UNITED BANCSHARES INC/OH - Quarter Report: 2011 September (Form 10-Q)

uboh_10q-093011.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

Commission file number 000-29283

UNITED BANCSHARES, INC.

(Exact name of Registrant as specified in its charter)

Ohio

(State or other jurisdiction of incorporation or organization)

100 S. High Street, Columbus Grove, Ohio

(Address of principal executive offices)

34-1516518

(I.R.S. Employer Identification Number)

45830

(Zip Code)

(419) 659-2141

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ____ Accelerated filer ____ Non-accelerated filer____ Smaller Reporting Company X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October 14, 2011: 3,445,679

This document contains 44 pages. The Exhibit Index is on page 38 immediately preceding the filed exhibits.

UNITED BANCSHARES, INC.

Table of Contents

	Page

Part I – Financial Information

Item 1 – Financial Statements	3

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3 – Quantitative and Qualitative Disclosures about Market Risk	32

Item 4 – Controls and Procedures	33

Part II – Other Information

Item 1 – Legal Proceedings	34

Item 1A – Risk Factors	34

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3 – Defaults upon Senior Securities	34

Item 4 – Reserved	35

Item 5 – Other Information	35

Item 6 – Exhibits	35

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

United Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	September 30,			December 31,
	2011			2010
ASSETS

CASH AND CASH EQUIVALENTS
Cash and due from banks	$	7,013,453		$	8,253,990
Interest-bearing deposits in other banks		38,376,532			40,349,646
Federal funds sold		526,439			-
Total cash and cash equivalents		45,916,424			48,603,636

SECURITIES, available-for-sale		152,507,095			140,440,361
FEDERAL HOME LOAN BANK STOCK, at cost		4,893,800			4,893,800

LOANS		349,569,167			383,907,387
Less allowance for loan losses		(8,442,101	)		(8,016,786	)
Net loans		341,127,066			375,890,601

PREMISES AND EQUIPMENT, net		9,608,871			9,933,432
GOODWILL		8,554,979			8,554,979
CASH SURRENDER VALUE OF LIFE INSURANCE		13,220,494			12,894,671
OTHER REAL ESTATE OWNED		3,294,500			4,524,729
OTHER ASSETS, including accrued interest receivable and other intangible assets		5,582,405			6,880,346

TOTAL ASSETS	$	584,705,634		$	612,616,555

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Deposits
Non-interest bearing	$	55,173,150		$	50,404,847
Interest bearing		426,112,940			438,245,779
Total deposits		481,286,090			488,650,626

Other borrowings		31,260,780			55,777,834
Junior subordinated deferrable interest debentures		10,300,000			10,300,000
Accrued expenses and other liabilities		3,312,711			2,883,032

Total liabilities		526,159,581			557,611,492

SHAREHOLDERS' EQUITY
Common stock, $1.00 stated value. Authorized 10,000,000 shares; issued 3,760,557 shares		3,760,557			3,760,557
Surplus		14,660,579			14,660,000
Retained earnings		41,601,465			39,600,718
Accumulated other comprehensive income		3,338,268			1,810,684
Treasury stock, 314,878 shares at September 30, 2011 and 315,668 shares at December 31, 2010, at cost		(4,814,816	)		(4,826,896	)
Total shareholders' equity		58,546,053			55,005,063

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	584,705,634		$	612,616,555

See notes to consolidated financial statements

United Bancshares, Inc. and Subsidiary

Condensed Consolidated Statements of Income (Unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2011			2010		2011			2010
INTEREST INCOME
Loans, including fees	$	5,147,788		$	6,049,849	$	16,190,060		$	18,409,873
Securities:
Taxable		800,111			952,278		2,567,595			3,059,246
Tax-exempt		481,889			500,674		1,462,628			1,496,057
Other		20,760			19,076		67,457			57,828
Total interest income		6,450,548			7,521,877		20,287,740			23,023,004

INTEREST EXPENSE
Deposits		1,422,020			1,510,361		4,248,446			4,800,062
Other borrowings		360,361			591,481		1,423,500			2,174,378
Total interest expense		1,782,381			2,101,842		5,671,946			6,974,440

NET INTEREST INCOME		4,668,167			5,420,035		14,615,794			16,048,564

PROVISION FOR LOAN LOSSES		1,400,000			1,900,000		3,975,000			4,500,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,268,167			3,520,035		10,640,794			11,548,564

NON-INTEREST INCOME
Gain on sales of loans		62,813			285,663		276,220			475,083
Gain on sales of securities		252,935			274,946		892,926			276,081
Change in fair value of mortgage servicing rights		(317,539	)		18,881		(263,253	)		(378,477	)
Other		809,302			666,135		2,101,728			2,043,552
Total non-interest income		807,511			1,245,625		3,007,621			2,416,239

NON-INTEREST EXPENSES		3,992,379			3,763,253		11,592,668			11,618,965

Income before income taxes		83,299			1,002,407		2,055,747			2,345,838
PROVISION (CREDIT) FOR INCOME TAXES		(164,000	)		123,000		55,000			136,000
NET INCOME	$	247,299		$	879,407	$	2,000,747		$	2,209,838

NET INCOME PER SHARE
Basic	$	0.07		$	0.26	$	0.58		$	0.64
Weighted average common shares outstanding		3,445,662			3,444,856		3,445,399			3,444,641

Diluted	$	0.07		$	0.26	$	0.58		$	0.64
Weighted average common shares outstanding		3,445,662			3,444,856		3,445,399			3,444,641

See notes to consolidated financial statements

United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

Nine months ended September 30, 2011 and 2010

							Accumulated Other
	Common				Retained		Comprehensive		Treasury
	Stock		Surplus		Earnings		Income		Stock			Total
BALANCE AT DECEMBER 31, 2010	$	3,760,557		14,660,000		39,600,718		1,810,684		(4,826,896	)	$	55,005,063

Net income						2,000,747							2,000,747
Change in unrealized gain on available-for-sale securities, net of income taxes								1,527,584					1,527,584
Total comprehensive income													3,528,331

790 shares issued from treasury in connection with the Corporation’s Employee Stock Purchase Plan				579						12,080			12,659
BALANCE AT SEPTEMBER 30, 2011	$	3,760,557		14,660,579		41,601,465		3,338,268		(4,814,816	)	$	58,546,053

BALANCE AT DECEMBER 31, 2009	$	3,760,557		14,659,661		38,343,134		2,359,821		(4,844,068	)	$	54,279,105

Net income						2,209,838							2,209,838
Change in unrealized loss on available-for-sale securities, net of income taxes								1,401,081					1,401,081
Total comprehensive income													3,610,919

Dividends declared ($0.45 per share)						-1,550,098							-1,550,098
1,123 shares issued from treasury in connection with the Corporation’s Employee Stock Purchase Plan				339						17,172			17,511
BALANCE AT SEPTEMBER 30, 2010	$	3,760,557		14,660,000		39,002,874		3,760,902		(4,826,896	)	$	56,357,437

See notes to consolidated financial statements

United Bancshares, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows (Unaudited)

	Nine months ended September 30,
	2011			2010

Cash flows provided by operating activities	$	6,693,659		$	7,729,675

Cash flows provided by investing activities:
Proceeds from calls or maturities of securities		26,558,683			27,354,405
Proceeds from sales of available-for-sale securities		18,370,945			9,130,745
Purchases of available-for-sale securities		(54,211,917	)		(40,597,943	)
Net decrease in loans		30,290,535			9,159,279
Cash received from branch acquisition		-			22,260,144
Proceeds from sale of other real estate owned		1,655,911			2,055,725
Expenditures for premises and equipment		(67,097	)		(276,843	)
Net cash provided by investing activities		22,597,060			29,085,512

Cash flows provided by financing activities:
Net change in deposits		(7,473,536	)		2,367,729
Long-term borrowings, net of repayments		(24,517,054	)		(27,302,621	)
Proceeds from issuance of common stock		12,659			17,511
Cash dividends paid		-			(1,550,098	)
Net cash used in financing activities		(31,977,931	)		(26,467,479	)

Net change in cash and cash equivalents		(2,687,212	)		10,347,708
Cash and cash equivalents:
At beginning of period		48,603,636			27,379,889
At end of period	$	45,916,424		$	37,727,597

Cash paid for:

Interest	$	5,721,149		$	7,385,684

Income taxes	$	-		$	475,000

Non-cash investing activities:
Change in net unrealized gain on available-for-sale securities	$	2,314,521		$	2,122,849

Transfer of loans to other real estate owned	$	498,000		$	658,000

See notes to consolidated financial statements

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

NOTE 1 – CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of United Bancshares, Inc. and subsidiaries (the “Corporation”) have been prepared without audit and in the opinion of management reflect all adjustments (which include normal recurring adjustments) necessary to present fairly such information for the periods and dates indicated. Since the unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q, they do not contain all information and footnotes typically included in financial statements prepared in conformity with generally accepted accounting principles. Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. Complete audited consolidated financial statements with footnotes thereto are included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2010.

The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The Union Bank Company (“the Bank”). The Bank has formed a wholly-owned subsidiary, UBC Investments, Inc. (“UBC”), to hold and manage its securities portfolio. The operations of UBC are located in Wilmington, Delaware. The Bank has also formed a wholly-owned subsidiary, UBC Property, Inc., to hold and manage properties that may be acquired in lieu of foreclosure. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and reporting policies of the Corporation conform to generally accepted practices within the banking industry. The Corporation considers all of its principal activities to be banking related.

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

ASU 2011-01, Deferral of the Effective Date of Disclosures about TDR in Update No. 2010-20, deferred additional disclosures regarding TDR required by ASU 2010-20 until ASU 2011-02 was issued. For interim and annual periods beginning after June 15, 2011 entities are required to enhance existing disclosures about the allowance for credit losses and the credit quality of financing receivables to include, at minimum, the nature and extent of a creditor’s TDR and financing receivables modified as TDR within the previous period that defaulted. The Corporation has provided the additional disclosures required regarding TDRs in Note 5.

In January 2010, The Financial Accounting Standards Board (FASB) issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, amending ASC Subtopic 820-10 to require disclosure of transfers in and out of levels 1 and 2 fair value measurement categories and activity in level 3 fair value measurement category. Additionally, the guidance amends existing disclosure requirements on level of disaggregation and inputs and valuation techniques. These disclosures are required for fiscal periods beginning after December 15, 2009, and for interim periods within those fiscal years except for activity in the level 3 fair value measurement category which is effective for annual and interim periods beginning after December 15, 2010. The Corporation has provided the additional disclosure required by ASU 2010-06 in Note 8. Additionally, in May 2011, FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs to ensure that fair value has the same meaning in U.S. GAAP and IFRSs and that their respective fair value measurement and disclosure requirements are the same. The Amendments of ASU 2011-04 are effective for interim and annual periods beginning after December 15, 2011. The Corporation does not believe that this will have an impact on the financial statements or disclosures.

In April 2011, FASB issued ASU 2011-02, A Creditors Determination of whether a Restructuring Is a Troubled Debt Restructuring. The new guidance clarifies when a loan modification or restructuring is considered a troubled debt restructuring (TDR) in order to address current diversity in practice and lead to more consistent application of accounting principles generally accepted in the United States of America. In evaluating whether a restructuring constitutes a TDR, a creditor must separately conclude that the restructuring constitutes a concession and the debtor is experiencing financial difficulties. Additionally, the guidance clarifies that a creditor is precluded from using the effective interest rate test in the debtor’s guidance on restructuring of payables (paragraph 470-60-55-10) when evaluating whether a restructuring constitutes a TDR. Management has determined that there has been no significant change in the amount of loan modifications or restructurings classified as TDRs as a result of clarification provided in ASU 2011-02.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

In April 2011, FASB issued ASU 2011-03, Reconsideration of Effective Control for Repurchase Agreements. The new guidance was issued to improve the accounting for repurchase agreements (repos) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. The guidance in this update is effective for the first interim or annual period beginning on or after December 15, 2011. The Corporation does not believe that this will have an impact on the financial statements or disclosures.

In June, 2011, FASB issued ASU 2011-05, Presentation of Comprehensive Income, an amendment to Subtopic 220-10. The guidance was issued to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. The amendments require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and are not expected to have a significant impact on the Corporation’s financial statements.

In September, 2011, FASB issued ASU 2011-08, Testing Goodwill for Impairment, an amendment to Subtopic 350-20. The objective of this update is to simplify how entities test goodwill for impairment by permitting entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted for annual or interim periods that have not yet been issued. The Corporation has not yet determined whether to early adopt the amendment, but it is not expected to have an impact on the Corporation’s financial statements.

NOTE 3 – BRANCH ACQUISITION

On November 30, 2009, the Bank entered into an agreement to purchase the Findlay, Ohio branch of The Home Savings and Loan Company of Youngstown, Ohio (“Seller”). Under the terms of the agreement, the Bank assumed all deposits and purchased the related branch premises and certain loans. The transaction was completed in March, 2010 with assets acquired and liabilities assumed being recorded at their estimated fair values as follows:

Assets acquired:
Cash, net of final settlement paid to seller	$	22,260,144
Loans		1,804,505
Bank premises		1,021,000
Goodwill		1,272,966
Core deposit intangible asset		286,000
	$	26,644,615

Deposits assumed	$	26,644,615

Cash proceeds from the branch acquisition were used to fund $10.0 million of brokered certificates of deposit and $16.5 million of FHLB borrowings that matured during the second quarter of 2010.

The operating results of the branch subsequent to the acquisition are included in the Corporation’s consolidated financial statements. The core deposit intangible asset is being amortized on a straight-line basis over a period of seven years.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

NOTE 4 - SECURITIES

The amortized cost and fair value of available-for-sale securities as of September 30, 2011 and December 31, 2010 are as follows (dollars in thousands):

	September 30, 2011				December 31, 2010
	Amortized cost		Fair value		Amortized cost		Fair value
U.S. Government and Agencies	$	7,511	$	7,503	$	-	$	-
Obligations of states and political subdivisions		46,580		48,551		46,547		47,298
Mortgage-backed		92,857		95,925		90,648		92,633
Other		502		528		502		509

Total	$	147,450	$	152,507	$	137,697	$	140,440

A summary of gross unrealized gains and losses on available-for-sale securities as of September 30, 2011 and December 31, 2010 are as follows (dollars in thousands):

	September 30, 2011				December 31, 2010
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
U.S. Government and Agencies	$	9	$	17	$	-	$	-
Obligations of states and political subdivisions		2,037		66		989		238
Mortgage-backed		3,080		12		2,529		544
Other		26		-		7		-

Total	$	5,152	$	95	$	3,525	$	782

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

NOTE 5 – LOANS

The following table presents the balance and activity in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of and for the period ending September 30, 2011:

				Commercial
				and			Residential
				multi-family			1 – 4 family
	Commercial			real estate			real estate			Consumer			Total
Balance at December 31, 2010	$	2,886,467		$	3,915,323		$	886,879		$	328,117		$	8,016,786
Provision charged to expenses		309,992			3,226,435			636,800			(198,227	)		3,975,000
Losses charged off		(470,612	)		(2,871,203	)		(472,937	)		(64,335	)		(3,879,087	)
Recoveries		15,460			142,082			106,621			65,239			329,402

Balance at September 30, 2011	$	2,741,307		$	4,412,637		$	1,157,363		$	130,794		$	8,442,101

Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	692,548		$	859,959		$	-		$	-		$	1,552,507
Collectively evaluated for impairment		2,048,759			3,552,678			1,157,363			130,794			6,889,594

Total allowance for loan losses	$	2,741,307		$	4,412,637		$	1,157,363		$	130,794		$	8,442,101

Loans:
Individually evaluated for impairment	$	4,665,790		$	17,842,742		$	13,776		$	-		$	22,522,308
Collectively evaluated for impairment		62,593,112			194,933,114			63,555,975			5,964,658			327,046,859

Total ending loans balance	$	67,258,902		$	212,775,856		$	63,569,751		$	5,964,658		$	349,569,167

Impaired loans were as follows as of September 30, 2011:

	2011

Loans with no allowance for loan losses allocated	$	12,290,204
Loans with allowance for loan losses allocated		10,232,104

Total impaired loans	$	22,522,308

Amount of the allowance allocated to impaired loans	$	1,552,507

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

The following is a summary of the activity in the allowance for loan losses of impaired loans, which is a part of the Bank’s overall allowance for loan losses for the nine month period ended September 30, 2011:

	2011

Balance at beginning of period	$	691,780
Provision for loan losses		1,200,428
Loans charged-off		(339,701	)

Balance at end of period	$	1,552,507

No additional funds are committed to be advanced in connection with impaired loans.

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2011:

	Recorded investment		Allowance for loan losses allocated
With no related allowance recorded:
Commercial	$	199,965	$	-
Commercial and multi-family real estate		6,980,561		-
Agriculture		3,690,613		-
Agricultural real estate		1,405,289		-
Consumer		-		-
Residential 1 – 4 family real estate		-		-
With an allowance recorded:
Commercial		775,212		692,548
Commercial and multi-family real estate		9,456,892		859,959
Agriculture		-		-
Agricultural real estate		-		-
Consumer		-		-
Residential 1 – 4 family real estate		13,776		-

Total	$	22,522,308	$	1,552,507

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

The following table presents the recorded investment in nonaccrual loans, loans past due over 90 days still on accrual and troubled debt restructurings by class of loans as of September 30, 2011:

	Nonaccrual		Loans past due over 90 days still accruing		Troubled debt restructurings

Commercial	$	757,618	$	-	$	882,767
Commercial real estate		16,069,925		1,338		10,281,801
Agriculture		1,362,824		-		2,158,200
Agricultural real estate		1,231,182		-		167,050
Consumer		1,446		2,779		-
Residential real estate		3,104,534		-		57,796

Total	$	22,527,529	$	4,117	$	13,547,614

The following table presents the aging of the recorded investment in past due loans as of September 30, 2011 by class of loans:

	30 – 59 days past due		60 – 89 days past due		Greater than 90 days past due		Total past due		Loans not past due		Total
Commercial	$	237,706	$	520,627	$	49,142	$	807,475	$	47,143,995	$	47,951,470
Commercial real estate		2,528,820		60,739		5,050,810		7,640,369		175,364,036		183,004,405
Agriculture		224,974		82,591		1,326,376		1,633,941		17,673,491		19,307,432
Agricultural real estate		658,558		-		933,945		1,592,503		28,178,948		29,771,451
Consumer		108,565		56,657		2,779		168,001		5,796,657		5,964,658
Residential real estate		1,968,610		603,149		543,165		3,114,924		60,454,827		63,569,751

Total	$	5,727,233	$	1,323,763	$	7,906,217	$	14,957,213	$	334,611,954	$	349,569,167

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to the credit risk. This analysis generally includes loans with an outstanding balance greater than $100,000 and non-homogenous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention: Loans which possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered "potential", versus "defined", impairments to the primary source of loan repayment.

Substandard: These loans are inadequately protected by the current sound net worth and paying ability of the borrower. Loans of this type will generally display negative financial trends such as poor or negative net worth, earnings or cash flow. These loans may also have historic and/or severe delinquency problems, and bank management may depend on secondary repayment sources to liquidate these loans. The bank could sustain some degree of loss in these loans if the weaknesses remain uncorrected.

Doubtful: Loans in this category display a high degree of loss, although the amount of actual loss at the time of classification is undeterminable. This should be a temporary category until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are generally either less than $100,000 or are included in groups of homogenous loans. As of September 30, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	Pass		Special Mention		Substandard		Doubtful		Not rated

Commercial	$	59,737,758	$	3,007,976	$	3,272,308	$	1,240,860	$	-
Commercial and multi-family real estate		175,980,875		13,077,386		22,783,650		933,945		-
Residential 1 – 4 family		-		257,525		280,172		-		63,032,054
Consumer		-		3,134		21,693		13,776		5,926,055

Total	$	235,718,633	$	16,346,021	$	26,357,823	$	2,188,581	$	68,958,109

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential 1 – 4 family and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in non-impaired residential 1 – 4 family and consumer loans based on payment activity as of September 30, 2011:

	Consumer		Residential 1 – 4 family

Performing	$	5,960,433	$	61,101,481
Nonperforming		4,225		1,916,797

Total	$	5,964,658	$	63,018,278

Purchased Loans:

From time to time, the Company enters into loan participation agreements to purchase loans and also acquired loans through the Findlay branch acquisition described in Note 3. At September 30, 2011, the Bank held no loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Modifications:

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period.

When the Company modifies a loan, management evaluates any possible concession based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except with the sole (remaining) source of repayment for the loan in the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at originations.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

The following table includes the recorded investment and number of modifications for TDR loans during the third quarter.

	Number of modifications		Recorded investment		Allowance for loan losses allocated
Troubled Debt Restructurings:
Commercial Real Estate		3	$	5,828,529	$	484,506

The recorded investment in the loans did not change as a result of the modifications. There are not any troubled debt restructurings for which there was a payment default in the current reporting period.

NOTE 6 – OTHER COMPREHENSIVE INCOME

The components of other comprehensive income and related tax effects are as follows for the nine month periods ended September 30, 2011 and 2010 (dollars in thousands):

	2011			2010
Unrealized holding gains on available-for-sale securities	$	3,207		$	2,399
Reclassification adjustments for securities gains realized in income		(893	)		(276	)

Net unrealized gains		2,314			2,123

Tax effect		786			722

Net-of-tax amount	$	1,528		$	1,401

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

NOTE 7 – JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

The Corporation has formed and invested $300,000 in a business trust, United (OH) Statutory Trust (“United Trust”) which is not consolidated by the Corporation. United Trust issued $10,000,000 of trust preferred securities, which are guaranteed by the Corporation, and are subject to mandatory redemption upon payment of the debentures. United Trust used the proceeds from the issuance of the trust preferred securities, as well as the Corporation’s capital investment, to purchase $10,300,000 of junior subordinated deferrable interest debentures issued by the Corporation. The debentures have a stated maturity date of March 26, 2033. As of March 26, 2008, and quarterly thereafter, the debentures may be shortened at the Corporation’s option. Interest is payable quarterly at a floating rate adjustable quarterly and equal to 315 basis points over the 3-month LIBOR amounting to 3.51% at September 30, 2011 and 3.69% at September 30, 2010. The Corporation has the right, subject to events in default, to defer payments of interest on the debentures by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods. Interest expense on the debentures approximated $262,000 and $267,000 for the nine month periods ended September 30, 2011 and 2010, respectively, and is included in interest expense-other borrowings in the accompanying consolidated statements of income.

Each issue of the trust preferred securities carries an interest rate identical to that of the related debenture. The securities have been structured to qualify as Tier I capital for regulatory purposes and the dividends paid on such are tax deductible. However, under Federal Reserve Board guidelines, the securities cannot be used to constitute more than 25% of the Corporation’s core Tier I capital inclusive of these securities.

NOTE 8 - FAIR VALUE MEASUREMENTS

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, and both able and willing to transact.

ASC 820-10 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820-10 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect the Corporation’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include the Corporation’s own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.

Financial assets (there were no financial liabilities) measured at fair value on a recurring basis at September 30, 2011 and December 31, 2010 include available-for-sale securities, which are all valued using Level 2 inputs, and mortgage servicing rights, amounting to $805,376 at September 30, 2011 and $1,114,126 at December 31, 2010, which are valued using Level 3 inputs. Financial assets (there were no financial liabilities) measured at fair value on a non-recurring basis at September 30, 2011 and December 31, 2010 include other real estate owned, as well as impaired loans approximating $20,969,801 at September 30, 2011 and $14,996,845 at December 31, 2010 all of which are valued using Level 3 inputs.

There were no financial instruments measured at fair value that moved to a lower level in the fair value hierarchy during the periods presented due to the lack of observable quotes in inactive markets for those instruments at September 30, 2011 and December 31, 2010.

The table below presents a reconciliation and income statement classification of gains and losses for mortgage servicing rights, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the nine month period ended September 30, 2011 and year ended December 31, 2010:

	September 30, 2011			December 31, 2010

Balance at beginning of period	$	1,114,126		$	1,273,525
Gains or losses, including realized and unrealized:
Disposals – amortization based on loan payments and payoffs		(136,896	)		(332,851	)
Purchases, issuances, and settlements		91,399			315,039
Other changes in fair value		(263,253	)		(141,587	)
Balance at end of period	$	805,376		$	1,114,126

The following is a summary of the changes in other real estate owned measured at fair value on a nonrecurring basis:

Balance as of December 31, 2010	$	4,524,729
Transfer of loans		498,000
Impairment		(96,749	)
Net Proceeds from sales		(1,631,480	)
Balance as of September 30, 2011	$	3,294,500

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

The following summarizes the changes in impaired loans measured at fair value on a nonrecurring basis:

Balance as of December 31, 2010	$	14,996,845
Net changes in impaired loans		7,930,891
Net principal payments and advances		(1,957,935	)
Balance as of September 30, 2011	$	20,969,801

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, follows.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Corporation’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Corporation’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

Securities Available-for-Sale

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would typically include government bonds and exchange traded equities. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include corporate and municipal bonds, mortgage-backed securities, and asset-backed securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. The Corporation did not have any securities classified as Level 1 or Level 3 at September 30, 2011 or December 31, 2010. There were no gains or losses relating to securities available-for-sale included in earnings before income taxes that were attributable to changes in fair values of securities held at September 30, 2011 or December 31, 2010.

Impaired Loans

The Corporation does not record impaired loans at fair value on a recurring basis. However, periodically, a loan is considered impaired and is reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. Collateral values are estimated using level 2 inputs, including recent appraisals and Level 3 inputs based on customized discounting criteria. Due to the significance of the level 3 inputs, impaired loans fair values have been classified as level 3.

Other Real Estate Owned

The Corporation values other real estate owned at the estimated fair value of the underlying collateral less expected selling costs. Such values are estimated primarily using appraisals and reflect a market value approach. Due to the significance of the Level 3 inputs, other real estate owned has been classified as Level 3. In accordance with the provisions of ASC 360-10, other real estate owned was written down to its estimated fair value of $3,294,500, resulting in impairment charges of $96,749 which are included in earnings for the nine month period ended September 30, 2011.

Certain other financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. Financial assets and financial liabilities, excluding impaired loans and other real estate owned, measured at fair value on a nonrecurring basis were not significant at September 30, 2011 and December 31, 2010.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of recognized financial instruments at September 30, 2011 and December 31, 2010 were as follows (dollars in thousands):

	September 30, 2011				December 31, 2010
	Carrying amount		Estimated value		Carrying amount		Estimated value
FINANCIAL ASSETS
Cash and cash equivalents	$	45,916	$	45,916	$	48,604	$	48,604
Securities, including Federal Home Loan Bank stock		157,401		157,401		145,334		145,334
Net loans		341,127		341,101		375,891		389,124
Mortgage servicing rights		805		805		1,114		1,114
	$	545,249	$	545,223	$	570,943	$	584,176
FINANCIAL LIABILITIES
Deposits	$	481,286	$	476,725	$	488,651	$	492,413
Other borrowings		31,261		34,091		55,778		58,415
Junior subordinated deferrable interest debentures		10,300		9,341		10,300		9,913
Other liabilities		3,313		3,386		2,883		2,963
	$	526,160	$	523,543	$	557,612	$	563,704

The above summary does not include accrued interest receivable or cash surrender value of life insurance which are also considered financial instruments. The estimated fair value of such items is considered to be their carrying amounts.

There are also unrecognized financial instruments at September 30, 2011 and December 31, 2010 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments amounts to $65,419,000 at September 30, 2011 and $70,035,000 at December 31, 2010. Such amounts are also considered to be the estimated fair values.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments shown above:

Cash and cash equivalents:

Fair value is determined to be the carrying amount for these items (which include cash on hand, due from banks, and federal funds sold) because they represent cash or mature in 90 days or less, and do not represent unanticipated credit concerns.

Securities:

The fair value of securities is determined based on quoted market prices of the individual securities; if not available, estimated fair value is obtained by comparison to other known securities with similar risk and maturity characteristics. Such value does not consider possible tax ramifications or estimated transaction costs.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

Loans:

Fair value for loans was estimated for portfolios of loans with similar financial characteristics. For adjustable rate loans, which re-price at least annually and generally possess low risk characteristics, the carrying amount is believed to be a reasonable estimate of fair value. For fixed rate loans, the fair value is estimated based on a discounted cash flow analysis, considering weighted average rates and terms of the portfolio, adjusted for credit and interest rate risk inherent in the loans. Fair value for nonperforming loans is based on recent appraisals or estimated discounted cash flows.

Mortgage servicing rights:

The fair value for mortgage servicing rights is determined based on an analysis of the portfolio by an independent third party.

Deposit liabilities:

The fair value of core deposits, including demand deposits, savings accounts, and certain money market deposits, is the amount payable on demand. The fair value of fixed-maturity certificates of deposit is estimated using the rates offered at quarter end for deposits of similar remaining maturities. The estimated fair value does not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the marketplace.

Other borrowings and junior subordinated deferrable interest debentures:

The fair value of other borrowings (consisting of Federal Home Loan Bank borrowings, and customer repurchase agreements), and junior subordinated deferrable interest debentures are determined using the net present value of discounted cash flows based on current borrowing rates for similar types of borrowing arrangements, and are obtained from an independent third party.

Other financial instruments:

The fair value of commitments to extend credit and letters of credit is determined to be the contract amount, since these financial instruments generally represent commitments at existing rates. The fair value of other borrowings is determined based on a discounted cash flow analysis using current interest rates. The fair value of other liabilities is generally considered to be carrying value except for the deferred compensation agreement. The fair value of the contract is determined based on a discounted cash flow analysis using a current interest rate for a similar instrument.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument over the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2011

NOTE 10 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the consolidated financial statements were issued. Events or transactions occurring after September 30, 2011 but prior to when the consolidated financial statements were issued, that provided additional evidence about conditions that existed at September 30, 2011 have been recognized in the consolidated financial statements for the period ended September 30, 2011. Events or transactions that provided evidence about conditions that did not exist at September 30, 2011 but arose before the financial statements were issued have not been recognized in the consolidated financial statements for the period ended September 30, 2011.

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

The following data should be read in conjunction with the unaudited consolidated financial statements and management’s discussion and analysis that follows:

	As of or for the Three Months Ended September 30,						As of or for the Nine Months Ended September 30,
	2011			2010			2011			2010
SIGNIFICANT RATIOS (Unaudited)
Net income to:
Average assets (a)		0.17	%		0.57	%		0.45	%		0.47	%
Average shareholders’ equity (a)		1.70	%		6.30	%		4.69	%		5.33	%
Net interest margin (a)		3.61	%		3.94	%		3.69	%		3.85	%
Efficiency ratio (b)		69.75	%		54.35	%		63.08	%		60.40	%
Average shareholders’ equity to average assets		9.94	%		8.99	%		9.54	%		8.80	%
Loans to deposits (end of period)		72.63	%		79.87	%		72.63	%		79.87	%
Allowance for loan losses to loans (end of period)		2.42	%		1.92	%		2.42	%		1.92	%
Cash dividends to net income		0.00	%		58.76	%		0.00	%		70.15	%


Book value per share	$	16.99		$	16.36		$	16.99		$	16.36

(a)	Net income to average assets, net income to average shareholders’ equity and net interest margin are presented on an annualized basis. Net interest margin is calculated using fully-tax equivalent net interest income as a percentage of average interest earning assets.

(b)	Efficiency ratio is a ratio of non-interest expense as a percentage of fully tax equivalent net interest income plus non-interest income.

Introduction

United Bancshares, Inc. (the “Corporation”), an Ohio corporation, is a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and is subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Corporation was incorporated and organized in 1985. The executive offices of the Corporation are located at 100 S. High Street, Columbus Grove, Ohio 45830. The Corporation is a one-bank holding company, as that term is defined by the Federal Reserve Board.

The Union Bank Company (“the Bank”), a wholly-owned subsidiary of the Corporation, is engaged in the business of commercial banking. The Bank is an Ohio state-chartered bank, which serves Allen, Hancock, Putnam, Sandusky, Van Wert and Wood counties in Ohio, with office locations in Bowling Green, Columbus Grove, Delphos, Findlay, Gibsonburg, Kalida, Leipsic, Lima, Ottawa, and Pemberville, Ohio.

The Bank offers a full range of commercial banking services, including checking accounts, savings and money market accounts, time certificates of deposit, automatic teller machines, commercial, consumer, agricultural, residential mortgage and home equity loans, credit card services, safe deposit box rentals, and other personalized banking services. The Bank has formed UBC Investments, Inc. (“UBC”) to hold and manage its securities portfolio. The operations of UBC are located in Wilmington, Delaware. The Bank has also formed UBC Property, Inc. to hold and manage certain other real estate owned.

When or if used in the Corporation’s Securities and Exchange Commission filings or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases: “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “is estimated,” “is projected,” or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to the risks and uncertainties that include but are not limited to: changes in economic conditions in the Corporation’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Corporation’s market area, and competition. All or some of these factors could cause actual results to differ materially from historical earnings and those presently anticipated or projected.

The Corporation cautions readers not to place undue reliance on any such forward looking statements, which speak only as of the date made, and advises readers that various factors, including regional and national economic conditions, substantial changes in the levels of market interest rates, credit and other risks associated with lending and investing activities, and competitive and regulatory factors could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims any obligation, to update any forward looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

The Corporation is registered as a Securities Exchange Act of 1934 reporting company.

The following discussion and analysis of the consolidated financial statements of the Corporation is presented to provide insight into management’s assessment of the financial results.

RESULTS OF OPERATIONS

Overview of the Income Statement

For the quarter ended September 30, 2011, the Corporation reported net income of $247,000, or $0.07 basic earnings per share. This compares to the third quarter of 2010 net income of $879,000, or $0.26 basic earnings per share. Compared with the same period in 2010, third quarter net income decreased $632,000 (71.9%) primarily due to a decrease in net interest income of $752,000 (13.9%), a decrease in non-interest income of $438,000, and an increase in non-interest expenses of $229,000 offset by a decrease in the provision for loan losses of $500,000 and a decrease in the provision for income taxes of $287,000.

Net income for the nine months ended September 30, 2011 totaled $2,001,000, or $0.58 basic earnings per share compared to $2,210,000 or $0.64 basic earnings per share for the same period in 2010. Compared with the same period in 2010, net income decreased $209,000, or 9.5%. The decrease for the nine month period ended September 30, 2011, as compared to the nine month period ended September 30, 2010, was primarily the result of decrease in net interest income of $1,433,000 (8.9%), offset by an increase in non-interest income of $592,000 (24.5%), a decrease in non-interest expenses of $26,000 (0.2%), a decrease in the provision for loan losses of $525,000 (11.7%) and a decrease in the provision for income taxes of $81,000 (59.6%).

Net Interest Income

Net interest income is the amount by which interest income from interest-earning assets exceeds interest incurred on interest-bearing liabilities. Interest-earning assets consist principally of loans and investment securities while interest-bearing liabilities include interest-bearing deposit accounts and borrowed funds. Net interest income remains the primary source of revenue for the Corporation. Changes in market interest rates, as well as changes in the mix and volume of interest-bearing assets and interest-bearing liabilities impact net interest income. Net interest income was $4,668,000 for the third quarter of 2011, compared to $5,420,000 for the same period of 2010, a decrease of $752,000 (13.9%). Net interest income was $14,616,000 for the first nine months of 2011 compared to $16,049,000 for the same period of 2010, a decrease of $1,433,000 (8.9%).

Net interest margin is calculated by dividing net interest income (adjusted to reflect tax-exempt interest income on a taxable equivalent basis) by average interest-earning assets. The resulting percentage serves as a measurement for the Corporation in comparing its results with those of past periods as well as those of peer institutions. For the quarterly and nine month periods ended September 30, 2011, the net interest margin (on a taxable equivalent basis) was 3.61% and 3.69%, respectively, compared with 3.94% and 3.85% for the same periods in 2010.

Deposits comprised 89% of average interest-bearing liabilities for the nine month period ended September 30, 2011, compared to 85% for the same period in 2010. The Corporation’s cost of funds were 1.56% for the first nine months of 2011 compared to 1.78% for the same period in 2010 and the yield on interest-earning assets was 5.05% for the first nine months of 2011 compared to 5.45% for the same period of 2010. The low interest rate environment has, and will continue to negatively impact the net interest margin.

Provision for Loan Losses

The Corporation’s provision for loan losses is determined based upon management’s calculation of the allowance for loan losses and is reflective of management’s assessment of the quality of the portfolio and overall management of the inherent credit risk of the loan portfolio. Changes in the provision for loan losses are dependent, among other things, on loan delinquencies, collateral position, portfolio risks and general economic conditions in the Corporation’s lending markets. A $1,400,000 provision for loan losses was made for the third quarter of 2011 compared to a $1,900,000 provision for the same period in 2010. A $3,975,000 provision for loan losses was made for the nine month period ended September 30, 2011 compared to a $4,500,000 provision for the same period in 2010. See “Allowance for Loan Losses” under Financial Condition and “Overview of the Income Statement” under Results of Operations for further discussion relating to the provision for loan losses.

Non-Interest Income

The Corporation’s non-interest income is largely generated from activities related to the origination, servicing and gain on sales of fixed rate mortgage loans, customer deposit account fees, earnings on life insurance policies, income arising from sales of investment products to customers, and occasional security sale transactions. Income related to customer deposit accounts and Bank Owned Life Insurance provides a relatively steady flow of income while the other sources are more volume or transaction related and consequently can vary from quarter to quarter. For the quarter ended September 30, 2011, non-interest income was $808,000, compared to $1,246,000 for the third quarter of 2010, a $438,000 (35.2%) decrease. For the nine month period ended September 30, 2011, non-interest income was $3,008,000, compared to $2,416,000 for the same period in 2010, a $592,000 (24.5%) increase.

Gain on sales of loans amounted to $63,000 for the quarter ended September 30, 2011, compared to $286,000 for the third quarter of 2010, a decrease of $223,000 (78.0%). Quarterly gains on sale of loans included capitalized servicing rights of $41,000 in 2011 and $97,000 in 2010. Gain on sales of loans amounted to $276,000 for the nine months ended September 30, 2011 compared to $475,000 for the comparable period in 2010, a decrease of $199,000 (41.9%). Gain on sales of loans for the nine month period included capitalized servicing rights of $91,000 in 2011 and $153,000 in 2010.

The fair value of mortgage servicing rights decreased $318,000 for the quarter ended September 30, 2011, compared to a $19,000 increase for the quarter ended September 30, 2010. For the nine month period ended September 30, 2011, there was a decrease in fair value of mortgage servicing rights of $263,000, compared to a decrease in fair value of mortgage servicing rights of $378,000 for the nine months ended September 30, 2010.

Gain on sales of securities amounted to $253,000 for the quarter ended September 30, 2011, compared to $275,000 for the third quarter of 2010, a decrease of $22,000 (8.0%). Gain on sales of securities amounted to $893,000 for the nine months ended September 30, 2011 compared to $276,000 for the comparable period in 2010, an increase of $617,000 (223.6%). During the first nine months of 2011, as part of its asset/liability management strategy, the Corporation sold $18,371,000 of securities resulting in a gain on sale of $893,000.

Non-Interest Expenses

For the quarter ended September 30, 2011, non-interest expenses were $3,992,000, compared to $3,763,000 for the third quarter of 2010, a $229,000 (6.1%) increase. For the nine month period ended September 30, 2011, non-interest expenses totaled $11,593,000, compared to $11,619,000 for the comparable period of 2010, a decrease of $26,000 (0.2%). The $26,000 decrease in other non-interest expenses includes decreases of $262,000 relating to other real estate owned and related asset management costs; $138,000 in data processing, $106,000 in miscellaneous expenses, and $97,000 in miscellaneous losses offset by a $182,000 increase in salaries and benefits, a $200,000 increase in FDIC premium expenses, and a $113,000 increase in advertising. The decrease in other real estate owned and related asset management costs is attributable to a decrease in impairment charges taken on other real estate owned assets during the first nine months of 2011, as well as a decrease in asset management legal expenses. Data processing expenses decreased as a result of the Bank utilizing a different data processing vendor. Miscellaneous expenses decreased as a result of a decrease in the Bank’s unfunded commitment liability and the lack of branch acquisition expenses in 2011. The decrease in miscellaneous losses is attributable to the charge-off of negative escrow related to thirty loans during the second quarter of 2010. Advertising expenses increased during the first nine months of 2011, as compared to the same period in 2010, primarily from the Bank rolling out additional product lines.

Maintaining acceptable levels of non-interest expenses and operating efficiency are key performance indicators for the Corporation in its strategic initiatives. The financial services industry uses the efficiency ratio (total non-interest expense as a percentage of the aggregate of fully-tax equivalent net interest income and non-interest income) as a key indicator of performance. For the quarter ended September 30, 2011, the Corporation’s efficiency ratio was 69.75%, compared to 54.35% for the same period of 2010. For the nine month period ended September 30, 2011, the Corporation’s efficiency ratio was 63.08%, compared to 60.40% for the same period of 2010.

Provision for Income Taxes

The provision (credit) for income taxes for the quarter ended September 30, 2011 was $(164,000), compared to $123,000 for the comparable 2010 period. The provision for income taxes for the nine month period ended September 30, 2011 was $55,000, or 2.7% of income before income taxes, compared to $136,000, or 5.8%, for the comparable 2010 period. The low effective tax rate for the nine months ended September 30, 2011 was due to tax exempt income from securities and loans, as well as bank-owned life insurance comprising approximately 71% of the Corporation’s income before income taxes. In addition, a $50,000 FIN 48 reserve that was established under the Tax Equity and Fiscal Responsibility Act (TEFRA) was reversed back into income during the first quarter of 2011. This reversal resulted from an IRS exam that was closed with no adjustments, so the 2009 FIN 48 reserve was reversed back into income under the effectively settled standard.

Return on Assets

Return on average assets was 0.17% for the third quarter of 2011, compared to 0.57% for the third quarter of 2010. For the nine month period ended September 30, 2011, return on average assets was 0.45%, compared to 0.47% for the same period of 2010.

Return on Equity

Return on average shareholders’ equity for the third quarter of 2011 was 1.70%, compared to 6.30% for the same period of 2010. Return on average equity for the nine months ended September 30, 2011 was 4.69%, compared to 5.33% for the same period in 2010.

The Corporation and Bank met all regulatory capital requirements as of September 30, 2011, and the Bank is considered “well capitalized” under regulatory and industry standards of risk-based capital.

FINANCIAL CONDITION

Overview of Balance Sheet

Total assets amounted to $584.7 million at September 30, 2011, compared to $612.6 million at December 31, 2010, a decrease of $27.9 million, or 4.6%. The decrease in total assets was primarily the result of decreases in total cash and cash equivalents of $2.7 million (5.5%), gross loans of $34.3 million (8.9%), other real estate owned of $1.2 million (27.2%) and other assets of $1.3 million (18.9%) offset by an increase in available-for-sale securities of $12.1 million (8.6%). Deposits during this same period decreased $7.4 million, or 1.5% and other borrowings, consisting of Federal Home Loan Bank (FHLB) borrowings, and customer repurchase agreements, decreased $24.5 million (44.0%).

Shareholders’ equity increased from $55.0 million at December 31, 2010 to $58.5 million at September 30, 2011. This increase was the result of net income ($2.0 million), the issuance of 790 treasury shares under the Corporation’s Employee Stock Purchase Plan ($13,000), and a $1.5 million increase in unrealized securities gains, net of tax. The increase in unrealized securities gains during the nine month period ended September 30, 2011, was the result of customary and expected changes in the bond market. Net unrealized gains on securities are reported as accumulated other comprehensive income in the consolidated balance sheets.

Cash and Cash Equivalents

Cash and cash equivalents totaled $45.9 million at September 30, 2011, compared to $48.6 million at December 31, 2010. Cash and cash equivalents at September 30, 2011 includes interest-bearing deposits in other banks of $38.4 million compared to $40.3 million at December 31, 2010. Management believes the current level of cash and cash equivalents is sufficient to meet the Corporation’s present liquidity and performance needs. Total cash and cash equivalents fluctuate on a daily basis due to transactions in process and corresponding liquidity sources and uses. Management believes the Corporation’s liquidity needs in the near term will be satisfied by the current level of cash and cash equivalents, readily available access to traditional and non-traditional funding sources, and the portions of the investment and loan portfolios that will mature within one year. These sources of funds should enable the Corporation to meet cash obligations and off-balance sheet commitments as they come due. In addition, the Corporation has access to various sources of additional borrowings by virtue of long-term assets that can be used as collateral for such borrowings.

Securities

Management monitors the earnings performance and liquidity of the securities portfolio on a regular basis through Asset/Liability Committee (ALCO) meetings. As a result, all securities, except FHLB stock, have been designated as available-for-sale and may be sold if needed for liquidity, asset-liability management or other reasons. Such securities are reported at fair value, with any net unrealized gains or losses reported as a separate component of shareholders’ equity, net of related incomes taxes.

At September 30, 2011, available-for-sale securities totaled $152.5 million, an increase of $12.1 million from December 31, 2010. At September 30, 2011, the amortized cost of the Corporation’s securities totaled $147.4 million, resulting in net unrealized gains of $5.1 million and a corresponding after tax increase in shareholders’ equity of $1.5 million.

Loans

The Corporation’s lending is primarily centered in Northwestern and West Central Ohio. Gross loans totaled $349.6 million at September 30, 2011, compared to $383.9 million at December 31, 2010, a decrease of $34.3 million (8.9%). The decrease in loan balances during the first nine months of 2011 resulted primarily from a decline in loan origination activity, normal pay downs and runoff on current loans, and a continued focus by the Bank’s credit administration department to identify and dispose of or reduce problem credits. The Bank has also continued to experience soft loan demand in its lending markets.

Allowance for Loan Losses

The following table presents a summary of activity in the allowance for loan losses for the nine months ended September 30, 2011 and 2010, respectively:

	(dollars in thousands)

	2011			2010
Balance, beginning of period	$	8,017		$	4,804
Provision for loan losses		3,975			4,500

Charge offs		(3,879	)		(2,058	)
Recoveries		329			390
Net charge offs		(3,550	)		(1,668	)

Balance, end of period	$	8,442		$	7,636

The allowance for loan losses as a percentage of gross loans was 2.42% at September 30, 2011 and 2.09% at December 31, 2010. The increase in the allowance for loan losses as a percentage of gross loans is attributable to the higher level of charge-offs experienced by the Bank over the past few years, a continued decline in the overall quality of the loan portfolio as evidenced by the level of classified credits, and continued concerns with the prolonged economic downturn.

Regular provisions are made in amounts sufficient to maintain the balance in the allowance for loan losses at a level considered by management to be adequate for losses within the portfolio. Even though management uses all available information to assess possible loan losses, future additions or reductions to the allowance may be required as changes occur in economic conditions and specific borrower circumstances. The regulatory agencies that periodically review the Bank’s allowance for loan losses may also require additions to the allowance or the charge-off of specific loans based upon the information available to them at the time of their examinations.

Loans on non-accrual status amounted to $22.5 million and $16.5 million at September 30, 2011 and December 31, 2010, respectively. As a result of the Bank financing several OREO properties with little or no down payment required, non-accrual loans include $1.1 million of performing loans that forbid the accrual of interest until a minimum principal amount is paid by the borrowers. Non-accrual loans as a percentage of outstanding loans amounted to 6.4% at September 30, 2011, compared to 4.3% at December 31, 2010.

The Bank considers a loan to be impaired when it becomes probable that the Bank will be unable to collect under the contractual terms of the loan, based on current information and events. Impaired loans, principally consisting of commercial and commercial real estate credits, amounted to $22.5 million at September 30, 2011 and $15.7 million at December 31, 2010. Impaired loans at September 30, 2011 and December 31, 2010, included $12.3 million and $9.6 million, respectively of loans with no specific reserves included in the allowance for loan losses and $10.2 million and $6.1 million, respectively of loans with specific reserves of $1.6 million and $700,000 included in the Bank’s September 30, 2011 and December 31, 2010 allowance for loan losses.

In addition to impaired loans, the Bank had other potential problem credits of $44.9 million at September 30, 2011 and $30.4 million at December 31, 2010. The Bank’s credit administration department continues to closely monitor these credits.

The Bank provides pooled reserves for potential problem loans using loss rates calculated considering historic net loan-charge off experience. The Bank has experienced $3.5 million of net loan charge-offs during the first nine months of 2011 compared to annual net loan charge-offs of $1.7 million in 2010, $5.9 million in 2009, and $1.2 million in 2008, with a significant amount of the charge-offs coming from the commercial and commercial real estate loan portfolios. The Bank also provides general reserves for the remaining portion of its loan portfolio not considered to be problem or potential problem loans. These general reserves are also calculated considering, among other things, the historic net charge-off experience for the relative loan type. Consequently, the loss rates applied to these loans have increased as a result of the increase in the Bank’s historic net loan charge-offs.

Funding Sources

The Corporation considers a number of alternatives, including but not limited to, deposits, as well as short-term and long-term borrowings when evaluating funding sources. Deposits, including customer deposits, brokered certificates of deposit, and public funds deposits, continue to be the most significant source of funds for the Corporation, totaling $481.0 million, or 92.1% of the Corporation’s funding sources at September 30, 2011. Total deposits decreased $7.4 million during the nine months ended September 30, 2011.

Non-interest bearing deposits remain a smaller portion of the funding source for the Corporation than for most of its peers. Non-interest bearing deposits comprised 11.5% of total deposits at September 30, 2011, compared to 9.5% at September 30, 2010.

In addition to traditional deposits, the Corporation maintains both short-term and long-term borrowing arrangements. Other borrowings consisted of FHLB borrowings totaling $27.6 million and $44.6 million at September 30, 2011 and December 31, 2010, respectively, and customer repurchase agreements totaling $3.7 million and $11.2 million at September 30, 2011 and December 31, 2010, respectively. The Corporation also has outstanding junior subordinated deferrable interest debentures of $10.3 million at September 30, 2011 and December 31, 2010. Management plans to maintain access to various borrowing alternatives as an appropriate funding source.

Shareholders’ Equity

For the nine month period ended September 30, 2011, the Corporation had net income of $2,001,000. The increase in net unrealized gains on available-for-sale securities, net of income taxes, was $1,528,000 and $1,401,000 for the nine months ended September 30, 2011 and 2010, respectively. Since all of the securities in the Corporation’s portfolio are classified as available-for-sale, both securities and the equity section of the consolidated balance sheets are sensitive to the changing market values of securities.

The Corporation has also complied with the standards of capital adequacy mandated by the banking industry. Bank regulators have established “risk-based” capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets banks hold in their portfolios. A weight category of 0% (lowest risk assets), 20%, 50%, or 100% (highest risk assets) is assigned to each asset on the balance sheet and to certain off-balance sheet commitments.

Liquidity and Interest Rate Sensitivity

The objective of the Corporation’s asset/liability management function is to maintain consistent growth in net interest income through management of the Corporation’s balance sheet liquidity and interest rate exposure based on changes in economic conditions, interest rate levels, and customer preferences.

The Corporation manages interest rate risk to minimize the impact of fluctuating interest rates on earnings. The Corporation uses simulation techniques that attempt to measure the volatility of changes in the level of interest rates, basic banking interest rate spreads, the shape of the yield curve, and the impact of changing product growth patterns. The primary method of measuring the sensitivity of earnings of changing market interest rates is to simulate expected cash flows using varying assumed interest rates while also adjusting the timing and magnitude of non-contractual deposit re-pricing to more accurately reflect anticipated pricing behavior. These simulations include adjustments for the lag in prime loan re-pricing and the spread and volume elasticity of interest-bearing deposit accounts, regular savings and money market deposit accounts.

The principal function of interest rate risk management is to maintain an appropriate relationship between those assets and liabilities that are sensitive to changing market interest rates. The Corporation closely monitors the sensitivity of its assets and liabilities on an ongoing basis and projects the effect of various interest rate changes on its net interest margin. Interest sensitive assets and liabilities are defined as those assets or liabilities that mature or re-price within a designated time frame.

Management believes the Corporation’s current mix of assets and liabilities provides a reasonable level of risk related to significant fluctuations in net interest income and the resulting volatility of the Corporation’s earning base. The Corporation’s management reviews interest rate risk in relation to its effect on net interest income, net interest margin, and the volatility of the earnings base of the Corporation.

Effects of Inflation on Financial Statements

All of the Corporation’s assets relate to commercial banking operations and are generally monetary in nature. Therefore, they are not impacted by inflation to the same degree as companies in capital-intensive industries in a replacement cost environment. During a period of rising prices, a net monetary asset position results in loss of purchasing power and conversely a net monetary liability position results in an increase in purchasing power. In the commercial banking industry, monetary assets typically exceed monetary liabilities. The Bank has not experienced a significant level of inflation or deflation during the nine month period ended September 30, 2011. However, because of the depressed national real estate market and sluggish local economy, the Bank has experienced declines in the value of collateral securing commercial and non-commercial real estate loans. Management continues to closely monitor these trends in calculating the Bank’s allowance for loan losses.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The only significant market risk to which the Corporation is exposed is interest rate risk. The business of the Corporation and the composition of its balance sheet consist of investments in interest-earning assets (primarily loans and securities), which are funded by interest bearing liabilities (deposits and borrowings). These financial instruments have varying levels of sensitivity to changes in the market rates of interest, resulting in market risk. None of the Corporation’s financial instruments are held for trading purposes.

The Corporation manages interest rate risk regularly through its Asset Liability Committee. The Committee meets on a regular basis and reviews various asset and liability management information, including but not limited to, the bank’s liquidity positions, projected sources and uses of funds, interest rate risk positions and economic conditions.

The Corporation monitors its interest rate risk through a sensitivity analysis, whereby it measures potential changes in its future earnings and the fair values of its financial instruments that may result from one or more hypothetical changes in interest rates. This analysis is performed by estimating the expected cash flows of the Corporation’s financial instruments using interest rates in effect at year-end. For the fair value estimates, the cash flows are then discounted to year-end to arrive at an estimated present value of the Corporation’s financial instruments. Hypothetical changes in interest rates are then applied to the financial instruments, and the cash flows and fair values are again estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows. The Corporation typically applies interest rate “shocks” to its financial instruments up and down under various scenarios up to as much as 300 basis points depending on the overall level of interest rates at any point in time.

There have been no material changes in the quantitative and qualitative information about market risk from the information provided in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

ITEM 4

CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures.

With the participation of our management, including our chief executive officer and chief financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")); as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that:

(a)

information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Corporation’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure;

(b)	information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c)

the Corporation’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Corporation and its consolidated subsidiaries is made known to them, particularly during the period for which our periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

Changes in Internal Control over Financial Reporting.

There were no significant changes during the period covered by this Quarterly Report on Form 10-Q in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – Other Information

Item 1: Legal Proceedings.

There are no pending legal proceedings to which the Corporation or its subsidiaries are a party or to which any of their property is subject except routine legal proceedings to which the Corporation or its subsidiaries are a party incident to the banking business. None of such proceedings are considered by the Corporation to be material.

Item 1A: Risk Factors

There have been no material changes in the discussion pertaining to risk factors that was provided in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds.

The Corporation has not sold any of its securities which were not registered under the Securities Act during the period covered by this report. The table below includes certain information regarding the Corporation’s purchase of United Bancshares, Inc. common stock during the quarterly period ended September 30, 2011:

Period

Total number

of shares

purchased

Average

price paid

per share

Total number of

shares purchased

as part of a publicly

announced plan

or program

Maximum number

of shares that may

yet be purchased

under the plan

or program (a)

07/01/11 -

07/31/11

None

302,058

97,942

08/01/11 -

08/31/11

None

302,058

97,942

09/01/11 -

09/30/11

None

302,058

97,942

(a) A stock repurchase program (“Plan”) was announced on July 29, 2005 (100,000 shares authorized) and expanded by 100,000 shares on December 23, 2005 and 200,000 shares on March 20, 2007. The Plan authorizes the Corporation to repurchase up to 400,000 of the Corporation’s common shares from time to time in a program of market purchases or in privately negotiated transactions as the securities laws and market conditions permit.

Item 3: Defaults upon Senior Securities.

None

Item 4: (Removed and Reserved.)

Item 5: Other Information.

None

Item 6: Exhibits

(a) Exhibits

Exhibit 3(i) Amended and Restated Articles of Incorporation

Exhibit 3(ii) Amended and Restated Code of Regulations

Exhibit 10.1 Employment Agreement – Daniel W. Schutt

Exhibit 10.2 Salary Continuation Agreement – Daniel W. Schutt

Exhibit 10.3 Agreement - Brian D. Young

Exhibit 10.4 Salary Continuation Agreement - Brian D. Young

Exhibit 10.5 Salary Continuation Agreement – Heather M. Oatman

Exhibit 10.6 Salary Continuation Agreement, First Amendment – Daniel W. Schutt

Exhibit 10.7 Preferred Trust Securities, Placement and Debenture agreements

Exhibit 10.8 Salary Continuation Agreement, Second Amendment – Daniel W. Schutt

Exhibit 10.9 Salary Continuation Agreement, First Amendment – Brian D. Young

Exhibit 10.10 Change in Control Agreement - Daniel W. Schutt

Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of CEO

Exhibit 31.2 Rule 13a-14(a)/15d-14(a) Certification of CFO

Exhibit 32.1 Section 1350 CEO’s Certification

Exhibit 32.2 Section 1350 CFO’s Certification

Exhibit 99 Safe Harbor under The Private Securities Litigation Reform Act of 1995

Exhibit 101.INS XBRL Instance Document

Exhibit 101.SCH XBRL Taxonomy Extension Schema

Exhibit 101.CAL XBRL Taxonomy Extension Calculation

Exhibit 101.DEF XBRL Taxonomy Extension Definition

Exhibit 101.LAB XBRL Taxonomy Extension Label

Exhibit 101.PRE XBRL Taxonomy Extension Presentation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UNITED BANCSHARES, INC.

Date:	November 4, 2011	By: /s/ Brian D. Young
		Brian D. Young
		Chief Financial Officer

EXHIBIT INDEX

UNITED BANCSHARES, INC. QUARTERLY REPORT ON FORM 10-Q

FOR PERIOD ENDED SEPTEMBER 30, 2011

Exhibit Number	Description	Exhibit Location
3(i)	Amended and Restated Articles of Incorporation	Incorporated herein by reference to the Corporation's Definitive Proxy Statement pursuant to Section 14(a) filed March 8, 2002.
3(ii)	Amended and Restated Code of Regulations	Incorporated herein by reference to the Corporation’s Form 10Q for the quarter ended June 30, 2007.
10.1	Employment Agreement – Daniel W. Schutt	Incorporated herein by reference to the Corporation's 2004 Form 10K/A filed August 5, 2005.
10.2	Salary Continuation Agreement – Daniel W. Schutt	Incorporated by reference to Corporation's Form 10K filed March 23, 2007.
10.3	Agreement - Brian D. Young	Incorporated by reference to Corporation's Form 8-K filed July 20, 2006.
10.4	Salary Continuation Agreement - Brian D. Young	Incorporated herein by reference to the Corporation's 2004 Form 10K/A filed August 5, 2005.
10.5	Salary Continuation Agreement – Heather M. Oatman	Incorporated herein by reference to the Corporation's 2008 Form 10K filed March 20, 2009.
10.6	Salary Continuation Agreement First Amendment – Daniel W. Schutt	Incorporated herein by reference to the Corporation’s 2007 Form 10Q filed April 27, 2007.
10.7	Preferred Trust Securities, Placement and Debenture agreements	Incorporated herein by reference to the Corporation’s 2004 Form 10K/A filed August 5, 2005.
10.8	Salary Continuation Agreement, Second Amendment – Daniel W. Schutt	Incorporated herein by reference to the Corporation’s 2007 Form 10Q filed April 27, 2007.
10.9	Salary Continuation Agreement, First Amendment – Brian D. Young	Incorporated herein by reference to the Corporation’s 2007 Form 10Q filed April 27, 2007.
10.10	Change in Control Agreement - Daniel W. Schutt	Incorporated herein by reference to the Corporation’s Form 8-K filed January 14, 2010.
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO	Filed herewith
32.1	Section 1350 CEO’s Certification	Filed herewith
32.2	Section 1350 CFO’s Certification	Filed herewith
99	Safe Harbor under the Private Securities Litigation Reform Act of 1995	Filed herewith
101.INS	XBRL Instance Document (a)	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition	Filed herewith
101.LAB	XBRL Taxonomy Extension Label	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation	Filed herewith

(a) Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.