Zacks Initiates Coverage of United Bancorp With Neutral Recommendation

Core Viewpoint - Zacks Investment Research has initiated coverage of United Bancorp, Inc. (UBCP) with a Neutral recommendation, indicating a balanced perspective on the company's strengths and challenges [1] Financial Performance - United Bancorp has a forward dividend yield of 5.51%, with a second-quarter 2025 dividend of 18.5 cents per share, reflecting a 5.7% year-over-year increase [2] - The bank reported $6.3 million in net interest income in Q1 2025, slightly up from the previous year, driven by steady loan yields and tax-exempt municipal income [3] - Noninterest income grew 48% year over year to $1.3 million, supported by stronger deposit-related fees and gains on securities [5] Liquidity and Stability - Liquidity surged more than 85% to $36.4 million, while deposits rose to $624.1 million, enhancing lending flexibility and financial stability [4] - The bank's loan book is conservatively managed, with nonperforming loans at just 0.39% and a solid 0.82% allowance for credit losses [4] Risks and Challenges - The 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, impacting tangible book value and shareholder equity [6] - Non-interest expenses increased by $0.7 million year over year, primarily due to rising employee costs, which compressed pre-tax income [7] - The company 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, which may narrow net interest margins [7] Market Position - United Bancorp's stock has appreciated but continues to trade below broader sector valuation benchmarks, indicating investor caution regarding long-term growth prospects amid rising costs and margin pressures [8] - The bank'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 [5]