UBCP Stock Rises 4% as Q3 Earnings Rise Y/Y on Strong Loan Growth

Shares of United Bancorp, Inc. UBCP have gained 4.3% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares favorably with the S&P 500 index’s 0.5% growth over the same period. However, over the past month, UBCP has underperformed, declining 2.9% against the S&P 500’s 3.2% gain.

United Bancorp posted a third-quarter 2025 earnings per share of 34 cents, which rose 9.7% year over year. 

Net interest income rose 9.6% to $6.7 million, driven by a 7% increase in total interest income, which totaled $10.6 million. Total noninterest income increased 10.9% to $1.4 million, while noninterest expenses climbed 8.2% to $6 million. These results produced an 8.9% increase in pre-tax earnings. 

Net income of $1.9 million reflected a 6.1% increase from the same quarter in 2024.

United Bancorp, Inc. Price, Consensus and EPS Surprise

United Bancorp, Inc. price-consensus-eps-surprise-chart | United Bancorp, Inc. Quote

Key Business Metrics: Asset Growth and Margin Expansion

Net interest margin rose 16 basis points to 3.66%, supported by a 5% increase in total assets to $866.8 million. Gross loans advanced 4.5% year over year to $496.5 million and cash held at the Federal Reserve climbed 20.6% to $45.6 million. The company also deployed $21 million in excess reserves into municipal securities, achieving a taxable equivalent yield of 6.1%, positioning itself to benefit further if interest rates decline.

On the funding side, total deposits increased 4.8% to $645.2 million. Notably, noninterest-bearing demand deposits rose 8.5% to $156.3 million. However, the mix shifted slightly toward higher-cost time deposits, leading to a 2.7% year-over-year increase in interest expense for the quarter. Despite this, interest expense as a percentage of average assets only rose three basis points to 1.80%, a level management believes will improve over time due to anticipated declines in funding costs.

Management Commentary: Strategic Growth Amid Economic Headwinds

CFO Randall M. Greenwood acknowledged the macroeconomic uncertainty driven by new trade policies and a government shutdown in October. Still, he emphasized that United Bancorp has delivered a stable financial performance despite the broader volatility. Greenwood highlighted the positive trends in net interest income and margin expansion, attributing much of the improvement to prudent asset deployment and the favorable repricing of existing loans.

CEO Scott A. Everson reinforced the company’s focus on expanding its balance sheet to exceed $1 billion in assets. He noted that strong demand in the small-business segment — especially within the commercial loan portfolio that comprises around 80% of total loans — presents a compelling opportunity to scale profitably. Everson expressed optimism that continued infrastructure investments would deliver operating leverage and drive long-term earnings growth.

Drivers of Financial Results: Earnings Supported by Credit Discipline and Loan Growth

The primary contributors to earnings growth were higher loan yields and an expanding loan book. Interest income on loans increased 7.6% in the quarter, while loan fees declined 4.4%. Meanwhile, credit quality remained stable. Nonperforming assets accounted for 0.66% of total assets, and net charge-offs were minimal at -0.04% of average loans, similar to prior-year levels.

However, the company more than doubled its provision for credit losses on loans, rising to $0.2 million for the quarter from $0.07 million in the prior year. This increase, though partially dilutive to EPS, reflects the company’s more proactive credit risk management in light of economic uncertainties. Despite the increase, the allowance for credit losses to total loans improved to 0.87%, with coverage of nonaccrual loans at 177%, up from the prior year’s 0.84% and 1053%, respectively.

Forward Strategy

The company laid out several growth initiatives expected to boost future performance. Management highlighted the pending opening of a new regional banking center in Wheeling, WV, which has already contributed to deposit and loan growth through pre-opening business development efforts. Additionally, the Unified Mortgage Division and newly developed Treasury Management services are expected to generate higher fee income and support deposit growth by enhancing client relationships.

United Bancorp also emphasized its continued investment in digital transformation, including a new artificial intelligence platform aimed at improving customer support and cross-selling opportunities. Management anticipates these developments will create a more scalable and efficient banking model, helping the company achieve higher profitability and customer satisfaction in future periods.

Other Developments

United Bancorp continued executing on its strategic infrastructure plan during the quarter. The company is finalizing renovations for the new Unified Center in St. Clairsville, OH, which will centralize key functions such as Accounting, IT and Customer Support. This facility is expected to be fully operational by the first quarter of 2026 and play a central role in enhancing customer experience and internal efficiencies.

Additionally, the company reiterated its commitment to shareholder returns. United Bancorp increased its regular cash dividend 5.7% year over year to 55.5 cents and its special dividend by 16.7% to 17.5 cents, bringing the total dividend payout to 73 cents for the first nine months of 2025, an 8.2% increase over the same period last year. This payout results in a forward dividend yield of 6.6%, which management describes as “near-industry leading.”

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research