10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

(Mark One)

_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009 OR

___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO _____________

UNITED BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

0-25976

Commission File Number

Pennsylvania	23-2802415
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

30 S. 15thStreet, Suite 1200, Philadelphia, PA	19102
(Address of principal executive office)	(Zip Code)

(215) 351-4600

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether 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 twelve months (or such shorter period that the registrant was required to filed such reports), and (2) has been subject to such filing requirements for the past 90 day. Yes _X_ No____

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

Large accelerated filer___ Accelerated filer___ Non-accelerated filer_X_ Smaller Reporting Company ___

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

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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _____ No _____  Not Applicable.

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

United Bancshares, Inc. (sometimes herein also referred to as the “Company” or “UBS”) has two classes of capital stock authorized - 2,000,000 shares of $.01 par value Common Stock and a Series Preferred Stock.

The Board of Directors designated a subclass of the common stock, Class B Common Stock, by filing of Articles of Amendment to its Articles of Incorporation on September 30, 1998.  This Class B Common Stock has all of the rights and privileges of Common Stock with the exception of voting rights.  Of the 2,000,000 shares of authorized Common Stock, 250,000 have been designated Class B Common Stock.  There is no market for the Common Stock.  As of May 5, 2009, the aggregate number of the shares of the Registrant’s Common Stock issued was 1,068,588 (including 191,667 Class B non-voting).  There are 33,500 shares of Common Stock held in treasury stock at May 5, 2009.

The Series Preferred Stock consists of 500,000 authorized shares of stock of which 250,000 have been designated as Series A Preferred stock of which 111,842 shares are issued and outstanding and 31,308 shares are held in treasury stock as of May 5, 2009.

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FORM 10-Q

Index

Item No. Page

PART I-FINANCIAL INFORMATION

1.	Financial Statements	4
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
3.	Quantitative and Qualitative Disclosures about Market Risk	21
4T.	Controls and Procedures	22
PART II-OTHER INFORMATION
1.	Legal Proceedings	22
1A.	Risk Factors	22
2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
3.	Defaults upon Senior Securities	23
4.	Submission of Matters to a Vote of Security Holders	23
5.	Other Information	23
6.	Exhibits	24

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Item1. Consolidated Balance Sheets (unaudited)

	March 31,			December 31,
	2009			2008
Assets
Cash and due from banks	$	2,207,800		$	2,449,181
Interest bearing deposits with banks		298,059			296,290
Federal funds sold		3,659,000			2,726,000
Cash & cash equivalents		6,164,859			5,471,471
Investment securities:
Held-to-maturity, at amortized cost (fair value of $10,254,611.		10,128,134			9,896,965
and $10,016,314 at March 31, 2009 and December 31, 2008, respectively)
Available-for-sale, at fair value		2,596,253			2,665,151
Loans , net of unearned discount		48,773,971			48,663,437
Less: allowance for loan losses		(612,150	)		(586,673	)
Net loans		48,161,821			48,076,764
Bank premises & equipment, net		1,547,794			1,622,314
Accrued interest receivable		462,883			421,132
Core deposit intangible		803,526			848,046
Prepaid expenses and other assets		413,691			433,369
Total Assets	$	70,278,961		$	69,435,212
Liabilities & Shareholders' Equity
Demand deposits, non-interest bearing	$	13,823,219		$	11,844,242
Demand deposits, interest bearing		11,224,062			11,290,173
Savings deposits		16,428,826			16,667,815
Time deposits, $100,000 and over		11,925,021			12,356,187
Time deposits		8,568,427			8,745,854
		61,969,555			60,904,271
Accrued interest payable		92,750			126,794
Accrued expenses and other liabilities		284,906			354,401
Total Liabilities		62,347,211			61,385,466
Commitments and Contingencies (Note 1)
Shareholders' equity:
Preferred Stock, Series A, 6%, $.01 par value,		1,368			1,368
500,000 shares authorized, 136,842 issued
Common stock, $.01 par value; 2,000,000 shares authorized;
876,921 shares issued		8,769			8,769
Class B Non-voting common stock; 250,000 shares authorized; $0.01 par value;
191,667 shares issued and outstanding		1,917			1,917
Treasury Stock, 33,500 common shares and 6,308 preferred shares, at cost
Additional-paid-in-capital		14,749,852			14,749,852
Accumulated deficit		(6,872,821	)		(6,735,664	)
Accumulated other comprehensive income		42,667			23,506
Total Shareholders' equity		7,931,750			8,049,746
	$	70,278,961		$	69,435,212

See Accompanying Notes to Consolidated Financial Statements which are an integral part of the unaudited consolidated financial statements.

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Consolidated Statements of Operations—(unaudited)

	Quarter ended			Quarter ended
	March 31,			March 31,
	2009			2008
Interest Income:
Interest and fees on loans		768,500			816,873
Interest on investment securities		148,225			149,045
Interest on Federal Funds sold		2,346			72,953
Interest on time deposits with other banks		1,774			1,920
Total interest income		920,845			1,040,791
Interest Expense:
Interest on time deposits		110,169			164,510
Interest on demand deposits		26,820			38,968
Interest on savings deposits		11,795			41,004
Total interest expense		148,784			244,482
Net interest income		772,061			796,309
Provision for loan losses		30,000			0
Net interest income less provision for
loan losses		742,061			796,309
Noninterest income:
Customer service fees		115,521			149,880
ATM activity fees		112,662			106,009
Loan syndication fees		30,000			30,000
Other income		17,721			21,914
Total noninterest income		275,904			307,803
Non-interest expense
Salaries, wages, and employee benefits		380,129			416,029
Occupancy and equipment		282,864			281,267
Office operations and supplies		70,636			86,451
Marketing and public relations		33,306			21,830
Professional services		59,809			44,114
Data processing		143,934			124,242
Deposit insurance assessments		10,000			39,193
Other noninterest expense		174,444			158,533
Total non-interest expense		1,155,122			1,171,659
Loss before taxes	$	(137,157	)	$	(67,547	)
Provision for income taxes		-			-
Net loss	$	(137,157	)	$	(67,547	)
Loss per share-basic	$	(0.13	)	$	(0.06	)
Loss per share-diluted	$	(0.13	)	$	(0.06	)
Weighted average number of shares		1,065,088			1,065,088
Total comprehensive loss	$	(117,996	)	$	(37,080	)

See Accompanying Notes to Consolidated Financial Statements which are an integral part of the unaudited consolidated financial statements.

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Consolidated Statements of Cash Flows--(unaudited)

	Three Months			Three Months
	March 31,			March 31,
	2009			2008
Cash flows from operating activities
Net loss		(137,157	)		(67,547	)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision for loan losses		30,000			0
Depreciation and amortization		141,870			114,771
(Increase) decrease in accrued interest receivable and other assets		(22,073	)		39,801
(Decrease) increase in accrued interest payable and other liabilites		(103,539	)		184,502
Net cash provided by (used in) operating activities		(90,900	)		271,527
Cash flows from investing activities
Purchase of investments-Available-for-Sale		0			0
Purchase of investments-Held-to-Maturity		(3,650,320	)		(1,498,528	)
Proceeds from maturity & principal reductions of investments-Available-for-Sale		87,002			151,542
Proceeds from maturity & principal reductions of investments-Held-to-Maturity		3,414,175			4,222,951
Net increase in loans		(115,057	)		(2,292,283	)
Purchase of premises and equipment		(16,795	)		(363,726	)
Net cash provided by (used in) investing activities		(280,996	)		219,956
Cash flows from financing activities
Net increase (decrease) in deposits		1,065,284			(3,034,986	)
Net cash provided by (used in) financing activities		1,065,284			(3,034,986	)
Increase (decrease) in cash and cash equivalents		693,388			(2,543,503	)
Cash and cash equivalents at beginning of period		5,471,471			13,920,006
Cash and cash equivalents at end of period		6,164,859			11,376,503
Supplemental disclosures of cash flow information
Cash paid during the period for interest		114,740			261,510

See Accompanying Notes to Consolidated Financial Statements which are an integral part of the unaudited consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(unaudited)

1. General

United Bancshares, Inc. (the "Company") is a bank holding company registered under the Bank Holding Company Act of 1956.  The Company's principal activity is the ownership and management of its wholly owned subsidiary, United Bank of Philadelphia (the "Bank").

During interim periods, the Company follows the accounting policies set forth in its Annual Report on Form 10-K filed with the Securities and Exchange Commission.  Readers are encouraged to refer to the Company's Form 10-K for the fiscal year ended December 31, 2008 when reviewing this Form 10-Q.  Quarterly results reported herein are not necessarily indicative of results to be expected for other quarters.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company's consolidated financial position as of March 31, 2009 and December 31, 2008 and the consolidated results of its operations for the three month periods ended March 31, 2009 and 2008, and its consolidated cash flows for the three months ended March 31, 2009 and 2008.

Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates.

Commitments

In the general course of business, there are various outstanding commitments to extend credit, such as letters of credit and un-advanced loan commitments, which are not reflected in the accompanying financial statements. Management does not anticipate any material losses as a result of these commitments.

Contingencies

The Company is from time to time a party to routine litigation in the normal course of its business. Management does not believe that the resolution of this litigation will have a material adverse effect on the financial condition or results of operations of the Company. However, the ultimate outcome of any such litigation, as with litigation generally, is inherently uncertain and it is possible that some litigation matters may be resolved adversely to the Company.

2.  Comprehensive Loss

Total comprehensive loss includes net loss and other comprehensive income or loss that is comprised of unrealized gains and losses on investment securities available for sale, net of taxes.  The Company’s total comprehensive loss for the three months ended March 31, 2009 and 2008 was $(117,996) and $(37,080), respectively. The difference between the Company’s net loss and total comprehensive income for these periods relates to the change in net unrealized gains and losses on investment securities available for sale during the applicable period of time.

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3. Net Loss Per Share

 The calculation of net loss per share follows:

	Three Months Ended March 31, 2009	Three Months Ended March 31, 2008
Basic:
Net loss available to common shareholders	$(137,157)	$(67,547)
Average common shares outstanding-basic	1,065,088	1,065,088
Net loss per share-basic	($0.13)	$(0.06)
Fully Diluted:
Average common shares-fully diluted	1,065,088	1,065,088
Net loss per share-fully diluted	($0.13)	$(0.06)

The preferred stock is non cumulative and the Company is restricted from paying dividends.  Therefore, no effect of the preferred stock is included in the loss per share calculations.

4.   New Accounting Pronouncements

On April 9, 2009 the Financial Accounting Standards Board (FASB) issued three amendments to the fair value measurement, disclosure and other-than-temporary impairment standards that will become effective for the Company in quarter ending June 30, 2009.  These amendments are described below.  Adoption of the FSPs is not expected to have a material impact on the Company’s financial condition, statement of operations and statement of cash flows.

FASB Staff Position (FSP) No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly FSP FAS 157-4 provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability.  When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with Financial Accounting Standard (FAS) No. 157. This FSP clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly.  In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. The FSP provides a list of circumstances that may indicate that a transaction is not orderly.   A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.  Adoption of this FSP will not have a material impact on the Company’s financial statements.

FSP No. FAS 115-2 and FAS 124-2 Recognition and Presentation of Other-Than-Temporary Impairments (OTTI)FSP FAS 115-2 and FAS 124-2 clarifies the interaction of the factors that should be considered when determining

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whether a debt security is other-than-temporarily impaired.  For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are done before assessing whether the entity will recover the cost basis of the investment.  Previously, this assessment required management to assert it has both the intent and the ability to hold a security for a period of time sufficient to allow for an anticipated recovery in fair value to avoid recognizing an other-than-temporary impairment. This change does not affect the need to forecast recovery of the value of the security through either cash flows or market price.In instances when a determination is made that an other-than-temporary impairment exists but the investor does not intend to sell the debt security or it is not more likely than not that it will not be required to sell the debt security prior to its anticipated recovery, FSP FAS 115-2 and FAS 124-2 changes the presentation and amount of the other-than-temporary impairment recognized in the income statement.  The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings.  The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

FSP No. FAS 107-1 and APB 28-1, Interim Fair Value DisclosuresFSP FAS 107-1 and APB 28-1 amends FAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods.

5.  Fair Value Measurement

FAS No. 157, Fair Value Measurement, provides a framework for measuring fair value under generally accepted accounting principles.  SFAS 157 applies to all financial instruments that are being measured and reported on a fair value basis, with the exception of nonfinancial assets and nonfinancial liabilities that are recognized and disclosed at fair value on a nonrecurring basis for which fair value disclosures were delayed under FASB Staff Position (FSP) No. 157-2 “Effective date of FASB Statement No. 157” to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years.  The Company had no non-financial assets and liabilities recorded at fair value on a non-recurring basis that required disclosure on March 31, 2009.

SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  In determining fair value, the Company uses various methods including market, income and cost approaches.  Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market corroborated, or generally unobservable inputs.  The Company utilizes techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  Based on the observable inputs used in valuation techniques the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Financial assets and liabilities carried at fair value will be classified and disclosed as follows:

Level 1

·   Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·   Generally, this includes debt and equity securities and derivative contracts that are traded in an active exchange market (i.e. New York Stock Exchange), as well as certain US Treasury and US Government and agency mortgage-backed securities and derivative contracts that are highly liquid and are actively traded in over-the-counter markets.

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Level 2

·   Quoted prices for similar assets or liabilities in active markets.

·   Quoted prices for identical or similar assets or liabilities in markets that are not active.

·   Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (e.g., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.”

·   Generally, this includes US Government and agency mortgage-backed securities, corporate debt securities, derivative contracts and loans held for sale.

Level 3 Inputs

·   Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities.

·   These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

These levels are not necessarily an indication of the risks or liquidity associated with these investments.  The following is a description of the valuation methodologies used for instruments measured at fair value:

Fair Value on a Recurring Basis

The table below presents the balances of assets and liabilities on the consolidated balance sheets at their fair value as of March 31, 2009 and December 31, 2008 by level within the SFAS No. 157 fair value measurement hierarchy.

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets/Liabilities Measured at Fair Value at March 31, 2009	Quoted Prices in Active markets for Identical Assets (Level 1)	Significant other observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets: Investment securities available-for-sale	$2,596		$2,596	-
(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets/Liabilities Measured at Fair Value at December 31, 2008	Quoted Prices in Active markets for Identical Assets (Level 1)	Significant other observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets: Investment securities available-for-sale	$2,665		$2,665	-

The fair value of available for sale securities is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1).  If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to the limited market activity of the instrument (Level 3).

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Fair Value on a Nonrecurring Basis

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).  The following table presents the assets and liabilities carried on the consolidated balance sheets by level within the SFAS No. 157 hierarchy as of March 31, 2009 and December 31, 2008, for which a nonrecurring change in fair value has been recorded during the three months ended March 31, 2009.

 Carrying Value at March 31, 2009:

(in 000’s)	Total	Quoted Prices in Active markets for Identical Assets (Level 1)	Significant other observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets: Impaired Loans	$ 2,498	-	-	$ 2,498

Carrying Value at December 31, 2008:

(in 000’s)	Total	Quoted Prices in Active markets for Identical Assets (Level 1)	Significant other observable Inputs (Level 2)	Significant Unobservable Inputs  (Level 3)
Assets: Impaired Loans	$ 2,531	-	-	$ 2,531

The fair value of impaired loans is derived in accordance with SFAS 114, Accounting by Creditors for Impairment of a Loan.  Fair value is determined at the fair value of the collateral if the loan is collateral dependent.  Collateral values are determined by appraisal, which may be discounted based upon management’s review and changes in market conditions.  The valuation allowance for impaired loans is included in the allowance for loan losses in the consolidated balance sheets.  The valuation allowance for impaired loans at March 31, 2009 was $97,000.   The valuation allowance for impaired loans at March 31, 2008 was $166,000.  There were no fair value losses for the three months ended March 31, 2009.

6. Critical Accounting Policies

Allowance for Loan Losses

The Bank considers that the determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies.   The balance in the allowance for loan losses is determined based on management's review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions, and other pertinent factors, including management's assumptions as to future delinquencies, recoveries and losses.   All of these factors may be susceptible to significant change.   To the extent actual outcomes differ from management’s estimates, additional provisions for loan losses may be required that would adversely impact earnings in future periods. The following table presents an analysis of the allowance for loan losses.

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(in 000’s)	Three months ended March 31, 2009	Three months ended March 31, 2008
Balance at January 1	$587	$590
Charge-offs:
Commercial loans	-	(25)
Consumer loans	(13)	(17)
Total charge-offs	(13)	(42)
Recoveries	10	112
Net recoveries(charge-offs)	(3)	70
Provision for loan losses	30	-
Balance at March 31	$612	$660

Nonperforming and Nonaccrual Loans

The Bank generally determines a loan to be "nonperforming" when interest or principal is past due 90 days or more.  If it otherwise appears doubtful that the loan will be repaid, management may consider the loan to be "nonperforming" before the lapse of 90 days.  The policy of the Bank is to charge-off unsecured loans after 90 days past due.  Interest on "nonperforming" loans ceases to accrue except for loans that are well collateralized and in the process of collection.  When a loan is placed on non-accrual, previously accrued and unpaid interest is generally reversed out of income unless adequate collateral from which to collect the principal and interest on the loan appears to be available and the loan is in the process of collection.

(Dollars in thousands)	March 31, 2009	December 31, 2008
Nonperforming loans:
Commercial	$1,447	$1,368
Consumer	126	115
Residential Real Estate	242	218
Total	$1,815	$1,701

At March 31, 2009, non-accrual loans totaled $1.8 million compared to $1.7 million at December 31, 2008. The increase is primarily related to the addition of one $85,000 commercial loan that was more than 90 days delinquent.  Non-accrual loans primarily include commercial loans with SBA guarantees or strong loan-to-value ratios that help to mitigate potential losses.  Management is actively working with these borrowers to develop suitable repayment plans.

Income Taxes

Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities.  Deferred tax assets are subject to management’s judgment based upon available evidence that future realization is more likely than not.   For financial reporting purposes, a valuation allowance of 100% of the net deferred tax asset has been recognized to offset the net deferred tax assets related to cumulative temporary differences and tax loss carryforwards.  If management determines that the Company may be able to realize all or part of the deferred tax asset in the future, an income tax benefit may be required to increase the recorded value of the net deferred tax asset to the expected realizable amount.

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

Special Cautionary Notice Regarding Forward-looking Statements

     Certain of the matters discussed in this document and the documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may constitute forward looking statements for the purposes of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended, and may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of United Bancshares, Inc (“UBS”) to be materially different from future results, performance or achievements expressed or implied by such forward looking statements.  The words “expect,” “anticipate,” “intended,” “plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to identify such forward-looking statements.  These forward looking statements include: (a) statements of

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goals, intentions and expectations; (b) statements regarding business prospects, asset quality, credit risk, reserve adequacy and liquidity.  UBS’ actual results may differ materially from the results anticipated by the forward-looking statements due to a variety of factors, including without limitation: (a) the effects of future economic conditions on UBS and its customers, including economic factors which affect consumer confidence in the securities markets, wealth creation, investment and consumer saving patterns; (b) UBS interest rate risk exposure and credit risk; (c) changes in the securities markets with respect to the market values of financial assets and the stability of particular securities markets; (d) governmental monetary and fiscal policies, as well as legislation and regulatory changes; (e) changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral and securities, as well as interest-rate risks; (f) changes in accounting requirements or interpretations; (g) the effects of competition from other commercial banks, thrifts, mortgage companies, consumer finance companies, credit unions securities brokerage firms, insurance company’s, money-market and mutual funds and other financial institutions operating in the UBS’ trade market area and elsewhere including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet; (h) any extraordinary events (such as the September 11, 2001 events) ,the war on terrorism and the U.S. Government’s response to those events or the U.S. Government becoming involved in a conflict in a foreign country including the war in Iraq; (i) the failure of assumptions underlying the establishment of reserves for loan losses and estimates in the value of collateral, and various financial assets and liabilities and technological changes being more difficult or expensive than anticipated; (j) UBS’ success in generating new business in its existing markets, as well as its success in identifying and penetrating targeted markets and generating a profit in those markets in a reasonable time; (k) UBS’ timely development of competitive new products and services in a changing environment and the acceptance of such products and services by its customers; and (l) UBS’ success in managing the risks involved in the foregoing.

All written or oral forward-looking statements attributed to UBS are expressly qualified in their entirety by use of the foregoing cautionary statements.  All forward-looking statements included in this Report are based upon information presently available, and UBS assumes no obligation to update any forward-looking statement.

Overview

The Bank incurred a net loss of $137 thousand ($0.13 per common share) for the quarter ended March 31, 2009 compared to a net loss of $68 thousand ($0.06 per common share) for the quarter ended March 31, 2008.  The increased loss in 2009 is related to provisions for loan losses, a lower level of customer service fees and a reduction in net interest income stemming from a higher level of non-accrual loans and a reduction in earning assets.

Management believes that core profitability of the Bank is directly linked to two critical factors:

The ability to manage and control asset quality to minimize credit losses.  The Bank’s level of noncurrent loans is trending upward.  Proactive collection strategies have been implemented to control delinquencies and reverse the negative trend.  Noncurrent loans are primarily concentrated in the commercial loan portfolio. To avoid further deterioration in credit quality, management will convene frequent asset quality meetings to identify and proactively manage identified risks before they become severe problems.  Also, loans will be underwritten to ensure that they meet the Bank’s tightened risk tolerance standards.

The ability to achieve core deposit growth.Deposit growth remains one of management’s primary challenges.  This challenge is compounded by the current low interest rate environment and the current regulatory environment.  Management intends to capitalize on “the movement back to community banking”, increased FDIC limits and its relationships with regional corporations, small businesses, service providers and the community to achieve deposit growth.

Selected Financial Data

The following table sets forth selected financial data for each of the following periods:

(Thousands of dollars, except per share data)	Quarter ended March 31, 2009	Quarter ended March 31, 2008
Net interest income	$772	$796
Provision for loan losses	30	-
Noninterest income	276	308
Noninterest expense	1,155	1,172
Net loss	(137)	(68)
Loss per share-basic and diluted	$(0.13)	$(0.06)

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Balance sheet totals:	March 31, 2009	December 31, 2008
Total assets	$70,279	$69,435
Loans, net	$48,162	$48,077
Investment securities	$12,724	$12,562
Deposits	$61,970	$60,904
Shareholders' equity	$7,932	$8,050
Ratios:	Quarter ended March 31, 2009	Quarter ended March 31, 2008
Loss on assets	(0.20%)	(0.09%)
Loss on equity	(1.73%)	(0.86%)

Financial Condition

Sources and Uses of Funds

The financial condition of the Bank can be evaluated in terms of trends in its sources and uses of funds.  The comparison of average balances in the following table indicates how the Bank has managed these elements.

Sources and Uses of Funds Trends

	March 31, 2009			December 31, 2008
(Thousands of Dollars, except percentages)	Average	Increase (Decrease)		Average
	Balance	Amount	%	Balance
Funding uses:
Loans	$48,830	$(696)	(1.41)%	$49,526
Investment securities
Held-to-maturity	9,971	561	5.96	9,410
Available-for-sale	2,589	(363)	(12.30)	2,952
Federal funds sold	3,067	283	10.17	2,784
Balances with other banks	297	2	0.68	295
Total  uses	$64,754	$( 213)	(0.33)%	$64,967
Funding sources:
Demand deposits
Noninterest-bearing	$12,815	$570	4.65%	$12,245
Interest-bearing	10,935	270	2.53	10,665
Savings deposits	16,473	(482)	(2.84)	16,955
Time deposits	20,895	(223)	(1.06)	21,118
Total sources	$61,118	$ 135	0.22%	$60,983

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Loans

Average loans declined $696,000, or 1.41%, during the quarter ended March 31, 2009 as a result of a reduction in loan origination activity coupled with payoffs/paydowns in the commercial loan portfolio.  In the current recessionary economic environment, the Bank has further tightened its underwriting standards around real estate lending—particularly non-owner occupied financing.  Management has shifted its focus to traditional small business lending for which credit enhancements through the Small Business Administration or other loan guaranty programs may be available.  During the quarter ended March 31, 2009, the Bank aligned itself with “feeder” entities (i.e. Philadelphia Industrial Development Corporation, Department of Transportation, etc.) that have loan guaranty programs.

The Bank’s loan portfolio is concentrated in commercial loans that comprise $36.6 million, or 76%, of total loans at March 31, 2009. Approximately $17.3 million of these loans are secured by owner occupied commercial real estate that may serve to minimize the risk of loss. The Bank continues to have a strong niche in lending to religious organizations for which total loans at March 31, 2009 were $13.4 million, or 36.6%, of the commercial portfolio.   In light of the economic uncertainty and the potential “trickle down” effect that may impact the level of tithes and offerings that provide cash flow for repayment, management has heightened its monitoring of this concentration to proactively identify and manage credit risk.

Allowance for Loan Losses

The allowance for loan losses reflects management’s continuing evaluation of the loan portfolio, the diversification and size of the portfolio, and adequacy of collateral.  The allowance for loan losses as a percentage of total loans was 1.26% at March 31, 2009 compared to 1.21% at December 31, 2008. Provisions are made to the allowance for loan losses in accordance with a detailed periodic analysis.  This analysis includes specific reserves allocated to impaired loans based on underlying recovery values as well as a general reserve based on many qualitative factors including charge-off history, delinquency trends, loan terms, regulatory environment, economic conditions, concentrations of credit risk and other relevant data.

The level of impaired loans was the same at $2.5 million at March 31, 2009 and December 31, 2008 with associated specific reserves of $97,000. Loans to religious organizations represented $137,000 of total impaired loans. Loans deemed “impaired” are those for which borrowers are no longer able to pay in accordance with the terms of their loan agreements.  The Bank’s source of repayment is generally the net liquidation value of the underlying collateral.  The Bank is working with a collection attorney to assist with its recovery efforts on its impaired loans including forbearance agreements, foreclosure and other collection strategies.  Based on a recent evaluation, the risk related to these credits is mitigated by strong collateral positions in real estate or guarantees of the SBA.

Management uses all available information to recognize losses on loans; however, future additions may be necessary based on changes in economic conditions.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses.  Such agencies may require the Bank to recognize additions to the allowance basedon their judgments of information available to them at the time of the examination. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(Dollars in thousands)	March 31, 2009	December 31, 2008
Allowance for loan losses	$612	$587
Total Impaired Loans (includes non-accrual loans)	$2,498	$2,531
Total non-accrual loans	$1,815	$1,701
Allowance for loan losses as a percentage of:
Total Loans	1.26%	1.21%
Total  nonperforming loans	33.7%	34.5%
Net(charge-offs) recoveries as a percentage of average loans	0.01%	0.77%

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There is no other known information about possible credit problems other than those classified as nonaccrual and/or impaired that causes management to be uncertain as to the ability of any borrower to comply with present loan terms.

Investment Securities and Other Short-term Investments

Investment securities increased on average by $198,000, or 1.60%, during the quarter ended March 31, 2009 from the quarter ending December 31, 2008.  The yield on the investment portfolio declined to 4.46% at March 31, 2009 compared to 4.70% at December 31, 2008 as a result of the call of higher yielding agency securities during the quarter.  The duration of the portfolio remains relatively short at 1.3 years.At March 31, 2009, 54% of the investment portfolio consisted of callable agency securities for which the duration shortened as a result of a high level of projected call activity in the current low interest rate environment.  The remainder of the portfolio consists of government sponsored agency (GSA) mortgage-backed pass-through securities.  These securities do not have the same risk characteristics of pooled subprime mortgages for which many financial institutions have experienced valuation declines and losses.  The payments of principal and interest on these pools of GSA loans are guaranteed by these entities that bear the risk of default.  The Bank’s risk is prepayment risk when defaults accelerate the repayment activity.  These loans have longer-term con­tractual maturities but are sometimes paid off/down before maturity or have repricing characteristics that occur before final maturity.  Management’s goal is to maintain a portfolio with a short duration to allow for adequate cash flow to fund loan origination activity and to manage interest rate risk.

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Deposits

During the quarter ended March 31, 2009, average deposits increased $135,000, or 0.22%, from the quarter ending December 31, 2008.  The most significant increase was in the Bank’s average non-interest bearing checking accounts that increased by $570,000, or 4.65%.  Management has made a concerted effort to attract and retain core deposits from existing commercial loan customers.  Savings account balances for which the Bank once offered premium interest rates declined by $482,000, or 2.84%, during the quarter.  With increased competition in the region as well as declining interest rates, the Bank is no longer able to utilize rates to attract deposits.   Management will seek to distinguish the Bank as a community development bank through which corporations in the region can work to impact community.  Placing deposits in the Bank provides the necessary funds for small business loans that improve the financial capacity of these businesses and result in job creation.  Therefore, management will focus its marketing efforts on large corporations headquartered or doing business in the region to drive deposit growth.

Certificates of deposit declined on average by $223,000, or 1.06%, as a result of several customers who redeemed certificates to create additional liquidity. While the Bank has $11.9 million in certificates of deposit with balances of $100,000 or more, approximately $8 million, or 67%, of these deposits are with governmental or quasi-governmental entities that have a long history with the Bank and are considered stable. Based on discussions with these entities, no further reduction in certificates held is anticipated.

Commitments and Lines of Credit

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and letters of credit, which are conditional commitments issued by the Bank to guarantee the performance of an obligation of a customer to a third party. Commitments to extend credit fluctuate with the completion and conversion of construction lines of credit to permanent commercial mortgage loans and/or the closing of loans approved not funded from one period to another.

Many of the commitments are expected to expire without being drawn upon. The total commitment amounts do not necessarily represent future cash requirements.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Management believes the Bank has adequate liquidity to support the funding of unused commitments. The Bank's financial instrument commitments at March 31, 2009 are summarized below:

Commitments to extend credit $10,609,000

There are no outstanding letters of credit.

Liquidity and Interest Rate Sensitivity Management

The primary functions of asset/liability management are to assure adequate liquidity and maintain appropriate balance between interest-sensitive earning assets and interest-bearing liabilities.  Liquidity management involves the ability to meet cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs.  Interest rate sensitivity management seeks to avoid fluctuating net interest margins and to enhance consistent growth of net interest income through periods of changing interest rates.

The Bank's principal sources of asset liquidity include investment securities consisting principally of U.S. Government and agency issues, particularly those of shorter maturities, and mortgage-backed securities with monthly repayments of principal and interest.  Other types of assets such as federal funds sold, as well as maturing loans, are also sources of liquidity.  Approximately $10.2 million in loans are scheduled to mature within one year.

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By policy, the Bank’s minimum level of liquidity is 6.00% of total assets.  At March 31, 2009, the Bank had total short-term liquidity, including cash and federal funds sold, of $6.2 million, or 8.77%, of total assets compared to $5.5 million, or 7.88%, at December 31, 2008.  The increase in liquidity is the result of an increase in noninterest bearing demand deposits that fluctuate widely.  The portion of the Bank’s investment portfolio classified as available-for-sale could also provide liquidity. However, the majority of these securities are pledged as collateral for deposits of governmental/quasi-governmental agencies as well as the Discount Window at the Federal Reserve Bank.  Therefore, they are restricted from use to fund loans or to meet other liquidity requirements.  To ensure the ongoing adequacy of liquidity, the following strategies will be utilized in order of priority:

·   Seek additional non-public deposits from existing private sector customers

·   Sell participations of existing commercial credits to other financial institutions in the region

The Bank’s contingent funding sources  include the Discount Window at the Federal Reserve Bank for which it currently has $1.75 million in securities pledged that result in borrowing capacity of $1.5 million. This arrangement replaced a fully secured $2 million Federal Funds Purchased line of credit the Bank had with its correspondent bank.  Liquidity will continue to be closely monitored and managed to minimize risk and ensure that adequate funds are available to meet daily customer requirements and loan demand.

Capital Resources

During the three months ended March 31, 2009, total shareholders' equity declined approximately $118,000 compared to December 31, 2008 as a result of a net loss of $137,000 offset by other comprehensive income of $19,000 from unrealized gains on investment securities classified as available-for-sale. As reflected in the table below, the Company’s risk-based capital ratios are above the minimum regulatory requirements.  Effective on November 12, 2008, the date the regulatory order was removed (as more fully described in the 10-K), the Bank is deemed "well capitalized."  The Company and the Bank do not anticipate paying dividends in the near future because of regulatory imposed dividend restrictions.

The Company will seek to maintain the requisite minimum regulatory capital levels by internal capital generation (retained earnings) and by monitoring its asset growth.  In response to the financial crisis affecting the overall banking system and financial markets, on October 3, 2008, the Emergency Economic Stabilization Act of 2008 (“EESA”) was enacted.  On October 14, 2008 the United States Treasury and banking regulators announced in a joint statement the details of new government programs under EESA including the Trouble Asset Relief Program (“TARP”).   In November 2008, the Company submitted an application for TARP funds.  In May 2009, management withdrew the application because of the projected cost and the extensive and growing number of requirements and restrictions.  Management will seek additional capital through other US Treasury programs available to Community Development Financial Institutions (“CDFIs”) to support growth and to supplement and provide a “cushion” for unforeseen economic events that may negatively impact the Bank’s capital position.

	Company			Company
(thousands of dollars, except percentages)	March 31, 2009			December 31, 2008
Total Capital	$	7,932		$	8,050
Less: Intangible Assets and accumulated other comprehensive  gain (loss)		(847	)		(872	)
Tier 1 Capital		7,085			7,178
Tier 2 Capital		590			587
Total Qualifying Capital	$	7,675		$	7,765
Risk Adjusted Total Assets (including off-
Balance sheet exposures)	$	47,234		$	46,862
Tier 1 Risk-Based Capital Ratio		15.00	%		15.32	%
Tier 2 Risk-Based Capital Ratio		16.24	%		16.57	%
Leverage Ratio		10.13	%		10.27	%

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		Bank			Bank
Total Capital		$	7,748		$	7,861
Less: Intangible Assets and accumulated other comprehensive gain (loss)			(847	)		(872	)
Tier 1 Capital			6,901			6,989
Tier 2 Capital			590			587
Total Qualifying Capital			7,491		$	7,576
Risk Adjusted Total Assets (including off-
Balance sheet exposures)		$	47,234		$	46,862
Tier 1 Risk-Based Capital Ratio	(Minimum Ratio- 4.00%)		14.62	%		14.91	%
Tier 2 Risk-Based Capital Ratio	(Minimum Ratio- 8.00%)		15.87	%		16.17	%
Leverage Ratio	(Minimum Ratio- 4.00%)		9.99	%		10.00	%

Results of Operations

Summary

The Bank incurred a net loss of $137,000 ($0.13 per common share) for the quarter ended March 31, 2009 compared to a net loss of $68,000 ($0.06 per common share) for the quarter ended March 31, 2008.  A detailed explanation of each component of earnings is included in the sections below.

Net Interest Income

Average Balances, Rates, and Interest Income and Expense Summary

		Three  months ended March 31, 2009			Three  months ended March 31, 2008
(Dollars in thousands)	Average Balance	Interest	Yield/Rate	Average Balance	Interest	Yield/Rate
Assets:
Interest-earning assets:
Loans	$48,830	$769	6.30%	$45,698	$817	7.15%
Investment securities-HTM	9,971	118	4.73	8,949	105	4.69
Investments securities-AFS	2,589	30	4.63	3,278	44	5.37
Federal funds sold	3,067	2	0.26	8,968	73	3.26
Interest bearing balances with other banks	297	2	2.69	290	2	2.76
Total interest-earning assets	64,754	921	5.69	67,183	1,041	6.20
Interest-bearing liabilities
Demand deposits	10,935	27	0.99	10,788	39	1.45
Savings deposits	16,473	12	0.29	19,000	41	0.86
Time deposits	20,895	110	2.11	20,627	165	3.20
Total interest-bearing liabilities	48,303	149	1.23	50,415	245	1.94
Net interest earnings		$772			$796
Net yield on interest-earning assets			4.77%			4.74%

Net interest income decreased approximately $24,000, or 3.05%, for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008. The yield on earning assets for the quarter ended March 31, 2009 declined to 5.69% from 6.20% for the same three months in 2008 as a result of reductions in the prime lending and Federal Funds Sold rates during 2008. While the yield on earning assets decreased 51 basis points, the cost of interest-bearing liabilities declined 71 basis points as a result of rate reductions made on the Bank’s deposit products to follow market conditions. As a result, the Bank did not experience margin compression. The reduction in the Bank’s net interest income during the three months ended March 31, 2009 compared to 2008 is directly related to an increase in non-accrual loans and a $2.4 million reduction in earning assets. Management continues to focus on growing its core assets to increase net interest income.  In addition, rates on loan and deposit products will continue to be reviewed and modified to manage interest rate risk and minimize margin compression.

Provision for Loan Losses

Provisions for loan losses were $30,000 for the quarter ended March 31, 2009.  There were no provisions made for the same quarter in 2008.  The requirement for additional provisions was based on credit losses inherent in the loan portfolio and the review and analysis of the loan portfolio in accordance with the Bank’s Allowance for Loan Loss policies and procedures. (Refer to Allowance for Loan Losses above for discussion and analysis of credit quality.)

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Noninterest Income

The amount of the Bank's noninterest income generally reflects the volume of the transactional and other accounts handled by the Bank and includes such fees and charges as low balance account fees, overdrafts, account analysis, ATM fees and other customer service fees.  Noninterest income decreased approximately $32,000, or 10.36%, for the quarter for ending March 31, 2009, compared to the same quarter in 2008.

Customer service fees decreased by approximately $34,000, or 22.92%, for the quarter ended March 31, 2009, compared to 2008 primarily as a result of a decrease in overdraft fees on deposit accounts.

ATM fees increased approximately $7,000, or 6.28%, for the three months ended March 31, 2009, compared to 2008. In July 2008, management imposed a 50% increase in its surcharge fee that offset the reduction in volume and stabilized the overall profitability of the network.  Management continues to evaluate methods to reduce cost and increase revenues associated with its ATM network.

Noninterest Expense

Salaries and benefits decreased approximately $36,000, or 8.63%, for the three months ended March 31, 2009 compared to 2008. The decline is primarily related to an open Senior Lending Officer position that became vacant in March 2008.  A search is underway to fill this position.  Management continues to review the organizational structure to maximize efficiencies and increase business development activity.

Occupancy expense increased approximately $2,000, or 0.57%, for the three months ended March 31, 2009 compared to 2008.  The increase is primarily attributable to interior and exterior improvements that were completed at the Bank’s West Philadelphia branch in December 2008.  These leasehold improvements have resulted in increased depreciation expense.

Office operations and supplies expense decreased approximately $16,000, or 18.29%, for the three months ended March 31, 2009 compared to 2008.  The decrease primarily related to a reduction in courier expense as a result of the movement to a new courier service for currency and coin delivery and a streamlined delivery schedule.  Management continues to review all office operations expenses including supplies, storage, security, etc. to determine if additional expense reductions can be made.

Marketing and public relations expense increased approximately $12,000, or 52.57%, for the three months ended March 31, 2009 compared to 2008.  In February 2009, the Bank ran a series of television advertisements in conjunction with Black History Month to increase brand recognition and push the message “Back to Community Banking”.

Professional services expense increased approximately $16,000, or 35.58%, for the three months ended March 31, 2009 compared to 2008 as a result of an increase in accounting and audit fees.

Data processing expenses increased approximately $20,000, or 13.68% for the three months ended March 31, 2009 compared to 2008.  The increase relates to an annual increase of 6% by the Bank’s core service provider.  The increase is also related to the Bank’s ATM processing expense—specifically, net interchange expense.  More Bank customers are using non-proprietary ATMs for which the Bank is charged a fee versus non-customers using the Bank’s ATM network for which it receives a fee.

Federal deposit insurance assessments decreased approximately $29,000, or 74.49%, for the three months ended March 31, 2009 compared to 2008. Assessments are based on many factors including the Bank’s deposit size and composition and its current regulatory ratings.  The reduction in 2009 resulted from an improvement in the Bank’s regulatory rating in December 2008 as well as lower deposit levels.  In February 2009, the FDIC adopted new rules,

20

including a special assessment to stabilize the Deposit Insurance Fund that will result in higher assessment rates for the Bank in future quarters. Due to numerous factors, including financial ratios, that are used to determine the assessment, it is not currently estimable.

All other expenses are reflective of the general cost to do business and compete in the current regulatory environment and maintenance of adequate insurance coverage.

Dividend Restrictions

The Company has never declared or paid any cash or stock dividends.  The Pennsylvania Banking Code of 1965, as amended, provides that cash dividends may be declared and paid only from accumulated net earnings and that, prior to the declaration of any dividend, if the surplus of a bank is less than the amount of its capital, the bank shall, until surplus is equal to such amount, transfer to surplus an amount which is at least ten percent(10%) of the net earnings of the bank for the period since the end of the last fiscal year or any shorter period since the declaration of a dividend.  If the surplus of a bank is less than fifty percent (50%) of the amount of its capital, no dividend may be declared or paid by the Bank without the prior approval of the Pennsylvania Department of Banking.

Under the Federal Reserve Act, the Federal Reserve Board has the power to prohibit the payment of cash dividends by a bank holding company if it determines that such a payment would be an unsafe or unsound practice or constitutes a serious risk to the financial soundness or stability of the subsidiary bank.  As a result of these laws and regulations, the Bank, and therefore the Company, whose only source of income is dividends from the Bank, will be unable to pay any dividends while an accumulated deficit exists.  The Company does not anticipate that dividends will be paid for the foreseeable future.

The FDIC generally prohibits all payments of dividends by a bank that is in default of any assessment to the FDIC.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities.  Overnight federal funds on which rates change daily and loans which are tied to prime or other short term indices differ considerably from long-term investment securities and fixed-rate loans.  Similarly, time deposits are much more interest sensitive than passbook savings accounts.  The shorter-term interest rate sensitivities are critical to measuring the interest sensitivity gap, or excess earning assets over interest-bearing liabilities.  Management of interest sensitivity involves matching repricing dates of interest-earning assets with interest-bearing liabilities in a manner designed to optimize net interest income within the limits imposed by regulatory authorities, liquidity determinations and capital considerations.

At March 31, 2009, an asset sensitive position is maintained on a cumulative basis through 1 year of 4.09% that is within the Bank’s policy guidelines of +/- 15% on a cumulative 1-year basis. This position creates makes the Bank’s net interest income more susceptible to declining interest rates.  However, with rates at historical lows, there is not a high probability that rates will decline further.

While using the interest sensitivity gap analysis is a useful management tool as it considers the quantity of assets and liabilities subject to repricing in a given time period, it does not consider the relative sensitivity to market interest rate changes that are characteristic of various interest rate-sensitive assets and liabilities.  A simulation model is used to estimate the impact of various changes, both upward and downward, in market interest rates and volumes of assets and liabilities on the net income of the Bank.  This model produces an interest rate exposure report that forecasts changes in the market value of portfolio equity under alternative interest rate environments.  The market value of portfolio equity is defined as the present value of the Company’s existing assets, liabilities and off-balance-sheet instruments.  At March 31, 2009, the change in the market value of equity in a +200 basis point interest rate change is -26.4%--in excess of the Bank’s policy limit of 25%.  This result is largely caused by

21

decline in value of the Bank’s investment and loan portfolios in a rising rate environment.  Management will work to mitigate this risk by originating more variable rate loans and/or purchasing floating rate mortgage-backed securities. However, based on these models, with the exception of the market value measure, interest-rate exposure is not considered significant and is within the policy limits of the Bank on all other measures at March 31, 2009.

Item 4T.  Controls and Procedures

As of the end of the period covered by the report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, Evelyn F. Smalls, and Chief Financial Officer, Brenda M. Hudson-Nelson, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e).  Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic Securities and Exchange Commission filings.

As of the date of this report, there have not been any changes in the Company’s internal controls over financial reporting that have materially affected or are reasonably likely to materially affect its internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have not been any material changes to the risk factors disclosed in the Company’s 2008 Annual Report on Form 10-K except as follows:

Changes in the economy could have an adverse effect on the Company

Poor economic conditions continue to create historic levels of financial institution failures and increased unemployment rates.  The business and earnings of the Bank are directly affected by general conditions in the U.S. and in particular, economic conditions in the Philadelphia region.  These conditions include legislative and regulatory changes, inflation, and changes in government and monetary and fiscal policies, all of which are beyond the Bank’s control.  Further downturn in the economy could result in a decrease in demand for the Bank’s products and services, an increase in loan delinquencies and increases in problem assets.  Real estate pledged as collateral for loans made by the Bank may decline in value, reducing the value of assets and collateral associated with the Bank’s existing loans.  These factors could result in an increase in the provision for loan losses and decline in the Bank’s and Company’s net income

Liquidity risk

The ability to increase deposits to fund asset growth represents a potential liquidity risk. The Company may need to reduce earning asset growth through the reduction of current production, sale of assets and/or the sale of participations interests in future and current loans.  This could reduce  net income of the Company in the future.

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

 None

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Item 3.  Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

None

Item 5.  Other Information.

None

Item 6. Exhibits.

a)           Exhibits.

Exhibit 31.1 Certification of the Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a)

Exhibit 31.2 Certification of the Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a)

Exhibit 32.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signatures

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

	UNITED BANCSHARES, INC.
Date: May 15, 2009	/s/ Evelyn F. Smalls
	Evelyn F. Smalls
	President & Chief Executive Officer
Date: May 15, 2009	/s/ Brenda M. Hudson-Nelson
	Brenda Hudson-Nelson
	Executive Vice President/Chief Financial Officer

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Index to Exhibits-FORM 10-Q

Exhibit 31.1	Certification of the Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 31.2	Certification of the Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

24

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Evelyn F. Smalls, Chief Executive Officer, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of United Bancshares, Inc.;

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

3.           Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.           The registrant’s other certifying officers and I am 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 Rule 13a-15(f) and 15d-15(f) for the registrant and we 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, (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(s) 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 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/ Evelyn F. Smalls

Evelyn F. Smalls

Chief Executive Officer

May 15, 2009

25

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Brenda M. Hudson-Nelson, Chief Financial Officer, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of United Bancshares, Inc.;

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

3.           Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.           The registrant’s other certifying officers 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 Rule 13a-15(f) and 15d-15(f) for the registrant and we 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, (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(s) 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 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/ Brenda M. Hudson-Nelson

Brenda M. Hudson-Nelson

Chief Financial Officer

May 15, 2009

26

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of United Bancshares, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Evelyn F. Smalls, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. '1350, as adopted pursuant to '906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(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 result of operations of the Company.

/s/ Evelyn F. Smalls

Evelyn F. Smalls

Chief Executive Officer

May 15, 2009

27

EX-32.2

 

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of United Bancshares, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brenda M. Hudson-Nelson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. '1350, as adopted pursuant to '906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(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 result of operations of the Company.

/s/ Brenda M. Hudson-Nelson

Brenda M. Hudson-Nelson

Chief Financial Officer

May 15, 2009

28