10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended:  September 30, 2018

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the transition period from:                    to

Commission file number: 0-25976

UNITED BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania (PA)	23-2802415
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

30 S. 15th Street
Philadelphia, PA	19102
(Address of principal	(Zip code)
executive offices)

Registrant's telephone number, including area code:  (215) 351-4600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ ]   No [ X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]  No ☐

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

(Check one):
Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company ☒
(Do not check if a smaller
reporting company)

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

Yes ☐  No [X]

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

As of October 5, 2021 the aggregate number of the shares of the Registrant’s Common Stock issued was 843,050.    

The Series Preferred Stock consists of 500,000 authorized shares of stock of which 250,000 have been designated as Series A, 7,000 as Series B, and 1,100 as Series C for which there were 99,442, 1,850, and 1,100 shares are issued, respectively as of October 5, 2021. 

EXPLANATORY NOTE

The sole purpose of this amendment to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, originally filed with the Securities and Exchange Commission on September 17, 2021, is to furnish Exhibit 101 to the Form 10-Q which contains the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes included in Part 1, Item 1 of the Form 10-Q.

No changes have been made to the Form 10-Q other than the furnishing of Exhibit 101 described above. This amendment does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way disclosures made in the Form 10-Q.

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

PART I - OTHER INFORMATION

Item 1.  Financial Statements (unaudited)

UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2018	December 31, 2017
Assets:
Cash and due from banks	$ 1,951,155	$ 2,075,258
Interest-bearing deposits with banks	3,334,124	311,995
Federal funds sold and other cash equivalents	2,936,296	9,284,000
Cash and cash equivalents	8,221,576	11,671,253
Investment securities available-for-sale, at fair value	4,587,304	5,144,707
Loans held for sale	12,583,544	10,297,168
Loans held at fair value	5,182,526	4,450,901
Loans, net of unearned discounts and deferred fees	22,075,761	25,725,700
Less allowance for loan losses	(202,353)	(179,949)
Net loans	21,873,408	25,545,751
Bank premises and equipment, net	186,352	303,298
Accrued interest receivable	193,952	153,415
Other real estate owned	391,571	626,071
Servicing asset	284,039	319,368
Prepaid expenses and other assets	548,260	496,935
Total assets	$ 54,052,532	$ 59,008,867
Liabilities and Shareholders’ Equity
Liabilities:
Demand deposits, noninterest-bearing	$ 16,714,432	$ 19,606,017
Demand deposits, interest-bearing	15,327,070	15,004,238
Savings deposits	10,820,460	11,505,417
Time deposits, under $250,000	4,390,631	4,331,306
Time deposits, $250,000 and over	3,849,892	5,008,276
Total deposits	51,102,485	55,455,254
Accrued interest payable	11,556	13,939
Accrued expenses and other liabilities	161,099	259,152
Total liabilities	51,275,140	55,728,345
Shareholders’ equity:
Series A preferred stock, noncumulative, 6%, $0.01 par value, 500,000 shares authorized; 99,342 issued and outstanding	993	993
Series B preferred stock, noncumulative, 7%, $0.01 par value, 7,000 shares authorized; 1,850 issued and outstanding	18	18
Common stock, $0.01 par value; 2,000,000 shares authorized; 826,921 issued and outstanding	8,269	8,269
Additional paid-in-capital	15,677,626	15,677,626
Accumulated deficit	(12,755,939)	(12,348,988)
Accumulated other comprehensive loss	(153,575)	(57,396)
Total shareholders’ equity	2,777,392	3,280,522
Total liabilities and shareholders’ equity	$ 54,052,532	$ 59,008,867

See accompanying notes to the unaudited consolidated financial statements.

UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	Three Months ended September 30, 2018	Three Months ended September 30, 2017	Nine Months ended September 30, 2018	Nine Months ended September 30, 2017
Interest income:
Interest and fees on loans	$ 600,438	$ 612,112	$ 1,745,278	$ 1,729,095
Interest on investment securities	28,394	29,985	86,743	92,550
Interest on federal funds sold	27,531	32,074	115,980	68,863
Interest on time deposits with other banks	21,950	202	22,690	574
Total interest income	678,313	674,373	1,970,691	1,891,082
Interest expense:
Interest on time deposits	10,787	11,021	35,064	28,775
Interest on demand deposits	6,675	6,515	19,708	18,953
Interest on savings deposits	1,395	1,470	4,234	4,399
Total interest expense	18,857	19,006	59,006	52,127
Net interest income	659,456	655,367	1,911,685	1,838,955
Provision (credit) for loan losses	20,000	(15,000)	45,000	(91,000)
Net interest income after provision (credit) for loan losses	639,456	670,367	1,866,685	1,929,955
Noninterest income:
Customer service fees	106,909	101,476	309,849	298,786
ATM fee income	24,777	30,644	76,134	93,791
Gain on sale of loans	41,204	54,459	265,022	206,319
Net change in fair value of financial instruments	83,278	197,665	103,794	271,182
Gain (loss) on sale of other real estate	16	-	(11,588)	-
Loan Syndication Fees	100,000	90,400	100,000	90,400
Other income	36,247	14,875	84,343	76,753
Total noninterest income	392,431	489,519	927,554	1,037,231
Noninterest expense:
Salaries, wages and employee benefits	372,642	395,915	1,154,522	1,175,163
Occupancy and equipment	244,865	253,981	746,000	755,115
Office operations and supplies	62,202	84,643	200,825	247,362
Marketing and public relations	1,742	3,056	27,069	11,865
Professional services	65,481	76,182	137,753	177,622
Data processing	98,878	95,509	307,735	290,861
Deposit insurance assessments	24,000	27,000	73,000	72,000
Other real estate expense	13,850	28,440	38,629	58,326
Loan and collection expense	50,974	43,979	115,968	124,603
Other operating	154,132	122,558	399,689	343,564
Total noninterest expense	1,088,766	1,131,263	3,201,190	3,256,481
Net (loss) income before income taxes	(56,879)	28,623	(406,951)	(289,295)
Provision for income taxes	-	-	-	-
Net (loss) income	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Net (loss) income per common share—basic and diluted	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)
Weighted average number of common shares outstanding	826,921	826,921	826,921	826,921
Comprehensive (loss) income:
Net (loss) income	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Unrealized (losses) gains on available for sale securities, net of taxes	(26,040)	4,835	(96,179)	39,800
Total comprehensive (loss) income	$ (82,919)	$ 33,458	$ (503,130)	$ (249,495)

See accompanying notes to the unaudited consolidated financial statements.

UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY  

Nine Months Ended September 30, 2018

	Series A Preferred stock		Series B Preferred stock		Common stock		Additional paid-in	Accumulated	Accumulated Other Comprehensive	Total Shareholders’
	Shares	Amount	Shares	Amount	Shares	Amount	capital	Deficit	Loss	Equity
Balance at December 31, 2017	99,342	$ 993	1,850	$ 18	826,921	$ 8,269	$ 15,677,626	($12,348,988)	($57,396)	$ 3,280,522
Net loss	-	-	-	-	-	-	-	(198,026)	-	(198,026)
Other comprehensive loss, net of tax	-	-	-	-	-	-	-	-	(53,879)	(53,879)
Issuance of Series B Preferred Stock	-	-			-	-	-	-	-	-
			-	-
Balance at March 31, 2018	99,342	$ 993	1,850	$ 18	826,921	$ 8,269	$ 15,677,626	(12,547,014)	(111,275)	3,028,617
Net loss		-		-	-	-	-	(152,046)	-	(152,046)
Other comprehensive loss, net of tax	-	-	-	-	-	-	-	-	(16,259)	(16,259)
Balance at June 31, 2018	99,342	$ 993	1,850	$ 18	826,921	$ 8,269	$ 15,677,626	$ (12,699,060)	$ (127,534)	$ 2,860,312
Net loss	-	-	-	-	-	-	-	(56,879)	-	(56,879)
Other comprehensive loss, net of tax	-	-	-	-	-	-	-	-	(26,041)	(26,041)
Balance at September 31, 2018	99,342	$ 993	1,850	$ 18	826,921	$ 8,269	$ 15,677,626	$ (12,755,939)	$ (153,575)	$ 2,777,392

See accompanying notes to the unaudited consolidated financial statements.

UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY  

Nine Months Ended September 30, 2017

	Series A Preferred stock		Series B Preferred stock		Common stock		Additional paid-in	Accumulated	Accumulated Other Comprehensive	Total Shareholders’
	Shares	Amount	Shares	Amount	Shares	Amount	capital	Deficit	Loss	Equity
Balance at December 31, 2016	99,342	$ 993	-	$ -	826,921	$ 8,269	$ 14,752,644	$ (12,038,281)	$ (63,710)	$ 2,659,915
Net loss	-	-	-	-	-	-	-	(202,621)	-	(202,621)
Other comprehensive loss, net of tax	-	-	-	-	-	-	-	-	9,767	9,767
Issuance of Series B Preferred Stock		-	1,350	13	-	-	674,987	-	-	675,000
Balance at March 31, 2017	99,342	993	1,350	13	826,921	8,269	15,427,631	(12,240,902)	(53,943)	3,142,061
Net loss	-	-	-	-	-	-	-	(115,297)	-	(115,297)
Other comprehensive income, net of tax	-	-	-	-	-	-	-	-	25,198	25,198
Balance at June 30, 2017	99,342	$ 993	1,350	$ 13	826,921	$ 8,269	$ 15,427,631	$ (12,356,199)	$ (28,745)	$ 3,051,962
Net loss	-	-	-	-	-	-	-	28,623	-	28,623
Other comprehensive income, net of tax	-	-	-	-	-	-	-	-	4,835	4,835
Issuance of Series B Preferred Stock			500	5	-	-	249,995	-	-	250,000
Balance at September 30, 2017	99,342	$ 993	1,850	$ 18	826,921	$ 8,269	$ 15,677,626	$ (12,327,576)	$ (23,910)	$ 3,335,420

See accompanying notes to the unaudited consolidated financial statements.

.

UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

	2018	2017
Cash flows from operating activities:
Net loss	$ (406,951)	$ (289,295)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision (credit) for loan losses	45,000	(91,000)
Amortization of premiums on investments, net	5,360	7,442
Loss on disposition of other real estate	11,588	-
Write-down of other real estate	5,000	-
Amortization of servicing asset	91,919	26,706
Depreciation on fixed assets	137,032	138,767
Net change in fair value of financial instruments	(103,794)	(271,182)
Gain on sale of loans	(265,022)	(206,319)
Proceeds from the sale of loans held-for-sale	3,098,258	2,174,935
Loans originated for sale	(5,747,443)	(4,337,673)
Increase in accrued interest receivable and other assets	(148,453)	(187,053)
Increase in accrued interest payable and other liabilities	(100,436)	(13,781)
Net cash used in operating activities	(3,345,041)	(3,048,452)
Cash flows from investing activities:
Proceeds from maturity and principal reductions of available-for-sale investment securities	457,629	324,771
Purchase of securities available-for-sale	(1,765)	(1,026)
Net decrease in loans	3,627,344	1,504,606
Proceeds from sale of other real estate	217,911	-
Purchase of bank premises and equipment	(20,086)	(22,121)
Net cash provided by investing activities	4,281,031	1,806,230
Cash flows from financing activities:
Proceeds from the sale of preferred stock	-	925,000
Net decrease in deposits	(4,385,667)	7,316,406
Net cash (used in) provided by financing activities	(4,385,667)	8,241,406
Net (decrease) increase in cash and cash equivalents	(3,449,677)	6,999,184
Cash and cash equivalents at beginning of period	11,671,253	7,802,831
Cash and cash equivalents at end of period	$ 8,221,576	$ 14,802,015
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$ 61,390	$ 32,493
Transfer of investment to other cash equivalents	$ 133,296	$ -
Transfer of loans from held-for-sale to held at fair value	$ 731,625	$ 437,111

See accompanying notes to the unaudited consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(unaudited)

1. Significant Accounting Policies

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, 2017 when reviewing this Form 10-Q.  Because this report is based on an interim period, certain information and footnote disclosures normally included in the Annual Report on Form 10-K have been condensed or omitted. 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 September 30, 2018 and December 31, 2017 and the consolidated results of its operations and its cash flows for the three and nine months ended September 30, 2018 and 2017.

Management’s Use of Estimates

The preparation of the financial statements has been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Material estimates which are particularly susceptible to significant change in the near term relate to the fair value of investment securities, the determination of the allowance for loan losses, the fair value of loans held at fair value, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities.

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 any such 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.

Loans Held for Sale

The Bank originates SBA loans for which the guaranteed portion is intended to be sold within a short period of time in the secondary market.  These loans are carried at fair value based on a loan-by-loan valuation using actual market bids.  Any change in the balance of the loan and its fair value is recorded as income or expense in each reporting period.  When the guaranteed portion of the loan is sold, the gain on the sale is reduced by the income previously recognized as part of the fair value adjustment.

Loans Held at Fair Value

The Bank originates SBA loans for which the un-guaranteed portion is retained after the guaranteed portion is sold in the secondary market.  Management has elected to carry these loans at fair value in accordance with the

irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments.  Fair value of these loans is estimated based on the present value of future cash flows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.

Loans

The Bank has both the positive intent and ability to hold the majority of its loans to maturity.  These loans are stated at the amount of unpaid principal, reduced by net unearned discount and an allowance for loan losses.  Interest income on loans is recognized as earned based on contractual interest rates applied to daily principal amounts outstanding and accretion of discount.  

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses.  Loans that are determined to be uncollectible are charged against the allowance account, and subsequent recoveries, if any, are credited to the allowance.  When evaluating the adequacy of the allowance, an assessment of the loan portfolio will typically include changes in the composition and volume of the loan portfolio, overall portfolio quality and past loss experience, review of specific problem loans, current economic conditions which may affect borrowers’ ability to repay, and other factors which may warrant current recognition.  Such periodic assessments may, in management’s judgment, require the Bank to recognize additions or reductions to the allowance.  

Various regulatory agencies periodically review the adequacy of the Bank’s allowance for loan losses as an integral part of their examination process.  Such agencies may require the Bank to recognize additions or reductions to the allowance based on their evaluation of information available to them at the time of their examination.  It is reasonably possible that the above factors may change significantly and, therefore, affects management’s determination of the allowance for loan losses in the near term.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired.  For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The general component covers non-impaired loans and is based on historical charge-off experience, other qualitative factors, and adjustments made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.  The Bank does not allocate reserves for unfunded commitments to fund lines of credit.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Bank will identify and assess loans that may be impaired through any of the following processes:

·During regularly scheduled meetings of the Asset Quality Committee 

·During regular reviews of the delinquency report 

·During the course of routine account servicing, annual review, or credit file update  

·Upon receipt of verifiable evidence of a material reduction in the value of collateral to a level that creates a less than desirable Loan-to-Value ratio 

Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller, homogeneous loans, including consumer installment and home equity loans, 1-4 family residential mortgages, and student loans are evaluated collectively for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

Non-accrual and Past Due Loans.

Loans are considered past due if the required principal and interest payments have not been received within 30 days as of the date such payments were due.  The Bank generally places a loan on non-accrual status when interest or principal is past due 90 days or more.  If it otherwise appears doubtful that the loan will be repaid, management may place the loan on nonaccrual status before the lapse of 90 days. Interest on loans past due 90 days or more ceases to accrue except for loans that are well collateralized and in the process of collection.  When a loan is placed on nonaccrual status, previously accrued and unpaid interest is reversed out of income.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Income Taxes

Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis 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.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more-likely-than not recognition threshold is measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits, if any, would be recognized in income tax expense in the consolidated statements of operations.

2. Net (Loss) Income Per Share

The calculation of net loss per share follows:

	Three Months Ended September 30, 2018	Three Months Ended September 30, 2017	Nine Months Ended September 30, 2018	Nine Months Ended September 30, 2017
Basic:
Net (loss) income available to common shareholders	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Average common shares outstanding-basic	826,921	826,921	826,921	826,921
Net (loss) income per share-basic	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)
Diluted:

Average common shares-diluted	826,921	826,921	826,921	826,921
Net (loss) income per share-diluted	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)

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.

3.Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss:

	Three Months Ended September 30, 2018
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (161)	$ 34	$ (127)
Unrealized loss on securities:
Unrealized holding loss arising during period	(32)	6	(26)
Other comprehensive loss, net	(32)	6	(26)
Ending balance	$ (193)	$ 40	$ (153)

	Three Months Ended September 30, 2017
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (43)	$ 14	$ (29)
Unrealized gain on securities:
Unrealized holding gain arising during period	8	(3)	5
Other comprehensive income, net	8	(3)	5
Ending balance	$ (35)	$ 11	$ (24)

	Nine Months Ended September 30, 2018
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (73)	$ 16	$ (57)
Unrealized loss on securities:
Unrealized holding loss arising during period	(120)	24	(96)
Other comprehensive loss, net	(120	24	(96)
Ending balance	$ (193)	$ 40	$ (153)

	Nine Months Ended September 30, 2017
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (97)	$ 33	$ (64)
Unrealized gain on securities:
Unrealized holding gain arising during period	62	(22)	40
Other comprehensive income, net	62	(22)	40
Ending balance	$ (35)	$ 11	$ (24)

4. New Authoritative Accounting Guidance

Effect of the Adoption of Accounting Standards

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers — Topic 606 and all subsequent ASUs that modified ASC 606. The standard required a company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers at the time the transfer of goods or services takes place. The Company completed an assessment of revenue streams and review of the related contracts potentially affected by the new standard and concluded that ASU 2014-09 did not materially change the method in which it recognizes revenue. Therefore, implementation of the new standard had no material impact to the measurement or recognition of revenue of prior periods. However, additional disclosures were added in the current period, which can be found in Note 9.

In January 2016, the FASB finalized ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This accounting standard (a) requires separate presentation of equity investments (except those accounted for under the equity method of accounting or those that result in

consolidation of the investee) on the balance sheet and measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (g) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

The Company has adopted this standard during the reporting period. On a prospective basis, the Company implemented changes to the measurement of the fair value of financial instruments using an exit price notion for disclosure purposes included in Note 8 to the financial statements. The December 31, 2017, fair value of each class of financial instruments disclosure did not utilize the exit price notion when measuring fair value and, therefore, would not be comparable to the March 31, 2018 disclosure. The Company estimated the fair value based on guidance from ASC 820-10, Fair Value Measurements, which defines fair value as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is no active observable market for sale information on community bank loans and time deposits and, thus, Level III fair value procedures were utilized, primarily in the use of present value techniques incorporating assumptions that market participants would use in estimating fair values.

Effect of Upcoming Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The standard ((along with subsequent amendments and clarifications in ASUs; 2018-01, 2018-11 and 2018-20) requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise.  For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis.  For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years.  For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020.  The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period.  This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.  The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset.  The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted.  The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements.  The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  This Update is not expected to have a significant impact on the Company’s financial statements.

5.  Investment Securities

The following is a summary of the Company's investment portfolio: 

(In 000’s)	September 30, 2018
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,349	$ -	$ (116)	$ 2,233
Government Sponsored Enterprises residential mortgage-backed securities	2,432	10	(88)	2,354
	$ 4,781	10	(204)	$ 4,587

	December 31, 2017
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,349	$ -	$ (76)	$ 2,273
Government Sponsored Enterprises residential mortgage-backed securities	2,737	21	(18)	2,740
Investments in money market funds	132	-	-	132
	$ 5,218	$ 21	$ (94)	$ 5,145

Effective January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments as describe in Note 4.  As a result, the Investment in Money Market Mutual Funds was reclassed to Federal Funds Sold and other cash equivalents.

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2018, are as follows:

(In 000’s)	Amortized Cost	Fair Value
Due in one year	$ -	$ -
Due after one year through five years	-	-
Due after five years through ten years	2,349	2,233
Government Sponsored Enterprises residential mortgage-backed securities	2,432	2,354
	$ 4,781	$ 4,587

Expected maturities will differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without any penalties.

There were no sales of securities during the three and nine months ended September 30, 2018 and 2017.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2018:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	losses	Value	Losses
U.S. Government agency securities	7	$ -	$ -	$ 2,233	$ (116)	$ 2,233	$ (116)

Government Sponsored Enterprises residential mortgage-backed securities	14	1,374	(48)	700	(40)	2,044	(88)
Total temporarily impaired investment Securities	21	$ 1,374	$ (48)	$ 2,903	$ (156)	$ 4,277	$ (204)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2017:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	securities	Value	Losses	Value	losses	Value	Losses
U.S. Government agency securities	7	$ 245	$ (5)	$2,028	$ (71)	$2,273	$ (76)
Government Sponsored Enterprises residential mortgage-backed securities	8	1,124	(7)	377	(11)	1,501	(18)
Total temporarily impaired investment Securities	15	$1,369	$ (12)	$ 2,405	$(82)	$ 3,774	$ (94)

Government Sponsored Enterprises residential mortgage-backed securities. Unrealized losses on the Company’s investment in Government Sponsored Enterprises residential mortgage-backed securities were caused by market interest rate increases. The Company purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company’s investments. Because the decline in fair value is attributable to changes in market interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired.

U.S. Government and Agency Securities. Unrealized losses on the Company's investments in direct obligations of U.S. government agencies were caused by market interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired.

The Company has a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary.  This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.  On a quarterly basis, the Company reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. The Company considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, the intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company’s ability and intent to hold the security for a period of time that allows for the recovery in value.  

As of September 30, 2018 and December 31, 2017, investment securities with a carrying value of $3,567,000 and $4,297,000, respectively, were pledged as collateral to secure public deposits and contingent borrowing at the Federal Reserve Discount Window.

6. Loans and Allowance for Loan Losses

The composition of the Bank’s loan portfolio is as follows:

(in 000’s)	September 30, 2018	December 31, 2017
Commercial and industrial	$ 1,790	$ 1,798
Commercial real estate	18,325	21,389
Consumer real estate	1,252	1,729
Consumer loans other	708	809
Total loans	$ 22,075	$ 25,725

At September 30, 2018, there was no unearned discount.  At December 31, 2017, the unearned discount totaled $10,858 respectively, and is included in the related loan accounts.

The determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance is the accumulation of three components that are calculated based on various independent methodologies that are based on management’s estimates.  The three components are as follows:

·Specific Loan Evaluation Component – Includes the specific evaluation of impaired loans.   

·Historical Charge-Off Component – Applies an eight-quarter rolling historical charge-off rate to all portfolio segments of non-classified loans.  

·Qualitative Factors Component – The loan portfolio is broken down into portfolio segments, upon which multiple factors (such as delinquency trends, economic conditions, concentrations, growth/volume trends, and management/staff ability) are evaluated, resulting in an allowance amount for each of the sub classifications. The sum of these amounts comprises the Qualitative Factors Component. 

All of these factors may be susceptible to significant change.  During the nine months ended September 30, 2018 the Bank did not change any of its qualitative factors in any segment of the loan portfolio.  In addition, the average historical loss factors were relatively unchanged as there were minimal net recoveries during the quarter. The increase in provision for commercial and industrial loans for the nine months ended September 30, 2018 is related to a specific reserve required for one impaired loan.  Credits to the provision for commercial real estate loans during 2018 was related to a decrease in balance in outstanding loans as well as the origination of SBA loans that are accounted for at fair value and are not included in the calculation of the allowance for loan losses.  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.

(in 000's)	For the Three months ended September 30, 2018
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 3	$ 150	$ 4	$ 8	$ 15	$ 180
Provision (credit) for loan losses	80	(37)	-	(8)	(15)	20
Charge-offs	-	-	-	(1)	-	(1)
Recoveries	1	1	-	1	-	3
Net recoveries	1	1	-	-	-	2
Ending balance	$ 84	$ 114	$ 4	$ -	$ -	$ 202

(in 000's)	For the Three months ended September 30, 2017
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 74	$ 170	$ 8	$ 10	$ 10	$ 252
Provision (credit) for loan losses	(65)	18	-	-	32	(15)
Charge-offs	-	-	-	(1)	-	(1)
Recoveries	1	2	-	-	-	3
Net recoveries	1	2	-	(1)	-	2

Ending balance  $ 10   $ 190  $ 8  $ 9   $ 22   $ 239 

(in 000's)	For the Nine months ended September 30, 2018
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 7	$ 155	$ 10	$ 8	$ -	$ 180
Provision (credit) for loan losses	84	(26)	(6)	(7)	-	45
Charge-offs	(10)	(18)	-	(8)	-	(36)
Recoveries	3	3	-	7		13
Net (charge-offs) recoveries	(7)	(15)	-	(1)	-	(23)
Ending balance	$ 84	$ 114	$ 4	$ -	$ -	$ 202

(in 000's)	For the Nine months ended September 30, 2017
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 68	$ 179	$ 10	$ 11	32	$ 300
Provision (credit) for loan losses	(61)	(16)	(3)	(1)	(10)	(91)
Charge-offs	-	-	-	(4)	-	(4)
Recoveries	3	27	1	3	-	34
Net (charge-offs) recoveries	3	27	1	(1)	-	30
Ending balance	$ 10	$ 190	$ 8	$ 9	22	$ 239

(in 000's)	September 30, 2018
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$ 76	$ -	$ -	$ -	$ -	$ 76
Loans collectively evaluated for impairment	8	114	4	-	-	126
	$ 84	$ 114	$ 4	$ -	$ -	$ 202
Loans, ending balance:
Loans individually evaluated for impairment	$ 152	$ 1,359	$ -	$ -	$ -	$ 1,511
Loans collectively evaluated for impairment	1,638	16,966	1,252	708	-	20,564
Total	$ 1,790	$ 18,325	$ 1,252	$ 708	$ -	$ 22,075

(in 000's)	December 31, 2017
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$ -	$ -	$ -	$ -	$ -	$ -
Loans collectively  evaluated for impairment	7	155	10	8	-	180
	$ 7	$ 155	$ 10	$ 8	$ -	$ 180
Loans, ending balance:
Loans individually evaluated for impairment	$ 76	$ 1,201	$ -	$ -	$ -	$ 1,277
Loans collectively  evaluated for impairment	1,722	20,188	1,729	809	-	24,448

Total  $ 1,798  $ 21,389  $ 1,729  $ 809  $ -  $ 25,725

Nonperforming and Nonaccrual and Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2018 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
(In 000's)	30-89 Days	More Days	More Days	Total Past	Current
	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$ 70	$ -	$ 76	146	636	$ 782
SBA loans	-	-	-	-	-	-
Asset-based	-	-	125	125	883	1,008
Total Commercial and industrial	70	-	201	271	1,519	1,790
Commercial real estate:
Commercial mortgages	144	-	1,108	1,252	9,000	10,252
SBA loans	-	-	72	72	179	251
Construction	-	-	-	-	305	305
Religious organizations	-	126	179	305	7,212	7,517
Total Commercial real estate	144	126	1,359	1,629	16,696	18,325
Consumer real estate:
Home equity loans	-	150	283	433	205	638
Home equity lines of credit	-	-	-	-	15	15
1-4 family residential mortgages	31	-	26	57	542	599
Total consumer real estate	31	150	309	490	762	1,252
Total real estate	175	276	1,668	2,119	17,458	19,577
Consumer and other:
Student loans	42	17	-	59	563	622
Other	5	1	-	6	80	86
Total consumer and other	47	18	-	65	643	708
Total loans	$ 292	$ 294	$ 1,869	$ 2,455	$ 19,620	$ 22,075

An age analysis of past due loans, segregated by class of loans, as of December 31, 2017 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
	30-89 Days	More Days	More Days	Total Past	Current
(In 000's)	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$ -	$ -	$ -	$ -	$ 909	$ 909
SBA Loans	-	-	-	-	19	19
Asset-based	-	-	76	76	794	870
Total Commercial and industrial	-	-	76	76	1,722	1,798
Commercial real estate:
Commercial mortgages	50	208	935	1,193	10,478	11,671
SBA loans	-	-	81	81	588	669
Construction	-	-	-	-	419	419
Religious organizations	-	-	187	187	8,443	8,630
Total Commercial real estate	50	208	1,203	1,461	19,928	21,389
Consumer real estate:
Home equity loans	38	123	289	450	191	641
Home equity lines of credit	-	-	-	-	17	17
1-4 family residential mortgages	64	-	48	112	959	1,071
Total consumer real estate	102	123	337	561	1,168	1,729
Total real estate
Consumer and other:

Student loans	32	55	-	87	613	700
Other	6	1	-	7	102	109
Total consumer and other	38	56	-	94	715	809
Total loans	$ 190	$ 387	$ 1,616	$ 2,192	$ 23,533	$ 25,725

Loan Origination/Risk Management.  The Bank has lending policies and procedures in place to maximize loan income within an acceptable level of risk.  Management reviews and approves these policies and procedures on a regular basis.  A reporting system supplements the review process by providing management with periodic reports related to loan origination, asset quality, concentrations of credit, loan delinquencies and non-performing and emerging problem loans.  Diversification in the portfolio is a means of managing risk with fluctuations in economic conditions.

Credit Quality Indicators.  For commercial loans, management uses internally assigned risk ratings as the best indicator of credit quality.  Each loan’s internal risk weighting is assigned at origination and updated at least annually and more frequently if circumstances warrant a change in risk rating.  The Bank uses a 1 through 8 loan grading system that follows regulatory accepted definitions as follows:

·Risk ratings of “1” through “3” are used for loans that are performing and meet and are expected to continue to meet all of the terms and conditions set forth in the original loan documentation and are generally current on principal and interest payments.  Loans with these risk ratings are reflected as “Good/Excellent” and “Satisfactory” in the following table. 

·Risk ratings of “4” are assigned to “Pass/Watch” loans which may require a higher degree of regular, careful attention.  Borrowers may be exhibiting weaker balance sheets and positive but inconsistent cash flow coverage. Borrowers in this classification generally exhibit a higher level of credit risk and are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Loans with this rating would not normally be acceptable as new credits unless they are adequately secured and/or carry substantial guarantors. Loans with this rating are reflected as “Pass” in the following table.  

·Risk ratings of “5” are assigned to “Special Mention” loans that do not presently expose the Bank to a significant degree of risks, but have potential weaknesses/deficiencies deserving Management’s closer attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. No loss of principal or interest is envisioned.  Borrower is experiencing adverse operating trends, which potentially could impair debt, services capacity and may necessitate restructuring of credit.  Secondary sources of repayment are accessible and considered adequate to cover the Bank's exposure. However, a restructuring of the debt should result in repayment.  The asset is currently protected, but is potentially weak.  This category may include credits with   inadequate loan agreements, control over the collateral or an unbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized but exceptions are considered material. These borrowers would have limited ability to obtain credit elsewhere. 

·Risk ratings of “6” are assigned to “Substandard” loans which are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets must have a well-defined weakness. They are characterized by the distinct possibility that some loss is possible if the deficiencies are not corrected. The borrower’s recent performance indicated an inability to repay the debt, even if restructured. Primary source of repayment is gone or severely impaired and the Bank may have to rely upon the secondary source. Secondary sources of repayment (e.g., guarantors and collateral) should be adequate for a full recovery. Flaws in documentation may leave the bank in a subordinated or unsecured position when the collateral is needed for the repayment. 

·Risk ratings of “7” are assigned to “Doubtful” loans which have all the weaknesses inherent in those classified “Substandard” with the added characteristic that the weakness makes the collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable  

and improbable.  The borrower's recent performance indicates an inability to repay the debt.  Recovery from secondary sources is uncertain.  The possibility of a loss is extremely high, but because of certain important and reasonably- specific pending factors, its classification as a loss is deferred.

·Risk rating of “8” are assigned to “Loss” loans which are considered non-collectible and do not warrant classification as active assets.  They are recommended for charge-off if attempts to recover will be long term in nature.  This classification does not mean that an asset has no recovery or salvage value, but rather, that it is not practical or desirable to defer writing off the loss, although a future recovery may be possible.  Loss should always be taken in the period in which they surface and are identified as non-collectible as a result there is no tabular presentation. 

For consumer and residential mortgage loans, management uses performing versus nonperforming as the best indicator of credit quality. Nonperforming loans consist of loans that are not accruing interest (nonaccrual loans) as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to contractual terms is in doubt as well as loans that are 90 days or more past due and have not been placed on nonaccrual.  These credit quality indicators are updated on an ongoing basis. A loan is placed on nonaccrual status as soon as management believes there is doubt as to the ultimate ability to collect interest on a loan.  

The tables below detail the Bank’s loans by class according to their credit quality indictors discussed above.

(In 000's)	Commercial Loans September 30, 2018
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$ -	$ 492	$ -	$ -	$ 214	$ 76	$ 782
SBA loans	-	-	-	-	-	-	-
Asset-based	250	537	-	9	136	76	1,008
	250	1,029	-	9	350	152	1,790
Commercial real estate:
Commercial mortgages	-	7372	1,768	-	901	211	10,252
SBA Loans	-	178	-	-	73	-	251
Construction	-	305	-	-	-	-	305
Religious organizations	30	5,195	2,113	-	179	-	7,517
	30	13,050	3,881	-	1,153	211	18,325
Total commercial loans	$ 280	$ 14,079	$ 3,881	$ 9	$ 1,503	$ 363	$ 20,115

	Residential Mortgage and Consumer Loans September 30, 2018
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$     205	$     433	$     638
Home equity line of credit	15	-	15
1-4 family residential mortgages	573	26	599
	793	459	1,252
Consumer Other:
Student loans	605	17	622
Other	85	1	86
	690	18	708
Total  consumer loans	$  1,483	$     477	$    1,960

(In 000's)	Commercial Loans,   December 31, 2017
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total

Commercial and industrial:
Commercial	$ 250	$ 423	$ -	$ 19	$ 217	$ -	$ 909
SBA loans	-	-	19	-	-	-	19
Asset-based	-	549	152	-	93	76	870
	250	972	171	19	310	76	1,798
Commercial real estate:
Commercial mortgages	-	7,876	2,764	17	797	217	11,671
SBA Loans	-	588	-	-	81	-	669
Construction	-	419	-	-	-	-	419
Religious organizations	48	7,560	835	-	187	-	8,630
	48	16,443	3,599	17	1,065	217	21,389
Total commercial loans	$ 298	$ 17,415	$ 3,770	$ 36	$ 1,375	$ 293	$ 23,187

	Residential Mortgage and Consumer Loans December 31, 2017
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$ 352	$ 289	$ 641
Home equity line of credit	17	-	17
1-4 family residential mortgages	1,023	48	1,071
	1,392	337	1,729
Consumer Other:
Student loans	700	-	700
Other	109	-	109
	809	-	809
Total  consumer loans	$ 2,201	$ 337	$ 2,538

Impaired Loans. The Bank identifies a loan as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. The Bank recognizes interest income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to the Bank.   If these factors do not exist, the Bank will record interest payments on the cost recovery basis.

In accordance with guidance provided by ASC 310-10, Accounting by Creditors for Impairment of a Loan, management employs one of three methods to determine and measure impairment: The Present Value of Future Cash Flow Method; the Fair Value of Collateral Method; or the Observable Market Price of a Loan Method.  To perform an impairment analysis, the Company reviews a loan’s internally assigned grade, its outstanding balance, guarantors, collateral, strategy, and a current report of the action being implemented. Based on the nature of the specific loans, one of the impairment methods is chosen for the respective loan and any impairment is determined, based on criteria established in ASC 310-10.   

The Company makes partial charge-offs of impaired loans when the impairment is deemed permanent and is considered a loss.  Specific reserves are allocated to cover “other-than-permanent” impairment for which the underlying collateral value may fluctuate with market conditions.  There was one commercial real estate partial charge-off totaling $18,000 for the nine months ended September 30, 2018.

Consumer real estate and other loans are not individually evaluated for impairment, but collectively evaluated, because they are pools of smaller balance homogeneous loans.   

Impaired loans as of September 30, 2018 are set forth in the following table.

(In 000's)	Unpaid Contractual	Recorded Investment	Recorded Investment	Total
	Principal	With No	With	Recorded	Related
	Balance	Allowance	Allowance	Investment	Allowance

Commercial and industrial:
Commercial	$ 76	$ -	$ 76	$ 76	$ 76
SBA loans	-	-	-	-	-
Asset-based	76	76	-	76	-
Total commercial and industrial	152	76	76	152	76
Commercial real estate:
Commercial mortgages	1,108	1,108	-	1,108	-
SBA Loans	72	72	-	72	-
Religious organizations	179	179	-	179	-
Total commercial real estate	1,359	1,359	-	1,359	-
Total loans	$ 1,511	$ 1,435	$ 76	$ 1,511	$ 76

Impaired loans as of December 31, 2017 are set forth in the following table.

(In 000's)	Unpaid Contractual	Recorded Investment	Recorded Investment	Total
	Principal	With No	With	Recorded	Related
	Balance	Allowance	Allowance	Investment	Allowance
Commercial and industrial:
Commercial	$ -	$ -	$ -	$ -	$ -
SBA	-	-	-	-	-
Asset based	76	76	-	76	-
Total Commercial and industrial	76	76	-	76	-
Commercial real estate:
Commercial mortgages	933	933	-	933	-
SBA Loans	81	81	-	81	-
Religious Organizations	187	187	-	187	-
Total Commercial real estate	1,201	1,201	-	1,201	-
Total loans	$ 1,277	$ 1,277	$ -	$ 1,277	-

The Bank recognizes interest income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to the Bank.   If these factors do not exist, the Bank will record interest payments on the cost recovery basis. The following tables present additional information about impaired loans.

(In 000's)	Three Months Ended September 30, 2018		Three Months Ended September 30, 2017
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$ 25	$ -	$ -	$ -
SBA loans	-	-	-	-
Asset-based	76	-	243	-
Total commercial and industrial	101	-	265	-
Commercial real estate:
Commercial mortgages	936	1	1,355	-
SBA loans	73	-	245	-
Religious organizations	180	-	189	-
Total Commercial real estate	1,189	-	1,789	-
Total loans	$ 1,290	$ 1	$ 2,032	$ -

(In 000's)	Nine Months Ended September 30, 2018		Nine Months Ended September 30, 2017
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans

Commercial and industrial:
Commercial	$ 8	$ 2	$ -	$ -
SBA  loans	-	-	-	-
Asset-based	76	-	261	-
Total commercial and industrial	84	2	270	-
Commercial real estate:
Commercial mortgages	946	1	1,355	-
SBA loans	76	-	249	-
Religious organizations	182	-	192	-
Total commercial real estate	1,204	-	1,796	-
Total loans	$ 1,288	$ 3	$ 2,057	$ -

Troubled debt restructurings (“TDRs”).  TDRs occur when a creditor, for economic or legal reasons related to a debtor’s financial condition, grants a concession to the debtor that it would not otherwise consider, such as a below market interest rate, extending the maturity of a loan, or a combination of both. The Company made modifications to certain loans in its commercial loan portfolio that included the term out of lines of credit to begin the amortization of principal.  The terms of these loans do not include any financial concessions and are not consistent with the current market.  Management reviews all loan modifications to determine whether the modification qualifies as a troubled debt restructuring (i.e. whether the creditor has been granted a concession or is experiencing financial difficulties).  Based on this review and evaluation, none of the modified loans met the criteria of a troubled debt restructuring.  Therefore, the Company had no troubled debt restructurings at September 30, 2018 and December 31, 2017.

7. Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties acquired as a result of deed in-lieu-of foreclosure and foreclosures. Properties or other assets are classified as OREO and are reported at the lower of carrying value or fair value, less estimated costs to sell. Costs relating to the development or improvement of assets are capitalized, and costs relating to holding the property are charged to expense. Activity in other real estate owned for the periods was as follows:  

(in 000's)	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Beginning balance	$ 402	$ 447	$ 626	$ 447
Additions, transfers from loans	-	-	-	-
Sales	(10)	-	(229)	-
	392	447	397	447
Write-ups (downs)	-	-	(5)	-
Ending Balance	$ 392	$ 447	$ 392	$ 447

There were no loans in the process of foreclosure at September 30, 2018 and December 31, 2017.

The following schedule reflects the components of other real estate owned:

(in 000's)	September 30, 2018	December 31, 2017
Commercial real estate	$ 317	$ 317
Residential real estate	75	309
Total	$ 392	$ 626

The following table details the components of net expense of other real estate owned:

	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Insurance	$ 4	$ -	$ 10	$ 7
Legal Fees	-	-	-	-
Professional fees	1	-	1	5
Real estate taxes	4	14	12	21

Utilities	4	1	6	2
Maintenance	1	13	4	22
Write downs	-	-	5	-
Other	-	-	1	-
Total	$ 14	$ 28	$ 39	$ 57

8.  Fair Value  

Fair Value Measurement

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures topic of ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance in FASB ASC 820 provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its assets and liabilities carried at fair value in three levels as follows:

Level 1

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

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.”   

Level 3

·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.   

A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Fair Value on a Recurring Basis

Securities Available for Sale (“AFS”): Where quoted prices are available in an active market, securities would be classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow models. Level 2 securities include U.S. agency securities and mortgage backed agency securities.  

Loans Held for Sale. Fair values are estimated by using actual indicative market bids on a loan by loan basis.

Loans Held at Fair Value. Fair values for loans for which the guaranteed portion is intended to be sold are estimated by using actual quoted market bids on a loan by loan basis. Fair values for the un-guaranteed portion of SBA loans are estimated based on the present value of future cashflows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.  

Servicing Assets. Fair values for servicing assets related to SBA loans are estimated based on the present value of future cashflows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.  

Assets on the consolidated balance sheets measured at fair value on a recurring basis are summarized below.

(in 000’s)	Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at September 30, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,233	$ -	$ 2,233	$ -
Government Sponsored Enterprises residential mortgage-backed securities	2,354	-	2,354	-
Total	$ 4,587	$ -	$ 4,587	-
Loans held for sale	$ 12,583	-	$ 12,583
Loans held at fair value	$ 5,183	-	-	$ 5,183
Servicing asset	$ 284	-	-	$ 284

(in 000’s)	Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at December 31, 2017	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,273	$ -	$ 2,273	$ -
Government Sponsored Enterprises residential mortgage-backed securities	2,740	-	2,740	-
Money market funds	132	132	-	-
Total	$ 5,145	$ 132	$ 5,013	$ -
Loans held for sale	$ 10,297	$ -	$ 10,297	$ -
Loans held at fair value	$ 4,451	$ -	$ -	$ 4,451
Servicing asset	$ 319	$ -	$ -	$ 319

The fair value of the Bank’s AFS securities portfolio was approximately $4,914,000 and $5,145,000 at September 30, 2018 and December 31, 2017, respectively. All the residential mortgage-backed securities were issued or guaranteed by the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).  The underlying loans for these securities are residential mortgages that are geographically dispersed throughout the United States.  The valuation of AFS securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar instruments and all relevant information.  There were no transfers between Level 1 and Level 2 assets during the periods ended September 30, 2018 and 2017.

When estimating the fair value of Level 3 financial instruments, management uses various observable and unobservable inputs.  These inputs include estimated cashflows, prepayment speeds, average projected default rate and discount rates as follows:

(in 000’s)

Assets measured at fair value September 30, 2018 Fair value December 31, 2017 Fair Value Principal valuation techniques Significant observable inputs September 30, 2018 Range of inputs December 31, 2017 Range of inputs

Loans held at fair value:	$ 5,183	$ 4,451	Discounted cash flow	Constant prepayment rate	11.44% to 15.00%	8.54% to 10.41 %
				Weighted average discount rate	8.91% to 12.63%	9.00% to 11.62%
				Weighted average life	2.23 yrs. to 7.26 yrs.	2.67 yrs. to 9.29 yrs.
				Projected default rate	1.02% to 9.26%	0.75% to 7.61%

(in 000’s)

Assets measured at fair value	September 30, 2018 Fair value	December 31, 2017 Fair Value	Principal valuation techniques	Significant observable inputs	September 30, 2018 Range of inputs	December 31, 2017 Range of inputs
Servicing asset	$284	$ 319	Discounted cash flow	Constant prepayment rate	7.36% to 14.64%	5.58% to 10.67 %
				Weighted average discount rate	11.45% to 27.06%	11.75% to 19.74%
				Weighted average life	2.23 yrs. to 7.13 yrs.	2.67 yrs. to 9.09 yrs.

Due to the inherent uncertainty of determining the fair value of assets that do not have a readily available market value, fair value as determined by management may fluctuate from period to period.

The following table summarizes additional information about assets measured at fair value on a recurring basis for which level 3 inputs were utilized to determine fair value:

(in 000’s)	Loans held at fair value	Servicing Asset
Balance at December 31, 2017	$  4,451	$ 319
Origination of loans/additions	732	62
Principal repayments/amortization	(104)	(92)
Change in fair value of financial instruments	104	(5)
Balance at September 30, 2018	$5,183	$284

Fair Value on a Nonrecurring Basis

Certain assets are not measured at fair value on a recurring 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 carried on the consolidated balance sheet by level within the hierarchy as of September 30, 2018 and December 31, 2017, for which a nonrecurring change in fair value has been recorded during the nine months ended September 30, 2018 and year ended December 31, 2017.

Carrying Value at September 30, 2018:

(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)
Impaired loans	$76	-	-	$76
Other real estate owned (“OREO”)	$392	-	-	$392

Carrying Value at December 31, 2017:

(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)
Impaired Loans	$134	-	-	$134
Other real estate owned (“OREO”)	$626	-	-	$ 626

The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan

to the fair value of the collateral (less estimated selling costs) and the loan is included in the table above as a Level 3 measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the table above as it is not currently being carried at its fair value. At September 30, 2018 and December 31, 2017, the fair values shown above exclude estimated selling costs of $39,000.

OREO is carried at the lower of cost or fair value, which is measured at the foreclosure date. If the fair value of the collateral exceeds the carrying amount of the loan, no charge-off or adjustment is necessary, the loan is not considered to be carried at fair value, and is therefore not included in the table above. If the fair value of the collateral is less than the carrying amount of the loan, management will charge the loan down to its estimated realizable value. The fair value of OREO is based on the appraised value of the property, which is generally unadjusted by management and is based on comparable sales for similar properties in the same geographic region as the subject property, and is included in the above table as a Level 2 measurement. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. In these cases, the loans are categorized in the above table as Level 3 measurement since these adjustments are considered to be unobservable inputs. Income and expenses from operations and further declines in the fair value of the collateral subsequent to foreclosure are included in net expenses from OREO.

Fair Value of Financial Instruments

FASB ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value of assets and liabilities not previously disclosed are depicted below:

		September 30, 2018		December 31, 2017
(in 000’s)	Level in	Carrying	Fair	Carrying	Fair
	Value Hierarchy	Amount	Value	Amount	Value
(Dollars in thousands)
Assets:
Cash and cash equivalents	Level 1	$ 8,088	$ 8,088	$ 11,671	$ 11,671
Loans, net of allowance for loan losses	(1)	21,873	21,797	25,545	25,831
Servicing asset	Level 3	284	284	319	319
Accrued interest receivable	Level 1	194	194	153	153
Liabilities:
Demand deposits	Level 1	32,041	32,041	34,610	34,610
Savings deposits	Level 1	10,820	10,820	11,505	11,505
Time deposits	(2)	8,241	8,152	9,339	9,280
Accrued interest payable	Level 1	12	12	14	14

(1)Level 2 for non-impaired loans; Level 3 for impaired loans.  

(2)Level 1 for variable rate instruments, level 3 for fixed rate instruments. 

9. Revenue Recognition

Management determined that the primary sources of revenue associated with financial instruments, including interest income on loans and investments, along with certain noninterest revenue sources including gains on the sale of loans, the change in fair value of financial instruments, are not within the scope of Topic 606. As a result, no changes were made during the period related to these sources of revenue, which cumulatively comprise 83.5% of the total revenue of the Company.

The significant components of noninterest income within the scope of Topic 606 are as follows:

Customer Service Fees and ATM Fees — The Company has contracts with its deposit account customers where fees are charged for certain items or services. Service charges include account analysis fees, monthly service fees, overdraft fees, and other deposit account related fees. Additionally, the Company collects revenue when outside customers utilize the Bank’s ATM machines for transactions.  Revenue related to account analysis fees, ATM transactions and service fees is recognized on a monthly basis as the Company has an unconditional right to the

fee consideration. Fees attributable to specific performance obligations of the Company (i.e. overdraft fees, etc.) are recognized at a defined point in time based on completion of the requested service or transaction.

Loan Syndication Fees – The Company contracts with certain corporate entities as an arranging institution for loan syndications whereby a fee is earned by the Company for soliciting, assembling, and obtaining commitments from other lenders related to certain facilities of the corporate entity.  A portion of the fee is paid as an up-front payment for acting as the arranger, which is earned and recognized on the date the contract is signed without further commitment.  Another portion of the fee is earned, and generally paid, upon completion of the loan syndication arrangement which is the performance obligation for that portion of the fee.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended September 30, 2018 and 2017.

	Three Months Ended September  30,		Nine Months Ended September 30,
	2018	2017	2018	2017
(Dollars in thousands)
Noninterest income:
In-scope of Topic 606
Customer Service Fees	$ 107	$ 101	$ 310	$ 299
ATM Fee Income	25	31	76	94
Loan Syndication Fees	100	90	100	90
Other income	36	15	84	77
Noninterest income (in-scope of Topic 606)	268	237	570	560
Noninterest income (out-of-scope of Topic 606)	124	253	358	477
Total noninterest income	$ 392	$ 490	$ 928	$ 1,037

10. Regulatory

On April 25, 2018, the Bank entered into stipulations consenting to the issuance of amended and restated Consent Orders with the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking (“Department”) which serve as a prescriptive Restoration Plan providing benchmarks for capital, earnings and asset quality. The material terms of the Consent Orders are identical.  The requirements and status of items included in the Orders are as follows:

The Orders will remain in effect until modified or terminated by the FDIC and the Department and do not restrict the Bank from transacting its normal banking business.  The Bank will continue to serve its customers in all areas including making loans, establishing lines of credit, accepting deposits and processing banking transactions.  Customer deposits remain fully insured to the highest limits set by the FDIC.  The FDIC and the Department did not impose or recommend any monetary penalties in connection with the Consent Orders. The Board of Directors is optimistic about the Bank’s ability to achieve the requirements as stated.  These Orders represent a more tailored approach by regulators to strengthen and preserve minority-owned financial institutions like United Bank of Philadelphia.  The priority for the Board of Directors and management is to comply with the Order promptly. The requirements of the Orders are as follows:

·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. Add two additional board members with banking experience. 

·Complete audited financial statements for 2016, 2017, and 2018. 

·Formulate and implement a Restoration/Strategic Plan to increase profitability reduce expenses and improve operating performance and related ratios. 

·Develop and implement a Strategic Plan for each year during which the orders are in effect, to be revised 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%, by September 2019; 

·Formulate a written plan to improve asset quality and reduce the Bank’s risk positions in  assets classified as “Doubtful” or “Substandard” at its regulatory examination; 

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

·Refrain from accepting any brokered deposits; Prepare and submit quarterly reports to the FDIC and the Department detailing the actions taken to secure compliance with the Orders. 

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

As of September 30, 2018 and December 31, 2017, the Bank’s tier one leverage capital ratio was 4.77% and 5.51%, respectively, and its total risk-based capital ratio was 9.20% and 10.11%, respectively. These ratios are below the levels required by the Consent Orders.  Management is in the process of addressing all matters outlined in the Consent Orders.   The net loss during the quarter resulted in a decrease in the capital ratios. Management has developed and submitted a Capital Plan that focuses on the following:

·Core Profitability from Bank operations—Core profitability is essential to stop the erosion of capital.  

·External equity investments—During 2017, the Company received external investments of $925,000 and from other financial institutions. External capital investments will continue to be sought.   

·Performance grants—Management has developed a performance grant strategy to attract funding based on economic impact and job creation/retention.  The goal is to obtain grant funding from local entities that are seeking a “return on impact”. In April 2019, the Bank received a $2.5 million economic stimulus grant from the City of Philadelphia.  

In September 2020, the Bank received a grant totaling $3.4 million from the Pennsylvania CDFI Network to provide financial assistance related to potential losses related to the COVID-19 pandemic.  Approximately $614,000 of the grant was allocated to make principal and interest payments for up to six months for struggling small businesses in the Bank’s loan portfolio and mitigate potential deterioration in asset quality.

Further, in August 2021, the Bank was awarded a grant totaling $1,286,000 from the US Treasury’s CDFI Rapid Response Program that was geared to strengthen the Bank as the economy recovers from the effects of the COVID-19 pandemic.  This grant resulted in further improvement in the Bank’s capital ratios.

As a result of the above actions, management believes that the Bank has and will be able to comply with the terms and conditions of the Orders.

11.  Going Concern

The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in its consolidated financial statements, the Company reported a net loss of approximately $58,000 for the quarter ended September 30, 2018 and net income of approximately $29,000 for the same quarter in 2017. Additionally, the Company reported a net loss of $407,000 for the nine months ended September 30, 2018 and a net loss of $289,000 for the nine months ended September 30, 2017.  Further, the Company has entered into Consent Orders with the FDIC and the Department which, among other provisions, require the Bank to increase its tier one leverage capital ratio to 8.50% and its total risk-based capital ratio to 12.50%.  As of September 30, 2018, the Bank’s tier one leverage capital ratio was 4.87% and its total risk-based capital ratio was 10.62%.  The Bank’s failure to comply with the terms of the Consent Orders could result in additional regulatory supervision and/or actions.  The ability of the Bank to continue as a going concern is dependent on many factors, including achieving required capital levels, earnings and fully complying with the Consent Orders.  The Consent Orders raise substantial doubt about the Company’s ability to continue as a going concern.

Management has developed a plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern.  This plan is primarily based on the following:

·Increase earnings:  Core profitability is essential to stop the erosion of capital.  Noninterest income will continue to be an important element of the Bank’s earnings enhancement plan, specifically noninterest income from SBA loans will continue to be an important income strategy for the Bank. In addition, management will seek to reduce noninterest expense by reducing targeted areas of overhead including the closure of the Mount Airy branch in 2018 as well as the projected recovery of SBA loan fair value write-downs and other cost reduction strategies. During 2018 and 2019, there were SBA fair value write-downs on defaulted loans that totaled more than $1 million.  Management has developed forbearance agreements and implemented other collection strategies including the sale of underlying collateral to mitigate the exposure on these loans that management believes will result in the reversal of some fair value write-downs. 

·Strengthen Capital: A concentrated effort will continue to be made to stabilize and strengthen the Bank’s capital. Management has identified potential sources of external capital that have been received in 2020 and 2021.  This capital will be used to further strengthen the Bank’s balance sheet. 

·Comply with the Consent Orders:  Management has developed a Restoration Plan to address matters outlined in the Consent Orders including strengthening management, asset quality, profitability and capital.  This plan received a “non-objection” from the Bank’s primary regulators in February 2020. Management plans to implement the Restoration Plan in an attempt to comply with the terms and conditions of the Orders. 

Based on management’s assessment of the Company’s ability to alleviate the substantial doubt about the its ability to continue as a going concern, these consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

12.  Subsequent Events

In December 31, 2018, there was a significant decline in asset quality that resulted in fair value write-downs of defaulted SBA loans totaling $473,000.  In addition, an increase of $139,000 in specific reserves related to non-SBA loans was required due to an increase in impaired loan exposure.  These write-downs resulted in a reduction in the Bank’s Tier 1 Capital Ratio to 3.75%, below the minimum of 4.00% considered to be “adequately” capitalized. Also, there was a reduction in the total risk-based capital ratio to 7.44%, below the minimum of 8.00% considered to be adequately capitalized.

In April 2019, the Bank received an economic stimulus grant from the City of Philadelphia of $2,500,000 that served to improve its Tier I leverage capital ratio.  At December 31, 2019, the Bank’s tier one leverage capital ratio was 5.66% and its total risk-based capital ratio was 11.91% that is considered “adequately capitalized” under the regulatory framework for prompt and corrective action.  The Bank’s growth and other operating factors such as the need for additional provisions to the allowance for loans losses may have an adverse effect on its capital ratios.

Beginning in March 2020, the onset of the COVID-19 pandemic has had an adverse economic effect on a global, national, and local level. Following the outbreak, market interest rates have declined significantly, as the 10-year Treasury bond fell below 1.00% in early March 2020 that could lead to a reduction in the Bank’s net interest margin.  In addition, this event may adversely affect asset quality related to the Company’s small business loan customers that have been affected by a reduction in their business operations because of government-imposed restrictions.  As a result, the Company has deferred loan payments as necessary for those customers that have been impacted by the pandemic.  The pandemic has also affected the way that the Company is conducting business. Since notice of the pandemic, the Company has temporarily closed its Center City branch office and consolidated all customer service activity at its Progress Plaza branch.  In addition, the Company has maintained limited on-site presence of four employees or less in the Lending Department while all other employees work remotely in an effort to slow the spread of the pandemic. The full extent of the effect of the pandemic is not yet known.

In September 2020, the Bank received a grant totaling $3.4 million from the Pennsylvania CDFI Network to provide financial assistance related to potential losses related to the COVID-19 pandemic.  Approximately $2.8

million of this grant was recorded as noninterest income and $617,000 was recorded as deferred revenue.  The deferred revenue portion of the grant was allocated to be used to make principal and interest payments for up to six months for struggling small businesses in the Bank’s loan portfolio. At June 30, 2021, the Bank’s tier one leverage capital ratio was 9.43% and its total risk-based capital ratio was 23.48% which is considered “well capitalized” under the regulatory framework for prompt and corrective action.  

Further, in August 2021, the Bank was awarded a grant totaling $1,286,000 from the US Treasury’s CDFI Rapid Response Program that was geared to strengthen the Bank as the economy recovers from the effects of the COVID-19 pandemic.  This grant resulted in further improvement in the Bank’s capital ratios.

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
	(Registrant)
October 8, 2021	/s/ Evelyn F. Smalls
Date	Evelyn F. Smalls
	President and Chief Executive Officer
October 8, 2021	/s/ Brenda Hudson-Nelson
Date	Executive Vice President,
	Chief Financial Officer

Exhibit No.	Description
3.1	Certificate of Incorporation (1)
3.2	Bylaws (1)
31.1	Rule 13a-14(a)/15d-14(a) Certifications (1)
31.2	Rule 13a-14(a)/15d-14(a) Certifications (1)
32.1	Section 1350 Certifications (1)
32.2 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE	Section 1350 Certifications (1) XBRL Instance Document (2) XBRL Taxonomy Extension Schema Document(2) XBRL Taxonomy Extension Calculation Linkbase Document(2) XBRL Taxonomy Extension Definition Linkbase Document(2) XBRL Taxonomy Extension Label Linkbase Document(2) XBRL Taxonomy Extension Presentation Linkbase Document(2)

(1)	Filed previously.
(2)	Furnished herewith.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 05, 2021
Details
Registrant Name	UNITED BANCSHARES INC /PA
Registrant CIK	0000944792
SEC Form	10-Q/A
Period End date	Sep. 30, 2018
Fiscal Year End	--12-31
Tax Identification Number (TIN)	23-2802415
Number of common stock shares outstanding		843,050
Filer Category	Non-accelerated Filer
Current with reporting	No
Amendment Description	The sole purpose of this amendment to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, originally filed with the Securities and Exchange Commission on September 17, 2021, is to furnish Exhibit 101 to the Form 10-Q which contains the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes included in Part 1, Item 1 of the Form 10-Q.
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	0-25976
Entity Incorporation, State or Country Code	PA
Entity Address, Address Line One	30 S. 15th Street
Entity Address, City or Town	Philadelphia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19102
City Area Code	(215)
Local Phone Number	351-4600
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Amendment Flag	true
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Assets:
Cash and due from banks	$ 1,951,155	$ 2,075,258
Interest-bearing deposits with banks	3,334,124	311,995
Federal funds sold and other cash equivalents	2,936,296	9,284,000
Cash and cash equivalents	8,221,576	11,671,253
Investment securities available-for-sale, at fair value	4,587,304	5,144,707
Loans held for sale	12,583,544	10,297,168
Loans held at fair value	5,182,526	4,450,901
Loans and Leases Receivable, Net of Deferred Income	22,075,761	25,725,700
Less allowance for loan losses	(202,353)	(179,949)
Net loans	21,873,408	25,545,751
Bank premises and equipment, net	186,352	303,298
Accrued interest receivable	193,952	153,415
Other real estate owned	391,571	626,071
Servicing asset	284,039	319,368
Prepaid expenses and other assets	548,260	496,935
Total assets	54,052,532	59,008,867
Liabilities:
Demand deposits, noninterest-bearing	16,714,432	19,606,017
Demand deposits, interest-bearing	15,327,070	15,004,238
Savings deposits	10,820,460	11,505,417
Time deposits, under $250,000	4,390,631	4,331,306
Time deposits, $250,000 and over	3,849,892	5,008,276
Total deposits	51,102,485	55,455,254
Accrued interest payable	11,556	13,939
Accrued expenses and other liabilities	161,099	259,152
Total liabilities	51,275,140	55,728,345
Shareholders' equity:
Common stock, $0.01 par value; 2,000,000 shares authorized; 826,921 issued and outstanding	8,269	8,269
Additional paid-in-capital	15,677,626	15,677,626
Accumulated deficit	(12,755,939)	(12,348,988)
Accumulated other comprehensive loss	(153,575)	(57,396)
Total shareholders' equity	2,777,392	3,280,522
Total liabilities and shareholders' equity	54,052,532	59,008,867
Series A Preferred Stock
Shareholders' equity:
Preferred Stock Value	993	993
Series B Preferred Stock
Shareholders' equity:
Preferred Stock Value	$ 18	$ 18

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CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares		9 Months Ended
	Dec. 31, 2017	Sep. 30, 2018
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	2,000,000	2,000,000
Common Stock, Shares, Issued	826,921	826,921
Common Stock, Shares, Outstanding	826,921	826,921
Series A Preferred Stock
Preferred Stock, Dividend Rate, Percentage	6.00%	6.00%
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	500,000	500,000
Preferred Stock, Shares Issued	99,342	99,342
Preferred Stock, Shares Outstanding	99,342	99,342
Series B Preferred Stock
Preferred Stock, Dividend Rate, Percentage	7.00%	7.00%
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	7,000	7,000
Preferred Stock, Shares Issued	1,850	1,850
Preferred Stock, Shares Outstanding	1,850	1,850

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Interest income:
Interest and fees on loans	$ 600,438	$ 612,112	$ 1,745,278	$ 1,729,095
Interest on investment securities	28,394	29,985	86,743	92,550
Interest on federal funds sold	27,531	32,074	115,980	68,863
Interest on time deposits with other banks	21,950	202	22,690	574
Total interest income	678,313	674,373	1,970,691	1,891,082
Interest expense:
Interest on time deposits	10,787	11,021	35,064	28,775
Interest on demand deposits	6,675	6,515	19,708	18,953
Interest on savings deposits	1,395	1,470	4,234	4,399
Total interest expense	18,857	19,006	59,006	52,127
Net interest income	659,456	655,367	1,911,685	1,838,955
Provision (credit) for loan losses	20,000	(15,000)	45,000	(91,000)
Net interest income after provision (credit) for loan losses	639,456	670,367	1,866,685	1,929,955
Noninterest income:
Customer service fees	106,909	101,476	309,849	298,786
ATM fee income	24,777	30,644	76,134	93,791
Gain on sale of loans	41,204	54,459	265,022	206,319
Net change in fair value of financial instruments	83,278	197,665	103,794	271,182
Gains (Losses) on Sales of Other Real Estate	16	0	(11,588)	0
Loan Syndication Fees	100,000	90,400	100,000	90,400
Other income	36,247	14,875	84,343	76,753
Total noninterest income	392,431	489,519	927,554	1,037,231
Noninterest expense:
Salaries, wages and employee benefits	372,642	395,915	1,154,522	1,175,163
Occupancy and equipment	244,865	253,981	746,000	755,115
Office operations and supplies	62,202	84,643	200,825	247,362
Marketing and public relations	1,742	3,056	27,069	11,865
Professional services	65,481	76,182	137,753	177,622
Data processing	98,878	95,509	307,735	290,861
Deposit insurance assessments	24,000	27,000	73,000	72,000
Other real estate expense	13,850	28,440	38,629	58,326
Loan and collection costs	50,974	43,979	115,968	124,603
Other operating	154,132	122,558	399,689	343,564
Total noninterest expense	1,088,766	1,131,263	3,201,190	3,256,481
Net (loss) income before income taxes	(56,879)	28,623	(406,951)	(289,295)
Provision for income taxes	0	0	0	0
Net (loss) income	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Net (loss) income per common share-basic and diluted	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)
Weighted average number of common shares outstanding	826,921	826,921	826,921	826,921
Comprehensive (loss) income:
Net (loss) income	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Unrealized (losses) gains on available for sale securities, net of taxes	(26,040)	4,835	(96,179)	39,800
Total comprehensive (loss) income	$ (82,919)	$ 33,458	$ (503,130)	$ (249,495)

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Series A Preferred Stock	Series B Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	AOCI Attributable to Parent	Total
Shares, Outstanding, Beginning Balance at Dec. 31, 2016	99,342	0	826,921
Net Income (Loss)	$ 0	$ 0	$ 0	$ 0	$ (202,621)	$ 0	$ (202,621)
Other Comprehensive Income (Loss), Net of Tax	0	0	0	0	0	9,767	9,767
Stock Issued During Period, Value, New Issues	$ 0	$ 13	$ 0	674,987	0	0	675,000
Stock Issued During Period, Shares, New Issues		1,350
Shares, Outstanding, Ending Balance at Mar. 31, 2017	99,342	1,350	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2016	$ 993	$ 0	$ 8,269	14,752,644	(12,038,281)	(63,710)	2,659,915
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2017	$ 993	$ 13	$ 8,269	15,427,631	(12,240,902)	(53,943)	3,142,061
Shares, Outstanding, Beginning Balance at Dec. 31, 2016	99,342	0	826,921
Stock Issued During Period, Value, New Issues							925,000
Shares, Outstanding, Ending Balance at Sep. 30, 2017	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2016	$ 993	$ 0	$ 8,269	14,752,644	(12,038,281)	(63,710)	2,659,915
Stockholders' Equity Attributable to Parent, Ending Balance at Sep. 30, 2017	$ 993	$ 18	$ 8,269	15,677,626	(12,327,576)	(23,910)	3,335,420
Shares, Outstanding, Beginning Balance at Dec. 31, 2016	99,342	0	826,921
Net Income (Loss)							(407,000)
Shares, Outstanding, Ending Balance at Dec. 31, 2017	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2016	$ 993	$ 0	$ 8,269	14,752,644	(12,038,281)	(63,710)	2,659,915
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 31, 2017	$ 993	$ 18	$ 8,269	15,677,626	(12,348,988)	(57,396)	3,280,522
Shares, Outstanding, Beginning Balance at Mar. 31, 2017	99,342	1,350	826,921
Net Income (Loss)	$ 0	$ 0	$ 0	0	(115,297)	0	(115,297)
Other Comprehensive Income (Loss), Net of Tax	$ 0	$ 0	$ 0	0	0	25,198	25,198
Shares, Outstanding, Ending Balance at Jun. 30, 2017	99,342	1,350	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Mar. 31, 2017	$ 993	$ 13	$ 8,269	15,427,631	(12,240,902)	(53,943)	3,142,061
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2017	993	13	8,269	15,427,631	(12,356,199)	(28,745)	3,051,962
Net Income (Loss)	0	0	0	0	28,623	0	28,623
Other Comprehensive Income (Loss), Net of Tax	$ 0	0	0	0	0	4,835	4,835
Stock Issued During Period, Value, New Issues		$ 5	$ 0	249,995	0	0	250,000
Stock Issued During Period, Shares, New Issues		500
Shares, Outstanding, Ending Balance at Sep. 30, 2017	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Ending Balance at Sep. 30, 2017	$ 993	$ 18	$ 8,269	15,677,626	(12,327,576)	(23,910)	3,335,420
Shares, Outstanding, Beginning Balance at Dec. 31, 2017	99,342	1,850	826,921
Net Income (Loss)	$ 0	$ 0	$ 0	0	(198,026)	0	(198,026)
Other Comprehensive Income (Loss), Net of Tax	$ 0	$ 0	$ 0	0	0	(53,879)	(53,879)
Shares, Outstanding, Ending Balance at Mar. 31, 2018	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2017	$ 993	$ 18	$ 8,269	15,677,626	(12,348,988)	(57,396)	3,280,522
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2018	$ 993	$ 18	$ 8,269	15,677,626	(12,547,014)	(111,275)	3,028,617
Shares, Outstanding, Beginning Balance at Dec. 31, 2017	99,342	1,850	826,921
Stock Issued During Period, Value, New Issues							0
Shares, Outstanding, Ending Balance at Sep. 30, 2018	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2017	$ 993	$ 18	$ 8,269	15,677,626	(12,348,988)	(57,396)	3,280,522
Stockholders' Equity Attributable to Parent, Ending Balance at Sep. 30, 2018	$ 993	$ 18	$ 8,269	15,677,626	(12,755,939)	(153,575)	2,777,392
Shares, Outstanding, Beginning Balance at Mar. 31, 2018	99,342	1,850	826,921
Net Income (Loss)	$ 0	$ 0	$ 0	0	(152,046)	0	(152,046)
Other Comprehensive Income (Loss), Net of Tax	$ 0	$ 0	$ 0	0	0	(16,259)	(16,259)
Shares, Outstanding, Ending Balance at Jun. 30, 2018	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Beginning Balance at Mar. 31, 2018	$ 993	$ 18	$ 8,269	15,677,626	(12,547,014)	(111,275)	3,028,617
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2018	993	18	8,269	15,677,626	(12,699,060)	(127,534)	2,860,312
Net Income (Loss)	0	0	0	0	(56,879)	0	(56,879)
Other Comprehensive Income (Loss), Net of Tax	$ 0	$ 0	$ 0	0	0	(26,041)	(26,041)
Shares, Outstanding, Ending Balance at Sep. 30, 2018	99,342	1,850	826,921
Stockholders' Equity Attributable to Parent, Ending Balance at Sep. 30, 2018	$ 993	$ 18	$ 8,269	$ 15,677,626	$ (12,755,939)	$ (153,575)	$ 2,777,392

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net loss	$ (406,951)	$ (289,295)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Provision (credit) for loan losses	45,000	(91,000)
Amortization of premiums on investments, net	5,360	7,442
Net (loss) gain on sale of other real estate	11,588	0
Write-down of other real estate	5,000	0
Amortization of servicing asset	91,919	26,706
Depreciation on fixed assets	137,032	138,767
Net change in fair value of financial instruments	(103,794)	(271,182)
Gain on sale of loans	(265,022)	(206,319)
Proceeds from the sale of loans held-for-sale	3,098,258	2,174,935
Loans originated for sale	(5,747,443)	(4,337,673)
Increase in accrued interest receivable and other assets	(148,453)	(187,053)
Increase in accrued interest payable and other liabilities	(100,436)	(13,781)
Net cash used in operating activities	(3,345,041)	(3,048,452)
Cash flows from investing activities:
Proceeds from maturity and principal reductions of available-for-sale investment securities	457,629	324,771
Purchase of securities available-for-sale	(1,765)	(1,026)
Net decrease in loans	3,627,344	1,504,606
Proceeds from sale of other real estate	217,911	0
Purchase of bank premises and equipment	(20,086)	(22,121)
Net cash provided by investing activities	4,281,031	1,806,230
Cash flows from financing activities:
Stock Issued During Period, Value, New Issues	0	925,000
Net decrease in deposits	(4,385,667)	7,316,406
Net cash (used in) provided by financing activities	(4,385,667)	8,241,406
Net (decrease) increase in cash and cash equivalents	(3,449,677)	6,999,184
Cash and cash equivalents at beginning of period	11,671,253	7,802,831
Cash and cash equivalents at end of period	8,221,576	14,802,015
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	61,390	32,493
Transfer of investment to other cash equivalents	133,296	0
Transfer of loans from held-for-sale to held at fair value	$ 731,625	$ 437,111

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1. Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes

1. Summary of Significant Accounting Policies

1. Significant Accounting Policies

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, 2017 when reviewing this Form 10-Q.  Because this report is based on an interim period, certain information and footnote disclosures normally included in the Annual Report on Form 10-K have been condensed or omitted. 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 September 30, 2018 and December 31, 2017 and the consolidated results of its operations and its cash flows for the three and nine months ended September 30, 2018 and 2017.

Management’s Use of Estimates

The preparation of the financial statements has been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Material estimates which are particularly susceptible to significant change in the near term relate to the fair value of investment securities, the determination of the allowance for loan losses, the fair value of loans held at fair value, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities.

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 any such 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.

Loans Held for Sale

The Bank originates SBA loans for which the guaranteed portion is intended to be sold within a short period of time in the secondary market.  These loans are carried at fair value based on a loan-by-loan valuation using actual market bids.  Any change in the balance of the loan and its fair value is recorded as income or expense in each reporting period.  When the guaranteed portion of the loan is sold, the gain on the sale is reduced by the income previously recognized as part of the fair value adjustment.

Loans Held at Fair Value

The Bank originates SBA loans for which the un-guaranteed portion is retained after the guaranteed portion is sold in the secondary market.  Management has elected to carry these loans at fair value in accordance with the

irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments.  Fair value of these loans is estimated based on the present value of future cash flows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.

Loans

The Bank has both the positive intent and ability to hold the majority of its loans to maturity.  These loans are stated at the amount of unpaid principal, reduced by net unearned discount and an allowance for loan losses.  Interest income on loans is recognized as earned based on contractual interest rates applied to daily principal amounts outstanding and accretion of discount.  

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses.  Loans that are determined to be uncollectible are charged against the allowance account, and subsequent recoveries, if any, are credited to the allowance.  When evaluating the adequacy of the allowance, an assessment of the loan portfolio will typically include changes in the composition and volume of the loan portfolio, overall portfolio quality and past loss experience, review of specific problem loans, current economic conditions which may affect borrowers’ ability to repay, and other factors which may warrant current recognition.  Such periodic assessments may, in management’s judgment, require the Bank to recognize additions or reductions to the allowance.  

Various regulatory agencies periodically review the adequacy of the Bank’s allowance for loan losses as an integral part of their examination process.  Such agencies may require the Bank to recognize additions or reductions to the allowance based on their evaluation of information available to them at the time of their examination.  It is reasonably possible that the above factors may change significantly and, therefore, affects management’s determination of the allowance for loan losses in the near term.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired.  For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The general component covers non-impaired loans and is based on historical charge-off experience, other qualitative factors, and adjustments made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.  The Bank does not allocate reserves for unfunded commitments to fund lines of credit.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Bank will identify and assess loans that may be impaired through any of the following processes:

·During regularly scheduled meetings of the Asset Quality Committee 

·During regular reviews of the delinquency report 

·During the course of routine account servicing, annual review, or credit file update  

·Upon receipt of verifiable evidence of a material reduction in the value of collateral to a level that creates a less than desirable Loan-to-Value ratio 

Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller, homogeneous loans, including consumer installment and home equity loans, 1-4 family residential mortgages, and student loans are evaluated collectively for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

Non-accrual and Past Due Loans.

Loans are considered past due if the required principal and interest payments have not been received within 30 days as of the date such payments were due.  The Bank generally places a loan on non-accrual status when interest or principal is past due 90 days or more.  If it otherwise appears doubtful that the loan will be repaid, management may place the loan on nonaccrual status before the lapse of 90 days. Interest on loans past due 90 days or more ceases to accrue except for loans that are well collateralized and in the process of collection.  When a loan is placed on nonaccrual status, previously accrued and unpaid interest is reversed out of income.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Income Taxes

Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis 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.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more-likely-than not recognition threshold is measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits, if any, would be recognized in income tax expense in the consolidated statements of operations.

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2. Net Loss Per Share

9 Months Ended

Sep. 30, 2018

Notes

2. Net Loss Per Share

2. Net (Loss) Income Per Share

The calculation of net loss per share follows:

	Three Months Ended September 30, 2018	Three Months Ended September 30, 2017	Nine Months Ended September 30, 2018	Nine Months Ended September 30, 2017
Basic:
Net (loss) income available to common shareholders	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Average common shares outstanding-basic	826,921	826,921	826,921	826,921
Net (loss) income per share-basic	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)
Diluted:

Average common shares-diluted	826,921	826,921	826,921	826,921
Net (loss) income per share-diluted	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)

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.

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3.Changes in Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2018

Notes

3.Changes in Accumulated Other Comprehensive Loss

3.Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss:

	Three Months Ended September 30, 2018
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (161)	$ 34	$ (127)
Unrealized loss on securities:
Unrealized holding loss arising during period	(32)	6	(26)
Other comprehensive loss, net	(32)	6	(26)
Ending balance	$ (193)	$ 40	$ (153)

	Three Months Ended September 30, 2017
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (43)	$ 14	$ (29)
Unrealized gain on securities:
Unrealized holding gain arising during period	8	(3)	5
Other comprehensive income, net	8	(3)	5
Ending balance	$ (35)	$ 11	$ (24)

	Nine Months Ended September 30, 2018
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (73)	$ 16	$ (57)
Unrealized loss on securities:
Unrealized holding loss arising during period	(120)	24	(96)
Other comprehensive loss, net	(120	24	(96)
Ending balance	$ (193)	$ 40	$ (153)

	Nine Months Ended September 30, 2017
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (97)	$ 33	$ (64)
Unrealized gain on securities:
Unrealized holding gain arising during period	62	(22)	40
Other comprehensive income, net	62	(22)	40
Ending balance	$ (35)	$ 11	$ (24)

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4. New Authoritative Accounting Guidance

9 Months Ended

Sep. 30, 2018

Notes

4. New Authoritative Accounting Guidance

4. New Authoritative Accounting Guidance

Effect of the Adoption of Accounting Standards

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers — Topic 606 and all subsequent ASUs that modified ASC 606. The standard required a company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers at the time the transfer of goods or services takes place. The Company completed an assessment of revenue streams and review of the related contracts potentially affected by the new standard and concluded that ASU 2014-09 did not materially change the method in which it recognizes revenue. Therefore, implementation of the new standard had no material impact to the measurement or recognition of revenue of prior periods. However, additional disclosures were added in the current period, which can be found in Note 9.

In January 2016, the FASB finalized ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This accounting standard (a) requires separate presentation of equity investments (except those accounted for under the equity method of accounting or those that result in

consolidation of the investee) on the balance sheet and measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (g) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

The Company has adopted this standard during the reporting period. On a prospective basis, the Company implemented changes to the measurement of the fair value of financial instruments using an exit price notion for disclosure purposes included in Note 8 to the financial statements. The December 31, 2017, fair value of each class of financial instruments disclosure did not utilize the exit price notion when measuring fair value and, therefore, would not be comparable to the March 31, 2018 disclosure. The Company estimated the fair value based on guidance from ASC 820-10, Fair Value Measurements, which defines fair value as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is no active observable market for sale information on community bank loans and time deposits and, thus, Level III fair value procedures were utilized, primarily in the use of present value techniques incorporating assumptions that market participants would use in estimating fair values.

Effect of Upcoming Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The standard ((along with subsequent amendments and clarifications in ASUs; 2018-01, 2018-11 and 2018-20) requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise.  For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis.  For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years.  For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020.  The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period.  This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.  The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset.  The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted.  The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements.  The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  This Update is not expected to have a significant impact on the Company’s financial statements.

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5. Investment Securities

9 Months Ended

Sep. 30, 2018

Notes

5. Investment Securities

5.  Investment Securities

The following is a summary of the Company's investment portfolio: 

(In 000’s)	September 30, 2018
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,349	$ -	$ (116)	$ 2,233
Government Sponsored Enterprises residential mortgage-backed securities	2,432	10	(88)	2,354
	$ 4,781	10	(204)	$ 4,587

	December 31, 2017
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,349	$ -	$ (76)	$ 2,273
Government Sponsored Enterprises residential mortgage-backed securities	2,737	21	(18)	2,740
Investments in money market funds	132	-	-	132
	$ 5,218	$ 21	$ (94)	$ 5,145

Effective January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments as describe in Note 4.  As a result, the Investment in Money Market Mutual Funds was reclassed to Federal Funds Sold and other cash equivalents.

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2018, are as follows:

(In 000’s)	Amortized Cost	Fair Value
Due in one year	$ -	$ -
Due after one year through five years	-	-
Due after five years through ten years	2,349	2,233
Government Sponsored Enterprises residential mortgage-backed securities	2,432	2,354
	$ 4,781	$ 4,587

Expected maturities will differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without any penalties.

There were no sales of securities during the three and nine months ended September 30, 2018 and 2017.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2018:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	losses	Value	Losses
U.S. Government agency securities	7	$ -	$ -	$ 2,233	$ (116)	$ 2,233	$ (116)

Government Sponsored Enterprises residential mortgage-backed securities	14	1,374	(48)	700	(40)	2,044	(88)
Total temporarily impaired investment Securities	21	$ 1,374	$ (48)	$ 2,903	$ (156)	$ 4,277	$ (204)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2017:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	securities	Value	Losses	Value	losses	Value	Losses
U.S. Government agency securities	7	$ 245	$ (5)	$2,028	$ (71)	$2,273	$ (76)
Government Sponsored Enterprises residential mortgage-backed securities	8	1,124	(7)	377	(11)	1,501	(18)
Total temporarily impaired investment Securities	15	$1,369	$ (12)	$ 2,405	$(82)	$ 3,774	$ (94)

Government Sponsored Enterprises residential mortgage-backed securities. Unrealized losses on the Company’s investment in Government Sponsored Enterprises residential mortgage-backed securities were caused by market interest rate increases. The Company purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company’s investments. Because the decline in fair value is attributable to changes in market interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired.

U.S. Government and Agency Securities. Unrealized losses on the Company's investments in direct obligations of U.S. government agencies were caused by market interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired.

The Company has a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary.  This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.  On a quarterly basis, the Company reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. The Company considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, the intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company’s ability and intent to hold the security for a period of time that allows for the recovery in value.  

As of September 30, 2018 and December 31, 2017, investment securities with a carrying value of $3,567,000 and $4,297,000, respectively, were pledged as collateral to secure public deposits and contingent borrowing at the Federal Reserve Discount Window.

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6. Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2018

Notes

6. Loans and Allowance for Loan Losses

6. Loans and Allowance for Loan Losses

The composition of the Bank’s loan portfolio is as follows:

(in 000’s)	September 30, 2018	December 31, 2017
Commercial and industrial	$ 1,790	$ 1,798
Commercial real estate	18,325	21,389
Consumer real estate	1,252	1,729
Consumer loans other	708	809
Total loans	$ 22,075	$ 25,725

At September 30, 2018, there was no unearned discount.  At December 31, 2017, the unearned discount totaled $10,858 respectively, and is included in the related loan accounts.

The determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance is the accumulation of three components that are calculated based on various independent methodologies that are based on management’s estimates.  The three components are as follows:

·Specific Loan Evaluation Component – Includes the specific evaluation of impaired loans.   

·Historical Charge-Off Component – Applies an eight-quarter rolling historical charge-off rate to all portfolio segments of non-classified loans.  

·Qualitative Factors Component – The loan portfolio is broken down into portfolio segments, upon which multiple factors (such as delinquency trends, economic conditions, concentrations, growth/volume trends, and management/staff ability) are evaluated, resulting in an allowance amount for each of the sub classifications. The sum of these amounts comprises the Qualitative Factors Component. 

All of these factors may be susceptible to significant change.  During the nine months ended September 30, 2018 the Bank did not change any of its qualitative factors in any segment of the loan portfolio.  In addition, the average historical loss factors were relatively unchanged as there were minimal net recoveries during the quarter. The increase in provision for commercial and industrial loans for the nine months ended September 30, 2018 is related to a specific reserve required for one impaired loan.  Credits to the provision for commercial real estate loans during 2018 was related to a decrease in balance in outstanding loans as well as the origination of SBA loans that are accounted for at fair value and are not included in the calculation of the allowance for loan losses.  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.

(in 000's)	For the Three months ended September 30, 2018
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 3	$ 150	$ 4	$ 8	$ 15	$ 180
Provision (credit) for loan losses	80	(37)	-	(8)	(15)	20
Charge-offs	-	-	-	(1)	-	(1)
Recoveries	1	1	-	1	-	3
Net recoveries	1	1	-	-	-	2
Ending balance	$ 84	$ 114	$ 4	$ -	$ -	$ 202

(in 000's)	For the Three months ended September 30, 2017
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 74	$ 170	$ 8	$ 10	$ 10	$ 252
Provision (credit) for loan losses	(65)	18	-	-	32	(15)
Charge-offs	-	-	-	(1)	-	(1)
Recoveries	1	2	-	-	-	3
Net recoveries	1	2	-	(1)	-	2

Ending balance  $ 10   $ 190  $ 8  $ 9   $ 22   $ 239 

(in 000's)	For the Nine months ended September 30, 2018
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 7	$ 155	$ 10	$ 8	$ -	$ 180
Provision (credit) for loan losses	84	(26)	(6)	(7)	-	45
Charge-offs	(10)	(18)	-	(8)	-	(36)
Recoveries	3	3	-	7		13
Net (charge-offs) recoveries	(7)	(15)	-	(1)	-	(23)
Ending balance	$ 84	$ 114	$ 4	$ -	$ -	$ 202

(in 000's)	For the Nine months ended September 30, 2017
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 68	$ 179	$ 10	$ 11	32	$ 300
Provision (credit) for loan losses	(61)	(16)	(3)	(1)	(10)	(91)
Charge-offs	-	-	-	(4)	-	(4)
Recoveries	3	27	1	3	-	34
Net (charge-offs) recoveries	3	27	1	(1)	-	30
Ending balance	$ 10	$ 190	$ 8	$ 9	22	$ 239

(in 000's)	September 30, 2018
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$ 76	$ -	$ -	$ -	$ -	$ 76
Loans collectively evaluated for impairment	8	114	4	-	-	126
	$ 84	$ 114	$ 4	$ -	$ -	$ 202
Loans, ending balance:
Loans individually evaluated for impairment	$ 152	$ 1,359	$ -	$ -	$ -	$ 1,511
Loans collectively evaluated for impairment	1,638	16,966	1,252	708	-	20,564
Total	$ 1,790	$ 18,325	$ 1,252	$ 708	$ -	$ 22,075

(in 000's)	December 31, 2017
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$ -	$ -	$ -	$ -	$ -	$ -
Loans collectively  evaluated for impairment	7	155	10	8	-	180
	$ 7	$ 155	$ 10	$ 8	$ -	$ 180
Loans, ending balance:
Loans individually evaluated for impairment	$ 76	$ 1,201	$ -	$ -	$ -	$ 1,277
Loans collectively  evaluated for impairment	1,722	20,188	1,729	809	-	24,448

Total  $ 1,798  $ 21,389  $ 1,729  $ 809  $ -  $ 25,725

Nonperforming and Nonaccrual and Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2018 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
(In 000's)	30-89 Days	More Days	More Days	Total Past	Current
	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$ 70	$ -	$ 76	146	636	$ 782
SBA loans	-	-	-	-	-	-
Asset-based	-	-	125	125	883	1,008
Total Commercial and industrial	70	-	201	271	1,519	1,790
Commercial real estate:
Commercial mortgages	144	-	1,108	1,252	9,000	10,252
SBA loans	-	-	72	72	179	251
Construction	-	-	-	-	305	305
Religious organizations	-	126	179	305	7,212	7,517
Total Commercial real estate	144	126	1,359	1,629	16,696	18,325
Consumer real estate:
Home equity loans	-	150	283	433	205	638
Home equity lines of credit	-	-	-	-	15	15
1-4 family residential mortgages	31	-	26	57	542	599
Total consumer real estate	31	150	309	490	762	1,252
Total real estate	175	276	1,668	2,119	17,458	19,577
Consumer and other:
Student loans	42	17	-	59	563	622
Other	5	1	-	6	80	86
Total consumer and other	47	18	-	65	643	708
Total loans	$ 292	$ 294	$ 1,869	$ 2,455	$ 19,620	$ 22,075

An age analysis of past due loans, segregated by class of loans, as of December 31, 2017 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
	30-89 Days	More Days	More Days	Total Past	Current
(In 000's)	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$ -	$ -	$ -	$ -	$ 909	$ 909
SBA Loans	-	-	-	-	19	19
Asset-based	-	-	76	76	794	870
Total Commercial and industrial	-	-	76	76	1,722	1,798
Commercial real estate:
Commercial mortgages	50	208	935	1,193	10,478	11,671
SBA loans	-	-	81	81	588	669
Construction	-	-	-	-	419	419
Religious organizations	-	-	187	187	8,443	8,630
Total Commercial real estate	50	208	1,203	1,461	19,928	21,389
Consumer real estate:
Home equity loans	38	123	289	450	191	641
Home equity lines of credit	-	-	-	-	17	17
1-4 family residential mortgages	64	-	48	112	959	1,071
Total consumer real estate	102	123	337	561	1,168	1,729
Total real estate
Consumer and other:

Student loans	32	55	-	87	613	700
Other	6	1	-	7	102	109
Total consumer and other	38	56	-	94	715	809
Total loans	$ 190	$ 387	$ 1,616	$ 2,192	$ 23,533	$ 25,725

Loan Origination/Risk Management.  The Bank has lending policies and procedures in place to maximize loan income within an acceptable level of risk.  Management reviews and approves these policies and procedures on a regular basis.  A reporting system supplements the review process by providing management with periodic reports related to loan origination, asset quality, concentrations of credit, loan delinquencies and non-performing and emerging problem loans.  Diversification in the portfolio is a means of managing risk with fluctuations in economic conditions.

Credit Quality Indicators.  For commercial loans, management uses internally assigned risk ratings as the best indicator of credit quality.  Each loan’s internal risk weighting is assigned at origination and updated at least annually and more frequently if circumstances warrant a change in risk rating.  The Bank uses a 1 through 8 loan grading system that follows regulatory accepted definitions as follows:

·Risk ratings of “1” through “3” are used for loans that are performing and meet and are expected to continue to meet all of the terms and conditions set forth in the original loan documentation and are generally current on principal and interest payments.  Loans with these risk ratings are reflected as “Good/Excellent” and “Satisfactory” in the following table. 

·Risk ratings of “4” are assigned to “Pass/Watch” loans which may require a higher degree of regular, careful attention.  Borrowers may be exhibiting weaker balance sheets and positive but inconsistent cash flow coverage. Borrowers in this classification generally exhibit a higher level of credit risk and are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Loans with this rating would not normally be acceptable as new credits unless they are adequately secured and/or carry substantial guarantors. Loans with this rating are reflected as “Pass” in the following table.  

·Risk ratings of “5” are assigned to “Special Mention” loans that do not presently expose the Bank to a significant degree of risks, but have potential weaknesses/deficiencies deserving Management’s closer attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. No loss of principal or interest is envisioned.  Borrower is experiencing adverse operating trends, which potentially could impair debt, services capacity and may necessitate restructuring of credit.  Secondary sources of repayment are accessible and considered adequate to cover the Bank's exposure. However, a restructuring of the debt should result in repayment.  The asset is currently protected, but is potentially weak.  This category may include credits with   inadequate loan agreements, control over the collateral or an unbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized but exceptions are considered material. These borrowers would have limited ability to obtain credit elsewhere. 

·Risk ratings of “6” are assigned to “Substandard” loans which are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets must have a well-defined weakness. They are characterized by the distinct possibility that some loss is possible if the deficiencies are not corrected. The borrower’s recent performance indicated an inability to repay the debt, even if restructured. Primary source of repayment is gone or severely impaired and the Bank may have to rely upon the secondary source. Secondary sources of repayment (e.g., guarantors and collateral) should be adequate for a full recovery. Flaws in documentation may leave the bank in a subordinated or unsecured position when the collateral is needed for the repayment. 

·Risk ratings of “7” are assigned to “Doubtful” loans which have all the weaknesses inherent in those classified “Substandard” with the added characteristic that the weakness makes the collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable  

and improbable.  The borrower's recent performance indicates an inability to repay the debt.  Recovery from secondary sources is uncertain.  The possibility of a loss is extremely high, but because of certain important and reasonably- specific pending factors, its classification as a loss is deferred.

·Risk rating of “8” are assigned to “Loss” loans which are considered non-collectible and do not warrant classification as active assets.  They are recommended for charge-off if attempts to recover will be long term in nature.  This classification does not mean that an asset has no recovery or salvage value, but rather, that it is not practical or desirable to defer writing off the loss, although a future recovery may be possible.  Loss should always be taken in the period in which they surface and are identified as non-collectible as a result there is no tabular presentation. 

For consumer and residential mortgage loans, management uses performing versus nonperforming as the best indicator of credit quality. Nonperforming loans consist of loans that are not accruing interest (nonaccrual loans) as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to contractual terms is in doubt as well as loans that are 90 days or more past due and have not been placed on nonaccrual.  These credit quality indicators are updated on an ongoing basis. A loan is placed on nonaccrual status as soon as management believes there is doubt as to the ultimate ability to collect interest on a loan.  

The tables below detail the Bank’s loans by class according to their credit quality indictors discussed above.

(In 000's)	Commercial Loans September 30, 2018
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$ -	$ 492	$ -	$ -	$ 214	$ 76	$ 782
SBA loans	-	-	-	-	-	-	-
Asset-based	250	537	-	9	136	76	1,008
	250	1,029	-	9	350	152	1,790
Commercial real estate:
Commercial mortgages	-	7372	1,768	-	901	211	10,252
SBA Loans	-	178	-	-	73	-	251
Construction	-	305	-	-	-	-	305
Religious organizations	30	5,195	2,113	-	179	-	7,517
	30	13,050	3,881	-	1,153	211	18,325
Total commercial loans	$ 280	$ 14,079	$ 3,881	$ 9	$ 1,503	$ 363	$ 20,115

	Residential Mortgage and Consumer Loans September 30, 2018
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$     205	$     433	$     638
Home equity line of credit	15	-	15
1-4 family residential mortgages	573	26	599
	793	459	1,252
Consumer Other:
Student loans	605	17	622
Other	85	1	86
	690	18	708
Total  consumer loans	$  1,483	$     477	$    1,960

(In 000's)	Commercial Loans,   December 31, 2017
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total

Commercial and industrial:
Commercial	$ 250	$ 423	$ -	$ 19	$ 217	$ -	$ 909
SBA loans	-	-	19	-	-	-	19
Asset-based	-	549	152	-	93	76	870
	250	972	171	19	310	76	1,798
Commercial real estate:
Commercial mortgages	-	7,876	2,764	17	797	217	11,671
SBA Loans	-	588	-	-	81	-	669
Construction	-	419	-	-	-	-	419
Religious organizations	48	7,560	835	-	187	-	8,630
	48	16,443	3,599	17	1,065	217	21,389
Total commercial loans	$ 298	$ 17,415	$ 3,770	$ 36	$ 1,375	$ 293	$ 23,187

	Residential Mortgage and Consumer Loans December 31, 2017
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$ 352	$ 289	$ 641
Home equity line of credit	17	-	17
1-4 family residential mortgages	1,023	48	1,071
	1,392	337	1,729
Consumer Other:
Student loans	700	-	700
Other	109	-	109
	809	-	809
Total  consumer loans	$ 2,201	$ 337	$ 2,538

Impaired Loans. The Bank identifies a loan as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. The Bank recognizes interest income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to the Bank.   If these factors do not exist, the Bank will record interest payments on the cost recovery basis.

In accordance with guidance provided by ASC 310-10, Accounting by Creditors for Impairment of a Loan, management employs one of three methods to determine and measure impairment: The Present Value of Future Cash Flow Method; the Fair Value of Collateral Method; or the Observable Market Price of a Loan Method.  To perform an impairment analysis, the Company reviews a loan’s internally assigned grade, its outstanding balance, guarantors, collateral, strategy, and a current report of the action being implemented. Based on the nature of the specific loans, one of the impairment methods is chosen for the respective loan and any impairment is determined, based on criteria established in ASC 310-10.   

The Company makes partial charge-offs of impaired loans when the impairment is deemed permanent and is considered a loss.  Specific reserves are allocated to cover “other-than-permanent” impairment for which the underlying collateral value may fluctuate with market conditions.  There was one commercial real estate partial charge-off totaling $18,000 for the nine months ended September 30, 2018.

Consumer real estate and other loans are not individually evaluated for impairment, but collectively evaluated, because they are pools of smaller balance homogeneous loans.   

Impaired loans as of September 30, 2018 are set forth in the following table.

(In 000's)	Unpaid Contractual	Recorded Investment	Recorded Investment	Total
	Principal	With No	With	Recorded	Related
	Balance	Allowance	Allowance	Investment	Allowance

Commercial and industrial:
Commercial	$ 76	$ -	$ 76	$ 76	$ 76
SBA loans	-	-	-	-	-
Asset-based	76	76	-	76	-
Total commercial and industrial	152	76	76	152	76
Commercial real estate:
Commercial mortgages	1,108	1,108	-	1,108	-
SBA Loans	72	72	-	72	-
Religious organizations	179	179	-	179	-
Total commercial real estate	1,359	1,359	-	1,359	-
Total loans	$ 1,511	$ 1,435	$ 76	$ 1,511	$ 76

Impaired loans as of December 31, 2017 are set forth in the following table.

(In 000's)	Unpaid Contractual	Recorded Investment	Recorded Investment	Total
	Principal	With No	With	Recorded	Related
	Balance	Allowance	Allowance	Investment	Allowance
Commercial and industrial:
Commercial	$ -	$ -	$ -	$ -	$ -
SBA	-	-	-	-	-
Asset based	76	76	-	76	-
Total Commercial and industrial	76	76	-	76	-
Commercial real estate:
Commercial mortgages	933	933	-	933	-
SBA Loans	81	81	-	81	-
Religious Organizations	187	187	-	187	-
Total Commercial real estate	1,201	1,201	-	1,201	-
Total loans	$ 1,277	$ 1,277	$ -	$ 1,277	-

The Bank recognizes interest income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to the Bank.   If these factors do not exist, the Bank will record interest payments on the cost recovery basis. The following tables present additional information about impaired loans.

(In 000's)	Three Months Ended September 30, 2018		Three Months Ended September 30, 2017
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$ 25	$ -	$ -	$ -
SBA loans	-	-	-	-
Asset-based	76	-	243	-
Total commercial and industrial	101	-	265	-
Commercial real estate:
Commercial mortgages	936	1	1,355	-
SBA loans	73	-	245	-
Religious organizations	180	-	189	-
Total Commercial real estate	1,189	-	1,789	-
Total loans	$ 1,290	$ 1	$ 2,032	$ -

(In 000's)	Nine Months Ended September 30, 2018		Nine Months Ended September 30, 2017
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans

Commercial and industrial:
Commercial	$ 8	$ 2	$ -	$ -
SBA  loans	-	-	-	-
Asset-based	76	-	261	-
Total commercial and industrial	84	2	270	-
Commercial real estate:
Commercial mortgages	946	1	1,355	-
SBA loans	76	-	249	-
Religious organizations	182	-	192	-
Total commercial real estate	1,204	-	1,796	-
Total loans	$ 1,288	$ 3	$ 2,057	$ -

Troubled debt restructurings (“TDRs”).  TDRs occur when a creditor, for economic or legal reasons related to a debtor’s financial condition, grants a concession to the debtor that it would not otherwise consider, such as a below market interest rate, extending the maturity of a loan, or a combination of both. The Company made modifications to certain loans in its commercial loan portfolio that included the term out of lines of credit to begin the amortization of principal.  The terms of these loans do not include any financial concessions and are not consistent with the current market.  Management reviews all loan modifications to determine whether the modification qualifies as a troubled debt restructuring (i.e. whether the creditor has been granted a concession or is experiencing financial difficulties).  Based on this review and evaluation, none of the modified loans met the criteria of a troubled debt restructuring.  Therefore, the Company had no troubled debt restructurings at September 30, 2018 and December 31, 2017.

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7. Other Real Estate Owned

9 Months Ended

Sep. 30, 2018

Notes

7. Other Real Estate Owned

7. Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties acquired as a result of deed in-lieu-of foreclosure and foreclosures. Properties or other assets are classified as OREO and are reported at the lower of carrying value or fair value, less estimated costs to sell. Costs relating to the development or improvement of assets are capitalized, and costs relating to holding the property are charged to expense. Activity in other real estate owned for the periods was as follows:  

(in 000's)	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Beginning balance	$ 402	$ 447	$ 626	$ 447
Additions, transfers from loans	-	-	-	-
Sales	(10)	-	(229)	-
	392	447	397	447
Write-ups (downs)	-	-	(5)	-
Ending Balance	$ 392	$ 447	$ 392	$ 447

There were no loans in the process of foreclosure at September 30, 2018 and December 31, 2017.

The following schedule reflects the components of other real estate owned:

(in 000's)	September 30, 2018	December 31, 2017
Commercial real estate	$ 317	$ 317
Residential real estate	75	309
Total	$ 392	$ 626

The following table details the components of net expense of other real estate owned:

	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Insurance	$ 4	$ -	$ 10	$ 7
Legal Fees	-	-	-	-
Professional fees	1	-	1	5
Real estate taxes	4	14	12	21

Utilities	4	1	6	2
Maintenance	1	13	4	22
Write downs	-	-	5	-
Other	-	-	1	-
Total	$ 14	$ 28	$ 39	$ 57

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8. Fair Value

9 Months Ended

Sep. 30, 2018

Notes

8. Fair Value

8.  Fair Value  

Fair Value Measurement

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures topic of ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance in FASB ASC 820 provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its assets and liabilities carried at fair value in three levels as follows:

Level 1

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

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.”   

Level 3

·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.   

A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Fair Value on a Recurring Basis

Securities Available for Sale (“AFS”): Where quoted prices are available in an active market, securities would be classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow models. Level 2 securities include U.S. agency securities and mortgage backed agency securities.  

Loans Held for Sale. Fair values are estimated by using actual indicative market bids on a loan by loan basis.

Loans Held at Fair Value. Fair values for loans for which the guaranteed portion is intended to be sold are estimated by using actual quoted market bids on a loan by loan basis. Fair values for the un-guaranteed portion of SBA loans are estimated based on the present value of future cashflows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.  

Servicing Assets. Fair values for servicing assets related to SBA loans are estimated based on the present value of future cashflows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.  

Assets on the consolidated balance sheets measured at fair value on a recurring basis are summarized below.

(in 000’s)	Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at September 30, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,233	$ -	$ 2,233	$ -
Government Sponsored Enterprises residential mortgage-backed securities	2,354	-	2,354	-
Total	$ 4,587	$ -	$ 4,587	-
Loans held for sale	$ 12,583	-	$ 12,583
Loans held at fair value	$ 5,183	-	-	$ 5,183
Servicing asset	$ 284	-	-	$ 284

(in 000’s)	Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at December 31, 2017	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,273	$ -	$ 2,273	$ -
Government Sponsored Enterprises residential mortgage-backed securities	2,740	-	2,740	-
Money market funds	132	132	-	-
Total	$ 5,145	$ 132	$ 5,013	$ -
Loans held for sale	$ 10,297	$ -	$ 10,297	$ -
Loans held at fair value	$ 4,451	$ -	$ -	$ 4,451
Servicing asset	$ 319	$ -	$ -	$ 319

The fair value of the Bank’s AFS securities portfolio was approximately $4,914,000 and $5,145,000 at September 30, 2018 and December 31, 2017, respectively. All the residential mortgage-backed securities were issued or guaranteed by the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).  The underlying loans for these securities are residential mortgages that are geographically dispersed throughout the United States.  The valuation of AFS securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar instruments and all relevant information.  There were no transfers between Level 1 and Level 2 assets during the periods ended September 30, 2018 and 2017.

When estimating the fair value of Level 3 financial instruments, management uses various observable and unobservable inputs.  These inputs include estimated cashflows, prepayment speeds, average projected default rate and discount rates as follows:

(in 000’s)

Assets measured at fair value September 30, 2018 Fair value December 31, 2017 Fair Value Principal valuation techniques Significant observable inputs September 30, 2018 Range of inputs December 31, 2017 Range of inputs

Loans held at fair value:	$ 5,183	$ 4,451	Discounted cash flow	Constant prepayment rate	11.44% to 15.00%	8.54% to 10.41 %
				Weighted average discount rate	8.91% to 12.63%	9.00% to 11.62%
				Weighted average life	2.23 yrs. to 7.26 yrs.	2.67 yrs. to 9.29 yrs.
				Projected default rate	1.02% to 9.26%	0.75% to 7.61%

(in 000’s)

Assets measured at fair value	September 30, 2018 Fair value	December 31, 2017 Fair Value	Principal valuation techniques	Significant observable inputs	September 30, 2018 Range of inputs	December 31, 2017 Range of inputs
Servicing asset	$284	$ 319	Discounted cash flow	Constant prepayment rate	7.36% to 14.64%	5.58% to 10.67 %
				Weighted average discount rate	11.45% to 27.06%	11.75% to 19.74%
				Weighted average life	2.23 yrs. to 7.13 yrs.	2.67 yrs. to 9.09 yrs.

Due to the inherent uncertainty of determining the fair value of assets that do not have a readily available market value, fair value as determined by management may fluctuate from period to period.

The following table summarizes additional information about assets measured at fair value on a recurring basis for which level 3 inputs were utilized to determine fair value:

(in 000’s)	Loans held at fair value	Servicing Asset
Balance at December 31, 2017	$  4,451	$ 319
Origination of loans/additions	732	62
Principal repayments/amortization	(104)	(92)
Change in fair value of financial instruments	104	(5)
Balance at September 30, 2018	$5,183	$284

Fair Value on a Nonrecurring Basis

Certain assets are not measured at fair value on a recurring 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 carried on the consolidated balance sheet by level within the hierarchy as of September 30, 2018 and December 31, 2017, for which a nonrecurring change in fair value has been recorded during the nine months ended September 30, 2018 and year ended December 31, 2017.

Carrying Value at September 30, 2018:

(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)
Impaired loans	$76	-	-	$76
Other real estate owned (“OREO”)	$392	-	-	$392

Carrying Value at December 31, 2017:

(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)
Impaired Loans	$134	-	-	$134
Other real estate owned (“OREO”)	$626	-	-	$ 626

The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan

to the fair value of the collateral (less estimated selling costs) and the loan is included in the table above as a Level 3 measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the table above as it is not currently being carried at its fair value. At September 30, 2018 and December 31, 2017, the fair values shown above exclude estimated selling costs of $39,000.

OREO is carried at the lower of cost or fair value, which is measured at the foreclosure date. If the fair value of the collateral exceeds the carrying amount of the loan, no charge-off or adjustment is necessary, the loan is not considered to be carried at fair value, and is therefore not included in the table above. If the fair value of the collateral is less than the carrying amount of the loan, management will charge the loan down to its estimated realizable value. The fair value of OREO is based on the appraised value of the property, which is generally unadjusted by management and is based on comparable sales for similar properties in the same geographic region as the subject property, and is included in the above table as a Level 2 measurement. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. In these cases, the loans are categorized in the above table as Level 3 measurement since these adjustments are considered to be unobservable inputs. Income and expenses from operations and further declines in the fair value of the collateral subsequent to foreclosure are included in net expenses from OREO.

Fair Value of Financial Instruments

FASB ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value of assets and liabilities not previously disclosed are depicted below:

		September 30, 2018		December 31, 2017
(in 000’s)	Level in	Carrying	Fair	Carrying	Fair
	Value Hierarchy	Amount	Value	Amount	Value
(Dollars in thousands)
Assets:
Cash and cash equivalents	Level 1	$ 8,088	$ 8,088	$ 11,671	$ 11,671
Loans, net of allowance for loan losses	(1)	21,873	21,797	25,545	25,831
Servicing asset	Level 3	284	284	319	319
Accrued interest receivable	Level 1	194	194	153	153
Liabilities:
Demand deposits	Level 1	32,041	32,041	34,610	34,610
Savings deposits	Level 1	10,820	10,820	11,505	11,505
Time deposits	(2)	8,241	8,152	9,339	9,280
Accrued interest payable	Level 1	12	12	14	14

(1)Level 2 for non-impaired loans; Level 3 for impaired loans.  

(2)Level 1 for variable rate instruments, level 3 for fixed rate instruments. 

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9. Revenue Recognition

9 Months Ended

Sep. 30, 2018

Notes

9. Revenue Recognition

9. Revenue Recognition

Management determined that the primary sources of revenue associated with financial instruments, including interest income on loans and investments, along with certain noninterest revenue sources including gains on the sale of loans, the change in fair value of financial instruments, are not within the scope of Topic 606. As a result, no changes were made during the period related to these sources of revenue, which cumulatively comprise 83.5% of the total revenue of the Company.

The significant components of noninterest income within the scope of Topic 606 are as follows:

Customer Service Fees and ATM Fees — The Company has contracts with its deposit account customers where fees are charged for certain items or services. Service charges include account analysis fees, monthly service fees, overdraft fees, and other deposit account related fees. Additionally, the Company collects revenue when outside customers utilize the Bank’s ATM machines for transactions.  Revenue related to account analysis fees, ATM transactions and service fees is recognized on a monthly basis as the Company has an unconditional right to the

fee consideration. Fees attributable to specific performance obligations of the Company (i.e. overdraft fees, etc.) are recognized at a defined point in time based on completion of the requested service or transaction.

Loan Syndication Fees – The Company contracts with certain corporate entities as an arranging institution for loan syndications whereby a fee is earned by the Company for soliciting, assembling, and obtaining commitments from other lenders related to certain facilities of the corporate entity.  A portion of the fee is paid as an up-front payment for acting as the arranger, which is earned and recognized on the date the contract is signed without further commitment.  Another portion of the fee is earned, and generally paid, upon completion of the loan syndication arrangement which is the performance obligation for that portion of the fee.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended September 30, 2018 and 2017.

	Three Months Ended September  30,		Nine Months Ended September 30,
	2018	2017	2018	2017
(Dollars in thousands)
Noninterest income:
In-scope of Topic 606
Customer Service Fees	$ 107	$ 101	$ 310	$ 299
ATM Fee Income	25	31	76	94
Loan Syndication Fees	100	90	100	90
Other income	36	15	84	77
Noninterest income (in-scope of Topic 606)	268	237	570	560
Noninterest income (out-of-scope of Topic 606)	124	253	358	477
Total noninterest income	$ 392	$ 490	$ 928	$ 1,037

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10. Regulatory

9 Months Ended

Sep. 30, 2018

Notes

10. Regulatory

10. Regulatory

On April 25, 2018, the Bank entered into stipulations consenting to the issuance of amended and restated Consent Orders with the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking (“Department”) which serve as a prescriptive Restoration Plan providing benchmarks for capital, earnings and asset quality. The material terms of the Consent Orders are identical.  The requirements and status of items included in the Orders are as follows:

The Orders will remain in effect until modified or terminated by the FDIC and the Department and do not restrict the Bank from transacting its normal banking business.  The Bank will continue to serve its customers in all areas including making loans, establishing lines of credit, accepting deposits and processing banking transactions.  Customer deposits remain fully insured to the highest limits set by the FDIC.  The FDIC and the Department did not impose or recommend any monetary penalties in connection with the Consent Orders. The Board of Directors is optimistic about the Bank’s ability to achieve the requirements as stated.  These Orders represent a more tailored approach by regulators to strengthen and preserve minority-owned financial institutions like United Bank of Philadelphia.  The priority for the Board of Directors and management is to comply with the Order promptly. The requirements of the Orders are as follows:

·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. Add two additional board members with banking experience. 

·Complete audited financial statements for 2016, 2017, and 2018. 

·Formulate and implement a Restoration/Strategic Plan to increase profitability reduce expenses and improve operating performance and related ratios. 

·Develop and implement a Strategic Plan for each year during which the orders are in effect, to be revised 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%, by September 2019; 

·Formulate a written plan to improve asset quality and reduce the Bank’s risk positions in  assets classified as “Doubtful” or “Substandard” at its regulatory examination; 

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

·Refrain from accepting any brokered deposits; Prepare and submit quarterly reports to the FDIC and the Department detailing the actions taken to secure compliance with the Orders. 

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

As of September 30, 2018 and December 31, 2017, the Bank’s tier one leverage capital ratio was 4.77% and 5.51%, respectively, and its total risk-based capital ratio was 9.20% and 10.11%, respectively. These ratios are below the levels required by the Consent Orders.  Management is in the process of addressing all matters outlined in the Consent Orders.   The net loss during the quarter resulted in a decrease in the capital ratios. Management has developed and submitted a Capital Plan that focuses on the following:

·Core Profitability from Bank operations—Core profitability is essential to stop the erosion of capital.  

·External equity investments—During 2017, the Company received external investments of $925,000 and from other financial institutions. External capital investments will continue to be sought.   

·Performance grants—Management has developed a performance grant strategy to attract funding based on economic impact and job creation/retention.  The goal is to obtain grant funding from local entities that are seeking a “return on impact”. In April 2019, the Bank received a $2.5 million economic stimulus grant from the City of Philadelphia.  

In September 2020, the Bank received a grant totaling $3.4 million from the Pennsylvania CDFI Network to provide financial assistance related to potential losses related to the COVID-19 pandemic.  Approximately $614,000 of the grant was allocated to make principal and interest payments for up to six months for struggling small businesses in the Bank’s loan portfolio and mitigate potential deterioration in asset quality.

Further, in August 2021, the Bank was awarded a grant totaling $1,286,000 from the US Treasury’s CDFI Rapid Response Program that was geared to strengthen the Bank as the economy recovers from the effects of the COVID-19 pandemic.  This grant resulted in further improvement in the Bank’s capital ratios.

As a result of the above actions, management believes that the Bank has and will be able to comply with the terms and conditions of the Orders.

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11. Going Concern

9 Months Ended

Sep. 30, 2018

Notes

11. Going Concern

11.  Going Concern

The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in its consolidated financial statements, the Company reported a net loss of approximately $58,000 for the quarter ended September 30, 2018 and net income of approximately $29,000 for the same quarter in 2017. Additionally, the Company reported a net loss of $407,000 for the nine months ended September 30, 2018 and a net loss of $289,000 for the nine months ended September 30, 2017.  Further, the Company has entered into Consent Orders with the FDIC and the Department which, among other provisions, require the Bank to increase its tier one leverage capital ratio to 8.50% and its total risk-based capital ratio to 12.50%.  As of September 30, 2018, the Bank’s tier one leverage capital ratio was 4.87% and its total risk-based capital ratio was 10.62%.  The Bank’s failure to comply with the terms of the Consent Orders could result in additional regulatory supervision and/or actions.  The ability of the Bank to continue as a going concern is dependent on many factors, including achieving required capital levels, earnings and fully complying with the Consent Orders.  The Consent Orders raise substantial doubt about the Company’s ability to continue as a going concern.

Management has developed a plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern.  This plan is primarily based on the following:

·Increase earnings:  Core profitability is essential to stop the erosion of capital.  Noninterest income will continue to be an important element of the Bank’s earnings enhancement plan, specifically noninterest income from SBA loans will continue to be an important income strategy for the Bank. In addition, management will seek to reduce noninterest expense by reducing targeted areas of overhead including the closure of the Mount Airy branch in 2018 as well as the projected recovery of SBA loan fair value write-downs and other cost reduction strategies. During 2018 and 2019, there were SBA fair value write-downs on defaulted loans that totaled more than $1 million.  Management has developed forbearance agreements and implemented other collection strategies including the sale of underlying collateral to mitigate the exposure on these loans that management believes will result in the reversal of some fair value write-downs. 

·Strengthen Capital: A concentrated effort will continue to be made to stabilize and strengthen the Bank’s capital. Management has identified potential sources of external capital that have been received in 2020 and 2021.  This capital will be used to further strengthen the Bank’s balance sheet. 

·Comply with the Consent Orders:  Management has developed a Restoration Plan to address matters outlined in the Consent Orders including strengthening management, asset quality, profitability and capital.  This plan received a “non-objection” from the Bank’s primary regulators in February 2020. Management plans to implement the Restoration Plan in an attempt to comply with the terms and conditions of the Orders. 

Based on management’s assessment of the Company’s ability to alleviate the substantial doubt about the its ability to continue as a going concern, these consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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12. Subsequent Events

9 Months Ended

Sep. 30, 2018

Notes

12. Subsequent Events

12.  Subsequent Events

In December 31, 2018, there was a significant decline in asset quality that resulted in fair value write-downs of defaulted SBA loans totaling $473,000.  In addition, an increase of $139,000 in specific reserves related to non-SBA loans was required due to an increase in impaired loan exposure.  These write-downs resulted in a reduction in the Bank’s Tier 1 Capital Ratio to 3.75%, below the minimum of 4.00% considered to be “adequately” capitalized. Also, there was a reduction in the total risk-based capital ratio to 7.44%, below the minimum of 8.00% considered to be adequately capitalized.

In April 2019, the Bank received an economic stimulus grant from the City of Philadelphia of $2,500,000 that served to improve its Tier I leverage capital ratio.  At December 31, 2019, the Bank’s tier one leverage capital ratio was 5.66% and its total risk-based capital ratio was 11.91% that is considered “adequately capitalized” under the regulatory framework for prompt and corrective action.  The Bank’s growth and other operating factors such as the need for additional provisions to the allowance for loans losses may have an adverse effect on its capital ratios.

Beginning in March 2020, the onset of the COVID-19 pandemic has had an adverse economic effect on a global, national, and local level. Following the outbreak, market interest rates have declined significantly, as the 10-year Treasury bond fell below 1.00% in early March 2020 that could lead to a reduction in the Bank’s net interest margin.  In addition, this event may adversely affect asset quality related to the Company’s small business loan customers that have been affected by a reduction in their business operations because of government-imposed restrictions.  As a result, the Company has deferred loan payments as necessary for those customers that have been impacted by the pandemic.  The pandemic has also affected the way that the Company is conducting business. Since notice of the pandemic, the Company has temporarily closed its Center City branch office and consolidated all customer service activity at its Progress Plaza branch.  In addition, the Company has maintained limited on-site presence of four employees or less in the Lending Department while all other employees work remotely in an effort to slow the spread of the pandemic. The full extent of the effect of the pandemic is not yet known.

In September 2020, the Bank received a grant totaling $3.4 million from the Pennsylvania CDFI Network to provide financial assistance related to potential losses related to the COVID-19 pandemic.  Approximately $2.8

million of this grant was recorded as noninterest income and $617,000 was recorded as deferred revenue.  The deferred revenue portion of the grant was allocated to be used to make principal and interest payments for up to six months for struggling small businesses in the Bank’s loan portfolio. At June 30, 2021, the Bank’s tier one leverage capital ratio was 9.43% and its total risk-based capital ratio was 23.48% which is considered “well capitalized” under the regulatory framework for prompt and corrective action.  

Further, in August 2021, the Bank was awarded a grant totaling $1,286,000 from the US Treasury’s CDFI Rapid Response Program that was geared to strengthen the Bank as the economy recovers from the effects of the COVID-19 pandemic.  This grant resulted in further improvement in the Bank’s capital ratios.

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1. Summary of Significant Accounting Policies: Management's Use of Estimates (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Management's Use of Estimates

Management’s Use of Estimates

The preparation of the financial statements has been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Material estimates which are particularly susceptible to significant change in the near term relate to the fair value of investment securities, the determination of the allowance for loan losses, the fair value of loans held at fair value, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities.

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1. Summary of Significant Accounting Policies: Commitments and Contingencies, Policy (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Commitments and Contingencies, Policy

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 any such 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.

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1. Summary of Significant Accounting Policies: Loans Held For Sale (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Loans Held For Sale

Loans Held for Sale

The Bank originates SBA loans for which the guaranteed portion is intended to be sold within a short period of time in the secondary market.  These loans are carried at fair value based on a loan-by-loan valuation using actual market bids.  Any change in the balance of the loan and its fair value is recorded as income or expense in each reporting period.  When the guaranteed portion of the loan is sold, the gain on the sale is reduced by the income previously recognized as part of the fair value adjustment.

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1. Summary of Significant Accounting Policies: Loans Held At Fair Value (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Loans Held At Fair Value

Loans Held at Fair Value

The Bank originates SBA loans for which the un-guaranteed portion is retained after the guaranteed portion is sold in the secondary market.  Management has elected to carry these loans at fair value in accordance with the

irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments.  Fair value of these loans is estimated based on the present value of future cash flows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, discount rates, default and voluntary prepayments as well as assumptions for losses and recoveries.

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1. Summary of Significant Accounting Policies: Loans (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Loans

Loans

The Bank has both the positive intent and ability to hold the majority of its loans to maturity.  These loans are stated at the amount of unpaid principal, reduced by net unearned discount and an allowance for loan losses.  Interest income on loans is recognized as earned based on contractual interest rates applied to daily principal amounts outstanding and accretion of discount.  

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1. Summary of Significant Accounting Policies: Allowance For Loan Losses (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Allowance For Loan Losses

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses.  Loans that are determined to be uncollectible are charged against the allowance account, and subsequent recoveries, if any, are credited to the allowance.  When evaluating the adequacy of the allowance, an assessment of the loan portfolio will typically include changes in the composition and volume of the loan portfolio, overall portfolio quality and past loss experience, review of specific problem loans, current economic conditions which may affect borrowers’ ability to repay, and other factors which may warrant current recognition.  Such periodic assessments may, in management’s judgment, require the Bank to recognize additions or reductions to the allowance.  

Various regulatory agencies periodically review the adequacy of the Bank’s allowance for loan losses as an integral part of their examination process.  Such agencies may require the Bank to recognize additions or reductions to the allowance based on their evaluation of information available to them at the time of their examination.  It is reasonably possible that the above factors may change significantly and, therefore, affects management’s determination of the allowance for loan losses in the near term.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired.  For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The general component covers non-impaired loans and is based on historical charge-off experience, other qualitative factors, and adjustments made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.  The Bank does not allocate reserves for unfunded commitments to fund lines of credit.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Bank will identify and assess loans that may be impaired through any of the following processes:

·During regularly scheduled meetings of the Asset Quality Committee 

·During regular reviews of the delinquency report 

·During the course of routine account servicing, annual review, or credit file update  

·Upon receipt of verifiable evidence of a material reduction in the value of collateral to a level that creates a less than desirable Loan-to-Value ratio 

Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller, homogeneous loans, including consumer installment and home equity loans, 1-4 family residential mortgages, and student loans are evaluated collectively for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

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1. Summary of Significant Accounting Policies: Non-accrual and Past Due Loans. (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Non-accrual and Past Due Loans.

Non-accrual and Past Due Loans.

Loans are considered past due if the required principal and interest payments have not been received within 30 days as of the date such payments were due.  The Bank generally places a loan on non-accrual status when interest or principal is past due 90 days or more.  If it otherwise appears doubtful that the loan will be repaid, management may place the loan on nonaccrual status before the lapse of 90 days. Interest on loans past due 90 days or more ceases to accrue except for loans that are well collateralized and in the process of collection.  When a loan is placed on nonaccrual status, previously accrued and unpaid interest is reversed out of income.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

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1. Summary of Significant Accounting Policies: Income Taxes (Policies)

9 Months Ended

Sep. 30, 2018

Policies

Income Taxes

Income Taxes

Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis 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.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more-likely-than not recognition threshold is measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits, if any, would be recognized in income tax expense in the consolidated statements of operations.

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4. New Authoritative Accounting Guidance: New Accounting Pronouncements, Policy (Policies)

9 Months Ended

Sep. 30, 2018

Policies

New Accounting Pronouncements, Policy

Effect of the Adoption of Accounting Standards

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers — Topic 606 and all subsequent ASUs that modified ASC 606. The standard required a company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers at the time the transfer of goods or services takes place. The Company completed an assessment of revenue streams and review of the related contracts potentially affected by the new standard and concluded that ASU 2014-09 did not materially change the method in which it recognizes revenue. Therefore, implementation of the new standard had no material impact to the measurement or recognition of revenue of prior periods. However, additional disclosures were added in the current period, which can be found in Note 9.

In January 2016, the FASB finalized ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This accounting standard (a) requires separate presentation of equity investments (except those accounted for under the equity method of accounting or those that result in

consolidation of the investee) on the balance sheet and measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (g) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.

The Company has adopted this standard during the reporting period. On a prospective basis, the Company implemented changes to the measurement of the fair value of financial instruments using an exit price notion for disclosure purposes included in Note 8 to the financial statements. The December 31, 2017, fair value of each class of financial instruments disclosure did not utilize the exit price notion when measuring fair value and, therefore, would not be comparable to the March 31, 2018 disclosure. The Company estimated the fair value based on guidance from ASC 820-10, Fair Value Measurements, which defines fair value as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is no active observable market for sale information on community bank loans and time deposits and, thus, Level III fair value procedures were utilized, primarily in the use of present value techniques incorporating assumptions that market participants would use in estimating fair values.

Effect of Upcoming Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The standard ((along with subsequent amendments and clarifications in ASUs; 2018-01, 2018-11 and 2018-20) requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise.  For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis.  For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years.  For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020.  The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period.  This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.  The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset.  The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted.  The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements.  The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  This Update is not expected to have a significant impact on the Company’s financial statements.

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2. Net Loss Per Share: Schedule of Net Loss per Common Share (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Net Loss per Common Share

The calculation of net loss per share follows:

	Three Months Ended September 30, 2018	Three Months Ended September 30, 2017	Nine Months Ended September 30, 2018	Nine Months Ended September 30, 2017
Basic:
Net (loss) income available to common shareholders	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Average common shares outstanding-basic	826,921	826,921	826,921	826,921
Net (loss) income per share-basic	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)
Diluted:

Average common shares-diluted	826,921	826,921	826,921	826,921
Net (loss) income per share-diluted	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)

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3.Changes in Accumulated Other Comprehensive Loss: Schedule of Components of Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Components of Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss:

	Three Months Ended September 30, 2018
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (161)	$ 34	$ (127)
Unrealized loss on securities:
Unrealized holding loss arising during period	(32)	6	(26)
Other comprehensive loss, net	(32)	6	(26)
Ending balance	$ (193)	$ 40	$ (153)

	Three Months Ended September 30, 2017
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (43)	$ 14	$ (29)
Unrealized gain on securities:
Unrealized holding gain arising during period	8	(3)	5
Other comprehensive income, net	8	(3)	5
Ending balance	$ (35)	$ 11	$ (24)

	Nine Months Ended September 30, 2018
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (73)	$ 16	$ (57)
Unrealized loss on securities:
Unrealized holding loss arising during period	(120)	24	(96)
Other comprehensive loss, net	(120	24	(96)
Ending balance	$ (193)	$ 40	$ (153)

	Nine Months Ended September 30, 2017
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (97)	$ 33	$ (64)
Unrealized gain on securities:
Unrealized holding gain arising during period	62	(22)	40
Other comprehensive income, net	62	(22)	40
Ending balance	$ (35)	$ 11	$ (24)

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5. Investment Securities: Schedule of Available-for-sale Securities Reconciliation (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Available-for-sale Securities Reconciliation

The following is a summary of the Company's investment portfolio: 

(In 000’s)	September 30, 2018
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,349	$ -	$ (116)	$ 2,233
Government Sponsored Enterprises residential mortgage-backed securities	2,432	10	(88)	2,354
	$ 4,781	10	(204)	$ 4,587

	December 31, 2017
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,349	$ -	$ (76)	$ 2,273
Government Sponsored Enterprises residential mortgage-backed securities	2,737	21	(18)	2,740
Investments in money market funds	132	-	-	132
	$ 5,218	$ 21	$ (94)	$ 5,145

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5. Investment Securities: Schedule of Investments Classified by Contractual Maturity Date (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Investments Classified by Contractual Maturity Date

(In 000’s)	Amortized Cost	Fair Value
Due in one year	$ -	$ -
Due after one year through five years	-	-
Due after five years through ten years	2,349	2,233
Government Sponsored Enterprises residential mortgage-backed securities	2,432	2,354
	$ 4,781	$ 4,587

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5. Investment Securities: Schedule of Continuous Unrealized Loss Positions on Held-To-Maturity Investments (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Continuous Unrealized Loss Positions on Held-To-Maturity Investments

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2018:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	losses	Value	Losses
U.S. Government agency securities	7	$ -	$ -	$ 2,233	$ (116)	$ 2,233	$ (116)

Government Sponsored Enterprises residential mortgage-backed securities	14	1,374	(48)	700	(40)	2,044	(88)
Total temporarily impaired investment Securities	21	$ 1,374	$ (48)	$ 2,903	$ (156)	$ 4,277	$ (204)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2017:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	securities	Value	Losses	Value	losses	Value	Losses
U.S. Government agency securities	7	$ 245	$ (5)	$2,028	$ (71)	$2,273	$ (76)
Government Sponsored Enterprises residential mortgage-backed securities	8	1,124	(7)	377	(11)	1,501	(18)
Total temporarily impaired investment Securities	15	$1,369	$ (12)	$ 2,405	$(82)	$ 3,774	$ (94)

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6. Loans and Allowance for Loan Losses: Schedule of Accounts, Notes, Loans and Financing Receivable (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Accounts, Notes, Loans and Financing Receivable

(in 000’s)	September 30, 2018	December 31, 2017
Commercial and industrial	$ 1,790	$ 1,798
Commercial real estate	18,325	21,389
Consumer real estate	1,252	1,729
Consumer loans other	708	809
Total loans	$ 22,075	$ 25,725

XML

6. Loans and Allowance for Loan Losses: Financing Receivable, Allowance for Credit Loss (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Financing Receivable, Allowance for Credit Loss

(in 000's)	For the Three months ended September 30, 2018
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 3	$ 150	$ 4	$ 8	$ 15	$ 180
Provision (credit) for loan losses	80	(37)	-	(8)	(15)	20
Charge-offs	-	-	-	(1)	-	(1)
Recoveries	1	1	-	1	-	3
Net recoveries	1	1	-	-	-	2
Ending balance	$ 84	$ 114	$ 4	$ -	$ -	$ 202

(in 000's)	For the Three months ended September 30, 2017
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 74	$ 170	$ 8	$ 10	$ 10	$ 252
Provision (credit) for loan losses	(65)	18	-	-	32	(15)
Charge-offs	-	-	-	(1)	-	(1)
Recoveries	1	2	-	-	-	3
Net recoveries	1	2	-	(1)	-	2

Ending balance  $ 10   $ 190  $ 8  $ 9   $ 22   $ 239 

(in 000's)	For the Nine months ended September 30, 2018
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 7	$ 155	$ 10	$ 8	$ -	$ 180
Provision (credit) for loan losses	84	(26)	(6)	(7)	-	45
Charge-offs	(10)	(18)	-	(8)	-	(36)
Recoveries	3	3	-	7		13
Net (charge-offs) recoveries	(7)	(15)	-	(1)	-	(23)
Ending balance	$ 84	$ 114	$ 4	$ -	$ -	$ 202

(in 000's)	For the Nine months ended September 30, 2017
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Beginning balance	$ 68	$ 179	$ 10	$ 11	32	$ 300
Provision (credit) for loan losses	(61)	(16)	(3)	(1)	(10)	(91)
Charge-offs	-	-	-	(4)	-	(4)
Recoveries	3	27	1	3	-	34
Net (charge-offs) recoveries	3	27	1	(1)	-	30
Ending balance	$ 10	$ 190	$ 8	$ 9	22	$ 239

(in 000's)	September 30, 2018
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$ 76	$ -	$ -	$ -	$ -	$ 76
Loans collectively evaluated for impairment	8	114	4	-	-	126
	$ 84	$ 114	$ 4	$ -	$ -	$ 202
Loans, ending balance:
Loans individually evaluated for impairment	$ 152	$ 1,359	$ -	$ -	$ -	$ 1,511
Loans collectively evaluated for impairment	1,638	16,966	1,252	708	-	20,564
Total	$ 1,790	$ 18,325	$ 1,252	$ 708	$ -	$ 22,075

(in 000's)	December 31, 2017
	Commercial and industrial	Commercial real Estate	Consumer real estate	Consumer loans Other	Unallocated	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$ -	$ -	$ -	$ -	$ -	$ -
Loans collectively  evaluated for impairment	7	155	10	8	-	180
	$ 7	$ 155	$ 10	$ 8	$ -	$ 180
Loans, ending balance:
Loans individually evaluated for impairment	$ 76	$ 1,201	$ -	$ -	$ -	$ 1,277
Loans collectively  evaluated for impairment	1,722	20,188	1,729	809	-	24,448

Total  $ 1,798  $ 21,389  $ 1,729  $ 809  $ -  $ 25,725

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6. Loans and Allowance for Loan Losses: Schedule of Age Analysis of Past Due Loans (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Age Analysis of Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2018 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
(In 000's)	30-89 Days	More Days	More Days	Total Past	Current
	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$ 70	$ -	$ 76	146	636	$ 782
SBA loans	-	-	-	-	-	-
Asset-based	-	-	125	125	883	1,008
Total Commercial and industrial	70	-	201	271	1,519	1,790
Commercial real estate:
Commercial mortgages	144	-	1,108	1,252	9,000	10,252
SBA loans	-	-	72	72	179	251
Construction	-	-	-	-	305	305
Religious organizations	-	126	179	305	7,212	7,517
Total Commercial real estate	144	126	1,359	1,629	16,696	18,325
Consumer real estate:
Home equity loans	-	150	283	433	205	638
Home equity lines of credit	-	-	-	-	15	15
1-4 family residential mortgages	31	-	26	57	542	599
Total consumer real estate	31	150	309	490	762	1,252
Total real estate	175	276	1,668	2,119	17,458	19,577
Consumer and other:
Student loans	42	17	-	59	563	622
Other	5	1	-	6	80	86
Total consumer and other	47	18	-	65	643	708
Total loans	$ 292	$ 294	$ 1,869	$ 2,455	$ 19,620	$ 22,075

An age analysis of past due loans, segregated by class of loans, as of December 31, 2017 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
	30-89 Days	More Days	More Days	Total Past	Current
(In 000's)	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$ -	$ -	$ -	$ -	$ 909	$ 909
SBA Loans	-	-	-	-	19	19
Asset-based	-	-	76	76	794	870
Total Commercial and industrial	-	-	76	76	1,722	1,798
Commercial real estate:
Commercial mortgages	50	208	935	1,193	10,478	11,671
SBA loans	-	-	81	81	588	669
Construction	-	-	-	-	419	419
Religious organizations	-	-	187	187	8,443	8,630
Total Commercial real estate	50	208	1,203	1,461	19,928	21,389
Consumer real estate:
Home equity loans	38	123	289	450	191	641
Home equity lines of credit	-	-	-	-	17	17
1-4 family residential mortgages	64	-	48	112	959	1,071
Total consumer real estate	102	123	337	561	1,168	1,729
Total real estate
Consumer and other:

Student loans	32	55	-	87	613	700
Other	6	1	-	7	102	109
Total consumer and other	38	56	-	94	715	809
Total loans	$ 190	$ 387	$ 1,616	$ 2,192	$ 23,533	$ 25,725

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6. Loans and Allowance for Loan Losses: Schedule of Bank Loans by Class According to Credit Quality (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Bank Loans by Class According to Credit Quality

The tables below detail the Bank’s loans by class according to their credit quality indictors discussed above.

(In 000's)	Commercial Loans September 30, 2018
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$ -	$ 492	$ -	$ -	$ 214	$ 76	$ 782
SBA loans	-	-	-	-	-	-	-
Asset-based	250	537	-	9	136	76	1,008
	250	1,029	-	9	350	152	1,790
Commercial real estate:
Commercial mortgages	-	7372	1,768	-	901	211	10,252
SBA Loans	-	178	-	-	73	-	251
Construction	-	305	-	-	-	-	305
Religious organizations	30	5,195	2,113	-	179	-	7,517
	30	13,050	3,881	-	1,153	211	18,325
Total commercial loans	$ 280	$ 14,079	$ 3,881	$ 9	$ 1,503	$ 363	$ 20,115

	Residential Mortgage and Consumer Loans September 30, 2018
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$     205	$     433	$     638
Home equity line of credit	15	-	15
1-4 family residential mortgages	573	26	599
	793	459	1,252
Consumer Other:
Student loans	605	17	622
Other	85	1	86
	690	18	708
Total  consumer loans	$  1,483	$     477	$    1,960

(In 000's)	Commercial Loans,   December 31, 2017
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total

Commercial and industrial:
Commercial	$ 250	$ 423	$ -	$ 19	$ 217	$ -	$ 909
SBA loans	-	-	19	-	-	-	19
Asset-based	-	549	152	-	93	76	870
	250	972	171	19	310	76	1,798
Commercial real estate:
Commercial mortgages	-	7,876	2,764	17	797	217	11,671
SBA Loans	-	588	-	-	81	-	669
Construction	-	419	-	-	-	-	419
Religious organizations	48	7,560	835	-	187	-	8,630
	48	16,443	3,599	17	1,065	217	21,389
Total commercial loans	$ 298	$ 17,415	$ 3,770	$ 36	$ 1,375	$ 293	$ 23,187

	Residential Mortgage and Consumer Loans December 31, 2017
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$ 352	$ 289	$ 641
Home equity line of credit	17	-	17
1-4 family residential mortgages	1,023	48	1,071
	1,392	337	1,729
Consumer Other:
Student loans	700	-	700
Other	109	-	109
	809	-	809
Total  consumer loans	$ 2,201	$ 337	$ 2,538

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6. Loans and Allowance for Loan Losses: Schedule of Impaired Loans (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Impaired Loans

Impaired loans as of September 30, 2018 are set forth in the following table.

(In 000's)	Unpaid Contractual	Recorded Investment	Recorded Investment	Total
	Principal	With No	With	Recorded	Related
	Balance	Allowance	Allowance	Investment	Allowance

Commercial and industrial:
Commercial	$ 76	$ -	$ 76	$ 76	$ 76
SBA loans	-	-	-	-	-
Asset-based	76	76	-	76	-
Total commercial and industrial	152	76	76	152	76
Commercial real estate:
Commercial mortgages	1,108	1,108	-	1,108	-
SBA Loans	72	72	-	72	-
Religious organizations	179	179	-	179	-
Total commercial real estate	1,359	1,359	-	1,359	-
Total loans	$ 1,511	$ 1,435	$ 76	$ 1,511	$ 76

Impaired loans as of December 31, 2017 are set forth in the following table.

(In 000's)	Unpaid Contractual	Recorded Investment	Recorded Investment	Total
	Principal	With No	With	Recorded	Related
	Balance	Allowance	Allowance	Investment	Allowance
Commercial and industrial:
Commercial	$ -	$ -	$ -	$ -	$ -
SBA	-	-	-	-	-
Asset based	76	76	-	76	-
Total Commercial and industrial	76	76	-	76	-
Commercial real estate:
Commercial mortgages	933	933	-	933	-
SBA Loans	81	81	-	81	-
Religious Organizations	187	187	-	187	-
Total Commercial real estate	1,201	1,201	-	1,201	-
Total loans	$ 1,277	$ 1,277	$ -	$ 1,277	-

The Bank recognizes interest income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to the Bank.   If these factors do not exist, the Bank will record interest payments on the cost recovery basis. The following tables present additional information about impaired loans.

(In 000's)	Three Months Ended September 30, 2018		Three Months Ended September 30, 2017
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$ 25	$ -	$ -	$ -
SBA loans	-	-	-	-
Asset-based	76	-	243	-
Total commercial and industrial	101	-	265	-
Commercial real estate:
Commercial mortgages	936	1	1,355	-
SBA loans	73	-	245	-
Religious organizations	180	-	189	-
Total Commercial real estate	1,189	-	1,789	-
Total loans	$ 1,290	$ 1	$ 2,032	$ -

(In 000's)	Nine Months Ended September 30, 2018		Nine Months Ended September 30, 2017
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans

Commercial and industrial:
Commercial	$ 8	$ 2	$ -	$ -
SBA  loans	-	-	-	-
Asset-based	76	-	261	-
Total commercial and industrial	84	2	270	-
Commercial real estate:
Commercial mortgages	946	1	1,355	-
SBA loans	76	-	249	-
Religious organizations	182	-	192	-
Total commercial real estate	1,204	-	1,796	-
Total loans	$ 1,288	$ 3	$ 2,057	$ -

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7. Other Real Estate Owned: Other Real Estate, Roll Forward (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Other Real Estate, Roll Forward

(in 000's)	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Beginning balance	$ 402	$ 447	$ 626	$ 447
Additions, transfers from loans	-	-	-	-
Sales	(10)	-	(229)	-
	392	447	397	447
Write-ups (downs)	-	-	(5)	-
Ending Balance	$ 392	$ 447	$ 392	$ 447

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7. Other Real Estate Owned: Schedule of Components Of Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Components Of Other Real Estate Owned

The following schedule reflects the components of other real estate owned:

(in 000's)	September 30, 2018	December 31, 2017
Commercial real estate	$ 317	$ 317
Residential real estate	75	309
Total	$ 392	$ 626

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7. Other Real Estate Owned: Components Of Net Expense Of Other Real Estate (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Components Of Net Expense Of Other Real Estate

The following table details the components of net expense of other real estate owned:

	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Insurance	$ 4	$ -	$ 10	$ 7
Legal Fees	-	-	-	-
Professional fees	1	-	1	5
Real estate taxes	4	14	12	21

Utilities	4	1	6	2
Maintenance	1	13	4	22
Write downs	-	-	5	-
Other	-	-	1	-
Total	$ 14	$ 28	$ 39	$ 57

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8. Fair Value: Fair Value, Assets Measured on Recurring Basis (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Fair Value, Assets Measured on Recurring Basis

(in 000’s)	Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at September 30, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,233	$ -	$ 2,233	$ -
Government Sponsored Enterprises residential mortgage-backed securities	2,354	-	2,354	-
Total	$ 4,587	$ -	$ 4,587	-
Loans held for sale	$ 12,583	-	$ 12,583
Loans held at fair value	$ 5,183	-	-	$ 5,183
Servicing asset	$ 284	-	-	$ 284

(in 000’s)	Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at December 31, 2017	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$ 2,273	$ -	$ 2,273	$ -
Government Sponsored Enterprises residential mortgage-backed securities	2,740	-	2,740	-
Money market funds	132	132	-	-
Total	$ 5,145	$ 132	$ 5,013	$ -
Loans held for sale	$ 10,297	$ -	$ 10,297	$ -
Loans held at fair value	$ 4,451	$ -	$ -	$ 4,451
Servicing asset	$ 319	$ -	$ -	$ 319

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8. Fair Value: Fair Value Measurement Inputs and Valuation Techniques (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Fair Value Measurement Inputs and Valuation Techniques

(in 000’s)

Assets measured at fair value September 30, 2018 Fair value December 31, 2017 Fair Value Principal valuation techniques Significant observable inputs September 30, 2018 Range of inputs December 31, 2017 Range of inputs

Loans held at fair value:	$ 5,183	$ 4,451	Discounted cash flow	Constant prepayment rate	11.44% to 15.00%	8.54% to 10.41 %
				Weighted average discount rate	8.91% to 12.63%	9.00% to 11.62%
				Weighted average life	2.23 yrs. to 7.26 yrs.	2.67 yrs. to 9.29 yrs.
				Projected default rate	1.02% to 9.26%	0.75% to 7.61%

(in 000’s)

Assets measured at fair value	September 30, 2018 Fair value	December 31, 2017 Fair Value	Principal valuation techniques	Significant observable inputs	September 30, 2018 Range of inputs	December 31, 2017 Range of inputs
Servicing asset	$284	$ 319	Discounted cash flow	Constant prepayment rate	7.36% to 14.64%	5.58% to 10.67 %
				Weighted average discount rate	11.45% to 27.06%	11.75% to 19.74%
				Weighted average life	2.23 yrs. to 7.13 yrs.	2.67 yrs. to 9.09 yrs.

Due to the inherent uncertainty of determining the fair value of assets that do not have a readily available market value, fair value as determined by management may fluctuate from period to period.

The following table summarizes additional information about assets measured at fair value on a recurring basis for which level 3 inputs were utilized to determine fair value:

(in 000’s)	Loans held at fair value	Servicing Asset
Balance at December 31, 2017	$  4,451	$ 319
Origination of loans/additions	732	62
Principal repayments/amortization	(104)	(92)
Change in fair value of financial instruments	104	(5)
Balance at September 30, 2018	$5,183	$284

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8. Fair Value: Fair Value Measurements, Nonrecurring (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Fair Value Measurements, Nonrecurring

Carrying Value at September 30, 2018:

(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)
Impaired loans	$76	-	-	$76
Other real estate owned (“OREO”)	$392	-	-	$392

Carrying Value at December 31, 2017:

(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)
Impaired Loans	$134	-	-	$134
Other real estate owned (“OREO”)	$626	-	-	$ 626

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8. Fair Value: Fair Value, by Balance Sheet Grouping (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Fair Value, by Balance Sheet Grouping

The fair value of assets and liabilities not previously disclosed are depicted below:

		September 30, 2018		December 31, 2017
(in 000’s)	Level in	Carrying	Fair	Carrying	Fair
	Value Hierarchy	Amount	Value	Amount	Value
(Dollars in thousands)
Assets:
Cash and cash equivalents	Level 1	$ 8,088	$ 8,088	$ 11,671	$ 11,671
Loans, net of allowance for loan losses	(1)	21,873	21,797	25,545	25,831
Servicing asset	Level 3	284	284	319	319
Accrued interest receivable	Level 1	194	194	153	153
Liabilities:
Demand deposits	Level 1	32,041	32,041	34,610	34,610
Savings deposits	Level 1	10,820	10,820	11,505	11,505
Time deposits	(2)	8,241	8,152	9,339	9,280
Accrued interest payable	Level 1	12	12	14	14

(1)Level 2 for non-impaired loans; Level 3 for impaired loans.  

(2)Level 1 for variable rate instruments, level 3 for fixed rate instruments. 

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9. Revenue Recognition: Noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 (Tables)

9 Months Ended

Sep. 30, 2018

Tables/Schedules

Noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606

	Three Months Ended September  30,		Nine Months Ended September 30,
	2018	2017	2018	2017
(Dollars in thousands)
Noninterest income:
In-scope of Topic 606
Customer Service Fees	$ 107	$ 101	$ 310	$ 299
ATM Fee Income	25	31	76	94
Loan Syndication Fees	100	90	100	90
Other income	36	15	84	77
Noninterest income (in-scope of Topic 606)	268	237	570	560
Noninterest income (out-of-scope of Topic 606)	124	253	358	477
Total noninterest income	$ 392	$ 490	$ 928	$ 1,037

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2. Net Loss Per Share: Schedule of Net Loss per Common Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
Loss attributable to common stockholders, basic (numerator)	$ (56,879)	$ 28,623	$ (406,951)	$ (289,295)
Weighted Average Number of Shares Outstanding, Basic (denominator)	826,921	826,921	826,921	826,921
Earnings Per Share, Basic	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)
Weighted Average Number of Shares Outstanding, Diluted (denominator)	826,921	826,921	826,921	826,921
Earnings Per Share, Diluted	$ (0.07)	$ 0.03	$ (0.49)	$ (0.35)

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3.Changes in Accumulated Other Comprehensive Loss: Schedule of Components of Other Comprehensive Loss (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Apr. 30, 2017	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Details
Other Comprehensive Income, Before Tax Amount	$ (43)	$ (193)	$ (161)	$ (35)	$ (193)	$ (35)	$ (73)	$ (97)
Other Comprehensive Income, Taxes	14	40	34	11	40	11	16	33
Other Comprehensive Income, Net of Tax Amount	$ (29)	(153)	$ (127)	(24)	(153)	(24)	$ (57)	$ (64)
Other comprehensive loss, net, before tax amount		(32)		8	(120)	62
Unrealized holding gain arising during period, taxes		6		(3)	24	(22)
Unrealized holding gain arising during period, net of tax amount		(26)		5	(96)	40
Other comprehensive income loss, net, tax (expense) benefit		6		(3)	24	(22)
Other comprehensive income loss, net, net after tax amount		$ (26)		$ 5	$ (96)	$ 40

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5. Investment Securities: Schedule of Available-for-sale Securities Reconciliation (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Available-for-sale Securities, Amortized Cost Basis	$ 4,781,000	$ 5,218,000
Available-for-sale Securities, Gross Unrealized Gain	10,000	21,000
Available-for-sale Securities, Gross Unrealized Loss	(204,000)	(94,000)
Investment securities available-for-sale, at fair value	4,587,304	5,144,707
Available-for-sale Securities, Gross Unrealized Loss	204,000	94,000
Thousand
Investment securities available-for-sale, at fair value	4,587,000	5,145,000
US Government Agencies Debt Securiities
Available-for-sale Securities, Amortized Cost Basis	2,349,000	2,349,000
Available-for-sale Securities, Gross Unrealized Gain	0	0
Available-for-sale Securities, Gross Unrealized Loss	(116,000)	(76,000)
Investment securities available-for-sale, at fair value	2,233,000	2,273,000
Available-for-sale Securities, Gross Unrealized Loss	116,000	76,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available-for-sale Securities, Amortized Cost Basis	2,432,000	2,737,000
Available-for-sale Securities, Gross Unrealized Gain	10,000	21,000
Available-for-sale Securities, Gross Unrealized Loss	(88,000)	(18,000)
Investment securities available-for-sale, at fair value	2,354,000	2,740,000
Available-for-sale Securities, Gross Unrealized Loss	$ 88,000	18,000
Money Market Funds
Available-for-sale Securities, Amortized Cost Basis		132,000
Available-for-sale Securities, Gross Unrealized Gain		0
Available-for-sale Securities, Gross Unrealized Loss		0
Investment securities available-for-sale, at fair value		132,000
Available-for-sale Securities, Gross Unrealized Loss		$ 0

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5. Investment Securities: Schedule of Investments Classified by Contractual Maturity Date (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Debt Securities, Available-for-Sale, Amortized Cost, Maturity, Allocated and Single Maturity Date, Year One	$ 0
Debt Securities, Available-for-Sale, Fair Value, Maturity, Allocated and Single Maturity Date, Year One	0
Debt Securities, Available-for-Sale, Amortized Cost, Maturity, Allocated and Single Maturity Date, after Year One Through Five	0
Debt Securities, Available-for-Sale, Fair Value, Maturity, Allocated and Single Maturity Date, after Year One Through Five	0
Debt Securities, Available-for-Sale, Amortized Cost, Maturity, Allocated and Single Maturity Date, after Year 5 Through 10	2,349,000
Debt Securities, Available-for-Sale, Fair Value, Maturity, Allocated and Single Maturity Date, after Year 5 Through 10	2,233,000
Available-for-sale Securities, Amortized Cost Basis	4,781,000	$ 5,218,000
Investment securities available-for-sale, at fair value	4,587,304	5,144,707
Total debt securities, Amortized Cost	4,781,000
Total debt securities, Fair Value	4,587,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available-for-sale Securities, Amortized Cost Basis	2,432,000	2,737,000
Investment securities available-for-sale, at fair value	$ 2,354,000	$ 2,740,000

XML

5. Investment Securities: Schedule of Continuous Unrealized Loss Positions on Held-To-Maturity Investments (Details) Pure in Thousands, $ in Thousands	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
US Government Agencies Debt Securiities
Number of Securities	7	7
Less than Twelve Months, Fair Value	$ 0	$ 245
Less than 12 Months, Unrealized Losses	0	(5)
Twelve Months or Longer, Fair Value	2,233	2,028
12 Months or Longer, Unrealized Losses	(116)	(71)
Total Fair Value	2,233	2,273
Total Unrealized Losses	$ (116)	$ (76)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Number of Securities	14	8
Less than Twelve Months, Fair Value	$ 1,374	$ 1,124
Less than 12 Months, Unrealized Losses	(48)	(7)
Twelve Months or Longer, Fair Value	700	377
12 Months or Longer, Unrealized Losses	(40)	(11)
Total Fair Value	2,044	1,501
Total Unrealized Losses	$ (88)	$ (18)
Number of Securities	21	15
Less than Twelve Months, Fair Value	$ 1,374	$ 1,369
Less than 12 Months, Unrealized Losses	(48)	(12)
Twelve Months or Longer, Fair Value	2,903	2,405
12 Months or Longer, Unrealized Losses	(156)	(82)
Total Fair Value	4,277	3,774
Total Unrealized Losses	$ (204)	$ (94)

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5. Investment Securities (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Held To Maturity Securities Pledged As Collateral	$ 3,567,000	$ 4,297,000

XML

6. Loans and Allowance for Loan Losses: Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Details
Commercial and industrial	$ 1,790	$ 1,798
Commercial real estate	18,325	21,389
Consumer real estate	1,252	1,729
Consumer loans other	708	809
Total loans	$ 22,075	$ 25,725

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6. Loans and Allowance for Loan Losses: Financing Receivable, Allowance for Credit Loss (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Period-end amount allocated to: Total	$ 202,353		$ 202,353		$ 179,949
Loans and Leases Receivable, Net of Deferred Income	22,075,761		22,075,761		25,725,700
Total
Beginning balance	180,000	$ 252,000	180,000	$ 300,000
Provision for loan losses	20,000	(15,000)	45,000	(91,000)
Charge-offs	(1,000)	(1,000)	(36,000)	(4,000)
Recoveries	3,000	3,000	13,000	34,000
Net charge-offs	2,000	2,000	(23,000)	30,000
Ending balance	202,000	239,000	202,000	239,000
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	76,000		76,000		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	126,000		126,000		180,000
Period-end amount allocated to: Total	202,000		202,000		180,000
Loans, ending balance: Loans individually evaluated for impairment	1,511,000		1,511,000		1,277,000
Loans, ending balance: Loans collectively evaluated for impairment	20,564,000		20,564,000		24,448,000
Loans and Leases Receivable, Net of Deferred Income	22,075,000		22,075,000		25,725,000
Commercial And Industrial
Beginning balance	3,000	74,000	7,000	68,000
Provision for loan losses	80,000	(65,000)	84,000	(61,000)
Charge-offs	0	0	(10,000)	0
Recoveries	1,000	1,000	3,000	3,000
Net charge-offs	1,000	1,000	(7,000)	3,000
Ending balance	84,000	10,000	84,000	10,000
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	76,000		76,000		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	8,000		8,000		7,000
Loans, ending balance: Loans individually evaluated for impairment	152,000		152,000		76,000
Loans, ending balance: Loans collectively evaluated for impairment	1,638,000		1,638,000		1,722,000
Commercial And Industrial | Thousand
Period-end amount allocated to: Total	84,000		84,000		7,000
Loans and Leases Receivable, Net of Deferred Income	1,790,000		1,790,000		1,798,000
Commercial Real Estate Portfolio Segment
Beginning balance	150,000	170,000	155,000	179,000
Provision for loan losses	(37,000)	18,000	(26,000)	(16,000)
Charge-offs	0	0	(18,000)	0
Recoveries	1,000	2,000	3,000	27,000
Net charge-offs	1,000	2,000	(15,000)	27,000
Ending balance	114,000	190,000	114,000	190,000
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0		0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	114,000		114,000		155,000
Loans, ending balance: Loans individually evaluated for impairment	1,359,000		1,359,000		1,201,000
Loans, ending balance: Loans collectively evaluated for impairment	16,966,000		16,966,000		20,188,000
Commercial Real Estate Portfolio Segment | Thousand
Period-end amount allocated to: Total	114,000		114,000		155,000
Loans and Leases Receivable, Net of Deferred Income	18,325,000		18,325,000		21,389,000
Consumer Real Estate
Beginning balance	4,000	8,000	10,000	10,000
Provision for loan losses	0	0	(6,000)	(3,000)
Charge-offs	0	0	0	0
Recoveries	0	0	0	1,000
Net charge-offs	0	0	0	1,000
Ending balance	4,000	8,000	4,000	8,000
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0		0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	4,000		4,000		10,000
Loans, ending balance: Loans individually evaluated for impairment	0		0		0
Loans, ending balance: Loans collectively evaluated for impairment	1,252,000		1,252,000		1,729,000
Consumer Real Estate | Thousand
Period-end amount allocated to: Total	4,000		4,000		10,000
Loans and Leases Receivable, Net of Deferred Income	1,252,000		1,252,000		1,729,000
Consumer And Other Loans
Beginning balance	8,000	10,000	8,000	11,000
Provision for loan losses	(8,000)	0	(7,000)	(1,000)
Charge-offs	(1,000)	(1,000)	(8,000)	(4,000)
Recoveries	1,000	0	7,000	3,000
Net charge-offs	0	(1,000)	(1,000)	(1,000)
Ending balance	0	9,000	0	9,000
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0		0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	0		0		8,000
Loans, ending balance: Loans individually evaluated for impairment	0		0		0
Loans, ending balance: Loans collectively evaluated for impairment	708,000		708,000		809,000
Consumer And Other Loans | Thousand
Period-end amount allocated to: Total	0		0		8,000
Loans and Leases Receivable, Net of Deferred Income	708,000		708,000		809,000
Unallocated Financing Receivables
Beginning balance	15,000	10,000	0	32,000
Provision for loan losses	(15,000)	32,000	0	(10,000)
Charge-offs	0	0	0	0
Recoveries	0	0		0
Net charge-offs	0	0	0	0
Ending balance	0	$ 22,000	0	$ 22,000
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0		0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	0		0		0
Loans, ending balance: Loans individually evaluated for impairment	0		0		0
Loans, ending balance: Loans collectively evaluated for impairment	0		0		0
Unallocated Financing Receivables | Thousand
Period-end amount allocated to: Total	0		0		0
Loans and Leases Receivable, Net of Deferred Income	$ 0		$ 0		$ 0

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6. Loans and Allowance for Loan Losses: Schedule of Age Analysis of Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Thousand
Past Due Loans	$ 2,455	$ 2,192
Nonaccrual	1,869	1,616
Current Loans	19,620	23,533
Loans and Leases Receivable, Gross	22,075	25,725
Commercial And Industrial
Past Due Loans	271	76
Nonaccrual	201	76
Current Loans	1,519	1,722
Loans and Leases Receivable, Gross	1,790	1,798
Commercial And Industrial | Commercial
Past Due Loans	146	0
Nonaccrual	76	0
Current Loans	636	909
Loans and Leases Receivable, Gross	782	909
Commercial And Industrial | :S B A Loans
Past Due Loans	0	0
Nonaccrual	0	0
Current Loans	0	19
Loans and Leases Receivable, Gross	0	19
Commercial And Industrial | Asset Based
Past Due Loans	125	76
Nonaccrual	125	76
Current Loans	883	794
Loans and Leases Receivable, Gross	1,008	870
Commercial Real Estate Portfolio Segment
Past Due Loans	1,629	1,461
Nonaccrual	1,359	1,203
Current Loans	16,696	19,928
Loans and Leases Receivable, Gross	18,325	21,389
Commercial Real Estate Portfolio Segment | :S B A Loans
Past Due Loans	72	81
Nonaccrual	72	81
Current Loans	179	588
Loans and Leases Receivable, Gross	251	669
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Past Due Loans	1,252	1,193
Nonaccrual	1,108	935
Current Loans	9,000	10,478
Loans and Leases Receivable, Gross	10,252	11,671
Commercial Real Estate Portfolio Segment | Construction
Past Due Loans	0	0
Nonaccrual	0	0
Current Loans	305	419
Loans and Leases Receivable, Gross	305	419
Commercial Real Estate Portfolio Segment | Religious Organizations
Past Due Loans	305	187
Nonaccrual	179	187
Current Loans	7,212	8,443
Loans and Leases Receivable, Gross	7,517	8,630
Consumer Real Estate
Past Due Loans	490	561
Nonaccrual	309	337
Current Loans	762	1,168
Loans and Leases Receivable, Gross	1,252	1,729
Consumer Real Estate | Home Equity Line of Credit
Past Due Loans	0	0
Nonaccrual	0	0
Current Loans	15	17
Loans and Leases Receivable, Gross	15	17
Consumer Real Estate | Home Equity Loans
Past Due Loans	433	450
Nonaccrual	283	289
Current Loans	205	191
Loans and Leases Receivable, Gross	638	641
Consumer Real Estate | Family Residential Mortgage
Past Due Loans	57	112
Nonaccrual	26	48
Current Loans	542	959
Loans and Leases Receivable, Gross	599	1,071
Consumer And Other Loans
Past Due Loans	65	94
Nonaccrual	0	0
Current Loans	643	715
Loans and Leases Receivable, Gross	708	809
Consumer And Other Loans | Student Loans
Past Due Loans	59	87
Nonaccrual	0	0
Current Loans	563	613
Loans and Leases Receivable, Gross	622	700
Consumer And Other Loans | Other 1
Past Due Loans	6	7
Nonaccrual	0	0
Current Loans	80	102
Loans and Leases Receivable, Gross	86	109
Financing Receivables 30 To 89 Days Past Due | Thousand
Past Due Loans	292	190
Financing Receivables 30 To 89 Days Past Due | Commercial And Industrial
Past Due Loans	70	0
Financing Receivables 30 To 89 Days Past Due | Commercial And Industrial | Commercial
Past Due Loans	70	0
Financing Receivables 30 To 89 Days Past Due | Commercial And Industrial | :S B A Loans
Past Due Loans	0	0
Financing Receivables 30 To 89 Days Past Due | Commercial And Industrial | Asset Based
Past Due Loans	0	0
Financing Receivables 30 To 89 Days Past Due | Commercial Real Estate Portfolio Segment
Past Due Loans	144	50
Financing Receivables 30 To 89 Days Past Due | Commercial Real Estate Portfolio Segment | :S B A Loans
Past Due Loans	0	0
Financing Receivables 30 To 89 Days Past Due | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Past Due Loans	144	50
Financing Receivables 30 To 89 Days Past Due | Commercial Real Estate Portfolio Segment | Construction
Past Due Loans	0	0
Financing Receivables 30 To 89 Days Past Due | Commercial Real Estate Portfolio Segment | Religious Organizations
Past Due Loans	0	0
Financing Receivables 30 To 89 Days Past Due | Consumer Real Estate
Past Due Loans	31	102
Financing Receivables 30 To 89 Days Past Due | Consumer Real Estate | Home Equity Line of Credit
Past Due Loans	0	0
Financing Receivables 30 To 89 Days Past Due | Consumer Real Estate | Home Equity Loans
Past Due Loans	0	38
Financing Receivables 30 To 89 Days Past Due | Consumer Real Estate | Family Residential Mortgage
Past Due Loans	31	64
Financing Receivables 30 To 89 Days Past Due | Consumer And Other Loans
Past Due Loans	47	38
Financing Receivables 30 To 89 Days Past Due | Consumer And Other Loans | Student Loans
Past Due Loans	42	32
Financing Receivables 30 To 89 Days Past Due | Consumer And Other Loans | Other 1
Past Due Loans	5	6
Financial Asset, Equal to or Greater than 90 Days Past Due | Thousand
Past Due Loans	294	387
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial And Industrial
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial And Industrial | Commercial
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial And Industrial | :S B A Loans
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial And Industrial | Asset Based
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial Real Estate Portfolio Segment
Past Due Loans	126	208
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial Real Estate Portfolio Segment | :S B A Loans
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Past Due Loans	0	208
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial Real Estate Portfolio Segment | Construction
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial Real Estate Portfolio Segment | Religious Organizations
Past Due Loans	126	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer Real Estate
Past Due Loans	150	123
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer Real Estate | Home Equity Line of Credit
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer Real Estate | Home Equity Loans
Past Due Loans	150	123
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer Real Estate | Family Residential Mortgage
Past Due Loans	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer And Other Loans
Past Due Loans	18	56
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer And Other Loans | Student Loans
Past Due Loans	17	55
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer And Other Loans | Other 1
Past Due Loans	$ 1	$ 1

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6. Loans and Allowance for Loan Losses: Schedule of Bank Loans by Class According to Credit Quality (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Good Excellent
Loans Receivable, Gross, Commercial, Mortgage	$ 280	$ 298
Good Excellent | Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	250	250
Good Excellent | Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	0	250
Good Excellent | Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Good Excellent | Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	250	0
Good Excellent | Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	30	48
Good Excellent | Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Good Excellent | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	0	0
Good Excellent | Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	0	0
Good Excellent | Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	30	48
Satisfactory
Loans Receivable, Gross, Commercial, Mortgage	14,079	17,415
Satisfactory | Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	1,029	972
Satisfactory | Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	492	423
Satisfactory | Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Satisfactory | Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	537	549
Satisfactory | Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	13,050	16,443
Satisfactory | Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	178	588
Satisfactory | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	7,372	7,876
Satisfactory | Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	305	419
Satisfactory | Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	5,195	7,560
Pass 1
Loans Receivable, Gross, Commercial, Mortgage	3,881	3,770
Pass 1 | Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	0	171
Pass 1 | Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	0	0
Pass 1 | Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	19
Pass 1 | Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	0	152
Pass 1 | Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	3,881	3,599
Pass 1 | Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Pass 1 | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	1,768	2,764
Pass 1 | Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	0	0
Pass 1 | Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	2,113	835
Special Mention
Loans Receivable, Gross, Commercial, Mortgage	9	36
Special Mention | Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	9	19
Special Mention | Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	0	19
Special Mention | Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Special Mention | Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	9	0
Special Mention | Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	0	17
Special Mention | Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Special Mention | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	0	17
Special Mention | Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	0	0
Special Mention | Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	0	0
Substandard
Loans Receivable, Gross, Commercial, Mortgage	1,503	1,375
Substandard | Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	350	310
Substandard | Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	214	217
Substandard | Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Substandard | Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	136	93
Substandard | Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	1,153	1,065
Substandard | Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	73	81
Substandard | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	901	797
Substandard | Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	0	0
Substandard | Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	179	187
Doubtful
Loans Receivable, Gross, Commercial, Mortgage	363	293
Doubtful | Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	152	76
Doubtful | Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	76	0
Doubtful | Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Doubtful | Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	76	76
Doubtful | Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	211	217
Doubtful | Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	0
Doubtful | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	211	217
Doubtful | Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	0	0
Doubtful | Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	0	0
Loans Receivable, Gross, Commercial, Mortgage	20,115	23,187
Commercial And Industrial
Loans Receivable, Gross, Commercial, Mortgage	1,790	1,798
Commercial And Industrial | Commercial
Loans Receivable, Gross, Commercial, Mortgage	782	909
Commercial And Industrial | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	0	19
Commercial And Industrial | Asset Based
Loans Receivable, Gross, Commercial, Mortgage	1,008	870
Commercial Real Estate Portfolio Segment
Loans Receivable, Gross, Commercial, Mortgage	18,325	21,389
Commercial Real Estate Portfolio Segment | :S B A Loans
Loans Receivable, Gross, Commercial, Mortgage	251	669
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans Receivable, Gross, Commercial, Mortgage	10,252	11,671
Commercial Real Estate Portfolio Segment | Construction
Loans Receivable, Gross, Commercial, Mortgage	305	419
Commercial Real Estate Portfolio Segment | Religious Organizations
Loans Receivable, Gross, Commercial, Mortgage	7,517	8,630
Performing
Loans and Leases Receivable, Gross, Consumer, Mortgage	793	1,392
Loans and Leases Receivable, Gross, Consumer, Other	690	809
Total consumer loans	1,483	2,201
Performing | Consumer Real Estate | Home Equity 1
Loans and Leases Receivable, Gross, Consumer, Mortgage	205	352
Performing | Consumer Real Estate | Home Equity Line Of Credit
Loans and Leases Receivable, Gross, Consumer, Mortgage	15	17
Performing | Consumer Real Estate | N14 Family Residential Mortgages
Loans and Leases Receivable, Gross, Consumer, Mortgage	573	1,023
Performing | Consumer And Other Loans | Student Loans
Loans and Leases Receivable, Gross, Consumer, Other	605	700
Performing | Consumer And Other Loans | Other 1
Loans and Leases Receivable, Gross, Consumer, Other	85	109
Nonperforming
Loans and Leases Receivable, Gross, Consumer, Mortgage	459	337
Loans and Leases Receivable, Gross, Consumer, Other	18	0
Total consumer loans	477	337
Nonperforming | Consumer Real Estate | Home Equity 1
Loans and Leases Receivable, Gross, Consumer, Mortgage	433	289
Nonperforming | Consumer Real Estate | Home Equity Line Of Credit
Loans and Leases Receivable, Gross, Consumer, Mortgage	0	0
Nonperforming | Consumer Real Estate | N14 Family Residential Mortgages
Loans and Leases Receivable, Gross, Consumer, Mortgage	26	48
Nonperforming | Consumer And Other Loans | Student Loans
Loans and Leases Receivable, Gross, Consumer, Other	17	0
Nonperforming | Consumer And Other Loans | Other 1
Loans and Leases Receivable, Gross, Consumer, Other	1	0
Subtotal
Loans and Leases Receivable, Gross, Consumer, Mortgage	1,252	1,729
Loans and Leases Receivable, Gross, Consumer, Other	708	809
Total consumer loans	1,960	2,538
Subtotal | Consumer Real Estate | Home Equity 1
Loans and Leases Receivable, Gross, Consumer, Mortgage	638	641
Subtotal | Consumer Real Estate | Home Equity Line Of Credit
Loans and Leases Receivable, Gross, Consumer, Mortgage	15	17
Subtotal | Consumer Real Estate | N14 Family Residential Mortgages
Loans and Leases Receivable, Gross, Consumer, Mortgage	599	1,071
Subtotal | Consumer And Other Loans | Student Loans
Loans and Leases Receivable, Gross, Consumer, Other	622	700
Subtotal | Consumer And Other Loans | Other 1
Loans and Leases Receivable, Gross, Consumer, Other	$ 86	$ 109

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6. Loans and Allowance for Loan Losses: Schedule of Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Total
Impaired Financing Receivable, Unpaid Principal Balance	$ 1,511		$ 1,511		$ 1,277
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,435		1,435		1,277
Impaired Financing Receivable, with Related Allowance, Recorded Investment	76		76		0
Impaired Financing Receivable, Recorded Investment	1,511		1,511		1,277
Impaired Financing Receivable, Related Allowance	76		76		0
Average Recorded Investment	1,290	$ 2,032	1,288	$ 2,057
Interest recognized on impaired loans	1	0	3	0
Commercial And Industrial
Impaired Financing Receivable, Unpaid Principal Balance	152		152		76
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	76		76		76
Impaired Financing Receivable, with Related Allowance, Recorded Investment	76		76		0
Impaired Financing Receivable, Recorded Investment	152		152		76
Impaired Financing Receivable, Related Allowance	76		76		0
Average Recorded Investment	101	265	84	270
Interest recognized on impaired loans	0	0	2	0
Commercial And Industrial | Commercial
Impaired Financing Receivable, Unpaid Principal Balance	76		76		0
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	76		76		0
Impaired Financing Receivable, Recorded Investment	76		76		0
Impaired Financing Receivable, Related Allowance	76		76		0
Average Recorded Investment	25	0	8	0
Interest recognized on impaired loans	0	0	2	0
Commercial And Industrial | :S B A Loans
Impaired Financing Receivable, Unpaid Principal Balance	0		0		0
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, Recorded Investment	0		0		0
Impaired Financing Receivable, Related Allowance	0		0		0
Average Recorded Investment	0	0	0	0
Interest recognized on impaired loans	0	0	0	0
Commercial And Industrial | Asset Based
Impaired Financing Receivable, Unpaid Principal Balance	76		76		76
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	76		76		76
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, Recorded Investment	76		76		76
Impaired Financing Receivable, Related Allowance	0		0		0
Average Recorded Investment	76	243	76	261
Interest recognized on impaired loans	0	0	0	0
Commercial Real Estate Portfolio Segment
Impaired Financing Receivable, Unpaid Principal Balance	1,359		1,359		1,201
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,359		1,359		1,201
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, Recorded Investment	1,359		1,359		1,201
Impaired Financing Receivable, Related Allowance	0		0		0
Average Recorded Investment	1,189	1,789	1,204	1,796
Interest recognized on impaired loans	0	0	0	0
Commercial Real Estate Portfolio Segment | :S B A Loans
Impaired Financing Receivable, Unpaid Principal Balance	72		72		81
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	72		72		81
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, Recorded Investment	72		72		81
Impaired Financing Receivable, Related Allowance	0		0		0
Average Recorded Investment	73	245	76	249
Interest recognized on impaired loans	0	0	0	0
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Impaired Financing Receivable, Unpaid Principal Balance	1,108		1,108		933
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,108		1,108		933
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, Recorded Investment	1,108		1,108		933
Impaired Financing Receivable, Related Allowance	0		0		0
Average Recorded Investment	936	1,355	946	1,355
Interest recognized on impaired loans	1	0	1	0
Commercial Real Estate Portfolio Segment | Religious Organizations
Impaired Financing Receivable, Unpaid Principal Balance	179		179		187
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	179		179		187
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, Recorded Investment	179		179		187
Impaired Financing Receivable, Related Allowance	0		0		$ 0
Average Recorded Investment	180	189	182	192
Interest recognized on impaired loans	$ 0	$ 0	$ 0	$ 0

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7. Other Real Estate Owned: Other Real Estate, Roll Forward (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other Real Estate, Beginning Balance			$ 626,071
Additions, transfers from loans	$ 0	$ 0	0	$ 0
Sales	(10,000)	0	(229,000)	0
Other Real Estate, Period Increase (Decrease)	392,000	447,000	397,000	447,000
Less: write-downs	0	0	(5,000)	0
Other Real Estate, Ending Balance	391,571		391,571
Thousand
Other Real Estate, Beginning Balance	402,000	447,000	626,000	447,000
Other Real Estate, Ending Balance	$ 392,000	$ 447,000	$ 392,000	$ 447,000

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7. Other Real Estate Owned: Schedule of Components Of Other Real Estate Owned (Details) - USD ($)	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Other real estate owned	$ 391,571		$ 626,071
Thousand
Other real estate owned	392,000	$ 402,000	626,000	$ 447,000	$ 447,000	$ 447,000
Thousand | Commercial Real Estate
Other real estate owned	317,000		317,000
Thousand | Residential Real Estate
Other real estate owned	$ 75,000		$ 309,000

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7. Other Real Estate Owned: Components Of Net Expense Of Other Real Estate (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Professional services	$ 65,481	$ 76,182	$ 137,753	$ 177,622
Other Real Estate 1
Insurance	4,000	0	10,000	7,000
Legal Fees	0	0	0	0
Professional services	1,000	0	1,000	5,000
Real estate taxes	4,000	14,000	12,000	21,000
Utilities	4,000	1,000	6,000	2,000
Maintenance	1,000	13,000	4,000	22,000
Write downs	0	0	5,000	0
Other	0	0	1,000	0
Total	$ 14,000	$ 28,000	$ 39,000	$ 57,000

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8. Fair Value: Fair Value, Assets Measured on Recurring Basis (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Loans held for sale	$ 12,583,544	$ 10,297,168
Loans held at fair value	5,182,526	4,450,901
Servicing asset	284,039	319,368
Thousand
Assets, Fair Value Disclosure	4,587,000	5,145,000
Loans held for sale	12,583,000	10,297,000
Loans held at fair value	5,183,000	4,451,000
Servicing asset	284,000	319,000
Thousand | US Government Agencies Debt Securiities
Assets, Fair Value Disclosure	2,233,000	2,273,000
Thousand | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure	2,354,000	2,740,000
Thousand | Money Market Funds
Assets, Fair Value Disclosure		132,000
Thousand | Fair Value, Inputs, Level 1
Assets, Fair Value Disclosure	0	132,000
Loans held for sale	0	0
Loans held at fair value	0	0
Servicing asset	0	0
Thousand | Fair Value, Inputs, Level 1 | US Government Agencies Debt Securiities
Assets, Fair Value Disclosure	0	0
Thousand | Fair Value, Inputs, Level 1 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure	0	0
Thousand | Fair Value, Inputs, Level 1 | Money Market Funds
Assets, Fair Value Disclosure		132,000
Thousand | Fair Value, Inputs, Level 2
Assets, Fair Value Disclosure	4,587,000	5,013,000
Loans held for sale	12,583,000	10,297,000
Loans held at fair value	0	0
Servicing asset	0	0
Thousand | Fair Value, Inputs, Level 2 | US Government Agencies Debt Securiities
Assets, Fair Value Disclosure	2,233,000	2,273,000
Thousand | Fair Value, Inputs, Level 2 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure	2,354,000	2,740,000
Thousand | Fair Value, Inputs, Level 2 | Money Market Funds
Assets, Fair Value Disclosure		0
Thousand | Fair Value, Inputs, Level 3
Assets, Fair Value Disclosure	0	0
Loans held for sale		0
Loans held at fair value	5,183,000	4,451,000
Servicing asset	284,000	319,000
Thousand | Fair Value, Inputs, Level 3 | US Government Agencies Debt Securiities
Assets, Fair Value Disclosure	0	0
Thousand | Fair Value, Inputs, Level 3 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure	$ 0	0
Thousand | Fair Value, Inputs, Level 3 | Money Market Funds
Assets, Fair Value Disclosure		$ 0

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8. Fair Value: Fair Value Measurement Inputs and Valuation Techniques (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Loans held at fair value	$ 5,182,526	$ 4,450,901
Servicing asset	$ 284,039	$ 319,368
Fair Value, Recurring | Fair Value, Inputs, Level 3
Fair Value Measurements Valuation Techniques	Discounted cash flow
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Minimum
Constant prepayment rate	7.36%	5.58%
Weighted average discount rate	11.45%	11.75%
Weighted average life	2.23	2.67
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Maximum
Constant prepayment rate	14.64%	10.67%
Weighted average discount rate	27.06%	19.74%
Weighted average life	7.13	9.09
Loans Held at Fair Value
Balance at December 31, 2017	$ 4,451,000
Origination of loans/additions	732,000
Principal repayments/amortization	(104,000)
Change in fair value of financial instruments	104,000
Balance at September 30, 2018	$ 5,183,000	$ 4,451,000
Loans Held at Fair Value | Fair Value, Recurring | Fair Value, Inputs, Level 3
Fair Value Measurements Valuation Techniques	Discounted cash flow
Loans Held at Fair Value | Fair Value, Recurring | Fair Value, Inputs, Level 3 | Minimum
Constant prepayment rate	11.44%	8.54%
Weighted average discount rate	8.91%	9.00%
Weighted average life	2.23	2.67
Average projected default rate	1.02%	0.75%
Loans Held at Fair Value | Fair Value, Recurring | Fair Value, Inputs, Level 3 | Maximum
Constant prepayment rate	15.00%	10.41%
Weighted average discount rate	12.63%	11.62%
Weighted average life	7.26	9.29
Average projected default rate	9.26%	7.61%
Servicing Asset
Balance at December 31, 2017	$ 319,000
Origination of loans/additions	62,000
Principal repayments/amortization	(92,000)
Change in fair value of financial instruments	(5,000)
Balance at September 30, 2018	284,000	$ 319,000
Thousand
Loans held at fair value	5,183,000	4,451,000
Servicing asset	284,000	319,000
Thousand | Fair Value, Inputs, Level 3
Loans held at fair value	5,183,000	4,451,000
Servicing asset	284,000	319,000
Thousand | Loans Held at Fair Value
Loans held at fair value	$ 5,183,000	$ 4,451,000

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8. Fair Value: Fair Value Measurements, Nonrecurring (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Impaired Loans
Assets, Fair Value Disclosure, Nonrecurring	$ 76	$ 134
Other Real Estate Owned
Assets, Fair Value Disclosure, Nonrecurring	392	626
Fair Value, Inputs, Level 1 | Impaired Loans
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 1 | Other Real Estate Owned
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 2 | Impaired Loans
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 2 | Other Real Estate Owned
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Inputs, Level 3 | Impaired Loans
Assets, Fair Value Disclosure, Nonrecurring	76	134
Fair Value, Inputs, Level 3 | Other Real Estate Owned
Assets, Fair Value Disclosure, Nonrecurring	$ 392	$ 626

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8. Fair Value: Fair Value, by Balance Sheet Grouping (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Cash and cash equivalents	$ 8,221,576	$ 11,671,253	$ 14,802,015	$ 7,802,831
Loans held for sale	12,583,544	10,297,168
Servicing asset	284,039	319,368
Savings deposits	10,820,460	11,505,417
Accrued interest payable	11,556	13,939
Carrying Amount | Fair Value, Inputs, Level 1
Cash and cash equivalents	8,088,000	11,671,000
Carrying Amount | Fair Value, Inputs, Level 2
Loans held for sale	21,873,000	25,545,000
Servicing asset	284,000	319,000
Interest Receivable	194,000	153,000
Demand Deposits	32,041,000	34,610,000
Savings deposits	10,820,000	11,505,000
Time deposits	8,241,000	9,339,000
Accrued interest payable	12,000	14,000
Fair Value | Fair Value, Inputs, Level 1
Cash and cash equivalents	8,088,000	11,671,000
Fair Value | Fair Value, Inputs, Level 2
Loans held for sale	21,797,000	25,831,000
Servicing asset	284,000	319,000
Interest Receivable	194,000	153,000
Demand Deposits	32,041,000	34,610,000
Savings deposits	10,820,000	11,505,000
Time deposits	8,152,000	9,280,000
Accrued interest payable	$ 12,000	$ 14,000

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9. Revenue Recognition: Noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Noninterest Income (in scope of Topic 606)	$ 268	$ 237	$ 570	$ 560
Noninterest income (out-of-scope of Topic 606)	124	253	358	477
Total noninterest income	392	490	928	1,037
Customer Service Fees
Noninterest Income (in scope of Topic 606)	107	101	310	299
ATM Fee Income
Noninterest Income (in scope of Topic 606)	25	31	76	94
Loan Syndication Fees
Noninterest Income (in scope of Topic 606)	100	90	100	90
Other Income
Noninterest Income (in scope of Topic 606)	$ 36	$ 15	$ 84	$ 77

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10. Regulatory (Details)	Sep. 30, 2018	Dec. 31, 2017
Regulatory	0.0487
Regulatory	0.1062
Bank
Regulatory	0.0477	0.0551
Regulatory	0.0920	0.1011

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11. Going Concern (Details)	3 Months Ended						12 Months Ended
	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Details
Net Income (Loss)	$ (56,879)	$ (152,046)	$ (198,026)	$ 28,623	$ (115,297)	$ (202,621)	$ (407,000)	$ (289,000)
Regulatory	0.0487
Regulatory	0.1062