A Letter From The President

If a good year is measured by improved earnings, increased shareholder value and new customer services, then we are pleased to report a great year of performance by United Bancorp, Inc. (UBCP) and its two subsidiary banks, The Citizens Savings Bank of Martins Ferry and The Citizens-State Bank of Strasburg. 

Our 1996 positive earnings performance of 1.32% Return On Average Assets and 13.49% Return On Average Equity reflects continued success in maximizing our interest earning assets and cost effective management of our noninterest income and noninterest expense. An industry standard used in the measurement of a bank's ability to manage overhead costs is its efficiency ratio, with outstanding performance rated between 50% to 60%. In non-accounting terms, this information reflects how much of each dollar is spent on costs associated with operating the bank. Obviously, the lower the percentage the better. UBCP's efficiency ratio was 54.51% in 1996 and 56.62% in 1995, demonstrating our efforts to control costs. 

Shareholder value, calculated as the stock price, (last trade) multiplied by the number of shares outstanding, grew 87.71% to $44,226,000 at December 31, 1996. The market positively reacted to our earnings performance and the 10% share dividend paid to shareholders on June 20, 1996. During this past year, we introduced a Dividend Reinvestment and Cash Deposit Plan to shareholders and also a Deferred Fee Plan to Directors. These programs allow dividends and fees to be reinvested in UBCP stock and together with our employee 401(k) program, all have added to increased trading activity and stock ownership by Shareholders, Directors, Officers and Employees. 

During the first quarter of 1996, we introduced Check Image Processing to all of our Citizens Bank customers. In place of cumbersome canceled checks, our customers now enjoy the convenience of receiving images of their checks arranged on a regular sheet of paper for orderly storage in a loose leaf binder which we provide as part of this new service. We successfully converted over 12,000 accounts and have received outstanding support and acceptance of this new service from our entire customer base. 

We centralized our Item Processing, Data Processing and Accounting for both subsidiary banks during the second quarter to our new Operations center in Martins Ferry. This consolidation of support functions has added to our cost efficiencies and will permit us to continue to improve our customer service through extended customer deposit times at each of our banking locations. 

During the fourth quarter, we expanded our real estate mortgage operations area within our Loan Center at Martins Ferry and hired two experienced Secondary Market real estate loan specialists. We are currently developing a new portfolio of home loan services and are training our lenders in the anticipation of an April introduction of these new fixed-rate home loan products. This "back office" facility will provide at all our banking offices a full range of home mortgage products. Our vision is to provide home ownership not only for those with a normal down payment and spotless credit background, but also for those just starting out with little or no down payment and additionally for those who may have experienced some degree of credit problems. Through our newly established Secondary Market investor relationships, we will be able to provide fixed rate mortgage products without assuming the credit risk or market risk. We will be able to expand our customer relationships through our new homeowners making their payments at their local Citizens Bank office. We project the income generated through this new program will have a very positive impact on future earnings of UBCP. 

On January 23, 1997, we announced the establishment of a new banking center in St. Clairsville, Ohio, the county seat of Belmont County. This new facility will be housed inside the Riesbeck Food Markets, Inc. store located there at Plaza West. The opening of this new in-store sales location marks the beginning of a new era in banking for UBCP, our customers and future customers in this expanded market area. Services offered in this new facility will include depository banking, with our full line of product offerings; lending products, including Secondary Market options as well as our regular full line of loan products. Additionally, we will feature a full service Automated Teller Machine (ATM). Regulatory applications are currently being processed and it is anticipated we will be opening this new full service banking center in May of this year. 

At the conclusion of our annual Meeting in 1996, Albert W. "Pete" Lash retired from the active Directorship to Director Emeritus of United Bancorp, Inc. and The Citizens Savings Bank. Pete began his service as a Director of The Citizens Savings Bank in 1975 near the time we opened our first branch office located in Colerain, Ohio. As a Colerain resident, active church member, business and community leader, he was able to bring to our decision making processes a genuine customer viewpoint. We thank him for his dedication to the growth and development our Banks and UBCP and wish him good health and happiness. 

All of our accomplishments reflect the dedication of loyal employees, officers and directors working together to promote our organization. To each I say "Thank You" for another outstanding year. This dedication to individualized, courteous and caring customer service combined with the implementation of the latest banking technologies equates to increased efficiencies in performance and continued increased shareholder value. As a banking team, we share many fine memories of past accomplishments, yet we continue to have dreams refined into attainable goals as we prepare ourselves to meet the new challenges and opportunities before us. 

Very truly yours 

James W. Everson 
President & Chief Executive Officer