10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended:   September 30, 2014

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	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 [ X]
(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 June 26, 2015 the aggregate number of the shares of the Registrant’s Common Stock issued was 1,068,588 (including 826,921 Class B non-voting).

The Series Preferred Stock consists of 500,000 authorized shares of stock of which 250,000 have been designated as Series A Preferred stock of which 124,342 shares are issued as of June 26, 2015.

EXPLANATORY NOTE

The sole purpose of this amendment to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, originally filed with the Securities and Exchange Commission on November 15, 2014, 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.

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)
June 26, 2015	/s/ Evelyn F. Smalls
Date	Evelyn F. Smalls
	President and Chief Executive Officer
June 26, 2015	/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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6. Loans and Allowance For Loan Losses: Allowance for Credit Losses on Financing Receivables (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Beginning balance	$ 657,000	$ 778,000	$ 839,000	$ 1,204,000
Provision for loan losses	62,000	30,000	132,000	45,000
Charge-offs	(26,000)	(1,000)	(297,000)	(529,000)
Recoveries	9,000	5,000	28,000	92,000
Net recoveries	(17,000)	4,000	(269,000)	(437,000)
Ending balance	702,000	812,000	702,000	812,000
Provision (credit) for loan losses	62,000	30,000	132,000	45,000
Net recoveries	(17,000)	4,000	(269,000)	(437,000)
Net charge-offs	(17,000)	4,000	(269,000)	(437,000)
Period-end amount allocated to: Loans individually evaluated for impairment	222,000		222,000		$ 378,000
Period-end amount allocated to: Loans collectively evaluated for impairment	480,000		480,000		461,000
Period-end amount allocated to: Total	701,925		701,925		839,133
Loans, ending balance: Loans individually evaluated for impairment	2,025,000		2,025,000		1,882,000
Loans, ending balance: Loans collectively evaluated for impairment	40,950,000		40,950,000		40,382,000
Period-end amount allocated to: Total	701,925		701,925		839,133
Loans, ending balance: Total	42,975,712		42,975,712		42,264,102
Commercial And Industrial
Beginning balance	297,000	446,000	483,000	891,000
Provision for loan losses	74,000	(40,000)	139,000	37,000
Charge-offs	0	0	(253,000)	(524,000)
Recoveries	1,000	1,000	3,000	3,000
Net recoveries	1,000	1,000	(250,000)	(521,000)
Ending balance	372,000	407,000	372,000	407,000
Provision (credit) for loan losses	74,000	(40,000)	139,000	37,000
Net recoveries	1,000	1,000	(250,000)	(521,000)
Net charge-offs	1,000	1,000	(250,000)	(521,000)
Period-end amount allocated to: Loans individually evaluated for impairment	195,000		195,000		378,000
Period-end amount allocated to: Loans collectively evaluated for impairment	177,000		177,000		105,000
Period-end amount allocated to: Total	372,000		372,000		483,000
Loans, ending balance: Loans individually evaluated for impairment	301,000		301,000		574,000
Loans, ending balance: Loans collectively evaluated for impairment	4,741,000		4,741,000		3,239,000
Period-end amount allocated to: Total	372,000		372,000		483,000
Loans, ending balance: Total	5,042,000		5,042,000		3,863,000
Commercial Real Estate Portfolio Segment
Beginning balance	295,000	288,000	280,000	308,000
Provision for loan losses	5,000	65,000	20,000	(33,000)
Charge-offs	0	0	0	0
Recoveries	0	0	0	78,000
Net recoveries	0	0	0	78,000
Ending balance	300,000	353,000	300,000	353,000
Provision (credit) for loan losses	5,000	65,000	20,000	(33,000)
Net recoveries	0	0	0	78,000
Net charge-offs	0	0	0	78,000
Period-end amount allocated to: Loans individually evaluated for impairment	27,000		27,000		0
Period-end amount allocated to: Loans collectively evaluated for impairment	273,000		273,000		280,000
Period-end amount allocated to: Total	300,000		300,000		280,000
Loans, ending balance: Loans individually evaluated for impairment	1,724,000		1,724,000		1,259,000
Loans, ending balance: Loans collectively evaluated for impairment	31,445,000		31,445,000		31,703,000
Period-end amount allocated to: Total	300,000		300,000		280,000
Loans, ending balance: Total	33,169,000		33,169,000		32,962,000
Consumer Real Estate
Beginning balance	52,000	44,000	59,000	5,000
Provision for loan losses	(18,000)	5,000	(28,000)	40,000
Charge-offs	(19,000)	0	(19,000)	0
Recoveries	3,000	0	6,000	7,000
Net recoveries	(16,000)	0	(13,000)	7,000
Ending balance	18,000	52,000	18,000	52,000
Provision (credit) for loan losses	(18,000)	5,000	(28,000)	40,000
Net recoveries	(16,000)	0	(13,000)	7,000
Net charge-offs	(16,000)	0	(13,000)	7,000
Period-end amount allocated to: Loans individually evaluated for impairment	0		0		0
Period-end amount allocated to: Loans collectively evaluated for impairment	18,000		18,000		59,000
Period-end amount allocated to: Total	18,000		18,000		59,000
Loans, ending balance: Loans individually evaluated for impairment	0		0		0
Loans, ending balance: Loans collectively evaluated for impairment	3,387,000		3,387,000		3,909,000
Period-end amount allocated to: Total	18,000		18,000		59,000
Loans, ending balance: Total	3,387,000		3,387,000		3,909,000
Consumer And Other Loans
Beginning balance	13,000	0	17,000	0
Provision for loan losses	1,000	0	1,000	1,000
Charge-offs	(7,000)	(1,000)	(25,000)	(5,000)
Recoveries	5,000	1,000	19,000	4,000
Net recoveries	(2,000)	0	(6,000)	(1,000)
Ending balance	12,000	0	12,000	0
Provision (credit) for loan losses	1,000	0	1,000	1,000
Net recoveries	(2,000)	0	(6,000)	(1,000)
Net charge-offs	(2,000)	$ 0	(6,000)	$ (1,000)
Period-end amount allocated to: Loans individually evaluated for impairment	0		0		0
Period-end amount allocated to: Loans collectively evaluated for impairment	12,000		12,000		17,000
Period-end amount allocated to: Total	12,000		12,000		17,000
Loans, ending balance: Loans individually evaluated for impairment	0		0		0
Loans, ending balance: Loans collectively evaluated for impairment	1,377,000		1,377,000		1,530,000
Period-end amount allocated to: Total	12,000		12,000		17,000
Loans, ending balance: Total	$ 1,377,000		$ 1,377,000		$ 1,530,000

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8. Fair Value (Details)	Sep. 30, 2014	Dec. 31, 2013
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises | AFS Securities Portfolio
Percent of portfolio	57.00%	59.00%

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7. Other Real Estate Owned: Components of Net Expense of Other Real Estate Owned (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Professional fees	$ 89,296	$ 115,528	$ 235,436	$ 263,708
Other	0	3,000	(13,000)	(153,000)
Impairment charges (net)			(13,250)	(142,506)
Total	(30,328)	17,210	6,828	184,754
Other Real Estate
Insurance	5	3	16	13
Professional fees	2	0	2	0
Real estate taxes	3	6	14	17
Utilities	1	1	3	3
Other	6	7	6	0
Transfer-in write up	(47)	0	(47)	8
Impairment charges (net)	$ 0	$ 0	$ 13	$ 144

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2. Net Loss Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic:
Net loss available to common shareholders	$ (182,996)	$ (333,359)	$ (607,195)	$ (576,205)
Average common shares outstanding-basic	1,068,588	1,068,588	1,068,588	1,068,588
Net loss per share-basic	$ (0.17)	$ (0.31)	$ (0.57)	$ (0.54)
Diluted:
Average common shares-diluted	1,068,588	1,068,588	1,068,588	1,068,588
Net loss per share-diluted	$ (0.17)	$ (0.31)	$ (0.57)	$ (0.54)

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6. Loans and Allowance For Loan Losses: Impaired Financing Receivables Additional Information (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Impaired Financing Receivables Additional Information

	Three Months Ended		Three Months Ended
(In 000's)	September 30, 2014		September 30, 2013
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$204	$3	$467	-
SBA  loans	48	-	49	-
Total commercial and industrial	252	3	516	-
Commercial real estate:
Commercial mortgages	995	-	559	-
SBA loans	122	-	161	2
Religious organizations	610	-	646	-
Total commercial real estate	1,727	-	1,366	2
Total loans	$1,979	$3	$1,882	2

	Nine Months Ended		Nine Months Ended
(In 000's)	September 30, 2014		September 30, 2013
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$231	$3	$573	-
SBA  loans	48	-	49	1
Asset-based	-	-	66	-
Total commercial and industrial	279	3	688	1
Commercial real estate:
Commercial mortgages	931	3	638	-
SBA loans	125	1	36	2
Religious organizations	617	2	625	-
Total commercial real estate	1,673	6	1,299	2
Total loans	$1,952	$9	$1,987	$3

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8. Fair Value: Schedule of Fair Value of Assets Measured on a Nonrecurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Impaired Loans, Carrying Value
Assets, Fair Value Disclosure, Nonrecurring	$ 2,025	$ 1,882
Total fair value gain (loss) during the period	(75)	(59)
Other Real Estate Owned
Assets, Fair Value Disclosure, Nonrecurring	631	433
Total fair value gain (loss) during the period	(13)	(157)
Fair Value, Inputs, Level 1 | Impaired Loans, Carrying Value
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, Carrying Value
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, Carrying Value
Assets, Fair Value Disclosure, Nonrecurring	2,025	1,882
Fair Value, Inputs, Level 3 | Other Real Estate Owned
Assets, Fair Value Disclosure, Nonrecurring	$ 631	$ 433

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6. Loans and Allowance For Loan Losses: Impaired Financing Receivables (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Unpaid Contractual Principal Balance	$ 2,025	$ 1,882
Recorded Investment With No Allowance	1,387	1,437
Recorded Investment With Allowance	638	445
Total Recorded Investment	2,025	1,882
Related Allowance	222	378
Commercial And Industrial
Unpaid Contractual Principal Balance	301	492
Recorded Investment With No Allowance	39	47
Recorded Investment With Allowance	262	445
Total Recorded Investment	301	492
Related Allowance	195	378
Commercial And Industrial | Commercial
Unpaid Contractual Principal Balance	253	444
Recorded Investment With No Allowance	39	47
Recorded Investment With Allowance	214	397
Total Recorded Investment	253	444
Related Allowance	147	330
Commercial And Industrial | SBA Loans
Unpaid Contractual Principal Balance	48	48
Recorded Investment With No Allowance	0	0
Recorded Investment With Allowance	48	48
Total Recorded Investment	48	48
Related Allowance	48	48
Commercial Real Estate Portfolio Segment
Unpaid Contractual Principal Balance	1,724	1,390
Recorded Investment With No Allowance	1,348	1,390
Recorded Investment With Allowance	376	0
Total Recorded Investment	1,724	1,390
Related Allowance	27	0
Commercial Real Estate Portfolio Segment | SBA Loans
Unpaid Contractual Principal Balance	121	130
Recorded Investment With No Allowance	121	130
Recorded Investment With Allowance	0	0
Total Recorded Investment	121	130
Related Allowance	0	0
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Unpaid Contractual Principal Balance	995	630
Recorded Investment With No Allowance	619	630
Recorded Investment With Allowance	376	0
Total Recorded Investment	995	630
Related Allowance	27	0
Commercial Real Estate Portfolio Segment | Religious Organizations
Unpaid Contractual Principal Balance	608	630
Recorded Investment With No Allowance	608	630
Recorded Investment With Allowance	0	0
Total Recorded Investment	608	630
Related Allowance	$ 0	$ 0

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5. Investment Securities: Schedule of Unrealized Loss on Investments (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2014 USD ($)	Dec. 31, 2013 USD ($)
Held-to-maturity, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	28	36
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 1,444	$ 8,353
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	(8)	(498)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	5,832	225
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	(167)	(25)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	7,276	8,578
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Loss	$ (175)	$ (523)
US Government Agencies Debt Securities
Held-to-maturity, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	15	15
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 748	$ 3,576
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	(2)	(270)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	3,244	225
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	(103)	(25)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	3,992	3,801
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Loss	$ (105)	$ (295)
Collateralized Mortgage Backed Securities
Held-to-maturity, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	13	21
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 696	$ 4,777
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	(6)	(228)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	2,588	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	(64)	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	3,284	4,777
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Loss	$ (70)	$ (228)

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9. Regulatory (Details)	9 Months Ended
	Sep. 30, 2014
Details
Description of Regulatory Requirements, Prompt Corrective Action	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%, within a reasonable but unspecified time period;

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8. Fair Value: Schedule of Fair Value Assets Measured on Recurring Basis (Details) - USD ($)	Sep. 30, 2014	Dec. 31, 2013
Assets, Fair Value Disclosure, Recurring	$ 9,481,000	$ 9,580,000
Loans held for sale	638,437	1,645,832
Loans held at fair value	613,682	446,523
US Government Agencies Debt Securities
Assets, Fair Value Disclosure, Recurring	3,992,000	3,802,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure, Recurring	5,360,000	5,649,000
Money Market Funds
Assets, Fair Value Disclosure, Recurring	129,000	129,000
Fair Value, Inputs, Level 1
Assets, Fair Value Disclosure, Recurring	129,000	129,000
Loans held for sale	0	0
Loans held at fair value	0	0
Fair Value, Inputs, Level 1 | US Government Agencies Debt Securities
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 | Money Market Funds
Assets, Fair Value Disclosure, Recurring	129,000	129,000
Fair Value, Inputs, Level 2
Assets, Fair Value Disclosure, Recurring	9,352,000	9,451,000
Loans held for sale	638,437	1,654,832
Loans held at fair value	0	0
Fair Value, Inputs, Level 2 | US Government Agencies Debt Securities
Assets, Fair Value Disclosure, Recurring	3,992,000	3,802,000
Fair Value, Inputs, Level 2 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure, Recurring	5,360,000	5,649,000
Fair Value, Inputs, Level 2 | Money Market Funds
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3
Assets, Fair Value Disclosure, Recurring	0	0
Loans held for sale	0	0
Loans held at fair value	613,682	446,523
Fair Value, Inputs, Level 3 | US Government Agencies Debt Securities
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 | Money Market Funds
Assets, Fair Value Disclosure, Recurring	$ 0	$ 0

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4. New Authoritative Accounting Guidance

9 Months Ended

Sep. 30, 2014

Notes

4. New Authoritative Accounting Guidance

4. New Authoritative Accounting Guidance

ASU 2014-04, Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. ASU 2014-04 clarifies that an in substance repossession or foreclosure occurs and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (a) the creditor obtaining legal title to residential real estate property upon completion of a foreclosure or (b) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan though completion of a deed in lieu of foreclosure or through a similar legal agreement.  The amendments require interim and annual disclosure of both the amount of the foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of this amendment.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

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6. Loans and Allowance For Loan Losses: Impaired Financing Receivables Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Average Recorded Investment	$ 1,979	$ 1,882	$ 1,952	$ 1,987
Interest recognized on impaired Loans	3	2	9	3
Commercial And Industrial
Average Recorded Investment	252	516	279	688
Interest recognized on impaired Loans	3	0	3	1
Commercial And Industrial | Commercial
Average Recorded Investment	204	467	231	573
Interest recognized on impaired Loans	3	0	3	0
Commercial And Industrial | SBA Loans
Average Recorded Investment	48	49	48	49
Interest recognized on impaired Loans	0	0	0	1
Commercial And Industrial | Asset Based Loans
Average Recorded Investment			0	66
Interest recognized on impaired Loans			0	0
Commercial Real Estate Portfolio Segment
Average Recorded Investment	1,727	1,366	1,673	1,299
Interest recognized on impaired Loans	0	2	6	2
Commercial Real Estate Portfolio Segment | SBA Loans
Average Recorded Investment	122	161	125	36
Interest recognized on impaired Loans	0	2	1	2
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Average Recorded Investment	995	559	931	638
Interest recognized on impaired Loans	0	0	3	0
Commercial Real Estate Portfolio Segment | Religious Organizations
Average Recorded Investment	610	646	617	625
Interest recognized on impaired Loans	$ 0	$ 0	$ 2	$ 0

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

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of 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, 2014	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	$3,992	-	$3,992	-
Government Sponsored Enterprises residential mortgage-backed securities	5,360	-	5,360	-
Money Market Funds	129	129	-	-
Total	$9,481	$129	$9,352	-
Loans held for sale	$638	-	$638	-
Loans held at fair value	$614	-	-	$614

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at December 31, 2013	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	$3,802	-	$3,802	-
Government Sponsored Enterprises residential mortgage-backed securities	5,649	-	5,649	-
Money Market Funds	129	129	-	-
Total	$9,580	$129	$9,451	-
Loans held for sale	$1,646	-	$1,646	-
Loans held at fair value	$447	-	-	$447

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

9 Months Ended

Sep. 30, 2014

Tables/Schedules

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, 2014	September 30, 2013	September 30, 2014	September 30, 2013
Insurance	$5	$3	$16	$13
Professional fees	2	-	2	-
Real estate taxes	3	6	14	17
Utilities	1	1	3	3
Other	6	7	6	-
Transfer-in write-up	(47)	-	(47)	8
Impairment charges (net)	-	-	13	144
Total	$(30)	$17	$7	$185

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7. Other Real Estate Owned: Other Real Estate, Roll Forward (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Details
Other Real Estate, Beginning Balance	$ 420,000	$ 527,000	$ 433,087	$ 775,000
Additions, transfers from loans	240,000	0	240,000	0
Proceeds from sales	(29,000)	(48,000)	(29,000)	(140,000)
Other Real Estate, Period Increase (Decrease)	631,000	479,000	644,000	635,000
Write-downs and net gains (losses) on sales	0	3,000	(13,000)	(153,000)
Other Real Estate, Ending Balance	$ 631,043	$ 482	$ 631,043	$ 482

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8. Fair Value: Fair Value Inputs, Level 3 Financial Instruments, Quantitative Information (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Fair Value Inputs, Level 3 Financial Instruments, Quantitative Information

Assets measured at fair value	September 30, 2014 Fair value	December 31, 2013 Fair Value	Principal valuation techniques	Significant observable inputs	September 30, 2014 Range of inputs	December 31, 2013 Range of inputs
Loans held at fair value:	$614	$447	Discounted cash flow	Constant prepayment rate	7.194% to 7.456%	7.74% to 7.985%
				Weighted average discount rate	8.031% to 8.033%	9.106% to 9.111%
				Weighted average life	3.87 yrs to 3.91 yrs	4.08 yrs to 4.11 yrs
				Average projected default rate	18%	18%

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
Balance at December 31, 2013	$447
Origination of loans	180
Principal repayments	(9)
Change in fair value of financial instruments	(4)
Balance at September 30, 2014	$614

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8. Fair Value: Schedule of Fair Value of Assets Measured on a Nonrecurring Basis (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Fair Value of Assets Measured on a Nonrecurring Basis

(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)	Total fair value gain (loss) during 9 months ended
Impaired loans	$2,025	-	-	$2,025	$(75)
Other real estate owned (“OREO”)	$631	-	-	$631	$(13)

Carrying Value at December 31, 2013:

(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)	Total fair value gain (loss) during 12 months ended
Impaired Loans	$1,882	-	-	$1,882	$(59)
Other real estate owned (“OREO”)	$433	-	-	$433	$( 157)

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3. Changes in Accumulated Other Comprehensive Income (loss)

9 Months Ended

Sep. 30, 2014

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):

	Three Months Ended September 30, 2014
	Before tax	Tax	Net of tax
(in (000’s)	Amount	expense	Amount
Unrealized gain on securities:
Unrealized holding gain arising during period	$163	$(54)	$109
Less: reclassification adjustment for gains (losses)
realized in net loss	-	-	-
Other comprehensive gain, net	$163	$(54)	$109

	Three Months Ended September 30, 2013
	Before tax	Tax	Net of tax
(in (000’s)	Amount	benefit	Amount
Unrealized loss on securities:
Unrealized holding loss arising during period	$(57)	$19	$(38)
Less: reclassification adjustment for gains (losses)
realized in net loss	-	-	-
Other comprehensive loss, net	$(57)	$19	$(38)

	Nine Months Ended September 30, 2014
	Before tax	Tax	Net of tax
(in (000’s)	Amount	expense	Amount
Unrealized gain on securities:
Unrealized holding gain arising during period	$359	$(118)	$241
Less: reclassification adjustment for gains (losses)
realized in net loss	-	-	-
Other comprehensive gain, net	$359	$(118)	$241

	Nine Months Ended September 30, 2013
	Before tax	Tax	Net of tax
(in (000’s)	Amount	Benefit(expense)	Amount
Unrealized loss on securities:
Unrealized holding loss arising during period	$(327)	$108	$(219)
Less: reclassification adjustment for gains (losses)
realized in net loss	52	(17)	35
Other comprehensive gain, net	$(379)	$125	$(254)

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8. Fair Value: Schedule of Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Fair Value of Assets and Liabilities

		September 30, 2014		December 31, 2013
(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	$5,523	$5,523	$ 5,790	$ 5,790
Available for sale securities	(1)	9,481	9,481	9,580	9,580
Loans held for sale	Level 2	638	638	1,646	1,646
Loans held at fair value	Level 3	614	614	447	447
Loans, net of allowance for loan losses	(2)	42,274	43,006	42,711	43,304
Accrued interest receivable	Level 2	284	284	256	256
Liabilities:
Demand deposits	Level 2	29,926	29,926	28,658	28,658
Savings deposits	Level 2	12,075	23,075	12,988	12,988
Time deposits	Level 2	15,328	15,348	15,463	15,472
Accrued interest payable	Level 2	15	15	13	13

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6. Loans and Allowance For Loan Losses: Past Due Financing Receivables (Details) - USD ($)	Sep. 30, 2014	Dec. 31, 2013
Loans 30-89 Days Days Past Due	$ 608,000	$ 632,000
Accruing Loans 90 or More Days Past Due	222,000	730,000
Nonaccrual	2,538,000	2,190,000
Total Past Due Loans	3,368,000	3,552,000
Current Loans	39,607,000	38,712,000
Total Loans	42,975,712	42,264,102
Loans, ending balance: Total	42,975,712	42,264,102
Commercial And Industrial
Loans 30-89 Days Days Past Due	220,000	0
Accruing Loans 90 or More Days Past Due	86,000	0
Nonaccrual	301,000	574,000
Total Past Due Loans	607,000	574,000
Current Loans	4,435,000	3,289,000
Total Loans	5,042,000	3,863,000
Loans, ending balance: Total	5,042,000	3,863,000
Commercial And Industrial | Commercial
Loans 30-89 Days Days Past Due	220,000	0
Accruing Loans 90 or More Days Past Due	86,000	0
Nonaccrual	253,000	444,000
Total Past Due Loans	559,000	444,000
Current Loans	2,025,000	767,000
Total Loans	2,584,000	1,211,000
Loans, ending balance: Total	2,584,000	1,211,000
Commercial And Industrial | SBA Loans
Loans 30-89 Days Days Past Due	0	0
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	48,000	130,000
Total Past Due Loans	48,000	130,000
Current Loans	158,000	455,000
Total Loans	206,000	585,000
Loans, ending balance: Total	206,000	585,000
Commercial And Industrial | Asset Based Loans
Loans 30-89 Days Days Past Due	0	0
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	0	0
Total Past Due Loans	0	0
Current Loans	2,252,000	2,067,000
Total Loans	2,252,000	2,067,000
Loans, ending balance: Total	2,252,000	2,067,000
Commercial Real Estate Portfolio Segment
Loans 30-89 Days Days Past Due	73,000	206,000
Accruing Loans 90 or More Days Past Due	0	442,000
Nonaccrual	1,724,000	1,259,000
Total Past Due Loans	1,797,000	1,907,000
Current Loans	31,372,000	31,055,000
Total Loans	33,169,000	32,962,000
Loans, ending balance: Total	33,169,000	32,962,000
Commercial Real Estate Portfolio Segment | SBA Loans
Loans 30-89 Days Days Past Due	0	184,000
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	121,000	0
Total Past Due Loans	121,000	184,000
Current Loans	423,000	382,000
Total Loans	544,000	566,000
Loans, ending balance: Total	544,000	566,000
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Loans 30-89 Days Days Past Due	73,000	2,000
Accruing Loans 90 or More Days Past Due	0	442,000
Nonaccrual	995,000	630,000
Total Past Due Loans	1,068,000	1,094,000
Current Loans	14,895,000	16,249,000
Total Loans	15,963,000	17,343,000
Loans, ending balance: Total	15,963,000	17,343,000
Commercial Real Estate Portfolio Segment | Construction
Loans 30-89 Days Days Past Due	0	0
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	0	0
Total Past Due Loans	0	0
Current Loans	4,850,000	2,456,000
Total Loans	4,850,000	2,456,000
Loans, ending balance: Total	4,850,000	2,456,000
Commercial Real Estate Portfolio Segment | Religious Organizations
Loans 30-89 Days Days Past Due	0	0
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	608,000	629,000
Total Past Due Loans	608,000	629,000
Current Loans	11,204,000	11,968,000
Total Loans	11,812,000	12,597,000
Loans, ending balance: Total	11,812,000	12,597,000
Consumer Real Estate
Loans 30-89 Days Days Past Due	203,000	334,000
Accruing Loans 90 or More Days Past Due	0	147,000
Nonaccrual	513,000	357,000
Total Past Due Loans	716,000	838,000
Current Loans	2,671,000	3,071,000
Total Loans	3,387,000	3,909,000
Loans, ending balance: Total	3,387,000	3,909,000
Consumer Real Estate | Home Equity Line of Credit
Loans 30-89 Days Days Past Due	0	0
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	0	0
Total Past Due Loans	0	0
Current Loans	23,000	24,000
Total Loans	23,000	24,000
Loans, ending balance: Total	23,000	24,000
Consumer Real Estate | Home Equity Loans
Loans 30-89 Days Days Past Due	203,000	209,000
Accruing Loans 90 or More Days Past Due	0	147,000
Nonaccrual	371,000	115,000
Total Past Due Loans	574,000	471,000
Current Loans	491,000	705,000
Total Loans	1,065,000	1,176,000
Loans, ending balance: Total	1,065,000	1,176,000
Consumer Real Estate | Family Residential Mortgage
Loans 30-89 Days Days Past Due	0	125,000
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	142,000	242,000
Total Past Due Loans	142,000	367,000
Current Loans	2,157,000	2,342,000
Total Loans	2,299,000	2,709,000
Loans, ending balance: Total	2,299,000	2,709,000
Total Real Estate
Loans 30-89 Days Days Past Due	276,000	540,000
Accruing Loans 90 or More Days Past Due	0	589,000
Nonaccrual	2,237,000	1,616,000
Total Past Due Loans	2,513,000	2,745,000
Current Loans	34,043,000	34,126,000
Total Loans	36,556,000	36,871,000
Loans, ending balance: Total	36,556,000	36,871,000
Consumer And Other Loans
Loans 30-89 Days Days Past Due	112,000	92,000
Accruing Loans 90 or More Days Past Due	136,000	141,000
Nonaccrual	0	0
Total Past Due Loans	248,000	233,000
Current Loans	1,129,000	1,297,000
Total Loans	1,377,000	1,530,000
Loans, ending balance: Total	1,377,000	1,530,000
Consumer And Other Loans | Consumer Installment
Loans 30-89 Days Days Past Due	0	0
Accruing Loans 90 or More Days Past Due	0	0
Nonaccrual	0	0
Total Past Due Loans	0	0
Current Loans	7,000	16,000
Total Loans	7,000	16,000
Loans, ending balance: Total	7,000	16,000
Consumer And Other Loans | Student Loans
Loans 30-89 Days Days Past Due	112,000	87,000
Accruing Loans 90 or More Days Past Due	129,000	141,000
Nonaccrual	0	0
Total Past Due Loans	241,000	228,000
Current Loans	998,000	1,138,000
Total Loans	1,229,000	1,366,000
Loans, ending balance: Total	1,229,000	1,366,000
Consumer And Other Loans | Other
Loans 30-89 Days Days Past Due	0	5,000
Accruing Loans 90 or More Days Past Due	7,000	0
Nonaccrual	0	0
Total Past Due Loans	7,000	5,000
Current Loans	134,000	143,000
Total Loans	141,000	148,000
Loans, ending balance: Total	$ 141,000	$ 148,000

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CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)		Sep. 30, 2014	Dec. 31, 2013
Assets:
Cash and due from banks		$ 1,928,494	$ 2,340,002
Interest-bearing deposits with banks		309,924	306,776
Federal funds sold		3,285,000	3,143,000
Cash and cash equivalents		5,523,418	5,789,778
Investment securities available-for-sale, at fair value		9,481,374	9,579,979
Loans held for sale		638,437	1,645,832
Loans held at fair value		613,682	446,523
Loans, net of unearned discounts and deferred fees		42,975,712	42,264,102
Less allowance for loan losses		(701,925)	(839,133)
Net loans		42,273,787	41,424,969
Bank premises and equipment, net		588,329	649,159
Accrued interest receivable		284,074	256,262
Other real estate owned		631,043	433,087
Prepaid expenses and other assets		497,702	525,466
Total assets		60,531,846	60,751,055
Liabilities:
Demand deposits, noninterest-bearing		14,842,818	14,526,988
Demand deposits, interest-bearing		15,083,108	14,131,452
Savings deposits		12,075,342	12,988,388
Time deposits, under $100,000		6,655,220	6,683,499
Time deposits, $100,000 and over		8,672,905	8,779,518
Total deposits		57,329,393	57,109,845
Accrued interest payable		15,294	12,722
Accrued expenses and other liabilities		343,572	418,604
Total liabilities		57,688,259	57,541,171
Shareholders' equity:
Series A preferred stock, noncumulative, 6%, $0.01 par value, 500,000 shares authorized; 136,842 issued and outstanding		1,368	1,368
Common stock		10,686	10,686
Additional paid-in-capital		14,749,852	14,749,852
Accumulated deficit		(11,832,171)	(11,224,976)
Accumulated other comprehensive loss		(86,148)	(327,046)
Total shareholders' equity		2,843,587	3,209,884
Total liabilities and shareholders' equity		60,531,846	60,751,055
Common Stock
Shareholders' equity:
Common stock	[1]	8,769	8,769
Class B Non-voting common stock
Shareholders' equity:
Common stock	[2]	$ 1,917	$ 1,917

[1] Common stock, $0.01 par value; 2,000,000 shares authorized; 876,921 issued and outstanding

[2] Class B Non-voting common stock; 250,000 shares authorized; $0.01 par value; 191,667 issued and outstanding

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7. Other Real Estate Owned: Schedule of Components Of Other Real Estate Owned (Details) - USD ($)	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Other real estate owned	$ 631,043	$ 420,000	$ 433,087	$ 482	$ 527,000	$ 775,000
Other Real Estate, Ending Balance	631,043	$ 420,000	433,087	$ 482	$ 527,000
Commercial Real Estate
Other real estate owned	191,000		191,000
Other Real Estate, Ending Balance	191,000		191,000
Residential Real Estate
Other real estate owned	440,000		242,000
Other Real Estate, Ending Balance	$ 440,000		$ 242,000

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1. Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

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, 2013 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 September 30, 2014 and December 31, 2013 and the consolidated results of its operations and its cash flows for the three and nine months ended September 30, 2014 and 2013.

Management’s 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, and 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 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.  Fair value of these loans is 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.

Loans Held at Fair Value

From time to time, 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 estimated fair value based on a loan-by-loan valuation using actual market bids in accordance with the irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments. 

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 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 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.

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5. Investment Securities: Investment Portfolio (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Available-for-sale Securities, Amortized Cost Basis	$ 9,610,000	$ 10,067,000
Available-for-sale Securities, Gross Unrealized Gain	46,000	36,000
Available-for-sale Securities, Gross Unrealized Loss	(175,000)	(523,000)
Investment securities available-for-sale, at fair value	9,481,374	9,579,979
US Government Agencies Debt Securities
Available-for-sale Securities, Amortized Cost Basis	4,097,000	4,097,000
Available-for-sale Securities, Gross Unrealized Gain	0	0
Available-for-sale Securities, Gross Unrealized Loss	(105,000)	(295,000)
Investment securities available-for-sale, at fair value	3,992,000	3,802,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available-for-sale Securities, Amortized Cost Basis	5,384,000	5,841,000
Available-for-sale Securities, Gross Unrealized Gain	46,000	36,000
Available-for-sale Securities, Gross Unrealized Loss	(70,000)	(228,000)
Investment securities available-for-sale, at fair value	5,360,000	5,649,000
Money Market Funds
Available-for-sale Securities, Amortized Cost Basis	129,000	129,000
Available-for-sale Securities, Gross Unrealized Gain	0	0
Available-for-sale Securities, Gross Unrealized Loss	0	0
Investment securities available-for-sale, at fair value	$ 129,000	$ 129,000

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6. Loans and Allowance For Loan Losses: Past Due Financing Receivables (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Past Due Financing Receivables

		Accruing
	Loans	Loans 90 or
(In 000's)	30-89 Days	More Days		Total Past	Current
	Past Due	Past Due	Nonaccrual	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$220	$86	$253	$559	$2,025	$2,584
SBA loans	-	-	48	48	158	206
Asset-based	-	-	-	-	2,252	2,252
Total Commercial and industrial	220	86	301	607	4,435	5,042
Commercial real estate:
Commercial mortgages	73	-	995	1,068	14,895	15,963
SBA loans	-	-	121	121	423	544
Construction	-	-	-	-	4,850	4,850
Religious organizations	-	-	608	608	11,204	11,812
Total Commercial real estate	73	-	1,724	1,797	31,372	33,169
Consumer real estate:
Home equity loans	203	-	371	574	491	1,065
Home equity lines of credit	-	-	-	-	23	23
1-4 family residential mortgages	-	-	142	142	2,157	2,299
Total consumer real estate	203	-	513	716	2,671	3,387
Total real estate	276	-	2,237	2,513	34,043	36,556
Consumer and other:
Consumer installment	-	-	-	-	7	7
Student loans	112	129	-	241	998	1,229
Other	-	7	-	7	134	141
Total consumer and other	112	136	-	248	1,129	1,377
Total loans	$608	$222	$2,538	$3,368	$39,607	$42,975

An age analysis of past due loans, segregated by class of loans, as of December 31, 2013 is as follows:

		Accruing
	Loans	Loans 90 or
	30-89 Days	More Days		Total Past	Current
(In 000's)	Past Due	Past Due	Nonaccrual	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	-	-	$444	$444	$767	$1,211
SBA loans	-	-	130	130	455	585
Asset-based	-	-	-	-	2,067	2,067
Total Commercial and industrial	-	-	574	574	3,289	3,863
Commercial real estate:
Commercial mortgages	2	442	630	1,094	16,249	17,343
SBA loans	184	-	-	184	382	566
Construction	-	-	-	-	2,456	2,456
Religious organizations	-	-	629	629	11,968	12,597
Total Commercial real estate	206	442	1,259	1,907	31,055	32,962
Consumer real estate:
Home equity loans	209	147	115	471	705	1,176
Home equity lines of credit	-	-	-	-	24	24
1-4 family residential mortgages	125	-	242	367	2,342	2,709
Total consumer real estate	334	147	357	838	3,071	3,909
Total real estate	540	589	1,616	2,745	34,126	36,871
Consumer and other:
Consumer installment	-	-	-	-	16	16
Student loans	87	141	-	228	1,138	1,366
Other	5	-	-	5	143	148
Total consumer and other	92	141	-	233	1,297	1,530
Total loans	$632	$730	$2,190	$3,552	$38,712	$42,264

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5. Investment Securities: Investments Classified by Contractual Maturity Date (Details) - USD ($)	Sep. 30, 2014	Dec. 31, 2013
Amortized Cost, due after one year through five years	$ 0
Fair Value, due after one year through five years	0
Amortized Cost, due after five years through ten years	4,097,000
Fair Value, due after five years through ten years	3,992,000
Available-for-sale Securities, Amortized Cost Basis	9,610,000	$ 10,067,000
Investment securities available-for-sale, at fair value	9,481,374	9,579,979
Total debt securities, Amortized Cost Basis	9,481,000
Total debt securities, Fair Value	9,352,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available-for-sale Securities, Amortized Cost Basis	5,384,000	5,841,000
Investment securities available-for-sale, at fair value	5,360,000	5,649,000
Money Market Funds
Available-for-sale Securities, Amortized Cost Basis	129,000	129,000
Investment securities available-for-sale, at fair value	$ 129,000	$ 129,000

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6. Loans and Allowance For Loan Losses: Impaired Financing Receivables (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Impaired Financing Receivables

(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	$253	$39	$214	$253	$147
SBA Loans	48	-	48	48	48
Total commercial and industrial	301	39	262	301	195
Commercial real estate:
Commercial mortgages	995	619	376	995	27
SBA Loans	121	121	-	121	-
Religious organizations	608	608	-	608	-
Total commercial real estate	1,724	1,348	376	1,724	27
Total loans	$2,025	$1,387	$638	$2,025	$222

Impaired loans as of December 31, 2013 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	$444	$47	$397	$444	$330
SBA loans	48	-	48	48	48
Total commercial and industrial	492	47	445	492	378
Commercial real estate:
Commercial mortgages	630	630	-	630	-
SBA Loans	130	130	-	130	-
Religious organizations	630	630	-	630	-
Total commercial real estate	1,390	1,390	-	1,390	-
Total loans	$1,882	$1,437	$445	$1,882	$378

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2. Net Loss Per Share

9 Months Ended

Sep. 30, 2014

Notes

2. Net Loss Per Share

2. Net Loss Per Share

The calculation of net loss per share follows:

	Three Months Ended  September 30, 2014	Three Months Ended September 30, 2013	Nine Months Ended  September 30, 2014	Nine Months Ended September 30, 2013
Basic:
Net loss available to common shareholders	$(182,996)	$(333,359)	$(607,195)	$(576,205)
Average common shares outstanding-basic	1,068,588	1,068,588	1,068,588	1,068,588
Net loss per share-basic	$(0.17)	$(0.31)	$(0.57)	$(0.54)
Diluted:
Average common shares-diluted	1,068,588	1,068,588	1,068,588	1,068,588
Net loss per share-diluted	$(0.17)	$(0.31)	$(0.57)	$(0.54)

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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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2014	Dec. 31, 2013
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	2,000,000	2,000,000
Common stock, shares issued	876,921	876,921
Common stock, shares outstanding	876,921	876,921
Series A Preferred Stock
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	136,842	136,842
Preferred stock, shares outstanding	136,842	136,842
Preferred stock, Dividend Rate	6.00%	6.00%
Class B Non-voting common stock
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	250,000	250,000
Common stock, shares issued	191,667	191,667
Common stock, shares outstanding	191,667	191,667

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3. Changes in Accumulated Other Comprehensive Income (loss): Changes in Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Changes in Accumulated Other Comprehensive Income (Loss)

	Three Months Ended September 30, 2014
	Before tax	Tax	Net of tax
(in (000’s)	Amount	expense	Amount
Unrealized gain on securities:
Unrealized holding gain arising during period	$163	$(54)	$109
Less: reclassification adjustment for gains (losses)
realized in net loss	-	-	-
Other comprehensive gain, net	$163	$(54)	$109

	Three Months Ended September 30, 2013
	Before tax	Tax	Net of tax
(in (000’s)	Amount	benefit	Amount
Unrealized loss on securities:
Unrealized holding loss arising during period	$(57)	$19	$(38)
Less: reclassification adjustment for gains (losses)
realized in net loss	-	-	-
Other comprehensive loss, net	$(57)	$19	$(38)

	Nine Months Ended September 30, 2014
	Before tax	Tax	Net of tax
(in (000’s)	Amount	expense	Amount
Unrealized gain on securities:
Unrealized holding gain arising during period	$359	$(118)	$241
Less: reclassification adjustment for gains (losses)
realized in net loss	-	-	-
Other comprehensive gain, net	$359	$(118)	$241

	Nine Months Ended September 30, 2013
	Before tax	Tax	Net of tax
(in (000’s)	Amount	Benefit(expense)	Amount
Unrealized loss on securities:
Unrealized holding loss arising during period	$(327)	$108	$(219)
Less: reclassification adjustment for gains (losses)
realized in net loss	52	(17)	35
Other comprehensive gain, net	$(379)	$125	$(254)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2014	Nov. 03, 2014
Entity Registrant Name	UNITED BANCSHARES INC /PA
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Entity Central Index Key	0000944792
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		1,068,588
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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5. Investment Securities: Investment Portfolio (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Investment Portfolio

(In 000’s)	September 30, 2014
		Gross	Gross
	Amortized	Unrealized	unrealized	Fair
	Cost	Gains	losses	Value
Available-for-sale:
U.S. Government agency securities	$4,097	-	$(105)	$3,992
Government Sponsored Enterprises residential mortgage-backed securities	5,384	46	(70)	5,360
Investments in money market funds	129	-	-	129
	$9,610	46	$(175)	$9,481
	December 31, 2013
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$4,097	-	$(295)	3,802
Government Sponsored Enterprises residential mortgage-backed securities	5,841	36	(228)	5,649
Investments in money market funds	129	-	-	129
	$10,067	$36	$(523)	9,580

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2014, 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	4,097	3,992
Government Sponsored Enterprises residential mortgage-backed securities	5,384	5,360
Total debt securities	9,481	9,352
Investments in money market funds	129	129
	$9,610	$9,481

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest income:
Interest and fees on loans	$ 677,703	$ 673,937	$ 1,963,866	$ 1,932,350
Interest on investment securities	57,763	59,822	177,555	213,161
Interest on federal funds sold	2,004	3,621	6,577	11,228
Interest on time deposits with other banks	166	174	3,153	578
Total interest income	737,636	737,554	2,151,151	2,157,317
Interest expense:
Interest on time deposits	10,194	10,478	29,697	38,012
Interest on demand deposits	6,806	6,507	20,157	21,396
Interest on savings deposits	1,521	1,651	4,667	5,063
Total interest expense	18,521	18,636	54,521	64,471
Net interest income	719,115	718,918	2,096,630	2,092,846
Provision for loan losses	62,000	30,000	132,000	45,137
Net interest income after provision for loan losses	657,115	688,918	1,964,630	2,047,709
Noninterest income:
Customer service fees	92,654	98,658	290,629	303,281
ATM fee income	36,002	56,144	123,249	216,301
Gain on sale of investment securities				378,248
Loan syndication fees			87,550	88,300
Gain (loss) on sale of other real estate owned	1,348	2,712	1,348	(11,168)
Gain on sale of loans	10,618		10,618
Net change in fair value of financial instruments	71,695		69,116
Other income	18,194	18,281	71,080	50,375
Total noninterest income	230,511	175,795	653,590	1,025,337
Noninterest expense:
Salaries, wages and employee benefits	394,190	395,598	1,208,180	1,144,594
Occupancy and equipment	247,361	242,853	743,864	750,897
Office operations and supplies	72,216	69,673	206,193	224,481
Marketing and public relations	10,477	22,281	47,747	56,983
Professional services	89,296	115,528	235,436	263,708
Data processing	103,327	114,664	323,198	339,243
Other real estate expense	(30,328)	17,210	6,828	184,754
Loan and collection costs	43,218	20,083	82,146	78,891
Deposit insurance assessments	34,200	32,000	106,200	106,652
Other operating	106,665	168,182	265,623	499,048
Total noninterest expense	1,070,622	1,198,072	3,225,415	3,649,251
Net loss before income taxes	$ (182,996)	$ (333,359)	$ (607,195)	$ (576,205)
Provision for income taxes
Net loss	$ (182,996)	$ (333,359)	$ (607,195)	$ (576,205)
Net loss per common share-basic and diluted	$ (0.17)	$ (0.31)	$ (0.57)	$ (0.54)
Weighted average number of common shares	1,068,588	1,068,588	1,068,588	1,068,588
Comprehensive loss:
Net loss	$ (182,996)	$ (333,359)	$ (607,195)	$ (576,205)
Unrealized gains (losses) on available for sale securities	109,208	(37,549)	240,898	(253,634)
Total comprehensive loss	$ (73,788)	$ (370,908)	$ (366,297)	$ (829,839)

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7. Other Real Estate Owned

9 Months Ended

Sep. 30, 2014

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, 2014	September 30, 2013	September 30, 2014	September 30, 2013
Beginning balance	$420	$527	$433	$775
Additions, transfers from loans	240	-	240	-
Proceeds from sales	(29)	(48)	(29)	(140)
	631	479	644	635
Write-downs and net gains (losses) on sales	-	3	(13)	(153)
Ending Balance	$631	$482	$631	$482

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

(in 000's)	September 30, 2014	December 31, 2013
Commercial real estate	$191	$191
Residential real estate	440	242
Total	$631	$433

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, 2014	September 30, 2013	September 30, 2014	September 30, 2013
Insurance	$5	$3	$16	$13
Professional fees	2	-	2	-
Real estate taxes	3	6	14	17
Utilities	1	1	3	3
Other	6	7	6	-
Transfer-in write-up	(47)	-	(47)	8
Impairment charges (net)	-	-	13	144
Total	$(30)	$17	$7	$185

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6. Loans and Allowance For Loan Losses

9 Months Ended

Sep. 30, 2014

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:

(Dollars in thousands)	September 30, 2014	December 31, 2013
Commercial and industrial	$5,042	$3,863
Commercial real estate	33,169	32,962
Consumer real estate	3,387	3,909
Consumer loans other	1,377	1,530
Total loans	$42,975	$42,264

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 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.  During the quarter ended September 30, 2014, 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 no significant charge-offs during the quarter. 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, 2014
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$297	$295	$52	$13	$657
Provision for loan losses	74	5	(18)	1	62
Charge-offs	-	-	(19)	(7)	(26)
Recoveries	1	-	3	5	9
Net charge-offs	1	-	(16)	(2)	(17)
Ending balance	$372	$300	$18	$12	$702

(in 000's)	For the Three months ended September 30, 2013
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$446	$288	$44	-	$778
Provision (credit) for loan losses	(40)	65	5	-	30
Charge-offs	-	-	-	(1)	(1)
Recoveries	1	-	-	1	5
Net recoveries	1	-	-	-	4
Ending balance	$407	$353	$52	-	$812

(in 000's)	For the Nine months ended September 30, 2014
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$483	$280	$59	$17	$839
Provision for loan losses	139	20	(28)	1	132
Charge-offs	(253)	-	(19)	(25)	(297)
Recoveries	3	-	6	19	28
Net charge-offs	(250)	-	(13)	(6)	(269)
Ending balance	$372	$300	$18	$12	$702

(in 000's)	For the Nine months ended September 30, 2013
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$891	$308	$5	-	$1,204
Provision for loan losses	37	(33)	40	1	45
Charge-offs	(524)	-	-	(5)	(529)
Recoveries	3	78	7	4	92
Net charge-offs	(521)	78	7	(1)	(437)
Ending balance	$407	$353	$52	-	$812

(in 000's)	September 30, 2014
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$195	$27	-	-	$222
Loans collectively  evaluated for impairment	177	273	18	12	480
	$372	$300	$18	$12	$702
Loans, ending balance:
Loans individually evaluated for impairment	$301	$1,724	-	-	$2,025
Loans collectively  evaluated for impairment	4,741	31,445	3,387	1,377	40,950
Total	$5,042	$33,169	$3,387	$1,377	$42,975

	December 31, 2013
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$378	-	-	-	$378
Loans collectively  evaluated for impairment	105	280	59	17	461
	483	$280	$59	$17	$839
Loans, ending balance:
Loans individually evaluated for impairment	$574	$1,259	-	-	$1,882
Loans collectively  evaluated for impairment	3,239	31,703	3,909	1,530	40,382
Total	$3,863	$32,962	$3,909	$1,530	$42,264

Nonperforming and Nonaccrual and Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2014 is as follows:

		Accruing
	Loans	Loans 90 or
(In 000's)	30-89 Days	More Days		Total Past	Current
	Past Due	Past Due	Nonaccrual	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$220	$86	$253	$559	$2,025	$2,584
SBA loans	-	-	48	48	158	206
Asset-based	-	-	-	-	2,252	2,252
Total Commercial and industrial	220	86	301	607	4,435	5,042
Commercial real estate:
Commercial mortgages	73	-	995	1,068	14,895	15,963
SBA loans	-	-	121	121	423	544
Construction	-	-	-	-	4,850	4,850
Religious organizations	-	-	608	608	11,204	11,812
Total Commercial real estate	73	-	1,724	1,797	31,372	33,169
Consumer real estate:
Home equity loans	203	-	371	574	491	1,065
Home equity lines of credit	-	-	-	-	23	23
1-4 family residential mortgages	-	-	142	142	2,157	2,299
Total consumer real estate	203	-	513	716	2,671	3,387
Total real estate	276	-	2,237	2,513	34,043	36,556
Consumer and other:
Consumer installment	-	-	-	-	7	7
Student loans	112	129	-	241	998	1,229
Other	-	7	-	7	134	141
Total consumer and other	112	136	-	248	1,129	1,377
Total loans	$608	$222	$2,538	$3,368	$39,607	$42,975

An age analysis of past due loans, segregated by class of loans, as of December 31, 2013 is as follows:

		Accruing
	Loans	Loans 90 or
	30-89 Days	More Days		Total Past	Current
(In 000's)	Past Due	Past Due	Nonaccrual	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	-	-	$444	$444	$767	$1,211
SBA loans	-	-	130	130	455	585
Asset-based	-	-	-	-	2,067	2,067
Total Commercial and industrial	-	-	574	574	3,289	3,863
Commercial real estate:
Commercial mortgages	2	442	630	1,094	16,249	17,343
SBA loans	184	-	-	184	382	566
Construction	-	-	-	-	2,456	2,456
Religious organizations	-	-	629	629	11,968	12,597
Total Commercial real estate	206	442	1,259	1,907	31,055	32,962
Consumer real estate:
Home equity loans	209	147	115	471	705	1,176
Home equity lines of credit	-	-	-	-	24	24
1-4 family residential mortgages	125	-	242	367	2,342	2,709
Total consumer real estate	334	147	357	838	3,071	3,909
Total real estate	540	589	1,616	2,745	34,126	36,871
Consumer and other:
Consumer installment	-	-	-	-	16	16
Student loans	87	141	-	228	1,138	1,366
Other	5	-	-	5	143	148
Total consumer and other	92	141	-	233	1,297	1,530
Total loans	$632	$730	$2,190	$3,552	$38,712	$42,264

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.  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 Bank’s loans by class according to their credit quality indictors discussed above.

(In 000's)	Commercial Loans September 30, 2014
	Good/Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial
Commercial	$250	$1,862	$220	-	$114	$138	$2,584
SBA loans	-	118	-	40	48	-	206
Asset-based	-	2,081	125	46	-	-	2,252
	250	4,061	345	86	162	138	5,042
Commercial real estate:
Commercial mortgages	-	13,485	829	57	1,276	316	15,963
SBA Loans	-	253	171	-	120	-	544
Construction	-	4,850	-	-	-	-	4,850
Religious organizations	-	9,827	760	617	608	-	11,812
	-	28,415	1,760	674	2,004	316	33,169
Total commercial loans	$250	$32,476	$2,105	$760	$2,166	$454	$38,211

	Residential Mortgage and Consumer Loans September 30, 2014
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$694	$371	$1,065
Home equity line of credit	23	-	23
1-4 family residential mortgages	2,157	142	2,299
	2,874	513	3,387
Consumer Other:
Consumer Installment	7	-	7
Student loans	1,229	-	1,229
Other	141	-	141
	1,377	-	1,377
Total  consumer loans	$4,251	$513	$4,764
Total loans				$42,975

(In 000's)	Commercial Loans, December 31, 2013
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$250	$296	$220	-	$52	$393	$1,658
SBA loans	-	497	-	40	48	-	585
Asset-based	-	1,897	124	46	-	-	2,067
	250	2,690	344	86	100	393	3,863
Commercial real estate:
Commercial mortgages	-	15,232	883	-	912	316	17,343
SBA Loans	-	265	171	-	150	-	566
Construction	-	2,456	-	-	-	-	2,456
Religious organizations	-	10,414	931	623	629	-	12,597
	-	28,367	1,985	623	1,671	316	32,962
Total commercial loans	$250	$31,057	$2,329	$709	$1,771	$709	$36,825

	Residential Mortgage and Consumer Loans December 31, 2013
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$1,061	$115	$1,176
Home equity line of credit	24	-	24
1-4 family residential mortgages	2,467	242	2,709
	3,552	357	3,909
Consumer Other:
Consumer Installment	16	-	16
Student loans	1,366	-	1,366
Other	148	-	148
	1,530	-	1,530
Total  consumer loans	$5,082	$357	$5,439
Total loans				$42,264

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. In March 2014, the Bank charged off approximately $253,000 related to one impaired loan for which specific reserves had been previously allocated. There were no other partial charge-offs.

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, 2014 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	$253	$39	$214	$253	$147
SBA Loans	48	-	48	48	48
Total commercial and industrial	301	39	262	301	195
Commercial real estate:
Commercial mortgages	995	619	376	995	27
SBA Loans	121	121	-	121	-
Religious organizations	608	608	-	608	-
Total commercial real estate	1,724	1,348	376	1,724	27
Total loans	$2,025	$1,387	$638	$2,025	$222

Impaired loans as of December 31, 2013 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	$444	$47	$397	$444	$330
SBA loans	48	-	48	48	48
Total commercial and industrial	492	47	445	492	378
Commercial real estate:
Commercial mortgages	630	630	-	630	-
SBA Loans	130	130	-	130	-
Religious organizations	630	630	-	630	-
Total commercial real estate	1,390	1,390	-	1,390	-
Total loans	$1,882	$1,437	$445	$1,882	$378

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.

	Three Months Ended		Three Months Ended
(In 000's)	September 30, 2014		September 30, 2013
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$204	$3	$467	-
SBA  loans	48	-	49	-
Total commercial and industrial	252	3	516	-
Commercial real estate:
Commercial mortgages	995	-	559	-
SBA loans	122	-	161	2
Religious organizations	610	-	646	-
Total commercial real estate	1,727	-	1,366	2
Total loans	$1,979	$3	$1,882	2

	Nine Months Ended		Nine Months Ended
(In 000's)	September 30, 2014		September 30, 2013
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$231	$3	$573	-
SBA  loans	48	-	49	1
Asset-based	-	-	66	-
Total commercial and industrial	279	3	688	1
Commercial real estate:
Commercial mortgages	931	3	638	-
SBA loans	125	1	36	2
Religious organizations	617	2	625	-
Total commercial real estate	1,673	6	1,299	2
Total loans	$1,952	$9	$1,987	$3

 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 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, 2014 and December 31, 2013.

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6. Loans and Allowance For Loan Losses: Financing Receivable Credit Quality Indicators (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Financing Receivable Credit Quality Indicators

(In 000's)	Commercial Loans September 30, 2014
	Good/Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial
Commercial	$250	$1,862	$220	-	$114	$138	$2,584
SBA loans	-	118	-	40	48	-	206
Asset-based	-	2,081	125	46	-	-	2,252
	250	4,061	345	86	162	138	5,042
Commercial real estate:
Commercial mortgages	-	13,485	829	57	1,276	316	15,963
SBA Loans	-	253	171	-	120	-	544
Construction	-	4,850	-	-	-	-	4,850
Religious organizations	-	9,827	760	617	608	-	11,812
	-	28,415	1,760	674	2,004	316	33,169
Total commercial loans	$250	$32,476	$2,105	$760	$2,166	$454	$38,211

	Residential Mortgage and Consumer Loans September 30, 2014
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$694	$371	$1,065
Home equity line of credit	23	-	23
1-4 family residential mortgages	2,157	142	2,299
	2,874	513	3,387
Consumer Other:
Consumer Installment	7	-	7
Student loans	1,229	-	1,229
Other	141	-	141
	1,377	-	1,377
Total  consumer loans	$4,251	$513	$4,764
Total loans				$42,975

(In 000's)	Commercial Loans, December 31, 2013
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$250	$296	$220	-	$52	$393	$1,658
SBA loans	-	497	-	40	48	-	585
Asset-based	-	1,897	124	46	-	-	2,067
	250	2,690	344	86	100	393	3,863
Commercial real estate:
Commercial mortgages	-	15,232	883	-	912	316	17,343
SBA Loans	-	265	171	-	150	-	566
Construction	-	2,456	-	-	-	-	2,456
Religious organizations	-	10,414	931	623	629	-	12,597
	-	28,367	1,985	623	1,671	316	32,962
Total commercial loans	$250	$31,057	$2,329	$709	$1,771	$709	$36,825

	Residential Mortgage and Consumer Loans December 31, 2013
	Performing	Nonperforming	Total
Consumer Real Estate:
Home equity	$1,061	$115	$1,176
Home equity line of credit	24	-	24
1-4 family residential mortgages	2,467	242	2,709
	3,552	357	3,909
Consumer Other:
Consumer Installment	16	-	16
Student loans	1,366	-	1,366
Other	148	-	148
	1,530	-	1,530
Total  consumer loans	$5,082	$357	$5,439
Total loans				$42,264

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5. Investment Securities: Schedule of Unrealized Loss on Investments (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Unrealized Loss on Investments

	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	15	$748	$(2)	$3,244	$(103)	$3,992	$(105)
Government Sponsored Enterprises residential mortgage-backed securities	13	696	(6)	2,588	(64)	3,284	(70)
Total temporarily impaired investment securities	28	$1,444	$(8)	$5,832	$(167)	$7,276	$(175)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2013:

	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	15	$3,576	$(270)	$225	$(25)	$3,801	$(295)
Government Sponsored Enterprises residential mortgage-backed securities	21	$4,777	$(228)	-	-	4,777	$(228)
Total temporarily impaired investment securities	36	$8,353	$(498)	$225	$(25)	$8,578	$(523)

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1. Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Policies

Management's Use of Estimates

Management’s 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, and the determination of other than temporary impairment for securities.

Commitments and Contingencies

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

Loans Held for Sale

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.  Fair value of these loans is 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.

Loans Held At Fair Value

Loans Held at Fair Value

From time to time, 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 estimated fair value based on a loan-by-loan valuation using actual market bids in accordance with the irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments. 

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.

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.

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 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

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 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

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8. Fair Value

9 Months Ended

Sep. 30, 2014

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. Level 1 securities include highly liquid government bonds and mutual funds. 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.  In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.

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.

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, 2014	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	$3,992	-	$3,992	-
Government Sponsored Enterprises residential mortgage-backed securities	5,360	-	5,360	-
Money Market Funds	129	129	-	-
Total	$9,481	$129	$9,352	-
Loans held for sale	$638	-	$638	-
Loans held at fair value	$614	-	-	$614

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at December 31, 2013	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	$3,802	-	$3,802	-
Government Sponsored Enterprises residential mortgage-backed securities	5,649	-	5,649	-
Money Market Funds	129	129	-	-
Total	$9,580	$129	$9,451	-
Loans held for sale	$1,646	-	$1,646	-
Loans held at fair value	$447	-	-	$447

The fair value of the Bank’s AFS securities portfolio was approximately $9,481,000 and $9,580,000 at September 30, 2014 and December 31, 2013, respectively. At September 30, 2014, approximately 57% of the portfolio consisted of residential mortgage-backed securities, which had a fair value of approximately $5,360,000.  At December 31, 2013, approximately 59% of the portfolio consisted of residential mortgage-backed securities, which had a fair value of approximately $5,649,000.  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, 2014 and 2013.

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, 2014 Fair value	December 31, 2013 Fair Value	Principal valuation techniques	Significant observable inputs	September 30, 2014 Range of inputs	December 31, 2013 Range of inputs
Loans held at fair value:	$614	$447	Discounted cash flow	Constant prepayment rate	7.194% to 7.456%	7.74% to 7.985%
				Weighted average discount rate	8.031% to 8.033%	9.106% to 9.111%
				Weighted average life	3.87 yrs to 3.91 yrs	4.08 yrs to 4.11 yrs
				Average projected default rate	18%	18%

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
Balance at December 31, 2013	$447
Origination of loans	180
Principal repayments	(9)
Change in fair value of financial instruments	(4)
Balance at September 30, 2014	$614

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, 2014 and December 31, 2013, for which a nonrecurring change in fair value has been recorded during the six months ended September 30, 2014 and year ended December 31, 2013.

 Carrying Value at September 30, 2014:

(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)	Total fair value gain (loss) during 9 months ended
Impaired loans	$2,025	-	-	$2,025	$(75)
Other real estate owned (“OREO”)	$631	-	-	$631	$(13)

Carrying Value at December 31, 2013:

(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)	Total fair value gain (loss) during 12 months ended
Impaired Loans	$1,882	-	-	$1,882	$(59)
Other real estate owned (“OREO”)	$433	-	-	$433	$( 157)

The measured impairment for collateral dependent of impaired loans is determined by the fair value of the collateral less estimated liquidation costs.  Collateral values for loans and OREO are determined by annual or more frequent appraisals if warranted by volatile market conditions, which may be discounted up to 10% based upon management’s review and the estimated cost of liquidation. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made on the appraisal process by the appraisers for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. The valuation allowance for impaired loans is adjusted as necessary based on changes in the value of collateral as well as the cost of liquidation.  It is included in the allowance for loan losses in the consolidated statements of condition.

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 following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the statement of condition for cash and cash equivalents approximate those assets’ fair values.

Investment securities: Fair values for investment securities available-for-sale are as described above.  If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans held for sale:  Fair values for loans held for sale are estimated by using actual quoted market bids on a loan by loan basis.

Loans held at fair value: The fair value of loans held at fair value was estimated based on the present value of future cashflows for each asset based on their unique characteristics, market-based assumptions for prepayment speeds, default and voluntary prepayments as well as loan specific assumptions for losses and recoveries.

Loans (other than impaired loans): The fair value of loans was estimated using a discounted cash flow analysis, which considered estimated pre­payments, amortizations, and non performance risk.  Prepayments and discount rates were based on current marketplace estimates and rates.

 Accrued interest receivable:  The carrying amount of accrued interest receivable approximates fair value.

Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings, and certain types of money market accounts) are equal to the amounts payable on demand at the reporting date (e.g., their carrying amounts).  The carrying amounts for variable-rate, fixed-term money market accounts and certificates of deposit approximate the fair values at the reporting date.  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation.  The Treasury yield curve was utilized for discounting cash flows as it approximates the average marketplace certificate of deposit rates across the relevant maturity spectrum.

Accrued interest payable:  The carrying amounts of accrued interest payable approximate fair value.

Commitments to extend credit: The carrying amounts for commitments to extend credit approximate fair value as such commitments are not substantially different from the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparts.  The carrying amount of accrued interest payable approximates fair market value.

The fair value of assets and liabilities are depicted below:

		September 30, 2014		December 31, 2013
(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	$5,523	$5,523	$ 5,790	$ 5,790
Available for sale securities	(1)	9,481	9,481	9,580	9,580
Loans held for sale	Level 2	638	638	1,646	1,646
Loans held at fair value	Level 3	614	614	447	447
Loans, net of allowance for loan losses	(2)	42,274	43,006	42,711	43,304
Accrued interest receivable	Level 2	284	284	256	256
Liabilities:
Demand deposits	Level 2	29,926	29,926	28,658	28,658
Savings deposits	Level 2	12,075	23,075	12,988	12,988
Time deposits	Level 2	15,328	15,348	15,463	15,472
Accrued interest payable	Level 2	15	15	13	13

(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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9. Regulatory

9 Months Ended

Sep. 30, 2014

Notes

9. Regulatory

9. Regulatory

On January 31, 2012, the Bank entered into stipulations consenting to the issuance of Consent Orders with the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking (“Department”).  The material terms of the Consent Orders are identical.  The requirements and status of items included in the Consent Orders are as follows:

Requirement	Status
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;	Board participation improved with attendance at board and committee meetings.
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;	A management assessment was completed in June 2012 in conjunction with the required management review and written management plan with benchmarks for recommended enhancements.
Retain a bank consultant acceptable to the FDIC and the Department to develop a written analysis and assessment of the Bank’s management needs and thereafter formulate a written management plan;	An engagement letter from a qualified consultant was received and approved by the Bank’s regulators.  Upon acceptance, the review commenced in May 2012 and was completed in June 2012.
Formulate and implement written profit and budget plans for each year during which the orders are in effect;	Profit and budget plans have been prepared and submitted to regulators as required annually.
Develop and implement a strategic plan for each year during which the orders are in effect, to be revised annually;	An annual comprehensive strategic plan was prepared and submitted to regulators as required.
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%, within a reasonable but unspecified time period;	A capital plan with quarterly benchmarks was prepared and submitted to regulators as required annually.
Formulate a written plan to reduce the Bank’s risk positions in each asset or loan in excess of $100,000 classified as “Doubtful” or “Substandard” at its regulatory examination;	A classified asset reduction plan with quarterly benchmarks measured against capital was prepared and submitted as required.
Eliminate all assets classified as “Loss” at its current regulatory examination;	All assets classified as “Loss” have been eliminated.
Revise the Bank’s loan policy to establish and monitor procedures for adherence to the loan policy and to eliminate credit administration and underwriting deficiencies identified at its current regulatory examination;	The Bank’s loan policy has been revised to include enhanced monitoring procedures and submitted as required.
Develop a comprehensive policy and methodology for determining the allowance for loan and lease losses;	The ALLL policy and methodology for determining the allowance for loan losses were submitted as required.
Develop an interest rate risk policy and procedures to identify, measure, monitor and control the nature and amount of interest rate risk the Bank takes;	The Bank’s interest rate risk policy and procedures were submitted to regulators as required.
Revise its liquidity and funds management policy and update and review the policy annually;	The Bank’s liquidity policy and contingency plan were submitted to regulators for review as required.
Refrain from accepting any brokered deposits;	The Bank did not accept brokered deposits.
Refrain from paying cash dividends without prior approval of the FDIC and the Department;	The Bank did not pay cash dividends.
Establish an oversight committee of the board of directors of the Bank with the responsibility to ensure the Bank’s compliance with the orders, and	An oversight committee consisting of three outside directors and one inside director was established and meets periodically to ensure compliance with the orders.
Prepare and submit quarterly reports to the FDIC and the Department detailing the actions taken to secure compliance with the orders.	Quarterly reports were prepared and submitted   as required.

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.

 As of September 30, 2014 and December 31, 2013, the Bank’s tier one leverage capital ratio was 4.79% and 5.67%, respectively, and its total risk based capital ratio was 8.34% and 9.48%, respectively.   Year-to-date losses continue to erode capital.  Also, the total risk based capital ratio decreased because of an increase in loans that carry a higher risk weight than cash or investments.  Management has developed and submitted a Capital Plan that focuses on the following:

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

2.     External equity investments—an investment banker has been engaged to help the Bank generate external capital investments.

As a result of the above actions, management believes that the Bank has and will continue to attempt to comply with the terms and conditions of the Orders and will continue to operate as a going concern and an independent financial institution for the foreseeable future.

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2. Net Loss Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Earnings Per Share, Basic and Diluted

	Three Months Ended  September 30, 2014	Three Months Ended September 30, 2013	Nine Months Ended  September 30, 2014	Nine Months Ended September 30, 2013
Basic:
Net loss available to common shareholders	$(182,996)	$(333,359)	$(607,195)	$(576,205)
Average common shares outstanding-basic	1,068,588	1,068,588	1,068,588	1,068,588
Net loss per share-basic	$(0.17)	$(0.31)	$(0.57)	$(0.54)
Diluted:
Average common shares-diluted	1,068,588	1,068,588	1,068,588	1,068,588
Net loss per share-diluted	$(0.17)	$(0.31)	$(0.57)	$(0.54)

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3. Changes in Accumulated Other Comprehensive Income (loss): Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Details
Unrealized holding gain arising during period, before tax amount	$ 163	$ (57)		$ 359	$ (327)
Unrealized holding gain arising during period, tax benefit (expense)	(54)		$ 19	(118)	108
Unrealized holding gain arising during period, net of tax amount	109		$ (38)	241	(219)
Less: reclassification adjustment for gains (losses) realized in net loss, before tax amount	0	0		0	52
Less: reclassification adjustment for gains (losses) realized in net loss, tax benefit	0	0		0	(17)
Less: reclassification adjustment for gains (losses) realized in net loss, net of tax amount	0	0		0	35
Other comprehensive gain, net, before tax amount	163	(57)		359	(379)
Other comprehensive gain, net, tax (expense) benefit	(54)	19		(118)	125
Other comprehensive gain, net, net after tax amount	$ 109	$ (38)		$ 241	$ (254)

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8. Fair Value: Schedule of Fair Value of Assets and Liabilities (Details) - USD ($)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Assets:
Cash and cash equivalents	$ 5,523,418	$ 5,789,778	$ 9,177,594	$ 10,236,199
Available for sale securities	9,481,374	9,579,979
Loans held for sale	638,437	1,645,832
Loans held at fair value	613,682	446,523
Loans, net of allowance for loan losses	42,273,787	41,424,969
Loans, net of allowance for loan losses	42,975,712	42,264,102
Accrued interest receivable	284,074	256,262
Liabilities:
Savings deposits	12,075,342	12,988,388
Accrued interest payable	15,294	12,722
Fair Value, Inputs, Level 1
Assets:
Loans held for sale	0	0
Loans held at fair value	0	0
Fair Value, Inputs, Level 2
Assets:
Loans held for sale	638,437	1,654,832
Loans held at fair value	0	0
Fair Value, Inputs, Level 3
Assets:
Loans held for sale	0	0
Loans held at fair value	613,682	446,523
Carrying Amount
Assets:
Available for sale securities	9,481,374	9,580,000
Loans, net of allowance for loan losses		42,711,000
Carrying Amount | Fair Value, Inputs, Level 1
Assets:
Cash and cash equivalents	5,523,000	5,790,000
Carrying Amount | Fair Value, Inputs, Level 2
Assets:
Loans held for sale	638,437,000	1,645,832
Loans, net of allowance for loan losses	42,273,787
Accrued interest receivable	284,074	256,262
Liabilities:
Demand Deposits	29,926,000	28,658,000
Savings deposits	12,075,000	12,988,000
Time deposits	15,328,000	15,463,000
Accrued interest payable	15,000	13,000
Carrying Amount | Fair Value, Inputs, Level 3
Assets:
Loans held at fair value	613,682	446,523
Fair Value
Assets:
Available for sale securities	9,481,000	9,580,000
Loans, net of allowance for loan losses		43,304,000
Fair Value | Fair Value, Inputs, Level 1
Assets:
Cash and cash equivalents	5,523,000	5,790,000
Fair Value | Fair Value, Inputs, Level 2
Assets:
Loans held for sale	638,437,000	1,645,832
Loans, net of allowance for loan losses	43,006
Accrued interest receivable	284,074	256,262
Liabilities:
Demand Deposits	29,926,000	28,658,000
Savings deposits	23,075,000	12,988,000
Time deposits	15,348,000	15,472,000
Accrued interest payable	15,000	13,000
Fair Value | Fair Value, Inputs, Level 3
Assets:
Loans held at fair value	$ 613,682	$ 446,523

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6. Loans and Allowance For Loan Losses: Allowance for Credit Losses on Financing Receivables (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Allowance for Credit Losses on Financing Receivables

(in 000's)	For the Three months ended September 30, 2014
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$297	$295	$52	$13	$657
Provision for loan losses	74	5	(18)	1	62
Charge-offs	-	-	(19)	(7)	(26)
Recoveries	1	-	3	5	9
Net charge-offs	1	-	(16)	(2)	(17)
Ending balance	$372	$300	$18	$12	$702

(in 000's)	For the Three months ended September 30, 2013
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$446	$288	$44	-	$778
Provision (credit) for loan losses	(40)	65	5	-	30
Charge-offs	-	-	-	(1)	(1)
Recoveries	1	-	-	1	5
Net recoveries	1	-	-	-	4
Ending balance	$407	$353	$52	-	$812

(in 000's)	For the Nine months ended September 30, 2014
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$483	$280	$59	$17	$839
Provision for loan losses	139	20	(28)	1	132
Charge-offs	(253)	-	(19)	(25)	(297)
Recoveries	3	-	6	19	28
Net charge-offs	(250)	-	(13)	(6)	(269)
Ending balance	$372	$300	$18	$12	$702

(in 000's)	For the Nine months ended September 30, 2013
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Beginning balance	$891	$308	$5	-	$1,204
Provision for loan losses	37	(33)	40	1	45
Charge-offs	(524)	-	-	(5)	(529)
Recoveries	3	78	7	4	92
Net charge-offs	(521)	78	7	(1)	(437)
Ending balance	$407	$353	$52	-	$812

(in 000's)	September 30, 2014
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$195	$27	-	-	$222
Loans collectively  evaluated for impairment	177	273	18	12	480
	$372	$300	$18	$12	$702
Loans, ending balance:
Loans individually evaluated for impairment	$301	$1,724	-	-	$2,025
Loans collectively  evaluated for impairment	4,741	31,445	3,387	1,377	40,950
Total	$5,042	$33,169	$3,387	$1,377	$42,975

	December 31, 2013
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$378	-	-	-	$378
Loans collectively  evaluated for impairment	105	280	59	17	461
	483	$280	$59	$17	$839
Loans, ending balance:
Loans individually evaluated for impairment	$574	$1,259	-	-	$1,882
Loans collectively  evaluated for impairment	3,239	31,703	3,909	1,530	40,382
Total	$3,863	$32,962	$3,909	$1,530	$42,264

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

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Other Real Estate, Roll Forward

(in 000's)	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
	September 30, 2014	September 30, 2013	September 30, 2014	September 30, 2013
Beginning balance	$420	$527	$433	$775
Additions, transfers from loans	240	-	240	-
Proceeds from sales	(29)	(48)	(29)	(140)
	631	479	644	635
Write-downs and net gains (losses) on sales	-	3	(13)	(153)
Ending Balance	$631	$482	$631	$482

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8. Fair Value: Fair Value Inputs, Level 3 Financial Instruments, Quantitative Information (Details) - Fair Value, Measurements, Recurring - Fair Value, Inputs, Level 3 - Major Types of Debt and Equity Securities	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Minimum
Constant prepayment rate	7.19%	7.74%
Weighted average discount rate		9.11%
Weighted average life	3 years 10 months 13 days	4 years 29 days
Maximum
Constant prepayment rate	7.46%	7.99%
Weighted average discount rate		9.11%
Weighted average life	3 years 10 months 28 days	4 years 1 month 10 days

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6. Loans and Allowance For Loan Losses: Financing Receivable Credit Quality Indicators (Details) - USD ($)	Sep. 30, 2014	Dec. 31, 2013
Loans and Leases Receivable, Gross, Commercial	$ 38,211,000	$ 36,825,000
Commercial real estate	33,169,000	32,962,000
Consumer real estate	3,387,000	3,909,000
Consumer loans other	1,377,000	1,530,000
Total consumer loans	4,764,000	5,439,000
Total Loans	42,975,712	42,264,102
Loans, ending balance: Total	42,975,712	42,264,102
Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	5,042,000	3,863,000
Total Loans	5,042,000	3,863,000
Loans, ending balance: Total	5,042,000	3,863,000
Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	2,584,000
Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	206,000	585,000
Total Loans	206,000	585,000
Loans, ending balance: Total	206,000	585,000
Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	2,252,000	2,067,000
Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		1,658,000
Total Loans	2,584,000	1,211,000
Loans, ending balance: Total	2,584,000	1,211,000
Commercial Real Estate Portfolio Segment
Commercial real estate	33,169,000	32,962,000
Total Loans	33,169,000	32,962,000
Loans, ending balance: Total	33,169,000	32,962,000
Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	15,963,000	17,343,000
Total Loans	15,963,000	17,343,000
Loans, ending balance: Total	15,963,000	17,343,000
Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	544,000	566,000
Total Loans	544,000	566,000
Loans, ending balance: Total	544,000	566,000
Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	4,850,000	2,456,000
Total Loans	4,850,000	2,456,000
Loans, ending balance: Total	4,850,000	2,456,000
Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	11,812,000	12,597,000
Total Loans	11,812,000	12,597,000
Loans, ending balance: Total	11,812,000	12,597,000
Consumer Real Estate
Total Loans	3,387,000	3,909,000
Loans, ending balance: Total	3,387,000	3,909,000
Consumer Real Estate | Home Equity
Consumer real estate	1,065,000	1,176,000
Consumer Real Estate | Home Equity Line Of Credit
Consumer real estate	23,000	24,000
Consumer Real Estate | 1-4 Family Residential Mortgages
Consumer real estate	2,299,000	2,709,000
Consumer And Other Loans
Total Loans	1,377,000	1,530,000
Loans, ending balance: Total	1,377,000	1,530,000
Consumer And Other Loans | Consumer Installment
Consumer loans other	7,000	16,000
Consumer And Other Loans | Student Loans
Consumer loans other	1,229,000	1,366,000
Consumer And Other Loans | Other
Consumer loans other	141,000	148,000
Good/Excellent
Loans and Leases Receivable, Gross, Commercial	250,000	250,000
Good/Excellent | Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	250,000	250,000
Good/Excellent | Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	250,000
Good/Excellent | Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	0	0
Good/Excellent | Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	0	0
Good/Excellent | Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		250,000
Good/Excellent | Commercial Real Estate Portfolio Segment
Commercial real estate	0	0
Good/Excellent | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	0	0
Good/Excellent | Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	0	0
Good/Excellent | Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	0	0
Good/Excellent | Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	0	0
Satisfactory
Loans and Leases Receivable, Gross, Commercial	32,476,000	31,057,000
Satisfactory | Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	4,061,000	2,690,000
Satisfactory | Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	1,862,000
Satisfactory | Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	118,000	497,000
Satisfactory | Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	2,081,000	1,897,000
Satisfactory | Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		296,000
Satisfactory | Commercial Real Estate Portfolio Segment
Commercial real estate	28,415,000	28,367,000
Satisfactory | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	13,485,000	15,232,000
Satisfactory | Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	253,000	265,000
Satisfactory | Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	4,850,000	2,456,000
Satisfactory | Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	9,827,000	10,414,000
Pass
Loans and Leases Receivable, Gross, Commercial	2,105,000	2,329,000
Pass | Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	345,000	344,000
Pass | Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	220,000
Pass | Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	0	0
Pass | Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	125,000	124,000
Pass | Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		220,000
Pass | Commercial Real Estate Portfolio Segment
Commercial real estate	1,760,000	1,985,000
Pass | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	829,000	883,000
Pass | Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	171,000	171,000
Pass | Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	0	0
Pass | Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	760,000	931,000
Special Mention
Loans and Leases Receivable, Gross, Commercial	760,000	709,000
Special Mention | Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	86,000	86,000
Special Mention | Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	0
Special Mention | Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	40,000	40,000
Special Mention | Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	46,000	46,000
Special Mention | Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		0
Special Mention | Commercial Real Estate Portfolio Segment
Commercial real estate	674,000	623,000
Special Mention | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	57,000	0
Special Mention | Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	0	0
Special Mention | Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	0	0
Special Mention | Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	617,000	623,000
Substandard
Loans and Leases Receivable, Gross, Commercial	2,166,000	1,771,000
Substandard | Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	162,000	100,000
Substandard | Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	114,000
Substandard | Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	48,000	48,000
Substandard | Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	0	0
Substandard | Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		52,000
Substandard | Commercial Real Estate Portfolio Segment
Commercial real estate	2,004,000	1,671,000
Substandard | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	1,276,000	912,000
Substandard | Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	120,000	150,000
Substandard | Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	0	0
Substandard | Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	608,000	629,000
Doubtful
Loans and Leases Receivable, Gross, Commercial	454,000	709,000
Doubtful | Commercial And Industrial
Loans and Leases Receivable, Gross, Commercial	138,000	393,000
Doubtful | Commercial And Industrial | Commercial Mortgages
Loans and Leases Receivable, Gross, Commercial	138,000
Doubtful | Commercial And Industrial | SBA Loans
Loans and Leases Receivable, Gross, Commercial	0	0
Doubtful | Commercial And Industrial | Asset Based
Loans and Leases Receivable, Gross, Commercial	0	0
Doubtful | Commercial And Industrial | Commercial
Loans and Leases Receivable, Gross, Commercial		393,000
Doubtful | Commercial Real Estate Portfolio Segment
Commercial real estate	316,000	316,000
Doubtful | Commercial Real Estate Portfolio Segment | Commercial Mortgages
Commercial real estate	316,000	316,000
Doubtful | Commercial Real Estate Portfolio Segment | SBA Loans
Commercial real estate	0	0
Doubtful | Commercial Real Estate Portfolio Segment | Construction
Commercial real estate	0	0
Doubtful | Commercial Real Estate Portfolio Segment | Religious Organizations
Commercial real estate	0	0
Performing Financing Receivable
Consumer real estate	2,874,000
Total consumer loans	4,251,000	5,082,000
Performing Financing Receivable | Consumer Real Estate | Home Equity
Consumer real estate	694,000	1,061,000
Performing Financing Receivable | Consumer Real Estate | Home Equity Line Of Credit
Consumer real estate	23,000	24,000
Performing Financing Receivable | Consumer Real Estate | 1-4 Family Residential Mortgages
Consumer real estate	2,157,000	2,467,000
Performing Financing Receivable | Consumer And Other Loans | Consumer Installment
Consumer loans other	7,000	16,000
Performing Financing Receivable | Consumer And Other Loans | Student Loans
Consumer loans other	1,229,000	1,366,000
Performing Financing Receivable | Consumer And Other Loans | Other
Consumer loans other	141,000	148,000
Nonperforming Financing Receivable
Consumer real estate	513,000
Total consumer loans	513,000	357,000
Nonperforming Financing Receivable | Consumer Real Estate | Home Equity
Consumer real estate	371,000	115,000
Nonperforming Financing Receivable | Consumer Real Estate | Home Equity Line Of Credit
Consumer real estate	0	0
Nonperforming Financing Receivable | Consumer Real Estate | 1-4 Family Residential Mortgages
Consumer real estate	142,000	242,000
Nonperforming Financing Receivable | Consumer And Other Loans | Consumer Installment
Consumer loans other	0	0
Nonperforming Financing Receivable | Consumer And Other Loans | Student Loans
Consumer loans other	0	0
Nonperforming Financing Receivable | Consumer And Other Loans | Other
Consumer loans other	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (607,195)	$ (576,205)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for loan losses	132,000	45,137
(Gain) loss on sale of other real estate	(1,348)	11,168
Amortization of premiums on investments	17,568	51,985
Amortization of core deposit intangible		133,558
Depreciation on fixed assets	130,544	118,089
Gain on sale of investment securities		(378,248)
Gain on sale of loans	(10,618)
Write-down of other real estate owned	13,250	142,506
Proceeds from the sale of loans held for sale	1,755,721
Originations in loans held-for-sale	(664,142)
Net change in fair value of financial instruments	(69,116)
(Increase) decrease in accrued interest receivable and other assets	(48)	48,752
Decrease in accrued interest payable and other liabilities	(72,460)	(167,675)
Net cash provided by (used in) operating activities	624,156	(570,933)
Cash flows from investing activities:
Purchase of available-for-sale investment securities	(32)	(7,699,797)
Proceeds from sale of available-for-sale investment Securities		7,731,845
Proceeds from maturity and principal reductions of available-for-sale investment securities	321,966	3,084,375
Proceeds from the sale of other real estate owned	29,642	139,996
Originations in loans held for sale	(171,609)
Net increase in loans	(1,220,317)	(1,253,775)
Purchase of bank premises and equipment	(69,714)	(217,806)
Net cash (used in) provided by investing activities	(1,110,064)	1,784,838
Cash flows from financing activities:
Net increase (decrease) in deposits	219,548	(2,272,510)
Net cash provided by (used in) financing activities	219,548	(2,272,510)
Net decrease in cash and cash equivalents	(266,360)	(1,058,605)
Cash and cash equivalents at beginning of period	5,789,778	10,236,199
Cash and cash equivalents at end of period	5,523,418	9,177,594
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	51,949	80,079
Noncash transfer of loans to other real estate	$ 239,500
Noncash transfer of investment securities from held-to-maturity to available-for sale		$ 11,895,037

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5. Investment Securities

9 Months Ended

Sep. 30, 2014

Notes

5. Investment Securities

5.  Investment Securities

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

(In 000’s)	September 30, 2014
		Gross	Gross
	Amortized	Unrealized	unrealized	Fair
	Cost	Gains	losses	Value
Available-for-sale:
U.S. Government agency securities	$4,097	-	$(105)	$3,992
Government Sponsored Enterprises residential mortgage-backed securities	5,384	46	(70)	5,360
Investments in money market funds	129	-	-	129
	$9,610	46	$(175)	$9,481
	December 31, 2013
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$4,097	-	$(295)	3,802
Government Sponsored Enterprises residential mortgage-backed securities	5,841	36	(228)	5,649
Investments in money market funds	129	-	-	129
	$10,067	$36	$(523)	9,580

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2014, 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	4,097	3,992
Government Sponsored Enterprises residential mortgage-backed securities	5,384	5,360
Total debt securities	9,481	9,352
Investments in money market funds	129	129
	$9,610	$9,481

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.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2014:

	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	15	$748	$(2)	$3,244	$(103)	$3,992	$(105)
Government Sponsored Enterprises residential mortgage-backed securities	13	696	(6)	2,588	(64)	3,284	(70)
Total temporarily impaired investment securities	28	$1,444	$(8)	$5,832	$(167)	$7,276	$(175)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2013:

	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	15	$3,576	$(270)	$225	$(25)	$3,801	$(295)
Government Sponsored Enterprises residential mortgage-backed securities	21	$4,777	$(228)	-	-	4,777	$(228)
Total temporarily impaired investment securities	36	$8,353	$(498)	$225	$(25)	$8,578	$(523)

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.

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

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Components Of Other Real Estate Owned

(in 000's)	September 30, 2014	December 31, 2013
Commercial real estate	$191	$191
Residential real estate	440	242
Total	$631	$433

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Label	Element	Value
Loans Held at Fair Value
Balance, Starting	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisAssetValue	$ 447
Balance, Starting	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisAssetValue	614
Change in fair value of financial instruments	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisAssetPeriodIncreaseDecrease	(4)
Origination of loans	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisAssetIssues	180
Principal repayments	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisAssetSettlements	$ (9)
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring
Average projected default rate	us-gaap_FairValueInputsProbabilityOfDefault	18.00%
Average projected default rate	us-gaap_FairValueInputsProbabilityOfDefault	18.00%
Fair Value Measurements, Valuation Techniques	us-gaap_FairValueMeasurementsValuationTechniques	Discounted cash flow
Weighted average discount rate	us-gaap_FairValueInputsDiscountRate	8.03%

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6. Loans and Allowance For Loan Losses: Schedule of Bank's Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Details
Commercial and industrial	$ 5,042	$ 3,863
Commercial real estate	33,169	32,962
Consumer real estate	3,387	3,909
Consumer loans other	1,377	1,530
Total loans	$ 42,975	$ 42,264

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6. Loans and Allowance For Loan Losses: Schedule of Bank's Loan Portfolio (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Bank's Loan Portfolio

(Dollars in thousands)	September 30, 2014	December 31, 2013
Commercial and industrial	$5,042	$3,863
Commercial real estate	33,169	32,962
Consumer real estate	3,387	3,909
Consumer loans other	1,377	1,530
Total loans	$42,975	$42,264