Total	$	15,175	$	(162	)	$	32,487	$	(513	)	$	47,662	$	(675	)

December 31, 2017
	Less than 12 Months					12 Months or More					Total
Description of ‎Securities	Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses			Fair Value		Unrealized ‎Losses
(In thousands)
U.S. Government agencies	$	12,190	$	(59	)	$	32,769	$	(231	)	$	44,959	$	(290	)

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2018

Loans and Allowance For Loan Losses [Abstract]

Categories of Loans

Categories of loans include:

	June 30,			December 31,
	2018			2017
	(In thousands)
Commercial loans	$	84,772		$	81,327
Commercial real estate		206,795			198,936
Residential real estate		76,476			75,853
Installment loans		11,470			12,473
Total gross loans		379,513			368,589
Less allowance for loan losses		(2,080	)		(2,122	)
Total loans	$	377,433		$	366,467

Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and six month periods ended June 30, 2018

	Commercial		Commercial ‎Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, April 1, 2018	$	522	$	671		$	446		$	400		$	86		$	2,125
Provision charged to expense		22		(17	)		137			16			(86	)		72
Losses charged off		—		—			(79	)		(55	)		—			(134	)
Recoveries		1		—			1			15			—			17
Balance, June 30, 2018	$	545	$	654		$	505		$	376		$	—		$	2,080
Balance, January 1, 2018	$	537	$	843		$	436		$	218		$	88		$	2,122
Provision charged to expense		6		(190	)		146			255			(88	)		129
Losses charged off		—		—			(79	)		(124	)		—			(203	)
Recoveries		2		1			2			27			—			32
Balance, June 30, 2018	$	545	$	654		$	505		$	376		$	—		$	2,080
Allocation:
Ending balance:  individually evaluated for impairment	$	—	$	75		$	—		$	—		$	—		$	75
Ending balance:  collectively evaluated for impairment	$	545	$	579		$	505		$	376		$	—		$	2,005
Loans:
Ending balance:  individually evaluated for impairment	$	58	$	577		$	—		$	98		$	—		$	733
Ending balance:  collectively evaluated for impairment	$	84,714	$	206,218		$	76,476		$	11,372		$	—		$	378,780

Allowance for Loan Losses and Recorded Investment in Loans

As of and for the three and six month periods ended June 30, 2017

	Commercial		Commercial ‎Real Estate			Residential			Installment			Unallocated			Total
(In thousands)
Allowance for loan losses:
Balance, April 1, 2017	$	498	$	793		$	583		$	162		$	297		$	2,333
Provision charged to expense		33		56			(137	)		193			(120	)		25
Losses charged off		—		(5	)		—			(77	)		—			(82	)
Recoveries		1		1			1			13			—			16
Balance, June 30, 2017	$	532	$	845		$	447		$	291		$	177		$	2,292
Balance, January 1, 2017	$	495	$	804		$	591		$	107		$	344		$	2,341
Provision charged to expense		36		44			(150	)		287			(167	)		50
Losses charged off		—		(5	)		—			(127	)		—			(132	)
Recoveries		1		2			6			24			—			33
Balance, June 30, 2017	$	532	$	845		$	447		$	291		$	177		$	2,292
Loans:
Ending balance:  individually evaluated for impairment	$	129	$	841		$	—		$	462		$	—		$	1,432
Ending balance: collectively evaluated for impairment	$	51,732	$	216,508		$	75,158		$	12,739		$	—		$	356,137

Allowance for Loan Losses and Recorded Investment in Loans

As of December 31, 2017

	Commercial		Commercial ‎Real Estate		Residential		Installment		Unallocated		Total
(In thousands)
Allowance for loan losses:
Ending balance:  individually evaluated for impairment	$	—	$	73	$	—	$	—	$	—	$	73
Ending balance:  collectively evaluated for impairment	$	537	$	770	$	436	$	218	$	88	$	2,049
Loans:
Ending balance:  individually evaluated for impairment	$	83	$	619	$	—	$	306	$	—	$	1,008
Ending balance:  collectively evaluated for impairment	$	81,244	$	198,317	$	75,853	$	12,167	$	—	$	367,581

Portfolio Quality Indicators

The following tables show the portfolio quality indicators.

	June 30, 2018
Loan Class	Commercial		Commercial ‎Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	84,701	$	203,010	$	76,476	$	11,371	$	375,558
Special Mention		—		2,943		—		—		2,943
Substandard		71		842		—		99		1,012
Doubtful		—		—		—		—		—
	$	84,772	$	206,795	$	76,476	$	11,470	$	379,513

	December 31, 2017
Loan Class	Commercial		Commercial ‎Real Estate		Residential		Installment		Total
	(In thousands)
Pass Grade	$	78,652	$	195,063	$	75,853	$	12,167	$	361,735
Special Mention		20		3,066		—		—		3,086
Substandard		2,655		807		—		306		3,768
Doubtful		—		—		—		—		—
	$	81,327	$	198,936	$	75,853	$	12,473	$	368,589

Loan Portfolio Aging Analysis

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the current and past year to date periods presented.

Loan Portfolio Aging Analysis

As of June 30, 2018

	30-59 Days ‎Past Due ‎and ‎Accruing		60-89 Days ‎Past Due ‎and ‎Accruing		Greater ‎Than 90 ‎Days and ‎Accruing		Non ‎Accrual		Total Past ‎Due and ‎Non Accrual		Current		Total Loans ‎Receivable
	(In thousands)
Commercial	$	35	$	—	$	57	$	—	$	92	$	84,680	$	84,772
Commercial real estate		997		—		—		486		1,483		205,312		206,795
Residential		611		18		—		659		1,288		75,188		76,476
Installment		13		—		—		59		72		11,398		11,470
Total	$	1,656	$	18	$	57	$	1,204	$	2,935	$	376,578	$	379,513

Loan Portfolio Aging Analysis

As of December 31, 2017

	30-59 Days ‎Past Due ‎and ‎Accruing		60-89 Days ‎Past Due ‎and ‎Accruing		Greater ‎Than 90 ‎Days and ‎Accruing		Non ‎Accrual		Total Past ‎Due and ‎Non Accrual		Current		Total Loans ‎Receivable
	(In thousands)
Commercial	$	56	$	—	$	—	$	83	$	139	$	81,188	$	81,327
Commercial real estate		262		—		—		500		762		198,174		198,936
Residential		559		306		—		760		1,625		74,228		75,853
Installment		61		40		—		52		153		12,320		12,473
Total	$	938	$	346	$	—	$	1,395	$	2,679	$	365,910	$	368,589

Impaired Loans

Impaired Loans

	As of June 30, 2018						For the three months ended ‎June 30, 2018				For the six months ended ‎June 30, 2018
	Recorded ‎Balance		Unpaid ‎Principal ‎Balance		Specific ‎Allowance		Average ‎Investment in ‎Impaired Loans		Interest ‎Income Recognized		Average ‎Investment in ‎Impaired Loans		Interest ‎Income ‎Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	58	$	58	$	—	$	59	$	2	$	60	$	2
Commercial real estate		168		168		—		583		1		582		5
Residential		—		—		—		—		—		—		—
Installment		98		98		—		99		1		100		2
		324		324		—		741		4		742		9
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		—
Commercial real estate		409		409		75		421		1		422		1
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		409		409		75		421		1		422		1
Total:
Commercial	$	58	$	58	$	—	$	59	$	2	$	60	$	2
Commercial real estate	$	577	$	577	$	75	$	1,004	$	2	$	1,004	$	6
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	98	$	98	$	—	$	99	$	1	$	100	$	2

Impaired Loans

	As of December 31, 2017						For the three months ended ‎June 30, 2017				For the six months ended ‎June 30, 2017
	Recorded ‎Balance		Unpaid ‎Principal ‎Balance		Specific ‎Allowance		Average ‎Investment in ‎Impaired Loans		Interest ‎Income Recognized		Average ‎Investment in ‎Impaired Loans		Interest ‎Income ‎Recognized
	(In thousands)
Loans without a specific valuation allowance:
Commercial	$	83	$	83	$	—	$	131	$	1	$	128	$	2
Commercial real estate		209		317		—		808		3		825		5
Residential		—		—		—		—		—		—		—
Installment		306		306		—		463		3		477		3
		598		706		—		1,402		7		1,430		10
Loans with a specific valuation allowance:
Commercial		—		—		—		—		—		—		3
Commercial real estate		410		410		73		489		6		498		12
Residential		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
		410		410		73		489		6		498		15
Total:
Commercial	$	83	$	83	$	73	$	131	$	1	$	128	$	5
Commercial real estate	$	619	$	727	$	—	$	1,297	$	9	$	1,323	$	17
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Installment	$	306	$	306	$	—	$	463	$	3	$	477	$	3

Troubled Debt Restructurings on Financing Receivables

	Three Months ended June 30, 2018
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		—		—		—
Residential		—		—		—
Installment		—		—		—

	Three Months Ended June 30, 2018
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Consumer		—		—		—		—

	Six Months ended June 30, 2018
	Number of ‎Contracts		Pre- Modification ‎Outstanding  ‎Recorded ‎Investment		Post-Modification ‎Outstanding  ‎Recorded  ‎Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		—		—		—
Residential		—		—		—
Installment		—		—		—

	Six Months Ended June 30, 2018
	Interest ‎Only		Term		Combination		Total ‎Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Consumer		—		—		—		—

	Three Months ended June 30, 2017
	Number of ‎Contracts		Pre- Modification ‎Outstanding ‎Recorded ‎Investment		Post-Modification ‎Outstanding ‎Recorded ‎Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		127		103
Residential		—		—		—
Installment		—		—		—

	Three Months Ended June 30, 2017
	Interest Only		Term		Combination		Total Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		103		—		103
Residential		—		—		—		—
Consumer		—		—		—		—

	Six Months ended June 30, 2017
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(In thousands)
Commercial		—	$	—	$	—
Commercial real estate		2		127		103
Residential		—		—		—
Installment		—		—		—

	Six Months Ended June 30, 2017
	Interest ‎Only		Term		Combination		Total ‎Modification
			(In thousands)
Commercial	$	—	$	—	$	—	$	—
Commercial real estate		—		103		—		103
Residential		—		—		—		—
Consumer		—		—		—		—

XML

Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2018

Benefit Plans [Abstract]

Pension Expense

Pension expense includes the following:

	Three months ended ‎June 30,						Six months ended ‎June 30,
	2018			2017			2018			2017
	(In thousands)
Service cost	$	76		$	68		$	152		$	136
Interest cost		55			50			110			100
Expected return on assets		(111	)		(90	)		(222	)		(180	)
Amortization of prior service cost and net loss		(10	)		(6	)		(20	)		(12	)
Pension expense	$	10		$	22		$	20		$	44

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Off-balance-sheet Activities (Tables)

6 Months Ended

Jun. 30, 2018

Off Balance Sheet Activities [Abstract]

Summary of the Notional or Contractual Amounts of Financial Instruments With Off-Balance-Sheet Risk

A summary of the notional or contractual amounts of financial instruments with off-balance-sheet risk at the indicated dates is as follows:

	June 30,		December 31,
	2018		2017
	(In thousands)
Commercial loans unused lines of credit	$	27,089	$	25,814
Commitment to originate loans		15,909		15,350
Consumer open end lines of credit		37,971		36,938
Standby lines of credit		46		—

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Components of Accumulated Other Comprehensive Loss included in Stockholders Equity

The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows:

	June 30, ‎2018			December 31, ‎2017
	(In thousands)
Net unrealized loss on securities available-for-sale	$	(405	)	$	(290	)
Net unrealized loss for unfunded status of defined benefit plan liability		(242	)		(289	)
		(647	)		(579	)
Tax effect		136			159
Net-of-tax amount	$	(511	)	$	(420	)

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Recurring Basis

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2018 and December 31, 2017:

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
June 30, 2018
U.S. government agencies	$	44,581	$	—	$	44,581	$	—
State and political subdivisions		41,631		—		41,631		—
December 31, 2017
U.S. government agencies	$	44,959	$	—	$	44,959	$	—

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Nonrecurring Basis

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2018 and December 31, 2017.

			Fair Value Measurements Using
	Fair ‎Value		Quoted Prices ‎in Active ‎Markets for ‎Identical ‎Assets (Level 1)		Significant ‎Other ‎Observable ‎Inputs (Level 2)		Significant ‎Unobservable ‎Inputs (Level 3)
	(In thousands)
June 30, 2018
Collateral dependent impaired loans	$	334	$	—	$	—	$	334
Foreclosed assets held for sale		250		—		—		250
December 31, 2017
Collateral dependent impaired loans	$	336	$	—	$	—	$	336
Foreclosed assets held for sale		34		—		—		34

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

	Fair Value at 6/30/18		Valuation Technique		Unobservable Inputs		Range
	(In thousands)
Collateral-dependent impaired loans	$	334		Market comparable properties		Marketability discount		10% - 25%
Foreclosed assets held for sale	$	250		Market comparable properties		Selling costs		10% – 35%

	Fair Value at ‎12/31/17		Valuation ‎Technique		Unobservable Inputs		Range
	(In thousands)
Collateral-dependent impaired loans	$	336		Market comparable properties		Marketability discount		10% - 25%
Foreclosed assets held for sale	$	34		Market comparable properties		Selling costs		10% – 35%

Estimated Fair Values of Company's Financial Instruments

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

			Fair Value Measurements Using
	Carrying ‎Amount		Quoted Prices ‎in Active ‎Markets for ‎Identical ‎Assets (Level 1)		Significant ‎Other ‎Observable ‎Inputs (Level 2)		Significant ‎Unobservable ‎Inputs (Level 3)
	(In thousands)
June 30, 2018
Financial assets
Cash and cash equivalents	$	16,308	$	16,308	$	—	$	—
Loans, net of allowance		377,433		—		—		373,437
Federal Home Loan Bank stock		4,164		—		4,164		—
Accrued interest receivable		1,275		—		1,275		—
Financial liabilities
Deposits		415,634		—		354,553		—
Short term borrowings		12,346		—		12,346		—
Federal Home Loan Bank Advances		33,768		—		33,762		—
Subordinated debentures		4,124		—		3,733		—
Interest payable		122				122		—

			Fair Value Measurements Using
	Carrying ‎Amount		Quoted Prices ‎in Active ‎Markets for ‎Identical ‎Assets (Level 1)		Significant ‎Other ‎Observable ‎Inputs (Level 2)		Significant ‎Unobservable ‎Inputs (Level 3)
	(In thousands)
December 31, 2017
Financial assets
Cash and cash equivalents	$	14,315	$	14,315	$	—	$	—
Loans, net of allowance		366,467		—		—		368,033
Federal Home Loan Bank stock		4,164		—		4,164		—
Accrued interest receivable		993		—		993		—
Financial liabilities
Deposits		385,966		—		358,722		—
Short term borrowings		11,085		—		11,085		—
Federal Home Loan Bank Advances		10,022		—		10,012		—
Subordinated debentures		4,124		—		3,590		—
Interest payable		70		—		70		—

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Repurchase Agreements (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Repurchase Agreements [Abstract]

Schedule of Repurchase Agreements

The following table presents the Company’s repurchase agreements accounted for as secured borrowings:

Remaining Contractual Maturity of the Agreement

(In thousands)

June 30, 2018	Overnight and ‎Continuous		Up to 30 Days		30-90 Days		Greater than 90 ‎Days		Total
Repurchase Agreements
U.S. government agencies	$	12,346	$	—	$	—	$	—	$	12,346
Total	$	12,346	$	—	$	—	$	—	$	12,346

December 31, 2017	Overnight and ‎Continuous		Up to 30 Days		30-90 Days		Greater than 90 ‎Days		Total
Repurchase Agreements
U.S. government agencies	$	11,085	$	—	$	—	$	—	$	11,085
Total	$	11,085	$	—	$	—	$	—	$	11,085

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)		6 Months Ended
	Jun. 20, 2018	Jun. 30, 2018	Jun. 13, 2018
Summary Of Significant Accounting Policies [Line Items]
Accumulated Other Comprehensive Income Loss Reclassification of Stranded Tax Effects		$ 48,000
Stock Issued During Period, Shares, Acquisitions	6.9233
Common Stock Held by Subsidiary			$ 38.75
Stock Issued During Period, Value, Acquisitions	$ 6,836,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets		62,800,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		6,700,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Assets		57,600,000
Consolidated Equity		5,100,000
Powhatan Community Bancshares Inc [Member]
Summary Of Significant Accounting Policies [Line Items]
Business Combination, Acquisition Related Costs		$ 123,000
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Sale of Stock, Price Per Share			$ 129.10
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Sale of Stock, Price Per Share			$ 13.05

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Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Basic
Net income	$ 1,212	$ 916	$ 2,360	$ 1,766
Dividends on non-vested restricted stock	(27)	(9)	(53)	(17)
Net income allocated to stockholders	$ 1,185	$ 907	$ 2,307	$ 1,749
Weighted average common shares outstanding	4,990,904	4,847,884	4,986,290	4,839,725
Basic earnings per common share	$ 0.24	$ 0.18	$ 0.46	$ 0.35
Diluted
Net income allocated to stockholders	$ 1,185	$ 907	$ 2,307	$ 1,749
Weighted average common shares outstanding for basic earnings per common share	4,990,904	4,847,884	4,986,290	4,839,725
Add: Dilutive effects of assumed exercise of stock options and restricted stock	226,030	119,102	224,998	119,102
Average shares and dilutive potential common shares	5,216,934	4,966,986	5,211,288	4,958,827
Diluted earnings per common share	$ 0.22	$ 0.18	$ 0.44	$ 0.35

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Securities - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Schedule Of Marketable Securities [Line Items]
Debt Securities, Available-for-sale, Restricted	$ 42.6	$ 41.5
Fair Value of Investment in debt securities	$ 47.7	$ 44.9
Percentage of fair value of investment in debt	55.20%	100.00%

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Amortized Cost and Approximate Fair Values, Together with Gross Unrealized Gains and Losses of Securities (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Amortized Cost	$ 86,616	$ 45,249
Available-for-sale Securities, Gross Unrealized Gains	271	3
Available-for-sale Securities, Gross Unrealized Losses	(675)	(290)
Available-for-sale securities, Fair Value	86,212	44,959
U.S. government agencies
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Amortized Cost	45,250	45,249
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	(669)	(290)
Available-for-sale securities, Fair Value	44,581	$ 44,959
State and political subdivisions
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Amortized Cost	41,366
Available-for-sale Securities, Gross Unrealized Gains	271
Available-for-sale Securities, Gross Unrealized Losses	(6)
Available-for-sale securities, Fair Value	$ 41,631

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Amortized Cost and Fair Value of Available-for-Sale Securities and Held-to-Maturity Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Available-for-sale, Amortized Cost
Within one year	$ 0
One to five years	45,250
Five to ten year	0
Due after ten years	41,366
Totals	86,616	$ 45,249
Available-for-sale, Fair Value
Within one year	0
One to five years	44,580
Five to ten year	0
Due after ten years	41,632
Totals	$ 86,212	$ 44,959

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Gross Unrealized Losses and Fair Value, Aggregated by Investment Category and Length of Time that Individual Securities have been in a Continuous Unrealized Loss Position (Detail) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Gain (Loss) on Investments [Line Items]
Less than 12 Months, Fair Value	$ 15,175,000
Less than 12 Months, Unrealized Losses	(162)
12 Months or More, Fair Value	32,487,000
12 Months or More, Unrealized Losses	(513)
Total, Fair Value	47,662,000
Total, Unrealized Losses	(675,000)
U.S. government agencies
Gain (Loss) on Investments [Line Items]
Less than 12 Months, Fair Value	12,094,000	$ 12,190,000
Less than 12 Months, Unrealized Losses	(156)	(59,000)
12 Months or More, Fair Value	32,487,000	32,769,000
12 Months or More, Unrealized Losses	(513)	(231,000)
Total, Fair Value	44,581,000	44,959,000
Total, Unrealized Losses	(669,000)	$ (290,000)
State and political subdivisions
Gain (Loss) on Investments [Line Items]
Less than 12 Months, Fair Value	3,081,000
Less than 12 Months, Unrealized Losses	(6)
12 Months or More, Fair Value	0
12 Months or More, Unrealized Losses	0
Total, Fair Value	3,081,000
Total, Unrealized Losses	$ (6,000)

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Loans and Allowance for Loan Losses - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 USD ($)
Loans and Allowance For Loan Losses [Abstract]
Allowance for Loan and Lease Losses, Period Increase (Decrease)	$ 24,000

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Categories of Loan (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Accounts Notes And Loans Receivable [Line Items]
Commercial loans	$ 84,772		$ 81,327
Commercial real estate	206,795		198,936
Residential real estate	76,476		75,853
Installment loans	11,470		12,473
Total gross loans	379,513		368,589
Less allowance for loan losses	(2,080)	$ (2,125)	(2,122)	$ (2,292)	$ (2,333)	$ (2,341)
Total loans	$ 377,433		$ 366,467

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Allowance for Loan Losses and Recorded Investment in Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Allowance for loan losses:
Balance, beginning of period	$ 2,125	$ 2,333	$ 2,122	$ 2,341
Provision charged to expense	72	25	129	50
Losses charged off	(134)	(82)	(203)	(132)
Recoveries	17	16	32	33
Balance, end of period	2,080	2,292	2,080	2,292
Ending balance: individually evaluated for impairment	75		75		$ 73
Ending balance: collectively evaluated for impairment	2,005	0	2,005	0	2,049
Loans:
Ending balance: individually evaluated for impairment	733	1,432	733	1,432	1,008
Ending balance: collectively evaluated for impairment	378,780	356,137	378,780	356,137	367,581
Commercial
Allowance for loan losses:
Balance, beginning of period	522	498	537	495
Provision charged to expense	22	33	6	36
Losses charged off	0	0	0	0
Recoveries	1	1	2	1
Balance, end of period	545	532	545	532
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	545		545		537
Loans:
Ending balance: individually evaluated for impairment	58	129	58	129	83
Ending balance: collectively evaluated for impairment	84,714	51,732	84,714	51,732	81,244
Commercial Real Estate
Allowance for loan losses:
Balance, beginning of period	671	793	843	804
Provision charged to expense	(17)	56	(190)	44
Losses charged off	0	(5)	0	(5)
Recoveries	0	1	1	2
Balance, end of period	654	845	654	845
Ending balance: individually evaluated for impairment	75		75		73
Ending balance: collectively evaluated for impairment	579		579		770
Loans:
Ending balance: individually evaluated for impairment	577	841	577	841	619
Ending balance: collectively evaluated for impairment	206,218	216,508	206,218	216,508	198,317
Residential
Allowance for loan losses:
Balance, beginning of period	446	583	436	591
Provision charged to expense	137	(137)	146	(150)
Losses charged off	(79)	0	(79)	0
Recoveries	1	1	2	6
Balance, end of period	505	447	505	447
Ending balance: individually evaluated for impairment	0	0	0	0	0
Ending balance: collectively evaluated for impairment	505		505		436
Loans:
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	76,476	75,158	76,476	75,158	75,853
Installment
Allowance for loan losses:
Balance, beginning of period	400	162	218	107
Provision charged to expense	16	193	255	287
Losses charged off	(55)	(77)	(124)	(127)
Recoveries	15	13	27	24
Balance, end of period	376	291	376	291
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	376		376		218
Loans:
Ending balance: individually evaluated for impairment	98	462	98	462	306
Ending balance: collectively evaluated for impairment	11,372	12,739	11,372	12,739	12,167
Unallocated
Allowance for loan losses:
Balance, beginning of period	86	297	88	344
Provision charged to expense	(86)	(120)	(88)	(167)
Losses charged off	0	0	0	0
Recoveries	0	0	0	0
Balance, end of period	0	177	0	177
Ending balance: individually evaluated for impairment	0	$ 0	0	$ 0	0
Ending balance: collectively evaluated for impairment	0		0		88
Loans:
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	$ 0		$ 0		$ 0

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Portfolio Quality Indicators (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment [Line Items]
Commercial	$ 84,772	$ 81,327
Commercial Real Estate	206,795	198,936
Residential	76,476	75,853
Installment	11,470	12,473
Total	379,513	368,589
Pass Grade
Financing Receivable, Recorded Investment [Line Items]
Commercial	84,701	78,652
Commercial Real Estate	203,010	195,063
Residential	76,476	75,853
Installment	11,371	12,167
Total	375,558	361,735
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Commercial	0	20
Commercial Real Estate	2,943	3,066
Residential	0	0
Installment	0	0
Total	2,943	3,086
Substandard
Financing Receivable, Recorded Investment [Line Items]
Commercial	71	2,655
Commercial Real Estate	842	807
Residential	0	0
Installment	99	306
Total	1,012	3,768
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Commercial	0	0
Commercial Real Estate	0	0
Residential	0	0
Installment	0	0
Total	$ 0	$ 0

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Loan Portfolio Aging Analysis (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	$ 1,204	$ 1,395
Total Past Due and Non Accrual	2,935	2,679
Current	376,578	365,910
Total Loans Receivable	379,513	368,589
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	1,656	938
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	18	346
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	57	0
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	0	83
Total Past Due and Non Accrual	92	139
Current	84,680	81,188
Total Loans Receivable	84,772	81,327
Commercial | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	35	56
Commercial | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	0	0
Commercial | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	57	0
Commercial Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	486	500
Total Past Due and Non Accrual	1,483	762
Current	205,312	198,174
Total Loans Receivable	206,795	198,936
Commercial Real Estate | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	997	262
Commercial Real Estate | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	0	0
Commercial Real Estate | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	0	0
Residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	659	760
Total Past Due and Non Accrual	1,288	1,625
Current	75,188	74,228
Total Loans Receivable	76,476	75,853
Residential | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	611	559
Residential | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	18	306
Residential | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	0	0
Installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	59	52
Total Past Due and Non Accrual	72	153
Current	11,398	12,320
Total Loans Receivable	11,470	12,473
Installment | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	13	61
Installment | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	0	40
Installment | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non Accrual	$ 0	$ 0

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Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Commercial
Financing Receivable, Impaired [Line Items]
Recorded Balance	$ 58		$ 58		$ 83
Unpaid Principal Balance	58		58		83
Specific Allowance	0		0		73
Average Investment in Impaired Loans	59	$ 131	60	$ 128
Interest Income Recognized	2	1	2	5
Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Balance	577		577		619
Unpaid Principal Balance	577		577		727
Specific Allowance	75		75		0
Average Investment in Impaired Loans	1,004	1,297	1,004	1,323
Interest Income Recognized	2	9	6	17
Residential
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0		0
Unpaid Principal Balance	0		0		0
Specific Allowance	0		0		0
Average Investment in Impaired Loans	0	0	0	0
Interest Income Recognized	0	0	0	0
Installment
Financing Receivable, Impaired [Line Items]
Recorded Balance	98		98		306
Unpaid Principal Balance	98		98		306
Specific Allowance	0		0		0
Average Investment in Impaired Loans	99	463	100	477
Interest Income Recognized	1	3	2	3
Loans without a specific valuation allowance
Financing Receivable, Impaired [Line Items]
Recorded Balance	324		324		598
Unpaid Principal Balance	324		324		706
Specific Allowance	0		0		0
Average Investment in Impaired Loans	741	1,402	742	1,430
Interest Income Recognized	4	7	9	10
Loans without a specific valuation allowance | Commercial
Financing Receivable, Impaired [Line Items]
Recorded Balance	58		58		83
Unpaid Principal Balance	58		58		83
Specific Allowance	0		0		0
Average Investment in Impaired Loans	59	131	60	128
Interest Income Recognized	2	1	2	2
Loans without a specific valuation allowance | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Balance	168		168		209
Unpaid Principal Balance	168		168		317
Specific Allowance	0		0		0
Average Investment in Impaired Loans	583	808	582	825
Interest Income Recognized	1	3	5	5
Loans without a specific valuation allowance | Residential
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0		0
Unpaid Principal Balance	0		0		0
Specific Allowance	0		0		0
Average Investment in Impaired Loans	0	0	0	0
Interest Income Recognized	0	0	0	0
Loans without a specific valuation allowance | Installment
Financing Receivable, Impaired [Line Items]
Recorded Balance	98		98		306
Unpaid Principal Balance	98		98		306
Specific Allowance	0		0		0
Average Investment in Impaired Loans	99	463	100	477
Interest Income Recognized	1	3	2	3
Loans with a specific valuation allowance
Financing Receivable, Impaired [Line Items]
Recorded Balance	409		409		410
Unpaid Principal Balance	409		409		410
Specific Allowance	75		75		73
Average Investment in Impaired Loans	421	489	422	498
Interest Income Recognized	1	6	1	15
Loans with a specific valuation allowance | Commercial
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0		0
Unpaid Principal Balance	0		0		0
Specific Allowance	0		0		0
Average Investment in Impaired Loans	0	0	0	0
Interest Income Recognized	0	0	0	3
Loans with a specific valuation allowance | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Balance	409		409		410
Unpaid Principal Balance	409		409		410
Specific Allowance	75		75		73
Average Investment in Impaired Loans	421	489	422	498
Interest Income Recognized	1	6	1	12
Loans with a specific valuation allowance | Residential
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0		0
Unpaid Principal Balance	0		0		0
Specific Allowance	0		0		0
Average Investment in Impaired Loans	0	0	0	0
Interest Income Recognized	0	0	0	0
Loans with a specific valuation allowance | Installment
Financing Receivable, Impaired [Line Items]
Recorded Balance	0		0		0
Unpaid Principal Balance	0		0		0
Specific Allowance	0		0		$ 0
Average Investment in Impaired Loans	0	0	0	0
Interest Income Recognized	$ 0	$ 0	$ 0	$ 0

XML

Troubled Debt Restructuring (Detail) Number in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($) Number	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($) Number
Financing Receivable, Modifications [Line Items]
Total Modification		$ 103,000		$ 103,000
Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0	0	0
Pre- Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Interest Only	0	0	0	0
Term	0	0	0	0
Combination	0	0	0	0
Total Modification	$ 0	$ 0	$ 0	$ 0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	2	0	2
Pre- Modification Outstanding Recorded Investment	$ 0	$ 127,000	$ 0	$ 127,000
Post-Modification Outstanding Recorded Investment	0	103,000	0	103,000
Interest Only	0	0	0	0
Term	0	103,000	0	103,000
Combination	0	0	0	0
Total Modification	$ 0	$ 103,000	$ 0	$ 103,000
Residential
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0	0	0
Pre- Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Interest Only	0	0	0	0
Term	0	0	0	0
Combination	0	0	0	0
Total Modification	$ 0	$ 0	$ 0	$ 0
Installment
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0	0	0
Pre- Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Consumer
Financing Receivable, Modifications [Line Items]
Interest Only	0	0	0	0
Term	0	0	0	0
Combination	0	0	0	0
Total Modification	$ 0	$ 0	$ 0	$ 0

XML

Pension Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Components of net periodic benefit cost
Service cost	$ 76	$ 68	$ 152	$ 136
Interest cost	55	50	110	100
Expected return on assets	(111)	(90)	(222)	(180)
Amortization of prior service cost and net loss	(10)	(6)	(20)	(12)
Pension expense	$ 10	$ 22	$ 20	$ 44

XML

Notional or Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Commercial loans unused lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	$ 27,089	$ 25,814
Commitment to originate loans
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	15,909	15,350
Consumer open end lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	37,971	36,938
Standby lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Asset	$ 46	$ 0

XML

Components of Accumulated Other Comprehensive Loss Included in Stockholders' Equity (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Other Comprehensive Income (Loss) [Line Items]
Net unrealized loss on securities available-for-sale	$ (405)	$ (290)
Net unrealized loss for unfunded status of defined benefit plan liability	(242)	(289)
Accumulated other comprehensive income (Loss), before taxes, total	(647)	(579)
Tax effect	136	159
Net-of-tax amount	$ (511)	$ (420)

XML

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	$ 44,581	$ 44,959
State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	41,631
Fair Value, Inputs, Level 1 | U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	0	0
Fair Value, Inputs, Level 1 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	0
Fair Value, Inputs, Level 2 | U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	44,581	44,959
Fair Value, Inputs, Level 2 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	41,631
Fair Value, Inputs, Level 3 | U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	0	$ 0
Fair Value, Inputs, Level 3 | State and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair value of asset, recurring basis	$ 0

XML

Fair Value Measurements of Assets Recognized in Consolidated Balance Sheets Measured at Fair Value on Nonrecurring Basis (Detail) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 334	$ 336
Foreclosed assets held for sale	250	34
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Foreclosed assets held for sale	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	0	0
Foreclosed assets held for sale	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	334	336
Foreclosed assets held for sale	$ 250	$ 34

XML

Quantitative Information About Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements (Detail) - Market comparable properties [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Collateral-dependent impaired loans | Marketability discount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 334	$ 336
Collateral-dependent impaired loans | Maximum | Marketability discount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range	25.00%	25.00%
Collateral-dependent impaired loans | Minimum | Marketability discount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range	10.00%	10.00%
Foreclosed assets held for sale | Selling costs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 250	$ 34
Foreclosed assets held for sale | Maximum | Selling costs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range	35.00%	35.00%
Foreclosed assets held for sale | Minimum | Selling costs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range	10.00%	10.00%

XML

Estimated Fair Values of Company's Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Financial assets
Cash and cash equivalents	$ 16,308	$ 14,315	$ 20,784	$ 11,541
Loans, net of allowance	377,433	366,467
Federal Home Loan Bank stock	4,164	4,164
Accrued interest receivable	1,275	993
Financial liabilities
Deposits	415,634	385,966
Short term borrowings	12,346	11,085
Federal Home Loan Bank Advances	33,768	10,022
Subordinated debentures	4,124	4,124
Interest payable	122	70
Fair Value, Inputs, Level 1
Financial assets
Cash and cash equivalents	16,308	14,315
Loans, net of allowance	0	0
Federal Home Loan Bank stock	0	0
Accrued interest receivable	0	0
Financial liabilities
Deposits	0	0
Short term borrowings	0	0
Federal Home Loan Bank Advances	0	0
Subordinated debentures	0	0
Interest payable		0
Fair Value, Inputs, Level 2
Financial assets
Cash and cash equivalents	0	0
Loans, net of allowance	0	0
Federal Home Loan Bank stock	4,164	4,164
Accrued interest receivable	1,275	993
Financial liabilities
Deposits	354,553	358,722
Short term borrowings	12,346	11,085
Federal Home Loan Bank Advances	33,762	10,012
Subordinated debentures	3,733	3,590
Interest payable	122	70
Fair Value, Inputs, Level 3
Financial assets
Cash and cash equivalents	0	0
Loans, net of allowance	373,437	368,033
Federal Home Loan Bank stock	0	0
Accrued interest receivable	0	0
Financial liabilities
Deposits	0	0
Short term borrowings	0	0
Federal Home Loan Bank Advances	0	0
Subordinated debentures	0	0
Interest payable	$ 0	$ 0

XML

Repurchase Agreements - Additional Information (Detail) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Short-term Debt	$ 12,346,000	$ 11,085,000
Repurchase Agreement Borrowings [Member]
Short-term Debt	12,346,000	11,085,000
US Government Corporations and Agencies Securities
Short-term Debt	$ 18,200,000	$ 18,400,000

XML

Repurchase Agreements (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	$ 12,346	$ 11,085
Repurchase Agreements U.S. government agencies [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	12,346	11,085
Overnight and Continuous [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	12,346	11,085
Overnight and Continuous [Member] | Repurchase Agreements U.S. government agencies [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	12,346	11,085
Up to 30 Days [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Up to 30 Days [Member] | Repurchase Agreements U.S. government agencies [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
30-90 Days [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
30-90 Days [Member] | Repurchase Agreements U.S. government agencies [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Greater than 90 Days [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	0	0
Greater than 90 Days [Member] | Repurchase Agreements U.S. government agencies [Member]
Secured Borrowings, Gross Including Not Subject to Master Netting Arrangement, Total	$ 0	$ 0