10-Q

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 June 30, 2014

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 July 24, 2014: 3,424,235

This document contains 43 pages. The Exhibit Index is on page 37 immediately preceding the filed exhibits.

1

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 – Mine Safety Disclosures	35
Item 5 – Other Information	35
Item 6 – Exhibits	35

2

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

United Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	June 30,			December 31,
	2014			2013
ASSETS
CASH AND CASH EQUIVALENTS
Cash and due from banks	$	17,794,629		$	13,698,325
Interest-bearing deposits in other banks		31,581,956			8,709,133
Total cash and cash equivalents		49,376,585			22,407,458
SECURITIES, available-for-sale		192,871,003			197,079,925
FEDERAL HOME LOAN BANK STOCK, at cost		4,144,200			4,893,800
CERTIFICATES OF DEPOSIT		2,739,000			2,739,000
LOANS HELD FOR SALE		489,450			423,720
LOANS		307,200,329			295,313,069
Less allowance for loan losses		(4,062,523	)		(4,014,391	)
Net loans		303,137,806			291,298,678
PREMISES AND EQUIPMENT, net		9,032,563			9,165,532
GOODWILL		8,554,979			8,554,979
CORE DEPOSIT INTANGIBLE ASSETS, net		112,357			132,786
CASH SURRENDER VALUE OF LIFE INSURANCE		14,375,898			14,173,138
OTHER REAL ESTATE OWNED		483,999			667,954
OTHER ASSETS, including accrued interest and intangible assets		4,454,717			4,697,774
TOTAL ASSETS	$	589,772,557		$	556,234,744
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Non-interest bearing	$	85,675,384		$	86,752,995
Interest bearing		411,158,613			381,247,070
Total deposits		496,833,997			468,000,065
Other borrowings		11,500,510			12,100,552
Junior subordinated deferrable interest debentures		10,300,000			10,300,000
Other Liabilities		4,293,811			2,826,262
Total liabilities		522,928,318			493,226,879
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		14,664,728			14,663,861
Retained earnings		52,347,123			50,807,689
Accumulated other comprehensive income (loss)		1,223,481			(1,358,205	)
Treasury stock 336,693 shares at June 30, 2014 and 318,506 shares at December 31, 2013, at cost		(5,151,650	)		(4,866,037	)
Total shareholders' equity		66,844,239			63,007,865
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	589,772,557		$	556,234,744

See notes to consolidated financial statements.

3

United Bancshares, Inc. and Subsidiary

Condensed Consolidated Statements of Income (Unaudited)

	Three months ended June 30,					Six months ended June 30,
	2014			2013		2014			2013
INTEREST INCOME
Loans, including fees	$	3,639,285		$	3,764,689	$	7,288,907		$	7,485,640
Securities:
Taxable		643,735			599,885		1,295,803			1,177,008
Tax-exempt		447,131			452,214		928,898			905,175
Other		83,487			85,414		158,571			168,738
Total interest income		4,813,638			4,902,202		9,672,179			9,736,561
INTEREST EXPENSE
Deposits		516,470			540,091		1,018,770			1,083,501
Other borrowings		169,142			276,071		337,141			549,277
Total interest expense		685,612			816,162		1,355,911			1,632,778
NET INTEREST INCOME		4,128,026			4,086,040		8,316,268			8,103,783
Provision for loan losses		115,000			-		115,000			-
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		4,013,026			4,086,040		8,201,268			8,103,783
NON-INTEREST INCOME
Gain on sales of loans		66,926			296,330		121,175			514,235
Gain on sales of securities		395,244			5,527		396,996			134,747
Change in fair value of mortgage servicing rights		(17,646	)		261,359		(71,037	)		317,789
Other		904,189			738,327		1,716,232			1,460,021
Total non-interest income		1,348,713			1,301,543		2,163,366			2,426,792
NON-INTEREST EXPENSES		3,629,467			3,624,776		7,575,203			7,391,144
INCOME BEFORE INCOME TAXES		1,732,272			1,762,807		2,789,431			3,139,431
Provision for income taxes		407,000			416,000		563,000			695,000
NET INCOME	$	1,325,272		$	1,346,807	$	2,226,431		$	2,444,431
NET INCOME PER SHARE
Basic	$	0.39		$	0.39	$	0.65		$	0.71
Weighted average common shares outstanding		3,426,172			3,446,746		3,431,317			3,446,731
Diluted	$	0.39		$	0.39	$	0.65		$	0.71
Weighted average common shares outstanding		3,426,172			3,446,746		3,431,317			3,446,731

See notes to consolidated financial statements.

4

United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

	Threemonths ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
NET INCOME	$	1,325,272		$	1,346,807		$	2,226,431		$	2,444,431
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) during period		2,420,328			(4,950,030	)		4,308,641			(6,005,113	)
Reclassification adjustments for gains included in net income		(395,244	)		(5,527	)		(396,996	)		(134,747	)
Other comprehensive income (loss), before income taxes		2,025,084			(4,955,557	)		3,911,645			(6,139,860	)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(688,529	)		1,684,889			(1,329,959	)		2,087,552
Other comprehensive income (loss)		1,336,555			(3,270,668	)		2,581,686			(4,052,308	)
COMPREHENSIVE INCOME (LOSS)	$	2,661,827		$	(1,923,861	)	$	4,808,117		$	(1,607,877	)

See notes to consolidated financial statements.

5

United Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

Six months ended June 30, 2014 and 2013

								Accumulated Other
	Common				Retained			Comprehensive			Treasury
	Stock		Surplus		Earnings			Income (Loss)			Stock			Total
BALANCE AT DECEMBER 31, 2013	$	3,760,557	$	14,663,861	$	50,807,689		$	(1,358,205	)	$	(4,866,037	)	$	63,007,865
Net income						2,226,431									2,226,431
Other comprehensive income									2,581,686						2,581,686
Dividends declared ($0.20 per share)						(686,997	)								(686,997	)
Repurchase of 18,500 shares												(290,395	)		(290,395	)
313 shares issued from treasury in connection with the Corporation’s Employee Stock Purchase Plan				867								4,782			5,649
BALANCE AT JUNE 30, 2014	$	3,760,557	$	14,664,728	$	52,347,123		$	1,223,481		$	(5,151,650	)	$	66,844,239
BALANCE AT DECEMBER 31, 2012	$	3,760,557	$	14,661,664	$	46,855,865		$	3,697,363		$	(4,805,244	)	$	64,170,205
Net income						2,444,431									2,444,431
Other comprehensive loss									(4,052,308	)					(4,052,308	)
Dividends declared ($0.10 per share)						(344,674	)								(344,674	)
441 shares issued from treasury in connection with the Corporation’s Employee Stock Purchase Plan				1,181								6,743			7,924
BALANCE AT JUNE 30, 2013	$	3,760,557	$	14,662,845	$	48,955,622		$	(354,945	)	$	(4,798,501	)	$	62,225,578

See notes to consolidated financial statements.

6

United Bancshares, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows (Unaudited)

	Six months ended June 30,
	2014			2013
Cash flows provided by operating activities	$	2,729,010		$	4,799,919
Cash flows used by investing activities:
Proceeds from calls or maturities of securities		15,203,440			22,482,111
Proceeds from sales of available-for-sale securities		9,121,368			8,821,116
Purchases of available-for-sale securities		(16,159,372	)		(45,664,744	)
Net (increase) decrease in loans		(11,839,128	)		2,449,709
Proceeds from sale of FHLB stock		749,600			-
Proceeds from sale of other real estate owned		-			650,046
Expenditures for premises and equipment		(97,938	)		(188,787	)
Net cash used by investing activities		(3,022,030	)		(11,450,549	)
Cash flows from financing activities:
Net change in deposits		28,833,932			(10,424,619	)
Long-term borrowings, net of repayments		(600,042	)		(1,167,280	)
Proceeds from issuance of common stock		5,649			7,924
Repurchase of common stock		(290,395	)		-
Cash dividends paid		(686,997	)		(344,674	)
Net cash provided by (used by) financing activities		27,262,147			(11,928,649	)
Net change in cash and cash equivalents		26,969,127			(18,579,279	)
Cash and cash equivalents:
At beginning of period		22,407,458			49,911,807
At end of period	$	49,376,585		$	31,332,528
Cash paid for:
Interest	$	1,378,215		$	1,620,246
Income taxes	$	40,000		$	150,000
Non-cash investing activities:
Change in net unrealized gain (loss) on available-for-sale securities	$	4,308,641		$	(6,005,113	)

See notes to consolidated financial statements.

7

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

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 quarter and six month period ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The balance sheet as of December 31, 2013 is derived from completed audited consolidated financial statements with footnotes, which are included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

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 certain property. 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

In July 2013, the FASB issued ASU 2013-11, Income Taxes, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The FASB issued ASU 2013-11 to eliminate the diversity in the presentation of unrecognized tax benefits in those instances. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Corporation has determined the provisions for ASU 2013-11 did not have a material impact on the financial statements.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, amending ASC topic 860. The FASB issued ASU 2014-11 to change the accounting for repurchase-to-maturity transactions and linked repurchase financials to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The amendments also require two new disclosures. The first disclosure requires an entity to disclose information on transfers accounted for as sales in transactions that are economically similar to repurchase agreements. The second disclosure provides increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The amendments in this update are effective for the first interim or annual period beginning after December 15, 2014, and the Corporation has not yet determined the financial statement impact.

8

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

NOTE 3 - SECURITIES

The amortized cost and fair value of available-for-sale securities as of June 30, 2014 and December 31, 2013 are as follows (dollars in thousands):

	June 30, 2014				December 31, 2013
	Amortized cost		Fair value		Amortized cost		Fair value
U.S. Government and agencies	$	9,639	$	9,535	$	12,637	$	12,333
Obligations of states and political subdivisions		56,426		57,798		66,585		66,540
Mortgage-backed		123,951		124,287		119,164		117,472
Other		1,002		1,251		752		735
Total	$	191,018	$	192,871	$	199,138	$	197,080

A summary of gross unrealized gains and losses on available-for-sale securities as of June 30, 2014 and December 31, 2013 follows (dollars in thousands):

	June 30, 2014				December 31, 2013
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
U.S. Government and agencies	$	2	$	106	$	-	$	304
Obligations of states and political subdivisions		1,677		305		1,113		1,158
Mortgage-backed		1,623		1,287		1,165		2,857
Other		249		-		-		17
Total	$	3,551	$	1,698	$	2,278	$	4,336

9

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

NOTE 4 – LOANS

The following tables present the activity in the allowance for loan losses by portfolio segment for the periods ending June 30, 2014 and 2013:

			Commercial
			and
	Commercial		multi-family real estate			Residential real estate			Consumer			Total
Balance at December 31, 2013	$	305,434	$	3,346,286		$	344,803		$	17,868		$	4,014,391
Provision charged to expenses		151,406		(67,744	)		27,729			3,609			115,000
Losses charged off		-		(77,462	)		(24,710	)		(8,555	)		(110,727	)
Recoveries		6,868		30,598			95			6,298			43,859
Balance at June 30, 2014	$	463,708	$	3,231,678		$	347,917		$	19,220		$	4,062,523

	Commercial			Commercial and multi-family real estate			Residential real estate			Consumer			Total
Balance at December 31, 2012	$	1,027,837		$	5,240,175		$	602,291		$	47,302		$	6,917,605
Provision charged to expenses		(87,718	)		235,489			(127,469	)		(20,302	)		-
Losses charged off		(201,297	)		(1,737,983	)		-			(9,621	)		(1,948,901	)
Recoveries		10,667			410,118			6,000			12,576			439,361
Balance at June 30, 2013	$	749,489		$	4,147,799		$	480,822		$	29,955		$	5,408,065

10

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the periods ending June 30, 2014 and December 31, 2013:

June 30, 2014	Commercial		Commercial and multi-family real estate		Residential real estate		Consumer		Total
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	158,606	$	737,928	$	-	$	-	$	896,534
Collectively evaluated for impairment		305,102		2,493,750		347,917		19,220		3,165,989
Total allowance for loan losses	$	463,708	$	3,231,678	$	347,917	$	19,220	$	4,062,523
Loans:
Individually evaluated for impairment	$	734,410	$	4,229,452	$	79,937	$	-	$	5,043,799
Collectively evaluated for impairment		56,046,354		184,562,045		57,713,233		3,834,898		302,156,530
Total ending loans balance	$	56,780,764	$	188,791,497	$	57,793,170	$	3,834,898	$	307,200,329

December 31, 2013	Commercial		Commercial and multi-family real estate		Residential real estate		Consumer		Total
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	-	$	179,016	$	-	$	-	$	179,016
Collectively evaluated for impairment		305,434		3,167,270		344,803		17,868		3,835,375
Total allowance for loan losses	$	305,434	$	3,346,286	$	344,803	$	17,868	$	4,014,391
Loans:
Individually evaluated for impairment	$	401,028	$	2,316,969	$	81,437	$	-	$	2,799,434
Collectively evaluated for impairment		50,904,208		181,529,447		56,146,111		3,933,869		292,513,635
Total ending loans balance	$	51,305,236	$	183,846,416	$	56,227,548	$	3,933,869	$	295,313,069

11

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

Impaired loans were as follows as of June 30, 2014 and December 31, 2013:

		June 30, 2014		December 31, 2013
Loans with no allowance for loan losses allocated	$	2,062,703	$	2,064,203
Loans with allowance for loan losses allocated		2,981,096		735,231
Total impaired loans	$	5,043,799	$	2,799,434
Amount of the allowance allocated to impaired loans	$	896,534	$	179,016

The average recorded investment in impaired loans for the six month periods ended June 30, 2014 and 2013 was approximately $3.4 million and $12.3 million, respectively. There was approximately $128,000 and $81,000 in interest income recognized by the Corporation on impaired loans on an accrual or cash basis for the six month periods ended June 30, 2014 and 2013, respectively.

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2014 and December 31, 2013:

	June 30, 2014				December 31, 2013
	Recorded investment		Allowance for loan losses allocated		Recorded investment		Allowance for loan losses allocated
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-
Agriculture		401,028		-		401,028		-
Commercial and multi-family real estate		1,007,702		-		1,007,702		-
Agricultural real estate		649,036		-		649,036		-
Residential real estate		4,937		-		6,437		-
With an allowance recorded:
Commercial		333,382		158,606		-		-
Commercial and multi-family real estate		2,572,714		731,362		660,231		165,300
Residential real estate		75,000		6,566		75,000		13,716
Total	$	5,043,799	$	896,534	$	2,799,434	$	179,016

12

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

The following tables present 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 June 30, 2014 and December 31, 2013:

June 30, 2014	Nonaccrual		Loans past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	-	$	-	$	-
Commercial real estate		2,891,939		-		1,945,257
Agriculture		401,028		-		-
Agricultural real estate		872,529		-		-
Consumer		22,945		3,399		-
Residential real estate		1,494,828		122,436		154,926
Total	$	5,683,269	$	125,835	$	2,100,183

December 31, 2013	Nonaccrual		Loans past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	294,475	$	-	$	294,475
Commercial real estate		2,966,751		-		43,508
Agriculture		401,028		-		-
Agricultural real estate		915,992		-		-
Consumer		7,551		3,112		-
Residential real estate		1,925,627		33,758		157,715
Total	$	6,511,424	$	36,870	$	495,698

The nonaccrual balances in the table above include troubled debt restructurings that have been classified as nonaccrual.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2014 by class of loans:

	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Loans not past due		Total
Commercial	$	123,420	$	-	$	-	$	123,420	$	44,842,584	$	44,966,004
Commercial real estate		26,223		-		2,513,228		2,539,451		159,442,433		161,981,884
Agriculture		152,000		-		401,028		553,028		11,261,732		11,814,760
Agricultural real estate		18,582		-		792,972		811,554		25,998,059		26,809,613
Consumer		21,201		47,053		7,498		75,752		3,759,146		3,834,898
Residential real estate		2,141,278		467,379		575,736		3,184,393		54,608,777		57,793,170
Total	$	2,482,704	$	514,432	$	4,290,462	$	7,287,598	$	299,912,731	$	307,200,329

13

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

The following table presents the aging of the recorded investment in past due loans as of December 31, 2013 by class of loans:

	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Loans not past due		Total
Commercial	$	149,250	$	4,021	$	-	$	153,271	$	37,952,459	$	38,105,730
Commercial real estate		223,934		115,269		2,465,193		2,804,396		155,898,123		158,702,519
Agriculture		-		-		401,028		401,028		12,798,477		13,199,505
Agricultural real estate		508,125		-		805,868		1,313,993		23,829,905		25,143,898
Consumer		68,583		24,514		10,663		103,760		3,830,109		3,933,869
Residential real estate		1,420,956		930,154		479,098		2,830,208		53,397,340		56,227,548
Total	$	2,370,848	$	1,073,958	$	4,161,850	$	7,606,656	$	287,706,413	$	295,313,069

Credit Quality Indicators:

The Corporation 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 Corporation analyzes loans individually by classifying the loans as to the credit risk. This analysis generally includes loans with an outstanding balance greater than $250,000 and non-homogenous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Corporation uses the following definitions for risk ratings:

● Special Mention: Loans which possess some credit deficiency or potential weakness which deserve 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 Corporation 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.

14

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

Loans not meeting the previous criteria 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 $250,000 or are included in groups of homogenous loans. As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

June 30, 2014	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	54,844,011	$	1,202,343	$	-	$	734,410	$	-
Commercial and multi-family real estate		172,151,531		9,342,178		6,648,752		649,036		-
Residential 1 – 4 family		-		-		75,000		4,937		57,713,233
Consumer		-		-		-		-		3,834,898
Total	$	226,995,542	$	10,544,521	$	6,723,752	$	1,388,383	$	61,548,131

December 31, 2013	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	49,943,919	$	960,289	$	-	$	401,028	$	-
Commercial and multi-family real estate		169,094,312		5,755,107		8,347,961		649,036		-
Residential 1 – 4 family		-		-		75,000		6,437		56,146,111
Consumer		-		-		8,744		-		3,925,125
Total	$	219,038,231	$	6,715,396	$	8,431,705	$	1,056,501	$	60,071,236

The Corporation 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 Corporation 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 June 30, 2014 and December 31, 2013:

	June 30, 2014				December 31, 2013
	Residential 1 – 4 family		Consumer		Residential 1 – 4 family		Consumer
Performing	$	56,100,906	$	3,808,554	$	54,501,907	$	3,914,625
Nonperforming		1,612,327		26,344		1,644,204		10,500
Total	$	57,713,233	$	3,834,898	$	56,146,111	$	3,925,125

15

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

Modifications:

The Corporation’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 Corporation’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. All TDRs are also classified as impaired loans.

When the Corporation 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), an impairment is recognized through a specific reserve in the allowance or a direct write down of the loan balance if collection is not expected.

The following table includes the recorded investment and number of modifications for TDR loans during the six month period ended June 30, 2014.

	Number of modifications		Recorded investment		Allowance for loan losses allocated
Troubled Debt Restructurings:
Commercial Real Estate		1	$	1,945,257	$	600,887

The concession granted in the above TDR was a temporary modification of the original term to interest only payments. The recorded investment in the loans did not change as a result of the modification. There are not any troubled debt restructurings for which there was a payment default in the current reporting period.

NOTE 5 – 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 3.38% at June 30, 2014 and 3.43% at June 30, 2013. 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 $170,000 and $174,000 for the six month periods ended June 30, 2014 and 2013, 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.

16

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

NOTE 6 - 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.

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 June 30, 2014 and December 31, 2013 include available-for-sale securities, which are all valued using Level 2 inputs, and mortgage servicing rights, amounting to $1,298,031 at June 30, 2014 and $1,398,396 at December 31, 2013, which are valued using Level 3 inputs. Financial assets (there were no financial liabilities) measured at fair value on a non-recurring basis at June 30, 2014 and December 31, 2013 include other real estate owned, as well as impaired loans approximating $4,147,000 at June 30, 2014 and $2,620,000 at December 31, 2013 all of which are valued using Level 3 inputs.

17

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

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 June 30, 2014 and December 31, 2013.

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 six month period ended June 30, 2014 and year ended December 31, 2013:

	June 30, 2014			December 31, 2013
Balance at beginning of period	$	1,398,396		$	930,760
Gains or losses, including realized and unrealized:
Disposals – amortization based on loan payments and payoffs		(83,449	)		(160,873	)
Purchases, issuances, and settlements		54,121			312,751
Other changes in fair value		(71,037	)		315,758
Balance at end of period	$	1,298,031		$	1,398,396

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 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.

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 June 30, 2014 or December 31, 2013. 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 June 30, 2014 or December 31, 2013.

18

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

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 cost to sell, if repayment is expected solely from collateral. Collateral values are estimated using level 2 inputs, including recent appraisals and level 3 inputs based on customized discounting criteria such as additional appraisal adjustments to consider deterioration of value subsequent to appraisal date and estimated cost to sell. Additional appraisal adjustments range between 10% and 70% of appraised value, and estimated selling cost ranges between 10% and 20% of the adjusted appraised value.  Due to the significance of the level 3 inputs, impaired loans fair values have been classified as level 3.

Mortgage Servicing Rights

The Corporation records mortgage servicing rights at estimated fair value based on a discounted cash flow model which includes discount rates between -0.11% and 1.03%, in addition to prepayment, internal rate of return, servicing costs, inflation rate of servicing costs and earnings rate assumptions that are considered to be unobservable inputs. Due to the significance of the level 3 inputs, mortgage servicing rights 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 appraisal adjustments between 10% and 20% of appraised value, and expected selling costs between 10% and 20% of adjusted appraised value. 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 $483,999, resulting in impairment charges of $183,955, which are included in non-interest expenses for the six month period ended June 30, 2014.

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 June 30, 2014 and December 31, 2013.

19

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of recognized financial instruments at June 30, 2014 and December 31, 2013 were as follows (dollars in thousands):

	June 30, 2014				December 31, 2013
	Carrying amount		Estimated value		Carrying amount		Estimated value		Input Level
FINANCIAL ASSETS
Cash and cash equivalents	$	49,377	$	49,377	$	22,407	$	22,407		1
Securities, including Federal Home Loan Bank stock		197,015		197,015		201,974		201,974		2
Certificates of deposit		2,739		2,739		2,739		2,739
Loans held for sale		489		489		424		424		3
Net loans		303,138		303,152		291,299		292,257		3
Mortgage servicing rights		1,298		1,298		1,398		1,398		3
	$	554,056	$	554,070	$	520,241	$	521,199
FINANCIAL LIABILITIES
Deposits
Maturity	$	163,618	$	163,510	$	172,349	$	172,956		3
Non-maturity		333,216		333,216		295,651		295,651		1
Other borrowings		11,501		12,191		12,101		13,036		3
Junior subordinated deferrable interest debentures		10,300		10,284		10,300		10,294		3
	$	518,635	$	519,201	$	490,401	$	491,937

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 June 30, 2014 and December 31, 2013 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments approximated $80,535,000 at June 30, 2014 and $76,322,000 at December 31, 2013. 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.

20

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

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, securities sold under agreements to repurchase, 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.

21

United Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2014

NOTE 8 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the consolidated financial statements were issued. On July 1, 2014, the Corporation, Ohio State Bancshares, Inc. (“OSB”) and Rbancshares, Inc. (“Rbancshares”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which the Corporation will purchase from OSB all of the issued and outstanding shares of The Ohio State Bank (“Ohio State Bank”), an Ohio banking corporation and wholly-owned subsidiary of OSB. Rbancshares is a majority shareholder of OSB. Immediately following the acquisition, Ohio State Bank will merge with and into The Union Bank Company and its offices will become branches of The Union Bank Company. The acquisition is expected to close in the fourth quarter of 2014, pending adoption of the Purchase Agreement by the shareholders of OSB, the satisfaction of various closing conditions, including the receipt of all necessary bank regulatory approvals, the accuracy of the representations and warranties of each party (subject to certain exceptions), the performance in all material respects by each party of its obligations under the Purchase Agreement, and other conditions customary for transactions of this type. On July 10, 2014, the Corporation repurchased 16,500 of its common shares for $242,055, and on July 18, 2014, an additional 7,000 common shares were repurchased for $102,200. There were no other significant events or transactions occurring after June 30, 2014, but prior to when the consolidated financial statements were issued, that provided additional evidence about conditions that existed at June 30, 2014. Events or transactions that provided evidence about conditions that did not exist at June 30, 2014, but arose before the financial statements were issued have not been recognized in the consolidated financial statements for the period ended June 30, 2014.

22

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 June 30,						As of or for the Six Months Ended June 30,
	2014			2013			2014			2013
SIGNIFICANT RATIOS (Unaudited)
Net income to:
Average assets (a)		0.90	%		0.95	%		0.78	%		0.87	%
Average shareholders’ equity (a)		8.24	%		8.51	%		7.01	%		7.67	%
Net interest margin (a)		3.25	%		3.31	%		3.37	%		3.28	%
Efficiency ratio (b)		63.60	%		64.49	%		69.13	%		67.21	%
Average shareholders’ equity to average assets		10.97	%		11.19	%		11.17	%		11.29	%
Loans to deposits (end of period)		61.93	%		65.40	%		61.93	%		65.40	%
Allowance for loan losses to loans (end of period)		1.32	%		1.80	%		1.32	%		1.80	%
Book value per share	$	19.52		$	18.05		$	19.52		$	18.05

(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.

23

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.

On July 1, 2014, the Corporation, Ohio State Bancshares, Inc. and Rbancshares, Inc. entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which United will purchase from OSB all of the issued and outstanding shares of The Ohio State Bank (“Ohio State Bank”), an Ohio banking corporation and wholly-owned subsidiary of OSB. Rbancshares is a majority shareholder of OSB. Under the terms of the Purchase Agreement, United will acquire Ohio State Bank for consideration that includes the assumption of OSB’s $3.0 million Trust Preferred Stock plus unpaid accrued interest thereon, repayment of approximately $550,000 of senior debt as well as a cash payment equal to approximately 50% of Ohio State Bank’s tangible capital at closing, after certain adjustments. Immediately following the acquisition, Ohio State Bank will merge with and into The Union Bank Company and its offices will become branches of The Union Bank Company. The transaction is expected to close in the fourth quarter of 2014, pending adoption of the Purchase Agreement by the shareholders of OSB, the satisfaction of various closing conditions, including the receipt of all necessary bank regulatory approvals, the accuracy of the representations and warranties of each party (subject to certain exceptions), the performance in all material respects by each party of its obligations under the Purchase Agreement, and other conditions customary for transactions of this type.

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.

24

RESULTS OF OPERATIONS

Overview of the Income Statement

For the quarter ended June 30, 2014, the Corporation reported net income of $1,325,000, or $0.39 basic earnings per share. This compares to second quarter 2013 net income of $1,347,000, or $0.39 basic earnings per share. The decrease in operating results for the second quarter of 2014 as compared to the same period in 2013 was primarily attributable to a $115,000 increase in the provision for loan losses, an $89,000 decrease in interest income and an increase of $5,000 in non-interest expense offset by an decrease of $131,000 in interest expense, an increase in non-interest income of $47,000, and the related income tax effects of these items.

Net income for the six months ended June 30, 2014 totaled $2,226,000, or $0.65 basic earnings per share compared to $2,444,000 or $0.71 basic earnings per share for the same period in 2013. Compared with the same period in 2013, net income decreased $218,000, or 8.9%. The decrease for the six month period ended June 30, 2014, as compared to the six month period ended June 30, 2013, was primarily the result of a $115,000 increase in the provision for loan losses, an increase of $184,000 in non-interest expenses and a decrease in non-interest income of $263,000 offset by an increase in net interest income of $212,000, and the related income tax effects of these items.

Net Interest Income

Net interest income is the amount by which 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 $4,128,000 for the second quarter of 2014, compared to $4,086,000 for the same period of 2013, an increase of $42,000 (1.0%). For the six months ended June 30, 2014, net interest income was $8,316,000 compared to $8,104,000 for the same period of 2013, an increase of $212,000 (2.6%).

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 six month periods ended June 30, 2014, the net interest margin (on a taxable equivalent basis) was 3.25% and 3.37%, respectively, compared with 3.31% and 3.28% for the same periods in 2013.

Interest-bearing deposits comprised 94.4% of average interest-bearing liabilities for the six month period ended June 30, 2014, compared to 92.5% for the same period in 2013. A decrease in other borrowing resulted in the Corporation’s cost of funds on interest-bearing liabilities to be 0.64% for the first six months of 2014 compared to 0.76% for the same period in 2013. This decrease in the cost of funds positively impacted the net interest margin when comparing the six month periods ended June30, 2014 and June 30, 2013.

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 $115,000 provision for loan losses was made during the second quarter and six month period ended June 30, 2014 compared to none during the same periods of 2013. See “Allowance for Loan Losses” under Financial Condition for further discussion relating to the provision for loan losses.

25

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 June 30, 2014, non-interest income was $1,349,000, compared to $1,302,000 for the first quarter of 2013, a $47,000 (3.6%) increase. For the six month period ended June 30, 2014, non-interest income was $2,163,000 compared to $2,427,000 for the same period of 2013, a $264,000 (10.9%) decrease.

Gain on sales of loans amounted to $67,000 for the quarter ended June 30, 2014, compared to $296,000 for the second quarter of 2013, a decrease of $229,000 (77.4%). Quarterly gain on sale of loans was impacted by an increase in capitalized servicing rights of $31,000 in 2014 and an increase of $145,000 in 2013. Gain on sales of loans amounted to $121,000 for the six months ended June 30, 2014 compared to $514,000 for the comparable period in 2013, a decrease of $393,000 (76.4%). Gain on sales of loans for the six month period included capitalized servicing rights of $54,000 in 2014 and $218,000 in 2013. The decrease in gain on sale of loans corresponds with the decrease in loan sales activity. Loan sales for the first six months of 2014 were $6.0 million, compared to $22.2 million for the first six months of 2013.

The fair value of mortgage servicing rights decreased $33,000 for the quarter ended June 30, 2014, compared to a $261,000 increase for the quarter ended June 30, 2013. For the six month period ended June 30, 2014, there was a decrease in fair value of mortgage servicing rights of $100,000, compared to an increase in fair value of mortgage servicing rights of $318,000 for the six months ended June 30, 2013. The decrease in fair value of mortgage servicing rights resulted from the decreased rate environment during the second quarter of 2014.

Gain on sales of securities amounted to $395,000 for the quarter ended June 30, 2014, compared to $6,000 for the second quarter of 2013, an increase of $389,000 (6,483.3%). Gain on sales of securities amounted to $397,000 for the six months ended June 30, 2014 compared to $135,000 for the comparable period in 2013, an increase of $262,000 (194.1%). 

Non-Interest Expenses

For the quarter ended June 30, 2014, non-interest expenses were $3,629,000, compared to $3,625,000 for the second quarter of 2013, a $4,000 (0.1%) increase. For the six month period ended June 30, 2014, non-interest expenses totaled $7,575,000, compared to $7,391,000 for the comparable period of 2013, an increase of $184,000 (2.5%). The increase in non-interest expenses for the six month period ended June 30, 2014 was primarily attributable to a $119,000 increase in salaries and benefits, and a $141,000 increase in other real estate owned expenses offset by a $102,000 decrease in marketing expense. 

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 June 30, 2014, the Corporation’s efficiency ratio was 63.6%, compared to 64.49% for the same period of 2013. For the six month period ended June 30, 2014, the Corporation’s efficiency ratio was 69.13% compared to 67.21% for the same period of 2013.

Provision for Income Taxes

The provision for income taxes for the quarter ended June 30, 2014 was $407,000 compared to $416,000 for the comparable 2013 period. The provision for income taxes for the six month period ended June 30, 2014 was $563,000, or 20.2% of income before income taxes, compared to $695,000 or 22.1% for the comparable 2013 period. The decrease in the effective tax rate is attributable to tax-exempt interest income comprising a larger portion of income before income taxes in 2014 than 2013.

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Return on Assets

Return on average assets was 0.90% for the second quarter of 2014, compared to 0.95% for the second quarter of 2013. For the six month period ended June 30, 2014, return on average assets was 0.78%, compared to 0.87% for the same period of 2013.

Return on Equity

Return on average shareholders’ equity for the second quarter of 2014 was 8.24%, compared to 8.51% for the same period of 2013. Return on average equity for the six months ended June 30, 2014 was 7.01%, compared to 7.67% for the same period in 2013.

The Corporation and Bank met all regulatory capital requirements as of June 30, 2014, and the Bank is considered “well capitalized” under regulatory and industry standards of risk-based capital.

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FINANCIAL CONDITION

Overview of Balance Sheet

Total assets amounted to $589.8 million at June 30, 2014, compared to $556.2 million at December 31, 2013, an increase of $33.6 million. The increase in total assets was primarily the result of an increase of $27.0 million (120.4%) in cash and cash equivalents, and an increase of $11.9 million (4.0%) in gross loans offset by a decrease in available-for-sale securities of $4.2 million (2.1%), a $750,000 (15.3%) decrease in Federal Home Loan Bank Stock, a $243,000 (5.2%) decrease in other assets and a $184,000 (27.5%) decrease in other real estate owned. Deposits during this same period increased $28.8 million, or 6.2%.

Shareholders’ equity increased from $63 million at December 31, 2013 to $66.8 million at June 30, 2014. This increase was the result of net income of $2,226,000, dividends paid of $687,000, repurchase of 18,500 shares of $290,000, the issuance of 313 treasury shares under the Corporation’s Employee Stock Purchase Plan of $6,000, and a $2.6 million increase in unrealized securities gains, net of tax. The increase in unrealized securities gains during the six month period ended June 30, 2014, 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 $49.4 million at June 30, 2014, compared to $22.4 million at December 31, 2013. Cash and cash equivalents includes interest-bearing deposits in other banks of $31.6 million at June 30, 2014 and $8.7 million at December 31, 2013. 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.

The amortized cost and fair value of available-for-sale securities as of June 30, 2014 totaled $191.0 million and $192.9 million, respectively, resulting in net unrealized gains of $1.9 million and a corresponding after tax increase in shareholders’ equity of $2.6 million. The amortized cost of available-for-sale securities decreased $8.1 million from December 31, 2013. The decrease resulted from the Corporation electing to sell $8.7 million of municipal securities in an effort to improve the overall credit quality of the municipal portfolio, while reducing the duration and interest rate risk on the portfolio as a whole.

Loans

The Corporation’s lending is primarily centered in Northwestern and West Central Ohio. Gross loans totaled $307.2 million at June 30, 2014, compared to $295.3 million at December 31, 2013, an increase of $11.9 million (4.0%). The increase in loan balances during the first six months of 2014 resulted primarily from an increase in loan origination activity.

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Allowance for Loan Losses

The following table presents a summary of activity in the allowance for loan losses for the six months ended June 30, 2014 and 2013, respectively:

	(dollars in thousands)
	2014			2013
Balance, beginning of period	$	4,014		$	6,918
Provision for loan losses		115			-
Charge offs		(110	)		(1,949	)
Recoveries		44			439
Net charge offs		(66	)		(1,510	)
Balance, end of period	$	4,063		$	5,408

The allowance for loan losses as a percentage of gross loans was 1.32% at June 30, 2014 and 1.36% at December 31, 2013. 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 Corporation’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 $5.7 million and $6.5 million at June 30, 2014 and December 31, 2013, respectively. Non-accrual loans as a percentage of outstanding loans amounted to 1.9% at June 30, 2014 and 2.2% at December 31, 2013.

The Corporation considers a loan to be impaired when it becomes probable that the Corporation will be unable to collect under the contractual terms of the loan, based on current information and events. Impaired loans, principally consisting of commercial real estate credits, amounted to $5.0 million at June 30, 2014 and $2.8 million at December 31, 2013. The increase in impaired loans resulted from two credits becoming impaired during the second quarter of 2014. Impaired loans at June 30, 2014 and December 31, 2013, included $2.0 million of loans with no specific reserves included in the allowance for loan losses and $3.0 million and $660,000, respectively, of loans with specific reserves of $897,000 and $179,000 included in the Corporation’s June 30, 2014 and December 31, 2013 allowance for loan losses.

In addition to impaired loans, the Corporation had other potential problem credits of $16.3 million at June 30, 2014 and $13.4 million at December 31, 2013. The Corporation’s credit administration department continues to closely monitor these credits.

The Corporation provides pooled reserves for potential problem loans using loss rates calculated considering historic net loan-charge off experience. The Corporation has experienced $66,000 of net loan charge-offs during the first six months of 2014 compared to annual net loan charge-offs of $2.2 million in 2013, $1.8 million in 2012, and $3.8 million in 2011, with most of the charge-offs coming from the commercial and commercial real estate loan portfolios. The Corporation 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.

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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 $496.8 million, or 95.8% of the Corporation’s funding sources at June 30, 2014. Total deposits increased $28.8 million during the six months ending June 30, 2014.

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 17.2% of total deposits at June 30, 2014, compared to 14.7% at June 30, 2013.

In addition to traditional deposits, the Corporation maintains both short-term and long-term borrowing arrangements. Other borrowings consisted of FHLB borrowings totaling $7.5 million at June 30, 2014 and December 31, 2013, and customer repurchase agreements totaling $4.0 million and $4.6 million at June 30, 2014 and December 31, 2013, respectively. The Corporation also has outstanding junior subordinated deferrable interest debentures of $10.3 million at June 30, 2014 and December 31, 2013. Management plans to maintain access to various borrowing alternatives as an appropriate funding source.

Shareholders’ Equity

For the six month period ended June 30, 2014, the Corporation had net income of $2.2 million. The increase (decrease) in net unrealized gains on available-for-sale securities, net of income taxes, was $2.6 million and ($4.1 million) for the six months ended June 30, 2014 and 2013, 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.

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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 Corporation has not experienced a significant level of inflation or deflation during the six month period ended June 30, 2014. However, because of the depressed national real estate market and sluggish local economy, the Corporation 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 Corporation’s allowance for loan losses.

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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 400 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, 2013.

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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.

33

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, 2013.

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 June 30, 2014:

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 (a)	Maximum number of shares that may yet be purchased under the plan or program (a)
04/01/14	-	04/30/14	7,500	$	15.95	238,058	361,942
05/01/14-	-	05/31/14	None		None	238,058	361,942
06/01/14	-	06/30/14	None		None	238,058	361,942

(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, 200,000 shares on March 20, 2007, and 200,000 shares on December 17, 2013. The Plan authorizes the Corporation to repurchase up to 600,000 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

34

Item 4:  Mine Safety Disclosures

Not applicable

Item 5:  Other Information.

None

Item 6:  Exhibits

(a) Exhibits

Exhibit 2 Stock Purchase Agreement, dated July 1, 2014 among United Bancshares, Inc., Ohio State Bancshares, Inc. and Rbancshares, Inc.

Exhibit 3(i) Amended and Restated Articles of Incorporation

Exhibit 3(ii) Amended and Restated Code of Regulations

Exhibit 10.1 Salary Continuation Agreement - Brian D. Young

Exhibit 10.2 Salary Continuation Agreement – Heather M. Oatman

Exhibit 10.3 Preferred Trust Securities, Placement and Debenture agreements

Exhibit 10.4 Salary Continuation Agreement, First Amendment – Brian D. Young

Exhibit 10.5 Change in Control Agreement – Diana L. Engelhardt

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

35

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:	July 29, 2014	By: /s/ Diana L. Engelhardt
		Diana L. Engelhardt
		Chief Financial Officer

36

EXHIBIT INDEX

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

FOR PERIOD ENDED June 30, 2014

Exhibit Number	Description	Exhibit Location
2	Stock Purchase Agreement, dated July 1, 2014 among United Bancshares, Inc., Ohio State Bancshares, Inc. and Rbancshares, Inc.	Incorporated herein by reference to the Corporation’s Form 8-K filed July 1, 2014.
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	Agreement - Brian D. Young	Incorporated by reference to Corporation's Form 8-K filed July 20, 2006.
10.2	Salary Continuation Agreement - Brian D. Young	Incorporated herein by reference to the Corporation's 2004 Form 10K/A filed August 5, 2005.
10.3	Salary Continuation Agreement – Heather M. Oatman	Incorporated herein by reference to the Corporation's 2008 Form 10K filed March 20, 2009.
10.4	Preferred Trust Securities, Placement and Debenture agreements	Incorporated herein by reference to the Corporation’s 2004 Form 10K/A filed August 5, 2005.
10.5	Salary Continuation Agreement, First Amendment – Brian D. Young	Incorporated herein by reference to the Corporation’s 2007 Form 10Q filed April 27, 2007.
10.6	Change in Control Agreement - Diana L. Engelhardt	Incorporated herein by reference to the Corporation’s Form 8-K filed July 23, 2012.
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.

37 

EX-31

Exhibit 31.1

Rule 13a–14(a)/15d–14(a) CERTIFICATION

I, Brian D. Young, President and Chief Executive Officer of United Bancshares, Inc., certify, that:

(1) I have reviewed this Quarterly Report on Form 10-Q of United Bancshares, Inc.;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Brian D. Young

Brian D. Young

President and Chief Executive Officer

July 29, 2014

EX-31

Exhibit 31.2

Rule 13a–14(a)/15d–14(a) CERTIFICATION

I, Diana L. Engelhardt, Chief Financial Officer of United Bancshares, Inc., certify, that:

(1) I have reviewed this Quarterly Report on Form 10-Q of United Bancshares, Inc.;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Diana L. Engelhardt

Diana L. Engelhardt

Chief Financial Officer

July 29, 2014

EX-32

Exhibit 32.1

SECTION 1350 CERTIFICATION

In connection with the Quarterly Report of United Bancshares, Inc. (the "Company") on Form 10-Q for the quarterly period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian D. Young, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Brian D. Young

Brian D. Young

President and Chief Executive Officer

Date: July 29, 2014

*This certification is being furnished as required by Rule 13a –14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EX-32

Exhibit 32.2

SECTION 1350 CERTIFICATION

In connection with the Quarterly Report of United Bancshares, Inc. (the "Company") on Form 10-Q for the quarterly period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Diana L. Engelhardt, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Diana L. Engelhardt

Diana L. Engelhardt

Chief Financial Officer

Date: July 29, 2014

*This certification is being furnished as required by Rule 13a –14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EX-99

Exhibit 99

SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statement. United Bancshares, Inc. ("Corporation") desires to take advantage of the "safe harbor" provisions of the Act. Certain information, particularly information regarding future economic performance and finances and plans and objectives of management, contained or incorporated by reference in the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, is forward-looking. In some cases, information regarding certain important factors that could cause actual results of operations or outcomes of other events to differ materially from any such forward-looking statement appears together with such statement. In addition, forward-looking statements are subject to other risks and uncertainties affecting the financial institutions industry, including, but not limited to, the following:

Interest Rate Risk

The Corporation’s operating results are dependent to a significant degree on its net interest income, which is the difference between interest income from loans, investments and other interest-earning assets and interest expense on deposits, borrowings and other interest-bearing liabilities. The interest income and interest expense of the Corporation changes as the interest rates on interest-earning assets and interest-bearing liabilities change. Interest rates may change because of general economic conditions, the policies of various regulatory authorities and other factors beyond the Corporation's control. In a rising interest rate environment, loans tend to prepay slowly and new loans at higher rates increase slowly, while interest paid on deposits increases rapidly because the terms to maturity of deposits tend to be shorter than the terms to maturity or prepayment of loans. Such differences in the adjustment of interest rates on assets and liabilities may negatively affect the Corporation's income.

Possible Inadequacy of the Allowance for Loan Losses

The Corporation maintains an allowance for loan losses based upon a number of relevant factors, including, but not limited to, trends in the level of non-performing assets and classified loans, current economic conditions in the primary lending area, past loss experience, possible losses arising from specific problem loans and changes in the composition of the loan portfolio. While the Board of Directors of the Corporation believe that it uses the best information available to determine the allowance for loan losses, unforeseen market conditions could result in material adjustments, and net earnings could be significantly adversely affected if circumstances differ substantially from the assumptions used in making the final determination.

Loans not secured by one to four family residential real estate are generally considered to involve greater risk of loss than loans secured by one to four-family residential real estate due, in part, to the effects of general economic conditions. The repayment of multifamily residential, nonresidential real estate and commercial loans generally depends upon the cash flow from the operation of the property or business, which may be negatively affected by national and local economic conditions. Construction loans may also be negatively affected by such economic conditions, particularly loans made to developers who do not have a buyer for a property before the loan is made. The risk of default on consumer loans increases during periods of recession, high unemployment and other adverse economic conditions. When consumers have trouble paying their bills, they are more likely to pay mortgage loans than consumer loans. In addition, the collateral securing such loans, if any, may decrease in value more rapidly than the outstanding balance of the loan.

Competition

The Corporation competes for deposits with other savings associations, commercial banks and credit unions and issuers of commercial paper and other securities, such as shares in money market mutual funds. The primary factors in competing for deposits are interest rates and convenience of office location. In making loans, the Corporation competes with other commercial banks, savings associations, consumer finance companies, credit unions, leasing companies, mortgage companies and other lenders. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors that are not readily predictable. The size of financial institutions competing with the Corporation is likely to increase as a result of changes in statutes and regulations eliminating various restrictions on interstate and inter-industry branching and acquisitions. Such increased competition may have an adverse effect upon the Corporation.

Legislation and Regulation that may Adversely Affect the Corporation's Earnings

The Corporation is subject to extensive regulation by the State of Ohio, Division of Financial Institutions (the “ODFI”), the Federal Reserve Bank (the “FED”), and the Federal Deposit Insurance Corporation (the "FDIC") and is periodically examined by such regulatory agencies to test compliance with various regulatory requirements. Such supervision and regulation of the Corporation and the bank are intended primarily for the protection of depositors and not for the maximization of shareholder value and may affect the ability of the Corporation to engage in various business activities. The assessments, filing fees and other costs associated with reports, examinations and other regulatory matters are significant and may have an adverse effect on the Corporation's net earnings.

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Note 6 - Fair Value Measurements (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Note 6 - Fair Value Measurements (Details) [Line Items]
Liabilities, Fair Value Disclosure, Recurring	$ 0	$ 0
Liabilities, Fair Value Disclosure, Nonrecurring	0	0
Available-for-sale Securities	192,871,003	197,079,925
Available-for-sale Securities, Gross Unrealized Gain (Loss)	0	0
Other Real Estate, Foreclosed Assets, and Repossessed Assets	483,999	667,954
Impairment of Real Estate	183,955
Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Assets, Fair Value Disclosure, Recurring	1,298,031	1,398,396
Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	4,147,000	2,620,000
Available-for-sale Securities	0	0
Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities	0	0
Impaired Loans [Member] | Minimum [Member] | Appraisal Adjustments [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	10.00%
Impaired Loans [Member] | Minimum [Member] | Estimated Selling Costs [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	10.00%
Impaired Loans [Member] | Maximum [Member] | Appraisal Adjustments [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	70.00%
Impaired Loans [Member] | Maximum [Member] | Estimated Selling Costs [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	20.00%
Mortgage Servicing Rights [Member] | Minimum [Member] | Discounted Cash Flow [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount Rate	(0.11%)
Mortgage Servicing Rights [Member] | Maximum [Member] | Discounted Cash Flow [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount Rate	1.03%
Other Real Estate Owned [Member] | Minimum [Member] | Appraisal Adjustments [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	10.00%
Other Real Estate Owned [Member] | Minimum [Member] | Estimated Selling Costs [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	10.00%
Other Real Estate Owned [Member] | Maximum [Member] | Appraisal Adjustments [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	20.00%
Other Real Estate Owned [Member] | Maximum [Member] | Estimated Selling Costs [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount	20.00%
Estimate of Fair Value Measurement [Member]
Note 6 - Fair Value Measurements (Details) [Line Items]
Other Real Estate, Foreclosed Assets, and Repossessed Assets	$ 483,999

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Note 4 - Loans (Details) - Impaired Loans (USD $)	Jun. 30, 2014	Dec. 31, 2013
Impaired Loans [Abstract]
Loans with no allowance for loan losses allocated	$ 2,062,703	$ 2,064,203
Loans with allowance for loan losses allocated	2,981,096	735,231
Total impaired loans	5,043,799	2,799,434
Amount of the allowance allocated to impaired loans	$ 896,534	$ 179,016

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Note 8 - Subsequent Events (Details) (USD $)	6 Months Ended	0 Months Ended
	Jun. 30, 2014	Jul. 18, 2014 Subsequent Event [Member]	Jul. 10, 2014 Subsequent Event [Member]
Note 8 - Subsequent Events (Details) [Line Items]
Treasury Stock, Shares, Acquired	18,500	7,000	16,500
Treasury Stock, Value, Acquired, Cost Method	$ (290,395)	$ 102,200	$ 242,055

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Note 1 - Consolidated Financial Statements

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

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 quarter and six month period ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The balance sheet as of December 31, 2013 is derived from completed audited consolidated financial statements with footnotes, which are included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

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 certain property. 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.

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Note 4 - Loans (Details) - Loans by Credit Quality Indicators (USD $)	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	$ 307,200,329	$ 295,313,069
Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	54,844,011	49,943,919
Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	1,202,343	960,289
Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	734,410	401,028
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	44,966,004	38,105,730
Commercial and Multi-Family Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	172,151,531	169,094,312
Commercial and Multi-Family Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	9,342,178	5,755,107
Commercial and Multi-Family Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	6,648,752	8,347,961
Commercial and Multi-Family Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	649,036	649,036
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	188,791,497	183,846,416
Residential 1-4 Family Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	75,000	75,000
Residential 1-4 Family Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	4,937	6,437
Residential 1-4 Family Real Estate [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	57,713,233	56,146,111
Residential 1-4 Family Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	57,793,170	56,227,548
Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable		8,744
Consumer Portfolio Segment [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	3,834,898	3,925,125
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	3,834,898	3,933,869
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	226,995,542	219,038,231
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	10,544,521	6,715,396
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	6,723,752	8,431,705
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	1,388,383	1,056,501
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable	$ 61,548,131	$ 60,071,236

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Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans (USD $)	Jun. 30, 2014	Dec. 31, 2013
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	$ 2,482,704	$ 2,370,848
60 - 89 days past due	514,432	1,073,958
Greater than 90 days past due	4,290,462	4,161,850
Total past due	7,287,598	7,606,656
Loans not past due	299,912,731	287,706,413
Total	307,200,329	295,313,069
Commercial Portfolio Segment [Member]
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	123,420	149,250
60 - 89 days past due		4,021
Total past due	123,420	153,271
Loans not past due	44,842,584	37,952,459
Total	44,966,004	38,105,730
Commercial Real Estate Portfolio Segment [Member]
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	26,223	223,934
60 - 89 days past due		115,269
Greater than 90 days past due	2,513,228	2,465,193
Total past due	2,539,451	2,804,396
Loans not past due	159,442,433	155,898,123
Total	161,981,884	158,702,519
Agriculture Portfolio [Member]
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	152,000
Greater than 90 days past due	401,028	401,028
Total past due	553,028	401,028
Loans not past due	11,261,732	12,798,477
Total	11,814,760	13,199,505
Agricultural Real Estate [Member]
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	18,582	508,125
Greater than 90 days past due	792,972	805,868
Total past due	811,554	1,313,993
Loans not past due	25,998,059	23,829,905
Total	26,809,613	25,143,898
Consumer Portfolio Segment [Member]
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	21,201	68,583
60 - 89 days past due	47,053	24,514
Greater than 90 days past due	7,498	10,663
Total past due	75,752	103,760
Loans not past due	3,759,146	3,830,109
Total	3,834,898	3,933,869
Residential Portfolio Segment [Member]
Note 4 - Loans (Details) - Aging of Recorded Investment in Past Due Loans [Line Items]
30 - 59 days past due	2,141,278	1,420,956
60 - 89 days past due	467,379	930,154
Greater than 90 days past due	575,736	479,098
Total past due	3,184,393	2,830,208
Loans not past due	54,608,777	53,397,340
Total	$ 57,793,170	$ 56,227,548

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Note 4 - Loans (Details) - Performance of Loan Portfolio (USD $)	Jun. 30, 2014	Dec. 31, 2013
Residential 1-4 Family Real Estate [Member] | Performing Financing Receivable [Member]
Note 4 - Loans (Details) - Performance of Loan Portfolio [Line Items]
Nonimpaired loans	$ 56,100,906	$ 54,501,907
Residential 1-4 Family Real Estate [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans (Details) - Performance of Loan Portfolio [Line Items]
Nonimpaired loans	1,612,327	1,644,204
Residential 1-4 Family Real Estate [Member]
Note 4 - Loans (Details) - Performance of Loan Portfolio [Line Items]
Nonimpaired loans	57,713,233	56,146,111
Consumer Portfolio Segment [Member] | Performing Financing Receivable [Member]
Note 4 - Loans (Details) - Performance of Loan Portfolio [Line Items]
Nonimpaired loans	3,808,554	3,914,625
Consumer Portfolio Segment [Member] | Nonperforming Financing Receivable [Member]
Note 4 - Loans (Details) - Performance of Loan Portfolio [Line Items]
Nonimpaired loans	26,344	10,500
Consumer Portfolio Segment [Member]
Note 4 - Loans (Details) - Performance of Loan Portfolio [Line Items]
Nonimpaired loans	$ 3,834,898	$ 3,925,125

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Note 4 - Loans (Details) - Recorded Investment and Number of Modifications for TDR (USD $)			6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Commercial Real Estate Portfolio Segment [Member]
Troubled Debt Restructurings:
Commercial Real Estate			1
Commercial Real Estate	$ 2,100,183	$ 495,698	$ 1,945,257
Commercial Real Estate			$ 600,887

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Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows provided by operating activities	$ 2,729,010	$ 4,799,919
Cash flows used by investing activities:
Proceeds from calls or maturities of securities	15,203,440	22,482,111
Proceeds from sales of available-for-sale securities	9,121,368	8,821,116
Purchases of available-for-sale securities	(16,159,372)	(45,664,744)
Net (increase) decrease in loans	(11,839,128)	2,449,709
Proceeds from sale of FHLB stock	749,600
Proceeds from sale of other real estate owned		650,046
Expenditures for premises and equipment	(97,938)	(188,787)
Net cash used by investing activities	(3,022,030)	(11,450,549)
Cash flows from financing activities:
Net change in deposits	28,833,932	(10,424,619)
Long-term borrowings, net of repayments	(600,042)	(1,167,280)
Proceeds from issuance of common stock	5,649	7,924
Repurchase of common stock	(290,395)
Cash dividends paid	(686,997)	(344,674)
Net cash provided by (used by) financing activities	27,262,147	(11,928,649)
Net change in cash and cash equivalents	26,969,127	(18,579,279)
Cash and cash equivalents:
At beginning of period	22,407,458	49,911,807
At end of period	49,376,585	31,332,528
Cash paid for:
Interest	1,378,215	1,620,246
Income taxes	40,000	150,000
Non-cash investing activities:
Change in net unrealized gain (loss) on available-for-sale securities	$ 4,308,641	$ (6,005,113)

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Note 5 - Junior Subordinated Deferrable Interest Debentures (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Note 5 - Junior Subordinated Deferrable Interest Debentures (Details) [Line Items]
Investments in and Advances to Affiliates, Balance, Principal Amount	$ 300,000
Guarantor Obligations, Maximum Exposure, Undiscounted	10,000,000
Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust	10,300,000		10,300,000
Interest Expense, Debt	$ 170,000	$ 174,000
Maximum Amount of Core Capital	25.00%
Junior Subordinated Debt [Member]
Note 5 - Junior Subordinated Deferrable Interest Debentures (Details) [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	3.38%	3.43%
London Interbank Offered Rate (LIBOR) [Member]
Note 5 - Junior Subordinated Deferrable Interest Debentures (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.15%

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Consolidated Balance Sheets (Unaudited) (USD $)	Jun. 30, 2014	Dec. 31, 2013
CASH AND CASH EQUIVALENTS
Cash and due from banks	$ 17,794,629	$ 13,698,325
Interest-bearing deposits in other banks	31,581,956	8,709,133
Total cash and cash equivalents	49,376,585	22,407,458
SECURITIES, available-for-sale	192,871,003	197,079,925
FEDERAL HOME LOAN BANK STOCK, at cost	4,144,200	4,893,800
CERTIFICATES OF DEPOSIT	2,739,000	2,739,000
LOANS HELD FOR SALE	489,450	423,720
LOANS	307,200,329	295,313,069
Less allowance for loan losses	(4,062,523)	(4,014,391)
Net loans	303,137,806	291,298,678
PREMISES AND EQUIPMENT, net	9,032,563	9,165,532
GOODWILL	8,554,979	8,554,979
CORE DEPOSIT INTANGIBLE ASSETS, net	112,357	132,786
CASH SURRENDER VALUE OF LIFE INSURANCE	14,375,898	14,173,138
OTHER REAL ESTATE OWNED	483,999	667,954
OTHER ASSETS, including accrued interest and intangible assets	4,454,717	4,697,774
TOTAL ASSETS	589,772,557	556,234,744
Deposits
Non-interest bearing	85,675,384	86,752,995
Interest bearing	411,158,613	381,247,070
Total deposits	496,833,997	468,000,065
Other borrowings	11,500,510	12,100,552
Junior subordinated deferrable interest debentures	10,300,000	10,300,000
Other Liabilities	4,293,811	2,826,262
Total liabilities	522,928,318	493,226,879
Common stock, $1.00 stated value. Authorized 10,000,000 shares; issued 3,760,557 shares	3,760,557	3,760,557
Surplus	14,664,728	14,663,861
Retained earnings	52,347,123	50,807,689
Accumulated other comprehensive income (loss)	1,223,481	(1,358,205)
Treasury stock 336,693 shares at June 30, 2014 and 318,506 shares at December 31, 2013, at cost	(5,151,650)	(4,866,037)
Total shareholders' equity	66,844,239	63,007,865
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 589,772,557	$ 556,234,744

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Consolidated Statements of Shareholders' Equity (Unaudited) (USD $)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2012	$ 3,760,557	$ 14,661,664	$ 46,855,865	$ 3,697,363	$ (4,805,244)	$ 64,170,205
Net income			2,444,431			2,444,431
Other comprehensive income				(4,052,308)		(4,052,308)
Dividends declared			(344,674)			(344,674)
Shares issued from treasury in connection with the Corporation’s Employee Stock Purchase Plan		1,181			6,743	7,924
Balance at Jun. 30, 2013	3,760,557	14,662,845	48,955,622	(354,945)	(4,798,501)	62,225,578
Balance at Dec. 31, 2013	3,760,557	14,663,861	50,807,689	(1,358,205)	(4,866,037)	63,007,865
Net income			2,226,431			2,226,431
Other comprehensive income				2,581,686		2,581,686
Dividends declared			(686,997)			(686,997)
Repurchase of 18,500 shares					(290,395)	(290,395)
Shares issued from treasury in connection with the Corporation’s Employee Stock Purchase Plan		867			4,782	5,649
Balance at Jun. 30, 2014	$ 3,760,557	$ 14,664,728	$ 52,347,123	$ 1,223,481	$ (5,151,650)	$ 66,844,239

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Note 7 - Fair Value of Financial Instruments (Details) (Commitments to Extend Credit [Member], USD $)	Jun. 30, 2014	Dec. 31, 2013
Commitments to Extend Credit [Member]
Note 7 - Fair Value of Financial Instruments (Details) [Line Items]
Other Commitment	$ 80,535,000	$ 76,322,000

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Note 3 - Securities (Details) - Gross Unrealized Gains and Losses on Available-for-sale Securities (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Note 3 - Securities (Details) - Gross Unrealized Gains and Losses on Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	$ 3,551	$ 2,278
Available-for-sale securities gross unrealized losses	1,698	4,336
US Government Agencies Debt Securities [Member]
Note 3 - Securities (Details) - Gross Unrealized Gains and Losses on Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	2
Available-for-sale securities gross unrealized losses	106	304
US States and Political Subdivisions Debt Securities [Member]
Note 3 - Securities (Details) - Gross Unrealized Gains and Losses on Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	1,677	1,113
Available-for-sale securities gross unrealized losses	305	1,158
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Note 3 - Securities (Details) - Gross Unrealized Gains and Losses on Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	1,623	1,165
Available-for-sale securities gross unrealized losses	1,287	2,857
Other Available-for-Sale Securities [Member]
Note 3 - Securities (Details) - Gross Unrealized Gains and Losses on Available-for-sale Securities [Line Items]
Available-for-sale securities gross unrealized gains	249
Available-for-sale securities gross unrealized losses		$ 17

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Note 7 - Fair Value of Financial Instruments (Details) - Carrying Amounts and Estimated Fair Values of Recognized Financial Instruments (USD $)	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 49,376,585	$ 22,407,458	$ 31,332,528	$ 49,911,807
Certificates of deposit	2,739,000	2,739,000
Certificates of deposit	2,739,000	2,739,000
Loans held for sale	489,450	423,720
Net loans	303,137,806	291,298,678
	589,772,557	556,234,744
Deposits carrying amount	496,833,997	468,000,065
Other borrowings	11,500,510	12,100,552
Junior subordinated deferrable interest debentures	10,300,000	10,300,000
	522,928,318	493,226,879
Maturity Deposits [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deposits carrying amount	163,618,000	172,349,000
Deposits estimated value	163,510,000	172,956,000
Non-Maturity Deposits [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deposits carrying amount	333,216,000	295,651,000
Deposits estimated value	333,216,000	295,651,000
Financial Liabilities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
	518,635,000	490,401,000
	519,201,000	491,937,000
Including Loans Held-for-sale [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net loans	303,138,000	291,299,000
Net loans	303,152,000	292,257,000
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	49,377,000	22,407,000
Cash and cash equivalents	49,377,000	22,407,000
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities, including Federal Home Loan Bank stock	197,015,000	201,974,000
Securities, including Federal Home Loan Bank stock	197,015,000	201,974,000
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for sale	489,000	424,000
Loans held for sale	489,000	424,000
Mortgage servicing rights	1,298,000	1,398,000
Mortgage servicing rights	1,298,031	1,398,396		930,760
Other borrowings	11,501,000	12,101,000
Other borrowings	12,191,000	13,036,000
Junior subordinated deferrable interest debentures	10,300,000	10,300,000
Junior subordinated deferrable interest debentures	10,284,000	10,294,000
Financial Assets [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
	554,056,000	520,241,000
	$ 554,070,000	$ 521,199,000

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Note 4 - Loans (Details) - Activity in Allowance for Loan Losses by Portfolio Segment (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		$ 4,014,391	$ 6,917,605
Provision charged to expenses	115,000	115,000
Losses charged off		(110,727)	(1,948,901)
Recoveries		43,859	439,361
Allowance for loan losses	4,062,523	4,062,523	5,408,065
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	896,534	896,534		179,016
Allowance collectively evaluated for impairment	3,165,989	3,165,989		3,835,375
Loans:
Loans individually evaluated for impairment	5,043,799	5,043,799		2,799,434
Loans collectively evaluated for impairment	302,156,530	302,156,530		292,513,635
Total ending loans balance	307,200,329	307,200,329		295,313,069
Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		305,434	1,027,837
Provision charged to expenses		151,406	(87,718)
Losses charged off			(201,297)
Recoveries		6,868	10,667
Allowance for loan losses	463,708	463,708	749,489
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	158,606	158,606
Allowance collectively evaluated for impairment	305,102	305,102		305,434
Loans:
Loans individually evaluated for impairment	734,410	734,410		401,028
Loans collectively evaluated for impairment	56,046,354	56,046,354		50,904,208
Total ending loans balance	56,780,764	56,780,764		51,305,236
Commercial and Multi-Family Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		3,346,286	5,240,175
Provision charged to expenses		(67,744)	235,489
Losses charged off		(77,462)	(1,737,983)
Recoveries		30,598	410,118
Allowance for loan losses	3,231,678	3,231,678	4,147,799
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	737,928	737,928		179,016
Allowance collectively evaluated for impairment	2,493,750	2,493,750		3,167,270
Loans:
Loans individually evaluated for impairment	4,229,452	4,229,452		2,316,969
Loans collectively evaluated for impairment	184,562,045	184,562,045		181,529,447
Total ending loans balance	188,791,497	188,791,497		183,846,416
Residential 1-4 Family Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		344,803	602,291
Provision charged to expenses		27,729	(127,469)
Losses charged off		(24,710)
Recoveries		95	6,000
Allowance for loan losses	347,917	347,917	480,822
Allowance for loan losses:
Allowance collectively evaluated for impairment	347,917	347,917		344,803
Loans:
Loans individually evaluated for impairment	79,937	79,937		81,437
Loans collectively evaluated for impairment	57,713,233	57,713,233		56,146,111
Total ending loans balance	57,793,170	57,793,170		56,227,548
Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses		17,868	47,302
Provision charged to expenses		3,609	(20,302)
Losses charged off		(8,555)	(9,621)
Recoveries		6,298	12,576
Allowance for loan losses	19,220	19,220	29,955
Allowance for loan losses:
Allowance collectively evaluated for impairment	19,220	19,220		17,868
Loans:
Loans collectively evaluated for impairment	3,834,898	3,834,898		3,933,869
Total ending loans balance	$ 3,834,898	$ 3,834,898		$ 3,933,869

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Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Dividends declared (in Dollars per share)	$ 0.20	$ 0.10
Repurchase of shares	18,500
Treasury Stock [Member]
Repurchase of shares	18,500
Shares of treasury stock sold	313	441

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Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Common stock par value (in Dollars per share) (in Dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	3,760,557	3,760,557
Treasury stock, shares	336,693	318,506

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Note 3 - Securities (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	June 30, 2014				December 31, 2013
	Amortized cost		Fair value		Amortized cost		Fair value
U.S. Government and agencies	$	9,639	$	9,535	$	12,637	$	12,333
Obligations of states and political subdivisions		56,426		57,798		66,585		66,540
Mortgage-backed		123,951		124,287		119,164		117,472
Other		1,002		1,251		752		735
Total	$	191,018	$	192,871	$	199,138	$	197,080

Unrealized Gain (Loss) on Investments [Table Text Block]

	June 30, 2014				December 31, 2013
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
U.S. Government and agencies	$	2	$	106	$	-	$	304
Obligations of states and political subdivisions		1,677		305		1,113		1,158
Mortgage-backed		1,623		1,287		1,165		2,857
Other		249		-		-		17
Total	$	3,551	$	1,698	$	2,278	$	4,336

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 24, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	UNITED BANCSHARES INC/OH
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		3,424,235
Amendment Flag	false
Entity Central Index Key	0001087456
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note 4 - Loans (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Allowance for Credit Losses on Financing Receivables [Table Text Block]

			Commercial
			and
	Commercial		multi-family real estate			Residential real estate			Consumer			Total
Balance at December 31, 2013	$	305,434	$	3,346,286		$	344,803		$	17,868		$	4,014,391
Provision charged to expenses		151,406		(67,744	)		27,729			3,609			115,000
Losses charged off		-		(77,462	)		(24,710	)		(8,555	)		(110,727	)
Recoveries		6,868		30,598			95			6,298			43,859
Balance at June 30, 2014	$	463,708	$	3,231,678		$	347,917		$	19,220		$	4,062,523

	Commercial			Commercial and multi-family real estate			Residential real estate			Consumer			Total
Balance at December 31, 2012	$	1,027,837		$	5,240,175		$	602,291		$	47,302		$	6,917,605
Provision charged to expenses		(87,718	)		235,489			(127,469	)		(20,302	)		-
Losses charged off		(201,297	)		(1,737,983	)		-			(9,621	)		(1,948,901	)
Recoveries		10,667			410,118			6,000			12,576			439,361
Balance at June 30, 2013	$	749,489		$	4,147,799		$	480,822		$	29,955		$	5,408,065

June 30, 2014	Commercial		Commercial and multi-family real estate		Residential real estate		Consumer		Total
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	158,606	$	737,928	$	-	$	-	$	896,534
Collectively evaluated for impairment		305,102		2,493,750		347,917		19,220		3,165,989
Total allowance for loan losses	$	463,708	$	3,231,678	$	347,917	$	19,220	$	4,062,523
Loans:
Individually evaluated for impairment	$	734,410	$	4,229,452	$	79,937	$	-	$	5,043,799
Collectively evaluated for impairment		56,046,354		184,562,045		57,713,233		3,834,898		302,156,530
Total ending loans balance	$	56,780,764	$	188,791,497	$	57,793,170	$	3,834,898	$	307,200,329

December 31, 2013	Commercial		Commercial and multi-family real estate		Residential real estate		Consumer		Total
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	-	$	179,016	$	-	$	-	$	179,016
Collectively evaluated for impairment		305,434		3,167,270		344,803		17,868		3,835,375
Total allowance for loan losses	$	305,434	$	3,346,286	$	344,803	$	17,868	$	4,014,391
Loans:
Individually evaluated for impairment	$	401,028	$	2,316,969	$	81,437	$	-	$	2,799,434
Collectively evaluated for impairment		50,904,208		181,529,447		56,146,111		3,933,869		292,513,635
Total ending loans balance	$	51,305,236	$	183,846,416	$	56,227,548	$	3,933,869	$	295,313,069

Impaired Financing Receivables [Table Text Block]

		June 30, 2014		December 31, 2013
Loans with no allowance for loan losses allocated	$	2,062,703	$	2,064,203
Loans with allowance for loan losses allocated		2,981,096		735,231
Total impaired loans	$	5,043,799	$	2,799,434
Amount of the allowance allocated to impaired loans	$	896,534	$	179,016

Additional Information Regarding Impaired Loans [Table Text Block]

	June 30, 2014				December 31, 2013
	Recorded investment		Allowance for loan losses allocated		Recorded investment		Allowance for loan losses allocated
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-
Agriculture		401,028		-		401,028		-
Commercial and multi-family real estate		1,007,702		-		1,007,702		-
Agricultural real estate		649,036		-		649,036		-
Residential real estate		4,937		-		6,437		-
With an allowance recorded:
Commercial		333,382		158,606		-		-
Commercial and multi-family real estate		2,572,714		731,362		660,231		165,300
Residential real estate		75,000		6,566		75,000		13,716
Total	$	5,043,799	$	896,534	$	2,799,434	$	179,016

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

June 30, 2014	Nonaccrual		Loans past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	-	$	-	$	-
Commercial real estate		2,891,939		-		1,945,257
Agriculture		401,028		-		-
Agricultural real estate		872,529		-		-
Consumer		22,945		3,399		-
Residential real estate		1,494,828		122,436		154,926
Total	$	5,683,269	$	125,835	$	2,100,183

December 31, 2013	Nonaccrual		Loans past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	294,475	$	-	$	294,475
Commercial real estate		2,966,751		-		43,508
Agriculture		401,028		-		-
Agricultural real estate		915,992		-		-
Consumer		7,551		3,112		-
Residential real estate		1,925,627		33,758		157,715
Total	$	6,511,424	$	36,870	$	495,698

Aging Analysis of Recorded Investment in Loans [Table Text Block]

	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Loans not past due		Total
Commercial	$	123,420	$	-	$	-	$	123,420	$	44,842,584	$	44,966,004
Commercial real estate		26,223		-		2,513,228		2,539,451		159,442,433		161,981,884
Agriculture		152,000		-		401,028		553,028		11,261,732		11,814,760
Agricultural real estate		18,582		-		792,972		811,554		25,998,059		26,809,613
Consumer		21,201		47,053		7,498		75,752		3,759,146		3,834,898
Residential real estate		2,141,278		467,379		575,736		3,184,393		54,608,777		57,793,170
Total	$	2,482,704	$	514,432	$	4,290,462	$	7,287,598	$	299,912,731	$	307,200,329

	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Loans not past due		Total
Commercial	$	149,250	$	4,021	$	-	$	153,271	$	37,952,459	$	38,105,730
Commercial real estate		223,934		115,269		2,465,193		2,804,396		155,898,123		158,702,519
Agriculture		-		-		401,028		401,028		12,798,477		13,199,505
Agricultural real estate		508,125		-		805,868		1,313,993		23,829,905		25,143,898
Consumer		68,583		24,514		10,663		103,760		3,830,109		3,933,869
Residential real estate		1,420,956		930,154		479,098		2,830,208		53,397,340		56,227,548
Total	$	2,370,848	$	1,073,958	$	4,161,850	$	7,606,656	$	287,706,413	$	295,313,069

Financing Receivable Credit Quality Indicators [Table Text Block]

June 30, 2014	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	54,844,011	$	1,202,343	$	-	$	734,410	$	-
Commercial and multi-family real estate		172,151,531		9,342,178		6,648,752		649,036		-
Residential 1 – 4 family		-		-		75,000		4,937		57,713,233
Consumer		-		-		-		-		3,834,898
Total	$	226,995,542	$	10,544,521	$	6,723,752	$	1,388,383	$	61,548,131

December 31, 2013	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	49,943,919	$	960,289	$	-	$	401,028	$	-
Commercial and multi-family real estate		169,094,312		5,755,107		8,347,961		649,036		-
Residential 1 – 4 family		-		-		75,000		6,437		56,146,111
Consumer		-		-		8,744		-		3,925,125
Total	$	219,038,231	$	6,715,396	$	8,431,705	$	1,056,501	$	60,071,236

Performance of the Loan Portfolio [Table Text Block]

	June 30, 2014				December 31, 2013
	Residential 1 – 4 family		Consumer		Residential 1 – 4 family		Consumer
Performing	$	56,100,906	$	3,808,554	$	54,501,907	$	3,914,625
Nonperforming		1,612,327		26,344		1,644,204		10,500
Total	$	57,713,233	$	3,834,898	$	56,146,111	$	3,925,125

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Number of modifications		Recorded investment		Allowance for loan losses allocated
Troubled Debt Restructurings:
Commercial Real Estate		1	$	1,945,257	$	600,887

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Condensed Consolidated Statements of Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
INTEREST INCOME
Loans, including fees	$ 3,639,285	$ 3,764,689	$ 7,288,907	$ 7,485,640
Securities:
Taxable	643,735	599,885	1,295,803	1,177,008
Tax-exempt	447,131	452,214	928,898	905,175
Other	83,487	85,414	158,571	168,738
Total interest income	4,813,638	4,902,202	9,672,179	9,736,561
INTEREST EXPENSE
Deposits	516,470	540,091	1,018,770	1,083,501
Other borrowings	169,142	276,071	337,141	549,277
Total interest expense	685,612	816,162	1,355,911	1,632,778
NET INTEREST INCOME	4,128,026	4,086,040	8,316,268	8,103,783
Provision for loan losses	115,000		115,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	4,013,026	4,086,040	8,201,268	8,103,783
NON-INTEREST INCOME
Gain on sales of loans	66,926	296,330	121,175	514,235
Gain on sales of securities	395,244	5,527	396,996	134,747
Change in fair value of mortgage servicing rights	(17,646)	261,359	(71,037)	317,789
Other	904,189	738,327	1,716,232	1,460,021
Total non-interest income	1,348,713	1,301,543	2,163,366	2,426,792
NON-INTEREST EXPENSES	3,629,467	3,624,776	7,575,203	7,391,144
INCOME BEFORE INCOME TAXES	1,732,272	1,762,807	2,789,431	3,139,431
Provision for income taxes	407,000	416,000	563,000	695,000
NET INCOME	$ 1,325,272	$ 1,346,807	$ 2,226,431	$ 2,444,431
NET INCOME PER SHARE
Basic (in Dollars per share)	$ 0.39	$ 0.39	$ 0.65	$ 0.71
Weighted average common shares outstanding (in Shares)	3,426,172	3,446,746	3,431,317	3,446,731
Diluted (in Dollars per share)	$ 0.39	$ 0.39	$ 0.65	$ 0.71
Weighted average common shares outstanding (in Shares)	3,426,172	3,446,746	3,431,317	3,446,731

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Note 4 - Loans

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4 – LOANS

The following tables present the activity in the allowance for loan losses by portfolio segment for the periods ending June 30, 2014 and 2013:

			Commercial
			and
	Commercial		multi-family real estate			Residential real estate			Consumer			Total
Balance at December 31, 2013	$	305,434	$	3,346,286		$	344,803		$	17,868		$	4,014,391
Provision charged to expenses		151,406		(67,744	)		27,729			3,609			115,000
Losses charged off		-		(77,462	)		(24,710	)		(8,555	)		(110,727	)
Recoveries		6,868		30,598			95			6,298			43,859
Balance at June 30, 2014	$	463,708	$	3,231,678		$	347,917		$	19,220		$	4,062,523

	Commercial			Commercial and multi-family real estate			Residential real estate			Consumer			Total
Balance at December 31, 2012	$	1,027,837		$	5,240,175		$	602,291		$	47,302		$	6,917,605
Provision charged to expenses		(87,718	)		235,489			(127,469	)		(20,302	)		-
Losses charged off		(201,297	)		(1,737,983	)		-			(9,621	)		(1,948,901	)
Recoveries		10,667			410,118			6,000			12,576			439,361
Balance at June 30, 2013	$	749,489		$	4,147,799		$	480,822		$	29,955		$	5,408,065

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the periods ending June 30, 2014 and December 31, 2013:

June 30, 2014	Commercial		Commercial and multi-family real estate		Residential real estate		Consumer		Total
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	158,606	$	737,928	$	-	$	-	$	896,534
Collectively evaluated for impairment		305,102		2,493,750		347,917		19,220		3,165,989
Total allowance for loan losses	$	463,708	$	3,231,678	$	347,917	$	19,220	$	4,062,523
Loans:
Individually evaluated for impairment	$	734,410	$	4,229,452	$	79,937	$	-	$	5,043,799
Collectively evaluated for impairment		56,046,354		184,562,045		57,713,233		3,834,898		302,156,530
Total ending loans balance	$	56,780,764	$	188,791,497	$	57,793,170	$	3,834,898	$	307,200,329

December 31, 2013	Commercial		Commercial and multi-family real estate		Residential real estate		Consumer		Total
Allowance for loan losses:
Attributable to loans individually evaluated for impairment	$	-	$	179,016	$	-	$	-	$	179,016
Collectively evaluated for impairment		305,434		3,167,270		344,803		17,868		3,835,375
Total allowance for loan losses	$	305,434	$	3,346,286	$	344,803	$	17,868	$	4,014,391
Loans:
Individually evaluated for impairment	$	401,028	$	2,316,969	$	81,437	$	-	$	2,799,434
Collectively evaluated for impairment		50,904,208		181,529,447		56,146,111		3,933,869		292,513,635
Total ending loans balance	$	51,305,236	$	183,846,416	$	56,227,548	$	3,933,869	$	295,313,069

Impaired loans were as follows as of June 30, 2014 and December 31, 2013:

		June 30, 2014		December 31, 2013
Loans with no allowance for loan losses allocated	$	2,062,703	$	2,064,203
Loans with allowance for loan losses allocated		2,981,096		735,231
Total impaired loans	$	5,043,799	$	2,799,434
Amount of the allowance allocated to impaired loans	$	896,534	$	179,016

The average recorded investment in impaired loans for the six month periods ended June 30, 2014 and 2013 was approximately $3.4 million and $12.3 million, respectively. There was approximately $128,000 and $81,000 in interest income recognized by the Corporation on impaired loans on an accrual or cash basis for the six month periods ended June 30, 2014 and 2013, respectively.

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2014 and December 31, 2013:

	June 30, 2014				December 31, 2013
	Recorded investment		Allowance for loan losses allocated		Recorded investment		Allowance for loan losses allocated
With no related allowance recorded:
Commercial	$	-	$	-	$	-	$	-
Agriculture		401,028		-		401,028		-
Commercial and multi-family real estate		1,007,702		-		1,007,702		-
Agricultural real estate		649,036		-		649,036		-
Residential real estate		4,937		-		6,437		-
With an allowance recorded:
Commercial		333,382		158,606		-		-
Commercial and multi-family real estate		2,572,714		731,362		660,231		165,300
Residential real estate		75,000		6,566		75,000		13,716
Total	$	5,043,799	$	896,534	$	2,799,434	$	179,016

The following tables present 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 June 30, 2014 and December 31, 2013:

June 30, 2014	Nonaccrual		Loans past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	-	$	-	$	-
Commercial real estate		2,891,939		-		1,945,257
Agriculture		401,028		-		-
Agricultural real estate		872,529		-		-
Consumer		22,945		3,399		-
Residential real estate		1,494,828		122,436		154,926
Total	$	5,683,269	$	125,835	$	2,100,183

December 31, 2013	Nonaccrual		Loans past due over 90 days still accruing		Troubled Debt Restructurings
Commercial	$	294,475	$	-	$	294,475
Commercial real estate		2,966,751		-		43,508
Agriculture		401,028		-		-
Agricultural real estate		915,992		-		-
Consumer		7,551		3,112		-
Residential real estate		1,925,627		33,758		157,715
Total	$	6,511,424	$	36,870	$	495,698

The nonaccrual balances in the table above include troubled debt restructurings that have been classified as nonaccrual.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2014 by class of loans:

	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Loans not past due		Total
Commercial	$	123,420	$	-	$	-	$	123,420	$	44,842,584	$	44,966,004
Commercial real estate		26,223		-		2,513,228		2,539,451		159,442,433		161,981,884
Agriculture		152,000		-		401,028		553,028		11,261,732		11,814,760
Agricultural real estate		18,582		-		792,972		811,554		25,998,059		26,809,613
Consumer		21,201		47,053		7,498		75,752		3,759,146		3,834,898
Residential real estate		2,141,278		467,379		575,736		3,184,393		54,608,777		57,793,170
Total	$	2,482,704	$	514,432	$	4,290,462	$	7,287,598	$	299,912,731	$	307,200,329

The following table presents the aging of the recorded investment in past due loans as of December 31, 2013 by class of loans:

	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Loans not past due		Total
Commercial	$	149,250	$	4,021	$	-	$	153,271	$	37,952,459	$	38,105,730
Commercial real estate		223,934		115,269		2,465,193		2,804,396		155,898,123		158,702,519
Agriculture		-		-		401,028		401,028		12,798,477		13,199,505
Agricultural real estate		508,125		-		805,868		1,313,993		23,829,905		25,143,898
Consumer		68,583		24,514		10,663		103,760		3,830,109		3,933,869
Residential real estate		1,420,956		930,154		479,098		2,830,208		53,397,340		56,227,548
Total	$	2,370,848	$	1,073,958	$	4,161,850	$	7,606,656	$	287,706,413	$	295,313,069

Credit Quality Indicators:

The Corporation 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 Corporation analyzes loans individually by classifying the loans as to the credit risk. This analysis generally includes loans with an outstanding balance greater than $250,000 and non-homogenous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Corporation uses the following definitions for risk ratings:

● Special Mention: Loans which possess some credit deficiency or potential weakness which deserve 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 Corporation 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 previous criteria 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 $250,000 or are included in groups of homogenous loans. As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

June 30, 2014	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	54,844,011	$	1,202,343	$	-	$	734,410	$	-
Commercial and multi-family real estate		172,151,531		9,342,178		6,648,752		649,036		-
Residential 1 – 4 family		-		-		75,000		4,937		57,713,233
Consumer		-		-		-		-		3,834,898
Total	$	226,995,542	$	10,544,521	$	6,723,752	$	1,388,383	$	61,548,131

December 31, 2013	Pass		Special Mention		Substandard		Doubtful		Not rated
Commercial	$	49,943,919	$	960,289	$	-	$	401,028	$	-
Commercial and multi-family real estate		169,094,312		5,755,107		8,347,961		649,036		-
Residential 1 – 4 family		-		-		75,000		6,437		56,146,111
Consumer		-		-		8,744		-		3,925,125
Total	$	219,038,231	$	6,715,396	$	8,431,705	$	1,056,501	$	60,071,236

The Corporation 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 Corporation 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 June 30, 2014 and December 31, 2013:

	June 30, 2014				December 31, 2013
	Residential 1 – 4 family		Consumer		Residential 1 – 4 family		Consumer
Performing	$	56,100,906	$	3,808,554	$	54,501,907	$	3,914,625
Nonperforming		1,612,327		26,344		1,644,204		10,500
Total	$	57,713,233	$	3,834,898	$	56,146,111	$	3,925,125

Modifications:

The Corporation’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 Corporation’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. All TDRs are also classified as impaired loans.

When the Corporation 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), an impairment is recognized through a specific reserve in the allowance or a direct write down of the loan balance if collection is not expected.

The following table includes the recorded investment and number of modifications for TDR loans during the six month period ended June 30, 2014.

	Number of modifications		Recorded investment		Allowance for loan losses allocated
Troubled Debt Restructurings:
Commercial Real Estate		1	$	1,945,257	$	600,887

The concession granted in the above TDR was a temporary modification of the original term to interest only payments. The recorded investment in the loans did not change as a result of the modification. There are not any troubled debt restructurings for which there was a payment default in the current reporting period.

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Note 3 - Securities

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 3 - SECURITIES

The amortized cost and fair value of available-for-sale securities as of June 30, 2014 and December 31, 2013 are as follows (dollars in thousands):

	June 30, 2014				December 31, 2013
	Amortized cost		Fair value		Amortized cost		Fair value
U.S. Government and agencies	$	9,639	$	9,535	$	12,637	$	12,333
Obligations of states and political subdivisions		56,426		57,798		66,585		66,540
Mortgage-backed		123,951		124,287		119,164		117,472
Other		1,002		1,251		752		735
Total	$	191,018	$	192,871	$	199,138	$	197,080

A summary of gross unrealized gains and losses on available-for-sale securities as of June 30, 2014 and December 31, 2013 follows (dollars in thousands):

	June 30, 2014				December 31, 2013
	Gross unrealized gains		Gross unrealized losses		Gross unrealized gains		Gross unrealized losses
U.S. Government and agencies	$	2	$	106	$	-	$	304
Obligations of states and political subdivisions		1,677		305		1,113		1,158
Mortgage-backed		1,623		1,287		1,165		2,857
Other		249		-		-		17
Total	$	3,551	$	1,698	$	2,278	$	4,336

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Note 4 - Loans (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Receivables [Abstract]
Impaired Financing Receivable, Average Recorded Investment	$ 3,400,000	$ 12,300,000
Impaired Financing Receivable, Interest Income, Accrual Method	128,000	81,000
Minimum Loan Balance for Categorization Into Risk Categories	$ 250,000

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Note 6 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	June 30, 2014			December 31, 2013
Balance at beginning of period	$	1,398,396		$	930,760
Gains or losses, including realized and unrealized:
Disposals – amortization based on loan payments and payoffs		(83,449	)		(160,873	)
Purchases, issuances, and settlements		54,121			312,751
Other changes in fair value		(71,037	)		315,758
Balance at end of period	$	1,298,031		$	1,398,396

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Note 7 - Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Financial Instruments Disclosure [Text Block]

NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of recognized financial instruments at June 30, 2014 and December 31, 2013 were as follows (dollars in thousands):

	June 30, 2014				December 31, 2013
	Carrying amount		Estimated value		Carrying amount		Estimated value		Input Level
FINANCIAL ASSETS
Cash and cash equivalents	$	49,377	$	49,377	$	22,407	$	22,407		1
Securities, including Federal Home Loan Bank stock		197,015		197,015		201,974		201,974		2
Certificates of deposit		2,739		2,739		2,739		2,739
Loans held for sale		489		489		424		424		3
Net loans		303,138		303,152		291,299		292,257		3
Mortgage servicing rights		1,298		1,298		1,398		1,398		3
	$	554,056	$	554,070	$	520,241	$	521,199
FINANCIAL LIABILITIES
Deposits
Maturity	$	163,618	$	163,510	$	172,349	$	172,956		3
Non-maturity		333,216		333,216		295,651		295,651		1
Other borrowings		11,501		12,191		12,101		13,036		3
Junior subordinated deferrable interest debentures		10,300		10,284		10,300		10,294		3
	$	518,635	$	519,201	$	490,401	$	491,937

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 June 30, 2014 and December 31, 2013 which relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments approximated $80,535,000 at June 30, 2014 and $76,322,000 at December 31, 2013. 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.

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, securities sold under agreements to repurchase, 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.

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Note 5 - Junior Subordinated Deferrable Interest Debentures

6 Months Ended

Jun. 30, 2014

Subordinated Borrowings [Abstract]

Subordinated Borrowings Disclosure [Text Block]

NOTE 5 – 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 3.38% at June 30, 2014 and 3.43% at June 30, 2013. 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 $170,000 and $174,000 for the six month periods ended June 30, 2014 and 2013, 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.

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Note 6 - Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 6 - 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.

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 June 30, 2014 and December 31, 2013 include available-for-sale securities, which are all valued using Level 2 inputs, and mortgage servicing rights, amounting to $1,298,031 at June 30, 2014 and $1,398,396 at December 31, 2013, which are valued using Level 3 inputs. Financial assets (there were no financial liabilities) measured at fair value on a non-recurring basis at June 30, 2014 and December 31, 2013 include other real estate owned, as well as impaired loans approximating $4,147,000 at June 30, 2014 and $2,620,000 at December 31, 2013 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 June 30, 2014 and December 31, 2013.

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 six month period ended June 30, 2014 and year ended December 31, 2013:

	June 30, 2014			December 31, 2013
Balance at beginning of period	$	1,398,396		$	930,760
Gains or losses, including realized and unrealized:
Disposals – amortization based on loan payments and payoffs		(83,449	)		(160,873	)
Purchases, issuances, and settlements		54,121			312,751
Other changes in fair value		(71,037	)		315,758
Balance at end of period	$	1,298,031		$	1,398,396

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 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.

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 June 30, 2014 or December 31, 2013. 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 June 30, 2014 or December 31, 2013.

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 cost to sell, if repayment is expected solely from collateral. Collateral values are estimated using level 2 inputs, including recent appraisals and level 3 inputs based on customized discounting criteria such as additional appraisal adjustments to consider deterioration of value subsequent to appraisal date and estimated cost to sell. Additional appraisal adjustments range between 10% and 70% of appraised value, and estimated selling cost ranges between 10% and 20% of the adjusted appraised value.  Due to the significance of the level 3 inputs, impaired loans fair values have been classified as level 3.

Mortgage Servicing Rights

The Corporation records mortgage servicing rights at estimated fair value based on a discounted cash flow model which includes discount rates between -0.11% and 1.03%, in addition to prepayment, internal rate of return, servicing costs, inflation rate of servicing costs and earnings rate assumptions that are considered to be unobservable inputs. Due to the significance of the level 3 inputs, mortgage servicing rights 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 appraisal adjustments between 10% and 20% of appraised value, and expected selling costs between 10% and 20% of adjusted appraised value. 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 $483,999, resulting in impairment charges of $183,955, which are included in non-interest expenses for the six month period ended June 30, 2014.

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 June 30, 2014 and December 31, 2013.

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Note 8 - Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 8 – SUBSEQUENT EVENTS

Management evaluated subsequent events through the date the consolidated financial statements were issued. On July 1, 2014, the Corporation, Ohio State Bancshares, Inc. (“OSB”) and Rbancshares, Inc. (“Rbancshares”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which the Corporation will purchase from OSB all of the issued and outstanding shares of The Ohio State Bank (“Ohio State Bank”), an Ohio banking corporation and wholly-owned subsidiary of OSB. Rbancshares is a majority shareholder of OSB. Immediately following the acquisition, Ohio State Bank will merge with and into The Union Bank Company and its offices will become branches of The Union Bank Company. The acquisition is expected to close in the fourth quarter of 2014, pending adoption of the Purchase Agreement by the shareholders of OSB, the satisfaction of various closing conditions, including the receipt of all necessary bank regulatory approvals, the accuracy of the representations and warranties of each party (subject to certain exceptions), the performance in all material respects by each party of its obligations under the Purchase Agreement, and other conditions customary for transactions of this type. On July 10, 2014, the Corporation repurchased 16,500 of its common shares for $242,055, and on July 18, 2014, an additional 7,000 common shares were repurchased for $102,200. There were no other significant events or transactions occurring after June 30, 2014, but prior to when the consolidated financial statements were issued, that provided additional evidence about conditions that existed at June 30, 2014. Events or transactions that provided evidence about conditions that did not exist at June 30, 2014, but arose before the financial statements were issued have not been recognized in the consolidated financial statements for the period ended June 30, 2014.

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Note 6 - Fair Value Measurements (Details) - Reconciliation and Income Statement Classification of Gains and Losses (Fair Value, Inputs, Level 3 [Member], USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance	$ 1,398,396	$ 930,760
Disposals – amortization based on loan payments and payoffs	(83,449)	(160,873)
Purchases, issuances, and settlements	54,121	312,751
Other changes in fair value	(71,037)	315,758
Balance	$ 1,298,031	$ 1,398,396

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Note 3 - Securities (Details) - Amortized Cost and Fair Value of Available-for-sale Securities (USD $)	Jun. 30, 2014	Dec. 31, 2013
Note 3 - Securities (Details) - Amortized Cost and Fair Value of Available-for-sale Securities [Line Items]
Amortized cost	$ 191,018,000	$ 199,138,000
Fair value	192,871,003	197,079,925
US Government Agencies Debt Securities [Member]
Note 3 - Securities (Details) - Amortized Cost and Fair Value of Available-for-sale Securities [Line Items]
Amortized cost	9,639,000	12,637,000
Fair value	9,535,000	12,333,000
US States and Political Subdivisions Debt Securities [Member]
Note 3 - Securities (Details) - Amortized Cost and Fair Value of Available-for-sale Securities [Line Items]
Amortized cost	56,426,000	66,585,000
Fair value	57,798,000	66,540,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Note 3 - Securities (Details) - Amortized Cost and Fair Value of Available-for-sale Securities [Line Items]
Amortized cost	123,951,000	119,164,000
Fair value	124,287,000	117,472,000
Other Available-for-Sale Securities [Member]
Note 3 - Securities (Details) - Amortized Cost and Fair Value of Available-for-sale Securities [Line Items]
Amortized cost	1,002,000	752,000
Fair value	$ 1,251,000	$ 735,000

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Note 4 - Loans (Details) - Loans Individually Evaluated for Impairment (USD $)	Jun. 30, 2014	Dec. 31, 2013
With no related allowance recorded:
Recorded investment	$ 2,062,703	$ 2,064,203
With an allowance recorded:
Recorded investment	2,981,096	735,231
Allowance for Loan Losses Allocated	896,534	179,016
Total	5,043,799	2,799,434
Total	896,534	179,016
Indivdually Evaluated for Impairment [Member] | Commercial Portfolio Segment [Member]
With an allowance recorded:
Recorded investment	333,382
Allowance for Loan Losses Allocated	158,606
Total	158,606
Indivdually Evaluated for Impairment [Member] | Agriculture Portfolio [Member]
With no related allowance recorded:
Recorded investment	401,028	401,028
Indivdually Evaluated for Impairment [Member] | Commercial and Multi-Family Real Estate [Member]
With no related allowance recorded:
Recorded investment	1,007,702	1,007,702
With an allowance recorded:
Recorded investment	2,572,714	660,231
Allowance for Loan Losses Allocated	731,362	165,300
Total	731,362	165,300
Indivdually Evaluated for Impairment [Member] | Agricultural Real Estate [Member]
With no related allowance recorded:
Recorded investment	649,036	649,036
Indivdually Evaluated for Impairment [Member] | Residential Portfolio Segment [Member]
With no related allowance recorded:
Recorded investment	4,937	6,437
With an allowance recorded:
Recorded investment	75,000	75,000
Allowance for Loan Losses Allocated	6,566	13,716
Total	6,566	13,716
Indivdually Evaluated for Impairment [Member]
With an allowance recorded:
Allowance for Loan Losses Allocated	896,534	179,016
Total	5,043,799	2,799,434
Total	$ 896,534	$ 179,016

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
NET INCOME	$ 1,325,272	$ 1,346,807	$ 2,226,431	$ 2,444,431
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) during period	2,420,328	(4,950,030)	4,308,641	(6,005,113)
Reclassification adjustments for gains included in net income	(395,244)	(5,527)	(396,996)	(134,747)
Other comprehensive income (loss), before income taxes	2,025,084	(4,955,557)	3,911,645	(6,139,860)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(688,529)	1,684,889	(1,329,959)	2,087,552
Other comprehensive income (loss)	1,336,555	(3,270,668)	2,581,686	(4,052,308)
COMPREHENSIVE INCOME (LOSS)	$ 2,661,827	$ (1,923,861)	$ 4,808,117	$ (1,607,877)

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Note 2 - New Accounting Pronouncements

6 Months Ended

Jun. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

In July 2013, the FASB issued ASU 2013-11, Income Taxes, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The FASB issued ASU 2013-11 to eliminate the diversity in the presentation of unrecognized tax benefits in those instances. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Corporation has determined the provisions for ASU 2013-11 did not have a material impact on the financial statements.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, amending ASC topic 860. The FASB issued ASU 2014-11 to change the accounting for repurchase-to-maturity transactions and linked repurchase financials to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The amendments also require two new disclosures. The first disclosure requires an entity to disclose information on transfers accounted for as sales in transactions that are economically similar to repurchase agreements. The second disclosure provides increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The amendments in this update are effective for the first interim or annual period beginning after December 15, 2014, and the Corporation has not yet determined the financial statement impact.

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Note 4 - Loans (Details) - Nonaccrual Loans (USD $)	Jun. 30, 2014	Dec. 31, 2013
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual	$ 5,683,269	$ 6,511,424
Loans past due over 90 days and still accruing	125,835	36,870
Troubled debt restructurings	2,100,183	495,698
Commercial Portfolio Segment [Member]
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual		294,475
Troubled debt restructurings		294,475
Commercial Real Estate Portfolio Segment [Member]
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual	2,891,939	2,966,751
Troubled debt restructurings	1,945,257	43,508
Agriculture Portfolio [Member]
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual	401,028	401,028
Agricultural Real Estate [Member]
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual	872,529	915,992
Consumer Portfolio Segment [Member]
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual	22,945	7,551
Loans past due over 90 days and still accruing	3,399	3,112
Residential Portfolio Segment [Member]
Note 4 - Loans (Details) - Nonaccrual Loans [Line Items]
Nonaccrual	1,494,828	1,925,627
Loans past due over 90 days and still accruing	122,436	33,758
Troubled debt restructurings	$ 154,926	$ 157,715

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Note 7 - Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

	June 30, 2014				December 31, 2013
	Carrying amount		Estimated value		Carrying amount		Estimated value		Input Level
FINANCIAL ASSETS
Cash and cash equivalents	$	49,377	$	49,377	$	22,407	$	22,407		1
Securities, including Federal Home Loan Bank stock		197,015		197,015		201,974		201,974		2
Certificates of deposit		2,739		2,739		2,739		2,739
Loans held for sale		489		489		424		424		3
Net loans		303,138		303,152		291,299		292,257		3
Mortgage servicing rights		1,298		1,298		1,398		1,398		3
	$	554,056	$	554,070	$	520,241	$	521,199
FINANCIAL LIABILITIES
Deposits
Maturity	$	163,618	$	163,510	$	172,349	$	172,956		3
Non-maturity		333,216		333,216		295,651		295,651		1
Other borrowings		11,501		12,191		12,101		13,036		3
Junior subordinated deferrable interest debentures		10,300		10,284		10,300		10,294		3
	$	518,635	$	519,201	$	490,401	$	491,937