8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

January 31, 2012

Date of Report (Date of earliest event reported)

UNITED BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania (State or other jurisdiction of incorporation) 0-25976 (Commission File Number) 23-2802415 (IRS Employer Ident. No.)

30 S. 15th Street, Suite 1200, Philadelphia, PA 19102

(Address of principal executive offices) (Zip Code)

(215) 351-4600

Registrant’s telephone number, including area code

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Item 1.01 Entry into a Material Definitive Agreement.

On January 31, 2012, United Bank of Philadelphia (the “Bank”), a wholly-owned subsidiary of United Bancshares, Inc. (the “Company”), agreed to enter into a Stipulation and Consent to the Issuance of a Consent Order with each of the Federal Deposit Insurance Corporation (“FDIC”) and the Commonwealth of Pennsylvania Department of Banking (“Department”).

The material terms of the orders are identical and require the Bank to:

·   increase participation of the Bank’s board of directors in the Bank’s affairs by having the board assume full responsibility for approving the Bank’s policies and objectives and for supervising the Bank’s management;

·   have and retain qualified management, and notify the FDIC and the Department of any changes in the Bank’s board of directors or senior executive officers;

·   retain a bank consultant acceptable to the FDIC and the Department to develop a written analysis and assessment of the Bank’s management needs and thereafter formulate a written management plan;

·   formulate and implement written profit and budget plans for each year during which the orders are in effect;

·   develop and implement a strategic plan for each year during which the orders are in effect, to be revised annually;

·   develop a written capital plan detailing the manner in which the Bank will meet and maintain a ratio of Tier 1 capital to total assets (“leverage ratio”) of at least 8.5% and a ratio of qualifying total capital to risk-weighted assets (total risk-based capital ratio) of at least 12.5%. The orders do not specify a time limit by which these ratios must be attained.  On December 31, 2010, the Bank’s leverage ratio and total risk-based capital ratio were 6.27% and 12.41%, respectively;

·   formulate a written plan to reduce the Bank’s risk positions in each asset or loan in excess of $100,000 classified as “Doubtful” or “Substandard” at its current regulatory examination;

·   eliminate all assets classified as “Loss” at its current regulatory examination;

·   revise the Bank’s loan policy to establish and monitor procedures for adherence to the loan policy and to eliminate credit administration and underwriting deficiencies identified at its current regulatory examination;

·   develop a comprehensive policy and methodology for determining the allowance for loan and lease losses;

·   develop an interest rate risk policy and procedures to identify, measure, monitor and control the nature and amount of interest rate risk the Bank takes;

·   revise its liquidity and funds management policy and update and review the policy annually;

·   refrain from accepting any brokered deposits;

·   refrain from paying cash dividends without prior approval of the FDIC and the Department;

·   establish an oversight committee of the board of directors of the Bank with the responsibility to ensure the Bank’s compliance with the orders, and

·   prepare and submit quarterly reports to the FDIC and the Department detailing the actions taken to secure compliance with the orders.

The orders will remain in effect until modified or terminated by the FDIC and the Department.

Management believes that compliance with the terms of the orders will strengthen the financial condition of the Bank.  Management is cooperating with representatives of the FDIC and the Department.

The foregoing description of the orders and the stipulation and consents does not purport to be complete and is qualified in its entirety by reference to the complete copies of the documents attached hereto as Exhibits 10.1 through 10.4, and are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

10.1	FDIC Stipulation and Consent to the Issuance of a Consent Order.
10.2	FDIC Consent Order.
10.3	Pennsylvania Department of Banking Stipulation and Consent to Entry of Order.

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 hereunto duly authorized.

	UNITED BANCSHARES, INC.
Dated:     February 6, 2012
	By:                 /s/ Evelyn F. Smalls
	Evelyn F. Smalls
	President and Chief Executive Officer

EX-10.1

Exhibit 10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

)

	)
In the Matter of	)	STIPULATION AND CONSENT
	)	TO THE ISSUANCE OF
UNITED BANK OF PHILADELPHIA	)	A CONSENT ORDER
PHILADELPHIA, PENNSYLVANIA	)
	)	FDIC-11-695b
(INSURED STATE NONMEMBER BANK)	)
	)

Subject to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("CONSENT AGREEMENT") by the Federal Deposit Insurance Corporation ("FDIC"), it is hereby stipulated and agreed by and between a representative of the Legal Division of the FDIC and UNITED BANK OF PHILADELPHIA, PHILADELPHIA, PENNSYLVANIA ("Bank"), as follows:

1.           The Bank has been advised of its right to receive a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking practices alleged to have been committed by the Bank and of its right to a hearing on the alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1), and has waived those rights.

2.           The Bank, solely for the purpose of this proceeding and without admitting or denying any of the alleged charges of unsafe or unsound banking practices, hereby consents and agrees to the issuance of a CONSENT ORDER ("ORDER") by the FDIC. The Bank further stipulates and agrees that such ORDER shall be deemed to be a final ORDER and that such ORDER shall become effective upon the issuance by the FDIC and fully enforceable by the FDIC pursuant to the provisions of section 8(i)(1) of the Act, 12 U.S.C. § 1818(i)(1), subject only to the conditions set forth in paragraph 3 of this CONSENT AGREEMENT.

3.           In the event the FDIC accepts this CONSENT AGREEMENT and issues the ORDER, it is agreed that no action to enforce such ORDER in the United States District Court will be taken by the FDIC unless the Bank or any director, officer, employee, agent, successor or assignee, or other institution-affiliated party, has violated or is about to violate any provision of the ORDER.

4.           The Bank hereby waives:

(a) the receipt of a NOTICE OF CHARGES AND OF HEARING;

(b)  all defenses in this proceeding;

(c)  a hearing for the purpose of taking evidence on such alleged charges;

(d) the filing of PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW;

(e) the issuance of a RECOMMENDED DECISION BY an Administrative Law Judge;

(f) the filing of exceptions and briefs with respect to such recommended decision; and

(g) judicial review of the ORDER as provided by section 8(h) of the Act, 12 U.S.C. § 1818(h), or any other challenge to the validity of the ORDER.

Dated January 31, 2012

FDIC

LEGAL DIVISION

BY:	By:	UNITED BANK OF PHILADELPHIA
		PHILADELPHIA, PENNSYLVANIA
/s/ Ramona J. Nicholson	/s/ Dr. Bernard E Anderson
Ramona J. Nicholson	Dr. Bernard E Anderson
Senior Attorney
	/s/ David R. Bright
	David R. Bright
	/s/ Joseph T. Dreman
	Joseph T. Dreman

/s/ L. Armstead Edwards

L. Armstead Edwards

/s/ Maurice R. Mitts

Maurice R. Mitts

/s/ Reverand William B. Moore

Reverand William B. Moore

/s/ Evelyn F. Smalls

Evelyn F. Smalls

/s/ Marionette Y. Wilson

Marionette Y. Wilson

/s/ Ernest L. Wright

Ernest L. Wright

Comprising the Board of Directors of

United Bank of Philadelphia

Philadelphia, Pennsylvania

EX-10.2

Exhibit 10.2

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

  In the Matter of   UNITED BANK OF PHILADELPHIA PHILADELPHIA, PENNSYLVANIA   (INSURED STATE NONMEMBER BANK)   ) ) ) ) ) ) ) )   CONSENT ORDER     FDIC-11-695b  

The Federal Deposit Insurance Corporation (“FDIC”) is the appropriate Federal banking agency for United Bank of Philadelphia, Philadelphia, Pennsylvania (“Bank”), under section 3(q) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1813(q).

The Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (“CONSENT AGREEMENT”), dated January 31, 2012, that is accepted by the FDIC.  With the CONSENT AGREEMENT, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices relating to, among other things, its management and Board oversight, earnings, strategic planning and budgeting, capital, asset quality, sensitivity to interest rate risk, and liquidity, to the issuance of this Consent Order (“ORDER”) by the FDIC.

Having determined that the requirements for issuance of an order under section 8(b) of the Act, 12 U.S.C. § 1818(b) have been satisfied, the FDIC hereby orders that:

BOARD PARTICIPATION

1.           (a)            The Board shall increase its participation in the affairs of the Bank, assuming full responsibility for the approval of sound policies and objectives and for the supervision of all of the Bank's activities, consistent with the role and expertise commonly expected for directors of banks of comparable size.

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(b)          This participation shall include meetings to be held no less frequently than monthly at which, at a minimum, the following areas shall be reviewed and approved: reports of income and expenses; new, overdue, renewal, insider, charged off, and recovered loans; investment activity; liquidity levels and funds management; adoption or modification of operating policies; individual committee reports; audit reports; internal control reviews including management’s responses; reconciliation of general ledger accounts; and compliance with this ORDER.  Board minutes shall be specific and detailed and document these reviews and approvals, including the names of any dissenting directors.

(c)           The Bank shall notify the Regional Director of the FDIC’s New York Regional Office (“Regional Director”) and the Director of the Bureau of Commercial Institutions of the Commonwealth of Pennsylvania Department of Banking (“Department of Banking”) in writing of any additions, resignations, or terminations of any members of its Board or any of its "senior executive officers" (as that term is defined in section 303.101(b) of the FDIC’s Rules and Regulations, 12 C.F.R. § 303.101(b)), within 10 days of the event.  Any notification required by this subparagraph shall include a description of the background(s) and experience of any proposed replacement personnel, and must be received at least 30 days prior to the individual(s) assuming the new position(s).  The Bank shall also establish procedures to ensure compliance with section 32 of the Act, 12 U.S.C. § 1831i, and Subpart F of Part 303 of the FDIC's Rules and Regulations, 12 C.F.R. Part 303.

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MANAGEMENT

2.           (a)            The Bank shall have and retain qualified management.  At a minimum, such management shall include: a chief executive officer with proven ability in managing a bank of comparable size and complexity, and experience in upgrading a low quality loan portfolio; a senior lending officer with an appropriate level of lending, collection, and loan supervision experience for the type and quality of the Bank's loan portfolio; and a chief financial officer with demonstrated ability in all financial areas including, but not limited to, accounting, regulatory reporting, budgeting and planning, management of the investment function, liquidity management, and interest rate risk management.  The Board shall provide the necessary written authority to management to implement the provisions of this ORDER.

(b)            The qualifications of management shall be assessed on its ability to:

(i)             comply with the requirements of this ORDER;

(ii)           operate the Bank in a safe and sound manner;

(iii)          comply with applicable laws, rules, and regulations; and

(iv)          restore all aspects of the Bank to a safe and sound condition, including management effectiveness, earnings, capital adequacy, asset quality, sensitivity to interest rate risk, and liquidity.

(c)            Within 75 days from the effective date of this ORDER, the Bank shall retain a bank consultant who is acceptable to the Regional Director and the Department of Banking and who will develop a written analysis and assessment of the Bank's management needs ("Management Report") for the purpose of providing qualified management for the Bank.

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(d)            The Management Report shall be developed within 135 days from the effective date of this ORDER and shall include, at a minimum:

(i)           identification of both the type and number of officer positions needed to properly manage and supervise the affairs of the Bank;

(ii)          identification and establishment of such Bank committees as are needed to provide guidance and oversight to active management;

(iii)         evaluation of all Bank officers and staff members to determine whether these individuals possess the ability, experience, and other qualifications required to perform present and anticipated duties, including adherence to the Bank's established policies and practices, and restoration and maintenance of the Bank in a safe and sound condition;

(iv)         evaluation of all Bank officers' compensation, including salaries, director fees, and other benefits; and

(v)          a plan to recruit and hire any additional or replacement personnel with the requisite ability, experience, and other qualifications to fill those officer or staff member positions identified in the Management Report.

(e)           Within 60 days from the effective date of this ORDER, the Bank shall provide the Regional Director and the Department of Banking with a copy of the proposed engagement letter or contract with the third party for non-objection or comment before it is executed.

(f)            The contract or engagement letter shall include, at a minimum:

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(i)            a description of the work to be performed under the contract or engagement letter, the fees for each significant element of the engagement, and the aggregate fee;

(ii)           the responsibilities of the firm or individual;

(iii)          identification of the professional standards covering the work to be performed;

(iv)          identification of the specific procedures to be used when carrying out the work to be performed;

(v)            the qualifications of the employee(s) who are to perform the work;

(vi)           the time frame for completion of the work;

(vii)         any restrictions on the use of the reported findings;

(viii)        a provision for unrestricted examiner access to work papers; and

(ix)           a certification that the firm or individual is not affiliated in any manner with the Bank.

(g)            Within 45 days from receipt of the Management Report, the Bank shall formulate a written plan ("Management Plan") that incorporates the findings of the Management Report, a plan of action in response to each recommendation contained in the Management Report, and a time frame for completing each action.

(h)            At a minimum, the Management Plan shall:

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(i)            contain a recitation of the recommendations included in the Management Report, a plan of action to respond to each recommendation, and a time frame for completing each action;

(ii)            include provisions to implement necessary training and development for all employees;

(iii)           establish procedures to periodically review and update the Management Plan, as well as periodically review and assess the performance of each officer and staff member; and

(iv)           contain a current management succession plan.

(i)            The Management Plan shall be submitted to the Regional Director and the Department of Banking for non-objection or comment. Within 30 days from receipt of non-objection or any comments from the Regional Director and the Department of Banking, and after incorporation and adoption of all comments, the Board shall approve the Management Plan, which approval shall be recorded in the minutes of the Board meeting. Thereafter, the Bank shall implement and fully comply with the Management Plan.

PROFIT AND BUDGET PLAN

3.           (a)            Within 60 days from the effective date of this ORDER, and within the first 30 days of each calendar year thereafter, the Bank shall formulate and submit for review as described in subparagraph (c), a written profit and budget plan ("Profit Plan") consisting of goals and strategies, consistent with sound banking practices, and taking into account the Bank's other written plans, policies, or other actions as required by this ORDER.

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(b)            The Profit Plan shall include, at a minimum:

(i)            a description of the operating assumptions that form the basis for, and adequately support, material projected revenue and expense components;

(ii)           specific goals to maintain appropriate provisions to the ALLL;

(iii)          realistic and comprehensive budgets for all categories of income and expense, including but not limited to the carrying costs associated with Other Real Estate Owned (“OREO”) and nonaccrual loans as well as personnel and occupancy expenses;

(iv)         an executive compensation plan, addressing any and all salaries, bonuses, and other benefits of every kind or nature whatsoever, both current and deferred, whether paid directly or indirectly, which plan incorporates qualitative as well as profitability performance standards for the Bank's senior executive officers;

(v)          a budget review process to monitor the revenue and expenses of the Bank, whereby actual performance is compared against budgetary projections not less than quarterly; and

(vi)         recording the results of the budget review, and any actions taken by the Bank as a result of the budget review, in the Board minutes.

(c)            The Profit Plan shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Department of Banking, and after incorporation and adoption of all comments, the Board shall approve the Profit Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Profit Plan.

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(d)          Within 30 days following the end of each calendar quarter following completion of the Profit Plan required by this paragraph, the Board shall evaluate the Bank's actual performance in relation to the Profit Plan, record the results of the evaluation, and note any actions taken by the Bank in the minutes of the Boards' meeting at which such evaluation is undertaken.

STRATEGIC PLAN

4.           (a)            Within 60 days from the effective date of this ORDER, the Bank shall develop and submit for review as required by subparagraph (c), a written strategic plan ("Strategic Plan") supported by an operating budget and consisting of goals and strategies, consistent with sound banking practices, and taking into account the Bank's other written plans, policies, or other actions as required by this ORDER.  The Strategic Plan shall contain an assessment of the Bank's current financial condition and market area, and a description of the operating assumptions that form the basis for major projected income and expense components.

(b)            The Strategic Plan shall include, at a minimum:

(i)             identification of the major areas in and means by which the Bank will seek to improve operating performance;

(ii)            specific goals to improve the net interest margin, increase interest income, and reduce discretionary expenses;

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(iii)          financial goals, including pro forma statements for asset growth, capital adequacy, and earnings; and

(iv)          coordination of the Bank's loan, investment, funds management, and operating policies, profit and budget plan, and ALLL methodology, with the Strategic Plan.

(c)            The Strategic Plan shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Department of Banking,   and after incorporation and adoption of all comments, the Board shall approve the Strategic Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Strategic Plan.

(d)            The Strategic Plan required by this ORDER shall be revised 30 days prior to the end of each calendar year, and approved by the Board, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and adhere to the revised Strategic Plan.

CAPITAL

5.             (a)     Within 60 days from the effective date of this ORDER, the Board shall develop a written capital plan ("Capital Plan"), subject to review and approval of the Regional Director and the Department of Banking, as described in subparagraph (c), that details the manner in which the Bank will meet and maintain a Leverage Ratio of at least 8.50% and a Total Risk-Based Capital Ratio of at least 12.50% (as such terms are defined in Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325).  At a minimum, the Capital Plan shall include specific benchmark Leverage Ratios and Total Risk-Based Capital Ratios to be met at each calendar quarter end, until the required capital levels are achieved.  The Bank shall comply with the FDIC's Statement of Policy on Risk-Based Capital, found in Appendix A to Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325, App. A.

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(b)       In the event any required capital ratio falls below the minimum quarter-end benchmark capital ratios required by the approved Capital Plan, the Bank shall immediately notify the Regional Director and the Department of Banking, and within 60 days shall either:

(i)          increase capital in an amount sufficient to comply with the quarter-end benchmark capital ratios as set forth in the approved Capital Plan; or

(ii)         submit to the Regional Director and the Department of Banking a contingency plan for the sale, merger, or liquidation of the Bank in the event the primary sources of capital are not available.

 (c)      The Capital Plan shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Department of Banking, and after incorporation and adoption of all comments, the Board shall approve the Capital Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Capital Plan.

 (d)      The Board shall review the Bank's adherence to the Capital Plan, at a minimum, on a monthly basis.  Copies of the reviews and updates shall be submitted to the Regional Director and the Department of Banking as part of the Progress Reports required by this ORDER, and any material changes to the Capital Plan shall be submitted to the Regional Director and the Department of Banking no later than 10 days after completion.

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CLASSIFIED ASSETS REDUCTION

6.           (a)            Within 60 days from the effective date of this ORDER, the Bank shall formulate and submit for review as described in subparagraph (c), a written plan ("Classified Asset Plan") to reduce the Bank's risk position in each asset or loan relationship (or related other real estate owned properties) in excess of $100,000 which is classified "Substandard" or "Doubtful" in the current Report of Examination.  For purposes of this provision, "reduce" means to collect, charge off, or improve the quality of an asset so as to warrant its removal from adverse classification by the Regional Director and the Department of Banking.

(b)            The Classified Asset Plan shall include, at a minimum, the following:

(i)            an action plan to review, analyze and document the current financial condition of each classified borrower, including source of repayment, repayment ability, and alternative repayment sources, as well as the value and accessibility of any pledged or assigned collateral, and any possible actions to improve the Bank's collateral position;

(ii)            a specific action plan to reduce delinquencies and classified items to 60% of Tier 1 Capital plus the ALLL, and 40% of Tier 1 Capital plus the ALLL, within 6 months and 12 months, respectively, from the effective date of this ORDER;

(iii)           a schedule showing, on a quarterly basis, the expected consolidated balance of all adversely classified items, and the ratio of the consolidated balance to the Bank's projected Tier 1 Capital plus the ALLL;

(iv)           specific action plans intended to reduce the Bank's risk exposure in each classified item;

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(v)            delineate areas of responsibility for loan officers; and

(vi)           provide for the submission of monthly written progress reports to the Board for review and notation in minutes of the Board meetings.

(vii)          The Classified Asset Plan shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of    non-objection or any comments from the Regional Director and the Department of Banking,   and after incorporation and adoption of all comments, the Board shall approve the Classified Asset Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Classified Asset Plan.

(c)            The Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who is already obligated in any manner to the Bank on any extensions of credit (including any portion thereof) that has been charged off the books of the Bank or classified "Loss" in the current or any future Report of Examination or visitation findings, so long as such credit remains uncollected.

(d)            The Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower whose loan or other credit has been classified "Substandard" or "Doubtful", or is listed for "Special Mention", in the current or any future Report of Examination, and is uncollected, unless the Board, or a designated committee thereof, provides, in writing, a detailed explanation of why the extension is in the best interest of the Bank.  Prior to extending additional credit pursuant to this paragraph, whether in the form of a renewal, extension, or further advance of funds, such additional credit shall be approved by the Board or a designated committee who shall determine that:

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(i)            the failure of the Bank to extend such credit would be detrimental to the best interests of the Bank, with a written explanation of why the failure to extend such credit would be detrimental;

(ii)           the extension of such credit would improve the Bank's position, with a written explanatory statement of how and why the Bank's position would improve; and

(iii)          an appropriate workout plan has been developed, and will be implemented, in conjunction with the additional credit to be extended.

(e)          The Board's determinations and approval shall be recorded in the minutes of the Board meeting, or designated committee, and copies shall be submitted to the Regional Director and the Department of Banking at such times as the Bank submits the Progress Reports required by this ORDER, or sooner upon the written request of the Regional Director or the Department of Banking.

LOSS CHARGE-OFF

7.           (a)            The Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified "Loss" by the FDIC or the Department of Banking in the current Report of Examination that have not been previously collected or charged off.  Elimination or reduction of such assets with the proceeds of other Bank extensions of credit shall not be considered "collection" for purposes of this paragraph.  Thereafter, within 15 days after the receipt of any Report of Examination or visitation findings of the Bank from the FDIC or the Department of Banking, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified "Loss" in any Report of Examination or visitation findings that have not been previously collected or charged off.

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LOAN POLICY

8.           (a)            Within 60 days from the effective date of this ORDER, the Bank shall revise its Loan Policy to establish review and monitoring procedures that ensure that all lending personnel adhere to the Loan Policy and that all credit administration and underwriting deficiencies identified in the current Report of Examination are addressed.  The revisions to the Loan Policy and related written procedures shall be submitted for review as described in subparagraph (c).

(b)            The revised Loan Policy shall ensure, at minimum, the following:

(i)            all extensions of credit originated, renewed, or modified by the Bank, including loans purchased from a third party (loan participations):

a.              have a clearly defined and stated purpose;

b.              have a predetermined and realistic repayment source and schedule, including secondary source of repayment;

c.              are supported by complete loan documentation, including lien searches, perfected security interests, and collateral valuations; and

d.              are supported by current financial information, profit and loss statements or copies of tax returns, and cash flow projections, which shall be maintained throughout the term of the loan, and are otherwise in conformance with the Loan Policy; and

(ii)            review and monitoring procedures comply with the FDIC's appraisal regulation, 12 C.F.R. Part 323, and the Interagency Appraisal and Evaluation Guidelines.

(c)            The revised Loan Policy and related written procedures shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of non-objection or comments from the Regional Director and the Department of Banking, and after incorporation and adoption of all comments, the Board shall approve the Loan Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the revised Loan Policy.

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ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)

9.           (a)            Within 60 days from the effective date of this ORDER, the Bank shall develop and submit for review as described in subparagraph (d), a comprehensive policy and methodology for determining the ALLL ("ALLL Policy").  The ALLL Policy shall provide for a review of the ALLL at least once each calendar quarter, and the results be properly reported in the quarterly Consolidated Reports of Condition and Income (“Call Report”).  Such reviews shall, at a minimum, be made in accordance with:

(i)            Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Subtopic 450-20 and Topic 310 (formerly FASB Statements Numbers 5 and 114, respectively), effective after September 15, 2009;

(ii)            the Federal Financial Institutions Examination Council’s (“FFIEC”) Instructions for the Call Report;

(iii)            the Interagency Statement of Policy on the Allowance for Loan and Lease Losses (FIL-105-206, issued December 13, 2006);

(iv)           other applicable regulatory guidance that addresses the appropriateness of the Bank's ALLL; and

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(v)            any analysis of the Bank's ALLL provided by the FDIC and the Department of Banking.

(b)            Such reviews shall include, at a minimum:

(i)            the Bank's loan loss experience;

(ii)           an estimate of the potential loss exposure in the portfolio; and

(iii)          trends of delinquent and non-accrual loans, and prevailing and prospective economic conditions.

(c)            The minutes of the Board meetings at which such reviews are undertaken shall include complete details of the reviews and the resulting recommended adjustment in the ALLL.  The Board shall document in the minutes the basis for any determination not to require provisions for loan losses in accordance with subparagraphs (a) and (b).

(d)            The ALLL Policy shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Department of Banking,   and after incorporation and adoption of all comments, the Board shall approve the ALLL Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the ALLL Policy.

(e)            A deficiency in the ALLL shall be remedied in the calendar quarter in which it is discovered by a charge to current operating earnings prior to any Tier 1 Capital determinations required by this ORDER and prior to the Bank's submission of its Call Report.  The Bank shall thereafter maintain an appropriate ALLL.

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(f)            The analysis supporting the determination of the adequacy of the ALLL shall be submitted to the Regional Director and the Department of Banking.  These submissions shall be made at such times as the Bank files the progress reports required by this ORDER, or sooner upon the written request of the Regional Director or the Department of Banking.  In the event that the Regional Director or the Department of Banking determines that the Bank's ALLL is inadequate, the Bank shall increase its ALLL and amend its Call Reports accordingly.

INTEREST RATE RISK

10.           (a)            Within 60 days from the effective date of this ORDER, the Bank shall develop and submit for review as described in subparagraph (c), an interest rate risk policy and procedures ("IRR Policy") that shall include, at a minimum:

(i)            measures designed to control the nature and amount of interest rate risk the Bank takes, including those that specify risk limits, and define lines of responsibility and authority for managing risk;

(ii)            a system for identifying and measuring interest rate risk;

(iii)           a system for monitoring and reporting risk exposures; and

(iv)           a system of internal controls, review, and audit to ensure the integrity of the overall risk management process.

(b)            The IRR Policy shall address the exceptions noted in the current Report of Examination, comply with the Federal Financial Institutions Examination Council's ("FFIEC’s") Advisory on Interest Rate Risk Management (FIL-2-2010, issued January 20, 2010), the FFIEC's Supervisory Policy Statement on Investment Securities and End-User Derivative Activities, and the Joint Agency Policy Statement on Interest Rate Risk (FIL-52-96, issued July 12, 1996).

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(c)            The IRR Policy shall be submitted to the Regional Director and the Department of Banking for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Department of Banking, and after incorporation and adoption of all comments, the Board shall approve the IRR Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the IRR Policy.

LIQUIDITY AND FUNDS MANAGEMENT

11.          (a)            Within 60 days from the effective date of this ORDER, the Bank shall revise its liquidity and funds management policy to strengthen the Bank's funds management procedures and maintain adequate provisions to meet the Bank's liquidity needs ("Liquidity and Funds Management Policy").  The policy shall be submitted for review as described in subparagraph (c).

(b)            The Liquidity and Funds Management Policy shall include, at a minimum, provisions that:  

(i)            provide a statement of the Bank's long-term and short-term liquidity needs and plans for ensuring that such needs are met;

(ii)           provide for a periodic review of the Bank's deposit structure, including the volume and trend of total deposits and the volume and trend of the various types of deposits offered;

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(iii)          establish sufficient back-up lines of credit that would allow the Bank to borrow funds to meet depositor demands if the Bank's other provisions for liquidity proved to be inadequate;

(iv)         require categories of investments that can be liquidated within one day in amounts sufficient (as a percentage of the Bank's total assets) to ensure the maintenance of the Bank's liquidity posture at a level consistent with short- and long-term liquidity objectives;

(v)          establish contingency plans by identifying alternative courses of action designed to meet the Bank's liquidity needs; and

(vi)         comply with the guidance set forth in Liquidity Risk Management (FIL-84-2008, issued August 26, 2008).

(c)            The Liquidity and Funds Management Policy shall be submitted to the Regional Director and the Department of Banking for non-objection or comment. Within 30 days from receipt of non-objection or any comments from the Regional Director or the Department of Banking, and after

incorporation and adoption of all comments, the Board shall approve the Liquidity and Funds Management Policy, which approval shall be recorded in the minutes of the Board meeting. Thereafter, the Bank shall implement and fully comply with the Liquidity and Funds Management Policy.

(d)            The Bank shall review annually its Liquidity and Funds Management Policy for adequacy and, based upon such review, shall make necessary revisions to the policy.

BROKERED DEPOSITS

12.           (a)            The Bank shall not accept, renew, or rollover any brokered deposit, as defined by section 337.6(a)(2) of the FDIC's Rules and Regulations, 12 C.F.R. § 337.6(a)(2), unless it is in compliance with the requirements of 12 C.F.R. § 337.6(b), governing solicitation and acceptance of brokered deposits by insured depository institutions.

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(b)            The Bank shall comply with the restrictions on the effective yields on deposits described in section 337.6 of the FDIC's Rules and Regulations, 12 C.F.R. § 337.6.

DIVIDEND RESTRICTION

13.           The Bank shall not declare or pay any dividend without the prior written consent of the Regional Director and the Department of Banking.

OVERSIGHT COMMITTEE

14.          (a)            Within 15 days from the effective date of this ORDER, the Board shall establish a subcommittee of the Board ("Oversight Committee"), a majority of the members of which are not now, and have never been, involved in the daily operations of the Bank, with the responsibility of ensuring compliance with the provisions of this ORDER.

(b)            The Oversight Committee shall monitor compliance with this ORDER, and submit a written report monthly to the entire Board.  A copy of the written report, and any discussion related to the written report or this ORDER, shall be part of the minutes of the Board meeting.  Copies of the monthly written report shall be submitted to the Regional Director and the Department of Banking as part of the Progress Reports required by this ORDER.  Nothing contained herein shall diminish the responsibility of the entire Board to ensure compliance with the provisions of this ORDER.

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PROGRESS REPORTS

15.           Within 45 days from the end of each calendar quarter following the effective date of this ORDER, the Bank shall furnish to the Regional Director and the Department of Banking written Progress Reports detailing the form, manner, and results of any actions taken to secure compliance with this ORDER.  All Progress Reports and other written responses to this ORDER shall be reviewed by the Board, and made a part of the Board minutes.

SHAREHOLDER DISCLOSURE

16.           Within 30 days from the effective date of this ORDER, the Bank shall send a copy of this ORDER, or otherwise furnish a description of this ORDER, to its parent holding company.  The description shall fully describe the ORDER in all material respects.

The provisions of this ORDER shall not bar, estop, or otherwise prevent the FDIC or any other federal or state agency or department from taking any other action against the Bank or any of the Bank’s current or former institution-affiliated parties.

This ORDER shall be effective on the date of issuance.

The provisions of this ORDER shall be binding upon the Bank, its institution-affiliated parties, and any successors and assigns thereof.

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The provisions of this ORDER shall remain effective and enforceable except to the extent that and until such time as any provision has been modified, terminated, suspended, or set aside by the FDIC.

Issued Pursuant to Delegated Authority

Dated: January 31, 2012

By:

/s/ John F. Vogel                                      

John F. Vogel

Deputy Regional Director

New York Regional Office

Federal Deposit Insurance Corporation

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EX-10.3

Exhibit 10.3

COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF BANKING

	:
Commonwealth of Pennsylvania,	:
Department of Banking, Bureau of	:
Commercial Institutions,	:
	:
v.	:	Docket No.: 120013 (ENF-ORD)
	:
United Bank of Philadelphia	:
	:

STIPULATION AND CONSENT TO

ENTRY OF ORDER

WHEREAS, United Bank of Philadelphia, Philadelphia, Pennsylvania (the "Bank"), is a Pennsylvania state-chartered bank and subject to regulation by the Commonwealth of Pennsylvania Department of Banking (the "Department") and the Federal Deposit Insurance Corporation (the "FDIC");

WHEREAS, the Bureau of Commercial Institutions (the "Bureau") is primarily responsible within the Department for the regulation and supervision of the Bank;

WHEREAS, the Bank was the subject of a Joint Report of Examination as of August 29, 2011 by the Bureau and the FDIC (the "Joint Report of Examination");

WHEREAS, the Joint Report of Examination gave the Bureau the reason to believe that the Bank had engaged in unsafe or unsound banking practices;

WHEREAS, as a result of the Joint Report of Examination, the Bureau is of the opinion that grounds exist for the entry of the attached Consent Order (the "Order") against the Bank pursuant to Section 501.A of the Department of Banking Code, 71 P.S. § 733-501.A; and,

WHEREAS, the Bank in the interest of compliance and cooperation, without admitting wrongdoing and in order to avoid administrative proceedings or other litigation, stipulates and agrees to the following terms and conditions in consideration of the Department's forbearance from further litigation and such other administrative proceedings based upon the forgoing recitals and the matters contained in the Order.

NOW, THEREFORE, IT IS AGREED BETWEEN THE DEPARTMENT AND THE BANK AS FOLLOWS:

1. Jurisdiction. The Bank is a "bank" within the meaning of Section 102(f) of the Banking Code of 1965, 7 P.S. § 102(f).

2.           Consent. The Bank consents to the issuance by the Department of the Order and further agrees to comply with the remedial action set forth in the Order upon its date of effectiveness as set forth in paragraph 5.

3.           Finality and Waiver. The Bank agrees that the Order is properly issued pursuant to the Department's authority under Section 501.A of the Department of Banking Code, 71 P.S. § 733-501.A, and complies with all requirements of law, and upon issuance, shall become final and unappealable. The Bank waives any rights they may have to seek administrative or judicial review of the issuance of the Order or the remedial actions and requirements set forth in the Order.

4.           Enforceability. The Bank acknowledges that the Department has the power to enforce the attached Order pursuant to Section 502 of the Department of Banking Code, 71 P.S. § 733-502.

5.           Effectiveness. The Bank stipulates and agrees that the Order will become effective on the date that it is executed by the Department.

6.           Confidentiality. The Bank acknowledges that this Stipulation and Consent to Entry of Order ("Stipulation and Consent") and the Order are for the confidential information of each member of the Board of Directors of the Bank, Bank committee persons and any of the Bank officers, employees or Bank attorneys at law who may be authorized by the Board of Directors of the Bank to review it. This Stipulation and Consent, the Order, any information contained therein and any reports or communication relating to the Stipulation and Consent and the Order may not be distributed to any party other than those identified in this paragraph without the prior approval of the Department, except as provided in Section 404.A of the Department of Banking Code, 71 P.S. § 733­404.A.

7.           Required Reports. The Bank acknowledges that the reports required to be submitted to the Department under the Order are special reports being required under Section 403 of the Department of Banking Code , 71 P.S. § 733-403, and that, pursuant to Section 403.E.(1), 71 P.S. § 733-403.E.(1), the Department may, in addition to such other relief the Department is authorized to take under the applicable statutes, impose a monetary penalty of One Hundred Dollars ($100.00) a day for each day after the time fixed by the Order that the Bank fails to submit a required report.

8.           Other Actions.

(a)It is expressly and clearly understood that if at any time the Department shall deem it appropriate in fulfilling the responsibilities placed upon the Department under applicable law to undertake any further action affecting the Bank, nothing in this Order shall in any way inhibit, estop, bar or otherwise prevent the Department from doing so.

(b)It is expressly and clearly understood that nothing herein shall. preclude any proceedings brought by the Department to enforce the terms of this Order, and that nothing herein constitutes, nor shall the Bank contend that it constitutes, a waiver of any right, power or authority of the Federal Reserve or any other representatives of the

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United States, departments or agencies thereof, Department of Justice, or any other representatives of the Commonwealth of Pennsylvania or any other departments or agencies thereof, including any prosecutorial agency, to bring other actions deemed appropriate.

9.          Counsel. This Stipulation and Consent is entered into by the parties upon full opportunity for legal advice from legal counsel.

10.         Titles. The titles used to identify the paragraphs of this document are for the convenience of reference only and do not control the interpretation of this document.

11.         Counterparts. This Stipulation and Consent may be executed in separatecounterparts and by facsimile or PDF.

WHEREFORE, in consideration of the foregoing, including the recital paragraphs, the Department and the Bank, both intending to be legally bound, do hereby execute this Stipulation and Consent this 31 day of  1 ,2012.

    /s/ Robert C. Lopez                                                     Robert C. Lopez, Director Bureau of Commerical Institutions Commonwealth of Pennsylvania Department of Banking 17 North Second Street, Suite 1300 Harrisburg, PA 17101

Section 501.B Notice. Pursuant to Section 501.B. of the Department of Banking Code, 71 P.S. § 733-501.B, the undersigned Directors of United Bank of Philadelphia are hereby given notice and warned that the Bank's failure to comply in full with the terms of the Order may result in an order being issued by the Bureau directing one or more members of the Board of Directors to appear and show cause why he or she should not be removed from his or her office or position within the Bank.

Acknowledgement. The undersigned Directors of United Bank of Philadelphia, each acknowledge that he or she has read the foregoing Stipulation and Consent and, acting solely in his or her capacity as a Director, approves of the consent thereto by United Bank of Philadelphia.

/s/ Bernard E. Anderson	/s/David R. Bright
Bernard E. Anderson	David R. Bright

[Signatures continued on next page]

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[Signatures continued from previous page]

/s/ Joseph T. Drennan	/s/ L. Armstead Edwards
Joseph T. Drennan	L. Armstead Edwards
/s/ Maurice R. Mitts	/s/ Rev. William B. Moore
Maurice R. Mitts	Rev. William B. Moore
/s/ Evelyn F. Smalls	/s/ Marionette Y. Wilson
Evelyn F. Smalls	Marionette Y. Wilson
/s/ Ernest L. Wright
Ernest L. Wright

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