A Letter from the President

To Our Present and Future Shareholders . . .

Each year, we write and tell you how great of a year we have had. This year is really no different! Quite frankly, your Company again did quite well. Our stock price moved from a low of 151/2 to a year end close at 27 and many of our shareholders saw their dividend check totals for 1997 to be 12.6% ahead of what they received in 1996. All was helped by the 10% share dividend paid this past September.

Earnings for the year were up 10.2%. And better yet, fourth quarter earnings (the most recent report period) was actually up 17.8%. It is always comforting to see the quarter trailing earnings moving upward. Our first two quarters were a little bit dampened by the start up costs of our new St. Clairsville location and by the effects of the longest steel strike in the Ohio Valley's history. It is exciting to report that our Strasburg charter did not even know a work stoppage had occurred. This reflects positively on our expansion into that area for the purpose of diversifying our market risk. We are really pleased to report that things are getting back to normal in our great Industrial Valley.

It is always exciting to write about expansions. Our St. Clairsville In-Store location at Riesbeck Food Markets opened in mid-July and has attracted over $1.3 million in new deposits. We continue to receive high praise from the original $10 million deposit customer base in this market who find our hours and new location to be convenient. We announced in January of this year our planned expansion into Athens County Ohio. Our work is cut out for us for the next few months, bringing The Glouster Community Bank into the United Bancorp, Inc. family of banks as a third banking charter. Our focus has been to diversify the economic risk of your investment through expansion into different marketplaces. The Glouster Community Bank with over $50 million in assets and four offices in Athens County will add to this diversification of market risk. The three largest employment categories in their market area are educational services, manufacturing and wholesale/retail trade. Farming and recreation are also important to their economy. All of these categories compliment our present market risk exposure.

Our customers have benefited this past year through the introduction of new services and the expansion in customer service hours at all of our locations. We now offer seven-day banking service at our St. Clairsville location and all of our traditional banking offices offer extended cut-off service hours through 4:00 p.m. daily. Through our expanded services, our new fixed rate home financing program has added over 100 new home loans to our customer list plus has been very positive in impacting our fee income which increased 12% over the previous year. In the fourth quarter of last year, we introduced a new MasterCard Check Card to our market areas and are now in the process of installing six new cash dispensing ATM's to better serve our customer base and further generate more fee income. The experts tell us that a Bank that is to be high performing must become less dependent upon net interest income as their primary source of earnings and more dependent upon fee income.

This past year, two of our long-term Directors retired to Emeritus status. Donald A. Davison joined our Directorship in 1963 and Premo R. Funari in 1976. Both men have been close by my side since my assuming the Presidency of The Citizens Savings Bank in January of 1973. Each were very much involved in the many projects that have been completed during the past twenty-five years. As Chairman of the Board following my mentor H. H. Riethmiller's death in 1980, Don Davison did an effective job in keeping me focused. I personally miss both Don and Premo's wise counsel and wish them good health and happiness in their retirement. Both men stepped down after last year's Annual Meeting.

We are pleased to report that we have expanded your Company's Management Team. Randall M. Greenwood, CPA, joined us on December 1st as Vice President and Chief Financial Officer of United Bancorp, Inc. and Senior Vice President and CFO of The Citizens Savings Bank. Randy brings a good mix of accounting and banking experience to us, having worked both for one of the Big Six Accounting Firms and for one of our country's super regional banks. He will play a vital roll as we continue to move our acquisition efforts forward.

A lot of media and regulatory attention is being given to the potential of a Year 2000 crisis! Many predict that our world will come tumbling down when many computers will not know if going from 1999 to 2000 might be misread as the Year 1900 ... thus causing the crises. Your Management Team is on top of this and we wish to assure you that our computers will know we are entering the new millennium.

As you work your way through this Annual Report, reviewing all the numbers and foot notes, I hope you realize the number of people responsible for making it all happen. Quite frankly my job is to make sure our 86 full time equivalent employees are kept focused, happy and rewarded. We are blessed with a great staff and with modern facilities. Our centralized Operation Center in Martins Ferry, Ohio, currently does the item processing and data processing for all of our banking locations and answers most of our customer inquiries in addition to producing necessary customer reports and notices. This is all accomplished with very few errors. Our lenders are always working to better serve our markets. Last year we financed over 1,600 vehicles for $17.9 million. This not only took the cooperation of our Loan Center Personnel but our 50+ automobile dealers. Our Customer Service Representatives meet daily with our customers taking their deposits, opening new accounts and just making our customers comfortable. On a regular basis, I receive notes praising our staff for being the "Hometown Bank". This Hometown Bank thing didn't just happen, it has been earned over the years through dedicated customer service. I must also recognize our Accounting Division, who keep us properly reported to our various regulators as well as keep our shareholders properly informed. Proof to their good work is in the hands of the reader of this report. To all of the members of our Bank Team, I personally want to say thank you for your continued dedication to Hometown Banking service.

To our shareholders, we say thank you for investing your funds and your trust in our Company and its banks. As we reach out to new heights, our pledge, is to continue earning your respect. Your Directors, Management Team and Staff are committed to making your shareholder value grow.

Very truly yours,

James W. Everson
Chairman, President & Chief Executive Officer