[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Pennsylvania
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23-2802415
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(State or other jurisdiction of
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(IRS Employer
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incorporation or organization)
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Identification No.)
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30 S. 15th Street
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Philadelphia, PA
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19102
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(Address of principal
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(Zip code)
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executive offices)
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(Check one):
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ X]
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(Do not check if a smaller
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reporting company)
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UNITED BANCSHARES, INC
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||
(Registrant)
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||
August 28, 2013
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/s/ Evelyn F. Smalls
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Date
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Evelyn F. Smalls
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President and Chief Executive Officer
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August 28, 2013
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/s/ Brenda Hudson-Nelson
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Date
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Executive Vice President,
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Chief Financial Officer
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Exhibit No.
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Description
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3.1
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Certificate of Incorporation (1)
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3.2
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Bylaws (1)
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31.1
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Rule 13a-14(a)/15d-14(a) Certifications (1)
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31.2
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Rule 13a-14(a)/15d-14(a) Certifications (1)
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32.1
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Section 1350 Certifications (1)
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32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
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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)
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(1)
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Filed previously.
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(2)
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Furnished herewith.
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3. Changes in Accumulated Other Comprehensive Income (loss): Schedule of Accumulated Other Comprehensive Income (Loss) (Tables)
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6 Months Ended | |||||||||||||||
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Jun. 30, 2013
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Tables/Schedules | ||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) |
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (USD $)
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3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Interest income: | ||||
Interest and fees on loans | $ 630,275 | $ 660,151 | $ 1,258,451 | $ 1,319,842 |
Interest on investment securities | 66,721 | 115,283 | 153,339 | 252,472 |
Interest on federal funds sold | 3,214 | 3,338 | 7,607 | 8,930 |
Interest on time deposits with other banks | 173 | 174 | 404 | 348 |
Total interest income | 700,383 | 778,946 | 1,419,801 | 1,581,592 |
Interest expense: | ||||
Interest on time deposits | 12,326 | 19,899 | 27,534 | 48,131 |
Interest on demand deposits | 6,145 | 12,074 | 14,889 | 25,127 |
Interest on savings deposits | 1,678 | 1,755 | 3,412 | 3,558 |
Total interest expense | 20,149 | 33,728 | 45,835 | 76,816 |
Net interest income | 680,234 | 745,218 | 1,373,966 | 1,504,776 |
(Credit)provision for loan losses | (55,000) | 30,000 | 15,137 | 60,000 |
Net interest income after (credit)provision for loan losses | 735,234 | 715,218 | 1,358,829 | 1,444,776 |
Noninterest income: | ||||
Customer service fees | 101,304 | 95,745 | 201,912 | 192,891 |
ATM fee income | 80,508 | 80,992 | 160,157 | 160,771 |
Gain on sale of investment securities | 378,248 | 378,248 | ||
Loan syndication fees | 88,300 | 80,000 | 88,300 | 80,000 |
Loss on sale of other real estate owned | (13,484) | (13,880) | ||
Other income | 19,187 | 22,243 | 34,805 | 39,557 |
Total noninterest income | 654,063 | 278,980 | 849,542 | 473,219 |
Noninterest expense: | ||||
Salaries, wages and employee benefits | 371,532 | 392,971 | 748,996 | 806,508 |
Occupancy and equipment | 264,145 | 265,820 | 508,044 | 540,597 |
Office operations and supplies | 76,454 | 75,718 | 154,808 | 150,123 |
Marketing and public relations | 18,722 | 18,840 | 34,702 | 23,489 |
Professional services | 77,346 | 78,294 | 148,180 | 151,532 |
Data processing | 103,714 | 111,196 | 224,579 | 238,002 |
Other real estate expense | 124,039 | 66,948 | 167,544 | 57,534 |
Loan and collection costs | 38,906 | 33,013 | 58,808 | 61,693 |
Deposit insurance assessments | 37,654 | 26,209 | 74,652 | 27,424 |
Other operating | 180,808 | 162,085 | 330,868 | 335,798 |
Total noninterest expense | 1,293,320 | 1,231,094 | 2,451,181 | 2,392,700 |
Net income (loss) before income taxes | 95,977 | (236,896) | (242,810) | (474,705) |
Provision for income taxes | ||||
Net income (loss) | 95,977 | (236,896) | (242,810) | (474,705) |
Net income (loss) per common share-basic and diluted | $ 0.09 | $ (0.22) | $ (0.23) | $ (0.45) |
Weighted average number of common shares | 1,065,588 | 1,065,588 | 1,065,588 | 1,065,588 |
Comprehensive loss: | ||||
Net income (loss) | 95,977 | (236,896) | (242,810) | (474,705) |
Unrealized losses on available for sale securities | (216,085) | (723) | (222,226) | (364) |
Total comprehensive loss | $ (120,108) | $ (237,619) | $ (465,036) | $ (475,069) |
5. Investment Securities
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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5. Investment Securities | 5. Investment Securities
The following is a summary of the Company's investment portfolio as of June 30, 2013:
The amortized cost and fair value of debt securities classified as available-for-sale and held-to-maturity, by contractual maturity, as of June 30, 2013, are as follows:
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.
In May 2013, the Bank transferred its entire held to maturity portfolio to available for sale. This transfer was made to improve capital ratios and liquidity by allowing for the disposition of securities, if necessary. In May and June 2013, the Bank sold securities with a book value totaling approximately $7.4 million and recognized a gain of approximately $378,000. Proceeds from the sale were reinvested in replacement securities.
The table below indicates the length of time individual securities have been in a continuous unrealized loss position at June 30, 2013:
The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2012:
Government Sponsored Enterprises residential mortgage-backed securities. Unrealized losses on the Companys 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 Companys 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 Companys ability and intent to hold the security for a period of time that allows for the recovery in value. |
6. Loans and Allowance For Loan Losses: Schedule of Bank's Loans by Class To Their Credit Quality Indictors (Tables)
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Schedule of Bank's Loans by Class To Their Credit Quality Indictors | The tables below detail the Banks loans by class according to their credit quality indictors discussed above.
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5. Investment Securities: Investment Portfolio (Tables)
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Jun. 30, 2013
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Investment Portfolio | The following is a summary of the Company's investment portfolio as of June 30, 2013:
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7. Other Real Estate Owned: Schedule of Components of Net Expense of Other Real Estate (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Professional services | $ 77,346 | $ 78,294 | $ 148,180 | $ 151,532 |
Other Real Estate, Valuation Adjustments | (126,000) | (11,000) | (156,000) | (26,000) |
Other Real Estate, Disposals | (65,000) | (92,000) | ||
Other Real Estate
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||||
Real Estate Insurance | 4,000 | 10,000 | 10,000 | 17,000 |
Professional services | 3,000 | |||
Real Estate Tax Expense | 5,000 | 33,000 | 11,000 | 36,000 |
Utilities Costs | 11,000 | 2,000 | 17,000 | |
Other Expenses | 2,000 | 2,000 | 2,000 | 2,000 |
Other Real Estate, Valuation Adjustments | (43,000) | |||
Other Real Estate, Disposals | 113,000 | 11,000 | 143,000 | 26,000 |
Other Real Estate Revenue | $ 124,000 | $ 67,000 | $ 168,000 | $ 58,000 |
7. Other Real Estate Owned: Other Real Estate Owned (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||
Other Real Estate Owned |
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6. Loans and Allowance For Loan Losses: Impaired Financing Receivables Additional Information (Tables)
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Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impaired Financing Receivables Additional Information |
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7. Other Real Estate Owned: Other Real Estate Owned (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Details | ||||
Other Real Estate, Beginning Balance | $ 718,000 | $ 1,344,000 | $ 775,407 | $ 1,284,000 |
SEC Schedule III, Real Estate, Other Additions | 75,000 | |||
Other Real Estate, Disposals | (65,000) | (92,000) | ||
Other Real Estate, Period Increase (Decrease) | 653,000 | 1,344,000 | 683,000 | 1,359,000 |
Other Real Estate, Valuation Adjustments | (126,000) | (11,000) | (156,000) | (26,000) |
Other Real Estate, Ending Balance | $ 526,537 | $ 1,333,000 | $ 526,537 | $ 1,333,000 |
3. Changes in Accumulated Other Comprehensive Income (loss): Schedule of Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
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3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2013
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Jun. 30, 2013
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Details | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning Balance | $ 28 | $ 34 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | (244) | (256) |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 28 | 34 |
Other Comprehensive Income (Loss), Net of Tax | $ (188) | $ (188) |
6. Loans and Allowance For Loan Losses (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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(Credit)provision for loan losses | $ (55,000) | $ 30,000 | $ 15,137 | $ 60,000 |
Commercial And Industrial
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(Credit)provision for loan losses | $ 340,000 |
8. Fair Value: Schedule of Fair Value of Assets on a Recurring Basis (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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---|---|---|
Available-for-sale, at fair value | $ 9,370,323 | $ 1,027,293 |
US Government Agencies Debt Securities
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Available-for-sale, at fair value | 3,917,000 | |
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
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Available-for-sale, at fair value | 5,324,000 | 898,000 |
Money Market Funds
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Available-for-sale, at fair value | 129,000 | 129,000 |
Fair Value, Inputs, Level 1
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Available-for-sale, at fair value | 129,000 | 129,000 |
Fair Value, Inputs, Level 1 | Money Market Funds
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Available-for-sale, at fair value | 129,000 | 129,000 |
Fair Value, Inputs, Level 2
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Available-for-sale, at fair value | 9,241,000 | 898,000 |
Fair Value, Inputs, Level 2 | US Government Agencies Debt Securities
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Available-for-sale, at fair value | 3,917,000 | |
Fair Value, Inputs, Level 2 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
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Available-for-sale, at fair value | $ 5,324,000 | $ 898,000 |
8. Fair Value: Schedule of Fair Value of Assets on a Nonrecurring Basis (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Tables/Schedules | |||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Assets on a Nonrecurring Basis | Carrying Value at June 30, 2013:
Carrying Value at December 31, 2012:
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6. Loans and Allowance For Loan Losses: Schedule of Bank's Loans by Class To Their Credit Quality Indictors (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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---|---|---|
Loans Receivable, Gross, Commercial, Real Estate | $ 32,876 | $ 31,381 |
Loans and Leases Receivable, Gross, Consumer, Real Estate | 4,361 | 4,619 |
Loans and Leases Receivable, Gross, Consumer | 1,624 | 1,768 |
Loans Receivable, Net | 41,853 | 41,502 |
Good Excellent
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Loans and Leases Receivable, Gross, Commercial | 250 | 250 |
Good Excellent | Commercial And Industrial
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Loans and Leases Receivable, Gross, Commercial | 250 | 250 |
Good Excellent | Commercial And Industrial | Commercial
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Loans and Leases Receivable, Gross, Commercial | 250 | 250 |
Satisfactory
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Loans and Leases Receivable, Gross, Commercial | 28,799 | 26,249 |
Satisfactory | Commercial And Industrial
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Loans and Leases Receivable, Gross, Commercial | 1,771 | 2,000 |
Satisfactory | Commercial And Industrial | Commercial
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Loans and Leases Receivable, Gross, Commercial | 9 | 104 |
Satisfactory | Commercial And Industrial | SBA Loans
|
||
Loans and Leases Receivable, Gross, Commercial | 25 | 27 |
Satisfactory | Commercial And Industrial | Asset Based
|
||
Loans and Leases Receivable, Gross, Commercial | 1,737 | 1,869 |
Satisfactory | Commercial Real Estate
|
||
Loans Receivable, Gross, Commercial, Real Estate | 27,028 | 24,349 |
Satisfactory | Commercial Real Estate | SBA Loans
|
||
Loans Receivable, Gross, Commercial, Real Estate | 607 | 621 |
Satisfactory | Commercial Real Estate | Commercial Mortgages
|
||
Loans Receivable, Gross, Commercial, Real Estate | 14,976 | 12,678 |
Satisfactory | Commercial Real Estate | Construction
|
||
Loans Receivable, Gross, Commercial, Real Estate | 2,244 | 2,767 |
Satisfactory | Commercial Real Estate | Religious Organizations
|
||
Loans Receivable, Gross, Commercial, Real Estate | 9,201 | 8,183 |
Pass
|
||
Loans and Leases Receivable, Gross, Commercial | 4,045 | 5,085 |
Pass | Commercial And Industrial
|
||
Loans and Leases Receivable, Gross, Commercial | 345 | 140 |
Pass | Commercial And Industrial | Commercial
|
||
Loans and Leases Receivable, Gross, Commercial | 220 | 15 |
Pass | Commercial And Industrial | Asset Based
|
||
Loans and Leases Receivable, Gross, Commercial | 125 | 125 |
Pass | Commercial Real Estate
|
||
Loans Receivable, Gross, Commercial, Real Estate | 3,700 | 4,945 |
Pass | Commercial Real Estate | Commercial Mortgages
|
||
Loans Receivable, Gross, Commercial, Real Estate | 1,372 | 1,322 |
Pass | Commercial Real Estate | Religious Organizations
|
||
Loans Receivable, Gross, Commercial, Real Estate | 2,328 | 3,623 |
Special Mention
|
||
Loans and Leases Receivable, Gross, Commercial | 258 | 485 |
Special Mention | Commercial And Industrial
|
||
Loans and Leases Receivable, Gross, Commercial | 100 | 323 |
Special Mention | Commercial And Industrial | Commercial
|
||
Loans and Leases Receivable, Gross, Commercial | 8 | 220 |
Special Mention | Commercial And Industrial | SBA Loans
|
||
Loans and Leases Receivable, Gross, Commercial | 43 | 49 |
Special Mention | Commercial And Industrial | Asset Based
|
||
Loans and Leases Receivable, Gross, Commercial | 49 | 54 |
Special Mention | Commercial Real Estate
|
||
Loans Receivable, Gross, Commercial, Real Estate | 158 | 162 |
Special Mention | Commercial Real Estate | Commercial Mortgages
|
||
Loans Receivable, Gross, Commercial, Real Estate | 158 | |
Special Mention | Commercial Real Estate | Religious Organizations
|
||
Loans Receivable, Gross, Commercial, Real Estate | 162 | |
Substandard
|
||
Loans and Leases Receivable, Gross, Commercial | 2,034 | 2,336 |
Substandard | Commercial And Industrial
|
||
Loans and Leases Receivable, Gross, Commercial | 133 | 628 |
Substandard | Commercial And Industrial | Commercial
|
||
Loans and Leases Receivable, Gross, Commercial | 84 | 480 |
Substandard | Commercial And Industrial | SBA Loans
|
||
Loans and Leases Receivable, Gross, Commercial | 49 | 49 |
Substandard | Commercial And Industrial | Asset Based
|
||
Loans and Leases Receivable, Gross, Commercial | 99 | |
Substandard | Commercial Real Estate
|
||
Loans Receivable, Gross, Commercial, Real Estate | 1,901 | 1,708 |
Substandard | Commercial Real Estate | Commercial Mortgages
|
||
Loans Receivable, Gross, Commercial, Real Estate | 618 | 403 |
Substandard | Commercial Real Estate | Construction
|
||
Loans Receivable, Gross, Commercial, Real Estate | 631 | |
Substandard | Commercial Real Estate | Religious Organizations
|
||
Loans Receivable, Gross, Commercial, Real Estate | 1,283 | 674 |
Doubtful
|
||
Loans and Leases Receivable, Gross, Commercial | 482 | 710 |
Doubtful | Commercial And Industrial
|
||
Loans and Leases Receivable, Gross, Commercial | 393 | 393 |
Doubtful | Commercial And Industrial | Commercial
|
||
Loans and Leases Receivable, Gross, Commercial | 393 | 393 |
Doubtful | Commercial Real Estate
|
||
Loans Receivable, Gross, Commercial, Real Estate | 89 | 317 |
Doubtful | Commercial Real Estate | Commercial Mortgages
|
||
Loans Receivable, Gross, Commercial, Real Estate | 89 | 317 |
Total
|
||
Loans and Leases Receivable, Gross, Commercial | 35,868 | 33,115 |
Loans and Leases Receivable, Gross, Consumer, Real Estate | 1,624 | 1,768 |
Loans and Leases Receivable, Gross, Consumer | 5,985 | 6,387 |
Total | Commercial And Industrial
|
||
Loans and Leases Receivable, Gross, Commercial | 2,992 | 3,734 |
Total | Commercial And Industrial | Commercial
|
||
Loans and Leases Receivable, Gross, Commercial | 964 | 1,462 |
Total | Commercial And Industrial | SBA Loans
|
||
Loans and Leases Receivable, Gross, Commercial | 117 | 125 |
Total | Commercial And Industrial | Asset Based
|
||
Loans and Leases Receivable, Gross, Commercial | 1,911 | 2,147 |
Total | Commercial Real Estate
|
||
Loans Receivable, Gross, Commercial, Real Estate | 32,876 | 31,381 |
Loans and Leases Receivable, Gross, Consumer, Real Estate | 4,361 | 4,619 |
Total | Commercial Real Estate | SBA Loans
|
||
Loans Receivable, Gross, Commercial, Real Estate | 607 | 621 |
Total | Commercial Real Estate | Commercial Mortgages
|
||
Loans Receivable, Gross, Commercial, Real Estate | 17,213 | 14,721 |
Total | Commercial Real Estate | Construction
|
||
Loans Receivable, Gross, Commercial, Real Estate | 2,244 | 3,398 |
Total | Commercial Real Estate | Religious Organizations
|
||
Loans Receivable, Gross, Commercial, Real Estate | 12,812 | 12,642 |
Total | Home Equity | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 1,366 | 1,453 |
Total | Home Equity Line Of Credit | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 25 | 26 |
Total | 14 Family Residential Mortgages | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 2,970 | 3,140 |
Total | Consumer Installment | Consumer Other
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 23 | 30 |
Total | Student Loans | Consumer Other
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 1,456 | 1,588 |
Total | Other | Consumer Other
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 145 | 150 |
Performing
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 1,624 | 1,768 |
Loans and Leases Receivable, Gross, Consumer | 5,620 | 6,098 |
Performing | Commercial Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 3,996 | 4,330 |
Performing | Home Equity | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 1,243 | 1,390 |
Performing | Home Equity Line Of Credit | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 25 | 26 |
Performing | 14 Family Residential Mortgages | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 2,728 | 2,914 |
Performing | Consumer Installment | Consumer Other
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 23 | 30 |
Performing | Student Loans | Consumer Other
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 1,456 | 1,588 |
Performing | Other | Consumer Other
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 145 | 150 |
Nonperforming
|
||
Loans and Leases Receivable, Gross, Consumer | 365 | 289 |
Nonperforming | Commercial Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 365 | 289 |
Nonperforming | Home Equity | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | 123 | 63 |
Nonperforming | 14 Family Residential Mortgages | Consumer Real Estate
|
||
Loans and Leases Receivable, Gross, Consumer, Real Estate | $ 242 | $ 226 |
6. Loans and Allowance For Loan Losses: Impaired Financing Receivables (Tables)
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Jun. 30, 2013
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Impaired Financing Receivables | Impaired loans as of June 30, 2013 are set forth in the following table.
Impaired loans as of December 31, 2012 are set forth in the following table.
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1. Significant Accounting Policies
|
6 Months Ended |
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Jun. 30, 2013
|
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Notes | |
1. 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, 2012 when reviewing this Form 10-Q. Quarterly results reported herein are not necessarily indicative of results to be expected for other quarters.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company's consolidated financial position as of June 30, 2013 and December 31, 2012 and the consolidated results of its operations and its cash flows for the three and six months ended June 30, 2013 and 2012.
Managements Use of Estimates The preparation of the financial statements have 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, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities and consideration of impairment of intangible assets.
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.
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 managements judgment, require the Bank to recognize additions or reductions to the allowance.
Various regulatory agencies periodically review the adequacy of the Banks 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 managements 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 borrowers 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 LTV 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 loans effective interest rate, the loans 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 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 managements 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 are 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. |
3. Changes in Accumulated Other Comprehensive Income (loss)
|
6 Months Ended | |||||||||||||||
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Jun. 30, 2013
|
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Notes | ||||||||||||||||
3. Changes in Accumulated Other Comprehensive Income (loss) | 3. Changes in Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in other comprehensive income(loss):
|
6. Loans and Allowance For Loan Losses
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. Loans and Allowance For Loan Losses | 6. Loans and Allowance for Loan Losses
The composition of the Banks loan portfolio is as follows:
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 managements 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 pools of non-classified loans.
· Qualitative Factors Component The loan portfolio is broken down into multiple homogenous sub classifications, 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. There were no changes in qualitative factors during period. In addition, the average historical loss factor for commercial and industrial loans increased as a result of a $340,000 charge-off during the quarter. To the extent actual outcomes differ from managements 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.
Nonperforming and Nonaccrual and Past Due Loans An age analysis of past due loans, segregated by class of loans, as of June 30, 2013 is as follows:
An age analysis of past due loans, segregated by class of loans, as of December 31, 2012 is as follows:
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 loans 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 Managements closer attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Banks 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 borrowers 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. 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, but no later than 90 days past due.
The tables below detail the Banks loans by class according to their credit quality indictors discussed above.
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 loans 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. To date, these charge-offs have only included the unguaranteed portion of Small Business Administration (SBA) loans. Specific reserves are allocated to cover other-than-permanent impairment for which the underlying collateral value may fluctuate with market conditions. During the three and six months ended June 30, 2013 and 2012, there were no partial charge-offs of impaired loans.
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 June 30, 2013 are set forth in the following table.
Impaired loans as of December 31, 2012 are set forth in the following table.
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 for the three and six months ended June 30, 2013 and 2012.
Troubled debt restructurings (TDRs). TDRs occur when a creditor, for economic or legal reasons related to a debtors 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 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 June 30, 2013 and December 31, 2012. |
4. New Authoritative Accounting Guidance
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6 Months Ended |
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Jun. 30, 2013
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Notes | |
4. New Authoritative Accounting Guidance | 4. New Authoritative Accounting Guidance
In December 2011, the FASB issued Accounting Standards Update ASU 2011-11: Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This Update affects all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information is intended to enable users of an entitys financial statements to evaluate the effect or potential effect of netting arrangements on an entitys financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. The amendments are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Companys adoption of this guidance in 2013 did not have an impact on its financial statements.
In February 2013, the FASB issued an update (ASU 2013-02 Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income) which requires entities to disclose, for items reclassified out of accumulated other comprehensive income (AOCI) and into net income in their entirety, the effect of the reclassification on each affected net income line item and, for AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference to other required U.S. GAAP disclosures. The guidance is effective for annual and interim reporting periods beginning after December 15, 2012; early adoption is allowed. The disclosures required by the adoption of this guidance in 2013 are included in Note 3 of the financial statements. |
7. Other Real Estate Owned: Schedule of Components of Other Real Estate Owned (Tables)
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6 Months Ended | ||||||||||||
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Jun. 30, 2013
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Tables/Schedules | |||||||||||||
Schedule of Components of Other Real Estate Owned |
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8. Fair Value: Schedule of Fair Value of Assets and Liabilities (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Schedule of Fair Value of Assets and Liabilities | The fair value of assets and liabilities are depicted below:
(1) Level 1 for money market funds; Level 2 for all other securities. (2) Level 2 for non-impaired loans; Level 3 for impaired loans.
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5. Investment Securities (Details) (USD $)
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0 Months Ended | ||
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May 01, 2013
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Jun. 30, 2013
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Dec. 31, 2012
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Details | |||
Book value of securities to be sold | $ 7,400,000 | $ 0 | $ 12,485,687 |
Available-for-sale Securities, Gross Unrealized Gain (Loss) | $ 378,000 |