Zacks Investment Research has recently initiated coverage of United Bancorp, Inc. (UBCP Quick QuoteUBCP - Free Report) with a Neutral recommendation, reflecting a balanced view of the company’s strengths and challenges. The regional bank, headquartered in Martins Ferry, OH, offers a mix of income stability, credit discipline, and strategic positioning, but faces near-term pressures that temper its growth outlook.

United Bancorp stands out with a forward dividend yield of 5.51%, supported by a consistent and rising payout. The company declared a second-quarter 2025 dividend of 18.5 cents per share, representing a 5.7% year-over-year increase. Combined with a special dividend paid in the first quarter, total dividends for the first half of 2025 rose by 9% from the same period last year. This reflects strong capital management and shareholder commitment.

Core banking operations remain resilient, as highlighted in the research report. Despite industry-wide margin pressures, United Bancorp reported $6.3 million in net interest income in Q1 2025, slightly up from the prior year. This performance was driven by steady loan yields and tax-exempt municipal income.

Liquidity surged more than 85% to $36.4 million, while deposits rose to $624.1 million, improving lending flexibility and financial stability. The bank’s loan book, valued at $496.9 million, is conservatively managed, with nonperforming loans at just 0.39% and a solid 0.82% allowance for credit losses.

Noninterest income grew 48% year over year to $1.3 million, driven by stronger deposit-related fees and gains on securities. This aligns with the bank’s strategy to diversify its revenue base beyond traditional interest income. United Bancorp’s footprint in southeastern Ohio and parts of West Virginia positions it to benefit from federal infrastructure investments, offering potential growth opportunities in commercial lending and community banking services.

However, several risks weigh on the outlook, as outlined in the report. The bank’s available-for-sale securities portfolio reported $15.2 million in unrealized losses as of March 2025, up from $12.5 million at year-end 2024. These losses, largely tied to long-term municipal bonds and subordinated notes, have reduced tangible book value and shareholder equity. 

At the same time, non-interest expenses increased by $0.7 million year over year, driven primarily by rising employee costs, which compressed pre-tax income. The company also faces pressure from a shift toward higher-cost funding, including a $9.1 million increase in time deposits and a $7.1 million rise in repurchase agreements. These trends have narrowed net interest margins and may continue to do so if rates stay elevated.

United Bancorp’s stock has appreciated. Despite this momentum, it continues to trade below broader sector valuation benchmarks, an indication that investors remain cautious about long-term growth prospects amid rising costs, margin pressures, and geographic concentration.

While United Bancorp demonstrates strengths such as a robust dividend yield, solid liquidity, and prudent credit risk management, challenges, including rising funding costs, noninterest expense growth and geographic concentration, warrant caution. Investors are encouraged to review the full Zacks Investment Research report for a comprehensive analysis of United Bancorp’s prospects.

Read the full Research Report on United Bancorp here>>>

Note: Our initiation of coverage on United Bancorp, which has a modest market capitalization of $82.3 million, aims to equip investors with the information needed to make informed decisions in this promising but inherently risky segment of the market.