United Bancorp's Q2 Earnings Rise on Loan Growth

United Bancorp’s Recent Performance and Strategic Moves

Shares of United Bancorp, Inc. (UBCP) have seen a modest 0.1% increase since the company released its earnings for the quarter ending June 30, 2025. This contrasts with the S&P 500 index, which saw a 0.9% decline over the same period. Over the past month, UCBP has experienced a 5.2% drop, while the S&P 500 grew by 1.4%, indicating a recent pullback despite long-term gains.

For the second quarter of 2025, United Bancorp reported an earnings per share (EPS) of 33 cents, up from 30 cents in the same period in 2024. The company's total interest income rose 5.4% year-over-year to $10.4 million, driven by a 9.3% increase in interest income on loans and a 30.3% surge in loan fees. However, interest income from securities declined by 5.6%. Total interest expense increased slightly by 3.8% to $3.8 million, resulting in net interest income of $6.6 million, a 6.4% rise from the previous year.

Net income for the quarter reached $1.9 million, marking a 10% increase compared to $1.7 million in the same quarter of 2024. Noninterest income for the quarter totaled $1.4 million, up 17.3% from the prior year. This growth was fueled by a 65.6% increase in other noninterest income and a 19.3% rise in gains on loan sales. Although gains on securities sales were absent this quarter, the overall income trajectory remained positive. Noninterest expenses rose 3.1% to $5.8 million, primarily due to ongoing investment initiatives. Despite the increase, earnings before income taxes improved to $1.9 million, a 20.1% jump from the previous year.

Credit Metrics and Management Commentary

Credit metrics remained stable throughout the quarter. The provision for credit losses dropped 12.2% to $0.2 million, while net charge-offs stayed steady at 0.07% of average loans. Total nonaccrual loans increased to $1.8 million from $0.4 million a year earlier, largely due to a single commercial account. However, loans past due by more than 30 days declined by 43.3%, and total past-due and nonaccrual loans remained at a modest 0.45% of gross loans. Nonperforming assets as a percentage of total assets stood at 0.60%, up from 0.46% last year but down sequentially.

Chief Financial Officer Randall Greenwood described the company’s earnings growth as encouraging amid macroeconomic pressures. He highlighted several transformative projects, including branch expansion, technology investments, and product development, which have contributed to higher noninterest expenses. Greenwood noted a year-over-year net interest margin expansion of 11 basis points to 3.65% and emphasized asset growth as a driver of higher income. Total assets rose 3.2% to $847.9 million, driven by a 3.4% increase in gross loans, which for the first time exceeded the $500 million threshold. Cash held with the Federal Reserve Bank also jumped 32.3% to $49.7 million.

CEO Scott Everson reinforced the company’s long-term growth ambitions, citing a renewed offensive strategy launched in 2024 after a period of conservative balance sheet management. He pointed to continued strength in the bank’s small-business-oriented commercial loan portfolio, which makes up 80% of total loans, and highlighted strong deposit-gathering trends. Everson reaffirmed the company’s goal of reaching $1 billion in total assets and expressed optimism that current initiatives would accelerate growth.

Factors Influencing Earnings and Future Outlook

The bank’s earnings performance was supported by growth in interest income and effective cost controls. Higher loan volumes and interest rates contributed to the revenue increase, while interest expense growth remained relatively modest. A shift in the deposit mix—marked by a decline in lower-cost deposits and an increase in time deposits—pushed up funding costs, though only slightly. Despite increased provisioning due to economic uncertainty, the bank maintained strong credit quality. While nonaccrual loans rose significantly year over year, the ratio of net charge-offs to average loans remained stable, and overall asset quality compared favorably with industry peers.

Management expressed confidence in sustaining growth trends through continued loan expansion and infrastructure investment. The bank anticipates improved performance in interest income and fee-based revenue streams in the coming quarters. The development of the Unified Mortgage Division and expansion of Treasury Management services are expected to support both top-line growth and deposit acquisition. Additionally, the company’s focus on omni-channel banking and AI-powered customer support aims to enhance efficiency and drive cross-sell opportunities.

Other Developments and Strategic Initiatives

During the quarter, United Bancorp made significant progress on several strategic initiatives. Construction advanced on a new regional banking center in Wheeling, WV, scheduled to open within 90 days. Although not yet operational, the center has already contributed to loan growth through pre-opening business development activities. The company also continued work on its Unified Center in St. Clairsville, OH, which will consolidate functions such as accounting, IT, and customer support. The facility is expected to become operational in early 2026.

Technology enhancements and the integration of artificial intelligence into customer service channels were also underway as part of a broader digital transformation effort. These projects are expected to boost operating leverage and improve client engagement. On the capital return front, United Bancorp raised its regular cash dividend by 5.8% and its special dividend by 16.7% year over year. In total, shareholders received 54.25 cents per share in cash dividends during the first half of 2025, a 9.1% increase from the prior year, yielding 6.3% based on the quarter-end closing price of $14.50.