10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

_______________________________

Form 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2013

_________________________

Commission File #0-16640

(Exact name of registrant as specified in its charter)

Michigan	38-2606280
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2723 South State Street, Ann Arbor, MI 48104

(Address of principal executive offices, including Zip Code)

Registrant's telephone number, including area code: (517) 423-8373

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 þNoo

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 þ No o

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 o	Accelerated filer o
Non-accelerated filer o (do not check if a smaller reporting company)	Smaller reporting company þ

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

As of October 25, 2013, there were outstanding 12,715,490 shares of the registrant's common stock, no par value.

Page 1

Forward-Looking Statements

This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and United Bancorp, Inc. Forward-looking statements are identifiable by words or phrases such as "outlook" or "strategy"; that an event or trend "may," "could," "will," "is likely," or is "probable or projected" to occur or "continue" or "is scheduled" or "on track" or that the Company or its management "anticipates," "believes," "estimates," "plans," "forecasts," "intends," "predicts," or "expects" a particular result, or is "confident," "optimistic" or has an "opinion" that an event will occur, or other words or phrases such as "ongoing," "trend,"  "future," "possible," or "tend" and variations of such words and similar expressions. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to the possible future redemption of the remaining shares of Preferred Stock, deployment of liquidity and loan demand, future economic conditions, future investment opportunities, future levels of expenses associated with other real estate owned, real estate valuation, future recognition of income, future levels of nonperforming loans, the rate of asset dispositions, future dividends, market growth potential, future growth and funding sources, future liquidity levels, future capital levels, future profitability levels, future effects of modified or new accounting standards, future impacts of legal proceedings, the effects on earnings of changes in interest rates and the future level of other revenue sources. Future redemption of the remaining shares of Preferred Stock would require regulatory and Board of Directors approval. All of the information concerning interest rate sensitivity is forward-looking. All statements referencing future time periods are forward-looking.

Management's determination of the provision and allowance for loan losses, the appropriate carrying value of intangible assets (including mortgage servicing rights and deferred tax assets) and other real estate owned and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) involves judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated or that other real estate owned can be sold for its carrying value or at all. Our ability to sell other assets owned at their carrying value or at all, successfully implement new programs and initiatives, increase efficiencies, utilize our deferred tax asset, address regulatory issues, respond to declines in collateral values and credit quality, resume payment of dividends, and improve profitability is not entirely within our control and is not assured. The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and on United Bancorp, Inc., specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. United Bancorp, Inc. undertakes no obligation to update, clarify or revise forward-looking statements to reflect developments that occur or information obtained after the date of this report.

Risk factors include, but are not limited to, the risk factors described in "Item 1A – Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2012. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

Page 2

Cross Reference Table

Item	Description		Page
Part I	Financial Information		4
	Item 1	Financial Statements	4
	(a)	Condensed Consolidated Balance Sheets (unaudited)	4
	(b)	Condensed Consolidated Statements of  Income (unaudited)	5
	(c)	Condensed Consolidated Statements of Comprehensive Income (unaudited)	6
	(d)	Condensed Consolidated Statements of Shareholders' Equity (unaudited)	6
	(e)	Condensed Consolidated Statements of Cash Flows (unaudited)	7
	(f)	Notes to Condensed Consolidated Financial Statements (unaudited)	8
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
		Background	36
		Other Developments	37
		Executive Summary	38
		Financial Condition	40
		Results of Operations	48
		Liquidity and Capital Resources	58
		Critical Accounting Policies	61
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	61
	Item 4	Controls and Procedures	62
Part II	Other Information		62
	Item 5	Other Information	62
	Item 6	Exhibits	63
Signatures			63
Exhibit Index			64

Page 3

Part I – Financial Information

Item 1 – Financial Statements

(a)Condensed Consolidated Balance Sheets

In thousands of dollars	(unaudited)
	September 30,			December 31,
Assets	2013			2012
Cash and demand balances in other banks	$	23,514		$	13,769
Interest bearing balances with banks		8,267			56,843
Total cash and cash equivalents		31,781			70,612
Securities available for sale		204,827			206,129
FHLB Stock		2,691			2,571
Loans held for sale		8,388			13,380
Portfolio loans		643,151			586,678
Less allowance for loan losses		21,963			22,543
Net portfolio loans		621,188			564,135
Premises and equipment, net		10,379			10,719
Bank-owned life insurance		14,540			14,241
Accrued interest receivable and other assets		25,038			25,954
Total Assets	$	918,832		$	907,741
Liabilities
Deposits
Noninterest bearing deposits	$	160,225		$	165,430
Interest bearing deposits		645,515			619,213
Total deposits		805,740			784,643
FHLB advances payable		11,983			21,999
Other borrowings		6,000			-
Accrued interest payable and other liabilities		4,472			3,702
Total Liabilities		828,195			810,344
Commitments and Contingent Liabilities
Shareholders' Equity
Preferred stock, no par value; 2,000,000 shares authorized, 10,300 and 20,600 shares outstanding, respectively; liquidation preference $1,000 per share		10,282			20,476
Common stock and paid in capital, no par value; 30,000,000 shares authorized; 12,715,490, and 12,705,983 shares issued and outstanding, respectively		85,830			85,682
Accumulated deficit		(5,063	)		(10,426	)
Accumulated other comprehensive income (loss), net of tax		(412	)		1,665
Total Shareholders' Equity		90,637			97,397
Total Liabilities and Shareholders' Equity	$	918,832		$	907,741
The accompanying notes are an integral part of these condensed consolidated financial statements.

Page 4

(b)Condensed Consolidated Statements of Income (unaudited)

	Three Months Ended						Nine Months Ended
In thousands of dollars, except per share data	September 30,						September 30,
Interest Income	2013			2012			2013			2012
Interest and fees on loans	$	7,723		$	7,917		$	22,920		$	23,695
Interest on securities
Taxable		770			618			1,951			1,988
Tax exempt		163			160			475			506
Interest on federal funds sold and balances with banks		19			36			84			133
Total interest income		8,675			8,731			25,430			26,322
Interest Expense
Interest on deposits		618			895			2,033			2,936
Interest on FHLB advances		72			190			300			605
Interest on other borrowings		4			-			4			-
Total interest expense		694			1,085			2,337			3,541
Net Interest Income		7,981			7,646			23,093			22,781
Provision for loan losses		300			2,000			1,900			6,650
Net Interest Income after Provision for Loan Losses		7,681			5,646			21,193			16,131
Noninterest Income
Service charges on deposit accounts		473			496			1,369			1,378
Wealth Management fee income		1,465			1,319			4,356			3,855
Gains on securities transactions		1			-			40			4
Income from loan sales and servicing		2,252			2,803			8,071			7,299
ATM, debit and credit card fee income		580			517			1,637			1,583
Income from bank-owned life insurance		101			106			300			316
Other income		243			323			913			1,165
Total noninterest income		5,115			5,564			16,686			15,600
Noninterest Expense
Salaries and employee benefits		5,884			5,464			17,984			15,686
Occupancy and equipment expense, net		1,350			1,350			4,055			3,988
External data processing		352			250			1,077			764
Advertising and marketing		304			190			860			567
Attorney, accounting and other professional fees		334			416			1,094			1,654
Director fees		105			98			314			293
Expenses relating to ORE property and foreclosed assets		158			417			585			1,533
FDIC insurance premiums		189			292			565			883
Other expenses		856			823			2,358			2,249
Total noninterest expense		9,532			9,300			28,892			27,617
Income Before Federal Income Tax		3,264			1,910			8,987			4,114
Federal income tax		988			520			2,682			1,097
Net Income	$	2,276		$	1,390		$	6,305		$	3,017
Preferred stock dividends and amortization		(305	)		(285	)		(879	)		(856	)
Income Available to Common Shareholders	$	1,971		$	1,105		$	5,426		$	2,161
Basic and diluted earnings per share	$	0.15		$	0.09		$	0.42		$	0.17
Cash dividends declared per share of common stock	$	-		$	-		$	-		$	-
The accompanying notes are an integral part of these condensed consolidated financial statements.

Page 5

(c)Condensed Consolidated Statements of Comprehensive Income (unaudited)

	Three Months Ended					Nine Months Ended
In thousands of dollars	September 30,					September 30,
	2013			2012		2013			2012
Net income	$	2,276		$	1,390	$	6,305		$	3,017
Other comprehensive income (loss):
Unrealized gains/losses on securities:
Unrealized gains (losses) on securities available for sale		791			872		(3,107	)		1,076
Less: Reclassification for realized amount included in income		(1	)		-		(40	)		(4	)
Other comprehensive income (loss) before tax effect		790			872		(3,147	)		1,072
Tax expenses (benefit)		269			296		(1,070	)		364
Other comprehensive income (loss)		521			576		(2,077	)		708
Total comprehensive income	$	2,797		$	1,966	$	4,228		$	3,725
The accompanying notes are an integral part of these condensed consolidated financial statements.

(d)Condensed Consolidated Statements of Shareholders' Equity (unaudited)

	Three Months Ended						Nine Months Ended
In thousands of dollars	September 30,						September 30,
Total Shareholders' Equity	2013			2012			2013			2012
Balance at beginning of period	$	98,402		$	95,113		$	97,397		$	93,774
Net income		2,276			1,390			6,305			3,017
Other comprehensive income (loss)		521			576			(2,077	)		708
Redemption of preferred shares		(10,300	)		-			(10,300	)		-
Cash dividends paid on preferred shares		(322	)		(258	)		(836	)		(772	)
Other common stock transactions		60			15			148			109
Balance at end of period	$	90,637		$	96,836		$	90,637		$	96,836
The accompanying notes are an integral part of these condensed consolidated financial statements.

Page 6

(e)Condensed Consolidated Statements of Cash Flows (unaudited)

	Nine Months Ended
In thousands of dollars	September 30,
	2013			2012
Cash Flows from Operating Activities
Net income	$	6,305		$	3,017
Adjustments to Reconcile Net Income to Net Cash from Operating Activities
Depreciation and amortization		4,286			4,070
Provision for loan losses		1,900			6,650
Gain on sale of loans		(7,331	)		(6,945	)
Proceeds from sales of loans originated for sale		270,399			271,598
Loans originated for sale		(258,076	)		(268,129	)
Gains on securities transactions		(40	)		(4	)
Change in deferred income taxes		1,406			737
Stock based compensation expense		188			112
Increase in cash surrender value of bank-owned life insurance		(300	)		(316	)
Change in investment in limited partnership		(309	)		(224	)
Change in accrued interest receivable and other assets		991			3,332
Change in accrued interest payable and other liabilities		859			1,791
Net cash from operating activities		20,278			15,689
Cash Flows from Investing Activities
Securities available for sale
Purchases		(72,828	)		(80,231	)
Sales		11,752			2,847
Maturities and calls		19,633			25,870
Principal payments		36,339			24,601
Purchase of FHLB stock		(120	)		-
Net change in portfolio loans		(59,419	)		(35,464	)
Premises and equipment expenditures		(470	)		(769	)
Net cash from investing activities		(65,113	)		(63,146	)
Cash Flows from Financing Activities
Net change in deposits		21,097			11,169
Net change in other borrowings		6,000			-
Principal payments on FHLB advances		(10,016	)		(2,276	)
Repurchase of preferred stock		(10,300	)		-
Other common stock transactions		59			20
Cash dividends paid on preferred shares		(836	)		(772	)
Net cash from financing activities		6,004			8,141
Net change in cash and cash equivalents		(38,831	)		(39,316	)
Cash and cash equivalents at beginning of year		70,612			107,592
Cash and cash equivalents at end of period	$	31,781		$	68,276
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	2,410		$	3,629
Loans transferred to other real estate		466			2,535
Income taxes paid		610			-
The accompanying notes are an integral part of these condensed consolidated financial statements.

Page 7

(f)Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 - Basis of Presentation

The unaudited condensed consolidated financial statements of United Bancorp, Inc. (the "Company" or "United") have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) believed necessary for a fair presentation have been included. The condensed consolidated balance sheet of the Company as of December 31, 2012 has been derived from the audited consolidated balance sheet of the Company as of that date. Operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Note 2 - Securities

Securities classified as available for sale consist of bonds and notes that might be sold prior to maturity. Securities classified as available for sale are reported at their fair values and the related net unrealized holding gain or loss is reported in other comprehensive income. Premiums and discounts on securities are recognized in interest income using the interest method over the period to maturity. Realized gains or losses are based upon the amortized cost of the specific securities sold.

Balances of securities by category are shown below at September 30, 2013 and December 31, 2012. All securities are classified as available for sale.

At September 30, 2013, in thousands of dollars	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Treasury and agency securities	$	26,556	$	34	$	(823	)	$	25,767
Mortgage-backed agency securities		154,205		1,407		(1,369	)		154,243
Obligations of states and political subdivisions		24,664		468		(342	)		24,790
Equity securities		26		1		-			27
Total	$	205,451	$	1,910	$	(2,534	)	$	204,827
At December 31, 2012, in thousands of dollars
U.S. Treasury and agency securities	$	27,200	$	130	$	(14	)	$	27,316
Mortgage-backed agency securities		158,829		2,324		(654	)		160,499
Obligations of states and political subdivisions		17,551		740		(5	)		18,286
Equity securities		26		2		-			28
Total	$	203,606	$	3,196	$	(673	)	$	206,129

Page 8

The following tables show fair value and the gross unrealized losses of the Company's investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012.

At September 30, 2013	Less than 12 Months					12 Months or Longer					Total
In thousands of dollars	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Treasury and agency securities	$	18,643	$	(823	)	$	-	$	-		$	18,643	$	(823	)
Mortgage-backed agency securities		84,078		(1,305	)		3,084		(64	)		87,162		(1,369	)
Obligations of states and political subdivisions		8,535		(342	)		-		-			8,535		(342	)
Total	$	111,256	$	(2,470	)	$	3,084	$	(64	)	$	114,340	$	(2,534	)
At December 31, 2012
In thousands of dollars
U.S. Treasury and agency securities	$	4,131	$	(14	)	$	-	$	-		$	4,131	$	(14	)
Mortgage-backed agency securities		54,538		(639	)		1,309		(15	)		55,847		(654	)
Obligations of states and political subdivisions		941		(5	)		-		-			941		(5	)
Total	$	59,610	$	(658	)	$	1,309	$	(15	)	$	60,919	$	(673	)

Unrealized losses within the investment portfolio are temporary. The Company performed an evaluation of its investments for other than temporary impairment, and no losses were recognized during the first nine months of 2013 or 2012.  The unrealized losses on the Company's investment in available for sale securities were caused by interest rate changes. All of the Company's mortgage-backed securities are issued by U.S. Government-sponsored agencies. The Company owns no obligations issued by the City of Detroit. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company did not consider those investments to be other-than-temporarily impaired at September 30, 2013 or December 31, 2012.

The entire investment portfolio is classified as available for sale. However, management has no specific intent to sell any securities, and management believes that it is likely the Company will not have to sell any security before recovery of its cost basis.

Page 9

Sales activity for securities for the three and nine month periods ended September 30, 2013 and 2012 is shown in the following table. All sales were of securities identified as available for sale.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands of dollars	2013		2012		2013			2012
Sales proceeds	$	-	$	-	$	11,752		$	2,847
Gross gains on sales		-		-		136			30
Gross loss on sales		-		-		(97	)		(26	)
Gross gains on calls		1		-		1			-

The amortized cost and fair value of securities available for sale by contractual maturity as of September 30, 2013 is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized
In thousands of dollars	Cost		Fair Value
Due in one year or less	$	16,821	$	16,892
Due after one year through five years		28,480		28,006
Due after five years through ten years		5,919		5,659
Due after ten years		-		-
Mortgage-backed agency securities		154,205		154,243
Equity securities		26		27
Total securities	$	205,451	$	204,827

Securities carried at $1.0 million as of September 30, 2013 were pledged to secure deposits of public funds, funds borrowed, repurchase agreements, and for other purposes as required by law.

The municipal portfolio contains a small level of geographic risk, as approximately 1.3% of the investment portfolio is issued by political subdivisions located within Lenawee County, Michigan, 1.1% in Monroe County, Michigan and 3.5% in Washtenaw County, Michigan. The total fair value of municipal obligations issued by political subdivisions located in these three counties is approximately $12.1 million.

Page 10

Note 3 – Loans

The following table shows the balances of the various categories of loans of the Company, and the percentage composition of the portfolio by class at September 30, 2013 and December 31, 2012.

	September 30, 2013					December 31, 2012
In thousands of dollars	Balance		% of total			Balance		% of total
Commercial construction & land development	$	18,528		2.9	%	$	28,511		4.9	%
Owner-occupied commercial real estate loans		109,144		17.0	%		97,755		16.7	%
Other commercial real estate loans		140,686		21.9	%		113,370		19.3	%
Commercial & industrial loans		104,133		16.2	%		104,332		17.8	%
Residential mortgages		133,905		20.8	%		121,393		20.6	%
Consumer construction		13,709		2.1	%		12,123		2.1	%
Home equity loans		79,898		12.4	%		72,983		12.4	%
Other consumer loans		38,797		6.0	%		33,969		5.8	%
Deferred loan fees and costs, overdrafts, in-process accounts		4,351		0.7	%		2,242		0.4	%
Total portfolio loans	$	643,151		100.0	%	$	586,678		100.0	%

Note 4 – Allowance for Loan Losses and Credit Risk

The allowance for loan losses ("allowance") is maintained at a level believed adequate by management to absorb probable incurred credit losses in the loan portfolio. The allowance is increased by provisions for loan losses charged to income. Loan losses are charged against the allowance when management believes a loan is uncollectible. Subsequent recoveries, if any, are credited to the allowance. This policy applies to each of the Company's loan portfolio segments.

The Company's established methodology for evaluating the adequacy of the allowance for loan losses considers both components of the allowance: (1) specific allowances allocated to loans evaluated individually for impairment under the Accounting Standards Codification ("ASC") Section 310-10-35 of the Financial Accounting Standards Board ("FASB"), and (2) allowances calculated for pools of loans evaluated collectively for impairment under FASB ASC Subtopic 450-20.

The Company's past loan loss experience is determined by analyzing pools of loans based on internal credit risk ratings for commercial loans (construction & land development, owner-occupied commercial real estate, other commercial real estate and all other commercial and industrial loans), and by delinquency status for residential mortgages, consumer loans and all other loan types, based on a migration analysis that is performed quarterly. The quarterly migration analysis is based on activity for the period beginning March 2008. The analysis computes loss rates based on a probability of default ("PD") and loss given default ("LGD"). The March 2008 date was selected in an effort to capture sufficient data points to provide a meaningful migration analysis using available data in comparable formats.

Page 11

Loss rates are adjusted to consider qualitative factors such as economic conditions and trends, among others. In addition, the Company applies a detailed analysis of qualitative factors that are assessed on a quarterly basis based upon ratios specific to the Company, as well as regional economic metrics.

Loan impairment is reported when full payment under the loan terms is not expected. Impaired loans are carried at the present value of estimated future cash flows using the loan's existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations require an increase in the allowance for loan losses, that increase is recorded as a component of the provision for loan losses. Loans are evaluated for impairment when payments are delayed or when the internal grading system indicates a substandard or doubtful classification. This policy applies to each class of the Company's loan portfolio.

Impairment is evaluated in total for smaller-balance loans of similar nature, such as residential mortgage, consumer, home equity and second mortgage loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When credit analysis of borrower operating results and financial condition indicates that underlying cash flows of the borrower's business are not adequate to meet its debt service requirements, including loans to the borrower by United Bank & Trust (the "Bank"), the loan is evaluated for impairment. Often this is associated with a delay or shortfall of payments of thirty days or more.

Loans are generally moved to nonaccrual status when ninety days or more past due, or in bankruptcy. These loans are often also considered impaired. Impaired loans are charged off, in part or in full, when deemed uncollectible. This typically occurs when the loan is 120 or more days past due, unless the loan is both well-secured and in the process of collection. This policy applies to each class of the Company's loan portfolio.

An analysis of the allowance for loan losses for the three and nine month periods ended September 30, 2013 and 2012 and balances as of December 31, 2012 follows:

	Three Months Ended September 30, 2013
Thousands of dollars	CLD (1)			Owner- Occupied CRE (2)			OtherCRE (2)			Commercial & Industrial			Residential Mortgage			Personal Loans			Total
Allowance for Loan Losses:
Balance, June 30	$	2,925		$	4,509		$	5,445		$	4,482		$	2,456		$	2,184		$	22,001
Provision charged to expense		(163	)		1			(26	)		414			(12	)		86			300
Losses charged off		(8	)		(92	)		(35	)		(367	)		(77	)		(89	)		(668	)
Recoveries		244			8			3			8			1			66			330
Balance, September 30	$	2,998		$	4,426		$	5,387		$	4,537		$	2,368		$	2,247		$	21,963

Page 12

	Nine Months Ended September 30, 2013
Thousands of dollars	CLD (1)			Owner- Occupied CRE (2)			OtherCRE (2)			Commercial & Industrial			Residential Mortgage			Personal Loans			Total
Allowance for Loan Losses:
Balance, January 1	$	4,216		$	5,093		$	4,708		$	4,131		$	2,456		$	1,939		$	22,543
Provision charged to expense		(1,414	)		808			559			1,415			55			477			1,900
Losses charged off		(808	)		(1,830	)		(73	)		(1,118	)		(200	)		(479	)		(4,508	)
Recoveries		1,004			355			193			109			57			310			2,028
Balance, September 30	$	2,998		$	4,426		$	5,387		$	4,537		$	2,368		$	2,247		$	21,963
Ending balance:
Individually evaluated for impairment	$	2,134		$	1,874		$	1,088		$	781		$	719		$	-		$	6,596
Collectively evaluated for impairment	$	864		$	2,552		$	4,299		$	3,756		$	1,649		$	2,247		$	15,367
Total Loans:
Ending balance	$	32,237		$	110,417		$	164,457		$	104,231		$	106,723		$	125,086		$	643,151
Ending balance:
Individually evaluated for impairment	$	4,812		$	4,261		$	7,914		$	3,528		$	4,560		$	345		$	25,420
Collectively evaluated for impairment	$	27,425		$	106,156		$	156,543		$	100,703		$	102,163		$	124,741		$	617,731

	Three Months Ended September 30, 2012
Allowance for Loan Losses:
Balance, June 30, 2012	$	4,587		$	4,778		$	4,845		$	4,355		$	1,808		$	1,724		$	22,097
Provision charged to expense		496			1,007			97			202			206			(8	)		2,000
Losses charged off		(110	)		(1,009	)		(239	)		(719	)		(216	)		(87	)		(2,380	)
Recoveries		80			5			174			335			80			69			743
Balance, September 30	$	5,053		$	4,781		$	4,877		$	4,173		$	1,878		$	1,698		$	22,460
	Nine Months Ended September 30, 2012
Thousands of dollars
Allowance for Loan Losses:
Balance, January 1	$	3,676		$	3,875		$	4,721		$	4,741		$	1,931		$	1,689		$	20,633
Provision charged to expense		1,945			1,942			1,940			11			659			153			6,650
Losses charged off		(868	)		(1,067	)		(2,056	)		(1,419	)		(855	)		(578	)		(6,843	)
Recoveries		300			31			272			840			143			434			2,020
Balance, September 30	$	5,053		$	4,781		$	4,877		$	4,173		$	1,878		$	1,698		$	22,460

Page 13

	Balances at December 31, 2012
Thousands of dollars	CLD (1)		Owner- Occupied CRE (2)		OtherCRE (2)		Commercial & Industrial		Residential Mortgage		Personal Loans		Total
Allowance for Loan Losses:
Ending balance:
Individually evaluated for impairment	$	3,271	$	2,904	$	1,079	$	274	$	771	$	5	$	8,304
Collectively evaluated for impairment		945		2,189		3,629		3,857		1,685		1,934		14,239
Total Allowance for Loan Losses	$	4,216	$	5,093	$	4,708	$	4,131	$	2,456	$	1,939	$	22,543
Total Loans:
Ending balance:
Individually evaluated for impairment	$	8,224	$	10,263	$	7,797	$	2,049	$	5,561	$	394	$	34,288
Collectively evaluated for impairment		32,410		92,316		123,207		96,336		96,095		112,026		552,390
Total Loans	$	40,634	$	102,579	$	131,004	$	98,385	$	101,656	$	112,420	$	586,678
(1) Construction and Land Development loans
(2) Commercial Real Estate loans

Credit Exposure and Quality Indicators

The Company categorizes commercial and tax-exempt loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, management capacity, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed during the loan approval process and is updated as circumstances warrant.

The risk characteristics of each loan portfolio segment are as follows:

Construction and Land Development. Construction and Land Development ("CLD") loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. CLD loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. CLD loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Page 14

Commercial Real Estate. Commercial Real Estate ("CRE") consists of two segments – owner-occupied real estate loans and other commercial real estate loans. CRE loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company's commercial real estate portfolio are diverse, but have geographic location almost entirely in the Company's market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Commercial & Industrial Loans. Commercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Consumer. Consumer loans consist of two segments – residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and personal loans are secured by personal assets, such as automobiles or recreational vehicles. Some personal loans are unsecured, such as small installment loans and certain lines of credit.

Repayment of consumer loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Page 15

Internal Risk Categories

Commercial and tax-exempt loans that are analyzed individually are assigned one of eight internal risk categories. Categories 1-4 are considered to be Pass-rated loans. Other risk category definitions for individually-analyzed commercial and tax-exempt loans are as follows:

5	Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.
6	Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral securing the loans, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
7	Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the additional characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
8	Loss. Loans classified as loss are regarded as uncollectible and should be charged off.

Consumer loans are not rated on the above-listed risk categories, but are classified by their payment activity, either as performing, accruing restructured, delinquent less than 90 days, or nonperforming.

Quality indicators for portfolio loans as of September 30, 2013 and December 31, 2012 based on the Bank's internal risk categories are detailed in the following tables.

In thousands of dollars		At September 30, 2013
Commercial & Tax-exempt Loans		CLD		Owner-Occupied CRE		Other CRE		Commercial & Industrial		Total Commercial
Credit Risk Profile by Internally Assigned Rating
1-4	Pass	$	7,930	$	96,748	$	118,953	$	91,616	$	315,247
5	Special Mention		5,110		6,600		13,671		5,627		31,008
6	Substandard		5,008		5,796		8,062		6,855		25,721
7	Doubtful		480		-		-		35		515
8	Loss		-		-		-		-		-
Total Commercial & Tax-exempt Loans		$	18,528	$	109,144	$	140,686	$	104,133	$	372,491

Page 16

	At September 30, 2013
Consumer Loans	Residential Mortgage		Consumer Construction		Home Equity		Other Consumer		Total Consumer
Credit risk profile based on payment activity
Performing	$	128,144	$	13,709	$	79,611	$	38,546	$	260,010
Accruing restructured		3,748		-		170		-		3,918
Delinquent less than 90 days		1,079		-		-		192		1,271
Nonperforming		934		-		117		59		1,110
Total Consumer Loans	$	133,905	$	13,709	$	79,898	$	38,797		266,309
Subtotal Commercial, Tax-exempt & Consumer Loans										638,800
Deferred loan fees and costs, overdrafts, in-process accounts										4,351
Total Portfolio Loans									$	643,151

In thousands of dollars		At December 31, 2012
Commercial & Tax-exempt Loans		CLD		Owner-Occupied CRE		Other CRE		Commercial & Industrial		Total Commercial
Credit Risk Profile by Internally Assigned Rating
1-4	Pass	$	12,813	$	78,507	$	86,445	$	91,711	$	269,476
5	Special Mention		7,378		11,510		17,073		5,104		41,065
6	Substandard		7,840		7,738		9,852		7,475		32,905
7	Doubtful		480		-		-		42		522
8	Loss		-		-		-		-		-
Total Commercial & Tax-exempt Loans		$	28,511	$	97,755	$	113,370	$	104,332	$	343,968

Consumer Loans	Residential Mortgage		Consumer Construction		Home Equity		Other Consumer		Total Consumer
Credit risk profile based on payment activity
Performing	$	114,071	$	12,123	$	72,344	$	33,764	$	232,302
Accruing restructured		3,267		-		171		-		3,438
Delinquent less than 90 days		1,714		-		343		150		2,207
Nonperforming		2,341		-		125		55		2,521
Total Consumer Loans	$	121,393	$	12,123	$	72,983	$	33,969		240,468
Subtotal Commercial, Tax-exempt & Consumer Loans										584,436
Deferred loan fees and costs, overdrafts, in-process accounts										2,242
Total Portfolio Loans									$	586,678

Loan Portfolio Aging Analysis

The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

Page 17

Tables detailing the loan portfolio aging analysis as of September 30, 2013 and December 31, 2012 follow.

Thousands of dollars	Delinquent Loans
As of September 30, 2013	30-89 Days Past Due		90 Days and Over (a) (1)		Total PastDue (b)		Current(c-b-d)		Total Portfolio Loans (c)		Nonaccrual Loans (d)		Total Non-performing (a+d)
Commercial
Commercial CLD	$	-	$	-	$	-	$	14,620	$	18,528	$	3,908	$	3,908
Owner-Occupied CRE		569		-		569		105,846		109,144		2,729		2,729
Other CRE		300		-		300		137,718		140,686		2,668		2,668
Commercial & Industrial		125		-		125		101,103		104,133		2,905		2,905
Consumer
Residential Mortgage		1,079		292		1,371		131,892		133,905		642		934
Consumer Construction		-		-		-		13,709		13,709		-		-
Home Equity		-		-		-		79,781		79,898		117		117
Other Consumer		192		-		192		38,546		38,797		59		59
Subtotal	$	2,265	$	292	$	2,557	$	623,215		638,800	$	13,028	$	13,320
Deferred loan fees and costs, overdrafts, in-process accounts										4,351
Total Portfolio Loans									$	643,151

As of December 31, 2012
Commercial
Commercial CLD	$	117	$	-	$	117	$	24,545	$	28,511	$	3,849	$	3,849
Owner-Occupied CRE		-		-		-		92,498		97,755		5,257		5,257
Other CRE		-		-		-		109,638		113,370		3,732		3,732
Commercial & Industrial		683		-		683		102,257		104,332		1,392		1,392
Consumer
Residential Mortgage		1,714		-		1,714		117,338		121,393		2,341		2,341
Consumer Construction		-		-		-		12,123		12,123		-		-
Home Equity		343		37		380		72,515		72,983		88		125
Other Consumer		150		-		150		33,764		33,969		55		55
Subtotal	$	3,007	$	37	$	3,044	$	564,678		584,436	$	16,714	$	16,751
Deferred loan fees and costs, overdrafts, in-process accounts										2,242
Total Portfolio Loans									$	586,678
(1) All are accruing.

Page 18

Impaired Loans

Information regarding impaired loans as of September 30, 2013 and December 31, 2012 follows.

	September 30, 2013						December 31, 2012
Thousands of dollars	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance
Commercial
Commercial CLD	$	445	$	753	$	-	$	654	$	1,673	$	-
Owner-Occupied CRE		947		1,334		-		4,181		6,267		-
Other CRE		1,891		2,313		-		4,438		6,158		-
Commercial & Industrial		1,262		3,315		-		1,640		3,992		-
Consumer
Residential Mortgage		1,667		1,667		-		2,207		2,989		-
Home Equity		170		170		-		232		232		-
Other Consumer		175		175		-		157		157		-
Subtotal		6,557		9,727		-		13,509		21,468		-

Loans with a specific valuation allowance
Commercial
Commercial CLD		4,367		4,546		2,134		7,570		7,629		3,271
Owner-Occupied CRE		3,314		6,489		1,874		6,082		7,495		2,904
Other CRE		6,023		6,273		1,088		3,359		3,359		1,079
Commercial & Industrial		2,266		3,077		781		409		409		274
Consumer
Residential Mortgage		2,893		2,893		719		3,354		3,817		771
Other Consumer		-		-		-		5		5		5
Subtotal		18,863		23,278		6,596		20,779		22,714		8,304
Total Impaired Loans
Commercial
Commercial CLD		4,812		5,299		2,134		8,224		9,302		3,271
Owner-Occupied CRE		4,261		7,823		1,874		10,263		13,762		2,904
Other CRE		7,914		8,586		1,088		7,797		9,517		1,079
Commercial & Industrial		3,528		6,392		781		2,049		4,401		274
Consumer
Residential Mortgage		4,560		4,560		719		5,561		6,806		771
Home Equity		170		170		-		232		232		-
Other Consumer		175		175		-		162		162		5
Total Impaired Loans	$	25,420	$	33,005	$	6,596	$	34,288	$	44,182	$	8,304

Page 19

Information regarding average investment in impaired loans and interest income recognized on those loans for the three and nine month periods ended September 30, 2013 and 2012 is shown below.

Periods ended September 30,	2013								2012
Thousands of dollars	Three Months				Year to Date				Three Months				Year to Date
	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Loans without a specific valuation allowance
Commercial
Commercial CLD	$	445	$	-	$	466	$	-	$	3,538	$	-	$	4,323	$	-
Owner-Occupied CRE		948		3		1,912		21		2,438		12		2,777		51
Other CRE		3,980		21		4,143		34		5,215		6		9,672		124
Commercial & Industrial		1,265		7		964		17		1,715		9		1,839		29
Consumer
Residential Mortgage		993		7		1,122		24		1,312		6		1,274		17
Home Equity		3		1		8		3		25		1		25		4
Other Consumer		158		-		145		-		122		-		155		-
Subtotal		7,792		39		8,760		99		14,365		34		20,065		225

Loans with a specific valuation allowance
Commercial
Commercial CLD		4,385		18		5,458		95		8,285		89		8,443		298
Owner-Occupied CRE		3,319		19		3,407		59		6,803		47		6,668		114
Other CRE		3,966		43		3,546		111		3,432		36		4,331		140
Commercial & Industrial		2,272		9		2,141		71		712		8		888		34
Consumer
Residential Mortgage		3,404		29		3,480		103		4,555		32		4,099		96
Home Equity		-		-		-		-		-		-		-		-
Other Consumer		-		-		-		-		78		-		56		2
Subtotal		17,346		118		18,032		439		23,865		212		24,485		684
Total Impaired Loans
Commercial
Commercial CLD		4,830		18		5,924		95		11,823		89		12,766		298
Owner-Occupied CRE		4,267		22		5,319		80		9,241		59		9,445		165
Other CRE		7,946		64		7,689		145		8,647		42		14,003		264
Commercial & Industrial		3,537		16		3,105		88		2,427		17		2,727		63
Consumer
Residential Mortgage		4,397		36		4,602		127		5,867		38		5,373		113
Home Equity		3		1		8		3		25		1		25		4
Other Consumer		158		-		145		-		200		-		211		2
Total Impaired Loans	$	25,138	$	157	$	26,792	$	538	$	38,230	$	246	$	44,550	$	909

Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions to principal. Subsequent payments on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Nonaccrual loans are returned to accrual status when, in the judgment of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. These policies apply to each class of the Company's loan portfolio.

Page 20

Troubled Debt Restructurings

In the course of working with borrowers, the Bank may choose to restructure the contractual terms of certain loans. In this scenario, the Bank attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Bank to identify if a troubled debt restructuring ("TDR") has occurred, which is when, for economic or legal reasons related to a borrower's financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with the borrower's current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

If such efforts by the Bank do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time before a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan.

It is the Bank's policy to have any restructured loan that is on nonaccrual status before being restructured, remain on nonaccrual status until six months of satisfactory borrower performance, at which time management would consider its return to accrual status. The balance of nonaccrual restructured loans, which is included in nonaccrual loans, was $10.0 million at September 30, 2013 and $10.8 million at December 31, 2012. If a restructured loan is on accrual status prior to being restructured, it is reviewed to determine if the restructured loan should remain on accrual status. The balance of accruing restructured loans was $10.6 million at September 30, 2013 and $15.8 million at December 31, 2012.

All TDRs are considered impaired by the Company. Loans that are considered TDRs are classified as performing unless they are on nonaccrual status or greater than 90 days delinquent as of the end of the most recent quarter. Under Company policy, a loan may be removed from TDR status when it is determined that the loan has performed according to its modified terms for a sustained period of repayment performance (generally not less than six months and not during the calendar year in which the restructuring took place), and the restructuring agreement specified an interest rate greater than or equal to an acceptable rate for a comparable new loan. On a quarterly basis, the Company individually reviews all TDR's to determine if any TDR should be removed from TDR status.

Accruing restructured loans at September 30, 2013 are comprised of two categories of loans on which interest is being accrued under their restructured terms, and the loans are current or less than ninety days past due. The first category consists of commercial loans, primarily comprised of business loans that have been temporarily modified as interest-only loans, generally for a period of up to one year, without a sufficient corresponding increase in the interest rate.

Within this category are CLD loans that have been renewed as interest only, generally for a period of up to one year, to assist the borrower. The Bank does not generally forgive principal or interest on restructured loans. However, when a loan is restructured, principal is generally received on a delayed basis as compared to the original repayment schedule. CLD loans that are restructured are generally modified to require interest-only for a period of time. The Bank does not generally reduce interest rates on restructured commercial loans.

Page 21

The second category included in accruing restructured loans consists of residential mortgage and home equity loans whose terms have been restructured at less than market terms and include rate modifications, extension of maturity, and forbearance.

The following tables present information regarding loans newly-classified as TDRs for the three and nine month periods ended September 30, 2013 and 2012.

Periods ended September 30, 2013	Three Months						Nine Months
Dollars in thousands	Total Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Total Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial
Owner-Occupied CRE		-	$	-	$	-		2	$	182	$	182
Other CRE		1		665		665		1		665		665
Consumer
Residential Mortgage		-		-		-		4		800		800
Total		1	$	665	$	665		7	$	1,647	$	1,647

Periods ended September 30, 2012
Commercial
Commercial CLD	-	$	-	$	-	2	$	400	$	400
Owner-Occupied CRE	1		645		645	6		1,271		1,271
Other CRE	-		-		-	4		2,304		2,304
Commercial & Industrial	-		-		-	1		190		190
Consumer
Residential Mortgage	-		-		-	2		224		224
Total	1	$	645	$	645	15	$	4,389	$	4,389

The table below provides a breakdown of accruing restructured loans by type at September 30, 2013. The table also includes the average yield on accruing restructured loans and the yield for the entire portfolio, for commercial loans and residential mortgage and home equity loans, for the third quarter of 2013.

	September 30, 2013				Third Quarter 2013
Dollars in thousands	Number of Loans		Recorded Balance		Avg. Yield			Portfolio Yield
CLD Loans		4	$	1,658
Other Commercial Loans		12		5,021
Total Commercial Loans		16		6,679		4.92	%		4.95	%
Residential Mortgage & Home Equity Loans		20		3,918		3.59	%		4.75	%
Total Accruing Restructured Loans		36	$	10,597

Page 22

The Company has no personal loans other than the loans described above that are classified as troubled debt restructurings. In determining the amount of the allowance for loan losses, all restructured loans are classified as impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

For the third quarter and first nine months ended in 2013, there were no TDRs that subsequently defaulted within twelve months of being restructured.  For the same periods in 2012, information is shown below regarding subsequent defaults.

Periods ended September 30, 2012	Three Months				Nine Months
Dollars in thousands	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
Commercial
Commercial CLD		1	$	1,892		4	$	3,423
Owner-Occupied CRE		-		-		2		239
Total		1	$	1,892		6	$	3,662

A TDR is in payment default once it is ninety days contractually past due under the modified terms (unless otherwise stated). Since the Company treats accruing TDRs as impaired loans and evaluates TDRs individually for impairment, the allowance for loan losses is not generally affected by a subsequent default of a TDR.

Note 5 - Stock Based Compensation

The Company has stock based compensation plans as described below. The Company recorded compensation expense related to stock based compensation of $62,500 and $37,500, respectively, for the three month periods and $187,500 and $112,500, respectively, for the nine month periods ended September 30, 2013 and 2012. The Company has a policy of issuing authorized but unissued common shares for the award, satisfaction or settlement of stock-based compensation.

Stock Incentive Plan of 2010

The Company's Stock Incentive Plan of 2010 (the "Incentive Plan") permits the grant and award of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards and other stock-based and stock-related awards (collectively referred to as "incentive awards") to directors, consultative board members, officers and other key employees of the Company and its subsidiaries.

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The following tables show activity for the nine months ended September 30, 2013 for awards granted under the Incentive Plan:

Stock-Only Stock Appreciation Rights
				Weighted
	Awards			Avg. Exer-
	Outstanding			cise Price
Balance at January 1		167,250		$	3.33
Awards granted		46,250			5.05
Awards exercised		(7,946	)		3.33
Awards forfeited		(8,250	)		3.63
Balance at September 30, 2013		197,304		$	3.72

	Restricted Stock					Restricted Stock Units
	Awards			Grant Date		Awards			Grant Date
	Outstanding			Fair Value		Outstanding			Fair Value
Nonvested at January 1		22,625		$	3.35		46,795		$	3.35
Awards granted		10,500			5.05		54,582			5.05
Awards vested		(22,625	)		3.35		-			-
Awards forfeited		-			-		(3,903	)		4.24
Nonvested at September 30		10,500		$	5.05		97,474		$	4.27

As of September 30, 2013, unrecognized compensation expense related to the Incentive Plan totaled $410,000. Compensation expense for stock-only stock appreciation rights ("SOSARs") and restricted stock grants is recognized over approximately three years. Compensation expense for restricted stock units ("RSUs") is based on an expected level of achievement of performance targets as determined at the time of each grant, and is usually recognized over three years.

The fair value of each SOSAR grant is estimated on the grant date using the Black-Scholes option pricing model. Grants were awarded in March of 2013 and 2012. Fair value of grants is based on the weighted-average assumptions shown in the following table.

	2013			2012
Dividend yield		0.0	%		0.0	%
Expected life in years		5			5
Expected volatility		28.8	%		37.0	%
Risk-free interest rate		0.72	%		0.84	%
Fair value	$	1.345		$	1.105

At September 30, 2013, the aggregate intrinsic value of SOSARs outstanding was $608,466. Intrinsic value was determined by calculating the difference between the Company's closing common stock price on September 30, 2013 and the exercise price of the SOSARs, multiplied by the number of in-the-money SOSARs held by each holder, assuming all holders had exercised their SOSARs on September 30, 2013. The weighted–average period over which non-vested SOSARs are expected to be recognized is one year.

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The fair value of restricted stock and RSU grants is considered to be the market price of Company common stock at the grant date. The Company has established three performance targets for 2013 grants. Those targets are based on the Company's pre-tax, pre-provision return on average assets, return on average assets, and classified assets coverage ratio¹. Each target is weighted equally, and target levels are based on United's 2013 financial plan.

Stock Option Plan

Through December 31, 2009, the Company granted stock options under its 2005 Stock Option Plan (the "2005 Plan"), which is a non-qualified stock option plan as defined under Internal Revenue Service regulations. The shares of stock that are subject to options are the authorized and unissued shares of common stock of the Company. Under the 2005 Plan, directors and management of the Company and subsidiaries were given the right to purchase stock of the Company at the then-current market price at the time the option was granted. The options have a three-year vesting period, and with certain exceptions, expire at the end of ten years, three years after retirement or ninety days after other separation from the Company. The 2005 Plan expired effective January 1, 2010, and no additional options may be granted under the plan.

The following summarizes year to date option activity for the 2005 Plan:

	Options			Weighted Avg.
Stock Options	Outstanding			Exercise Price
Balance at January 1, 2013		358,070		$	21.32
Options expired		(25,434	)		22.97
Options forfeited		(3,400	)		12.71
Balance at September 30, 2013		329,236		$	21.28

The table below provides information regarding stock options outstanding under the 2005 Plan at September 30, 2013.

	Options Outstanding							Options Exercisable
Range of	Number		Weighted Average			Weighted Avg.		Number		Weighted Avg.
Exercise Prices	Outstanding		Remaining Contractual Life			Exercise Price		Outstanding		Exercise Price
$6.00 to $32.14		329,236		3.12	Years	$	21.28		329,236	$	21.28

As of the end of the third quarter of 2013, there was no unrecognized compensation expense related to the stock options granted under the 2005 Plan. At September 30, 2013, the total outstanding stock options granted under the 2005 Plan had no intrinsic value. Intrinsic value was determined by calculating the difference between the Company's closing common stock price on September 30, 2013 and the exercise price of each option, multiplied by the number of in-the-money stock options held by each holder, assuming all holders had exercised their stock options on September 30, 2013.

¹ Adversely classified assets as a percent of Tier 1 capital plus allowance for loan losses.

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Note 6 - Loan Servicing

Loans serviced for others are not included in the accompanying consolidated financial statements. The unpaid principal balance of loans serviced for others at September 30, 2013 and December 31, 2012 were as follows:

In thousands of dollars	9/30/13		12/31/12		Change		Percent
Total loans serviced	$	962,935	$	853,761	$	109,174		12.8	%

Unamortized loan servicing rights are included in accrued interest receivable and other assets on the consolidated balance sheet, for the three and nine month periods ended September 30, 2013 and 2012, are shown below.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands of dollars	2013			2012			2013			2012
Balance at beginning of period	$	7,072		$	5,855		$	6,379		$	5,405
Amount capitalized		627			780			2,205			2,029
Amount amortized		(386	)		(509	)		(1,271	)		(1,308	)
Balance at September 30,	$	7,313		$	6,126		$	7,313		$	6,126

The fair value of servicing rights was as follows:

In thousands of dollars	9/30/13		9/30/12
Fair value, January 1	$	8,285	$	7,331
Fair value, end of period	$	11,041	$	7,848

Note 7 - Common Stock and Earnings per Share

Basic earnings per common share is determined by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus contingently issuable shares during the period. The diluted earnings per share further assumes the dilutive effect of additional common shares issuable under stock based compensation plans and warrants.

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A reconciliation of basic and diluted earnings per common share follows.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands, except per-share data	2013			2012			2013			2012
Net income	$	2,276		$	1,390		$	6,305		$	3,017
Less:
Accretion of discount on preferred stock		(47	)		(27	)		(106	)		(83	)
Dividends on preferred stock		(258	)		(258	)		(773	)		(773	)
Income available to common shareholders	$	1,971		$	1,105		$	5,426		$	2,161

Basic earnings per share:
Weighted avg. common shares outstanding		12,703.5		12,683.4		12,698.6		12,677.7
Weighted avg. contingently issuable shares		133.3		114.5		127.6		113.5
Total weighted average common shares outstanding		12,836.8		12,797.9		12,826.2		12,791.2
Basic earnings per share	$	0.15	$	0.09	$	0.42	$	0.17
Diluted earnings per share:
Weighted average common shares outstanding from basic earnings per share		12,836.8		12,797.9		12,826.2		12,791.2
Dilutive effect of stock incentive plans		73.9		-		55.1		-
Total weighted average common shares outstanding		12,910.7		12,797.9		12,881.4		12,791.2
Diluted earnings per share	$	0.15	$	0.09	$	0.42	$	0.17

A total of 370,986 and 373,986 shares subject to RSU and SOSAR grants, stock options and restricted stock existed for the three and nine month periods ended September 30, 2013 and 527,751 shares subject to RSU and SOSAR grants, stock options and restricted stock existed for the same time periods in 2012.  These shares were not considered in computing diluted earnings per share because they were not dilutive.

Note 8 – Disclosures About Fair Value of Assets and Liabilities

Fair Value Measurements. The Fair Value Measurements Topic of the FASB Accounting Standards Codification ("FASB ASC") defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC Topic 820-10-20 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 at the measurement date.

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Topic 820-10-55 establishes a fair value hierarchy that emphasizes use of observable inputs and minimizes use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements were classified at September 30, 2013 and December 31, 2012, in thousands of dollars:

Thousands of dollars			Fair Value Measurements Using
September 30, 2013	Fair Value		Level 1		Level 2		Level 3
Available for sale securities:
U.S. Treasury and agency securities	$	25,767	$	-	$	25,767	$	-
Mortgage-backed agency securities		154,243		-		154,243		-
Obligations of states and political subdivisions		24,790		-		24,790		-
Equity securities		27		27		-		-
Hedged loan		7,257		-		7,257		-
Interest rate swap asset		120		-		120		-

December 31, 2012
Available for sale securities:
U.S. Treasury and agency securities	$	27,316	$	-	$	27,316	$	-
Mortgage-backed agency securities		160,499		-		160,499		-
Obligations of states and political subdivisions		18,286		-		18,286		-
Equity securities		28		28		-		-

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Following is a description of the inputs and valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of those instruments under the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities include U.S. Government agency securities, mortgage-backed securities, obligations of states and municipalities, and certain corporate securities. Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities, but rather, relying on the investment securities' relationship to other benchmark quoted investment securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company has no Level 3 securities.

Interest Rate Swaps (Derivatives)

The fair value of interest rate swaps is based on valuation models using observable market data as of the measurement date (Level 2). Additional information is included in Note 9 – Derivative Instruments of the Notes to Consolidated Condensed Financial Statements of this Form 10-Q.

Transfers between Levels

There were no transfers between Levels 1, 2 and 3 in the quarter ended September 30, 2013 of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis.

Nonrecurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a non-recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at September 30, 2013 and December 31, 2012:

In thousands of dollars			Fair Value Measurements Using
Impaired Loans (Collateral Dependent):	Fair Value		Level 1		Level 2		Level 3
September 30, 2013	$	13,803	$	-	$	-	$	13,803
December 31, 2012		21,866		-		-		21,866

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Significant Unobservable Inputs

The following is a discussion of the significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement. Those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

Impaired Loans (Collateral Dependent)

Loan balances which indicate that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Collateral-dependent loans are assigned an impairment rating using the Fair Value of the Collateral method, based on the current appraisals of loan collateral.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. The Company's practice is to obtain new or updated appraisals on the loans subject to the initial impairment review and then to generally update on an annual basis thereafter. The Company discounts the appraisal amount as necessary for selling costs and past due real estate taxes. If a new or updated appraisal is not available at the time of a loan's impairment review, the Company typically applies a discount to the value of an old appraisal to reflect the property's current estimated value if there is believed to be deterioration in either (i) the physical or economic aspects of the subject property or (ii) any market conditions. These discounts and estimates are developed by the Credit Department, and are reviewed by the Chief Credit Officer and the Chief Financial Officer. The impairment review results in an increase in the allowance for loan loss or in a partial charge-off of the loan, if warranted. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method based on current appraisals.

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements as of September 30, 2013 and December 31, 2012. For both periods, the valuation technique used is market comparable properties and unobservable inputs are based on marketability discount at the rates shown.

	Impaired loans (collateral dependent)
dollars in thousands	9/30/13				12/31/12
Fair value		$	13,803			$	21,866
Range			7.5%-49.5	%			7.5%-49.5	%
Weighted average			16.3	%			14.0	%

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Fair Value of Financial Instruments

The carrying amounts and estimated fair value of principal financial assets and liabilities, in thousands of dollars, at September 30, 2013 and December 31, 2012, were as follows:

	September 30, 2013
	Carrying			Fair Value Measurements Using
	Amount			Level 1			Level 2			Level 3
Financial Assets
Cash and cash equivalents	$	31,781		$	31,781		$	-		$	-
Securities available for sale		204,827			27			204,800			-
FHLB Stock		2,691			-			2,691			-
Loans held for sale		8,388			-			8,388			-
Net portfolio loans		621,188			-			7,257			618,335
Accrued interest receivable		2,760			-			2,760			-
Interest rate swap asset		120			-			120			-
Financial Liabilities
Total deposits	$	(805,740	)	$	(160,225	)	$	(646,587	)	$	-
FHLB advances		(11,983	)		-			(12,595	)		-
Other borrowings		(6,000	)		-			(6,000	)		-
Accrued interest payable		(281	)		-			(281	)		-

	December 31, 2012
Financial Assets
Cash and cash equivalents	$	70,612		$	70,612	$	-		$	-
Securities available for sale		206,129			28		206,101			-
FHLB Stock		2,571			-		2,571			-
Loans held for sale		13,380			-		13,380			-
Net portfolio loans		564,135			-		-			574,137
Accrued interest receivable		2,620			-		2,620			-
Financial Liabilities
Total deposits	$	(784,643	)	$	-	$	(787,015	)	$	-
FHLB advances		(21,999	)		-		(23,007	)		-
Accrued interest payable		(354	)		-		(354	)		-

Estimated fair values require subjective judgments and are approximate. The above estimates of fair value are not necessarily representative of amounts that could be realized in actual market transactions, or of the underlying value of the Company.

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Changes in the following methodologies and assumptions could significantly affect the estimated fair value:

Cash and cash equivalents, FHLB stock, loans held for sale, accrued interest receivable and accrued interest payable – The carrying amounts are reasonable estimates of the fair values of these instruments at the respective balance sheet dates.

Net portfolio loans – The carrying amount is a reasonable estimate of fair value for personal loans for which rates adjust quarterly or more frequently, and for business and tax-exempt loans that are prime related and for which rates adjust immediately or quarterly. The fair value of all other loans is estimated by discounting future cash flows using current rates for loans with similar characteristics and maturities. The Bank's current loan rates are comparable with rates offered by other financial institutions. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns.

Total deposits – With the exception of certificates of deposit, the carrying value is deemed to be the fair value due to the demand nature of the deposits. The fair value of fixed maturity certificates of deposit is estimated by discounting future cash flows using the current rates paid on certificates of deposit with similar maturities. The Bank's current deposit rates are comparable with rates offered by other financial institutions.

FHLB advances – The fair value is estimated by discounting future cash flows using current rates on advances with similar maturities.

Other borrowings – The fair value is estimated by discounting future cash flows using current rates on borrowings with similar maturities.

Off-balance-sheet financial instruments – Commitments to extend credit, standby letters of credit and undisbursed loans are deemed to have no material fair value as such commitments are generally fulfilled at current market rates.

Note 9 – Derivative Instruments

The Company may use interest rate swaps as part of its interest rate risk management strategy to add stability to interest income and to manage its exposure to interest rate movements. The Company does not use derivative instruments for trading or speculative purposes. The Company has entered into an interest rate swap agreement, primarily as an asset/liability management strategy, in order to mitigate the changes in the fair value of a specified long-term fixed-rate loan caused by changes in interest rates. This hedge allowed us to offer a long-term fixed rate loan to a client without assuming the interest rate risk of a long-term asset. Converting our fixed-rate interest stream to a floating-rate interest stream, benchmarked to the one-month U.S. dollar LIBOR index, protects against changes in the fair value of our loan otherwise associated with fluctuating interest rates.

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The fixed-rate payment feature of the interest rate swap is structured at inception to mirror substantially all of the provisions of the hedged loan agreements. This interest rate swap, designated and qualified as a fair value hedge, is carried on the consolidated balance sheet at fair value in "other assets" (when the fair value is positive) or in "other liabilities" (when the fair value is negative).

The change in fair value of the interest rate swap is recorded in interest income. The unrealized gain or loss in fair value of the hedged fixed-rate loan due to LIBOR interest rate movements is recorded as an adjustment to the hedged loan and is offset in interest income. The net effect of the change in fair value of the interest rate swap and the change in the fair value of the hedged loan may result in an insignificant amount of hedge ineffectiveness recognized in interest income.

Our credit exposure, if any, on the interest rate swap is limited to the favorable value (net of any collateral pledged to us) and interest payments of the interest rate swap by the counterparty. We are required to post collateral to the counterparty. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. As of September 30, 2013, we have posted cash collateral of $370,100 related to the collateral requirements of the interest rate swap.

As of September 30, 2013, we had one interest rate swap, which is scheduled to mature in June 2020. The interest rate swap is accounted for as a fair value hedge, and is settled monthly with the counterparty. As of September 30, 2013, the notional amount of the interest rate swap was approximately $7.4 million. The fair value of the interest rate swap at September 30, 2013 was $120,000. The Company had no interest rate swaps at December 31, 2012.

The hedging relationship of the interest rate swap is tested for effectiveness on a quarterly basis, and, at September 30, 2013, was determined to be highly effective, with no resulting impact on the income statement of the Company for the three and nine months ended September 30, 2013.

Note 10 – Borrowings

The Company entered into a Business Loan Agreement with Chemical Bank (the "Loan Agreement") and a revolving line of credit as of September 16, 2013.  The Loan Agreement provides for a $10.0 million line of credit by Chemical Bank to the Company at an interest rate of prime plus 0.125% (3.375% as of September 30, 2013).  The Company will pay quarterly payments of accrued interest, and the balance of all outstanding principal and accrued interest will become due on September 16, 2015.  As of September 30, 2013, United had an outstanding principal balance of $6.0 million on the line of credit.

The Loan Agreement contained customary affirmative and negative covenants and events of default.  Affirmative covenants include the maintenance of certain minimum capital ratios, a maximum net charge off to average loan ratio, a maximum non-performing loan to total assets ratio, a minimum return on average assets, a minimum return on average equity and a limit on the amount of dividends that the Company may pay to holders of common stock.

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If return on average assets falls below a certain specified level, then the Company's quarterly dividend payment to common shareholders could not be increased and the payout ratio could not exceed 40%. Negative covenants include restrictions on additional indebtedness, and a covenant not to merge, acquire or consolidate with another entity without Chemical Bank's consent.  Events of default include payment defaults, false representations, insolvency and certain other events.

As security for its obligations under the Loan Agreement, the Company pledged to Chemical Bank all of the outstanding common stock of its subsidiary, United Bank & Trust.

Note 11 – Preferred Stock Redemption

On September 30, 2013, the Company completed the redemption of 10,300 shares, or 50%, of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, Liquidation Preference Amount $1,000 per share ("Preferred Stock") that were originally issued to the United States Department of the Treasury ("U.S. Treasury") under the Troubled Asset Relief Program Capital Purchase Program.  U.S. Treasury sold all 20,600 shares of Preferred Stock to private investors in June 2012.  Following completion of the partial redemption, 10,300 shares of Preferred Stock remain outstanding.

The redemption price for the shares of Preferred Stock was the stated liquidation preference amount of $1,000 per share, plus any accrued and unpaid dividends to but excluding September 30, 2013.  The total cost of the partial redemption of shares of Preferred Stock was approximately $10.4 million, which was funded with a combination of excess cash at the holding company, a dividend to the holding company of retained earnings by the Bank, and the borrowing of $6.0 million under the Company's $10.0 million revolving line of credit.

Following completion of the partial redemption of shares of Preferred Stock, the capital ratios of the Company and the Bank continue to exceed regulatory standards to be categorized as well-capitalized.  In addition, the Bank's Tier 1 capital ratio continues to exceed the 8.5% level required by resolution of the Bank's Board of Directors.  The Bank's Tier 1 leverage ratio was 9.72% at September 30, 2013, after payment of a $3.0 million dividend to the Company in the third quarter of 2013.

Note 12 – Accounting Developments

Accounting Standards Update No. 2013-04 – Liabilities (Topic 405). On February 28, 2013, FASB issued ASU 2013-04. The amendments in this Update provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors.

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The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF12D – Liabilities (Topic 405) which has been deleted.

The amendments in this Update are effective for fiscal years beginning after December 31, 2013. Early adoption is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Accounting Standards Update No. 2013-07 – Presentation of Financial Statements (Topic 205). On April 22, 2013, FASB issued ASU 2013-07. The objective of this Update is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2012-210– Presentation of Financial Statements (Topic 205), which has been deleted.

The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Accounting Standards Update No. 2013-10 - Derivatives and Hedging (Topic 815) In July 2013, FASB issued ASU 2013-10. The objective of this Update is to provide for the inclusion of the Fed Funds Effective Swap Rate - Overnight Index Swap Rate (OIS) as a U.S. benchmark interest rate for hedge accounting purposes, in addition to U.S. Treasury (UST) or London Interbank Offered Rate (LIBOR) indices. The Update also removes a restriction stating that entities must use the same rates for similar hedges, offering greater flexibility in hedge accounting.

The amendments in this Update are effective prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The Company has adopted the applicable methodologies prescribed by this ASU and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Accounting Standards Update No. 2013-11- Income Taxes (Topic 740) – In July 2013, FASB issued ASU 2013-11. This update pertains to the unrecognized tax benefit when a net operating loss carry forward, a similar tax loss or a tax credit carry forward exists. The ASU is intended to end the varying ways that entities present these situations since GAAP is non-specific and leads to diversity in practice.  The new standard deems that any unrecognized tax benefit or portion of an unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward except for certain defined situations.

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The amendments in this Update are effective for fiscal years beginning after December 15, 2013. Early adoption is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Note 13 – Legal Proceedings

The Company is involved in routine legal proceedings occurring in the ordinary course of its business, which, in the aggregate, are believed to be immaterial to the financial condition of the Company.

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

This discussion provides information about the consolidated financial condition and results of operations forUnited Bancorp, Inc. (the "Company" or "United") and its subsidiary bank, United Bank & Trust ("UBT" or the "Bank"), for the three and nine month periods ended September 30, 2013 and 2012. The discussion should be reviewed in conjunction with the Company's consolidated financial statements and related notes.

Background

United is a Michigan Corporation headquartered in Ann Arbor, Michigan and is the holding company for UBT, a Michigan-chartered bank organized 120 years ago. We are registered as a bank holding company under the Bank Holding Company Act of 1956. At September 30, 2013, we had total assets of $918.8 million, deposits of $805.7 million, and total shareholders' equity of $90.6 million. Our common stock is quoted on the OTCQB under the symbol "UBMI."

We have four primary lines of business under one operating segment of commercial banking: banking services, residential mortgage, wealth management and structured finance. We believe that these four lines of business provide us with a diverse and strong core revenue stream. During the nine months ended September 30, 2013, our noninterest income equaled 41.9% of our combined net interest income and noninterest income. For the five years ended December 31, 2012, noninterest income averaged 35.7% of our combined net interest income and noninterest income.

This diverse revenue stream has enabled us to achieve a pre-tax, pre-provision return on average assets of 1.55% and 1.60%, respectively, for the three and nine month periods ended September 30, 2013. Pre-tax, pre-provision return on average assets is not consistent with, or intended to replace, presentation under generally accepted accounting principles. For additional information about our pre-tax, pre-provision income and return on average assets, please see "Pre-Tax, Pre-provision Income and Return on Average Assets" under "Results of Operations" below.

The Bank offers a full range of services to individuals, corporations, fiduciaries and other institutions. Banking services include checking accounts, NOW accounts, savings accounts, time deposit accounts, money market deposit accounts, safe deposit facilities and money transfers. Lending operations provide real estate loans, secured and unsecured business and personal loans, consumer installment loans, credit card and check-credit loans, home equity loans, accounts receivable and inventory financing, and construction financing.

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The Bank offers a full complement of online services, including internet banking and bill payment. In 2011, the Bank opened a loan production office in Livingston County, Michigan which was converted to a full-service banking office in 2012.  The Bank opened a loan production office in the city of Monroe, Michigan in 2012, which was converted to a full-service banking office effective July 15, 2013.

Our mortgage group offers our customers a full array of conventional residential mortgage products, including purchase, refinance and construction loans. Due to our local decision making and fully-functional back office, we believe we have consistently been one of the most active originators of residential mortgage loans in our market area. Our mortgage group generated 34.5% of our noninterest income for the nine months ended September 30, 2013.

Our Wealth Management group is a key focus of our growth and diversification strategy and offers a variety of investment services to individuals, corporations and governmental entities. Our Wealth Management group generated 26.1% of our noninterest income for the nine months ended September 30, 2013.

Our structured finance group, United Structured Finance Company ("USFC"), offers simple, effective financing solutions to small businesses and commercial property owners, primarily by utilizing various government guaranteed loan programs and other off-balance sheet finance solutions through secondary market sources.

For the twelve months ended September 30, 2012 and 2011, USFC was the leading SBA lender in each of Lenawee, Washtenaw and Livingston Counties. For the twelve months ended September 30, 2012, USFC was the second largest SBA 7A lender in Michigan, based on loan volume.² For the nine months ended June 30, 2013, USFC was the third largest SBA 7A lender in Michigan, based on loan volume. ³

Other Developments

Board Resolutions

In connection with the termination of the Bank's Memorandum of Understanding in the fourth quarter of 2012, the Board of Directors of the Bank has resolved that the Bank will maintain a Tier 1 leverage ratio at a level equal to or exceeding 8.5% and that the Bank will not declare or pay any dividend to the Company unless the Board of Directors first determines that the Bank has produced stable earnings. The Bank's Tier 1 leverage ratio was 9.72% at September 30, 2013, after payment of a $3.0 million dividend to the Company in the third quarter of 2013.

On April 22, 2010, at the direction of the Federal Reserve Bank, the Company's Board of Directors adopted a resolution requiring the Company to obtain written approval from the Federal Reserve Bank prior to any of the following:  (i) declaration or payment of common or preferred stock dividends; (ii) any increase in debt or issuance of trust preferred obligations; or (iii) the redemption of Company stock.

² U.S. Small Business Administration, Detroit, Michigan office

³ U.S. Small Business Administration, Detroit, Michigan office

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On February 12, 2013, the Federal Reserve Bank notified the Company that it is no longer required to obtain prior approval of future payments of dividends on the Company's outstanding shares of Preferred Stock.

Capital Planning and Partial Redemption of Preferred Stock

On September 30, 2013, the Company completed the redemption of 10,300 shares, or 50%, of its Preferred Stock that were originally issued to the United States Department of the Treasury ("U.S. Treasury") under the Troubled Asset Relief Program Capital Purchase Program.  U.S. Treasury sold all 20,600 shares of Preferred Stock to private investors in June 2012.  Following completion of the partial redemption, 10,300 shares of Preferred Stock remain outstanding.

The redemption price for the shares of Preferred Stock was the stated liquidation preference amount of $1,000 per share, plus any accrued and unpaid dividends to but excluding September 30, 2013.  The total cost of the partial redemption of shares of Preferred Stock was approximately $10.4 million, which was funded with a combination of excess cash at the holding company, a dividend to the holding company of retained earnings by the Bank, and the borrowing of $6.0 million under the Company's $10.0 million revolving line of credit.  The partial redemption of shares of Preferred Stock will result in an estimated annual savings of $660,000, or $0.05 per common share, due to the elimination of payment of dividends on the redeemed shares.

Following completion of the partial redemption of shares of Preferred Stock, the capital ratios of the Company and the Bank continue to exceed regulatory standards to be categorized as well-capitalized.  In addition, the Bank's Tier 1 capital ratio continues to exceed the 8.5% level required by resolution of the Bank's Board of Directors.  The Bank's Tier 1 leverage ratio was 9.72% at September 30, 2013, after payment of a $3.0 million dividend to the Company in the third quarter of 2013.

The Company continues to evaluate the possible future redemption of its remaining $10.3 million of Preferred Stock in light of the dividend rate increase from 5% to 9% that will occur in January 2014. The Company's cash balance at the holding company was $6.4 million at September 30, 2013, and the Bank had $5.7 million of retained earnings that could be available to be paid in dividends to the Company at September 30, 2013. In addition, the Company had $4.0 million in borrowing available on its $10.0 million revolving line of credit at September 30, 2013.  These sources of funding may be available to fund the possible future redemption of the remaining shares of Preferred Stock.

Executive Summary

The Company's consolidated net income was $2.3 million in the third quarter of 2013 and $6.3 million for the first nine months of 2013, compared to $1.4 million and $3.0 million, respectively, for the same periods of 2012. Net income per common share for the three and nine months ended September 30, 2013 was $0.15 and $0.42, respectively, compared to $0.09 and $0.17, respectively, for the comparable periods of 2012. Return on average assets ("ROA") was 0.99% and 0.93%, respectively, for the third quarter and first nine months of 2013, compared to 0.62% and 0.45%, respectively, for the comparable periods of 2012. Return on average shareholders' equity ("ROE") was 9.20% and 8.57%, respectively, for the third quarter and first nine months of 2013, compared to 5.79% and 4.26%, respectively, for the same periods of 2012.

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The Company's combined net interest income and noninterest income was down 0.9% in the third quarter of 2013 but up 3.6% in the first nine months of 2013 compared to the same periods of 2012. While some categories of noninterest income decreased in the first nine months of 2013 compared to the same period of 2012, large increases in wealth management income and structured finance income more than offset the decreases. Total noninterest income for the third quarter of 2013 was down 8.1% compared to the same period of 2012, but was up 7.0% for the nine month period ended September 30, 2013 compared to the same period of 2012.

Total noninterest expense was up 2.5% in the third quarter and 4.6% in the first nine months of 2013, compared to the same periods of 2012. The largest dollar increases were in compensation expense, while several categories of noninterest expense declined. Among those declining were attorney, accounting and other professional fees, FDIC insurance premiums, and expenses related to other real estate owned ("ORE") and other foreclosed properties.

The Company's provision for loan losses for the third quarter and first nine months of 2013 was $300,000 and $1.9 million, respectively, down from $2.0 million and $6.7 million for the same periods of 2012. The reduced level of provision for loan losses is a direct result of United's improvement in its credit quality measures and Management's evaluation of the adequacy of the allowance for loan losses.

Total consolidated assets of the Company were $918.8 million at September 30, 2013, compared to $907.7 million at December 31, 2012 and $898.6 million at September 30, 2012. Total portfolio loans of $643.2 million increased by $56.5 million in the first nine months of 2013, and by $51.3 million since September 30, 2012.

The Company generally sells its fixed rate long-term residential mortgages on the secondary market, and retains adjustable rate mortgages in its loan portfolio. Loans serviced for others are not included in the accompanying consolidated financial statements. The unpaid principal balance of loans serviced for others at September 30, 2013 was $962.9 million, and has increased by $146.7 million, or 18.0%, in the twelve months ended September 30, 2013.

United's balances in federal funds sold and other short-term investments were $8.3 million at September 30, 2013, compared to $56.8 million at December 31, 2012 and $52.0 million at September 30, 2012.  Higher levels of loan activity contributed to the decreased level during the third quarter of 2013.Securities available for sale of $204.8 million at September 30, 2013 were down $1.3 million from December 31, 2012 levels, but have increased by $6.8 million since September 30, 2012.

Total deposits of $805.7 million at September 30, 2013 were up $21.1 million from $784.6 million at December 31, 2012, with all of the growth in interest bearing deposit balances. The majority of the Bank's deposits are derived from core client sources, relating to long-term relationships with local individual, business and public fund clients. Public fund clients include local government and municipal bodies, hospitals, universities and other educational institutions. As a result of its strong core funding, the Company's cost of interest-bearing deposits was 0.39% and 0.43%, respectively, for the third quarter and first nine months of 2013 down, from 0.59% and 0.64%, respectively, for the same periods of 2012.

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The Company's ratio of allowance for loan losses to total loans was 3.41% and the ratio of allowance for loan losses to nonperforming loans was 164.9% at September 30, 2013, compared to 3.84% and 134.6%, respectively, at December 31, 2012 and 3.80% and 108.0%, respectively, at September 30, 2012. The Company's allowance for loan losses decreased by $580,000 from December 31, 2012 to September 30, 2013, as net charge-offs exceeded the provision for loan losses in the period. Net charge-offs for the most recent quarter were $338,000, and annualized net charge-offs through the first nine months of 2013 were 0.55% of average loans.

Within the Company's loan portfolio, $13.3 million of loans were considered nonperforming at September 30, 2013, compared to $16.8 million at December 31, 2012 and $20.8 million at September 30, 2012. Total nonperforming loans as a percent of total portfolio loans decreased from 2.86% at the end of 2012 and 3.51% at September 30, 2012 to 2.07% at September 30, 2013. For purposes of this presentation, nonperforming loans consist of nonaccrual loans and accruing loans that are past due 90 days or more, and exclude accruing restructured loans. Balances of accruing restructured loans at September 30, 2013, December 31, 2012 and September 30, 2012 were $10.6 million, $15.8 million and $16.3 million, respectively. The decline in balances of accruing restructured loans during the first nine months of 2013 was primarily the result of the payoff of two loans in the second quarter.

Financial Condition

Investment Securities

Balances in the securities portfolio have declined modestly in the first nine months of 2013.  The makeup of the Company's investment portfolio evolves with the changing price and risk structure, and liquidity needs of the Company.

The table below reflects the carrying value of the various categories of investment securities of the Company, along with the percentage composition of the portfolio by type as of September 30, 2013 and December 31, 2012.

	September 30, 2013					December 31, 2012
In thousands of dollars	Balance		% of total			Balance		% of total
U.S. Treasury and agency securities	$	25,767		12.6	%	$	27,316		13.3	%
Mortgage-backed agency securities		154,243		75.3	%		160,499		77.9	%
Obligations of states and political subdivisions		24,790		12.1	%		18,286		8.9	%
Equity securities		27		0.0	%		28		0.0	%
Total Investment Securities	$	204,827		100.0	%	$	206,129		100.0	%

Investments in U.S. Treasury and agency securities are considered to possess low credit risk. Obligations of U.S. government agency mortgage-backed securities possess a somewhat higher interest rate risk due to certain prepayment risks. The Company's portfolio contains no mortgage-backed securities or structured notes that the Company believes to be "high risk." The municipal portfolio contains a small level of geographic risk, as approximately 1.3% of the investment portfolio is issued by political subdivisions located within Lenawee County, Michigan, 3.5% in Washtenaw County,Michigan, and 1.1% in Monroe County, Michigan. The Bank's investment in local municipal issues reflects our commitment to the development of the local area through support of its local political subdivisions. The Company has no investments in securities of issuers outside of the United States.  The Company owns no obligations issued by the City of Detroit.

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Management believes that the unrealized losses within the investment portfolio are temporary, since they are a result of interest rate changes, rather than a reflection of credit quality. Management has no specific intent to sell any securities, although the entire investment portfolio is classified as available for sale. The following chart summarizes net unrealized gains and losses in each category of the portfolio at September 30, 2013 and December 31, 2012.

Unrealized gains (losses) in thousands of dollars	9/30/13			12/31/12		Change
U.S. Treasury and agency securities	$	(789	)	$	116	$	(905	)
Mortgage-backed agency securities		38			1,670		(1,632	)
Obligations of states and political subdivisions		126			735		(609	)
Equity securities		1			2		(1	)
Total Investment Securities	$	(624	)	$	2,523	$	(3,147	)

Portfolio Loans

The following table shows the dollar and percent change in the major categories of loans for the periods reported. All loans are domestic and contain no significant concentrations by industry or client.

Periods ended September 30, 2013	Three Months						Nine Months						Twelve Months
In thousands of dollars	Change			Percent			Change			Percent			Change			Percent
Personal loans	$	3,252			2.8	%	$	11,743			11.0	%	$	12,244			11.5	%
Business loans		19,405			5.8	%		38,506			12.2	%		34,600			10.8	%
Residential mortgages		5,066			3.9	%		12,512			10.3	%		22,249			19.9	%
Construction & development		(1,357	)		-4.0	%		(8,397	)		-20.7	%		(15,899	)		-33.0	%
Other (1)		(2,189	)		-33.5	%		2,109			94.1	%		(1,851	)		-29.8	%
Total portfolio loans	$	24,177			3.9	%	$	56,473			9.6	%	$	51,343			8.7	%
(1) Includes deferred loan fees and costs, overdrafts, in-process accounts

The Company continues to experience steady growth of portfolio loans. Total portfolio loan balances increased by $56.5 million, or 9.6%, from December 31, 2012 and $51.3 million, or 8.7%, from September 30, 2012. Personal loans on the Company's balance sheet included home equity lines of credit, direct and indirect loans for automobiles, boats, recreational vehicles and other items for personal use. Personal loan balances increased by $3.3 million, or 2.8%, in the third quarter of 2013, and grew by $12.2 million, or 11.5%, in the twelve months ended September 30, 2013.

Business loan balances (consisting of owner-occupied commercial real estate loans, other commercial real estate loans and commercial and industrial loans) increased by $19.4 million, or 5.8%, in the third quarter of 2013, and have increased by $34.6 million, or 10.8%, over the twelve months ended September 30, 2013. Growth of business loans in those periods reflected an improvement in loan demand, net of write-downs, charge-offs and payoffs. The Bank's loan portfolio includes $3.6 million of purchased participations in business loans originated by other institutions. These participations represent 0.6% of total loans. Of those participation loans, 95.5% of the outstanding balances are the result of participations purchased from other Michigan community banks.

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The Bank generally sells its production of fixed-rate residential mortgages on the secondary market, and retains high credit quality residential mortgage loans that are not otherwise eligible to be sold on the secondary market and shorter-term adjustable rate residential mortgages in its portfolio. As a result, the mix of residential mortgage production for any given year will have an impact on the amount of residential mortgages held in the portfolio of the Bank. Portfolio balances of residential mortgages increased by 3.9% in the third quarter of 2013 and by 19.9% in the twelve months ended September 30, 2013.

Outstanding balances of loans for construction and development have decreased by $1.4 million in the third quarter of 2013 and by $15.9 million since September 30, 2012. The decrease over the past year consisted of approximately $15.0 million of commercial construction (primarily owner-occupied) loans, and $931,000 in consumer residential construction loans. Residential construction loans generally convert to residential mortgages to be retained in the Bank's portfolio or to be sold in the secondary market, while commercial construction loans generally will be converted to commercial mortgages.

Credit Quality

Nonperforming Assets. The Company actively monitors delinquencies, nonperforming assets and potential problem loans. The accrual of interest income is discontinued when a loan becomes ninety days past due unless the loan is both well secured and in the process of collection, or the borrower's capacity to repay the loan and the collateral value appears sufficient.

The chart below shows the amount of nonperforming assets by category for the past five quarters.

In thousands of dollars	9/30/13			6/30/13			3/31/13			12/31/12			9/30/12
Nonaccrual loans	$	13,028		$	13,910		$	14,598		$	16,714		$	20,386
Accruing loans past due 90 days or more		292			298			380			37			406
Total nonperforming loans		13,320			14,208			14,978			16,751			20,792
Nonperforming loans % of total portfolio loans		2.07	%		2.30	%		2.50	%		2.86	%		3.51	%
Allowance coverage of nonperforming loans		164.9	%		154.8	%		147.9	%		134.6	%		108.0	%
Other assets owned		2,056			2,402			3,106			3,412			2,179
Total nonperforming assets	$	15,376		$	16,610		$	18,084		$	20,163		$	22,971
Nonperforming assets % of total assets		1.67	%		1.83	%		1.95	%		2.22	%		2.56	%

Loans delinquent 30-89 days	$	2,265	$	2,396	$	2,352	$	3,007	$	2,807
Accruing restructured loans
Business, including commercial mortgages	$	5,021	$	5,029	$	5,266	$	7,643	$	7,819
Construction and development		1,658		1,686		4,728		4,738		5,017
Residential mortgage		3,748		4,296		4,001		3,267		3,276
Home equity		170		171		171		171		171
Total accruing restructured loans	$	10,597	$	11,182	$	14,166	$	15,819	$	16,283

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Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions to principal. Subsequent payments on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Nonaccrual loans are returned to accrual status when, in the judgment of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

The Company has achieved significant improvement in its credit quality measures in recent periods. Total nonperforming loans have declined by $3.4 million since December 31, 2012, and have declined by $7.5 million since September 30, 2012. Total nonperforming loans as a percent of total portfolio loans were 2.07% at September 30, 2013, down from 2.86% and 3.51% at December 31 and September 30, 2012, respectively, while the ratio of allowance for loan losses to nonperforming loans improved from 108.0% and 134.6%, respectively, at September 30 and December 31, 2012, to 164.9% at September 30, 2013. Loan workout and collection efforts continue with all delinquent clients, in an effort to bring them back to performing status.

Other assets owned includes other real estate owned and other repossessed assets, which may include automobiles, boats and other personal property. Holdings of other assets owned decreased by $1.4 million for the nine months ended September 30, 2013. At September 30, 2013, other real estate owned included ten properties that were acquired through foreclosure or in lieu of foreclosure. The properties included seven commercial properties, four of which were the result of out-of-state loan participations, and three residential properties. All properties are for sale. Other repossessed assets at September 30, 2013 consisted of two automobiles. The following table reflects the activity in other assets owned during the first nine months of 2013.

In thousands of dollars	ORE			Other Repossessed Assets			Total
Balance at January 1	$	3,409		$	3		$	3,412
Additions		466			95			561
Sold		(1,696	)		(83	)		(1,779	)
Write-downs of book value		(138	)		-			(138	)
Balance at September 30	$	2,041		$	15		$	2,056

Troubled Debt Restructurings. In the course of working with borrowers, the Bank may choose to restructure the contractual terms of certain loans. In this scenario, the Bank attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Bank to identify if a troubled debt restructuring ("TDR") has occurred, which is when, for economic or legal reasons related to a borrower's financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider.

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Terms may be modified to fit the ability of the borrower to repay in line with the borrower's current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Bank do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.

It is the Bank's policy to have any restructured loans which are on nonaccrual status prior to being restructured, remain on nonaccrual status until six months of satisfactory borrower performance, at which time management would consider its return to accrual status. The balance of nonaccrual restructured loans, which is included in nonaccrual loans, was $10.0 million at September 30, 2013 and $10.8 million at December 31, 2012. If a restructured loan is on accrual status prior to being restructured, it is reviewed to determine if the restructured loan should remain on accrual status. The balance of accruing restructured loans was $10.6 million at September 30, 2013 and $15.8 million at December 31, 2012.

All TDRs are considered impaired by the Company. Loans that are considered TDRs are classified as performing unless they are on nonaccrual status or are greater than 90 days delinquent as of the end of the most recent quarter. Under Company policy, a loan may be removed from TDR status when it is determined that the loan has performed according to its modified terms for a sustained period of repayment performance (generally not less than six months and not during the calendar year in which the restructuring took place), and the restructuring agreement specified an interest rate greater than or equal to an acceptable rate for a comparable new loan. On a quarterly basis, the Company individually reviews all TDRs to determine if any TDR should be removed from TDR status.

Accruing restructured loans at September 30, 2013 are comprised of two categories of loans on which interest is being accrued under their restructured terms, and the loans are current or less than ninety days past due. The first category consists of commercial loans, primarily comprised of business loans that have been temporarily modified as interest-only loans, generally for a period of up to one year, without a sufficient corresponding increase in the interest rate.

Within this category are CLD loans that have been renewed as interest only, generally for a period of up to one year, to assist the borrower. The Bank does not generally forgive principal or interest on restructured loans. However, when a loan is restructured, principal is generally received on a delayed basis as compared to the original repayment schedule. CLD loans that are restructured are generally modified to require interest-only for a period of time. The Bank does not generally reduce interest rates on restructured commercial loans.

The second category included in accruing restructured loans consists of residential mortgage and home equity loans whose terms have been restructured at less than market terms and include rate modifications, extension of maturity, and forbearance. The Company performed its quarterly evaluation of the specific reserves on all of its TDRs at September 30, 2013. All of the Company's accruing TDRs are performing in accordance with their modified terms and have demonstrated the necessary performance for the accrual of interest.

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The following table compares the recorded investment in accruing TDRs and their specific reserve amount, as of September 30, 2013 and December 31, 2012.

In thousands of dollars	9/30/13			12/31/12			Change
Balance of TDR Loans	$	10,597		$	15,819		$	(5,222	)
Specific reserve on above loans		2,802			4,467			(1,665	)
Percent		26.4	%		28.2	%

Impaired Loans. A loan is classified as impaired when it is probable that the Bank will be unable to collect all amounts due (including both interest and principal) according to the contractual terms of the loan agreement. Within the Bank's loan portfolio, $25.4 million of impaired loans have been identified as of September 30, 2013, down from $34.3 million at December 31, 2012. The specific allowance for impaired loans was $6.6 million at September 30, 2013, down from $8.3 million at December 31, 2012.

The ultimate amount of the impairment and the potential losses to the Company may be substantially higher or lower than estimated, depending on the realizable value of the collateral. The level of provision for loan losses made in connection with impaired loans reflects the amount management believes to be necessary to maintain the allowance for loan losses at an adequate level, based upon the Bank's current analysis of losses inherent in its loan portfolio.

Business loans carry the largest balances per loan, and any single loss would be proportionally larger than losses in other portfolios. In addition to internal loan rating systems and active monitoring of loan trends, the Bank uses an independent loan review firm to assess the quality of its business loan portfolio. Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions to principal.

CLD loans include residential and non-residential construction and land development loans. The residential CLD loan portfolio consists mainly of loans for the construction, development, and improvement of residential lots, homes, and subdivisions. The non-residential CLD loan portfolio consists mainly of loans for the construction and development of office buildings and other non-residential commercial properties.

This type of lending is generally considered to have greater and complex credit risks than traditional single-family residential lending because the principal is concentrated in a limited number of loans with repayment dependent on the successful completion and sales of the related real estate project. Consequently, these loans are often more sensitive to adverse conditions in the real estate market or the general economy than other real estate loans. These loans are generally less predictable and difficult to evaluate and monitor. Collateral may be difficult to dispose of in a market decline.

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The residential mortgage portfolio consists of loans to finance 1-4 family residences, second homes, vacation homes, and residential investment properties. The personal loan portfolio consists of direct and indirect installment, home equity and unsecured revolving line of credit loans. Installment loans consist primarily of home equity loans and loans for consumer durable goods, principally automobiles. Indirect personal loans, which make up a small percent of the personal loans, consist of loans for automobiles, boats and manufactured housing.

Allowance for Loan Losses. The Company's allowance for loan losses declined by $38,000 during the third quarter of 2013 and has decreased by $497,000 since September 30, 2012. The allowance for loan losses as a percent of total loans of 3.41% at September 30, 2013 was down from 3.80% at September 30, 2012. The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred credit losses in the loan portfolio. Management's determination of the adequacy of the allowance for loan losses is based on an evaluation of the loan portfolio, past loan loss experience, current economic conditions, volume, amount, and composition of the loan portfolio, and other factors management believes to be relevant.

The table below provides a breakdown of ALLL, charge-offs and combined losses as of September 30, 2013 for impaired and non-impaired loans. Impaired loans are further split between accruing TDRs and other impaired loans.

							% of
	Unpaid						Unpaid
	Principal				Cumulative		Principal
Dollars in thousands	Balance		ALLL		Allowance		Balance
Accruing TDRs	$	10,597	$	2,802	$	2,802		26.4	%
Other Impaired Loans		14,823		3,794		3,794
Cumulative Charge-offs		7,585		-		7,585
Total		22,408		3,794		11,379		50.8	%
Non-impaired loans	$	617,731	$	15,367	$	15,367		2.5	%

Deposits

United, funds its operations internally through a large stable base of core deposits to provide cost-effective funding for its lending operations. The majority of deposits are derived from core client sources, relating to long term relationships with local individual, business and public fund clients. Public fund clients include local governments and municipal bodies, hospitals, universities and other educational institutions. At September 30, 2013, core deposits accounted for 99.3% of total deposits, up slightly from 99.1% at September 30, 2012. For this presentation, core deposits consist of total deposits less national certificates of deposit and brokered deposits. Core deposits include CDARS deposits as they represent deposits originated in the Bank's market area.

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The table below shows the change in the various categories of the deposit portfolio for the three, nine and twelve month periods ended September 30, 2013.

Changes in categories of deposits
	Three Months							Nine Months							Twelve Months
In thousands of dollars	Change				Percent			Change				Percent			Change			Percent
Noninterest bearing		$	(3,513	)		-2.1	%		$	(5,205	)		-3.1	%		$	892		0.6	%
Interest bearing deposits			17,134			2.7	%			26,302			4.2	%			28,823		4.7	%
Total deposits		$	13,621			1.7	%		$	21,097			2.7	%		$	29,715		3.8	%

Deposit balances increased by $13.6 million, or 1.7%, in the third quarter of 2013, and have also increased by $29.7 million, or 3.8%, in the twelve months ended September 30, 2013. In the most recent quarter, demand deposit balances decreased by $3.5 million, while interest bearing deposits increased by $17.1 million. The increase in interest bearing deposits during the three months ended September 30, 2013 was primarily a result of a seasonal increase in public fund balances.

The Bank utilizes purchased or brokered deposits for interest rate risk management purposes, but does not support its growth through the use of those products. In addition, the Bank participates in the CDARS program, which allows it to provide competitive CD products while maintaining FDIC insurance for clients with larger balances. Management believes the Bank's deposit rates are consistently competitive with other banks in its market areas.

Noninterest bearing deposits continue to make up approximately 20% of total deposits. The following table shows the makeup of the Company's deposits at September 30, 2013, December 31, 2012 and September 30, 2012.

Percentage Makeup of Deposit Portfolio	9/30/13			12/31/12			9/30/12
Noninterest bearing		19.9	%		21.1	%		20.5	%
Interest bearing deposits		80.1	%		78.9	%		79.5	%
Total deposits		100.0	%		100.0	%		100.0	%

Cash Equivalents and Borrowed Funds

The Company maintains correspondent accounts with a number of other banks for various purposes. In addition, cash sufficient to meet the operating needs of its banking offices is maintained at its lowest practical levels. The Bank is sometimes a participant in the federal funds market, either as a borrower or seller. Federal funds are generally borrowed or sold for one-day periods. The Bank maintains interest-bearing deposit accounts with the Federal Reserve Bank and the FHLBI, as alternatives to federal funds. The Bank also has the ability to utilize short term advances from the FHLBI and borrowings at the discount window of the Federal Reserve Bank as additional short-term funding sources, but has not used either of these borrowing sources during the reported periods.

Page 47

The Company periodically finds it advantageous to utilize longer-term borrowings from the FHLBI. These longer-term borrowings serve to provide a balance to some of the interest rate risk inherent in the Company's balance sheet.

The Bank entered into a Business Loan Agreement with Chemical Bank (the "Loan Agreement") and a revolving line of credit as of September 16, 2013.  The Loan Agreement provides for a $10,000,000 line of credit by Chemical Bank to the Company.  The Company will pay quarterly payments of accrued interest, and principal payments as cash flow permits.  The balance of all outstanding principal and accrued interest will become due on September 16, 2015.  As of September 30, 2013, United had an outstanding principal balance of $6.0 million on the line of credit.

Results of Operations

Earnings Summary and Key Ratios

The Company achieved consolidated net income of $2.3 million in the third quarter and $6.3 million for the first nine months of 2013. This compares to consolidated net income of $1.4 million and $3.0 million for the same periods of 2012. The improvement in net income in the third quarter of 2013 resulted primarily from increased net interest income and reduced amounts in the Company's provision for loan losses, offset in part by increases in noninterest expense of 2.5%.  For the nine month period ended September 30, 2013, the Company also recognized higher levels of net interest income, as well as an increase of noninterest income of 7.0% over levels for the same period of 2012, and reduced amounts of provision for loan losses.  Noninterest expense partially offset these positive factors by increasing 4.6% for the first nine months of 2013 compared to the same period in 2012.

United's net interest margin of 3.70% for the third quarter of 2013 was up from 3.63% for the third quarter of 2012, while the net interest margin of 3.61% for the first nine months of 2013 was down from 3.63% for the same period of 2012. For the third quarter of 2013, net interest income of $8.0 million was up 4.4% compared to the same period of 2012, and net interest income of $23.1 million for the first nine months of 2013 was up slightly from the same period of 2012.

Noninterest income of $5.1 million for the quarter ended September 30, 2013 declined by 8.1% compared to the third quarter of 2012, while noninterest income for the nine months ended September 30, 2013 was 7.0% higher than the same period of 2012. Noninterest income represented 39.1% and 41.9%, respectively, of the Company's combined net interest income and noninterest income for the three and nine months ended September 30, 2013, compared to 42.1% and 40.6%, respectively, for the same periods of 2012.

Page 48

Total noninterest expense for the third quarter of 2013 was up 2.5% from the third quarter of 2012, and increased by 4.6% for the first nine months of 2013 compared to the same period of 2012. In the third quarter and first nine months of 2013, the largest dollar increases in noninterest expense were in compensation expense. Compensation expense increased by 7.7% in the third quarter of 2013 compared to the same period of 2012, and by 14.7% in the first nine months of 2013 compared to the same period of 2012. The increase in the first nine months of 2013 reflected, in part, continued higher levels of commissions and other compensation costs related to the generation of income from loan sales and servicing.

In addition, the Company has increased its staffing levels modestly to accommodate its expansion into Livingston and Monroe Counties, and moderate salary increases were implemented effective April 1, 2013. Expenses in the third quarter and first nine months of 2013 also included accruals for profit sharing and cash bonuses, reflecting the Company's improved financial condition and results of operations. The Company did not pay or accrue any cash bonus or other payout to executive officers under our bonus plans in 2012.

The Company's provision for loan losses of $300,000 in the third quarter of 2013 was down from $2.0 million for the third quarter of 2012. The Company's provision for loan losses of $1.9 million for the first nine months of 2013 was down from $6.7 million for the same period of 2012.

ROA was 0.99% for the third quarter and 0.93% for the first nine months of 2013, compared to 0.62% and 0.45%, respectively, for the comparable periods of 2012. ROE was 9.20% for the third quarter and 8.57% for the first nine months of 2013, compared to 5.79% and 4.26%, respectively, for the same periods of 2012.

The following chart shows trends in these and other ratios, along with trends of the major components of earnings for the five most recent quarters.

	2013									2012
in thousands of dollars, where appropriate	3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			3rd Qtr
Net interest income	$	7,981		$	7,824		$	7,288		$	7,384		$	7,646
Provision for loan losses		300			600			1,000			1,700			2,000
Noninterest income		5,115			5,647			5,924			5,891			5,564
Noninterest expense		9,532			9,874			9,486			9,586			9,300
Federal income tax provision		988			910			784			543			520
Net income		2,276			2,087			1,942			1,446			1,390
Earnings per common share	$	0.15		$	0.14		$	0.13		$	0.09		$	0.09
Return on average assets (a)		0.99	%		0.92	%		0.87	%		0.64	%		0.62	%
Return on average shareholders' equity (a)		9.20	%		8.44	%		8.07	%		5.94	%		5.79	%
Net interest margin		3.70	%		3.68	%		3.46	%		3.45	%		3.63	%
Efficiency ratio (tax equivalent basis)		72.2	%		72.8	%		71.3	%		71.7	%		69.9	%
Tier 1 leverage ratio		9.8	%		10.7	%		10.5	%		10.2	%		10.1	%
(a)  annualized

Page 49

Pre-tax, Pre-provision Income and Return on Average Assets

In an attempt to evaluate the trends of net interest income, noninterest income and noninterest expense, the Company calculates pre-tax, pre-provision income ("PTPP Income") and pre-tax, pre-provision return on average assets ("PTPP ROA"). PTPP Income adjusts net income by the amount of the Company's federal income tax (benefit) and provision for loan losses, which is excluded because its level is elevated and volatile in times of economic stress. PTPP ROA measures PTPP Income as a percent of average assets. While this information is not consistent with, or intended to replace, presentation under generally accepted accounting principles, it is presented here for comparison.

Management believes that PTPP Income and PTPP ROA are useful and consistent measures of the Company's earning capacity, as these financial measures enable investors and others to assess the Company's ability to generate capital to cover credit losses through a credit cycle, particularly in times of economic stress. The Company's strong PTPP Income has been achieved through a substantial core funding base which has resulted in a comparatively strong net interest margin, a diversity of noninterest income sources and expansion of our markets.

The Company's PTPP ROA was 1.55% and 1.60%, respectively, for the third quarter and first nine months of 2013, compared to 1.74% and 1.61%, respectively, for the same periods in 2012.

The following table shows the calculation and trend of the components of PTPP Income and PTPP ROA for the three and nine month periods ended September 30, 2013 and 2012.

	Three Months Ended September 30,									Nine Months Ended September 30,
In thousands of dollars	2013			2012			Change			2013			2012			Change
Interest income	$	8,675		$	8,731			-0.6	%	$	25,430		$	26,322			-3.4	%
Interest expense		694			1,085			-36.0	%		2,337			3,541			-34.0	%
Net interest income		7,981			7,646			4.4	%		23,093			22,781			1.4	%
Noninterest income		5,115			5,564			-8.1	%		16,686			15,600			7.0	%
Noninterest expense		9,532			9,300			2.5	%		28,892			27,617			4.6	%
Pre-tax, pre-provision income	$	3,564		$	3,910			-8.8	%	$	10,887		$	10,764			1.1	%
Average assets	$	914,815		$	892,235			2.5	%	$	907,102		$	890,539			1.9	%
Pre-tax, pre-provision ROA		1.55	%		1.74	%		-0.19	%		1.60	%		1.61	%		-0.01	%
Reconcilement to GAAP income:
Provision for loan losses		300			2,000						1,900			6,650
Income tax		988			520						2,682			1,097
Net income	$	2,276		$	1,390					$	6,305		$	3,017

Net Interest Income

United's net interest margin has been under pressure in recent quarters, as a result of continued downward pressure on both short and long-term interest rates. The Company's mix of assets has evolved over recent quarters. Portfolio loan growth of $51.3 million in the twelve months ended September 30, 2013 has contributed to this shift in mix and has helped United's yield on its earning assets. The Company converted its loan production office in Brighton, Michigan to a full-service banking office in the second quarter of 2012.  In July 2012, the Company opened a loan production office within the City of Monroe, Michigan, which was converted to a full-service banking office during the third quarter of 2013. Both offices have contributed to increased lending activity. In addition, loan volumes within the Bank's other markets have improved modestly.

Page 50

The Company has held historically high levels of liquidity since 2009. While the additional liquidity contributed to the Company's margin compression during that time period, a shift of a portion of its liquidity from federal funds and equivalents to investment securities in 2012 has slowed United's decline in yields on earning assets. At the same time, the Bank has reduced its average balances of FHLB advances and higher-cost deposits during the twelve months ended September 30, 2013. The Company continues to fund its growth primarily with core deposits.

United's net interest margin was 3.70% and 3.61%, respectively, for the three and nine month periods ended September 30, 2013, compared to 3.63% for both the same periods of 2012. Net interest spread on a fully-tax equivalent basis improved from 3.45% for the third quarter of 2012 to 3.59% for the third quarter of 2013. Net interest spread on a fully-tax-equivalent basis of 3.49% for the first nine months of 2013 was also improved over 3.44% for the same period of 2012.

The following table provides a summary of the various components of net interest income, and the results of changes in balance sheet makeup that have resulted in the changes in net interest spread and net interest margin for the three and nine month periods ended September 30, 2013 and 2012.

Page 51

	Three Months Ended September 30,																		Nine Months Ended September 30,
	2013									2012									2013									2012
dollars in thousands	Average Balance			Interest (b)			Yield/ Rate (c)			Average Balance			Interest (b)			Yield/ Rate (c)			Average Balance			Interest (b)			Yield/ Rate (c)			Average Balance			Interest (b)			Yield/ Rate (c)
Assets
Interest earning assets (a)
Federal funds & equivalents	$	28,948		$	19			0.26	%	$	55,558		$	36			0.26	%	$	43,920		$	84			0.25	%	$	69,385		$	133			0.25	%
Taxable investments		183,499			770			1.64	%		179,999			618			1.34	%		185,722			1,951			1.40	%		169,445			1,988			1.57	%
Tax exempt securities (b)		21,140			245			4.54	%		16,450			241			5.73	%		18,287			714			5.21	%		19,878			760			5.86	%
Taxable loans		630,262			7,691			4.84	%		593,992			7,898			5.29	%		613,789			22,829			4.97	%		588,064			23,633			5.37	%
Tax exempt loans (b)		3,516			48			5.33	%		1,744			28			6.34	%		3,340			137			5.46	%		1,800			93			6.91	%
Total int. earning assets (b)		867,365			8,773			4.02	%		847,743			8,821			4.14	%		865,058			25,715			3.97	%		848,572			26,607			4.18	%
Less allowance for loan losses		(22,690	)								(22,921	)								(22,935	)								(22,126	)
Other assets		70,140									67,413									64,979									64,093
Total Assets	$	914,815								$	892,235								$	907,102								$	890,539
Liabilities and Shareholders' Equity
NOW and savings deposits	$	420,046			125			0.12	%	$	363,878			131			0.14	%	$	410,801			376			0.12	%	$	363,522			436			0.16	%
Other interest bearing deposits		213,946			493			0.91	%		240,684			764			1.26	%		222,563			1,657			1.00	%		250,225			2,500			1.34	%
Total int. bearing deposits		633,992			618			0.39	%		604,562			895			0.59	%		633,364			2,033			0.43	%		613,747			2,936			0.64	%
FHLB advances		11,996			72			2.38	%		22,446			190			3.37	%		15,581			300			2.54	%		23,429			605			3.39	%
Other borrowings		522			4			3.04	%		-			-			-			175			4			3.09	%		-			-			-
Total int. bearing liabilities		646,510			694			0.43	%		627,008			1,085			0.69	%		649,120			2,337			0.48	%		637,176			3,541			0.74	%
Noninterest bearing deposits		162,205			-						162,066			-						155,986			-						155,161			-
Total including noninterestbearing deposits		808,715			694			0.34	%		789,074			1,085			0.55	%		805,106			2,337			0.39	%		792,337			3,541			0.60	%
Other liabilities		7,922									7,678									3,676									3,656
Shareholders' equity		98,178									95,483									98,320									94,546
Total Liabilities and Shareholders' Equity	$	914,815								$	892,235								$	907,102								$	890,539
Net interest income (b)					8,079									7,736									23,378									23,066
Net spread (b)								3.59	%								3.45	%								3.49	%								3.44	%
Net yield on interest earning assets (b)								3.70	%								3.63	%								3.61	%								3.63	%
Tax equivalent adjustment on interest income					(98	)								(90	)								(285	)								(285	)
Net interest income per income statement				$	7,981								$	7,646								$	23,093								$	22,781
Ratio of interest earning assets to interest bearing liabilities								1.34									1.35									1.33									1.33
(a) Non-accrual loans and overdrafts are included in the average balances of loans
(b) Fully tax-equivalent basis, net of nondeductible interest impact; 34% tax rate
(c) Annualized

Page 52

Provision for Loan Losses

The Company's provision for loan losses for the third quarter and first nine months of 2013 was $300,000 and $1.9 million, respectively, down from $2.0 million and $6.7 million, respectively, for the same periods of 2012. The provision for loan losses provides for probable incurred credit losses inherent in the loan portfolio.

The Company's net charge-offs of $338,000 in the third quarter of 2013 marginally exceeded the Company's provision for loan losses of $300,000 for the quarter, and were primarily associated with loans for which the Company carried specific reserves at June 30, 2013. The Bank has continued to closely monitor the impact of economic circumstances on its lending clients, and is working with these clients to minimize losses. Additional information regarding the allowance for loan losses is included in the "Credit Quality" discussion above.

Noninterest Income

Total noninterest income declined by 8.1% for the third quarter of 2013, but has improved 7.0% for the first nine months of 2013, compared to the same periods of 2012. The following table summarizes changes in noninterest income by category for the three and nine month periods ended September 30, 2013 and 2012.

	Three Months Ended September 30,							Nine Months Ended September 30,
In thousands of dollars	2013		2012		Change			2013		2012		Change
Service charges on deposit accounts	$	473	$	496		-4.6	%	$	1,369	$	1,378		-0.7	%
Wealth Management fee income		1,465		1,319		11.1	%		4,356		3,855		13.0	%
Income from loan sales and servicing		2,252		2,803		-19.7	%		8,071		7,299		10.6	%
ATM, debit and credit card fee income		580		517		12.2	%		1,637		1,583		3.4	%
Other income		345		429		-19.6	%		1,253		1,485		-15.6	%
Total noninterest income	$	5,115	$	5,564		-8.1	%	$	16,686	$	15,600		7.0	%

Service charges on deposit accounts were down 4.6% in the third quarter of 2013 and were essentially unchanged in the first nine months of 2013 compared to the same periods a year earlier. Substantially all of the change in the third quarter of 2013 was due to the Company's reduced levels of non-sufficient funds and overdraft fees collected.

The Wealth Management Group of the Bank provides the second-largest component of the Company's noninterest income. Wealth Management Group income includes trust and investment management fee income and income from the sale of non-deposit investment products. Wealth Management Group income improved by 11.1% in the third quarter and by 13.0% in the first nine months of 2013, respectively, compared to the same periods of 2012.

Page 53

Income from loan sales and servicing includes gains on the sale of residential mortgages and the guaranteed portion of SBA loans sold on the secondary market, along with servicing income resulting from loans sold with servicing retained.  Income in this category has decreased 19.7% during the third quarter of 2013 from the same period in 2012, as mortgage refinance levels slowed due to changes in interest rates.  However, activity for the first nine months of 2013 was strong and is 10.6% above the same period for 2012.

The Bank generally sells the fixed rate long-term residential mortgages it originates on the secondary market, and retains adjustable rate residential mortgages for its portfolios. The guaranteed portion of SBA loans originated by its structured finance group, United Structured Finance Company ("USFC"), is typically sold on the secondary market, and gains on the sale of those loans contribute to income from loan sales and servicing.

The Company maintains a portfolio of sold residential real estate mortgages that it services, and this servicing provides ongoing income for the life of the loans. The Bank also originates, sells and services SBA loans through USFC. Loans serviced consist primarily of residential mortgages sold on the secondary market. The following table shows the breakdown of income from loan sales and servicing between residential mortgages and USFC.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands of dollars	2013		2012		2013		2012
Residential mortgage sales and servicing	$	1,651	$	2,054	$	5,758	$	5,692
USFC commercial loan sales and servicing		601		749		2,313		1,607
Total income from loan sales and servicing	$	2,252	$	2,803	$	8,071	$	7,299

ATM, debit and credit card fee income provides a source of noninterest income for the Company. The Bank operates twenty-one ATMs throughout its market areas, and Bank clients are active users of debit cards. The Bank receives ongoing fee income from credit card referrals and operation of its credit card merchant business. Income from these areas increased 12.2% and 3.4%, respectively, over the third quarter and first nine months of 2012.

Other income includes income from bank-owned life insurance and various fee-based banking services, including sale of official checks, wire transfer fees, safe deposit box income, sweep account and other fees. Other income also included gains on the sale of ORE property of $18,000 in the third quarter and $334,000 in the first nine months of 2013, compared to $127,000 and $518,000, respectively, in the comparable periods of 2012. Total other income was down 19.6% and 15.6%, respectively, in the third quarter and first nine months of 2013 compared to the same periods of 2012.

Page 54

The following table shows the trends of various noninterest income categories for the most recent five quarters.

	2013						2012
In thousands of dollars	3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Service charges on deposit accounts	$	473	$	472	$	424	$	483	$	496
Wealth Management fee income		1,465		1,487		1,404		1,395		1,319
Income from loan sales and servicing		2,252		2,767		3,052		2,805		2,803
ATM, debit and credit card fee income		580		561		496		543		517
Other income		345		360		548		665		429
Total noninterest income	$	5,115	$	5,647	$	5,924	$	5,891	$	5,564

Noninterest Expense

Salaries and employee benefits typically make up 60% to 65% of the Company's total noninterest expense. Occupancy and equipment expense is the second-largest noninterest expense category, and expenses in this area have remained relatively consistent over the most recent five quarters. The Company has implemented changes in its data processing as part of its risk mitigation initiatives, resulting in an increase in external data processing expense beginning in the third quarter of 2012.

The following table shows the trends of various noninterest expense categories for the most recent five quarters.

	2013						2012
In thousands of dollars	3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Salaries and employee benefits	$	5,884	$	6,223	$	5,877	$	5,796	$	5,464
Occupancy and equipment expense, net		1,350		1,357		1,348		1,323		1,350
External data processing		352		353		372		349		250
Advertising and marketing		304		292		264		185		190
Attorney, accounting and other professional fees		334		349		411		226		416
Expenses relating to ORE property and other foreclosed assets		158		259		168		395		417
FDIC insurance premiums		189		190		186		250		292
Other expenses		961		851		860		1,062		921
Total noninterest expense	$	9,532	$	9,874	$	9,486	$	9,586	$	9,300

Page 55

The following table summarizes changes in the Company's noninterest expense by category for the three and nine month periods ended September 30, 2013 and 2012.

	Three Months Ended September 30,							Nine Months Ended September 30,
In thousands of dollars	2013		2012		Change			2013		2012		Change
Salaries and employee benefits	$	5,884	$	5,464		7.7	%	$	17,984	$	15,686		14.7	%
Occupancy and equipment expense, net		1,350		1,350		0.0	%		4,055		3,988		1.7	%
External data processing		352		250		40.8	%		1,077		764		41.0	%
Advertising and marketing		304		190		60.0	%		860		567		51.7	%
Attorney, accounting and other professional fees		334		416		-19.7	%		1,094		1,654		-33.9	%
Director fees		105		98		7.1	%		314		293		7.2	%
Expenses relating to ORE property and foreclosed assets		158		417		-62.1	%		585		1,533		-61.8	%
FDIC insurance premiums		189		292		-35.3	%		565		883		-36.0	%
Other expenses		856		823		4.0	%		2,358		2,249		4.8	%
Total noninterest expense	$	9,532	$	9,300		2.5	%	$	28,892	$	27,617		4.6	%

Total noninterest expenses were up 2.5% in the third quarter of 2013, and were up 4.6% in the first nine months of 2013 compared to the same periods of 2012. A number of categories of noninterest expense declined during the third quarter and first nine months of 2013 compared to the same periods of 2012. Those included attorney, accounting and other professional fees, FDIC insurance premiums and expenses relating to ORE property and other foreclosed assets.

Salaries and employee benefits for the third quarter and the first nine months of 2013 increased by 7.7% and 14.7%, respectively, compared to the same periods one year earlier. The increase in the first nine months of 2013 reflected, in part, continued higher levels of commissions and other compensation costs related to the generation of income from loan sales and servicing. In addition, the Company has increased its staffing levels modestly to accommodate its expansion into Livingston and Monroe Counties, and moderate salary increases were implemented effective April 1, 2013. Expenses in the first nine months of 2013 also included accruals for profit sharing and cash bonuses, reflecting the Company's improved earnings. The Company did not pay or accrue any cash bonus or other payout to executive officers under our bonus plans in 2012.

Advertising and marketing expenses in the third quarter and the first nine months of 2013 increased by 60.0% and 51.7%, respectively, compared to the same periods of 2012. The increases partially reflect the Company's launch of a new branding initiative in the third quarter of 2012. The Company reduced its advertising and marketing expenditures by approximately 50% in 2009 compared to 2008, and remained at reduced levels until the launch of the branding initiative. This branding initiative represents a renewed emphasis on marketing, and the Company expects a continued trend toward historic spending levels for marketing and advertising expense.

Page 56

Expenses related to ORE and other foreclosed properties decreased by 62.1% in the third quarter of 2013 compared to the same quarter of 2012, and have also declined by 61.8% in the first nine months of 2013 compared to the same period of 2012. Those expenses included write-downs of the value and losses on the sale of property held as ORE, along with costs to maintain and carry those properties. During the first nine months of 2012, the Company recorded $770,000 of probable incurred expenses relating to residential mortgages previously sold on the secondary market that subsequently defaulted, and $275,000 of probable incurred expenses were recorded in the first nine months of 2013. FDIC insurance premiums declined by 35.3% and 36.0%, respectively, during the three and nine months ended September 30, 2013 compared to the same periods of 2012 as a result of lower base charges.

Attorney, accounting and other professional fees in the third quarter and first nine months of 2013 declined by 19.7% and 33.9%, respectively, from comparable periods of 2012. Costs in the second quarter of 2012 included $299,000 of legal and accounting costs related to the sale of the Company's outstanding Preferred Stock by the U.S. Treasury to private investors.

Federal Income Tax

The table below shows the Company's effective tax rates for the three and nine month periods ended September 30, 2013 and 2012. The differences between the effective rates and the Company's expected tax rate were primarily due to the benefit from tax-exempt income.

	Current Quarter						Year to Date
	2013			2012			2013			2012
Effective tax rate		30.3	%		27.2	%		29.8	%		26.7	%

The Company's net deferred tax asset was $8.3 million at September 30, 2013. The Company's net deferred tax asset is included in the category "Accrued interest receivable and other assets" on the balance sheet. A valuation allowance related to deferred tax assets is required when it is determined that all or part of the benefit related to such deferred tax assets will not be realized. The following lists the evidence considered in determining whether a valuation allowance was necessary for deferred tax assets:

Negative Evidence

As a result of cumulative losses from 2009 to 2011, the Company had a tax Net Operating Loss ("NOL") of $1.6 million as of December 31, 2012.

Page 57

Positive Evidence

· The Company had many years of consistently profitable operations before 2009.

· The Company's NOL carry-forward position of $1.6 million at December 31, 2012, which was not large in comparison to historical profitability (taxable income of $41.6 million from 2004 to 2008).

· The Company can carry-forward losses for up to 20 years.

· The Company's pre-tax loss was reduced from $14.5 million in 2009 to $6.6 million in 2010; the Company generated a pre-tax profit of $0.5 million in 2011, $6.1 million in 2012, and $9.0 million for the first nine months of 2013.

· The Company's 2009-2010 losses were due to a goodwill impairment of $3.5 million in 2009 along with high provision for loan losses, which have been reduced from $25.8 million in 2009 to $21.5 million in 2010, $12.2 million in 2011, $8.4 million in 2012, and $1.9 million for the first nine months of 2013.

· The Company believes it has returned to sustained profitability as a result of strong core earnings and continued reduction in loan losses.

· The Company does have available certain tax planning strategies, including:

o Sale and leaseback of premises

o Sale of mortgage servicing rights

o Sale of securities

Based upon its analysis of the evidence (both negative and positive), management has determined that no valuation allowance was required at September 30, 2013 or December 31, 2012.

Liquidity and Capital Resources

Liquidity, Cash Equivalents and Borrowed Funds

The Company maintains correspondent accounts with a number of other banks for various purposes. In addition, cash sufficient to meet the operating needs of its banking offices is maintained at its lowest practical levels. At times, the Bank is a participant in the federal funds market, either as a borrower or seller. Federal funds are generally borrowed or sold for one-day periods. In 2013 and 2012, the Bank generally utilized short-term interest-bearing balances with banks as an alternative to federal funds sold.

The Company's balances in federal funds sold and short-term interest-bearing balances with banks were $8.3 million at September 30, 2013, compared to $56.8 million at December 31, 2012 and $52.0 million at September 30, 2012. Balances of investments held for sale were $204.8 million at September 30, 2013, compared to $206.1 million at December 31, 2012 and $198.1 million at September 30, 2012.  Over the past several years, United has maintained high levels of liquidity, with investments, federal funds and cash equivalents held to improve the liquidity of the balance sheet during the prolonged period of economic uncertainty.  However, higher levels of loan activity contributed to the decreased level of federal funds sold and short-term interest-bearing balances during the third quarter of 2013.

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The Bank also has the ability to utilize short-term advances from the FHLBI and borrowings at the discount window of the Federal Reserve Bank as additional short-term funding sources. Short-term advances and discount window borrowings were not utilized during 2013 or 2012.

The Company periodically finds it advantageous to utilize longer-term borrowings from the FHLBI. These longer-term borrowings serve primarily to provide a balance to some of the interest rate risk inherent in the Company's balance sheet.

In the first nine months of 2013, the Bank procured no new advances, and repaid $10.0 million of matured borrowings. In the twelve months ended September 30, 2013, maturities and principal payments on advances have reduced outstanding balances by $9.8 million.

The Bank entered into a Business Loan Agreement with Chemical Bank (the "Loan Agreement") and a revolving line of credit as of September 16, 2013.  The Loan Agreement provides for a $10,000,000 line of credit by Chemical Bank to the Company.  The Company will pay quarterly payments of accrued interest, and principal payments as cash flow permits.  The balance of all outstanding principal and accrued interest will become due on September 16, 2015.  As of September 30, 2013, United had an outstanding principal balance of $6.0 million on the line of credit.

Capital Resources

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum ratios of Total and Tier I capital to risk-weighted assets and of Tier I capital to average assets.

In connection with termination of the Bank's MOU, the Board of Directors of the Bank has resolved that the Bank will maintain a Tier 1 leverage ratio at a level equal to or exceeding 8.5% and that the Bank will not declare or pay any dividend to the Company unless the Board of Directors first determines that the Bank has produced stable earnings. The Bank's Tier 1 leverage ratio was 9.72% at September 30, 2013, after payment of a $3.0 million dividend to the Company in the third quarter of 2013.

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The following table shows information about the Company's and the Bank's capital levels compared to regulatory and Board resolution requirements at September 30, 2013 and December 31, 2012.

	Actual					Regulatory Minimum for Capital Adequacy (1)					Regulatory Minimum to be Well Capitalized (2)						Minimum Required by Board Resolution (3)
	$	000	%			$	000	%			$	000		%			$	000		%
As of September 30, 2013
Tier 1 Capital to Average Assets
Consolidated	$	89,424		9.8	%	$	36,528		4.0	%		N/	A		N/	A		N/	A		N/	A
Bank		88,528		9.7	%		36,423		4.0	%		45,529			5.0	%		77,399			8.5	%
Tier 1 Capital to Risk Weighted Assets
Consolidated		89,424		13.7	%		26,109		4.0	%		N/	A		N/	A		N/	A		N/	A
Bank		88,528		13.6	%		26,083		4.0	%		39,124			6.0	%		N/	A		N/	A
Total Capital to Risk Weighted Assets
Consolidated		97,753		15.0	%		52,218		8.0	%		N/	A		N/	A		N/	A		N/	A
Bank		96,849		14.9	%		52,165		8.0	%		65,207			10.0	%		N/	A		N/	A
As of December 31, 2012
Tier 1 Capital to Average Assets
Consolidated	$	91,886		10.2	%	$	36,059		4.0	%		N/	A		N/	A		N/	A		N/	A
Bank		85,727		9.6	%		35,755		4.0	%		44,694			5.0	%		75,980			8.5	%
Tier 1 Capital to Risk Weighted Assets
Consolidated		91,886		15.4	%		23,914		4.0	%		N/	A		N/	A		N/	A		N/	A
Bank		85,727		14.4	%		23,862		4.0	%		35,792			6.0	%		N/	A		N/	A
Total Capital to Risk Weighted Assets
Consolidated		99,545		16.7	%		47,829		8.0	%		N/	A		N/	A		N/	A		N/	A
Bank		93,370		15.7	%		47,723		8.0	%		59,654			10.0	%		N/	A		N/	A
(1) Represents minimum required to be categorized as adequately capitalized under Federal regulatory requirements.
(2) Represents minimum generally required to be categorized as well-capitalized under Federal regulatory prompt corrective action provisions.
(3) Represents requirements of a Board resolution adopted in November 2012.

In July 2013, Federal banking regulators issued interim final rules that revise the existing regulatory capital requirements to incorporate certain revisions to the Basel capital framework, including Basel III and other elements. The interim final rule seeks to strengthen the components of regulatory capital, increases risk-based capital requirements, and makes selected changes to the calculation of risk-weighted assets.

The interim final rule:

· Revises minimum capital requirements and adjusts prompt corrective action thresholds.

· Revises the components of regulatory capital, adds a new minimum common equity Tier 1 capital ratio of 4.5% of risk-weighted assets and increases the minimum Tier 1 capital ratio requirement from 4% to 6% of risk-weighted assets.

· Retains the existing risk-based capital treatment for 1-4 family residential mortgage exposures.

Page 60

· Permits banking organizations that are not subject to the advanced approaches rule, such as the Company, to retain, through a one-time election, the existing capital treatment for accumulated other comprehensive income.

· Implements a new capital conservation buffer of common equity Tier 1 capital equal to 2.5% of risk-weighted assets, which will be in addition to the 4.5% common equity Tier 1 capital ratio and be phased in over a three year period beginning January 1, 2016.

· Becomes effective January 1, 2015, for most banking organizations, subject to a transition period for several aspects of the rule, including the new minimum capital ratio requirements, the capital conservation buffer, and the regulatory capital adjustments and deductions.

· Increases capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term loan commitments.

· Expands the recognition of collateral and guarantors in determining risk-weighted assets.

· Removes references to credit ratings consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act and establishes due diligence requirements for securitization exposures.

While not effective until 2015, United's capital position at September 30, 2013 exceeded the minimum capital requirements of the interim final rule assuming they were applicable as of September 30, 2013, including the fully phased-in capital conservation buffer.

Critical Accounting Policies

Generally accepted accounting principles are complex and require management to apply significant judgments to various accounting, reporting and disclosure matters. The Company's management must use assumptions and estimates to apply these principles where actual measurement is not possible or practical. For a complete discussion of the Company's significant accounting policies, see "Note 1 – Significant Accounting Policies" to the Company's Consolidated Financial Statements beginning on Page A-36 of the Company's Annual Report on Form 10-K for the year ended December 31, 2012. Certain policies are considered critical because they are highly dependent upon subjective or complex judgments, assumptions and estimates. Changes in such estimates may have a significant impact on the Company's financial statements. See "Forward-Looking Statements."

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

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Item 4 – Controls and Procedures

Our management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"). Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report (the "Evaluation Date"), and have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

There have been no changes in the Company's internal control over financial reporting that occurred during the third quarter ended September 30, 2013 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Part II – Other Information

Item 5 – Other Information

The Company has entered into employment contracts with the following named executive officers of the Company and the Bank:

Name and Position With the Company and the Bank	Salary Provided by Contract
Robert K. Chapman President and Chief Executive Officer of the Company; Chief Executive Officer of the Bank	$	285,700
Randal J. Rabe Executive Vice President and Chief Financial Officer of the Company and the Bank	$	212,200
Todd C. Clark Executive Vice President of the Company; President of the Bank	$	234,000

Salary amounts are subject to adjustment as set forth in the contracts.

The contracts are effective from October 24, 2013 through March 31, 2014, and thereafter for successive one year terms unless either party gives timely notice of non-renewal.

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Under the contracts, if the Company terminates the employee's employment before a Change in Control (as defined in the contracts) other than for Cause (as defined in the contracts), the employee will receive severance pay consisting of six months of salary continuation and six months of healthcare continuation payments, provided that the severance pay will end if the employee secures other employment. If the Company terminates the employee's employment other than for Cause within 12 months after a Change in Control, or if the employee resigns for Good Reason (as defined in the contracts) within 12 months after a Change in Control, the employee will receive severance pay consisting of a lump sum payment equal to two years of salary, and will also receive 24 months of healthcare continuation payments.

The contracts provide for a general release from the employee as a condition to eligibility for severance pay. The contracts also provide that to be eligible for severance pay the employee must comply with confidentiality requirements and 24-month non-solicitation and non-competition commitments included in the contracts.

Under the contracts, the Company may recover and the employee must repay any bonus or incentive compensation based on statements of earnings, revenues, gains or other criteria that are later found to be materially inaccurate.

A form of the employment contract is filed as Exhibit 10.1 to this report and is here incorporated by reference.

On October 24, 2013, the Board of Directors adopted an amendment to the Company's Amended and Restated Bylaws, which eliminated a provision that stated that no person shall be nominated or elected as a director of the Company after having attained the age of seventy years.  The amendment is consistent with the Company's Corporate Governance Policy, which states that a director will not ordinarily be nominated for re-election to the Board of Directors following the expiration of the term of office which ends after his or her 70th birthday, but that the Board of Directors recognizes that the wisdom, experience and contribution of an older director could benefit the Board of Directors and the Compensation & Governance Committee may, in its discretion, nominate a director for re-election after his or her 70th birthday.  A copy of the Amended and Restated Bylaws, as amended, is filed as Exhibit 3.2 to this report.

Item 6 – Exhibits

The exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index, which is here incorporated by reference.

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 Bancorp, Inc.

October 25, 2013

/s/ Robert K. Chapman	/s/ Randal J. Rabe
Robert K. Chapman	Randal J. Rabe
President and Chief Executive Officer	Executive Vice President and Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)

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Exhibit Index

Exhibit	Description
3.1	Restated Articles of Incorporation of United Bancorp, Inc. Previously filed with the Commission on October 1, 2010 in United Bancorp, Inc.'s Form S-1 Registration Statement, Exhibit 3.1. Incorporated here by reference.
3.2	Amended and Restated Bylaws of United Bancorp, Inc.
3.3	Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series A. Previously filed with the Commission on January 16, 2009 in United Bancorp, Inc.'s Current Report on Form 8-K, Exhibit 3.1. Incorporated here by reference.
4.1	Restated Articles of Incorporation of United Bancorp, Inc. Exhibit 3.1 is incorporated here by reference.
4.2	Amended and Restated Bylaws of United Bancorp, Inc. Exhibit 3.2 is incorporated here by reference.
4.3	Form of Certificate for Fixed Rate Cumulative Perpetual Preferred Stock, Series A. Previously filed with the Commission on January 16, 2009 in United Bancorp, Inc.'s Current Report on Form 8-K, Exhibit 4.1. Incorporated here by reference.
4.4	Certificate of Designations for Fixed Rate Cumulative Perpetual Preferred Stock, Series A. Exhibit 3.3 is incorporated here by reference.
10.1	Form of Employment Contract.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350.

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EX-3.2

Bylaws

of

United Bancorp, Inc.

As amended and restated on

December 8, 2009 and

amended October 24, 2013

Table of Contents

ARTICLE I	MEETINGS OF SHAREHOLDERS	1
Section 1.	Times and Places of Meetings	1
Section 2.	Annual Meetings	1
Section 3.	Special Meetings	1
Section 4.	Notice of Meetings	1
Section 5.	Shareholder List	1
Section 6.	Quorum	1
Section 7.	Vote Required	2
Section 8.	Voting Rights	2
Section 9.	Participation in Meeting by Remote Communication	2
Section 10.	Matters to be Considered	2
Section 11.	Conduct of Meetings	3
Section 12.	Inspectors of Election	4
Section 13.	Vote by Shareholder Corporation	4
ARTICLE II	RECORD DATE	4
Section 1.	Fixing of Record Date by Board	4
Section 2.	Record Date in the Absence of Board Action	5
Section 3.	Adjournments	5
ARTICLE III	DIRECTORS	5
Section 1.	Qualification and Number	5
Section 2.	Term	5
Section 3.	Vacancies	5
Section 4.	Fees and Expenses	5
Section 5.	Resignation and Removal	6
Section 6.	Chairman of the Board	6
Section 7.	Nominations	6
ARTICLE IV	COMMITTEES OF DIRECTORS	7
Section 1.	Committees	7
Section 2.	Audit Committee	7
Section 3.	Compensation & Governance Committee	7
Section 4.	Executive Committee	7
Section 5.	Other Committees	7
Section 6.	Meetings	7
Section 7.	Substitutes	8
ARTICLE V	MEETINGS OF DIRECTORS	8
Section 1.	Places of Meetings	8
Section 2.	Organizational Meeting of Board	8
Section 3.	Regular Meetings	8
Section 4.	Special Meetings	8
Section 5.	Notice of Meetings	8

Section 6.	Purpose Need Not Be Stated	8
Section 7.	Board Quorum	8
Section 8.	Action Without a Meeting	9
Section 9.	Meeting by Remote Communication	9
Section 10.	Waiver of Notice	9
ARTICLE VI	OFFICERS	9
Section 1.	Appointment of Officers	9
Section 2.	Appointment to Titled Positions	9
Section 3.	Authority of Officers	9
Section 4.	Authority of Titled Positions	10
Section 5.	President	10
Section 6.	Other Officers	10
Section 7.	Secretary	10
Section 8.	Treasurer	10
Section 9.	Combined Offices	10
Section 10.	Subsidiary Officers	10
ARTICLE VII	STOCKS AND TRANSFERS	11
Section 1.	Certificates for Shares	11
Section 2.	Issuance of Shares Without Certificates	11
Section 3.	Fractional Shares	11
Section 4.	Transferable Only on Books of Corporation	11
Section 5.	Registered Shareholders	11
Section 6.	Transfer Agent and Registrar	11
Section 7.	Regulations	11
Section 8.	Replacement of Lost or Destroyed Certificates
ARTICLE VIII	INDEMNIFICATION	12
Section 1.	Indemnification in Action by Third Party	12
Section 2.	Indemnification in Action by or in Right of the Corporation	12
Section 3.	Expenses	12
Section 4.	Determination, Evaluation, and Authorization of Indemnification	13
Section 5.	Advances	15
Section 6.	Other Indemnification Agreements	15
Section 7.	Insurance	15
Section 8.	Definitions	15
Section 9.	Contract Rights	16
Section 10.	Savings Clause	16
Section 11.	Construction	16
ARTICLE IX	SUBSIDIARIES	16
ARTICLE X	AMENDMENTS	17
ARTICLE XI	GENERAL PROVISIONS	17

Section 1.	Distributions	17
Section 2.	Reserves	17
Section 3.	Voting Securities	17
Section 4.	Contracts	17
Section 5.	Corporate Books and Records	18
Section 6.	Fiscal Year	18
Section 7.	Seal	18

ARTICLE I

MEETINGS OF SHAREHOLDERS

Section 1.Times and Places of Meetings.  All meetings of the shareholders shall be held at such times and places, within or without the State of Michigan, as may be fixed from time to time by the Board of Directors.

Section 2.Annual Meetings.  An annual meeting of the shareholders shall be held on such date and at such place, within or without the State of Michigan, as is designated by the Board of Directors.  One of the purposes of the annual meeting shall be the election of directors.

Section 3.Special Meetings. Special meetings of the shareholders may be called by resolution of a majority of the Board of Directors, the Chairman of the Board or the President, and shall be held on a date fixed by the Board of Directors, the Chairman of the Board or the President.

Section 4.Notice of Meetings.Written notice of each meeting of shareholders, stating the time, place, if any, and purposes thereof, shall be given to each shareholder entitled to vote at the meeting not less than ten nor more than sixty days before the date fixed for the meeting, either personally, by mail, or, if authorized by the Board of Directors, by a form of electronic transmission to which the shareholder has consented.  For the purposes of these bylaws, "electronic transmission" means any form of communication that does not directly involve the physical transmission of paper, that creates a record that may be retained and retrieved by the recipient and that may be reproduced in paper form by the recipient through an automated process.  Notice of a meeting need not be given to any shareholder who signs a waiver of notice before or after the meeting.  Attendance of a shareholder at a meeting shall constitute both (i) a waiver of notice or defective notice except when the shareholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to holding the meeting or transacting any business because the meeting has not been lawfully called or convened, and (ii) a waiver of objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, except when the shareholder objects to considering the matter when it is presented.

Section 5.Shareholder List.  The officer or agent who has charge of the stock ledger of this Corporation shall prepare and make a complete list of the shareholders entitled to vote at the meeting, arranged by class or series of shares in alphabetical order, showing the address of and the number of shares registered in the name of each shareholder.  The list shall be produced and kept at the time and place of the meeting and may be inspected during the whole time of the meeting by any shareholder who is present at the meeting.  If the meeting is held solely by means of remote communication, then the list shall be open to the examination of any shareholder during the entire meeting by posting the list on a reasonably accessible electronic network and the information required to access the list shall be provided with the notice of the meeting.

Section 6.Quorum.

(a)            Unless a greater or lesser quorum is provided in the articles of incorporation, these bylaws, or by law, the number of shares entitled to cast a majority of the votes at a meeting constitute a quorum at the meeting.

(b)      Except when the holders of a class or series of shares are entitled to vote separately on an item of business, shares of all classes and series entitled to vote shall be combined as a single class and series for the purpose of determining a quorum.  When the holders of a class or series of shares are entitled to vote separately on an item of business, shares of that class or series entitled to cast a majority of the votes of that class or series at a meeting constitute

1

               a quorum of that class or series at the meeting, unless a greater or lesser quorum is provided in the articles of incorporation, these bylaws, or by   law.

  (c)       If there is no quorum, the chairman of the meeting shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present, when any business may be transacted which might have been transacted at the meeting as first convened had there been a quorum.  However, if the adjournment is for more than thirty days, or if after the adjournment the Board of Directors fixes a new record date for the adjourned meeting, notice of the time, place, and purposes of such meeting shall be given to each shareholder of record on the new record date.

(d)     Once a quorum is determined to be present, the shareholders present in person or by proxy at any meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.  If a meeting is adjourned solely for the purpose of receiving the results of voting by shareholders, such meeting need not be reconvened, but shall stand adjourned pending submission of the results of voting to the Secretary of this Corporation, whereupon the meeting shall stand adjourned until the next regular or special meeting of shareholders.

Section 7.Vote Required.  When a quorum is present at any meeting, any action to be taken by a vote of the shareholders, other than the election of directors, shall be authorized by a majority of the votes cast by the holders of shares entitled to vote on the action, whether present in person or represented by proxy, unless a greater vote is required by statute, the articles of incorporation or these bylaws.  Except as otherwise provided by the articles of incorporation, directors shall be elected by a plurality of the votes cast at an election.

Section 8.Voting Rights.  Except as otherwise provided by the articles of incorporation or the resolution or resolutions of the Board of Directors creating any class of stock, each shareholder shall at every meeting of shareholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such shareholder.  Each proxy to vote shall be in writing and signed by the shareholder or his or her duly authorized representative, and no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

Section 9.Participation in Meeting by Remote Communication.  A shareholder may participate (including voting) in a shareholder meeting by a conference telephone or by other means of remote communication through which all persons participating in the meeting may communicate with the other participants, if (a) the Board of Directors authorizes such participation; (b) all participants are advised of the means of remote communication and the names of the participants in the meeting; (c) the Corporation implements reasonable measures to verify that each person considered present and permitted to vote at the meeting by means of remote communication is a shareholder or proxy holder; (d) the Corporation implements reasonable measures to provide each shareholder and proxy holder a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with the proceedings; and (e) if any shareholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of the vote or other action is maintained by the Corporation.  Unless otherwise restricted by the articles of incorporation or these bylaws, the Board of Directors may hold a meeting of shareholders solely by means of remote communication if the requirements of this Section and Article V, Section 9 are met.

Section 10.Matters to be Considered.  Except as otherwise provided by statute, the articles of incorporation, or these bylaws:

2

(a)No matter may be presented for shareholder action at an annual or special meeting of shareholders unless such matter is: (i) specified in the notice of the meeting (or any supplement to the notice) given by or at the direction of the Board of Directors; (ii) presented at the meeting by or at the direction of the Board of Directors; (iii) properly presented for action at the meeting by a shareholder of record in accordance with the notice provisions set forth in this Section and any other applicable requirements; or (iv) a procedural matter presented, or accepted for presentation, by the chairman of the meeting in the chairman's sole discretion.

(b)For a matter to be properly presented by a shareholder for action at a meeting of shareholders, the shareholder must be a shareholder of record and must have given timely notice of the shareholder's intention to present the matter for action at the meeting in writing to the Secretary of the Corporation.  To be timely, the notice must be delivered to, or mailed to and received at, the office of the Secretary of the Corporation not less than 120 calendar days prior to the date corresponding to the date on which the Corporation's proxy statement or notice of meeting was first released to shareholders in connection with the last preceding annual meeting of shareholders, in the case of an annual meeting (unless the Corporation did not hold an annual meeting within the last year, or if the date of the upcoming annual meeting changed by more than 30 days from the date of the last preceding meeting, then the notice must be delivered or mailed and received not more than seven days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting), or not more than seven days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting, in the case of a special meeting.  The notice by the shareholder must set forth: (i) a brief description of the matter the shareholder desires to present for shareholder action; (ii) the name and record address of the shareholder proposing the matter for shareholder action; (iii) the class and number of shares of stock of the Corporation that are beneficially owned by the shareholder; (iv) any material interest of the shareholder in the matter proposed for shareholder action; and (v) the exact text of any resolution the shareholder proposes to present for action at the meeting.

Section 11.Conduct of Meetings.  Meetings of shareholders generally shall follow accepted rules of parliamentary procedure, subject to the following:

(a)The chairman of the meeting shall have absolute authority over matters of procedure, and there shall be no appeal from the ruling of the chairman.  If, in his or her absolute discretion, the chairman deems it advisable to dispense with the rules of parliamentary procedure as to any meeting of shareholders or part thereof, he or she shall so state and shall clearly state the rules under which the meeting or appropriate part thereof shall be conducted.

(b)If disorder should arise which, in the absolute discretion of the chairman, prevents the continuation of the legitimate business of the meeting, the chairman may quit the chair and announce the adjournment of the meeting, and upon his or her so doing, the meeting shall be immediately adjourned without the necessity of any vote or further action of the shareholders.

(c)The chairman may require any person who is not a bona fide shareholder of record on the record date, or is not a validly appointed proxy of such a shareholder, to leave the meeting.

(d)The chairman may introduce nominations, resolutions or motions submitted by the Board of Directors for consideration by the shareholders without a motion or second.  Except as the chairman shall direct, a resolution or motion not submitted by the Board of Directors shall be considered for a vote only if proposed by a shareholder of record on the record date or a validly appointed proxy of such a shareholder.

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(e)When all shareholders present at a meeting in person or by proxy have been offered an opportunity to vote on any matter properly before a meeting, the chairman may at his or her discretion declare the polls to be closed, and no further votes may be cast or changed after such declaration.  If no such declaration is made by the chairman, the polls shall remain open and shareholders may cast additional votes or change votes until the inspectors of election have delivered their final report to the chairman.

(f)When the chairman has declared the polls to be closed on all matters then before a meeting, the chairman may declare the meeting to be adjourned pending determination of the results by the inspectors of election.  In such event, the meeting shall be considered adjourned for all purposes, and the business of the meeting shall be finally concluded upon delivery of the final report of the inspectors of election to the chairman at or after the meeting.

(g)When the chairman determines that no further matters may properly come before a meeting, he or she may declare the meeting to be adjourned, without motion, second, or vote of the shareholders.

(h)When the chairman has declared a meeting to be adjourned, unless the chairman has declared the meeting to be adjourned until a later date, no further business may properly be considered at the meeting even though shareholders or holders of proxies representing a quorum may remain at the site of the meeting.

Section 12.Inspectors of Election.  The Board of Directors or, if they shall not have so acted, the chairman may appoint, at or prior to any meeting of shareholders, one or more persons (who may be directors, officers, or employees of this Corporation) to serve as inspectors of election.  The inspectors so appointed shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes or ballots, hear and determine challenges and questions arising in connection with the right to vote, count and tabulate votes or ballots, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders.  Whenever any shareholder present at a meeting of shareholders shall request the appointment of inspectors, the presiding officer of the meeting shall appoint inspectors, who need not be shareholders.  If the right of any person to vote at the meeting shall be challenged, the inspectors of election shall determine the right.  The inspectors shall receive and count the votes either upon an election, or for the decision of any question, and shall determine the result.  Their certificate of any vote shall be prima facia evidence thereof.

Section 13.Vote by Shareholder Corporation.  Any other corporation which is a shareholder in this Corporation may vote by an officer or agent, or by proxy appointed by an officer or agent or by some other person, who by action of its Board of Directors or pursuant to its bylaws, shall be authorized to vote.

ARTICLE II

RECORD DATE

Section 1.Fixing of Record Date by Board.  For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or to express consent to or dissent from any corporate action in writing without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the distribution or allotment of any rights or evidences of interests arising out of any change, conversion or exchange of capital stock, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date

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for any such determination of shareholders.  Such date shall not be more than 60 days nor less than 10 days before the date of any such meeting, nor more than 60 days prior to the effective date of any other action proposed to be taken.  Only shareholders of record on a record date so fixed shall be entitled to notice of, and to vote at, such meeting or to receive payment of any dividend or the distribution or allotment of any rights or evidences of interests arising out of any change, conversion or exchange of capital stock.

Section 2.Record Date in the Absence of Board Action.  If a record date is not fixed by the Board of Directors: (i) the record date for determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day next preceding the day on which the meeting is held; and (ii) the record date for determining shareholders for any other purpose shall be the close of business on the day on which the resolution of the Board of Directors relating thereto is adopted.

Section 3.Adjournments.  When a determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders has been made as provided in this Article, the determination applies to any adjournment of the meeting, unless the Board of Directors fixes a new record date for the adjourned meeting.

ARTICLE III

DIRECTORS

Section 1.Qualification and Number.  The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than five nor more than twenty directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors.

Section 2.Term. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors.  At each annual meeting of shareholders, successors to the class of directors whose term expires at that annual meeting shall be elected for a term of office to expire at the third succeeding annual meeting of shareholders after their election. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.

Section 3.Vacancies.  A director shall hold office until the annual meeting for the year at which his term expires and thereafter until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.

Section 4.Compensation.  The Board of Directors, by affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, may establish reasonable compensation of directors for services to the corporation as directors, but approval of the shareholders is required if the articles of incorporation, these bylaws or any provisions of the Michigan Business

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Corporation Act so provide.  The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors.  No such payment shall preclude any director from serving this Corporation in any other capacity and receiving compensation for such service.  Members of special or standing committees may be paid compensation for attending committee meetings or for serving as members or chairman of any committee.

Section 5.Resignation and Removal.  Any director may resign at any time and such resignation shall take effect upon receipt of written notice thereof by this Corporation, or at such subsequent time as set forth in the notice of resignation.  Any director, or the entire Board of directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of not less than 75% of the outstanding shares of capital stock of the Corporation entitled to vote, voting together as a single class.

Section 6.Chairman of the Board.  The Board of Directors at its first meeting after the annual meeting of the shareholders, or as soon as practicable after the election of directors in each year, shall appoint from its members a Chairman of the Board and may appoint one or more Vice Chairmen.  The Chairman of the Board shall have such other duties and powers as may be imposed upon or given to him or her by the Board of Directors but shall not be an officer of the Corporation unless he or she is also the President or otherwise appointed and designated an officer by the Board of Directors.  The Chairman of the Board shall preside at all meetings of the Board of Directors.  The Chairman of the Board shall preside at all meetings of the shareholders, or the Chairman of the Board or the Board of Directors may appoint the President to serve as chairman of any or all meetings of the shareholders in lieu of the Chairman of the Board.  The Chairman of the Board and any Vice Chairman shall serve at the pleasure of the Board of Directors and may be removed or replaced by the Board of Directors at any time and for any reason.

Section 7.Nominations.

(a)Nominations of candidates for election as directors of the Corporation at any meeting of shareholders called for election of directors (an "Election Meeting") may be made by the Board of Directors or by any shareholder entitled to vote at such Election Meeting.

(b)Nominations made by the Board of Directors shall be made at a meeting of the Board of Directors, or by written consent of directors in lieu of a meeting, not less than 30 days prior to the date of the Election Meeting, and such nominations shall be reflected in the minute books of the Corporation as of the date made. At the request of the Secretary of the Corporation, each proposed nominee shall provide the Corporation with such information concerning himself or herself as is required, under the rules of the Securities and Exchange Commission, to be included in the Corporation's proxy statement soliciting proxies for his or her election as a director.

(c)No less than120 days prior to the date of the Election Meeting in the case of an annual meeting, and not more than seven days following the date of notice of the meeting in the case of a special meeting, any shareholder who intends to make a nomination at the Election Meeting shall deliver a notice to the Secretary of the Corporation setting forth (i) the name, age, business address and residence of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of each class and series of capital stock of the Corporation which are beneficially owned by each such nominee and (iv) such other information concerning each such nominee as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee.

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(d)In the event that a person is validly designated as a nominee in accordance with subsection (b) and shall thereafter become unable or unwilling to stand for election to the board of directors, the Board of Directors may designate a substitute nominee.

(e)If the chairman of the Election Meeting determines that a nomination was not in accordance with the foregoing procedures, such nomination shall be void.

ARTICLE IV

COMMITTEES OF DIRECTORS

Section 1.Committees. The Board of Directors may from time to time designate committees, whose membership shall consist of such members of the Board of Directors as it may deem advisable, to serve at the pleasure of the Board of Directors. The Board of Directors may also appoint directors to serve as alternates for members of each committee in the absence or disability of regular members. The Board of Directors may fill any vacancies in any committee as they occur.

Section 2.Audit Committee.  The Audit Committee will perform the function of an audit committee for the Corporation and each of its subsidiaries as that function is defined in the Audit Committee Charter adopted by the Board of Directors from time to time.  The Audit Committee shall have the authority, responsibilities and powers provided in the Audit Committee Charter, any resolutions adopted by the Board of Directors from time to time, and any applicable laws and regulations.  The members of the Audit Committee shall have the qualifications set forth in the Audit Committee Charter, any resolutions adopted by the Board of Directors from time to time, and any applicable laws and regulations.

Section 3.Compensation & Governance Committee.  The Compensation & Governance Committee will perform the functions of a compensation, governance and nominations committee for the Corporation and each of its subsidiaries as that function is defined in the Compensation & Governance Committee Charter adopted by the Board of Directors from time to time.  The Compensation & Governance Committee shall have the authority, responsibilities, and powers provided in the Compensation & Governance Committee Charter, any resolutions adopted by the Board of Directors from time to time, and any applicable laws and regulations.  The members of the Compensation & Governance Committee shall have the qualifications set forth in the Compensation & Governance Committee Charter, any resolutions adopted by the Board of Directors from time to time, and any applicable laws and regulations.

Section 4.Executive Committee.  The Executive Committee, if one is designated by the Board of Directors, will have and may exercise the full powers and authority of the Board of Directors in the management of the business affairs and property of the Corporation during the intervals between meetings of the Board of Directors

Section 5.Other Committees. The Board of Directors may designate such other committees as it may deem appropriate, and such committees shall exercise the authority delegated to them.

Section 6.Meetings. Each committee provided for above shall meet as often as its business may require and may fix a day and time for regular meetings, notice of which shall not be required. Whenever the day fixed for a meeting shall fall on a holiday, the meeting shall be held on the following business day or on such other day as the chairman of the committee may determine.  Special meetings of committees may be called by any member, and notice of special meetings may be given to the members

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personally, by telephone, by mail, or by electronic transmission. A majority of the members of a committee will constitute a quorum for the transaction of the business of the committee. A record of the proceedings of each committee shall be kept and presented to the Board of Directors.

Section 7.Substitutes. In the absence or disqualification of a member of a committee, the members present at a meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint any other member of the board who has the qualifications, if any, set forth in the committee charter or any resolution of the Board of Directors to act at the meeting in place of such absent or disqualified member.

ARTICLE V

MEETINGS OF DIRECTORS

Section 1.Places of Meetings.  The Board of Directors of this Corporation may hold meetings, both regular and special, either within or without the State of Michigan.

Section 2.Organizational Meeting of Board.  The Board of Directors may meet immediately following each annual meeting of shareholders and no notice of such meeting shall be necessary to any newly elected directors in order legally to constitute the meeting, provided a quorum shall be present.  In the event such meeting is not held immediately following the annual meeting of shareholders, the meeting may be held at such time and place as shall be specified in a notice given as provided in these bylaws for special meetings of the Board of Directors, unless such notice shall have been waived by each of the directors as provided in these bylaws.

Section 3.Regular Meetings.   Regular meetings of the Board of Directors may be held with or without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

Section 4.Special Meetings.  Special meetings of the Board of Directors may be called by the Chairman of the Board or the President.  Special meetings shall be called by the Chairman of the Board or the President on the request of any two directors.

Section 5.Notice of Meetings.  Except as otherwise provided by these bylaws, notice of the date, time, and place of each meeting of the Board of Directors shall be given to each director by either of the following methods:

(a)by mailing a written notice of the meeting to the address that the director has designated or, in the absence of designation, to the last known address of the director, at least two days before the date of the meeting; or

(b)by delivering a written notice of the meeting to the director at least one full business day before the meeting, personally or by electronic transmission, to the address that the director has designated, or in the absence of such designation, to the director's last known office, home or electronic address.

Section 6.Purpose Need Not Be Stated.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting.

Section 7.Board Quorum.  At all meetings of the Board of Directors a majority of the directors then in office shall constitute a quorum for the transaction of business, and the act of a majority

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of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, the articles of incorporation, or these bylaws.  If a quorum is not present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

Section 8.Action Without a Meeting.  Any action required or permitted to be taken under authorization voted at any meeting of the Board of Directors, or of any committee of the board, may be taken without a meeting if, before or after the action, all directors then in office or members of such committee, as the case may be, consent thereto in writing or by electronic transmission.  The consent shall have the same effect as a vote of the board or committee for all purposes.  Any such consent shall be filed with the minutes or proceedings of the board or committee.

Section 9.Meeting by Remote Communication.  The Board of Directors or any committee appointed by the Board of Directors may participate in a meeting of such board or committee by means of conference telephone or other means of remote communication through which all persons participating in the meeting can communicate with the other participants.  Participation in a meeting pursuant to this Section shall constitute presence in person at the meeting.

Section 10.Waiver of Notice.  A director's attendance at or participation in a meeting of the Board of Directors or any committee constitutes a waiver of notice of the meeting, unless the director at the beginning of the meeting, or upon his or her arrival, objects to the meeting or the transacting of business at the meeting and does not thereafter vote for or assent to any action taken at the meeting.  Notice of any meeting of the board or a committee need not be given to any person entitled thereto who waives such notice in writing, either before or after such meeting.

ARTICLE VI

OFFICERS

Section 1.Appointment of Officers.  The Board of Directors shall appoint a President, a Secretary and a Treasurer, all of whom shall be officers of the Corporation.  The Board of Directors may also appoint and expressly designate Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, or such other individuals as it may deem proper to be officers of the Corporation with such titles as the Board of Directors may deem appropriate.  Any officer appointed by the Board of Directors shall hold office for an indefinite term at the pleasure of the Board of Directors.  All officers shall respectively have such authority and perform such duties in the management of the property and affairs of the Corporation as may be delegated by the Board of Directors.  Any officer may be removed by the Board of Directors at any time and for any reason.  The Board of Directors may secure the fidelity of any or all of the officers by bond or otherwise.  The Board of Directors shall have the power to fill any vacancies in any offices.

Section 2.Appointment to Titled Positions.  The Board of Directors or the President may from time to time appoint individuals to titled positions.  Holders of titled positions who may from time to time be appointed pursuant to this Section shall hold such titles as are assigned by the Board of Directors or the President.  The title of "Vice President" with or without other words, may be conferred on a holder of a titled position.  Dismissal of the holder of a titled position, appointment of replacement for a holder of a titled position, appointment of an additional titled position holder, and a change of titled position holder to a different or additional position may be made by the Board of Directors or the President.  Any two or more titled positions may be filled by the same person.

Section 3.Authority of Officers.  The President, Executive Vice Presidents, Senior Vice Presidents, Secretary, Treasurer, and any Vice Presidents or other persons as the Board of Directors shall

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have appointed and expressly designated as officers, shall be the only officers of the Corporation.  Only the officers of the Corporation shall have the discretionary authority to determine the fundamental policies of the Corporation.  Holders of titled positions who have not been expressly designated as officers of the Corporation in this Section or by the Board of Directors shall not be officers of the Corporation regardless of their titles.

Section 4.Authority of Titled Positions.  Holders of title positions who are not officers shall not have discretionary authority to determine fundamental policies of the Corporation and shall not, by reason of holding such titled positions, be entitled to attend or receive the minutes of any meetings of the Board of Directors or any committee of the Corporation, except as and to the extent expressly authorized and permitted by the Board of Directors or the President.

Section 5.President.  The President shall be the Chief Executive Officer of the Corporation.  The President shall have the general and active authority and responsibility for the management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.

Section 6.Other Officers.  Each Executive Vice President, Senior Vice President, and any Vice Presidents who are appointed and designated as officers by the Board of Directors shall have such powers and perform such duties as may be assigned to him or her from time to time by the Board of Directors or the President.  In case of the absence of or the inability to act of the President, the duties of the President shall be performed by the Executive Vice Presidents, the Senior Vice Presidents, and any Vice Presidents designated by the Board of Directors as officers, in the order of their seniority or such other priority as may be established by the Board of Directors, unless and until the Board of Directors shall otherwise direct, and, when so acting the duly authorized Executive Vice President, Senior Vice President, or Vice President shall have all the powers of, and shall be subject to the restrictions upon, the President.

Section 7.             Secretary.  The Secretary shall attend all meetings of the shareholders and the Board of Directors, and shall preserve in books of the Corporation true minutes of the proceedings of all such meetings.  The Secretary shall give all notices required by statute, these bylaw or resolution of the Board of Directors.

Section 8.Treasurer.  The Treasurer shall have custody of all corporate funds and securities and shall keep in books of the Corporation full and accurate accounts of all receipts and disbursements.  The Treasurer shall deposit all monies, securities, and other valuable effects in the name of the Corporation in such depositories as may be designated for that purpose by the Board of Directors.  The Treasurer shall disburse the funds of the Corporation as ordered by the Board of Directors, and shall render to the President and directors at the regular meetings of the Board of Directors, or whenever requested by them, an account of the financial condition of the Corporation.

Section 9.Combined Offices.  The Board of Directors may combine any of the above described offices, except those of President and Vice President.

Section 10.Subsidiary Officers.  The officers of any Subsidiary (as defined in Article IX) shall not, by virtue of holding such title and position, be deemed to be officers of this Corporation, nor shall any such officer of a Subsidiary, unless he or she is also a director or officer of this Corporation, be entitled to have access to any files, records, or other information relating or pertaining to this Corporation, its business and finances, or to attend or receive the minutes of any meetings of the Board of Directors or any committee of this Corporation, except as and to the extent expressly authorized and permitted by the Board of Directors or the President.

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ARTICLE VII

STOCKS AND TRANSFERS

Section 1.Certificates for Shares.  Certificates representing shares of capital stock of the Corporation shall be in such form as is required by law and approved by the officers who sign the certificates.  Certificates shall be signed in the name of the Corporation by the Chairman of the Board or the President, and may also be signed by another officer of the Corporation. If any officer who has signed a certificate ceases to be such officer before the certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer at the date of issue.

Section 2.Issuance of Shares Without Certificates.  The Corporation may issue some or all of the shares of any or all of its classes or series without certificates. Within a reasonable time after issuance or transfer of shares without certificates, the Corporation shall send the shareholder a written statement confirming the issuance or transfer of shares without certificates.  Such written statement shall include (i) the name of the Corporation and that it is formed under the laws of the State of Michigan, (ii) the name of the person to whom the shares are issued, (iii) the number and class of shares and the designation of the series, if any, (iv) that the holder of the shares is entitled to have a certificate upon written request made to the Secretary of the Corporation, and (v) any other information required by law.

Section 3.Fractional Shares.  The Corporation may issue fractions of shares.  Holders of fractions of shares shall be entitled to exercise voting rights and to receive dividends and distributions in proportion to their fractional shares.  The Corporation may, alternatively, pay in cash the fair value of fractions of shares, as determined from time to time by the Board of Directors, as of the time when those entitled to receive any fractions of sharing are determined.

Section 4.Transferable Only on Books of Corporation.  Shares shall be transferable only on the books of the Corporation by the person named in the certificate, or by attorney lawfully constituted in writing, or by the Secretary of the Corporation, and upon surrender of the certificate.  A record shall be made of every transfer and issue. Whenever any transfer is made for collateral security and not absolutely, that fact shall be so expressed in the entry of the transfer.

Section 5.Registered Shareholders.  The Corporation shall have the right to treat the registered holder of any share as the absolute owner, and shall not be bound to recognize any equitable or other claim to, or interest in, the share on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as may be otherwise expressly provided by the statutes of Michigan.

Section 6.Transfer Agent and Registrar.  The Board of Directors may appoint a transfer agent and registrar of transfers, and may require all certificates of shares to bear the signature of the transfer agent and of the registrar of transfers, or as the Board of Directors may otherwise direct.

Section 7.Regulations.  The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient regulating the issue, transfer and registration of certificates for shares of this Corporation.

Section 8.Replacement of Lost or Destroyed Certificates.  The Corporation may issue a new certificate for shares or fractional shares in place of a certificate previously issued by it, alleged to have been lost or destroyed, and the Board of Directors may require the owner of the lost or destroyed certificate, or his legal representative, to give the Corporation a bond or other security sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged lost or destroyed certificate or the issuance of such new certificate.

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ARTICLE VIII

INDEMNIFICATION

Section 1.Indemnification in Action by Third Party.  The Corporation shall indemnify any director or officer of the Corporation and any director or officer of any bank subsidiary of the Corporation and may indemnify any employee, agent, or other person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding (other than an action by or in the right of the Corporation), whether civil, criminal, administrative, or investigative and whether formal or informal, by reason of the fact that the person is or was a director, officer, employee, or agent of the Corporation or any bank subsidiary of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, whether for profit or not for profit, against expenses (including attorneys' fees), judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit, or proceeding, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation or its shareholders or any bank subsidiary of the Corporation, as applicable, and, with respect to a criminal action or proceeding, the person had no reasonable cause to believe his or her conduct was unlawful.  The termination of an action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner that the person reasonably believed to be in or not opposed to the best interests of the Corporation or its shareholders or any bank subsidiary of the Corporation, as applicable, and, with respect to a criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Section 2.Indemnification in Action by or in Right of the Corporation.  The Corporation shall indemnify any director or officer of the Corporation and any director or officer of a bank subsidiary of the Corporation and may indemnify any employee, agent, or other person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee, or agent of the Corporation or any bank subsidiary of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, whether for profit or not for profit, against expenses (including attorneys' fees) and amounts paid in settlement actually and reasonably incurred by the person in connection with the action or suit, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation or its shareholders or any bank subsidiary of the Corporation, as applicable.  Indemnification shall not be made for any such claim, issue, or matter in which the person shall have been found liable to the Corporation or any bank subsidiary of the Corporation, as applicable, except to the extent authorized by statute.

Section 3.Expenses.To the extent that a director or officer of the Corporation or any other person entitled to mandatory indemnification under Section 1 or 2 of this Article has been successful on the merits or otherwise in defense of an action, suit, or proceeding referred to in Section 1 or 2 of this Article, or in defense of a claim, issue, or matter in the action, suit, or proceeding, the Corporation shall indemnify that person against actual and reasonable expenses (including attorneys' fees), incurred by the person in connection with the action, suit, or proceeding and any action, suit, or proceeding brought to enforce the mandatory indemnification provided in this Article.  The Corporation may indemnify any other employee, agent or person who may be indemnified under Section 1 or 2 to the extent that person has been successful on the merits or otherwise against actual and reasonable expenses (including

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attorneys' fees) incurred by the person in connection with the action, suit, or proceeding and an action, suit, or proceeding brought to enforce the mandatory indemnification provided in this Article.

Section 4.Determination, Evaluation, and Authorization of Indemnification.

(a)Any person who claims indemnification under Section 1 or 2 of this Article or the articles of incorporation shall be entitled to a strong presumption that he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation or its shareholders or any bank subsidiary of the Corporation, as applicable, and, with respect to a criminal action or proceeding, that he or she had no reason to believe his or her conduct was unlawful.  Except as otherwise provided in Subsection (e) or unless ordered by a court, the Corporation shall make an indemnification under Section 1 or 2 of this Article upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 1 or 2 of this Article and upon an evaluation of the reasonableness of expenses and amounts paid in settlement.  This determination and evaluation may be made in any of the following ways:

(i)By a majority vote of a quorum of the Board of Directors consisting of directors who are not parties or threatened to be made parties to the action, suit, or proceeding.

(ii)If a quorum cannot be obtained under Subsection (i) above, by majority vote of a committee duly designated by the Board and consisting solely of two or more directors not at the time parties or threatened to be made parties to the action, suit, or proceeding.

(iii)By independent legal counsel in a written opinion, which counsel shall be selected in one of the following ways:

(A)By the Board of Directors or its committee in the manner prescribed in Subsection (i) or (ii) above.

(B)If a quorum of the Board of Directors cannot be obtained under Subsection (i) above and a committee cannot be designated under Subsection (ii) above, by the Board of Directors.

(iv)By all independent directors (as that term is defined in the Michigan Business Corporation Act) who are not parties or threatened to be made parties to the action, suit, or proceeding.

(v)By the shareholders, but shares held by directors, officers, employees, or agents who are parties or threatened to be made parties to the action, suit, or proceeding may not be voted.

(b)In the designation of a committee under Subsection (a)(ii) or in the selection of independent legal counsel under Subsection (a)(iii)(B), all directors may participate.

(c)If a person is entitled to indemnification under Section 1 or 2 of this Article for a portion of expenses, including reasonable attorneys' fees, judgments, penalties, fines, and amounts paid in settlement, but not for the total amount, the Corporation may indemnify the person for the portion of the expenses, judgments, penalties, fines, or amounts paid in settlement for which the person is entitled to be indemnified.

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(d)The Corporation shall authorize payment of indemnification under this Section in one of the following ways:

(i)By the Board of Directors in one of the following ways:

(A)If there are two or more directors who are not parties or threatened to be made parties to the action, suit, or proceeding, by a majority vote of all directors who are not parties or threatened to be made parties, a majority of whom shall constitute a quorum for this purpose.

(B)By a majority of the members of a committee of two or more directors who are not parties or threatened to be made parties to the action, suit, or proceeding.

(C)If the Corporation has one or more independent directors who are not parties or threatened to be made parties to the action, suit, or proceeding, by a majority vote of all independent directors who are not parties or are threatened to be made parties, a majority of whom shall constitute a quorum for this purpose.

(D)If there are no independent directors and less than two directors who are not parties or threatened to be made parties to the action, suit, or proceedings, by the vote necessary for action by the Board of Directors in accordance with Section 523 of the Michigan Business Corporation Act, in which authorization all directors may participate.

(ii)By the shareholders, but shares held by directors, officers, employees, or agents who are parties or threatened to be made parties to the action, suit, or proceeding may not be voted on the authorization.

(e)To the extent that the articles of incorporation include a provision eliminating or limiting the liability of a director pursuant to Section 209(1)(c) of the Michigan Business Corporation Act, the Corporation may indemnify a director for the expenses and liabilities described in this Subsection without a determination that the director has met the standard of conduct set forth in Section 1 or 2 of this Article, but no indemnification shall be made except to the extent authorized in Section 564c of the Michigan Business Corporation Act if the director received a financial benefit to which he or she was not entitled, intentionally inflicted harm on the Corporation or its shareholders, violated Section 551 of the Michigan Business Corporation Act, or intentionally committed a criminal act.  In connection with an action or suit by or in the right of the Corporation as described in Section 2 of this Article, indemnification under this Subsection shall be for expenses, including attorneys' fees, actually and reasonably incurred.  In connection with an action, suit, or proceeding other than an action, suit, or proceeding by or in the right of the Corporation, as described in Section 1 of this Article, indemnification under this Subsection shall be for expenses, including attorneys' fees, actually and reasonably incurred, and for judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred.

(f)Notwithstanding the foregoing, if a change in control of the Corporation has occurred, and all or any part of the events or circumstances giving rise to the claim for which indemnification is sought occurred prior to the change in control, a determination that a person claiming mandatory indemnification under this Article is not entitled to indemnification shall be made only by a court of competent jurisdiction in an order, opinion, or judgment.  A change in control shall be deemed to have occurred if a majority of the Board of Directors is composed of

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persons who were not directors of this Corporation at the time of all such events and circumstances, or a majority of the shares of common stock of the Corporation or its successor are held by a shareholder or group of shareholders who held fewer than 25 percent of the Corporation's common stock at the time of such events and circumstances.

Section 5.Advances

(a)The Corporation may pay or reimburse the reasonable expenses incurred by a director, officer, employee, or agent who is a party or threatened to be made a party to an action, suit, or proceeding before final disposition of the proceeding if the person furnishes the Corporation a written undertaking, executed personally or on the person's behalf, to repay the advance if it is ultimately determined that the person did not meet the applicable standard of conduct, if any, required by statute for the indemnification of a person under the circumstances.

(b)The undertaking required by Subsection (a) above must be an unlimited general obligation of the person, but need not be secured and may be accepted without reference to the financial ability of the person to make repayment.

(c)An evaluation of reasonableness under this Section shall be made in the manner specified in Section 8.4(a) above, and authorizations shall be made in the manner specified in Section 8.4(d) above.

(d)      A provision in the articles of incorporation or bylaws, a resolution of the Board or shareholders, or an agreement making indemnification mandatory shall also make the advancement of expenses mandatory unless the provision, resolution, or agreement specifically provides otherwise.

Section 6.Other Indemnification Agreements.  The indemnification or advancement of expenses provided by this Article is not exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation, these bylaws, or a contractual agreement.  The total amount of expenses advanced or indemnified from all sources combined may not exceed the amount of actual expenses incurred by the person seeking indemnification or advancement of expenses.  The indemnification provided in this Article continues as to a person who ceases to be a director, officer, employee, or agent and shall inure to the benefit of the person's heirs, personal representatives, and administrators.

Section 7.Insurance.  The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation or any bank subsidiary of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against the person and incurred by the person in any such capacity or arising out of the person's status as such, whether or not the Corporation would have power to indemnify the person against the liability under this Article.

Section 8.Definitions.  For the purposes of this Article: (a) "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; (b) "other enterprises" shall include employee benefit plans; (c) "serving at the request of the Corporation" shall include any service as a director, officer, employee, or agent of the Corporation which service imposes duties on, or involves services by, the director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries; and (d) a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan

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shall be considered to have acted in manner "not opposed to the best interest of the Corporation or its shareholders" as referred to in Sections 1 and 2 of this Article.

Section 9.Contract Rights. The provisions of this Article shall be deemed to be a contract for the benefit of and enforceable by any person entitled to indemnification under this Article and shall be applicable to actions, suits, or proceedings, whether arising from acts or omissions occurring before or after the adoption hereof, and to directors and officers of the Corporation or any bank subsidiary of the Corporation who have ceased to render such service, and shall inure to the benefit of the heirs, executors, and administrators of the directors and officers of the Corporation or any bank subsidiary of the Corporation referred to in this Article.  Changes in these bylaws reducing the scope of indemnification shall not apply to actions or omissions occurring before such change. The provisions of this Article shall survive any merger, consolidation or sale of the Corporation's stock or substantially all of the business or assets of the Corporation.

Section 10.Savings Clause.  If this Article or any portion thereof shall be invali­dated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer of the Corporation whose indemnification is authorized under the articles of incorporation and each director or officer of any bank subsidiary of the Corproation as to expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including a grand jury proceeding and an action by the Corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated or by any other applicable law.

Section 11.Construction  It is the intent of this Article to grant to the directors and officers of this Corporation or any bank subsidiary of the Corporation, and to directors and officers serving at the request of this Corporation as directors, officers, employees, or agents of another corporation, partnership, joint venture, trust, or other enterprise, the broadest indemnification permitted under the laws of the State of Michigan, as the same may be amended from time to time.  This Article shall be liberally construed to give effect to such intent.  The Corporation further intends, acknowledges, and agrees that all directors and officers have undertaken and will undertake the performance of their duties and obligations in reliance upon the indemnification provided for in this Article.  Accordingly, such rights of indemnification may not be retroactively reduced or abolished as to any director or officer without his or her consent.

ARTICLE IX

SUBSIDIARIES

With respect to each corporation, partnership, limited liability company, limited partnership, joint venture, trust, or other enterprise which is wholly or partly owned or controlled by this Corporation ("Subsidiary"):

(a)The Board of Directors, the President, or any officer appointed by the Board of Directors may vote the shares of stock owned by this Corporation in the Subsidiary for the election of directors of the Subsidiary, for any amendments to the articles of incorporation, bylaws, or governing instruments of the Subsidiary, for the liquidation, merger, or sale of assets of any the Subsidiary, or for any other matter submitted to the vote of the shareholders of the Subsidiary.

(b)The Board of Directors, the President, or any officer appointed by the Board of Directors may nominate and cause to be elected to the Board of Directors of the Subsidiary such

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persons as they shall designate, any of whom may, but need not be, directors, officers, or other employees or agents of this Corporation.

(c)Subject to applicable corporate law, the articles of incorporation, bylaws, or governing instruments of the Subsidiary, the Board of Directors, the President, or any officer appointed by the Board of Directors of this Corporation may instruct the directors of the Subsidiary as to the manner in which they are to vote upon any issue properly coming before them as the directors of the Subsidiary.  Directors of the Subsidiary shall have no liability to this Corporation as the result of any action taken in accordance with such instructions from this Corporation.

ARTICLE X

AMENDMENTS

The Board of Directors shall have the power to make, alter, amend, change, add to or repeal the bylaws of the Corporation not inconsistent with the provisions of the articles of incorporation, or any amendment thereto. The affirmative vote of the holders of not less than 75% of the outstanding shares of capital stock of the Corporation entitled to vote shall be required for the approval and adoption of any amendment, alteration, change, addition to or repeal of the bylaws of the Corporation proposed by any shareholder of the Corporation.

ARTICLE XI

GENERAL PROVISIONS

Section 1.Distributions.  The Board of Directors, in its discretion, may from time to time declare and direct payment of dividends or other distributions to shareholders.  A dividend or other distribution shall not be made if, after giving it effect, the Corporation would not be able to pay its debts as the debts become due in the usual course of business, or the Corporation's total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit otherwise, the amount that would be needed, if the Corporation were to be dissolved at the time of the dividend or distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

Section 2.Reserves.  The Board of Directors shall have the power and authority to set apart, out of any funds available for dividends or other distributions to shareholders, such reserve or reserves, for any proper purpose, as the Board of Directors in its discretion approves, and the Board of Directors shall have the power and authority to abolish any reserve created by the Board of Directors.

Section 3.Voting Securities.  The Chairman of the Board, the President and any other person appointed by the Board of Directors shall have full power and authority on behalf of the Corporation to attend and to act and to vote, or to execute in the name or on behalf of the Corporation a consent in writing in lieu of a meeting of shareholders or a proxy authorizing an agent or attorney-in-fact for the Corporation to attend and vote at any meetings of security holders of corporations in which the Corporation may hold securities, and at such meetings he or his duly authorized agent or attorney-in-fact shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have possessed and exercised if present.

Section 4.             Contracts.  When the execution of any contract, conveyance or other instrument has been authorized without specification of the executing officers, the Chairman of the Board, the President, the Executive Vice Presidents, the Secretary, and any other officer appointed by the Board of Directors, may execute the same in the name and on behalf of this Corporation and may affix the corporate seal thereto.

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Section 5.Corporate Books and Records.  The Corporation shall keep books and records of account and minutes of the proceedings of its shareholders, Board of Directors and committees. The books, records and minutes may be kept outside the State of Michigan . The Corporation shall keep at its registered office, or at the office of its transfer agent within or without the State of Michigan, records containing the names and addresses of all shareholders, the number, class and series of shares of capital stock held by each and the dates when they respectively became holders of record thereof. Any of such books, records or minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. The Corporation shall convert into written form without charge any such record not in such form, upon written request of a person entitled to inspect them.

Section 6.Fiscal Year.  The fiscal year of the Corporation shall be fixed by resolution of the board of directors.

Section 7.Seal.  If the Corporation has a corporate seal, it shall have inscribed thereon the name of the Corporation and the words "Corporate Seal" and "Michigan". The seal may be used by causing it or a facsimile to be affixed, impressed or reproduced in any other manner.

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EX-10.1

EMPLOYMENT CONTRACT

THIS EMPLOYMENT CONTRACT ("Contract") made and effective this 24th day of October, 2013, by and between _________ ("Employee") and UNITED BANCORP, INC., 2723 S. State Street, Ann Arbor, Michigan 48104 ("UBI").

RECITALS

A. UBI desires to continue to employ Employee.

B. Employee desires to continue to be employed by UBI.

C. There is continued activity by multi-bank holding companies in the acquisition of independent community banks, which often jeopardizes the continued employment of senior officers of the acquired bank, and UBI wishes to minimize the uncertainty and distraction caused by such activity, which would detract from Employee's ability to perform his/her duties, by providing Employee with some transition assistance if Employee's employment is terminated under circumstances entitling Employee to payments under paragraph 3 or 11 of this Contract.

NOW, THEREFORE, UBI and Employee hereby enter into this Employment Contract on the following terms and conditions:

1. Employment.  UBI hereby employs Employee, and Employee accepts this employment and agrees to devote his/her full-time attention and energies to the performance of his/her employment duties.  UBI retains the right to terminate Employee's employment at will subject to the terms of this Contract.

2. Term of Contract.  The Initial Term of this Contract shall be from October 24, 2013, through March 31, 2014.  Beginning on April 1, 2014, this contract shall automatically renew for additional one year terms from April 1 through March 31 ("Renewal Term") unless either party gives the other written notice of nonrenewal not later than 60 days before the expiration of the Initial Term or any Renewal Term; if such notice of nonrenewal is given this Contract will expire at the end of its then-current term.  If Employee's employment terminates before expiration of this Contract: (A) Employee will be entitled to the payments under paragraph 3 or 11, if applicable, notwithstanding such expiration and (B) Employee will remain subject to paragraphs 9, 12, 13 and 14 notwithstanding such expiration.  The confidentiality provisions in paragraph 12 shall survive termination of Employee's employment and expiration of this Contract, and will remain in effect permanently as provided in paragraph 12.

3. Payment Upon Termination in Certain Circumstances.  If UBI terminates Employee's employment other than for "Cause," as defined in paragraph 6, below, under circumstances constituting an involuntary separation from service, as those terms are defined under Section 409A of the Internal Revenue Code and related regulations (the "Code"), Employee will be entitled to the payments provided in this paragraph, subject to the conditions in this paragraph.  Provided, however, that if Employee is entitled to payments under paragraph 11, this paragraph will not apply.

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a. Payments.

i. Employee shall continue to receive his/her regular salary (the salary in effect immediately prior to such termination) in accordance with UBI's regular payroll practices and subject to required payroll withholding, for 6 months after the date of Employee's separation from service.

ii. Provided that Employee elects and remains eligible for COBRA continuation coverage, UBI will pay the COBRA continuation premiums to continue Employee's employee and dependent coverage under the Company's health insurance program for 6 months after the date of Employee's separation from service.

b. Conditions.  Employee's entitlement to the payments in subparagraph a. above is subject to the following conditions.

i. Employee must sign within a time period designated by UBI (which shall be at least 7 days and not more than 45 days after Employee's separation from service), and must not revoke or purport to revoke, a general release, in a form prepared by UBI, of any claims that the Employee might otherwise have against UBI, any entity owning, owned by, or under common ownership with UBI ("Affiliate"), and the officers, directors, employees and agents of UBI and each Affiliate, provided that such general release will not release Employee's right to any payments under this Contract, any vested benefits to which Employee is entitled under the terms of UBI's benefit programs with respect to Employee's service through the date of separation from service, any rights of Employee under the terms of any applicable UBI equity compensation programs with respect to outstanding stock options or restricted stock, or any rights of Employee to indemnification under the Articles of Incorporation of Bylaws of UBI or any Affiliate.

ii. Employee's entitlement to the payments under this paragraph is conditioned on Employee's compliance with Employee's obligations under paragraphs 9, 12, 13 and 14.

iii. The continuation of salary and COBRA premiums shall immediately cease if Employee secures employment before the end of the 6 month period following Employee's separation from service.

iv. In no event shall the total salary amounts paid under paragraph 3.a.i. or 11.a.i. exceed twice the compensation limit under Code Section 401(a)(17) in effect at the time the payments are made.

4. Duties.  The duties, responsibilities and authority of Employee shall be as determined by UBI from time to time.

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5. Compensation.  Employee's annual salary for the Initial Term shall be $_____, unless adjusted pursuant to the following provisions:

a. It is contemplated that Employee will be eligible for an annual cash bonus as a participant in the Management Committee Incentive Compensation Plan, subject to the terms of the plan.  Any annual cash bonus shall be paid not later than 2½ months following the end of the applicable fiscal year.

b. Employee shall receive the standard employee benefits of employees of UBI.

c. Changes may be made to the salary and fringe benefits herein set forth and such changes shall be set forth in Attachment A.  Changes to the salary and fringe benefits are effective only after Attachment A has been signed by the Chairman of the Board of Directors of UBI and by the Employee.  UBI retains the right to modify its benefit programs as applicable to all participating employees, and such changes will not require an Attachment A.

6. Termination for Cause.  UBI may terminate this Contract for "Cause," such termination to be immediate, without notice, at any time, and with compensation and benefits only to the date of the termination of Employee.  The term "Cause" shall include the following enumerated and substantially equivalent matters:

a. the death of Employee;

b. the disability of Employee rendering him/her unable to perform the services required under the Contract for a period of 180 days;

c. known substance abuse by Employee;

d. felony conviction or plea (including a plea of guilty, nolo contendere or similar plea) of Employee;

e. misdemeanor conviction or plea (including a plea of guilty, nolo contendere or similar plea) of Employee, if the misdemeanor involves moral turpitude;

f. Employee's repeated unprofessional, irresponsible or disruptive language or conduct in the performance of his duties;

g. Employee's dishonesty, breach of professional or corporate ethics, or criticism by a regulatory agency involving a serious violation of law or regulations;

h. Employee's substantial breach of any significant term of this Contract, including, but not limited to, continued unsatisfactory job performance (other than as provided in paragraph 8), or repeated uncooperative conduct.

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7. Suspension.  UBI may suspend the employment of Employee resulting in the cessation of the performance of duties and the cessation of all compensation and benefits, in accordance with the following provisions:

a. If criminal charges as described in subparagraph 6.d. or e. are made against Employee, then UBI, acting in its discretion, may suspend Employee for any period of time, provided that the suspension shall end if such charges do not result in a conviction or a plea (of guilty or nolo contendere, etc.) of either the original charge(s) or any lesser charge(s).

b.  If a regulatory agency criticizes Employee for regulatory violations as set forth in paragraph 6.g. above, UBI shall have the discretion to suspend Employee for any period of time, provided that if the alleged violations are resolved in the Employee's favor, the suspension shall end.

The discretion invested in UBI as set forth in this paragraph 7 shall be exercised by the Chairman of its Board of Directors (as to suspension of UBI's Chief Executive Officer) or by UBI's Chief Executive Officer (as to suspension of any other employee).

8. Failure to Meet Goals and Objectives.  In the event of Employee's repeated failure to meet goals and objectives which are established by the Board of Directors of UBI from time to time, Employee's employment may be terminated immediately, without notice, at any time, provided that upon such termination Employee shall receive the payments provided in paragraph 3 (or paragraph 11 if applicable) subject to the conditions in such paragraph.

9. Employee Responsibilities Following Termination.  Termination of this Contract shall not relieve Employee of his/her responsibilities to complete any records, cooperate with UBI on any litigation, audits, regulatory reviews, claims or investigations, and otherwise to fulfill all responsibilities under this Contract which should have been rendered prior to its termination.

10. Change in Control.  For purposes of this Contract, a Change in Control of UBI shall mean:

a. the acquisition by any individual, entity, or group (a "Person"), including any "person" within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 20% or more of either (i) the then outstanding shares of common stock of UBI (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding securities of UBI entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition by UBI or a UBI subsidiary, (B) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by UBI or a UBI subsidiary or any Person controlled by UBI or a UBI subsidiary,

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(C) any acquisition by any corporation pursuant to a reorganization, merger, or consolidation involving UBI or a UBI subsidiary, if, immediately after such reorganization, merger, or consolidation, each of the conditions described in clauses (i), (ii), and (iii) of subsection c. shall be satisfied, or (D) any acquisition by the Employee or any group of persons including the Employee;

b. individuals who, as of the date hereof, constitute the Board of Directors of UBI (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided, however, that any individual who becomes a director of UBI subsequent to the date hereof whose election, or nomination for election by the shareholders of UBI, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of UBI in which such person is named as a nominee for director, without objection to such nomination) shall be deemed to have been a member of the Incumbent Board; and provided further, that no individual who was initially elected as a director of UBI as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board, shall be deemed to have been a member of the Incumbent Board;

c. approval by the shareholders of UBI of a reorganization, merger, or consolidation unless, in any such case, immediately after such reorganization, merger, or consolidation, (i) more than 50% of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, or consolidation and more than 50% of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such reorganization, merger, or consolidation and in substantially the same proportions relative to each other as their ownership, immediately prior to such reorganization, merger, or consolidation, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than (A) UBI or a UBI subsidiary, any employee benefit plan (or related trust) sponsored or maintained by UBI or a UBI subsidiary or the corporation resulting from such reorganization, merger, or consolidation (or any corporation controlled by UBI or a UBI subsidiary), or (B) any Person which beneficially owned, immediately prior to such reorganization, merger, or consolidation, directly or indirectly, 20% or more of the Outstanding Company Common Stock or the Outstanding Company Voting Securities, as the case may be, beneficially owns, directly or indirectly, 20% or more of the then outstanding shares of common stock of such corporation or 20% or more of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger, or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger, or consolidation; or

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d. approval by the shareholders of UBI of (i) a plan of complete liquidation or dissolution of UBI or (ii) the sale or other disposition of all or substantially all of the assets of UBI.

11. Provisions Applicable in the Event of a Change in Control.  Employee will be entitled to the payments in this paragraph, subject to the conditions in this paragraph, if, within 12 months following the effective date of a Change in Control (A) Employee's employment is terminated by UBI (or a successor) for any reason (other than for a cause described in subparagraphs 6.a, b, c, d or e) and such termination constitutes an involuntary separation from service, as those terms are defined under Section 409A of the Code or (B) Employee resigns for "Good Reason" (as defined below) and such resignation constitutes an involuntary separation from service as those terms are defined in Section 409A of the Code.

a. Payments.

i. UBI will pay Employee, within 15 days after the effective date of the release of claims referred to in paragraph 11.b. and 3.b.i., a lump sum in cash equal to 24 months of Employee's salary (at a rate equal to Employee's regular base pay in effect immediately prior to such termination and subject to required payroll withholding).

ii. UBI will provide Employee with continued health insurance coverage for Employee and Employee's dependents for 24 months after the date of Employee's separation from service.  UBI will provide that coverage by directly paying the COBRA continuation premiums for the period that Employee elects and remains eligible for COBRA continuation coverage.  For any period during which Employee is not eligible for COBRA continuation coverage, or UBI's direct payment of the COBRA continuation premiums would result in a negative tax impact on Employee or UBI, UBI will reimburse Employee for 100% of Employee's cost to obtain health insurance that is substantially equivalent to those provided by UBI for the Employee and eligible dependents immediately before the Employee's separation from service.  For any portion of the above 24-month period that Employee is not entitled to elect COBRA continuation coverage, such reimbursement shall be in the amount of the Employee's cost to obtain equivalent coverage from another source.  Reimbursements under this Section 11(a)(2) will be made no later than thirty (30) days after Employee requests reimbursement, but in no event after the year following that in which Employee incurs such expense.

b. Conditions.  Employee's entitlement to the payments in (a) above is subject to the conditions in paragraph 3.b.i., ii., and iv. and paragraph 17.

c. "Good Reason" Defined.  Employee's separation from service will be considered an involuntary separation from service for Good Reason if Employee resigns as a result of any of the conditions in i. below, UBI has had the opportunity to correct such condition and has failed to do so within the period provided in ii. below and Employee resigns as provided in ii. below.

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i. Any one or more of the following conditions arises in the 12 months following the Change in Control without the consent of Employee:

1. A material diminution in Employee's base compensation;

2. A material diminution in Employee's authority, duties, or responsibilities;

3. A material diminution in the authority, duties or responsibility of the supervisor to whom Employee reports, including (if Employee reports to UBI's Board of Directors) a requirement that Employee report to a corporate officer or employee instead of reporting directly to the Board of Directors;

4. A material diminution in the budget over which Employee retains authority;

5. A material change in the geographic location at which Employee must perform services; or

6. Any other action or inaction by UBI or its successor that constitutes material breach of this Contract.

ii. Employee notifies UBI or its successor in writing of the existence of the condition described in paragraph 11.c.i. within 90 days of the initial existence of the condition, UBI or its successor fails to remedy the condition and make Employee whole within 30 days after such notification by Employee and Employee resigns by written notice within 30 days thereafter.

12. Confidential Information.  The following confidentiality provisions are a material part of the consideration relied upon by UBI in entering into this Contract:

a. In connection with Employee's employment with UBI, Employee will have access to information or materials of UBI and/or its subsidiaries that are considered trade secret, confidential and/or proprietary ("Information").  Information includes, but is not limited to, compilations of data, strategic plans, sales and marketing plans, customer and supplier information, financial information, and proposed agreements, and applies to such Information whether communicated orally, in writing, electronically, or by any other means.

b. Information created by Employee during Employee's employment with UBI that relates to the business of UBI and its subsidiaries (or prospective business opportunities), or uses by UBI and/or its subsidiaries of Information created with resources of UBI and/or its subsidiaries (including staff, premises and equipment), belongs to UBI.  The term "Information" includes copyrightable works of original authorship (including but not limited to reports, analyses, and compilations, business plans, new product plans), ideas, inventions (whether patentable or not), know-how, processes, trademarks and other intellectual property.  All works of original authorship created during Employee's employment are "works for hire" as that term is used in connection with the U.S. Copyright Act.  Employee hereby assigns to UBI all rights, title and interest in work product, including copyrights, patents, trade secrets, trademarks and know-how.

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c. Employee shall use Information only for the benefit of UBI and/or its subsidiaries and not for Employee's own benefit.  Employee shall not take Information or the materials of UBI and/or its subsidiaries upon termination of Employee's employment.

d. Information shall be disclosed and used only by staff members of UBI and/or its subsidiaries who have a need to access it in order to do their jobs, shall be maintained in secure physical locations, and shall not be disclosed to any other company or person except in connection with the business activities of UBI and/or its subsidiaries.

e. The confidentiality provisions of this paragraph will survive termination of the employment relationship with UBI and expiration of this Contract, and shall continue in effect permanently for so long a period of time as the Information is maintained by UBI and/or its subsidiaries as confidential.

13. Nonsolicitation of Employees and Customers.  The following nonsolicitation provisions form a material part of the consideration relied upon by UBI in entering into this Contract:

a. During the term of Employee's employment and for a period of 24 months after Employee's last day of employment, Employee agrees not to hire, and not to solicit for hire, any then-current employees of UBI and/or its subsidiaries, or to contact them for the purpose of inducing them to leave UBI and/or its subsidiaries.

b. During the term of Employee's employment and for a period of 24 months after Employee's last day of employment, Employee agrees not to contact any then-current customers of UBI and/or its subsidiaries for the purpose of inducing them to leave UBI and/or its subsidiaries or to discourage them from doing business with UBI and/or its subsidiaries.  Employee agrees that, for such time period, Employee will not provide the type of services Employee provided under this Contract to any person or business customer who was a customer of UBI and/or its subsidiaries at the time of Employee's departure.

14. Noncompete.  UBI and Employee acknowledge and agree that by virtue of his/her past experience in the banking industry and his/her knowledge of the business of UBI and its subsidiaries, Employee is uniquely qualified to successfully compete with UBI and/or its subsidiaries.  In recognition of these circumstances, and in consideration of UBI's continued employment of Employee in accordance with the terms of this Contract, Employee covenants and agrees that during the term of Employee's employment and for  a period of 24 months after Employee's last day of employment, Employee will not engage in the counties of Lenawee, Livingston, Monroe and/or Washtenaw in any business which is competitive with a business then regularly conducted by UBI and/or its subsidiaries in any of said counties, as an owner, employee, independent contractor or in any other capacity; provided, however, that the forgoing covenants shall not prohibit the Employee from owning, directly or indirectly, 1% or less of any publicly traded class of securities of a financial services corporation.

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15. Enforcement of Contract; Injunctive Relief; Attorney Fees and Expenses.  Employee acknowledges that violation of paragraph 12, 13, or 14 of this Contract would cause irreparable damage to UBI and/or its subsidiaries, and that they shall be entitled to injunctive relief for any such violation, in addition to any other available remedy.  If Employee violates this Contract, in addition to all other remedies available to UBI and/or its subsidiaries at law, in equity, and under Contract, Employee agrees that he/she is obligated to pay all of the costs enforcement of this Contract incurred by UBI and/or its subsidiaries, including attorney fees and expenses.  The parties agree that venue concerning this Contract shall be Washtenaw County, Michigan.

16. Recovery.  Notwithstanding any other provision of this Contract, UBI may recover and Employee shall repay to UBI any bonus or incentive compensation based on statements of earnings, revenues, gains or other criteria that are later found to be materially inaccurate.

17. Code Section 280G Cap.  Notwithstanding any other provision of this Contract, if (a) part or all of any compensation and benefits to be paid to Employee by or on behalf of UBI or any affiliate, whether under this Contract or otherwise, constitute a "parachute payment" (or payments) under Section 280G or any other similar provision of the Code, and (b) if the aggregate present value of such parachute payments (the "Parachute Amount") exceeds 2.99 times Employee's "base amount" as defined in Section 280G of the Code, then the amounts otherwise payable to or for the benefit of Employee under this Contract and taken into account in calculating the Parachute Amount shall be adjusted to the extent necessary to equate the Parachute Amount with 2.99 times Employee's "base amount."  The adjustments permitted under this paragraph may include the elimination of payments and the reduction of the amount of any payments.

18. Notice.  For purposes of this Contract, notices and all other communications provided for in this Contract shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows:

If to UBI: Chairman of the Board United Bancorp, Inc. 2723 S. State Street Ann Arbor, Michigan 48104 If to Employee: _________________ _________________ _________________

or such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

19. Miscellaneous Provisions.  The following miscellaneous provisions form a part of this Contract:

-9-

a. Applicable Law.  This Contract and the rights of the parties hereunder shall be interpreted, construed and performed in accordance with the laws of the State of Michigan.

b. Entire Agreement.  This Contract as it may be modified in writing from time to time, constitutes the entire agreement between the parties, and supersedes any and all other agreements, oral or in writing, with respect to the subject matter contained herein.

c. Amendments.  This Contract may be altered, amended or modified at any time, but only by written agreement executed by the parties hereto, except that UBI may unilaterally amend the Contract to the extent required by law.  Notwithstanding the preceding, no amendment or modification may be made to the Contract, even by mutual agreement, that would cause any Contract payments to violate the requirements of Section 409A of the Code.  No waiver of any provision of this Contract shall be valid unless made in writing and signed by the party against whom such waiver is sought.

d. Paragraph Headings.  Any paragraph title or caption contained in this Contract is for convenience only, and shall not be deemed a part of this Contract.

e. Invalid Provisions.  The invalidity or unenforceability of any particular provision of this Contract shall not affect any other provision hereof.  If any provision or portion of a provision of this Contract is determined by a court of competent jurisdiction to be unenforceable as written, it is the intent of the parties that the court should modify such provision, including modifications to the activities covered, duration, or geographic scope of such provision, to the extent necessary to allow its enforcement as so modified.

f. Successors and Assigns.  This Contract shall be binding upon, and shall inure to the benefit of the successors and assigns, including purchasers of UBI, and for purposes of realizing any benefits payable hereunder to Employee prior to his/her death, the heirs and personal representative of Employee.  In no event shall Employee assign or delegate any of Employee's rights, powers, duties and obligations under this Contract without prior written consent of UBI.  If Employee dies after a termination of Employee's employment entitling Employee to payments under paragraph 3 or 11, any remaining salary payments otherwise payable under paragraph 3 or 11 will be made to the beneficiary designated by Employee in writing to receive such payments (or if none, to Employee's estate), and COBRA premium payments will continue for the remainder of the period called for by paragraph 3 or 11 for the benefit of Employee's eligible dependents.  UBI shall have the right to assign and delegate any or all of its rights, powers, duties and obligations under this Contract to any of its subsidiaries.

-10-

g. This Agreement is intended to be exempt from Section 409A of the Internal Revenue Code as an involuntary separation pay plan as that term is understood under Treasury Regulation § 1.409A-1(b)(9) and as providing for short-term deferrals, and shall be interpreted and operated consistently with those intentions.  To the extent Section 409A is found to be applicable to this Agreement, this Agreement is to be interpreted to comply with Section 409A and shall be interpreted and operated consistently with those intentions, including but not limited to, any applicable six-month delay in payment if Employee is a specified employee of UBI.

20. Waiver of Jury Trial.  UBI and Employee specifically and knowingly waive their rights to a jury trial.

21. Arbitration.  The parties agree that any dispute or controversy arising out of or in connection with this Contract shall be resolved by arbitration in accordance with the following provisions:

a. The arbitration proceeding shall be conducted under the Employment Dispute Resolution Rules of the American Arbitration Association in effect at the time a demand for arbitration of the dispute is made.  The decision and award of the arbitrator made under the AAA rules shall be exclusive, final and binding on all parties, their heirs, representatives, successors and assigns.  Judgment upon the award rendered by the arbitrator may be rendered in any circuit court having jurisdiction of the matter.  In the event Employee or UBI shall require equitable relief prior to the selection of an arbitrator to resolve the dispute, either party may seek temporary equitable relief from any court having jurisdiction of the dispute, subject to any final relief awarded by the arbitrator.

b. Limited civil discovery shall be permitted for the production of documents and the taking of depositions, provided, however, that no party is permitted to take the deposition of more than three witnesses except by agreement of the other party or upon order of the arbitrator pursuant to the motion of a party.  Subject to the foregoing limitations, discovery shall be conducted in accordance with the Federal Rules of Civil Procedure with any enforcement issues resolved by the arbitrator.

c. The arbitration and all proceedings, discovery and any award of the arbitrator, is confidential.  Neither the parties nor the arbitrator shall disclose any information gained during the course of the arbitration to any person or entity who is not a party to the arbitration unless permitted by law.  Attendance at the arbitration shall be limited to the parties and those called as witnesses.

d. The arbitration provisions of this paragraph shall not apply to any alleged violation by Employee of paragraph 12, 13 or 14, and UBI shall be entitled to seek judicial injunctive and other relief for any such alleged violation.

e. The fees and expenses of the arbitrator shall be divided equally between and paid by the parties.  Each party shall bear the cost of its own attorney fees and expenses.

-11-

IN WITNESS WHEREOF, the parties have executed this Contract, effective as of the date first above written.

UNITED BANCORP, INC.     By:____________________________   Chairman of the  Board       _______________________________   Employee

-12-

ATTACHMENT A

Employee:Effective Date:

Salary Per Annum: $

________________________________ Employee	_________________________ Date
________________________________ Chairman of the Board, United Bancorp, Inc.	_________________________ Date

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Robert K. Chapman, certify that:

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

2. Based on my knowledge, this 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 subsidiaries, 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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/ Robert K. Chapman	October 25, 2013
Robert K. Chapman (Principal Executive Officer)	Date
President and Chief Executive Officer

Page 65

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Randal J. Rabe, certify that:

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

2. Based on my knowledge, this 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 subsidiaries, 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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/ Randal J. Rabe	October 25, 2013
Randal J. Rabe (Principal Financial Officer)	Date
Executive Vice President and Chief Financial Officer

Page 66

EX-32.1

Exhibit 32.1

In connection with the accompanying Quarterly Report on Form 10-Q of United Bancorp, Inc. ("Company") for the quarter ended September 30, 2013 ("Report"), each of the undersigned in his capacity as an officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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/ Robert K. Chapman	October 25, 2013
Robert K. Chapman (Principal Executive Officer)	Date
President and Chief Executive Officer

/s/ Randal J. Rabe	October 25, 2013
Randal J. Rabe (Principal Financial Officer)	Date
Executive Vice President and Chief Financial Officer

Page 67

XML

Accounting Developments

9 Months Ended

Sep. 30, 2013

Accounting Changes and Error Corrections [Abstract]

Accounting Developments

Note 12 – Accounting Developments

Accounting Standards Update No. 2013-04 – Liabilities (Topic 405). On February 28, 2013, FASB issued ASU 2013-04. The amendments in this Update provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors.

The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF12D – Liabilities (Topic 405) which has been deleted.

The amendments in this Update are effective for fiscal years beginning after December 31, 2013. Early adoption is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Accounting Standards Update No. 2013-07 – Presentation of Financial Statements (Topic 205). On April 22, 2013, FASB issued ASU 2013-07. The objective of this Update is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2012-210– Presentation of Financial Statements (Topic 205), which has been deleted.

The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Accounting Standards Update No. 2013-10 - Derivatives and Hedging (Topic 815) In July 2013, FASB issued ASU 2013-10. The objective of this Update is to provide for the inclusion of the Fed Funds Effective Swap Rate - Overnight Index Swap Rate (OIS) as a U.S. benchmark interest rate for hedge accounting purposes, in addition to U.S. Treasury (UST) or London Interbank Offered Rate (LIBOR) indices. The Update also removes a restriction stating that entities must use the same rates for similar hedges, offering greater flexibility in hedge accounting.

The amendments in this Update are effective prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The Company has adopted the applicable methodologies prescribed by this ASU and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

Accounting Standards Update No. 2013-11- Income Taxes (Topic 740) – In July 2013, FASB issued ASU 2013-11. This update pertains to the unrecognized tax benefit when a net operating loss carry forward, a similar tax loss or a tax credit carry forward exists. The ASU is intended to end the varying ways that entities present these situations since GAAP is non-specific and leads to diversity in practice.  The new standard deems that any unrecognized tax benefit or portion of an unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward except for certain defined situations.

The amendments in this Update are effective for fiscal years beginning after December 15, 2013. Early adoption is permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

XML

Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest Income
Interest and fees on loans	$ 7,723	$ 7,917	$ 22,920	$ 23,695
Interest on securities
Taxable	770	618	1,951	1,988
Tax exempt	163	160	475	506
Interest on federal funds sold and balances with banks	19	36	84	133
Total interest income	8,675	8,731	25,430	26,322
Interest Expense
Interest on deposits	618	895	2,033	2,936
Interest on FHLB advances	72	190	300	605
Interest on other borrowings	4	0	4	0
Total interest expense	694	1,085	2,337	3,541
Net Interest Income	7,981	7,646	23,093	22,781
Net provision after amounts related to change in allocation methodology	300	2,000	1,900	6,650
Net Interest Income after Provision for Loan Losses	7,681	5,646	21,193	16,131
Noninterest Income
Service charges on deposit accounts	473	496	1,369	1,378
Wealth Management fee income	1,465	1,319	4,356	3,855
Gains on securities transactions	1	0	40	4
Income from loan sales and servicing	2,252	2,803	8,071	7,299
ATM, debit and credit card fee income	580	517	1,637	1,583
Income from bank-owned life insurance	101	106	300	316
Other income	243	323	913	1,165
Total noninterest income	5,115	5,564	16,686	15,600
Noninterest Expense
Salaries and employee benefits	5,884	5,464	17,984	15,686
Occupancy and equipment expense, net	1,350	1,350	4,055	3,988
External data processing	352	250	1,077	764
Advertising and marketing	304	190	860	567
Attorney, accounting and other professional fees	334	416	1,094	1,654
Director fees	105	98	314	293
Expenses relating to ORE property and foreclosed assets	158	417	585	1,533
FDIC insurance premiums	189	292	565	883
Other expenses	856	823	2,358	2,249
Total noninterest expense	9,532	9,300	28,892	27,617
Income Before Federal Income Tax	3,264	1,910	8,987	4,114
Federal income tax	988	520	2,682	1,097
Net Income	2,276	1,390	6,305	3,017
Preferred stock dividends and amortization	(305)	(285)	(879)	(856)
Income Available to Common Shareholders	$ 1,971	$ 1,105	$ 5,426	$ 2,161
Basic and diluted earnings per share (in dollars per share)	$ 0.15	$ 0.09	$ 0.42	$ 0.17
Cash dividends declared per share of common stock (in dollars per share)	$ 0	$ 0	$ 0	$ 0

XML

Loans

9 Months Ended

Sep. 30, 2013

Loans [Abstract]

Loans

Note 3 – Loans

The following table shows the balances of the various categories of loans of the Company, and the percentage composition of the portfolio by class at September 30, 2013 and December 31, 2012.

	September 30, 2013					December 31, 2012
In thousands of dollars	Balance		% of total			Balance		% of total
Commercial construction & land development	$	18,528		2.9	%	$	28,511		4.9	%
Owner-occupied commercial real estate loans		109,144		17.0	%		97,755		16.7	%
Other commercial real estate loans		140,686		21.9	%		113,370		19.3	%
Commercial & industrial loans		104,133		16.2	%		104,332		17.8	%
Residential mortgages		133,905		20.8	%		121,393		20.6	%
Consumer construction		13,709		2.1	%		12,123		2.1	%
Home equity loans		79,898		12.4	%		72,983		12.4	%
Other consumer loans		38,797		6.0	%		33,969		5.8	%
Deferred loan fees and costs, overdrafts, in-process accounts		4,351		0.7	%		2,242		0.4	%
Total portfolio loans	$	643,151		100.0	%	$	586,678		100.0	%

XML

Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Stock Based Compensation [Abstract]

Stock incentive plan activity

The following tables show activity for the nine months ended September 30, 2013 for awards granted under the Incentive Plan:

Stock-Only Stock Appreciation Rights
				Weighted
	Awards			Avg. Exer-
	Outstanding			cise Price
Balance at January 1		167,250		$	3.33
Awards granted		46,250			5.05
Awards exercised		(7,946	)		3.33
Awards forfeited		(8,250	)		3.63
Balance at September 30, 2013		197,304		$	3.72

	Restricted Stock					Restricted Stock Units
	Awards			Grant Date		Awards			Grant Date
	Outstanding			Fair Value		Outstanding			Fair Value
Nonvested at January 1		22,625		$	3.35		46,795		$	3.35
Awards granted		10,500			5.05		54,582			5.05
Awards vested		(22,625	)		3.35		-			-
Awards forfeited		-			-		(3,903	)		4.24
Nonvested at September 30		10,500		$	5.05		97,474		$	4.27

Fair value assumptions of SOSAR grants issued

The fair value of each SOSAR grant is estimated on the grant date using the Black-Scholes option pricing model. Grants were awarded in March of 2013 and 2012. Fair value of grants is based on the weighted-average assumptions shown in the following table.

	2013			2012
Dividend yield		0.0	%		0.0	%
Expected life in years		5			5
Expected volatility		28.8	%		37.0	%
Risk-free interest rate		0.72	%		0.84	%
Fair value	$	1.345		$	1.105

Summary of stock option activity and options outstanding

The following summarizes year to date option activity for the 2005 Plan:

	Options			Weighted Avg.
Stock Options	Outstanding			Exercise Price
Balance at January 1, 2013		358,070		$	21.32
Options expired		(25,434	)		22.97
Options forfeited		(3,400	)		12.71
Balance at September 30, 2013		329,236		$	21.28

XML

Legal Proceedings

9 Months Ended

Sep. 30, 2013

Legal Proceedings [Abstract]

Legal Matters And Contingencies [TextBlock]

Note 13 – Legal Proceedings

The Company is involved in routine legal proceedings occurring in the ordinary course of its business, which, in the aggregate, are believed to be immaterial to the financial condition of the Company.

XML

Disclosures About Fair Value of Assets and Liabilities, Quantitative Information (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Fair Value Inputs, Quantitative Information [Abstract]
Asset fair value	$ 13,803	$ 21,866
Asset valuation technique	marketability discount	marketability discount
Maximum [Member]
Fair Value Inputs, Quantitative Information [Abstract]
Marketability discount (in hundredths)	49.50%	49.50%
Minimum [Member]
Fair Value Inputs, Quantitative Information [Abstract]
Marketability discount (in hundredths)	7.50%	7.50%
Weighted Average [Member]
Fair Value Inputs, Quantitative Information [Abstract]
Marketability discount (in hundredths)	16.30%	14.00%

XML

Securities (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Available-for-sale Securities [Abstract]
Amortized Cost	$ 205,451,000		$ 205,451,000		$ 203,606,000
Unrealized Gains			1,910,000		3,196,000
Unrealized Losses			(2,534,000)		(673,000)
Total Securities available for sale	204,827,000		204,827,000		206,129,000
Available-for-sale securities in continuous unrealized loss position , fair value [Abstract]
Fair Value, Less than 12 Months	111,256,000		111,256,000		59,610,000
Fair Value, 12 Months or Longer	3,084,000		3,084,000		1,309,000
Fair Value, Total	114,340,000		114,340,000		60,919,000
Available-for-sale securities in continuous unrealized loss position, aggregate losses [Abstract]
Losses, Less than 12 Months			(2,470,000)		(658,000)
Losses, 12 Months or Longer			(64,000)		(15,000)
Losses, Total			(2,534,000)		(673,000)
Sales of available for sale securities [Abstract]
Sales proceeds	0	0	11,752,000	2,847,000
Gross gains on sales	0	0	136,000	30,000
Gross loss on sales	0	0	(97,000)	(26,000)
Available For Sale Securities Gross Realized Gains on Calls	1,000	0	1,000	0
Amortized Cost
Due in one year or less	16,821,000		16,821,000
Due after one year through five years	28,480,000		28,480,000
Due after five years through ten years	5,919,000		5,919,000
Due after ten years	0		0
Mortgage backed securities Amortized Cost	154,205,000		154,205,000
Equity securities	26,000		26,000
Amortized Cost	205,451,000		205,451,000		203,606,000
Fair Value
Due in one year or less	16,892,000		16,892,000
Due after one year through five years	28,006,000		28,006,000
Due after five years through ten years	5,659,000		5,659,000
Due after ten years	0		0
Mortgage-backed agency securities	154,243,000		154,243,000
Equity securities	27,000		27,000
Total Securities available for sale	204,827,000		204,827,000		206,129,000
Available-for-sale securities pledged to secure deposits	1,000,000		1,000,000
Municipal Obligations Issued By Political Subdivisions	12,100,000		12,100,000
Municipal Portfolio, Lenawee (Percentage)	1.30%		1.30%
Municipal Portfolio, Washtenaw (Percentage)	3.50%		3.50%
Municipal Portfolio, Monroe (Percentage)	1.10%		1.10%
U.S. Treasury and agency securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	26,556,000		26,556,000		27,200,000
Unrealized Gains			34,000		130,000
Unrealized Losses			(823,000)		(14,000)
Total Securities available for sale	25,767,000		25,767,000		27,316,000
Available-for-sale securities in continuous unrealized loss position , fair value [Abstract]
Fair Value, Less than 12 Months	18,643,000		18,643,000		4,131,000
Fair Value, 12 Months or Longer	0		0		0
Fair Value, Total	18,643,000		18,643,000		4,131,000
Available-for-sale securities in continuous unrealized loss position, aggregate losses [Abstract]
Losses, Less than 12 Months			(823,000)		(14,000)
Losses, 12 Months or Longer			0		0
Losses, Total			(823,000)		(14,000)
Amortized Cost
Amortized Cost	26,556,000		26,556,000		27,200,000
Fair Value
Total Securities available for sale	25,767,000		25,767,000		27,316,000
Mortgage-backed agency securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	154,205,000		154,205,000		158,829,000
Unrealized Gains			1,407,000		2,324,000
Unrealized Losses			(1,369,000)		(654,000)
Total Securities available for sale	154,243,000		154,243,000		160,499,000
Available-for-sale securities in continuous unrealized loss position , fair value [Abstract]
Fair Value, Less than 12 Months	84,078,000		84,078,000		54,538,000
Fair Value, 12 Months or Longer	3,084,000		3,084,000		1,309,000
Fair Value, Total	87,162,000		87,162,000		55,847,000
Available-for-sale securities in continuous unrealized loss position, aggregate losses [Abstract]
Losses, Less than 12 Months			(1,305,000)		(639,000)
Losses, 12 Months or Longer			(64,000)		(15,000)
Losses, Total			(1,369,000)		(654,000)
Amortized Cost
Amortized Cost	154,205,000		154,205,000		158,829,000
Fair Value
Total Securities available for sale	154,243,000		154,243,000		160,499,000
Obligations of states and political subdivisions [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	24,664,000		24,664,000		17,551,000
Unrealized Gains			468,000		740,000
Unrealized Losses			(342,000)		(5,000)
Total Securities available for sale	24,790,000		24,790,000		18,286,000
Available-for-sale securities in continuous unrealized loss position , fair value [Abstract]
Fair Value, Less than 12 Months	8,535,000		8,535,000		941,000
Fair Value, 12 Months or Longer	0		0		0
Fair Value, Total	8,535,000		8,535,000		941,000
Available-for-sale securities in continuous unrealized loss position, aggregate losses [Abstract]
Losses, Less than 12 Months			(342,000)		(5,000)
Losses, 12 Months or Longer			0		0
Losses, Total			(342,000)		(5,000)
Amortized Cost
Amortized Cost	24,664,000		24,664,000		17,551,000
Fair Value
Total Securities available for sale	24,790,000		24,790,000		18,286,000
Equity securities [Member]
Available-for-sale Securities [Abstract]
Amortized Cost	26,000		26,000		26,000
Unrealized Gains			1,000		2,000
Unrealized Losses			0		0
Total Securities available for sale	27,000		27,000		28,000
Amortized Cost
Amortized Cost	26,000		26,000		26,000
Fair Value
Total Securities available for sale	$ 27,000		$ 27,000		$ 28,000

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Disclosures About Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair value measurements of assets on recurring basis

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements were classified at September 30, 2013 and December 31, 2012, in thousands of dollars:

Thousands of dollars			Fair Value Measurements Using
September 30, 2013	Fair Value		Level 1		Level 2		Level 3
Available for sale securities:
U.S. Treasury and agency securities	$	25,767	$	-	$	25,767	$	-
Mortgage-backed agency securities		154,243		-		154,243		-
Obligations of states and political subdivisions		24,790		-		24,790		-
Equity securities		27		27		-		-
Hedged loan		7,257		-		7,257		-
Interest rate swap asset		120		-		120		-

December 31, 2012
Available for sale securities:
U.S. Treasury and agency securities	$	27,316	$	-	$	27,316	$	-
Mortgage-backed agency securities		160,499		-		160,499		-
Obligations of states and political subdivisions		18,286		-		18,286		-
Equity securities		28		28		-		-

Schedule of fair value assets on nonrecurring basis

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a non-recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at September 30, 2013 and December 31, 2012:

In thousands of dollars			Fair Value Measurements Using
Impaired Loans (Collateral Dependent):	Fair Value		Level 1		Level 2		Level 3
September 30, 2013	$	13,803	$	-	$	-	$	13,803
December 31, 2012		21,866		-		-		21,866

Unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements as of September 30, 2013 and December 31, 2012. For both periods, the valuation technique used is market comparable properties and unobservable inputs are based on marketability discount at the rates shown.

	Impaired loans (collateral dependent)
dollars in thousands	9/30/13				12/31/12
Fair value		$	13,803			$	21,866
Range			7.5%-49.5	%			7.5%-49.5	%
Weighted average			16.3	%			14.0	%

Carrying amounts and estimated fair value of principal financial assets and liabilities

The carrying amounts and estimated fair value of principal financial assets and liabilities, in thousands of dollars, at September 30, 2013 and December 31, 2012, were as follows:

	September 30, 2013
	Carrying			Fair Value Measurements Using
	Amount			Level 1			Level 2			Level 3
Financial Assets
Cash and cash equivalents	$	31,781		$	31,781		$	-		$	-
Securities available for sale		204,827			27			204,800			-
FHLB Stock		2,691			-			2,691			-
Loans held for sale		8,388			-			8,388			-
Net portfolio loans		621,188			-			7,257			618,335
Accrued interest receivable		2,760			-			2,760			-
Interest rate swap asset		120			-			120			-
Financial Liabilities
Total deposits	$	(805,740	)	$	(160,225	)	$	(646,587	)	$	-
FHLB advances		(11,983	)		-			(12,595	)		-
Other borrowings		(6,000	)		-			(6,000	)		-
Accrued interest payable		(281	)		-			(281	)		-

	December 31, 2012
Financial Assets
Cash and cash equivalents	$	70,612		$	70,612	$	-		$	-
Securities available for sale		206,129			28		206,101			-
FHLB Stock		2,571			-		2,571			-
Loans held for sale		13,380			-		13,380			-
Net portfolio loans		564,135			-		-			574,137
Accrued interest receivable		2,620			-		2,620			-
Financial Liabilities
Total deposits	$	(784,643	)	$	-	$	(787,015	)	$	-
FHLB advances		(21,999	)		-		(23,007	)		-
Accrued interest payable		(354	)		-		(354	)		-

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Stock Based Compensation (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Stock Based Compensation [Abstract]
Stock based compensation expenses	$ 62,500	$ 37,500	$ 187,500	$ 112,500
Weighted average exercise price of SOSARs
Awards forfeited			$ 3.63
SOSARs [Member]
Fair value of SOSAR grants based on weighted-average assumptions [Abstract]
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Aggregate Intrinsic Value	608,466		608,466
Weighted average period over which nonvested SOSARs are expected to recognized	1 year
2005 Plan [Member]
Fair value of SOSAR grants based on weighted-average assumptions [Abstract]
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Aggregate Intrinsic Value	0		0
Schedule Of Share Based Compensation Stock Options Activity [Abstract]
Stock option vesting period			3 years
Stock option vesting period under special circumstances			10 years
Stock option vesting period after retirement			3 years
Stock option vesting period after other separation with entity			90 days
Share-based Compensation Arrangement by Share-based Payment Award, Options [Roll Forward]
Balance at beginning of period (in shares)			358,070
Options expired (in shares)			(25,434)
Options forfeited (in shares)			(3,400)
Balance at end of period (in shares)	329,236		329,236
Weighted average exercise price
Balance at beginning of period (in dollars per share)			$ 21.32
Options expired (in dollars per share)			$ 22.97
Options forfeited (in dollars per share)			$ 12.71
Balance at end of period (in dollars per share)	$ 21.28		$ 21.28
Stock options outstanding [Abstract]
Range of exercise prices, minimum (in dollars per share)			$ 6.00
Range of exercise prices, maximum (in dollars per share)			$ 32.14
Options outstanding, number outstanding (in shares)	329,236		329,236
Options outstanding, weighted average remaining contractual life			3 years 1 month 13 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 21.28		$ 21.28
Options exercisable, number outstanding (in shares)	329,236		329,236
Options exercisable, weighted average exercise price (in dollars per share)	$ 21.28		$ 21.28
2005 Plan [Member] | Stock Options [Member]
Fair value of SOSAR grants based on weighted-average assumptions [Abstract]
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Aggregate Intrinsic Value	0		0
Stock Incentive Plan of 2010 [Member]
Grant date fair value
Unrecognized compensation expense	410,000		410,000
Unrecognized compensation cost to recognized period			3 years
Fair value of SOSAR grants based on weighted-average assumptions [Abstract]
Dividend yield (in hundredths)			0.00%	0.00%
Expected life in years			5 years	5 years
Expected volatility (in hundredths)			28.80%	37.00%
Risk-free interest rate (in hundredths)			0.72%	0.84%
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Fair Value	$ 1.345	$ 1.105	$ 1.345	$ 1.105
Stock Incentive Plan of 2010 [Member] | SOSARs [Member]
Share-based Compensation Award, Equity Instruments Other than Options [Roll Forward]
Balance at beginning of period (in shares)			167,250
Awards granted (in shares)			46,250
Stock Issued During Period, Value, Stock Options Exercised in Shares			(7,946)
Awards forfeited (in shares)			(8,250)
Balance at end of period (in shares)	197,304		197,304
Weighted average exercise price of SOSARs
Balance at beginning of period (in dollars per share)			$ 3.33
Awards granted (in dollars per share)			$ 5.05
Awards exercised			$ 3.33
Balance at end of period (in dollars per share)	$ 3.72		$ 3.72
Stock Incentive Plan of 2010 [Member] | RSU [Member]
Share-based Compensation Award, Equity Instruments Other than Options [Roll Forward]
Balance at beginning of period (in shares)			46,795
Awards granted (in shares)			54,582
Awards vested (in shares)			0
Awards forfeited (in shares)			(3,903)
Balance at end of period (in shares)	97,474		97,474
Grant date fair value
Balance at beginning of period (in dollars per share)			$ 3.35
Awards granted (in dollars per share)			$ 5.05
Awards vested (in dollars per share)			$ 0
Awards forfeited (in dollars per share)			$ 4.24
Balance at end of period (in dollars per share)	$ 4.27		$ 4.27
Stock Incentive Plan of 2010 [Member] | Restricted Stock [Member]
Share-based Compensation Award, Equity Instruments Other than Options [Roll Forward]
Balance at beginning of period (in shares)			22,625
Awards granted (in shares)			10,500
Awards vested (in shares)			(22,625)
Awards forfeited (in shares)			0
Balance at end of period (in shares)	10,500		10,500
Grant date fair value
Balance at beginning of period (in dollars per share)			$ 3.35
Awards granted (in dollars per share)			$ 5.05
Awards vested (in dollars per share)			$ 3.35
Awards forfeited (in dollars per share)			$ 0
Balance at end of period (in dollars per share)	$ 5.05		$ 5.05

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Borrowings (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2013	Sep. 16, 2013
Borrowings [Abstract]
Line of Credit Facility, Maximum Borrowing Capacity	$ 10.0	$ 10.0
Debt Instrument, Basis Spread on Variable Rate	0.125%
Long-term Line of Credit	6
Line of Credit Facility, Amount Outstanding	$ 6
Line of Credit Facility, Interest Rate at Period End	3.375%

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Allowance for Loan Losses and Credit Risk, Portfolio Aging Analysis (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	$ 2,265		$ 3,007
Delinquent loans, 90 days and over (a)	292	[1]	37	[1]
Delinquent loans, total past due (b)	2,557		3,044
Current (c-b-d)	623,215		564,678
Total portfolio loans (c)	638,800		584,436
Nonaccrual loans (d)	13,028		16,714
Financing Receivable Recorded Investment Nonperforming Status	13,320		16,751
Deferred loan fees and costs, overdrafts, in-process accounts	4,351		2,242
Total portfolio loans	643,151		586,678
Commercial [Member] | CLD [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	0		117
Delinquent loans, 90 days and over (a)	0	[1]	0	[1]
Delinquent loans, total past due (b)	0		117
Current (c-b-d)	14,620		24,545
Total portfolio loans (c)	18,528		28,511
Nonaccrual loans (d)	3,908		3,849
Financing Receivable Recorded Investment Nonperforming Status	3,908		3,849
Commercial [Member] | Owner-Occupied CRE [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	569		0
Delinquent loans, 90 days and over (a)	0	[1]	0	[1]
Delinquent loans, total past due (b)	569		0
Current (c-b-d)	105,846		92,498
Total portfolio loans (c)	109,144		97,755
Nonaccrual loans (d)	2,729		5,257
Financing Receivable Recorded Investment Nonperforming Status	2,729		5,257
Commercial [Member] | Other CRE [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	300		0
Delinquent loans, 90 days and over (a)	0	[1]	0	[1]
Delinquent loans, total past due (b)	300		0
Current (c-b-d)	137,718		109,638
Total portfolio loans (c)	140,686		113,370
Nonaccrual loans (d)	2,668		3,732
Financing Receivable Recorded Investment Nonperforming Status	2,668		3,732
Commercial [Member] | Commercial And Industrial [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	125		683
Delinquent loans, 90 days and over (a)	0	[1]	0	[1]
Delinquent loans, total past due (b)	125		683
Current (c-b-d)	101,103		102,257
Total portfolio loans (c)	104,133		104,332
Nonaccrual loans (d)	2,905		1,392
Financing Receivable Recorded Investment Nonperforming Status	2,905		1,392
Consumer [Member] | Residential Mortgage [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	1,079		1,714
Delinquent loans, 90 days and over (a)	292	[1]	0	[1]
Delinquent loans, total past due (b)	1,371		1,714
Current (c-b-d)	131,892		117,338
Total portfolio loans (c)	133,905		121,393
Nonaccrual loans (d)	642		2,341
Financing Receivable Recorded Investment Nonperforming Status	934		2,341
Consumer [Member] | Consumer Construction [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	0		0
Delinquent loans, 90 days and over (a)	0	[1]	0	[1]
Delinquent loans, total past due (b)	0		0
Current (c-b-d)	13,709		12,123
Total portfolio loans (c)	13,709		12,123
Nonaccrual loans (d)	0		0
Financing Receivable Recorded Investment Nonperforming Status	0		0
Consumer [Member] | Home Equity [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	0		343
Delinquent loans, 90 days and over (a)	0	[1]	37	[1]
Delinquent loans, total past due (b)	0		380
Current (c-b-d)	79,781		72,515
Total portfolio loans (c)	79,898		72,983
Nonaccrual loans (d)	117		88
Financing Receivable Recorded Investment Nonperforming Status	117		125
Consumer [Member] | Other Consumer [Member]
Loan portfolio aging analysis [Abstract]
Financing Receivable Recorded Investment 30 To 89 Days Past Due	192		150
Delinquent loans, 90 days and over (a)	0	[1]	0	[1]
Delinquent loans, total past due (b)	192		150
Current (c-b-d)	38,546		33,764
Total portfolio loans (c)	38,797		33,969
Nonaccrual loans (d)	59		55
Financing Receivable Recorded Investment Nonperforming Status	$ 59		$ 55

[1] All are accruing

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Loan Servicing (Tables)

9 Months Ended

Sep. 30, 2013

Loan Servicing [Abstract]

Components Of Managed Servicing Portfolio [Table Text Block]

Loans serviced for others are not included in the accompanying consolidated financial statements. The unpaid principal balance of loans serviced for others at September 30, 2013 and December 31, 2012 were as follows:

In thousands of dollars	9/30/13		12/31/12		Change		Percent
Total loans serviced	$	962,935	$	853,761	$	109,174		12.8	%

Unamortized cost of loan servicing rights

Unamortized loan servicing rights are included in accrued interest receivable and other assets on the consolidated balance sheet, for the three and nine month periods ended September 30, 2013 and 2012, are shown below.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands of dollars	2013			2012			2013			2012
Balance at beginning of period	$	7,072		$	5,855		$	6,379		$	5,405
Amount capitalized		627			780			2,205			2,029
Amount amortized		(386	)		(509	)		(1,271	)		(1,308	)
Balance at September 30,	$	7,313		$	6,126		$	7,313		$	6,126

Fair value of servicing rights

The fair value of servicing rights was as follows:

In thousands of dollars	9/30/13		9/30/12
Fair value, January 1	$	8,285	$	7,331
Fair value, end of period	$	11,041	$	7,848

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Total Shareholders' Equity
Balance at beginning of period	$ 98,402	$ 95,113	$ 97,397	$ 93,774
Net income	2,276	1,390	6,305	3,017
Other comprehensive income (loss)	521	576	(2,077)	708
Redemption of preferred shares	(10,300)	0	(10,300)	0
Cash dividends paid on preferred shares	(322)	(258)	(836)	(772)
Other common stock transactions	60	15	148	109
Balance at end of period	$ 90,637	$ 96,836	$ 90,637	$ 96,836

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Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 - Basis of Presentation

The unaudited condensed consolidated financial statements of United Bancorp, Inc. (the "Company" or "United") have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) believed necessary for a fair presentation have been included. The condensed consolidated balance sheet of the Company as of December 31, 2012 has been derived from the audited consolidated balance sheet of the Company as of that date. Operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

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Allowance for Loan Losses and Credit Risk

9 Months Ended

Sep. 30, 2013

Allowance for Loan Losses and Credit Risk [Abstract]

Allowance for Loan Losses and Credit Risk

Note 4 – Allowance for Loan Losses and Credit Risk

The allowance for loan losses ("allowance") is maintained at a level believed adequate by management to absorb probable incurred credit losses in the loan portfolio. The allowance is increased by provisions for loan losses charged to income. Loan losses are charged against the allowance when management believes a loan is uncollectible. Subsequent recoveries, if any, are credited to the allowance. This policy applies to each of the Company's loan portfolio segments.

The Company's established methodology for evaluating the adequacy of the allowance for loan losses considers both components of the allowance: (1) specific allowances allocated to loans evaluated individually for impairment under the Accounting Standards Codification ("ASC") Section 310-10-35 of the Financial Accounting Standards Board ("FASB"), and (2) allowances calculated for pools of loans evaluated collectively for impairment under FASB ASC Subtopic 450-20.

The Company's past loan loss experience is determined by analyzing pools of loans based on internal credit risk ratings for commercial loans (construction & land development, owner-occupied commercial real estate, other commercial real estate and all other commercial and industrial loans), and by delinquency status for residential mortgages, consumer loans and all other loan types, based on a migration analysis that is performed quarterly. The quarterly migration analysis is based on activity for the period beginning March 2008. The analysis computes loss rates based on a probability of default ("PD") and loss given default ("LGD"). The March 2008 date was selected in an effort to capture sufficient data points to provide a meaningful migration analysis using available data in comparable formats.

Loss rates are adjusted to consider qualitative factors such as economic conditions and trends, among others. In addition, the Company applies a detailed analysis of qualitative factors that are assessed on a quarterly basis based upon ratios specific to the Company, as well as regional economic metrics.

Loan impairment is reported when full payment under the loan terms is not expected. Impaired loans are carried at the present value of estimated future cash flows using the loan's existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations require an increase in the allowance for loan losses, that increase is recorded as a component of the provision for loan losses. Loans are evaluated for impairment when payments are delayed or when the internal grading system indicates a substandard or doubtful classification. This policy applies to each class of the Company's loan portfolio.

Impairment is evaluated in total for smaller-balance loans of similar nature, such as residential mortgage, consumer, home equity and second mortgage loans. Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment. When credit analysis of borrower operating results and financial condition indicates that underlying cash flows of the borrower's business are not adequate to meet its debt service requirements, including loans to the borrower by United Bank & Trust (the "Bank"), the loan is evaluated for impairment. Often this is associated with a delay or shortfall of payments of thirty days or more.

Loans are generally moved to nonaccrual status when ninety days or more past due, or in bankruptcy. These loans are often also considered impaired. Impaired loans are charged off, in part or in full, when deemed uncollectible. This typically occurs when the loan is 120 or more days past due, unless the loan is both well-secured and in the process of collection. This policy applies to each class of the Company's loan portfolio.

An analysis of the allowance for loan losses for the three and nine month periods ended September 30, 2013 and 2012 and balances as of December 31, 2012 follows:

	Three Months Ended September 30, 2013
Thousands of dollars	CLD (1)			Owner- Occupied CRE (2)			OtherCRE (2)			Commercial & Industrial			Residential Mortgage			Personal Loans			Total
Allowance for Loan Losses:
Balance, June 30	$	2,925		$	4,509		$	5,445		$	4,482		$	2,456		$	2,184		$	22,001
Provision charged to expense		(163	)		1			(26	)		414			(12	)		86			300
Losses charged off		(8	)		(92	)		(35	)		(367	)		(77	)		(89	)		(668	)
Recoveries		244			8			3			8			1			66			330
Balance, September 30	$	2,998		$	4,426		$	5,387		$	4,537		$	2,368		$	2,247		$	21,963

	Nine Months Ended September 30, 2013
Thousands of dollars	CLD (1)			Owner- Occupied CRE (2)			OtherCRE (2)			Commercial & Industrial			Residential Mortgage			Personal Loans			Total
Allowance for Loan Losses:
Balance, January 1	$	4,216		$	5,093		$	4,708		$	4,131		$	2,456		$	1,939		$	22,543
Provision charged to expense		(1,414	)		808			559			1,415			55			477			1,900
Losses charged off		(808	)		(1,830	)		(73	)		(1,118	)		(200	)		(479	)		(4,508	)
Recoveries		1,004			355			193			109			57			310			2,028
Balance, September 30	$	2,998		$	4,426		$	5,387		$	4,537		$	2,368		$	2,247		$	21,963
Ending balance:
Individually evaluated for impairment	$	2,134		$	1,874		$	1,088		$	781		$	719		$	-		$	6,596
Collectively evaluated for impairment	$	864		$	2,552		$	4,299		$	3,756		$	1,649		$	2,247		$	15,367
Total Loans:
Ending balance	$	32,237		$	110,417		$	164,457		$	104,231		$	106,723		$	125,086		$	643,151
Ending balance:
Individually evaluated for impairment	$	4,812		$	4,261		$	7,914		$	3,528		$	4,560		$	345		$	25,420
Collectively evaluated for impairment	$	27,425		$	106,156		$	156,543		$	100,703		$	102,163		$	124,741		$	617,731

	Three Months Ended September 30, 2012
Allowance for Loan Losses:
Balance, June 30, 2012	$	4,587		$	4,778		$	4,845		$	4,355		$	1,808		$	1,724		$	22,097
Provision charged to expense		496			1,007			97			202			206			(8	)		2,000
Losses charged off		(110	)		(1,009	)		(239	)		(719	)		(216	)		(87	)		(2,380	)
Recoveries		80			5			174			335			80			69			743
Balance, September 30	$	5,053		$	4,781		$	4,877		$	4,173		$	1,878		$	1,698		$	22,460
	Nine Months Ended September 30, 2012
Thousands of dollars
Allowance for Loan Losses:
Balance, January 1	$	3,676		$	3,875		$	4,721		$	4,741		$	1,931		$	1,689		$	20,633
Provision charged to expense		1,945			1,942			1,940			11			659			153			6,650
Losses charged off		(868	)		(1,067	)		(2,056	)		(1,419	)		(855	)		(578	)		(6,843	)
Recoveries		300			31			272			840			143			434			2,020
Balance, September 30	$	5,053		$	4,781		$	4,877		$	4,173		$	1,878		$	1,698		$	22,460

	Balances at December 31, 2012
Thousands of dollars	CLD (1)		Owner- Occupied CRE (2)		OtherCRE (2)		Commercial & Industrial		Residential Mortgage		Personal Loans		Total
Allowance for Loan Losses:
Ending balance:
Individually evaluated for impairment	$	3,271	$	2,904	$	1,079	$	274	$	771	$	5	$	8,304
Collectively evaluated for impairment		945		2,189		3,629		3,857		1,685		1,934		14,239
Total Allowance for Loan Losses	$	4,216	$	5,093	$	4,708	$	4,131	$	2,456	$	1,939	$	22,543
Total Loans:
Ending balance:
Individually evaluated for impairment	$	8,224	$	10,263	$	7,797	$	2,049	$	5,561	$	394	$	34,288
Collectively evaluated for impairment		32,410		92,316		123,207		96,336		96,095		112,026		552,390
Total Loans	$	40,634	$	102,579	$	131,004	$	98,385	$	101,656	$	112,420	$	586,678
(1) Construction and Land Development loans
(2) Commercial Real Estate loans

Credit Exposure and Quality Indicators

The Company categorizes commercial and tax-exempt loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, management capacity, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed during the loan approval process and is updated as circumstances warrant.

The risk characteristics of each loan portfolio segment are as follows:

Construction and Land Development. Construction and Land Development ("CLD") loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. CLD loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. CLD loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Commercial Real Estate. Commercial Real Estate ("CRE") consists of two segments – owner-occupied real estate loans and other commercial real estate loans. CRE loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company's commercial real estate portfolio are diverse, but have geographic location almost entirely in the Company's market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Commercial & Industrial Loans. Commercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Consumer. Consumer loans consist of two segments – residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and personal loans are secured by personal assets, such as automobiles or recreational vehicles. Some personal loans are unsecured, such as small installment loans and certain lines of credit.

Repayment of consumer loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Internal Risk Categories

Commercial and tax-exempt loans that are analyzed individually are assigned one of eight internal risk categories. Categories 1-4 are considered to be Pass-rated loans. Other risk category definitions for individually-analyzed commercial and tax-exempt loans are as follows:

5	Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.
6	Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral securing the loans, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
7	Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the additional characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
8	Loss. Loans classified as loss are regarded as uncollectible and should be charged off.

Consumer loans are not rated on the above-listed risk categories, but are classified by their payment activity, either as performing, accruing restructured, delinquent less than 90 days, or nonperforming.

Quality indicators for portfolio loans as of September 30, 2013 and December 31, 2012 based on the Bank's internal risk categories are detailed in the following tables.

In thousands of dollars		At September 30, 2013
Commercial & Tax-exempt Loans		CLD		Owner-Occupied CRE		Other CRE		Commercial & Industrial		Total Commercial
Credit Risk Profile by Internally Assigned Rating
1-4	Pass	$	7,930	$	96,748	$	118,953	$	91,616	$	315,247
5	Special Mention		5,110		6,600		13,671		5,627		31,008
6	Substandard		5,008		5,796		8,062		6,855		25,721
7	Doubtful		480		-		-		35		515
8	Loss		-		-		-		-		-
Total Commercial & Tax-exempt Loans		$	18,528	$	109,144	$	140,686	$	104,133	$	372,491

	At September 30, 2013
Consumer Loans	Residential Mortgage		Consumer Construction		Home Equity		Other Consumer		Total Consumer
Credit risk profile based on payment activity
Performing	$	128,144	$	13,709	$	79,611	$	38,546	$	260,010
Accruing restructured		3,748		-		170		-		3,918
Delinquent less than 90 days		1,079		-		-		192		1,271
Nonperforming		934		-		117		59		1,110
Total Consumer Loans	$	133,905	$	13,709	$	79,898	$	38,797		266,309
Subtotal Commercial, Tax-exempt & Consumer Loans										638,800
Deferred loan fees and costs, overdrafts, in-process accounts										4,351
Total Portfolio Loans									$	643,151

In thousands of dollars		At December 31, 2012
Commercial & Tax-exempt Loans		CLD		Owner-Occupied CRE		Other CRE		Commercial & Industrial		Total Commercial
Credit Risk Profile by Internally Assigned Rating
1-4	Pass	$	12,813	$	78,507	$	86,445	$	91,711	$	269,476
5	Special Mention		7,378		11,510		17,073		5,104		41,065
6	Substandard		7,840		7,738		9,852		7,475		32,905
7	Doubtful		480		-		-		42		522
8	Loss		-		-		-		-		-
Total Commercial & Tax-exempt Loans		$	28,511	$	97,755	$	113,370	$	104,332	$	343,968

Consumer Loans	Residential Mortgage		Consumer Construction		Home Equity		Other Consumer		Total Consumer
Credit risk profile based on payment activity
Performing	$	114,071	$	12,123	$	72,344	$	33,764	$	232,302
Accruing restructured		3,267		-		171		-		3,438
Delinquent less than 90 days		1,714		-		343		150		2,207
Nonperforming		2,341		-		125		55		2,521
Total Consumer Loans	$	121,393	$	12,123	$	72,983	$	33,969		240,468
Subtotal Commercial, Tax-exempt & Consumer Loans										584,436
Deferred loan fees and costs, overdrafts, in-process accounts										2,242
Total Portfolio Loans									$	586,678

Loan Portfolio Aging Analysis

The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.

Tables detailing the loan portfolio aging analysis as of September 30, 2013 and December 31, 2012 follow.

Thousands of dollars	Delinquent Loans
As of September 30, 2013	30-89 Days Past Due		90 Days and Over (a) (1)		Total PastDue (b)		Current(c-b-d)		Total Portfolio Loans (c)		Nonaccrual Loans (d)		Total Non-performing (a+d)
Commercial
Commercial CLD	$	-	$	-	$	-	$	14,620	$	18,528	$	3,908	$	3,908
Owner-Occupied CRE		569		-		569		105,846		109,144		2,729		2,729
Other CRE		300		-		300		137,718		140,686		2,668		2,668
Commercial & Industrial		125		-		125		101,103		104,133		2,905		2,905
Consumer
Residential Mortgage		1,079		292		1,371		131,892		133,905		642		934
Consumer Construction		-		-		-		13,709		13,709		-		-
Home Equity		-		-		-		79,781		79,898		117		117
Other Consumer		192		-		192		38,546		38,797		59		59
Subtotal	$	2,265	$	292	$	2,557	$	623,215		638,800	$	13,028	$	13,320
Deferred loan fees and costs, overdrafts, in-process accounts										4,351
Total Portfolio Loans									$	643,151

As of December 31, 2012
Commercial
Commercial CLD	$	117	$	-	$	117	$	24,545	$	28,511	$	3,849	$	3,849
Owner-Occupied CRE		-		-		-		92,498		97,755		5,257		5,257
Other CRE		-		-		-		109,638		113,370		3,732		3,732
Commercial & Industrial		683		-		683		102,257		104,332		1,392		1,392
Consumer
Residential Mortgage		1,714		-		1,714		117,338		121,393		2,341		2,341
Consumer Construction		-		-		-		12,123		12,123		-		-
Home Equity		343		37		380		72,515		72,983		88		125
Other Consumer		150		-		150		33,764		33,969		55		55
Subtotal	$	3,007	$	37	$	3,044	$	564,678		584,436	$	16,714	$	16,751
Deferred loan fees and costs, overdrafts, in-process accounts										2,242
Total Portfolio Loans									$	586,678
(1) All are accruing.

Impaired Loans

Information regarding impaired loans as of September 30, 2013 and December 31, 2012 follows.

	September 30, 2013						December 31, 2012
Thousands of dollars	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance
Commercial
Commercial CLD	$	445	$	753	$	-	$	654	$	1,673	$	-
Owner-Occupied CRE		947		1,334		-		4,181		6,267		-
Other CRE		1,891		2,313		-		4,438		6,158		-
Commercial & Industrial		1,262		3,315		-		1,640		3,992		-
Consumer
Residential Mortgage		1,667		1,667		-		2,207		2,989		-
Home Equity		170		170		-		232		232		-
Other Consumer		175		175		-		157		157		-
Subtotal		6,557		9,727		-		13,509		21,468		-

Loans with a specific valuation allowance
Commercial
Commercial CLD		4,367		4,546		2,134		7,570		7,629		3,271
Owner-Occupied CRE		3,314		6,489		1,874		6,082		7,495		2,904
Other CRE		6,023		6,273		1,088		3,359		3,359		1,079
Commercial & Industrial		2,266		3,077		781		409		409		274
Consumer
Residential Mortgage		2,893		2,893		719		3,354		3,817		771
Other Consumer		-		-		-		5		5		5
Subtotal		18,863		23,278		6,596		20,779		22,714		8,304
Total Impaired Loans
Commercial
Commercial CLD		4,812		5,299		2,134		8,224		9,302		3,271
Owner-Occupied CRE		4,261		7,823		1,874		10,263		13,762		2,904
Other CRE		7,914		8,586		1,088		7,797		9,517		1,079
Commercial & Industrial		3,528		6,392		781		2,049		4,401		274
Consumer
Residential Mortgage		4,560		4,560		719		5,561		6,806		771
Home Equity		170		170		-		232		232		-
Other Consumer		175		175		-		162		162		5
Total Impaired Loans	$	25,420	$	33,005	$	6,596	$	34,288	$	44,182	$	8,304

Information regarding average investment in impaired loans and interest income recognized on those loans for the three and nine month periods ended September 30, 2013 and 2012 is shown below.

Periods ended September 30,	2013								2012
Thousands of dollars	Three Months				Year to Date				Three Months				Year to Date
	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Loans without a specific valuation allowance
Commercial
Commercial CLD	$	445	$	-	$	466	$	-	$	3,538	$	-	$	4,323	$	-
Owner-Occupied CRE		948		3		1,912		21		2,438		12		2,777		51
Other CRE		3,980		21		4,143		34		5,215		6		9,672		124
Commercial & Industrial		1,265		7		964		17		1,715		9		1,839		29
Consumer
Residential Mortgage		993		7		1,122		24		1,312		6		1,274		17
Home Equity		3		1		8		3		25		1		25		4
Other Consumer		158		-		145		-		122		-		155		-
Subtotal		7,792		39		8,760		99		14,365		34		20,065		225

Loans with a specific valuation allowance
Commercial
Commercial CLD		4,385		18		5,458		95		8,285		89		8,443		298
Owner-Occupied CRE		3,319		19		3,407		59		6,803		47		6,668		114
Other CRE		3,966		43		3,546		111		3,432		36		4,331		140
Commercial & Industrial		2,272		9		2,141		71		712		8		888		34
Consumer
Residential Mortgage		3,404		29		3,480		103		4,555		32		4,099		96
Home Equity		-		-		-		-		-		-		-		-
Other Consumer		-		-		-		-		78		-		56		2
Subtotal		17,346		118		18,032		439		23,865		212		24,485		684
Total Impaired Loans
Commercial
Commercial CLD		4,830		18		5,924		95		11,823		89		12,766		298
Owner-Occupied CRE		4,267		22		5,319		80		9,241		59		9,445		165
Other CRE		7,946		64		7,689		145		8,647		42		14,003		264
Commercial & Industrial		3,537		16		3,105		88		2,427		17		2,727		63
Consumer
Residential Mortgage		4,397		36		4,602		127		5,867		38		5,373		113
Home Equity		3		1		8		3		25		1		25		4
Other Consumer		158		-		145		-		200		-		211		2
Total Impaired Loans	$	25,138	$	157	$	26,792	$	538	$	38,230	$	246	$	44,550	$	909

Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions to principal. Subsequent payments on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Nonaccrual loans are returned to accrual status when, in the judgment of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. These policies apply to each class of the Company's loan portfolio.

Troubled Debt Restructurings

In the course of working with borrowers, the Bank may choose to restructure the contractual terms of certain loans. In this scenario, the Bank attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Bank to identify if a troubled debt restructuring ("TDR") has occurred, which is when, for economic or legal reasons related to a borrower's financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with the borrower's current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

If such efforts by the Bank do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time before a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan.

It is the Bank's policy to have any restructured loan that is on nonaccrual status before being restructured, remain on nonaccrual status until six months of satisfactory borrower performance, at which time management would consider its return to accrual status. The balance of nonaccrual restructured loans, which is included in nonaccrual loans, was $10.0 million at September 30, 2013 and $10.8 million at December 31, 2012. If a restructured loan is on accrual status prior to being restructured, it is reviewed to determine if the restructured loan should remain on accrual status. The balance of accruing restructured loans was $10.6 million at September 30, 2013 and $15.8 million at December 31, 2012.

All TDRs are considered impaired by the Company. Loans that are considered TDRs are classified as performing unless they are on nonaccrual status or greater than 90 days delinquent as of the end of the most recent quarter. Under Company policy, a loan may be removed from TDR status when it is determined that the loan has performed according to its modified terms for a sustained period of repayment performance (generally not less than six months and not during the calendar year in which the restructuring took place), and the restructuring agreement specified an interest rate greater than or equal to an acceptable rate for a comparable new loan. On a quarterly basis, the Company individually reviews all TDR's to determine if any TDR should be removed from TDR status.

Accruing restructured loans at September 30, 2013 are comprised of two categories of loans on which interest is being accrued under their restructured terms, and the loans are current or less than ninety days past due. The first category consists of commercial loans, primarily comprised of business loans that have been temporarily modified as interest-only loans, generally for a period of up to one year, without a sufficient corresponding increase in the interest rate.

Within this category are CLD loans that have been renewed as interest only, generally for a period of up to one year, to assist the borrower. The Bank does not generally forgive principal or interest on restructured loans. However, when a loan is restructured, principal is generally received on a delayed basis as compared to the original repayment schedule. CLD loans that are restructured are generally modified to require interest-only for a period of time. The Bank does not generally reduce interest rates on restructured commercial loans.

The second category included in accruing restructured loans consists of residential mortgage and home equity loans whose terms have been restructured at less than market terms and include rate modifications, extension of maturity, and forbearance.

The following tables present information regarding loans newly-classified as TDRs for the three and nine month periods ended September 30, 2013 and 2012.

Periods ended September 30, 2013	Three Months						Nine Months
Dollars in thousands	Total Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Total Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial
Owner-Occupied CRE		-	$	-	$	-		2	$	182	$	182
Other CRE		1		665		665		1		665		665
Consumer
Residential Mortgage		-		-		-		4		800		800
Total		1	$	665	$	665		7	$	1,647	$	1,647

Periods ended September 30, 2012
Commercial
Commercial CLD	-	$	-	$	-	2	$	400	$	400
Owner-Occupied CRE	1		645		645	6		1,271		1,271
Other CRE	-		-		-	4		2,304		2,304
Commercial & Industrial	-		-		-	1		190		190
Consumer
Residential Mortgage	-		-		-	2		224		224
Total	1	$	645	$	645	15	$	4,389	$	4,389

The table below provides a breakdown of accruing restructured loans by type at September 30, 2013. The table also includes the average yield on accruing restructured loans and the yield for the entire portfolio, for commercial loans and residential mortgage and home equity loans, for the third quarter of 2013.

	September 30, 2013				Third Quarter 2013
Dollars in thousands	Number of Loans		Recorded Balance		Avg. Yield			Portfolio Yield
CLD Loans		4	$	1,658
Other Commercial Loans		12		5,021
Total Commercial Loans		16		6,679		4.92	%		4.95	%
Residential Mortgage & Home Equity Loans		20		3,918		3.59	%		4.75	%
Total Accruing Restructured Loans		36	$	10,597

The Company has no personal loans other than the loans described above that are classified as troubled debt restructurings. In determining the amount of the allowance for loan losses, all restructured loans are classified as impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

For the third quarter and first nine months ended in 2013, there were no TDRs that subsequently defaulted within twelve months of being restructured.  For the same periods in 2012, information is shown below regarding subsequent defaults.

Periods ended September 30, 2012	Three Months				Nine Months
Dollars in thousands	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
Commercial
Commercial CLD		1	$	1,892		4	$	3,423
Owner-Occupied CRE		-		-		2		239
Total		1	$	1,892		6	$	3,662

A TDR is in payment default once it is ninety days contractually past due under the modified terms (unless otherwise stated). Since the Company treats accruing TDRs as impaired loans and evaluates TDRs individually for impairment, the allowance for loan losses is not generally affected by a subsequent default of a TDR.

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Securities

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Securities

Note 2 - Securities

Securities classified as available for sale consist of bonds and notes that might be sold prior to maturity. Securities classified as available for sale are reported at their fair values and the related net unrealized holding gain or loss is reported in other comprehensive income. Premiums and discounts on securities are recognized in interest income using the interest method over the period to maturity. Realized gains or losses are based upon the amortized cost of the specific securities sold.

Balances of securities by category are shown below at September 30, 2013 and December 31, 2012. All securities are classified as available for sale.

At September 30, 2013, in thousands of dollars	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Treasury and agency securities	$	26,556	$	34	$	(823	)	$	25,767
Mortgage-backed agency securities		154,205		1,407		(1,369	)		154,243
Obligations of states and political subdivisions		24,664		468		(342	)		24,790
Equity securities		26		1		-			27
Total	$	205,451	$	1,910	$	(2,534	)	$	204,827
At December 31, 2012, in thousands of dollars
U.S. Treasury and agency securities	$	27,200	$	130	$	(14	)	$	27,316
Mortgage-backed agency securities		158,829		2,324		(654	)		160,499
Obligations of states and political subdivisions		17,551		740		(5	)		18,286
Equity securities		26		2		-			28
Total	$	203,606	$	3,196	$	(673	)	$	206,129

The following tables show fair value and the gross unrealized losses of the Company's investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012.

At September 30, 2013	Less than 12 Months					12 Months or Longer					Total
In thousands of dollars	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Treasury and agency securities	$	18,643	$	(823	)	$	-	$	-		$	18,643	$	(823	)
Mortgage-backed agency securities		84,078		(1,305	)		3,084		(64	)		87,162		(1,369	)
Obligations of states and political subdivisions		8,535		(342	)		-		-			8,535		(342	)
Total	$	111,256	$	(2,470	)	$	3,084	$	(64	)	$	114,340	$	(2,534	)
At December 31, 2012
In thousands of dollars
U.S. Treasury and agency securities	$	4,131	$	(14	)	$	-	$	-		$	4,131	$	(14	)
Mortgage-backed agency securities		54,538		(639	)		1,309		(15	)		55,847		(654	)
Obligations of states and political subdivisions		941		(5	)		-		-			941		(5	)
Total	$	59,610	$	(658	)	$	1,309	$	(15	)	$	60,919	$	(673	)

Unrealized losses within the investment portfolio are temporary. The Company performed an evaluation of its investments for other than temporary impairment, and no losses were recognized during the first nine months of 2013 or 2012.  The unrealized losses on the Company's investment in available for sale securities were caused by interest rate changes. All of the Company's mortgage-backed securities are issued by U.S. Government-sponsored agencies. The Company owns no obligations issued by the City of Detroit. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company did not consider those investments to be other-than-temporarily impaired at September 30, 2013 or December 31, 2012.

The entire investment portfolio is classified as available for sale. However, management has no specific intent to sell any securities, and management believes that it is likely the Company will not have to sell any security before recovery of its cost basis.

Sales activity for securities for the three and nine month periods ended September 30, 2013 and 2012 is shown in the following table. All sales were of securities identified as available for sale.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands of dollars	2013		2012		2013			2012
Sales proceeds	$	-	$	-	$	11,752		$	2,847
Gross gains on sales		-		-		136			30
Gross loss on sales		-		-		(97	)		(26	)
Gross gains on calls		1		-		1			-

The amortized cost and fair value of securities available for sale by contractual maturity as of September 30, 2013 is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized
In thousands of dollars	Cost		Fair Value
Due in one year or less	$	16,821	$	16,892
Due after one year through five years		28,480		28,006
Due after five years through ten years		5,919		5,659
Due after ten years		-		-
Mortgage-backed agency securities		154,205		154,243
Equity securities		26		27
Total securities	$	205,451	$	204,827

Securities carried at $1.0 million as of September 30, 2013 were pledged to secure deposits of public funds, funds borrowed, repurchase agreements, and for other purposes as required by law.

The municipal portfolio contains a small level of geographic risk, as approximately 1.3% of the investment portfolio is issued by political subdivisions located within Lenawee County, Michigan, 1.1% in Monroe County, Michigan and 3.5% in Washtenaw County, Michigan. The total fair value of municipal obligations issued by political subdivisions located in these three counties is approximately $12.1 million.

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Preferred Stock Redemption (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 16, 2013	Dec. 31, 2012	Jun. 30, 2012
Class of Stock [Line Items]
Preferred shares Redemption	10,300
Preferred Stock, Liquidation Preference Per Share	$ 1,000		$ 1,000
Preferred Stock, Shares Issued				20,600
Contribution of capital	$ 3,000,000
Preferred Stock, Redemption Price Per Share	$ 1,000
Preferred Stock, Redemption Amount	10,400,000
Excess of Tier One Leverage Capital to Average Assets	8.50%
Excess Tier One Leverage Capital to Average Assets	9.72%
Line of Credit Facility, Amount Outstanding	6,000,000
Line of Credit Facility, Maximum Borrowing Capacity	10,000,000	10,000,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred Stock, Value, Outstanding	$ 10,300,000

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Loans (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	$ 643,151	$ 586,678
Total portfolio loans (in hundredths)	100.00%	100.00%
Owner-Occupied CRE [Member] | Commercial & Tax-exempt Loans [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	109,144	97,755
Total portfolio loans (in hundredths)	17.00%	16.70%
Other CRE [Member] | Commercial & Tax-exempt Loans [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	140,686	113,370
Total portfolio loans (in hundredths)	21.90%	19.30%
Commercial & Industrial [Member] | Commercial & Tax-exempt Loans [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	104,133	104,332
Total portfolio loans (in hundredths)	16.20%	17.80%
Consumer Construction [Member] | Consumer Loan [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	13,709	12,123
Total portfolio loans (in hundredths)	2.10%	2.10%
Home Equity [Member] | Consumer Loan [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	79,898	72,983
Total portfolio loans (in hundredths)	12.40%	12.40%
Other Consumer [Member] | Consumer Loan [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	38,797	33,969
Total portfolio loans (in hundredths)	6.00%	5.80%
Residential mortgage [Member] | Consumer Loan [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	133,905	121,393
Total portfolio loans (in hundredths)	20.80%	20.60%
Construction and development [Member] | Commercial & Tax-exempt Loans [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	18,528	28,511
Total portfolio loans (in hundredths)	2.90%	4.90%
Deferred loan fees and costs [Member]
Loans categories and percentage composition of portfolio [Abstract]
Total portfolio loans	$ 4,351	$ 2,242
Total portfolio loans (in hundredths)	0.70%	0.40%

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Allowance for Loan Losses and Credit Risk, Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Loans without a specific valuation allowance
Recorded balance	$ 6,557		$ 6,557	$ 6,557		$ 13,509
Unpaid principal balance	9,727		9,727	9,727		21,468
Specific allowance	0		0	0		0
Average investment in impaired loans	7,792	14,365		8,760	20,065
Interest income recognized	39	34		99	225
Loans with a specific valuation allowance
Recorded balance	18,863		18,863	18,863		20,779
Unpaid principal balance	23,278		23,278	23,278		22,714
Specific allowance	6,596		6,596	6,596		8,304
Average investment in impaired loans	17,346	23,865		18,032	24,485
Interest income recognized	118	212		439	684
Total Impaired Loans
Recorded balance	25,420		25,420	25,420		34,288
Unpaid principal balance	33,005		33,005	33,005		44,182
Specific allowance	6,596		6,596	6,596		8,304
Average investment in impaired loans	25,138	38,230		26,792	44,550
Interest income recognized	157	246		538	909
Minimum satisfactory period required to returning nonaccrual to accrual status			6 months
Commercial [Member] | CLD [Member]
Loans without a specific valuation allowance
Recorded balance	445		445	445		654
Unpaid principal balance	753		753	753		1,673
Specific allowance	0		0	0		0
Average investment in impaired loans	445	3,538		466	4,323
Interest income recognized	0	0		0	0
Loans with a specific valuation allowance
Recorded balance	4,367		4,367	4,367		7,570
Unpaid principal balance	4,546		4,546	4,546		7,629
Specific allowance	2,134		2,134	2,134		3,271
Average investment in impaired loans	4,385	8,285		5,458	8,443
Interest income recognized	18	89		95	298
Total Impaired Loans
Recorded balance	4,812		4,812	4,812		8,224
Unpaid principal balance	5,299		5,299	5,299		9,302
Specific allowance	2,134		2,134	2,134		3,271
Average investment in impaired loans	4,830	11,823		5,924	12,766
Interest income recognized	18	89		95	298
Commercial [Member] | Owner-Occupied CRE [Member]
Loans without a specific valuation allowance
Recorded balance	947		947	947		4,181
Unpaid principal balance	1,334		1,334	1,334		6,267
Specific allowance	0		0	0		0
Average investment in impaired loans	948	2,438		1,912	2,777
Interest income recognized	3	12		21	51
Loans with a specific valuation allowance
Recorded balance	3,314		3,314	3,314		6,082
Unpaid principal balance	6,489		6,489	6,489		7,495
Specific allowance	1,874		1,874	1,874		2,904
Average investment in impaired loans	3,319	6,803		3,407	6,668
Interest income recognized	19	47		59	114
Total Impaired Loans
Recorded balance	4,261		4,261	4,261		10,263
Unpaid principal balance	7,823		7,823	7,823		13,762
Specific allowance	1,874		1,874	1,874		2,904
Average investment in impaired loans	4,267	9,241		5,319	9,445
Interest income recognized	22	59		80	165
Commercial [Member] | Other CRE [Member]
Loans without a specific valuation allowance
Recorded balance	1,891		1,891	1,891		4,438
Unpaid principal balance	2,313		2,313	2,313		6,158
Specific allowance	0		0	0		0
Average investment in impaired loans	3,980	5,215		4,143	9,672
Interest income recognized	21	6		34	124
Loans with a specific valuation allowance
Recorded balance	6,023		6,023	6,023		3,359
Unpaid principal balance	6,273		6,273	6,273		3,359
Specific allowance	1,088		1,088	1,088		1,079
Average investment in impaired loans	3,966	3,432		3,546	4,331
Interest income recognized	43	36		111	140
Total Impaired Loans
Recorded balance	7,914		7,914	7,914		7,797
Unpaid principal balance	8,586		8,586	8,586		9,517
Specific allowance	1,088		1,088	1,088		1,079
Average investment in impaired loans	7,946	8,647		7,689	14,003
Interest income recognized	64	42		145	264
Commercial [Member] | Commercial And Industrial [Member]
Loans without a specific valuation allowance
Recorded balance	1,262		1,262	1,262		1,640
Unpaid principal balance	3,315		3,315	3,315		3,992
Specific allowance	0		0	0		0
Average investment in impaired loans	1,265	1,715		964	1,839
Interest income recognized	7	9		17	29
Loans with a specific valuation allowance
Recorded balance	2,266		2,266	2,266		409
Unpaid principal balance	3,077		3,077	3,077		409
Specific allowance	781		781	781		274
Average investment in impaired loans	2,272	712		2,141	888
Interest income recognized	9	8		71	34
Total Impaired Loans
Recorded balance	3,528		3,528	3,528		2,049
Unpaid principal balance	6,392		6,392	6,392		4,401
Specific allowance	781		781	781		274
Average investment in impaired loans	3,537	2,427		3,105	2,727
Interest income recognized	16	17		88	63
Consumer [Member]
Loans without a specific valuation allowance
Recorded balance	170		170	170		232
Unpaid principal balance	170		170	170		232
Specific allowance	0		0	0		0
Total Impaired Loans
Recorded balance	170		170	170		232
Unpaid principal balance	170		170	170		232
Specific allowance	0		0	0		0
Consumer [Member] | Residential Mortgage [Member]
Loans without a specific valuation allowance
Recorded balance	1,667		1,667	1,667		2,207
Unpaid principal balance	1,667		1,667	1,667		2,989
Specific allowance	0		0	0		0
Average investment in impaired loans	993	1,312		1,122	1,274
Interest income recognized	7	6		24	17
Loans with a specific valuation allowance
Recorded balance	2,893		2,893	2,893		3,354
Unpaid principal balance	2,893		2,893	2,893		3,817
Specific allowance	719		719	719		771
Average investment in impaired loans	3,404	4,555		3,480	4,099
Interest income recognized	29	32		103	96
Total Impaired Loans
Recorded balance	4,560		4,560	4,560		5,561
Unpaid principal balance	4,560		4,560	4,560		6,806
Specific allowance	719		719	719		771
Average investment in impaired loans	4,397	5,867		4,602	5,373
Interest income recognized	36	38		127	113
Consumer [Member] | Home Equity [Member]
Loans without a specific valuation allowance
Average investment in impaired loans	3	25		8	25
Interest income recognized	1	1		3	4
Loans with a specific valuation allowance
Average investment in impaired loans	0	0		0	0
Interest income recognized	0	0		0	0
Total Impaired Loans
Average investment in impaired loans	3	25		8	25
Interest income recognized	1	1		3	4
Consumer [Member] | Other Consumer [Member]
Loans without a specific valuation allowance
Recorded balance	175		175	175		157
Unpaid principal balance	175		175	175		157
Specific allowance	0		0	0		0
Average investment in impaired loans	158	122		145	155
Interest income recognized	0	0		0	0
Loans with a specific valuation allowance
Recorded balance	0		0	0		5
Unpaid principal balance	0		0	0		5
Specific allowance	0		0	0		5
Average investment in impaired loans	0	78		0	56
Interest income recognized	0	0		0	2
Total Impaired Loans
Recorded balance	175		175	175		162
Unpaid principal balance	175		175	175		162
Specific allowance	0		0	0		5
Average investment in impaired loans	158	200		145	211
Interest income recognized	$ 0	$ 0		$ 0	$ 2

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Disclosures About Fair Value of Assets and Liabilities (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Available for sale securities: [Abstract]
Interest rate swap asset	$ 120,000
Total Securities available for sale	204,827,000	206,129,000
Financial Assets Fair Value Disclosure [Abstract]
Securities available for sale	204,827,000	206,129,000
Interest rate swap asset	120,000
Impaired Loans (Collateral Dependent):
Impaired Loans	33,005,000	44,182,000
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Available for sale securities: [Abstract]
Interest rate swap asset	120,000
Total Securities available for sale	204,827,000	206,129,000
Financial Assets Fair Value Disclosure [Abstract]
Cash and cash equivalents	31,781,000	70,612,000
Securities available for sale	204,827,000	206,129,000
FHLB Stock	2,691,000	2,571,000
Loans held for sale	8,388,000	13,380,000
Net portfolio loans	621,188,000	564,135,000
Accrued interest receivable	2,760,000	2,620,000
Interest rate swap asset	120,000
Financial Liabilites Fair Value Disclosure [Abstract]
Total deposits	(805,740,000)	(784,643,000)
FHLB advances	(11,983,000)	(21,999,000)
Accrued interest payable	(281,000)	(354,000)
Other borrowings Fair Value	(6,000,000)
Unobservable (Level 3) Inputs	(6,000,000)
Carrying (Reported) Amount, Fair Value Disclosure [Member] | Recurring [Member]
Available for sale securities: [Abstract]
U. S. Treasury and agency securities	25,767,000	27,316,000
Mortgage-backed agency securities	154,243,000	160,499,000
Obligations of states and political subdivisions	24,790,000	18,286,000
Equity Securities	27,000	28,000
Hedged loan	7,257,000
Interest rate swap asset	120,000
Financial Assets Fair Value Disclosure [Abstract]
Interest rate swap asset	120,000
Carrying (Reported) Amount, Fair Value Disclosure [Member] | Nonrecurring [Member]
Impaired Loans (Collateral Dependent):
Impaired Loans	13,803,000	21,866,000
Level 1 [Member]
Available for sale securities: [Abstract]
Interest rate swap asset	0
Total Securities available for sale	27,000	28,000
Financial Assets Fair Value Disclosure [Abstract]
Cash and cash equivalents	31,781,000	70,612,000
Securities available for sale	27,000	28,000
FHLB Stock	0	0
Loans held for sale	0	0
Net portfolio loans	0	0
Accrued interest receivable	0	0
Interest rate swap asset	0
Financial Liabilites Fair Value Disclosure [Abstract]
Total deposits	(160,225,000)	0
FHLB advances	0	0
Accrued interest payable	0	0
Other borrowings Fair Value	0
Unobservable (Level 3) Inputs	0
Level 1 [Member] | Recurring [Member]
Available for sale securities: [Abstract]
U. S. Treasury and agency securities	0	0
Mortgage-backed agency securities	0	0
Obligations of states and political subdivisions	0	0
Equity Securities	27,000	28,000
Hedged loan	0
Interest rate swap asset	0
Financial Assets Fair Value Disclosure [Abstract]
Interest rate swap asset	0
Level 1 [Member] | Nonrecurring [Member]
Impaired Loans (Collateral Dependent):
Impaired Loans	0	0
Level 2 [Member]
Available for sale securities: [Abstract]
Interest rate swap asset	120,000
Total Securities available for sale	204,800,000	206,101,000
Financial Assets Fair Value Disclosure [Abstract]
Cash and cash equivalents	0	0
Securities available for sale	204,800,000	206,101,000
FHLB Stock	2,691,000	2,571,000
Loans held for sale	8,388,000	13,380,000
Net portfolio loans	7,257,000	0
Accrued interest receivable	2,760,000	2,620,000
Interest rate swap asset	120,000
Financial Liabilites Fair Value Disclosure [Abstract]
Total deposits	(646,587,000)	(787,015,000)
FHLB advances	(12,595,000)	(23,007,000)
Accrued interest payable	(281,000)	(354,000)
Other borrowings Fair Value	(6,000,000)
Unobservable (Level 3) Inputs	(6,000,000)
Level 2 [Member] | Recurring [Member]
Available for sale securities: [Abstract]
U. S. Treasury and agency securities	25,767,000	27,316,000
Mortgage-backed agency securities	154,243,000	160,499,000
Obligations of states and political subdivisions	24,790,000	18,286,000
Equity Securities	0	0
Hedged loan	7,257,000
Interest rate swap asset	120,000
Financial Assets Fair Value Disclosure [Abstract]
Interest rate swap asset	120,000
Level 2 [Member] | Nonrecurring [Member]
Impaired Loans (Collateral Dependent):
Impaired Loans	0	0
Level 3 [Member]
Available for sale securities: [Abstract]
Interest rate swap asset	0
Total Securities available for sale	0	0
Financial Assets Fair Value Disclosure [Abstract]
Cash and cash equivalents	0	0
Securities available for sale	0	0
FHLB Stock	0	0
Loans held for sale	0	0
Net portfolio loans	618,335,000	574,137,000
Accrued interest receivable	0	0
Interest rate swap asset	0
Financial Liabilites Fair Value Disclosure [Abstract]
Total deposits	0	0
FHLB advances	0	0
Accrued interest payable	0	0
Other borrowings Fair Value	0
Unobservable (Level 3) Inputs	0
Level 3 [Member] | Recurring [Member]
Available for sale securities: [Abstract]
U. S. Treasury and agency securities	0	0
Mortgage-backed agency securities	0	0
Obligations of states and political subdivisions	0	0
Equity Securities	0	0
Hedged loan	0
Interest rate swap asset	0
Financial Assets Fair Value Disclosure [Abstract]
Interest rate swap asset	0
Level 3 [Member] | Nonrecurring [Member]
Impaired Loans (Collateral Dependent):
Impaired Loans	$ 13,803,000	$ 21,866,000

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Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Shareholders' Equity
Preferred stock, no par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares outstanding (in shares)	10,300	20,600
Preferred stock, liquidation preference (in dollars per share)	$ 1,000	$ 1,000
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	12,715,490	12,705,983
Common stock, outstanding (in shares)	12,715,490	12,705,983

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Common Stock and Earnings Per Share

9 Months Ended

Sep. 30, 2013

Common Stock and Earnings Per Share [Abstract]

Common Stock and Earnings Per Share

Note 7 - Common Stock and Earnings per Share

Basic earnings per common share is determined by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus contingently issuable shares during the period. The diluted earnings per share further assumes the dilutive effect of additional common shares issuable under stock based compensation plans and warrants.

A reconciliation of basic and diluted earnings per common share follows.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands, except per-share data	2013			2012			2013			2012
Net income	$	2,276		$	1,390		$	6,305		$	3,017
Less:
Accretion of discount on preferred stock		(47	)		(27	)		(106	)		(83	)
Dividends on preferred stock		(258	)		(258	)		(773	)		(773	)
Income available to common shareholders	$	1,971		$	1,105		$	5,426		$	2,161

Basic earnings per share:
Weighted avg. common shares outstanding		12,703.5		12,683.4		12,698.6		12,677.7
Weighted avg. contingently issuable shares		133.3		114.5		127.6		113.5
Total weighted average common shares outstanding		12,836.8		12,797.9		12,826.2		12,791.2
Basic earnings per share	$	0.15	$	0.09	$	0.42	$	0.17
Diluted earnings per share:
Weighted average common shares outstanding from basic earnings per share		12,836.8		12,797.9		12,826.2		12,791.2
Dilutive effect of stock incentive plans		73.9		-		55.1		-
Total weighted average common shares outstanding		12,910.7		12,797.9		12,881.4		12,791.2
Diluted earnings per share	$	0.15	$	0.09	$	0.42	$	0.17

A total of 370,986 and 373,986 shares subject to RSU and SOSAR grants, stock options and restricted stock existed for the three and nine month periods ended September 30, 2013 and 527,751 shares subject to RSU and SOSAR grants, stock options and restricted stock existed for the same time periods in 2012.  These shares were not considered in computing diluted earnings per share because they were not dilutive.

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Condensed Consolidated Statements Of Comprehensive Income Loss [Abstract]
Net income	$ 2,276	$ 1,390	$ 6,305	$ 3,017
Unrealized gains/losses on securities [Abstract]
Unrealized gains (losses) on securities available for sale	791	872	(3,107)	1,076
Less: Reclassification for realized amount included in income	(1)	0	(40)	(4)
Other comprehensive income (loss) before tax effect	790	872	(3,147)	1,072
Tax expenses (benefit)	269	296	(1,070)	364
Other comprehensive income (loss)	521	576	(2,077)	708
Total comprehensive income	$ 2,797	$ 1,966	$ 4,228	$ 3,725

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets
Cash and demand balances in other banks	$ 23,514	$ 13,769
Interest bearing balances with banks	8,267	56,843
Total cash and cash equivalents	31,781	70,612
Securities available for sale	204,827	206,129
FHLB Stock	2,691	2,571
Loans held for sale	8,388	13,380
Portfolio loans	643,151	586,678
Less allowance for loan losses	21,963	22,543
Net portfolio loans	621,188	564,135
Premises and equipment, net	10,379	10,719
Bank-owned life insurance	14,540	14,241
Accrued interest receivable and other assets	25,038	25,954
Total Assets	918,832	907,741
Deposits
Noninterest bearing deposits	160,225	165,430
Interest bearing deposits	645,515	619,213
Total deposits	805,740	784,643
FHLB advances payable	11,983	21,999
Other borrowings	6,000	0
Accrued interest payable and other liabilities	4,472	3,702
Total Liabilities	828,195	810,344
Commitments and Contingent Liabilities
Shareholders' Equity
Preferred stock, no par value; 2,000,000 shares authorized, 10,300 and 20,600 shares outstanding, respectively; liquidation preference $1,000 per share	10,282	20,476
Common stock and paid in capital, no par value; 30,000,000 shares authorized; 12,715,490, and 12,705,983 shares issued and outstanding, respectively	85,830	85,682
Accumulated deficit	(5,063)	(10,426)
Accumulated other comprehensive income (loss), net of tax	(412)	1,665
Total Shareholders' Equity	90,637	97,397
Total Liabilities and Shareholders' Equity	$ 918,832	$ 907,741

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Allowance for Loan Losses and Credit Risk (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012		Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum days shortfall or delay in payment encourage evaluation of loan for impairment					30 days
Minimum days shortfall or delay in payment loans moved to nonaccrual status					90 days
Minimum period due to impaired loans charged off					120 days
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	$ 22,001		$ 22,097		$ 22,543		$ 20,633
Provision charged to expense	300		2,000		1,900		6,650
Net provision after amounts related to change in allocation methodology	300		2,000		1,900		6,650
Losses charged off	(668)		(2,380)		(4,508)		(6,843)
Recoveries	330		743		2,028		2,020
Balance, end of period	21,963		22,460		21,963		22,460		22,543
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	6,596				6,596				8,304
Ending balance: collectively evaluated for impairment	15,367				15,367				14,239
Total Allowance for Loan Losses	21,963		22,460		21,963		22,460		22,543
Total loans: [Abstract]
Ending balance	643,151				643,151				586,678
Ending balance: individually evaluated for impairment	25,420				25,420				34,288
Ending balance: collectively evaluated for impairment	617,731				617,731				552,390
CLD [Member]
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	2,925	[1]	4,587	[1]	4,216	[1]	3,676	[1]
Provision charged to expense	(163)	[1]	496	[1]	(1,414)	[1]	1,945	[1]
Net provision after amounts related to change in allocation methodology	(163)	[1]	496	[1]	(1,414)	[1]	1,945	[1]
Losses charged off	(8)	[1]	(110)	[1]	(808)	[1]	(868)	[1]
Recoveries	244	[1]	80	[1]	1,004	[1]	300	[1]
Balance, end of period	2,998	[1]	5,053	[1]	2,998	[1]	5,053	[1]	4,216	[1]
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	2,134	[1]			2,134	[1]			3,271	[1]
Ending balance: collectively evaluated for impairment	864	[1]			864	[1]			945	[1]
Total Allowance for Loan Losses	2,998	[1]	5,053	[1]	2,998	[1]	5,053	[1]	4,216	[1]
Total loans: [Abstract]
Ending balance	32,237	[1]			32,237	[1]			40,634	[1]
Ending balance: individually evaluated for impairment	4,812	[1]			4,812	[1]			8,224	[1]
Ending balance: collectively evaluated for impairment	27,425	[1]			27,425	[1]			32,410	[1]
Owner-Occupied CRE [Member]
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	4,509	[2]	4,778	[2]	5,093	[2]	3,875	[2]
Provision charged to expense	1	[2]	1,007	[2]	808	[2]	1,942	[2]
Net provision after amounts related to change in allocation methodology	1	[2]	1,007	[2]	808	[2]	1,942	[2]
Losses charged off	(92)	[2]	(1,009)	[2]	(1,830)	[2]	(1,067)	[2]
Recoveries	8	[2]	5	[2]	355	[2]	31	[2]
Balance, end of period	4,426	[2]	4,781	[2]	4,426	[2]	4,781	[2]	5,093	[2]
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	1,874	[2]			1,874	[2]			2,904	[2]
Ending balance: collectively evaluated for impairment	2,552	[2]			2,552	[2]			2,189	[2]
Total Allowance for Loan Losses	4,426	[2]	4,781	[2]	4,426	[2]	4,781	[2]	5,093	[2]
Total loans: [Abstract]
Ending balance	110,417	[2]			110,417	[2]			102,579	[2]
Ending balance: individually evaluated for impairment	4,261	[2]			4,261	[2]			10,263	[2]
Ending balance: collectively evaluated for impairment	106,156	[2]			106,156	[2]			92,316	[2]
Other CRE [Member]
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	5,445	[2]	4,845	[2]	4,708	[2]	4,721	[2]
Provision charged to expense	(26)	[2]	97	[2]	559	[2]	1,940	[2]
Net provision after amounts related to change in allocation methodology	(26)	[2]	97	[2]	559	[2]	1,940	[2]
Losses charged off	(35)	[2]	(239)	[2]	(73)	[2]	(2,056)	[2]
Recoveries	3	[2]	174	[2]	193	[2]	272	[2]
Balance, end of period	5,387	[2]	4,877	[2]	5,387	[2]	4,877	[2]	4,708	[2]
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	1,088	[2]			1,088	[2]			1,079	[2]
Ending balance: collectively evaluated for impairment	4,299	[2]			4,299	[2]			3,629	[2]
Total Allowance for Loan Losses	5,387	[2]	4,877	[2]	5,387	[2]	4,877	[2]	4,708	[2]
Total loans: [Abstract]
Ending balance	164,457	[2]			164,457	[2]			131,004	[2]
Ending balance: individually evaluated for impairment	7,914	[2]			7,914	[2]			7,797	[2]
Ending balance: collectively evaluated for impairment	156,543	[2]			156,543	[2]			123,207	[2]
Commercial & Industrial [Member]
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	4,482		4,355		4,131		4,741
Provision charged to expense	414		202		1,415		11
Net provision after amounts related to change in allocation methodology	414		202		1,415		11
Losses charged off	(367)		(719)		(1,118)		(1,419)
Recoveries	8		335		109		840
Balance, end of period	4,537		4,173		4,537		4,173		4,131
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	781				781				274
Ending balance: collectively evaluated for impairment	3,756				3,756				3,857
Total Allowance for Loan Losses	4,537		4,173		4,537		4,173		4,131
Total loans: [Abstract]
Ending balance	104,231				104,231				98,385
Ending balance: individually evaluated for impairment	3,528				3,528				2,049
Ending balance: collectively evaluated for impairment	100,703				100,703				96,336
Residential Mortgage [Member]
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	2,456		1,808		2,456		1,931
Provision charged to expense	(12)		206		55		659
Net provision after amounts related to change in allocation methodology	(12)		206		55		659
Losses charged off	(77)		(216)		(200)		(855)
Recoveries	1		80		57		143
Balance, end of period	2,368		1,878		2,368		1,878		2,456
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	719				719				771
Ending balance: collectively evaluated for impairment	1,649				1,649				1,685
Total Allowance for Loan Losses	2,368		1,878		2,368		1,878		2,456
Total loans: [Abstract]
Ending balance	106,723				106,723				101,656
Ending balance: individually evaluated for impairment	4,560				4,560				5,561
Ending balance: collectively evaluated for impairment	102,163				102,163				96,095
Personal Loans [Member]
Allowance for Loan and Lease Losses [Abstract]
Balance, beginning of period	2,184		1,724		1,939		1,689
Provision charged to expense	86		(8)		477		153
Net provision after amounts related to change in allocation methodology	86		(8)		477		153
Losses charged off	(89)		(87)		(479)		(578)
Recoveries	66		69		310		434
Balance, end of period	2,247		1,698		2,247		1,698		1,939
Allowance for Loan Losses: [Abstract]
Ending balance: individually evaluated for impairment	0				0				5
Ending balance: collectively evaluated for impairment	2,247				2,247				1,934
Total Allowance for Loan Losses	2,247		1,698		2,247		1,698		1,939
Total loans: [Abstract]
Ending balance	125,086				125,086				112,420
Ending balance: individually evaluated for impairment	345				345				394
Ending balance: collectively evaluated for impairment	$ 124,741				$ 124,741				$ 112,026

[1] Construction and Land Development loans

[2] Commercial Real Estate loans

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Allowance for Loan Losses and Credit Risk (Tables)

9 Months Ended

Sep. 30, 2013

Allowance for Loan Losses and Credit Risk [Abstract]

Allowance for credit losses on financing receivables

An analysis of the allowance for loan losses for the three and nine month periods ended September 30, 2013 and 2012 and balances as of December 31, 2012 follows:

	Three Months Ended September 30, 2013
Thousands of dollars	CLD (1)			Owner- Occupied CRE (2)			OtherCRE (2)			Commercial & Industrial			Residential Mortgage			Personal Loans			Total
Allowance for Loan Losses:
Balance, June 30	$	2,925		$	4,509		$	5,445		$	4,482		$	2,456		$	2,184		$	22,001
Provision charged to expense		(163	)		1			(26	)		414			(12	)		86			300
Losses charged off		(8	)		(92	)		(35	)		(367	)		(77	)		(89	)		(668	)
Recoveries		244			8			3			8			1			66			330
Balance, September 30	$	2,998		$	4,426		$	5,387		$	4,537		$	2,368		$	2,247		$	21,963

	Nine Months Ended September 30, 2013
Thousands of dollars	CLD (1)			Owner- Occupied CRE (2)			OtherCRE (2)			Commercial & Industrial			Residential Mortgage			Personal Loans			Total
Allowance for Loan Losses:
Balance, January 1	$	4,216		$	5,093		$	4,708		$	4,131		$	2,456		$	1,939		$	22,543
Provision charged to expense		(1,414	)		808			559			1,415			55			477			1,900
Losses charged off		(808	)		(1,830	)		(73	)		(1,118	)		(200	)		(479	)		(4,508	)
Recoveries		1,004			355			193			109			57			310			2,028
Balance, September 30	$	2,998		$	4,426		$	5,387		$	4,537		$	2,368		$	2,247		$	21,963
Ending balance:
Individually evaluated for impairment	$	2,134		$	1,874		$	1,088		$	781		$	719		$	-		$	6,596
Collectively evaluated for impairment	$	864		$	2,552		$	4,299		$	3,756		$	1,649		$	2,247		$	15,367
Total Loans:
Ending balance	$	32,237		$	110,417		$	164,457		$	104,231		$	106,723		$	125,086		$	643,151
Ending balance:
Individually evaluated for impairment	$	4,812		$	4,261		$	7,914		$	3,528		$	4,560		$	345		$	25,420
Collectively evaluated for impairment	$	27,425		$	106,156		$	156,543		$	100,703		$	102,163		$	124,741		$	617,731

	Three Months Ended September 30, 2012
Allowance for Loan Losses:
Balance, June 30, 2012	$	4,587		$	4,778		$	4,845		$	4,355		$	1,808		$	1,724		$	22,097
Provision charged to expense		496			1,007			97			202			206			(8	)		2,000
Losses charged off		(110	)		(1,009	)		(239	)		(719	)		(216	)		(87	)		(2,380	)
Recoveries		80			5			174			335			80			69			743
Balance, September 30	$	5,053		$	4,781		$	4,877		$	4,173		$	1,878		$	1,698		$	22,460
	Nine Months Ended September 30, 2012
Thousands of dollars
Allowance for Loan Losses:
Balance, January 1	$	3,676		$	3,875		$	4,721		$	4,741		$	1,931		$	1,689		$	20,633
Provision charged to expense		1,945			1,942			1,940			11			659			153			6,650
Losses charged off		(868	)		(1,067	)		(2,056	)		(1,419	)		(855	)		(578	)		(6,843	)
Recoveries		300			31			272			840			143			434			2,020
Balance, September 30	$	5,053		$	4,781		$	4,877		$	4,173		$	1,878		$	1,698		$	22,460

	Balances at December 31, 2012
Thousands of dollars	CLD (1)		Owner- Occupied CRE (2)		OtherCRE (2)		Commercial & Industrial		Residential Mortgage		Personal Loans		Total
Allowance for Loan Losses:
Ending balance:
Individually evaluated for impairment	$	3,271	$	2,904	$	1,079	$	274	$	771	$	5	$	8,304
Collectively evaluated for impairment		945		2,189		3,629		3,857		1,685		1,934		14,239
Total Allowance for Loan Losses	$	4,216	$	5,093	$	4,708	$	4,131	$	2,456	$	1,939	$	22,543
Total Loans:
Ending balance:
Individually evaluated for impairment	$	8,224	$	10,263	$	7,797	$	2,049	$	5,561	$	394	$	34,288
Collectively evaluated for impairment		32,410		92,316		123,207		96,336		96,095		112,026		552,390
Total Loans	$	40,634	$	102,579	$	131,004	$	98,385	$	101,656	$	112,420	$	586,678
(1) Construction and Land Development loans
(2) Commercial Real Estate loans

Quality indicators for portfolio loans based on entity's internal risk categories

Quality indicators for portfolio loans as of September 30, 2013 and December 31, 2012 based on the Bank's internal risk categories are detailed in the following tables.

In thousands of dollars		At September 30, 2013
Commercial & Tax-exempt Loans		CLD		Owner-Occupied CRE		Other CRE		Commercial & Industrial		Total Commercial
Credit Risk Profile by Internally Assigned Rating
1-4	Pass	$	7,930	$	96,748	$	118,953	$	91,616	$	315,247
5	Special Mention		5,110		6,600		13,671		5,627		31,008
6	Substandard		5,008		5,796		8,062		6,855		25,721
7	Doubtful		480		-		-		35		515
8	Loss		-		-		-		-		-
Total Commercial & Tax-exempt Loans		$	18,528	$	109,144	$	140,686	$	104,133	$	372,491

	At September 30, 2013
Consumer Loans	Residential Mortgage		Consumer Construction		Home Equity		Other Consumer		Total Consumer
Credit risk profile based on payment activity
Performing	$	128,144	$	13,709	$	79,611	$	38,546	$	260,010
Accruing restructured		3,748		-		170		-		3,918
Delinquent less than 90 days		1,079		-		-		192		1,271
Nonperforming		934		-		117		59		1,110
Total Consumer Loans	$	133,905	$	13,709	$	79,898	$	38,797		266,309
Subtotal Commercial, Tax-exempt & Consumer Loans										638,800
Deferred loan fees and costs, overdrafts, in-process accounts										4,351
Total Portfolio Loans									$	643,151

In thousands of dollars		At December 31, 2012
Commercial & Tax-exempt Loans		CLD		Owner-Occupied CRE		Other CRE		Commercial & Industrial		Total Commercial
Credit Risk Profile by Internally Assigned Rating
1-4	Pass	$	12,813	$	78,507	$	86,445	$	91,711	$	269,476
5	Special Mention		7,378		11,510		17,073		5,104		41,065
6	Substandard		7,840		7,738		9,852		7,475		32,905
7	Doubtful		480		-		-		42		522
8	Loss		-		-		-		-		-
Total Commercial & Tax-exempt Loans		$	28,511	$	97,755	$	113,370	$	104,332	$	343,968

Consumer Loans	Residential Mortgage		Consumer Construction		Home Equity		Other Consumer		Total Consumer
Credit risk profile based on payment activity
Performing	$	114,071	$	12,123	$	72,344	$	33,764	$	232,302
Accruing restructured		3,267		-		171		-		3,438
Delinquent less than 90 days		1,714		-		343		150		2,207
Nonperforming		2,341		-		125		55		2,521
Total Consumer Loans	$	121,393	$	12,123	$	72,983	$	33,969		240,468
Subtotal Commercial, Tax-exempt & Consumer Loans										584,436
Deferred loan fees and costs, overdrafts, in-process accounts										2,242
Total Portfolio Loans									$	586,678

Loan portfolio aging analysis

Tables detailing the loan portfolio aging analysis as of September 30, 2013 and December 31, 2012 follow.

Thousands of dollars	Delinquent Loans
As of September 30, 2013	30-89 Days Past Due		90 Days and Over (a) (1)		Total PastDue (b)		Current(c-b-d)		Total Portfolio Loans (c)		Nonaccrual Loans (d)		Total Non-performing (a+d)
Commercial
Commercial CLD	$	-	$	-	$	-	$	14,620	$	18,528	$	3,908	$	3,908
Owner-Occupied CRE		569		-		569		105,846		109,144		2,729		2,729
Other CRE		300		-		300		137,718		140,686		2,668		2,668
Commercial & Industrial		125		-		125		101,103		104,133		2,905		2,905
Consumer
Residential Mortgage		1,079		292		1,371		131,892		133,905		642		934
Consumer Construction		-		-		-		13,709		13,709		-		-
Home Equity		-		-		-		79,781		79,898		117		117
Other Consumer		192		-		192		38,546		38,797		59		59
Subtotal	$	2,265	$	292	$	2,557	$	623,215		638,800	$	13,028	$	13,320
Deferred loan fees and costs, overdrafts, in-process accounts										4,351
Total Portfolio Loans									$	643,151

As of December 31, 2012
Commercial
Commercial CLD	$	117	$	-	$	117	$	24,545	$	28,511	$	3,849	$	3,849
Owner-Occupied CRE		-		-		-		92,498		97,755		5,257		5,257
Other CRE		-		-		-		109,638		113,370		3,732		3,732
Commercial & Industrial		683		-		683		102,257		104,332		1,392		1,392
Consumer
Residential Mortgage		1,714		-		1,714		117,338		121,393		2,341		2,341
Consumer Construction		-		-		-		12,123		12,123		-		-
Home Equity		343		37		380		72,515		72,983		88		125
Other Consumer		150		-		150		33,764		33,969		55		55
Subtotal	$	3,007	$	37	$	3,044	$	564,678		584,436	$	16,714	$	16,751
Deferred loan fees and costs, overdrafts, in-process accounts										2,242
Total Portfolio Loans									$	586,678
(1) All are accruing.

Impaired loans

Information regarding impaired loans as of September 30, 2013 and December 31, 2012 follows.

	September 30, 2013						December 31, 2012
Thousands of dollars	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance
Commercial
Commercial CLD	$	445	$	753	$	-	$	654	$	1,673	$	-
Owner-Occupied CRE		947		1,334		-		4,181		6,267		-
Other CRE		1,891		2,313		-		4,438		6,158		-
Commercial & Industrial		1,262		3,315		-		1,640		3,992		-
Consumer
Residential Mortgage		1,667		1,667		-		2,207		2,989		-
Home Equity		170		170		-		232		232		-
Other Consumer		175		175		-		157		157		-
Subtotal		6,557		9,727		-		13,509		21,468		-

Loans with a specific valuation allowance
Commercial
Commercial CLD		4,367		4,546		2,134		7,570		7,629		3,271
Owner-Occupied CRE		3,314		6,489		1,874		6,082		7,495		2,904
Other CRE		6,023		6,273		1,088		3,359		3,359		1,079
Commercial & Industrial		2,266		3,077		781		409		409		274
Consumer
Residential Mortgage		2,893		2,893		719		3,354		3,817		771
Other Consumer		-		-		-		5		5		5
Subtotal		18,863		23,278		6,596		20,779		22,714		8,304
Total Impaired Loans
Commercial
Commercial CLD		4,812		5,299		2,134		8,224		9,302		3,271
Owner-Occupied CRE		4,261		7,823		1,874		10,263		13,762		2,904
Other CRE		7,914		8,586		1,088		7,797		9,517		1,079
Commercial & Industrial		3,528		6,392		781		2,049		4,401		274
Consumer
Residential Mortgage		4,560		4,560		719		5,561		6,806		771
Home Equity		170		170		-		232		232		-
Other Consumer		175		175		-		162		162		5
Total Impaired Loans	$	25,420	$	33,005	$	6,596	$	34,288	$	44,182	$	8,304

Information regarding average investment in impaired loans and interest income recognized on those loans for the three and nine month periods ended September 30, 2013 and 2012 is shown below.

Periods ended September 30,	2013								2012
Thousands of dollars	Three Months				Year to Date				Three Months				Year to Date
	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Loans without a specific valuation allowance
Commercial
Commercial CLD	$	445	$	-	$	466	$	-	$	3,538	$	-	$	4,323	$	-
Owner-Occupied CRE		948		3		1,912		21		2,438		12		2,777		51
Other CRE		3,980		21		4,143		34		5,215		6		9,672		124
Commercial & Industrial		1,265		7		964		17		1,715		9		1,839		29
Consumer
Residential Mortgage		993		7		1,122		24		1,312		6		1,274		17
Home Equity		3		1		8		3		25		1		25		4
Other Consumer		158		-		145		-		122		-		155		-
Subtotal		7,792		39		8,760		99		14,365		34		20,065		225

Loans with a specific valuation allowance
Commercial
Commercial CLD		4,385		18		5,458		95		8,285		89		8,443		298
Owner-Occupied CRE		3,319		19		3,407		59		6,803		47		6,668		114
Other CRE		3,966		43		3,546		111		3,432		36		4,331		140
Commercial & Industrial		2,272		9		2,141		71		712		8		888		34
Consumer
Residential Mortgage		3,404		29		3,480		103		4,555		32		4,099		96
Home Equity		-		-		-		-		-		-		-		-
Other Consumer		-		-		-		-		78		-		56		2
Subtotal		17,346		118		18,032		439		23,865		212		24,485		684
Total Impaired Loans
Commercial
Commercial CLD		4,830		18		5,924		95		11,823		89		12,766		298
Owner-Occupied CRE		4,267		22		5,319		80		9,241		59		9,445		165
Other CRE		7,946		64		7,689		145		8,647		42		14,003		264
Commercial & Industrial		3,537		16		3,105		88		2,427		17		2,727		63
Consumer
Residential Mortgage		4,397		36		4,602		127		5,867		38		5,373		113
Home Equity		3		1		8		3		25		1		25		4
Other Consumer		158		-		145		-		200		-		211		2
Total Impaired Loans	$	25,138	$	157	$	26,792	$	538	$	38,230	$	246	$	44,550	$	909

Troubled debt restructurings

The following tables present information regarding loans newly-classified as TDRs for the three and nine month periods ended September 30, 2013 and 2012.

Periods ended September 30, 2013	Three Months						Nine Months
Dollars in thousands	Total Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Total Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial
Owner-Occupied CRE		-	$	-	$	-		2	$	182	$	182
Other CRE		1		665		665		1		665		665
Consumer
Residential Mortgage		-		-		-		4		800		800
Total		1	$	665	$	665		7	$	1,647	$	1,647

Periods ended September 30, 2012
Commercial
Commercial CLD	-	$	-	$	-	2	$	400	$	400
Owner-Occupied CRE	1		645		645	6		1,271		1,271
Other CRE	-		-		-	4		2,304		2,304
Commercial & Industrial	-		-		-	1		190		190
Consumer
Residential Mortgage	-		-		-	2		224		224
Total	1	$	645	$	645	15	$	4,389	$	4,389

The table below provides a breakdown of accruing restructured loans by type at September 30, 2013. The table also includes the average yield on accruing restructured loans and the yield for the entire portfolio, for commercial loans and residential mortgage and home equity loans, for the third quarter of 2013.

	September 30, 2013				Third Quarter 2013
Dollars in thousands	Number of Loans		Recorded Balance		Avg. Yield			Portfolio Yield
CLD Loans		4	$	1,658
Other Commercial Loans		12		5,021
Total Commercial Loans		16		6,679		4.92	%		4.95	%
Residential Mortgage & Home Equity Loans		20		3,918		3.59	%		4.75	%
Total Accruing Restructured Loans		36	$	10,597

The Company has no personal loans other than the loans described above that are classified as troubled debt restructurings. In determining the amount of the allowance for loan losses, all restructured loans are classified as impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

For the third quarter and first nine months ended in 2013, there were no TDRs that subsequently defaulted within twelve months of being restructured.  For the same periods in 2012, information is shown below regarding subsequent defaults.

Periods ended September 30, 2012	Three Months				Nine Months
Dollars in thousands	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
Commercial
Commercial CLD		1	$	1,892		4	$	3,423
Owner-Occupied CRE		-		-		2		239
Total		1	$	1,892		6	$	3,662

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Derivative Instruments (Details) (USD $)	Sep. 30, 2013
Derivative Instruments [Abstract]
Cash Collateral for Derivative Instrument	$ 370,100
Interest rate swap asset	120,000
Notional Amount of Interest Rate Derivatives	$ 7,400,000

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Loan Servicing (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Components Of Managed Servicing Portfolio [Abstract]
Unpaid principal balance of loans serviced for others	$ 962,935		$ 962,935		$ 853,761
Unpaid principal balance of loans serviced for others change in period	109,174		109,174
Unpaid principal balance of loans serviced for others percentage change in period (in hundredths)	12.80%		12.80%
Unamortized cost of loan servicing rights [Abstract]
Balance at beginning of period	7,072	5,855	6,379	5,405
Amount capitalized	627	780	2,205	2,029
Amount amortized	(386)	(509)	(1,271)	(1,308)
Balance at end of period	7,313	6,126	7,313	6,126
Fair value of servicing rights [Abstract]
Fair value beginning of period			8,285	7,331
Fair value, end of period	$ 11,041	$ 7,848	$ 11,041	$ 7,848

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Common Stock and Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share, Basic and Diluted [Abstract]
Net income	$ 2,276	$ 1,390	$ 6,305	$ 3,017
Less:
Accretion of discount on preferred stock	(47)	(27)	(106)	(83)
Preferred Stock Dividends Other Adjustments	(258)	(258)	(773)	(773)
Income available to common shareholders	$ 1,971	$ 1,105	$ 5,426	$ 2,161
Basic and diluted income:
Weighted avg. common shares outstanding (in shares)	12,703,500	12,683,400	12,698,600	12,677,700
Weighted avg. contingently issuable shares (in shares)	73,900	0	55,100	0
Total weighted avg. shares outstanding (in shares)	12,910,700	12,797,900	12,881,400	12,791,200
Basic and diluted earnings per share (in dollars per share)	$ 0.15	$ 0.09	$ 0.42	$ 0.17
Weighted average common shares outstanding from basic earnings per share	12,910,700	12,797,900	12,881,400	12,791,200
Basic earnings per share	$ 0.15	$ 0.09	$ 0.42	$ 0.17
Total Weighted Average Number of Shares Outstanding, Basic	12,836,800	12,797,900	12,826,200	12,791,200
Weighted avg. basic shares outstanding adjustment	133,300	114,500	127,600	113,500
Diluted earnings per share	$ 0.15	$ 0.09	$ 0.42	$ 0.17
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded for computing diluted earnings per share (in shares)	370,986		373,986
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded for computing diluted earnings per share (in shares)		527,751

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Loan Servicing

9 Months Ended

Sep. 30, 2013

Loan Servicing [Abstract]

Loan Servicing

Note 6 - Loan Servicing

Loans serviced for others are not included in the accompanying consolidated financial statements. The unpaid principal balance of loans serviced for others at September 30, 2013 and December 31, 2012 were as follows:

In thousands of dollars	9/30/13		12/31/12		Change		Percent
Total loans serviced	$	962,935	$	853,761	$	109,174		12.8	%

Unamortized loan servicing rights are included in accrued interest receivable and other assets on the consolidated balance sheet, for the three and nine month periods ended September 30, 2013 and 2012, are shown below.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands of dollars	2013			2012			2013			2012
Balance at beginning of period	$	7,072		$	5,855		$	6,379		$	5,405
Amount capitalized		627			780			2,205			2,029
Amount amortized		(386	)		(509	)		(1,271	)		(1,308	)
Balance at September 30,	$	7,313		$	6,126		$	7,313		$	6,126

The fair value of servicing rights was as follows:

In thousands of dollars	9/30/13		9/30/12
Fair value, January 1	$	8,285	$	7,331
Fair value, end of period	$	11,041	$	7,848

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Allowance for Loan Losses and Credit Risk, Credit Exposure and Quality Indicators (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Quality indicators for portfolio of loans [Line Items]
Subtotal	$ 638,800		$ 584,436
Deferred loan fees and costs, overdrafts, in-process accounts	4,351		2,242
Portfolio loans	643,151		586,678
CLD [Member]
Quality indicators for portfolio of loans [Line Items]
Portfolio loans	32,237	[1]	40,634	[1]
Owner-Occupied CRE [Member]
Quality indicators for portfolio of loans [Line Items]
Portfolio loans	110,417	[2]	102,579	[2]
Other CRE [Member]
Quality indicators for portfolio of loans [Line Items]
Portfolio loans	164,457	[2]	131,004	[2]
Commercial And Industrial [Member]
Quality indicators for portfolio of loans [Line Items]
Portfolio loans	104,231		98,385
Residential Mortgage [Member]
Quality indicators for portfolio of loans [Line Items]
Portfolio loans	106,723		101,656
Commercial [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	372,491		343,968
Commercial [Member] | Pass [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	315,247		269,476
Commercial [Member] | Special Mention [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	31,008		41,065
Commercial [Member] | Substandard [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	25,721		32,905
Commercial [Member] | Doubtful [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	515		522
Commercial [Member] | Loss [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Commercial [Member] | CLD [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	18,528		28,511
Commercial [Member] | CLD [Member] | Pass [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	7,930		12,813
Commercial [Member] | CLD [Member] | Special Mention [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	5,110		7,378
Commercial [Member] | CLD [Member] | Substandard [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	5,008		7,840
Commercial [Member] | CLD [Member] | Doubtful [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	480		480
Commercial [Member] | CLD [Member] | Loss [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Commercial [Member] | Owner-Occupied CRE [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	109,144		97,755
Commercial [Member] | Owner-Occupied CRE [Member] | Pass [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	96,748		78,507
Commercial [Member] | Owner-Occupied CRE [Member] | Special Mention [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	6,600		11,510
Commercial [Member] | Owner-Occupied CRE [Member] | Substandard [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	5,796		7,738
Commercial [Member] | Owner-Occupied CRE [Member] | Doubtful [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Commercial [Member] | Owner-Occupied CRE [Member] | Loss [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Commercial [Member] | Other CRE [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	140,686		113,370
Commercial [Member] | Other CRE [Member] | Pass [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	118,953		86,445
Commercial [Member] | Other CRE [Member] | Special Mention [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	13,671		17,073
Commercial [Member] | Other CRE [Member] | Substandard [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	8,062		9,852
Commercial [Member] | Other CRE [Member] | Doubtful [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Commercial [Member] | Other CRE [Member] | Loss [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Commercial [Member] | Commercial And Industrial [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	104,133		104,332
Commercial [Member] | Commercial And Industrial [Member] | Pass [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	91,616		91,711
Commercial [Member] | Commercial And Industrial [Member] | Special Mention [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	5,627		5,104
Commercial [Member] | Commercial And Industrial [Member] | Substandard [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	6,855		7,475
Commercial [Member] | Commercial And Industrial [Member] | Doubtful [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	35		42
Commercial [Member] | Commercial And Industrial [Member] | Loss [Member] | Commercial & Tax-exempt Loans [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Consumer [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	266,309		240,468
Consumer [Member] | Performing [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	260,010		232,302
Consumer [Member] | Nonperforming [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	1,110		2,521
Consumer [Member] | Accruing restructured [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	3,918		3,438
Consumer [Member] | Delinquent Less Than 90 Days [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	1,271		2,207
Consumer [Member] | Consumer Construction [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	13,709		12,123
Consumer [Member] | Consumer Construction [Member] | Performing [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	13,709		12,123
Consumer [Member] | Consumer Construction [Member] | Nonperforming [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Consumer [Member] | Consumer Construction [Member] | Accruing restructured [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Consumer [Member] | Consumer Construction [Member] | Delinquent Less Than 90 Days [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Consumer [Member] | Other Consumer [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	38,797		33,969
Consumer [Member] | Other Consumer [Member] | Performing [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	38,546		33,764
Consumer [Member] | Other Consumer [Member] | Nonperforming [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	59		55
Consumer [Member] | Other Consumer [Member] | Accruing restructured [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		0
Consumer [Member] | Other Consumer [Member] | Delinquent Less Than 90 Days [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	192		150
Consumer [Member] | Home Equity [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	79,898		72,983
Consumer [Member] | Home Equity [Member] | Performing [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	79,611		72,344
Consumer [Member] | Home Equity [Member] | Nonperforming [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	117		125
Consumer [Member] | Home Equity [Member] | Accruing restructured [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	170		171
Consumer [Member] | Home Equity [Member] | Delinquent Less Than 90 Days [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	0		343
Consumer [Member] | Residential Mortgage [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	133,905		121,393
Consumer [Member] | Residential Mortgage [Member] | Performing [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	128,144		114,071
Consumer [Member] | Residential Mortgage [Member] | Nonperforming [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	934		2,341
Consumer [Member] | Residential Mortgage [Member] | Accruing restructured [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	3,748		3,267
Consumer [Member] | Residential Mortgage [Member] | Delinquent Less Than 90 Days [Member] | Consumer Loan [Member]
Quality indicators for portfolio of loans [Line Items]
Subtotal	$ 1,079		$ 1,714

[1] Construction and Land Development loans

[2] Commercial Real Estate loans

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Derivative Instruments

9 Months Ended

Sep. 30, 2013

Derivative Instruments [Abstract]

Derivative Instruments [Text Block]

Note 9 – Derivative Instruments

The Company may use interest rate swaps as part of its interest rate risk management strategy to add stability to interest income and to manage its exposure to interest rate movements. The Company does not use derivative instruments for trading or speculative purposes. The Company has entered into an interest rate swap agreement, primarily as an asset/liability management strategy, in order to mitigate the changes in the fair value of a specified long-term fixed-rate loan caused by changes in interest rates. This hedge allowed us to offer a long-term fixed rate loan to a client without assuming the interest rate risk of a long-term asset. Converting our fixed-rate interest stream to a floating-rate interest stream, benchmarked to the one-month U.S. dollar LIBOR index, protects against changes in the fair value of our loan otherwise associated with fluctuating interest rates.

The fixed-rate payment feature of the interest rate swap is structured at inception to mirror substantially all of the provisions of the hedged loan agreements. This interest rate swap, designated and qualified as a fair value hedge, is carried on the consolidated balance sheet at fair value in "other assets" (when the fair value is positive) or in "other liabilities" (when the fair value is negative).

The change in fair value of the interest rate swap is recorded in interest income. The unrealized gain or loss in fair value of the hedged fixed-rate loan due to LIBOR interest rate movements is recorded as an adjustment to the hedged loan and is offset in interest income. The net effect of the change in fair value of the interest rate swap and the change in the fair value of the hedged loan may result in an insignificant amount of hedge ineffectiveness recognized in interest income.

Our credit exposure, if any, on the interest rate swap is limited to the favorable value (net of any collateral pledged to us) and interest payments of the interest rate swap by the counterparty. We are required to post collateral to the counterparty. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. As of September 30, 2013, we have posted cash collateral of $370,100 related to the collateral requirements of the interest rate swap.

As of September 30, 2013, we had one interest rate swap, which is scheduled to mature in June 2020. The interest rate swap is accounted for as a fair value hedge, and is settled monthly with the counterparty. As of September 30, 2013, the notional amount of the interest rate swap was approximately $7.4 million. The fair value of the interest rate swap at September 30, 2013 was $120,000. The Company had no interest rate swaps at December 31, 2012.

The hedging relationship of the interest rate swap is tested for effectiveness on a quarterly basis, and, at September 30, 2013, was determined to be highly effective, with no resulting impact on the income statement of the Company for the three and nine months ended September 30, 2013.

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Stock Based Compensation

9 Months Ended

Sep. 30, 2013

Stock Based Compensation [Abstract]

Stock Based Compensation

Note 5 - Stock Based Compensation

The Company has stock based compensation plans as described below. The Company recorded compensation expense related to stock based compensation of $62,500 and $37,500, respectively, for the three month periods and $187,500 and $112,500, respectively, for the nine month periods ended September 30, 2013 and 2012. The Company has a policy of issuing authorized but unissued common shares for the award, satisfaction or settlement of stock-based compensation.

Stock Incentive Plan of 2010

The Company's Stock Incentive Plan of 2010 (the "Incentive Plan") permits the grant and award of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards and other stock-based and stock-related awards (collectively referred to as "incentive awards") to directors, consultative board members, officers and other key employees of the Company and its subsidiaries.

The following tables show activity for the nine months ended September 30, 2013 for awards granted under the Incentive Plan:

Stock-Only Stock Appreciation Rights
				Weighted
	Awards			Avg. Exer-
	Outstanding			cise Price
Balance at January 1		167,250		$	3.33
Awards granted		46,250			5.05
Awards exercised		(7,946	)		3.33
Awards forfeited		(8,250	)		3.63
Balance at September 30, 2013		197,304		$	3.72

	Restricted Stock					Restricted Stock Units
	Awards			Grant Date		Awards			Grant Date
	Outstanding			Fair Value		Outstanding			Fair Value
Nonvested at January 1		22,625		$	3.35		46,795		$	3.35
Awards granted		10,500			5.05		54,582			5.05
Awards vested		(22,625	)		3.35		-			-
Awards forfeited		-			-		(3,903	)		4.24
Nonvested at September 30		10,500		$	5.05		97,474		$	4.27

As of September 30, 2013, unrecognized compensation expense related to the Incentive Plan totaled $410,000. Compensation expense for stock-only stock appreciation rights ("SOSARs") and restricted stock grants is recognized over approximately three years. Compensation expense for restricted stock units ("RSUs") is based on an expected level of achievement of performance targets as determined at the time of each grant, and is usually recognized over three years.

The fair value of each SOSAR grant is estimated on the grant date using the Black-Scholes option pricing model. Grants were awarded in March of 2013 and 2012. Fair value of grants is based on the weighted-average assumptions shown in the following table.

	2013			2012
Dividend yield		0.0	%		0.0	%
Expected life in years		5			5
Expected volatility		28.8	%		37.0	%
Risk-free interest rate		0.72	%		0.84	%
Fair value	$	1.345		$	1.105

At September 30, 2013, the aggregate intrinsic value of SOSARs outstanding was $608,466. Intrinsic value was determined by calculating the difference between the Company's closing common stock price on September 30, 2013 and the exercise price of the SOSARs, multiplied by the number of in-the-money SOSARs held by each holder, assuming all holders had exercised their SOSARs on September 30, 2013. The weighted–average period over which non-vested SOSARs are expected to be recognized is one year.

The fair value of restricted stock and RSU grants is considered to be the market price of Company common stock at the grant date. The Company has established three performance targets for 2013 grants. Those targets are based on the Company's pre-tax, pre-provision return on average assets, return on average assets, and classified assets coverage ratio¹. Each target is weighted equally, and target levels are based on United's 2013 financial plan.

Stock Option Plan

Through December 31, 2009, the Company granted stock options under its 2005 Stock Option Plan (the "2005 Plan"), which is a non-qualified stock option plan as defined under Internal Revenue Service regulations. The shares of stock that are subject to options are the authorized and unissued shares of common stock of the Company. Under the 2005 Plan, directors and management of the Company and subsidiaries were given the right to purchase stock of the Company at the then-current market price at the time the option was granted. The options have a three-year vesting period, and with certain exceptions, expire at the end of ten years, three years after retirement or ninety days after other separation from the Company. The 2005 Plan expired effective January 1, 2010, and no additional options may be granted under the plan.

The following summarizes year to date option activity for the 2005 Plan:

	Options			Weighted Avg.
Stock Options	Outstanding			Exercise Price
Balance at January 1, 2013		358,070		$	21.32
Options expired		(25,434	)		22.97
Options forfeited		(3,400	)		12.71
Balance at September 30, 2013		329,236		$	21.28

The table below provides information regarding stock options outstanding under the 2005 Plan at September 30, 2013.

	Options Outstanding							Options Exercisable
Range of	Number		Weighted Average			Weighted Avg.		Number		Weighted Avg.
Exercise Prices	Outstanding		Remaining Contractual Life			Exercise Price		Outstanding		Exercise Price
$6.00 to $32.14		329,236		3.12	Years	$	21.28		329,236	$	21.28

As of the end of the third quarter of 2013, there was no unrecognized compensation expense related to the stock options granted under the 2005 Plan. At September 30, 2013, the total outstanding stock options granted under the 2005 Plan had no intrinsic value. Intrinsic value was determined by calculating the difference between the Company's closing common stock price on September 30, 2013 and the exercise price of each option, multiplied by the number of in-the-money stock options held by each holder, assuming all holders had exercised their stock options on September 30, 2013.

¹ Adversely classified assets as a percent of Tier 1 capital plus allowance for loan losses.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash Flows from Operating Activities
Net income	$ 6,305	$ 3,017
Adjustments to Reconcile Net Income to Net Cash from Operating Activities
Depreciation and amortization	4,286	4,070
Net provision after amounts related to change in allocation methodology	1,900	6,650
Gain on sale of loans	(7,331)	(6,945)
Proceeds from sales of loans originated for sale	270,399	271,598
Loans originated for sale	(258,076)	(268,129)
Gains on securities transactions	(40)	(4)
Change in deferred income taxes	1,406	737
Stock based compensation expense	188	112
Increase in cash surrender value of bank-owned life insurance	(300)	(316)
Change in investment in limited partnership	(309)	(224)
Change in accrued interest receivable and other assets	991	3,332
Change in accrued interest payable and other liabilities	859	1,791
Net cash from operating activities	20,278	15,689
Securities available for sale
Purchases	(72,828)	(80,231)
Sales	11,752	2,847
Maturities and calls	19,633	25,870
Principal payments	36,339	24,601
Purchase of FHLB stock	(120)	0
Net change in portfolio loans	(59,419)	(35,464)
Premises and equipment expenditures	(470)	(769)
Net cash from investing activities	(65,113)	(63,146)
Cash Flows from Financing Activities
Net change in deposits	21,097	11,169
Net change in other borrowings	6,000	0
Principal payments on FHLB advances	(10,016)	(2,276)
Redemption of preferred shares	(10,300)	0
Other common stock transactions	59	20
Cash dividends paid on preferred shares	(836)	(772)
Net cash from financing activities	6,004	8,141
Net change in cash and cash equivalents	(38,831)	(39,316)
Cash and cash equivalents at beginning of year	70,612	107,592
Cash and cash equivalents at end of period	31,781	68,276
Supplemental Disclosure of Cash Flow Information:
Interest paid	2,410	3,629
Loans transferred to other real estate	466	2,535
Income taxes paid	$ 610	$ 0

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Allowance for Loan Losses and Credit Risk, Troubled Debt Restructuring (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Nonaccrual restructured loans	$ 10,000,000		$ 10,000,000		$ 10,800,000
Summary of Restructured Loans Still Accruing By Type [Abstract]
Financing Receivable Restructured Still Accruing Status Number Of Contracts	36		36
Financing Receivable Recorded Investment Restructured Still Accruing Status	10,597,000		10,597,000		15,800,000
Troubled Debt Restructuring Note, Debtor [Abstract]
Total number of loans	1	1	7	15
Pre-modification outstanding recorded balance	665,000	645,000	1,647,000	4,389,000
Post-modification outstanding recorded balance	665,000	645,000	1,647,000	4,389,000
Subsequent default number of contracts	0	1	0	6
Subsequent default recorded balance	0	1,892,000	0	3,662,000
Minimum Days Payment Default to Past Due Modified Terms	90 days
Commercial [Member]
Summary of Restructured Loans Still Accruing By Type [Abstract]
Financing Receivable Restructured Still Accruing Status Number Of Contracts	16		16
Financing Receivable Recorded Investment Restructured Still Accruing Status	6,679,000		6,679,000
Average yield on modified restructured loan (in hundredths)	4.92%
Yield on loan portfolio (in hundredths)	4.95%
Commercial [Member] | CLD [Member]
Summary of Restructured Loans Still Accruing By Type [Abstract]
Financing Receivable Restructured Still Accruing Status Number Of Contracts	4		4
Financing Receivable Recorded Investment Restructured Still Accruing Status	1,658,000		1,658,000
Troubled Debt Restructuring Note, Debtor [Abstract]
Total number of loans		0		2
Pre-modification outstanding recorded balance		0		400,000
Post-modification outstanding recorded balance		0		400,000
Subsequent default number of contracts		1		4
Subsequent default recorded balance		1,892,000		3,423,000
Commercial [Member] | Owner-Occupied CRE [Member]
Troubled Debt Restructuring Note, Debtor [Abstract]
Total number of loans	0	1	2	6
Pre-modification outstanding recorded balance	0	645,000	182,000	1,271,000
Post-modification outstanding recorded balance	0	645,000	182,000	1,271,000
Subsequent default number of contracts		0		2
Subsequent default recorded balance		0		239,000
Commercial [Member] | Other CRE [Member]
Summary of Restructured Loans Still Accruing By Type [Abstract]
Financing Receivable Restructured Still Accruing Status Number Of Contracts	12		12
Financing Receivable Recorded Investment Restructured Still Accruing Status	5,021,000		5,021,000
Troubled Debt Restructuring Note, Debtor [Abstract]
Total number of loans	1	0	1	4
Pre-modification outstanding recorded balance	665,000	0	665,000	2,304,000
Post-modification outstanding recorded balance	665,000	0	665,000	2,304,000
Commercial [Member] | Commercial And Industrial [Member]
Troubled Debt Restructuring Note, Debtor [Abstract]
Total number of loans		0		1
Pre-modification outstanding recorded balance		0		190,000
Post-modification outstanding recorded balance		0		190,000
Consumer [Member]
Summary of Restructured Loans Still Accruing By Type [Abstract]
Average yield on modified restructured loan (in hundredths)	3.59%
Yield on loan portfolio (in hundredths)	4.75%
Consumer [Member] | Residential Mortgage And Home Equity Loans [Member]
Summary of Restructured Loans Still Accruing By Type [Abstract]
Financing Receivable Restructured Still Accruing Status Number Of Contracts	20		20
Financing Receivable Recorded Investment Restructured Still Accruing Status	3,918,000		3,918,000
Troubled Debt Restructuring Note, Debtor [Abstract]
Total number of loans	0	0	4	2
Pre-modification outstanding recorded balance	0	0	800,000	224,000
Post-modification outstanding recorded balance	$ 0	$ 0	$ 800,000	$ 224,000

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Borrowings

9 Months Ended

Sep. 30, 2013

Borrowings [Abstract]

Borrowings [Text Block]

Note 10 – Borrowings

The Company entered into a Business Loan Agreement with Chemical Bank (the "Loan Agreement") and a revolving line of credit as of September 16, 2013.  The Loan Agreement provides for a $10.0 million line of credit by Chemical Bank to the Company at an interest rate of prime plus 0.125% (3.375% as of September 30, 2013).  The Company will pay quarterly payments of accrued interest, and the balance of all outstanding principal and accrued interest will become due on September 16, 2015.  As of September 30, 2013, United had an outstanding principal balance of $6.0 million on the line of credit.

The Loan Agreement contained customary affirmative and negative covenants and events of default.  Affirmative covenants include the maintenance of certain minimum capital ratios, a maximum net charge off to average loan ratio, a maximum non-performing loan to total assets ratio, a minimum return on average assets, a minimum return on average equity and a limit on the amount of dividends that the Company may pay to holders of common stock.

If return on average assets falls below a certain specified level, then the Company's quarterly dividend payment to common shareholders could not be increased and the payout ratio could not exceed 40%. Negative covenants include restrictions on additional indebtedness, and a covenant not to merge, acquire or consolidate with another entity without Chemical Bank's consent.  Events of default include payment defaults, false representations, insolvency and certain other events.

As security for its obligations under the Loan Agreement, the Company pledged to Chemical Bank all of the outstanding common stock of its subsidiary, United Bank & Trust.

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Disclosures About Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Disclosures About Fair Value of Assets and Liabilities

Note 8 – Disclosures About Fair Value of Assets and Liabilities

Fair Value Measurements. The Fair Value Measurements Topic of the FASB Accounting Standards Codification ("FASB ASC") defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC Topic 820-10-20 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 at the measurement date.

Topic 820-10-55 establishes a fair value hierarchy that emphasizes use of observable inputs and minimizes use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements were classified at September 30, 2013 and December 31, 2012, in thousands of dollars:

Thousands of dollars			Fair Value Measurements Using
September 30, 2013	Fair Value		Level 1		Level 2		Level 3
Available for sale securities:
U.S. Treasury and agency securities	$	25,767	$	-	$	25,767	$	-
Mortgage-backed agency securities		154,243		-		154,243		-
Obligations of states and political subdivisions		24,790		-		24,790		-
Equity securities		27		27		-		-
Hedged loan		7,257		-		7,257		-
Interest rate swap asset		120		-		120		-

December 31, 2012
Available for sale securities:
U.S. Treasury and agency securities	$	27,316	$	-	$	27,316	$	-
Mortgage-backed agency securities		160,499		-		160,499		-
Obligations of states and political subdivisions		18,286		-		18,286		-
Equity securities		28		28		-		-

Following is a description of the inputs and valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of those instruments under the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities include U.S. Government agency securities, mortgage-backed securities, obligations of states and municipalities, and certain corporate securities. Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities, but rather, relying on the investment securities' relationship to other benchmark quoted investment securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company has no Level 3 securities.

Interest Rate Swaps (Derivatives)

The fair value of interest rate swaps is based on valuation models using observable market data as of the measurement date (Level 2). Additional information is included in Note 9 – Derivative Instruments of the Notes to Consolidated Condensed Financial Statements of this Form 10-Q.

Transfers between Levels

There were no transfers between Levels 1, 2 and 3 in the quarter ended September 30, 2013 of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis.

Nonrecurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a non-recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at September 30, 2013 and December 31, 2012:

In thousands of dollars			Fair Value Measurements Using
Impaired Loans (Collateral Dependent):	Fair Value		Level 1		Level 2		Level 3
September 30, 2013	$	13,803	$	-	$	-	$	13,803
December 31, 2012		21,866		-		-		21,866

Significant Unobservable Inputs

The following is a discussion of the significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement. Those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

Impaired Loans (Collateral Dependent)

Loan balances which indicate that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Collateral-dependent loans are assigned an impairment rating using the Fair Value of the Collateral method, based on the current appraisals of loan collateral.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. The Company's practice is to obtain new or updated appraisals on the loans subject to the initial impairment review and then to generally update on an annual basis thereafter. The Company discounts the appraisal amount as necessary for selling costs and past due real estate taxes. If a new or updated appraisal is not available at the time of a loan's impairment review, the Company typically applies a discount to the value of an old appraisal to reflect the property's current estimated value if there is believed to be deterioration in either (i) the physical or economic aspects of the subject property or (ii) any market conditions. These discounts and estimates are developed by the Credit Department, and are reviewed by the Chief Credit Officer and the Chief Financial Officer. The impairment review results in an increase in the allowance for loan loss or in a partial charge-off of the loan, if warranted. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method based on current appraisals.

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements as of September 30, 2013 and December 31, 2012. For both periods, the valuation technique used is market comparable properties and unobservable inputs are based on marketability discount at the rates shown.

	Impaired loans (collateral dependent)
dollars in thousands	9/30/13				12/31/12
Fair value		$	13,803			$	21,866
Range			7.5%-49.5	%			7.5%-49.5	%
Weighted average			16.3	%			14.0	%

Fair Value of Financial Instruments

The carrying amounts and estimated fair value of principal financial assets and liabilities, in thousands of dollars, at September 30, 2013 and December 31, 2012, were as follows:

	September 30, 2013
	Carrying			Fair Value Measurements Using
	Amount			Level 1			Level 2			Level 3
Financial Assets
Cash and cash equivalents	$	31,781		$	31,781		$	-		$	-
Securities available for sale		204,827			27			204,800			-
FHLB Stock		2,691			-			2,691			-
Loans held for sale		8,388			-			8,388			-
Net portfolio loans		621,188			-			7,257			618,335
Accrued interest receivable		2,760			-			2,760			-
Interest rate swap asset		120			-			120			-
Financial Liabilities
Total deposits	$	(805,740	)	$	(160,225	)	$	(646,587	)	$	-
FHLB advances		(11,983	)		-			(12,595	)		-
Other borrowings		(6,000	)		-			(6,000	)		-
Accrued interest payable		(281	)		-			(281	)		-

	December 31, 2012
Financial Assets
Cash and cash equivalents	$	70,612		$	70,612	$	-		$	-
Securities available for sale		206,129			28		206,101			-
FHLB Stock		2,571			-		2,571			-
Loans held for sale		13,380			-		13,380			-
Net portfolio loans		564,135			-		-			574,137
Accrued interest receivable		2,620			-		2,620			-
Financial Liabilities
Total deposits	$	(784,643	)	$	-	$	(787,015	)	$	-
FHLB advances		(21,999	)		-		(23,007	)		-
Accrued interest payable		(354	)		-		(354	)		-

Estimated fair values require subjective judgments and are approximate. The above estimates of fair value are not necessarily representative of amounts that could be realized in actual market transactions, or of the underlying value of the Company.

Changes in the following methodologies and assumptions could significantly affect the estimated fair value:

Cash and cash equivalents, FHLB stock, loans held for sale, accrued interest receivable and accrued interest payable – The carrying amounts are reasonable estimates of the fair values of these instruments at the respective balance sheet dates.

Net portfolio loans – The carrying amount is a reasonable estimate of fair value for personal loans for which rates adjust quarterly or more frequently, and for business and tax-exempt loans that are prime related and for which rates adjust immediately or quarterly. The fair value of all other loans is estimated by discounting future cash flows using current rates for loans with similar characteristics and maturities. The Bank's current loan rates are comparable with rates offered by other financial institutions. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns.

Total deposits – With the exception of certificates of deposit, the carrying value is deemed to be the fair value due to the demand nature of the deposits. The fair value of fixed maturity certificates of deposit is estimated by discounting future cash flows using the current rates paid on certificates of deposit with similar maturities. The Bank's current deposit rates are comparable with rates offered by other financial institutions.

FHLB advances – The fair value is estimated by discounting future cash flows using current rates on advances with similar maturities.

Other borrowings – The fair value is estimated by discounting future cash flows using current rates on borrowings with similar maturities.

Off-balance-sheet financial instruments – Commitments to extend credit, standby letters of credit and undisbursed loans are deemed to have no material fair value as such commitments are generally fulfilled at current market rates.

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Loans (Tables)

9 Months Ended

Sep. 30, 2013

Loans [Abstract]

Loans categories and percentage composition of portfolio

The following table shows the balances of the various categories of loans of the Company, and the percentage composition of the portfolio by class at September 30, 2013 and December 31, 2012.

	September 30, 2013					December 31, 2012
In thousands of dollars	Balance		% of total			Balance		% of total
Commercial construction & land development	$	18,528		2.9	%	$	28,511		4.9	%
Owner-occupied commercial real estate loans		109,144		17.0	%		97,755		16.7	%
Other commercial real estate loans		140,686		21.9	%		113,370		19.3	%
Commercial & industrial loans		104,133		16.2	%		104,332		17.8	%
Residential mortgages		133,905		20.8	%		121,393		20.6	%
Consumer construction		13,709		2.1	%		12,123		2.1	%
Home equity loans		79,898		12.4	%		72,983		12.4	%
Other consumer loans		38,797		6.0	%		33,969		5.8	%
Deferred loan fees and costs, overdrafts, in-process accounts		4,351		0.7	%		2,242		0.4	%
Total portfolio loans	$	643,151		100.0	%	$	586,678		100.0	%

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Preferred Stock Redemption

9 Months Ended

Sep. 30, 2013

Preferred Stock Redemption [Abstract]

Preferred Stock Redemption [Text Block]

Note 11 – Preferred Stock Redemption

On September 30, 2013, the Company completed the redemption of 10,300 shares, or 50%, of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, Liquidation Preference Amount $1,000 per share ("Preferred Stock") that were originally issued to the United States Department of the Treasury ("U.S. Treasury") under the Troubled Asset Relief Program Capital Purchase Program.  U.S. Treasury sold all 20,600 shares of Preferred Stock to private investors in June 2012.  Following completion of the partial redemption, 10,300 shares of Preferred Stock remain outstanding.

The redemption price for the shares of Preferred Stock was the stated liquidation preference amount of $1,000 per share, plus any accrued and unpaid dividends to but excluding September 30, 2013.  The total cost of the partial redemption of shares of Preferred Stock was approximately $10.4 million, which was funded with a combination of excess cash at the holding company, a dividend to the holding company of retained earnings by the Bank, and the borrowing of $6.0 million under the Company's $10.0 million revolving line of credit.

Following completion of the partial redemption of shares of Preferred Stock, the capital ratios of the Company and the Bank continue to exceed regulatory standards to be categorized as well-capitalized.  In addition, the Bank's Tier 1 capital ratio continues to exceed the 8.5% level required by resolution of the Bank's Board of Directors.  The Bank's Tier 1 leverage ratio was 9.72% at September 30, 2013, after payment of a $3.0 million dividend to the Company in the third quarter of 2013.

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Document and Entity Information (USD $)	9 Months Ended
	Sep. 30, 2013	Oct. 25, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	UNITED BANCORP INC /MI/
Entity Central Index Key	0000775345
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 41,811,000
Entity Common Stock, Shares Outstanding		12,715,490
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013

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Securities (Tables)

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Available for sale securities by category

Balances of securities by category are shown below at September 30, 2013 and December 31, 2012. All securities are classified as available for sale.

At September 30, 2013, in thousands of dollars	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Treasury and agency securities	$	26,556	$	34	$	(823	)	$	25,767
Mortgage-backed agency securities		154,205		1,407		(1,369	)		154,243
Obligations of states and political subdivisions		24,664		468		(342	)		24,790
Equity securities		26		1		-			27
Total	$	205,451	$	1,910	$	(2,534	)	$	204,827
At December 31, 2012, in thousands of dollars
U.S. Treasury and agency securities	$	27,200	$	130	$	(14	)	$	27,316
Mortgage-backed agency securities		158,829		2,324		(654	)		160,499
Obligations of states and political subdivisions		17,551		740		(5	)		18,286
Equity securities		26		2		-			28
Total	$	203,606	$	3,196	$	(673	)	$	206,129

Fair value and gross unrealized losses of entity's investments

The following tables show fair value and the gross unrealized losses of the Company's investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012.

At September 30, 2013	Less than 12 Months					12 Months or Longer					Total
In thousands of dollars	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. Treasury and agency securities	$	18,643	$	(823	)	$	-	$	-		$	18,643	$	(823	)
Mortgage-backed agency securities		84,078		(1,305	)		3,084		(64	)		87,162		(1,369	)
Obligations of states and political subdivisions		8,535		(342	)		-		-			8,535		(342	)
Total	$	111,256	$	(2,470	)	$	3,084	$	(64	)	$	114,340	$	(2,534	)
At December 31, 2012
In thousands of dollars
U.S. Treasury and agency securities	$	4,131	$	(14	)	$	-	$	-		$	4,131	$	(14	)
Mortgage-backed agency securities		54,538		(639	)		1,309		(15	)		55,847		(654	)
Obligations of states and political subdivisions		941		(5	)		-		-			941		(5	)
Total	$	59,610	$	(658	)	$	1,309	$	(15	)	$	60,919	$	(673	)

Sales of available for sale securities

Sales activity for securities for the three and nine month periods ended September 30, 2013 and 2012 is shown in the following table. All sales were of securities identified as available for sale.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In thousands of dollars	2013		2012		2013			2012
Sales proceeds	$	-	$	-	$	11,752		$	2,847
Gross gains on sales		-		-		136			30
Gross loss on sales		-		-		(97	)		(26	)
Gross gains on calls		1		-		1			-

Fair value and amortized cost of securities available for sale by contractual maturity

The amortized cost and fair value of securities available for sale by contractual maturity as of September 30, 2013 is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized
In thousands of dollars	Cost		Fair Value
Due in one year or less	$	16,821	$	16,892
Due after one year through five years		28,480		28,006
Due after five years through ten years		5,919		5,659
Due after ten years		-		-
Mortgage-backed agency securities		154,205		154,243
Equity securities		26		27
Total securities	$	205,451	$	204,827