10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

(Mark One)

_X_QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016 OR 

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

UNITED BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

0-25976

Commission File Number

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

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

(215) 351-4600

(Registrant's telephone number, including area code)

N/A

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Registration 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, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer___ Accelerated filer___ Non-accelerated filer__ Smaller Reporting Company _X__

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

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

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

Applicable only to corporate issuers:

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

United Bancshares, Inc. (sometimes herein also referred to as the “Company” or “UBS”) has two classes of capital stock authorized - 2,000,000 shares of $.01 par value Common Stock and 500,000 shares of $0.01 par value Preferred Stock.   

The Board of Directors designated a subclass of the common stock, Class B Common Stock, by filing of Articles of Amendment to its Articles of Incorporation on September 30, 1998.  This Class B Common Stock has all of the rights and privileges of Common Stock with the exception of voting rights.  Of the 2,000,000 shares of authorized Common Stock, 250,000 have been designated Class B Common Stock.  There is no market for the Common Stock.  As of November 30, 2018, the aggregate number of the shares of the Registrant’s Common Stock issued was 826,921.  

The Preferred Stock consists of 500,000 authorized shares of stock of which 250,000 have been designated as Series A and 7,000 as Series B for which there were 99,442 and 1,350 shares are issued, respectively as of November 30, 2018.

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FORM 10-Q

Index

Item No. Page

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PART I - OTHER INFORMATION

Item 1.  Financial Statements (unaudited)

UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

Assets:	September 30, 2016	December 31, 2015
Cash and due from banks	$ 1,875,628	$2,107,359
Interest-bearing deposits with banks	311,176	310,739
Federal funds sold	7,413,000	8,364,000
Cash and cash equivalents	9,599,804	10,782,098
Investment securities available-for-sale, at fair value	6,283,682	7,572,029
Loans held for sale	6,602,035	3,260,761
Loans held at fair value	3,726,003	2,458,930
Loans, net of unearned discounts and deferred fees	28,305,134	33,519,042
Less allowance for loan losses	(316,979)	(418,013)
Net loans	27,988,155	33,101,029
Bank premises and equipment, net	427,543	492,730
Accrued interest receivable	140,756	175,416
Other real estate owned Servicing asset	447,371 283,069	479,627 199,781
Prepaid expenses and other assets	452,464	461,837
Total assets	$55,950,882	$58,984,238
Liabilities and Shareholders’ Equity
Liabilities:
Demand deposits, noninterest-bearing	$15,078,236	$16,417,150
Demand deposits, interest-bearing	14,288,590	13,605,888
Savings deposits	11,865,814	11,680,878
Time deposits, under $250,000	5,303,819	7,505,729
Time deposits, $250,000 and over	6,291,146	6,752,759
Total deposits	52,827,605	55,962,404
Accrued interest payable	10,488	9,157
Accrued expenses and other liabilities	349,027	332,915
Total liabilities	53,187,120	56,304,476
Shareholders’ equity:
Series A preferred stock, noncumulative, 6%, $0.01 par value, 500,000 shares authorized; 99,442 issued and outstanding at September 30, 2016 and December 31, 2015	993	993
Common stock, $0.01 par value; 2,000,000 shares authorized;
826,921 issued and outstanding at September 30, 2016 and December 31, 2015	8,269	8,269
Additional paid-in-capital	14,752,644	14,752,644
Accumulated deficit	(12,064,660)	(12,062,818)
Accumulated other comprehensive income (loss)	66,516	(19,326)
Total shareholders’ equity	2,763,762	2,679,762
Total liabilities and shareholders’ equity	$55,950,882	$58,984,238

See accompanying notes to the unaudited consolidated financial statements.

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UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	Three Monthsended September 30, 2016	Three Monthsended September 30, 2015	Nine Months ended September 30, 2016	Nine Months ended September 30, 2015
Interest income:
Interest and fees on loans	$601,002	$588,991	$1,829,942	$1,833,681
Interest on investment securities	35,236	42,561	120,188	135,152
Interest on federal funds sold	6,059	4,739	23,286	8,998
Interest on time deposits with other banks	173	166	463	492
Total interest income	642,470	636,457	1,973,879	1,978,323
Interest expense:
Interest on time deposits	9,173	9,472	26,529	29,264
Interest on demand deposits	6,175	6,426	18,274	18,705
Interest on savings deposits	1,475	1,493	4,291	4,430
Total interest expense	16,823	17,391	49,094	52,399
Net interest income	625,647	619,066	1,924,785	1,925,924
Provision (credit) for loan losses	(45,000)	83,000	(50,000)	(17,000)
Net interest income after provision (credit) for loan losses	670,647	536,066	1,974,785	1,942,924
Noninterest income:
Customer service fees	86,376	89,368	262,643	324,920
ATM fee income	28,141	27,661	84,155	90,810
Gain on sale of loans	188,385	176,229	500,358	380,625
Gain (loss) on sale of other real estate	-	4,048	(3,239)	1,759
Net change in fair value of financial instruments	(36,194)	19,225	252,086	50,104
Loan syndication fees	85,000	-	85,000	85,000
Other income	22,325	17,245	185,075	43,854
Total noninterest income	374,033	333,776	1,366,078	977,072
Noninterest expense:
Salaries, wages and employee benefits	391,000	377,504	1,155,616	1,180,883
Occupancy and equipment	241,950	240,517	720,587	742,761
Office operations and supplies	86,700	76,253	253,114	226,635
Marketing and public relations	9,016	7,935	36,736	34,124
Professional services	74,723	76,977	223,854	242,392
Data processing	93,025	94,218	302,320	281,305
Other real estate expense (income)	65,955	9,999	103,516	(53,215)
Loan and collection costs	39,816	42,345	98,392	146,116
Deposit insurance assessments	30,000	34,200	87,000	100,600
Other operating	130,372	119,803	361,570	331,401
Total noninterest expense	1,162,557	1,079,751	3,342,705	3,233,002
Net loss before income taxes	(117,877)	(209,909)	(1,842)	(313,006)
Provision for income taxes	-	-	-	-
Net loss	$ (117,877)	$   (209,909)	$  (1,842)	$  ( 313,006)
Net loss per common share—basic and diluted	$        (0.14)	$        (0.25)	$     0.00	$        (0.32)
Weighted average number of common shares	826,921	826,921	826,921	986,487
Comprehensive loss:
Net loss	$   (117,877)	$     (209,909)	$  (1,842)	$  (313,006)
Unrealized gains on available for sale securities	59,202	64,491	85,841	43,258
Total comprehensive loss	$     (58,675)	$     (145,418)	$ 83,999	$  (269,748)

See accompanying notes to the unaudited consolidated financial statements.

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UNITED BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

	2016	2015
Cash flows from operating activities:
Net loss	$    (1,842)	$    (313,006)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Credit to provision for loan losses	(50,000)	(17,000)
Amortization of premiums on investments, net	10,689	13,397
Depreciation on fixed assets	141,771	132,713
Net change in fair value of financial instruments	(252,086)	(50,104)
Gain on sale of loans	(500,358)	(380,625)
Write-up of other real estate owned	-	(88,460)
Loss (gain) on sale of other real estate owned	3,239	(1,759)
Proceeds from the sale of loans held-for-sale	5,070,979	6,433,243
Amortization of servicing asset	25,892	-
Loans originated for sale	(8,926,882)	(377,675)
Increase in accrued interest receivable  and
other assets	(65,147)	(157,850)
Increase in accrued interest payable and
other liabilities	17,447	37,831
Net cash (used in) provided by operating activities	(4,526,301)	5,230,705
Cash flows from investing activities:
Proceeds from maturity and principal reductions of
available-for-sale investment securities	5,213,099	1,405,542
Purchase of securities available-for-sale	(3,849,600)	(79)
Net decrease in loans	5,162,874	4,065,976
Purchase of bank premises and equipment	(76,584)	(99,465)
Proceeds from sale of other real estate	29,017	83,209
Net cash provided by investing activities	6,478,806	5,455,183
Cash flows from financing activities:
Net decrease in deposits	(3,134,799)	(1,087,258)
Net cash used in financing activities	(3,134,799)	(1,087,258)
Net (decrease) increase in cash and cash equivalents	(1,182,294)	9,598,630
Cash and cash equivalents at beginning of period	10,782,098	3,236,582
Cash and cash equivalents at end of period	$ 9,599,804	$ 12,835,212
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$       47,763	$       55,424
Noncash transfer of loans to other real estate	$               -	$     148,241
Transfer of loans from held-for-sale to held as fair value	$  1,285,309	$  1,844,725

See accompanying notes to the unaudited consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(unaudited)

1. Significant Accounting Policies

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

During interim periods, the Company follows the accounting policies set forth in its Annual Report on Form 10-K filed with the Securities and Exchange Commission.  Readers are encouraged to refer to the Company's Form 10-K for the fiscal year ended December 31, 2015 when reviewing this Form 10-Q. Because this report is based on an interim period, certain information and footnote disclosures normally included in the Annual Report on Form 10-K have been condensed or omitted. Quarterly results reported herein are not necessarily indicative of results to be expected for other quarters.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company's consolidated financial position as of September 30, 2016 and December 31, 2015 and the consolidated results of its operations and its cash flows for the three and nine months ended September 30, 2016 and 2015.

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, the fair value of loans held at fair value, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities.

Commitments

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

Contingencies

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

Loans Held for Sale

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

Loans Held at Fair Value

The Bank originates SBA loans for which the un-guaranteed portion is retained after the guaranteed portion is sold in the secondary market.  Management has elected to carry these loans at fair value in accordance with the irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments.  Fair value of these loans is estimated based on the present value of future 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.

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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.

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Non-accrual and Past Due Loans.

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

Income Taxes

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

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more-likely-than not recognition threshold 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.

2. Net (Loss) Income Per Share

The calculation of net loss per share follows:

	Three Months Ended  September 30, 2016	Three Months Ended September 30, 2015	Nine Months Ended   September 30, 2016	Nine Months Ended   September 30, 2015
Basic:
Net loss available to common shareholders	$     (117,877)	$     (209,909)	$     (1,842)	$     (313,006)
Average common shares outstanding-basic	826,921	826,921	826,921	986,487
Net loss per share-basic	$   (0.14)	$   (0.25)	$   0.00	$   (0.32)
Diluted:
Average common shares-diluted	826,921	826,921	826,921	986,487
Net loss per share-diluted	$   (0.14)	$   (0.25)	$   0.00	$   (0.32)

Wells Fargo (formerly Wachovia Corporation) owned 241,666 shares of UBS Common Stock (50,000 voting shares); however, on February 18, 2015, Wells Fargo returned all shares (voting and non voting) for cancellation.

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

3.Changes in Accumulated Other Comprehensive Income

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

	Three Months Ended September 30, 2016
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$  106	$  (35)	$  71
Unrealized gain on securities:
Unrealized holding gain arising during period	(5)	1	(4)
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	(5)	1	(4)
Ending balance	$  101	$  (34)	$  67
	Three Months Ended September 30, 2015
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$  (39)	$     5	$  (34)
Unrealized gain on securities:
Unrealized holding gain arising during period	97	(33)	64
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	97	(33)	64
Ending balance	$      58	$      (28)	$     30
	Nine Months Ended September 30, 2016
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$   (29)	$     10	$   (19)
Unrealized gain on securities:
Unrealized holding gain arising during period	$  130	(44)	86
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	130	(44)	86
Ending balance	$  101	$  (34)	$    67
	Nine Months Ended September 30, 2015
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (21)	$        8	$  (13)
Unrealized gain on securities:
Unrealized holding gain arising during period	$      66	$       (23)	$      43
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	$      66	$      (23)	$      43
Ending balance	$      45	$      (15)	$     30

4. New Authoritative Accounting Guidance

ASU 2014-9 (Topic 606), “Revenue from Contracts with Customers”.  The Company adopted ASU 2014-9 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as OREO. The majority of the Company’s revenues come from interest income and other sources, including loans, leases, investment securities and derivatives, that are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Corporation satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposits, loan syndication fees, ne gains on SBA loan sales and the net gain on sale of OREO. The adoption of this ASU did not have an impact to our Consolidated Financial Statements.

ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments” Issued in June 2016, ASU 2016-13 significantly changes how companies measure and recognize credit impairment for many financial assets. The new current expected credit loss model will require companies to immediately recognize an estimate of credit losses expected

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to occur over the remaining life of the financial assets that are in the scope of the standard. The ASU also makes targeted amendments to the current impairment model for available-for-sale debt securities. ASU 2016-13 is effective for the annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures.

ASU 2016-02 (Topic 842), “Leases” Issued in February 2016, ASU 2016-02 revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. ASU 2016-02 is effective for the first interim period within annual periods beginning after December 15, 2018, with early adoption permitted. The standard is required to be adopted using the modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

ASU 2016-01 (Subtopic 825-10), “Financial Instruments – Overall, Recognition and Measurement of Financial Assets and Financial Liabilities” Issued in January 2016, ASU 2016-01 provides that equity investments will be measured at fair value with changes in fair value recognized in net income. When fair value is not readily determinable an entity may elect to measure the equity investment at cost, minus impairment, plus or minus any change in the investment’s observable price. For financial liabilities that are measured at fair value, the amendment requires an entity to present separately, in other comprehensive income, any change in fair value resulting from a change in instrument-specific credit risk. ASU 2016-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. Entities may apply this guidance on a prospective or retrospective basis. The Company is evaluating the effect that ASU 2016-01 will have on its consolidated financial statements and related disclosures.

ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” Issued on August 15, 2014, ASU 2014-15 describes how an entity should assess its ability to meet obligations and sets disclosure requirements for how this information should be disclosed in the financial statements. The standard provides accounting guidance that will be used with existing auditing standards. The new standard applies to all entities for the first annual period ending after December 15, 2016, and interim periods thereafter. The Company is evaluating the effect that ASU 2014-15 will have on its consolidated financial statements and related disclosures as adoption of the new accounting standard could result in a different conclusion.

5.  Investment Securities

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

(In 000’s)	September 30, 2016
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,699	$      2	$    ( 2)	$   2,699
Government Sponsored Enterprises residential mortgage-backed securities	3,355	100	-	3,455
Investments in money market funds	130	-	-	130
	$ 6,184	$  102	$     (2)	$   6,284
	December 31, 2015
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$  3,697	$      3	$   (38)	$   3,662
Government Sponsored Enterprises residential mortgage-backed securities	3,774	36	(30)	3,780
Investments in money market funds	130	-	-	130
	$  7,601	$   39	$   (68)	$  7,572

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2016, are as follows:

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(In 000’s)	Amortized Cost				Fair Value
Due in one year	$	-	$	-
Due after one year through five years		-		-
Due after five years through ten years		2,699		2,699
Government Sponsored Enterprises residential mortgage-backed securities		3,355		3,455
Total debt securities		6,054		6,154
Investments in money market funds		130		130
	$	6,184	$	6,284

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

There were no sales of securities during the three months ended September 30, 2016 and 2015.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2016:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	Of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	losses	value	Losses
U.S. Government
agency securities	2	$997	$  (2)	$-	$ -	$997	$ (2)
Total temporarily
impaired investment
Securities	2	$ 997	$   (2)	$-	$-	$ 997	$ (2)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2015:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	securities	Value	Losses	Value	Losses	value	Losses
U.S. Government
agency securities	9	$ 2,416	$   (32)	$ 243	$  (6)	$ 2,659	$ (38)
Government Sponsored Enterprises residential
mortgage-backed securities	8	1,486	(19)	227	(11)	1,713	(30)
Total temporarily
impaired investment
Securities	17	$ 3,902	$   (51)	$ 470	$ (17)	$ 4,372	$ (68)

Government Sponsored Enterprises residential mortgage-backed securities. Unrealized losses on the Company’s investment in Government Sponsored Enterprises residentialmortgage-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

12

whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, the intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company’s ability and intent to hold the security for a period of time that allows for the recovery in value.  

As of September 30, 2016 and December 31, 2015, investment securities with a carrying value of $4,577,000 and $7,076,000, respectively, were pledged as collateral to secure public deposits and contingent borrowing at the Discount Window.

6. Loans and Allowance for Loan Losses

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

(in 000’s)	September 30, 2016	December 31, 2015
Commercial and industrial	$ 2,292	$  3,062
Commercial real estate	22,442	26,414
Consumer real estate	2,517	2,841
Consumer loans other	1,054	1,202
Total loans	$28,305	$ 33,519

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 annualized eight-quarter rolling historical charge-off rate to all portfolio segments of non-classified loans.  

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

All of these factors may be susceptible to significant change.  During the nine months ended September 30, 2016, the Bank reduced several of its qualitative factors in the commercial real estate segment of the loan portfolio for which it has never experienced losses or charge-offs and for improvement in credit quality during the year resulting in a credit to the provision 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.  

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The following table presents an analysis of the allowance for loan losses.

(in 000's)		For the Three months ended September 30, 2016
	Commercial and industrial			Commercial real estate		Consumer real estate	Consumer loans Other	Total
Beginning balance	$ 87			$ 245		$  13	$    10	$   355
Provision (credit) for loan losses	41			(75)		(11)	-	(45)
Charge-offs	-			(1)		-	-	(1)
Recoveries	1			-		6	1	8
Net (charge-offs) recoveries	1			(1)		6	1	7
Ending balance	$ 129			$ 169		$   8	$    11	$    317
(in 000's)		For the Three months ended September 30, 2015
	Commercial and industrial		Commercial real estate		Consumer real estate		Consumer loans Other	Total
Beginning balance	$     320		$     236		$      23		$         17	$   596
Provision (credit) for loan losses	100		(9)		(4)		(4)	83
Charge-offs	(212)		-		-		(2)	$ (214)
Recoveries	2		-		1		1	4
Net (charge-off) recoveries	(210)		-		1		(1)	(210)
Ending balance	$     210		$ 227		$  20		$  12	$  469
(in 000's)		For the Nine months ended September 30, 2016
	Commercial and industrial		Commercial real estate		Consumer real estate		Consumer loans Other	Total
Beginning balance	$ 151		$ 250		$ 8		$    9	$   418
Provision (credit) for loan losses	(25)		(39)		14		-	(50)
Charge-offs	-		(42)		(22)		(3)	(67)
Recoveries	3		-		8		5	16
Net (charge-offs) recoveries	3		(42)		(14)		2	(51)
Ending balance	$ 129		$ 169		$   8		$    11	$    317

(in 000's)		For the Nine months ended September 30, 2015
	Commercial and industrial		Commercial real estate	Consumer real estate	Consumer loans Other	Total
Beginning balance	$      403		$      300	$      20	$      12	$    735
Provision (credit) for loan losses	63		(73)	(4)	(3)	(17)
Charge-offs	(259)		-	-	(15)	(274)
Recoveries	3		-	4	18	25
Net (charge-offs)recoveries	(256)		-	4	3	(249)
Ending balance	$210		$     227	$     20	$      12	$    469

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(in 000's)		September 30, 2016
	Commercial and industrial		Commercial real estate	Consumer real estate	Consumer loans Other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$           -		$    71	$    -	$   -	$       71
Loans collectively  evaluated for impairment	129		98	8	11	246
	$       129		$  169	$   8	$ 11	$     317
Loans, ending balance:
Loans individually evaluated for impairment	$     437		$   1,738	$         -	$          -	$    2,175
Loans collectively  evaluated for impairment	1,855		20,704	2,517	1,054	26,130
Total	$   2,292		$  22,442	$   2,517	$   1,054	$  28,305

(in 000's)			December 31, 2015
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$    -	$    91	$       -	$      -	$      91
Loans collectively  evaluated for impairment	151	159	8	9	327
	$    151	$   250	$      8	$     9	$     418
Loans, ending balance:
Loans individually evaluated for impairment	$     439	$   2,076	$         -	$         -	$   2,515
Loans collectively  evaluated for impairment	2,623	24,338	2,841	1,202	31,004
Total	$  3,062	$ 26,414	$ 2,841	$ 1,202	$ 33,519

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Nonperforming and Nonaccrual and Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2016 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
(In 000's)	30-89 Days	More Days	More Days	Total Past	Current
	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$        30	$     -	$     109	$    139	$   820	$    959
SBA loans	-	-	39	39	-	39
Asset-based	-	-	289	289	1,005	1,294
Total Commercial and industrial	30	-	437	467	1,825	2,292
Commercial real estate:
Commercial mortgages	-	14	1,280	1,294	10,608	11,902
SBA loans	-	-	259	259	162	421
Construction	-	-	-	-	843	843
Religious organizations	-	-	199	199	9,077	9,276
Total Commercial real estate	-	14	1,738	1,752	20,690	22,442
Consumer real estate:
Home equity loans	30	147	323	500	311	811
Home equity lines of credit	-	-	-	-	19	19
1-4 family residential mortgages	34	-	136	170	1,517	1,687
Total consumer real estate	64	147	459	670	1,847	2,517
Total real estate	64	161	2,197	2,422	22,537	24,959
Consumer and other:
Student loans	85	38	-	123	741	864
Other	1	1	-	2	188	190
Total consumer and other	86	39	-	125	929	1,054
Total loans	$    180	$  200	$  2,634	$  3,014	$  25,291	$    28,305

An age analysis of past due loans, segregated by class of loans, as of December 31, 2015 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
	30-89 Days	More Days	More Days	Total Past	Current
(In 000's)	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$     -	$       -	$   110	$   110	$   1,425	$   1,535
SBA loans	-	-	40	40	-	40
Asset-based	11	-	289	300	1,187	1,487
Total Commercial and industrial	11	-	439	450	2,612	3,062
Commercial real estate:
Commercial mortgages	169	39	1,335	1,543	12,231	13,774
SBA loans	-	-	271	271	82	353
Construction	-	-	-	-	2,175	2,175
Religious organizations	-	-	471	471	9,641	10,112
Total Commercial real estate	169	39	2,077	2,285	24,129	26,414
Consumer real estate:
Home equity loans	56	125	358	539	358	897
Home equity lines of credit	-	-	-	-	20	20
1-4 family residential mortgages	35	-	129	164	1,760	1,924
Total consumer real estate	91	125	487	703	2,138	2,841
Total real estate	260	164	2,564	2,988	26,267	29,255
Consumer and other:
Student loans	66	129	-	195	886	1,081
Other	2	-	-	2	119	121
Total consumer and other	68	129	-	197	1,005	1,202
Total loans	$    339	$    293	$    3,003	$    3,635	$    29,884	$  33,519

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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

17

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. 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.  

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, 2016
	Good/ Excellent	Satisfactory		Pass	Special Mention	Substandard		Doubtful	Total
Commercial and industrial:
Commercial	$   250	$   344		$    70	$      43	$    252		$  -	$  959
SBA loans	-				-	39			39
Asset-based	-	727		202	-	289		76	1,294
	250	1,071		272	43	580		76	2,292
Commercial real estate:
Commercial mortgages	-	8,664		1,389	554	1,074		221	11,902
SBA Loans	-	162		-	-	259		-	421
Construction	-	843		-	-	-		-	843
Religious organizations	53	8,098		61	865	199		-	9,276
	53	17,767		1,450	1,419	1,532		221	22,442
Total commercial loans	$  303	$  18,838		$  1,722	$  1,462	$  2,112		$  297	$ 24,734
(In 000's)			Residential Mortgage and Consumer Loans September 30, 2016
	Performing			Nonperforming			Total
Consumer Real Estate:
Home equity	$   488			$   323			$   811
Home equity line of credit	19			-			19
1-4 family residential mortgages	1,551			136			1,687
	2,058			459			2,517
Consumer Other:
Consumer Installment	-			-			-
Student loans	864			-			864
Other	190			-			190
	1,054			-			1,054
Total  consumer loans	$  3,112			$   459			$  3,571

18

(In 000's)			Commercial Loans December 31, 2015
	Good/ Excellent	Satisfactory	Pass	Special Mention		Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$    285	$    922	$    16	$    58		$    254	$    -	$    1,535
SBA loans	-	-	-	-		40	-	40
Asset-based	-	900	222	-		289	76	1,487
	285	1,822	238	58		583	76	3,062
Commercial real estate:
Commercial mortgages	-	10,689	1,098	613		1,151	223	13,774
SBA Loans	-	82	-	-		271	-	353
Construction	-	2,175	-	-		-	-	2,175
Religious organizations	-	7,624	1,131	886		471	-	10,112
	-	20,570	2,229	1,499		1,893	223	26,414
Total commercial loans	$    285	$    22,393	$    2,467	$    1,557		$    2,476	$    299	$  29,476
			Residential Mortgage and Consumer Loans December 31, 2015
	Performing		Nonperforming		Total
Consumer Real Estate:
Home equity	$    539		$    358		$    897
Home equity line of credit	20		-		20
1-4 family residential mortgages	1,795		129		1,924
	2,354		487		2,841
Consumer Other:
Consumer Installment	-		-		-
Student loans	1,081		-		1,081
Other	121		-		121
	1,202		-		1,202
Total  consumer loans	$  3,556		$    487		$    4,043

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

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

The Company makes partial charge-offs of impaired loans when the impairment is deemed permanent and is considered a loss.  Specific reserves are allocated to cover “other-than-permanent” impairment for which the underlying collateral value may fluctuate with market conditions. There were no partial charge-offs.  

19

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, 2016 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	$   109	$   109	$      -	$  109	$    -
SBA Loans	39	39	-	39	-
Asset-based	289	289	-	289	-
Total commercial and industrial	437	437	-	437	-
Commercial real estate:
Commercial mortgages	1,280	806	474	1,280	67
SBA Loans	259	162	97	259	4
Religious organizations	199	199	-	199	-
Total commercial real estate	1,738	1,167	571	1,738	71
Total loans	$  2,175	$ 1,604	$  571	$  2,175	$  71

Impaired loans as of December 31, 2015 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	$  818	$    353	$    -	$    353	$   -
SBA loans	46	46	-	46	-
Asset-based	40	40	-	40	-
Total commercial and industrial	904	439	-	439	-
Commercial real estate:
Commercial mortgages	1,334	810	524	1,334	91
SBA Loans	271	271	-	271	-
Religious organizations	471	471	-	471	-
Total commercial real estate	2,076	1,552	524	2,076	91
Total loans	$2,980	$ 1,991	$   524	$  2,515	$ 91

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

(In 000's)	Three Months Ended September 30, 2016		Three Months Ended September 30, 2015
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$   109	$      -	$  160	$      -
SBA  loans	39	-	40	1
Asset-based	289	-	46	1
Total commercial and industrial	437	-	246	2
Commercial real estate:
Commercial mortgages	1,280	1	976	-
SBA loans	162	-	110	-
Religious organizations	200	-	488	-
Total commercial real estate	1,642	1	1,574	-
Total loans	$   2,079	$    1	$ 1,820	$    2

(In 000's)	Nine Months Ended September 30, 2016		Nine Months Ended September 30, 2015
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$     109	$    -	$    188	$      -
SBA  loans	39	-	58	2
Asset-based	289	-	36	2
Total commercial and industrial	437	-	282	4
Commercial real estate:
Commercial mortgages	1,422	5	971	-
SBA loans	304	3	112	-
Religious organizations	299	-	496	2
Total commercial real estate	2,025	8	1,579	2
Total loans	$   2,462	$  8	$   1,861	$    6

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

21

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, 2016 and December 31, 2015.

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, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Beginning balance	$  447	$  757	$  480	$    564
Additions, transfers from loans	-	-	-	149
Sales	-	(38)	(33)	(83)
	447	719	447	630
Write-ups	-	-	-	89
Ending Balance	$   447	$  719	$ 447	$   719

There were no loans in the process of foreclosure at September 30, 2016 and December 31, 2015.

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

(in 000's)	September 30, 2016	December 31, 2015
Commercial real estate	$  316	$ 297
Residential real estate	131	183
Total	$  447	$ 480

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

	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Insurance	$3	$4	$9	$13
Legal fees	-	-	16	-
Foreclosure expense	56	-	56	-
Professional fees	-	-	4	-
Real estate taxes	6	4	16	10
Utilities	1	1	2	2
Transfer-in write-up	-	-	-	(89)
Other	-	1	1	11
Total	$66	$10	$104	$(53)

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,

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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.  

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

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

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

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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, 2016	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$2,699	$      -	$2,699	$    -
Government Sponsored Enterprises residential mortgage-backed securities	3,455	-	3,455	-
Money market funds	130	130	-	-
Total	$6,284	$130	$6,154	$    -
Loans held for sale	$6,602	$   -	$6,602	$   -
Loans held at fair value	$3,726	$   -	$         -	$ 3,726
Servicing asset	$  283	$   -	$         -	$     283

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at   December 31, 2015	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	$ 3,662	$  -	$3,662	$      -
Government Sponsored Enterprises residential mortgage-backed securities	3,780	-	3,780	-
Money market funds	130	130	-	-
Total	$7,572	$130	$ 7,442	$    -
Loans held for sale	$3,261	$   -	$3,261	$   -
Loans held at fair value	$2,459	$   -	$     -	$ 2,459
Servicing asset	$   200	$   -	$     -	$    200

The fair value of the Bank’s AFS securities portfolio was approximately $6,284,000 and $7,572,000 at September 30, 2016 and December 31, 2015, respectively. All the residential mortgage-backed securities were issued or guaranteed by the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).  The underlying loans for these securities are residential mortgages that are geographically dispersed throughout the United States.  The valuation of AFS securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar instruments and all relevant information.  There were no transfers between Level 1 and Level 2 assets during the periods ended September 30, 2016 and 2015.

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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,     2016 Fair value	December 31, 2015 Fair Value	Principal valuation techniques	Significant observable inputs	September 30,      2016 Range of inputs	December 31, 2015 Range of inputs
Loans held at fair value:	$  3,726	$ 2,459	Discounted cash flow	Constant prepayment rate	7.50% to 9.71  %	7.10% to 9.88%
				Weighted average discount rate	7.72% to 9.38%	7.76% to 9.94%
				Weighted average life	3.12 yrs to 9.97yrs	3.40 yrs to 8.78 yrs

(in 000’s)

Assets measured at fair value	September 30,     2016 Fair value	December 31, 2015 Fair Value	Principal valuation techniques	Significant observable inputs	September 30,      2016 Range of inputs	December 31, 2015 Range of inputs
Servicing asset	$283	$ 200	Discounted cash flow	Constant prepayment rate	4.76% to 10.10%	6.57% to 10.27%
				Weighted average discount rate	9.54% to 16.04%	11.94 % to 16.23%
				Weighted average life	3.12 yrs to 9.72 yrs	3.40 yrs to 8.78 yrs

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

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

(in 000’s)	Loans held at fair value
Balance at December 31, 2015	$   2,459
Origination of loans	1,339
Principal repayments	(324)
Change in fair value of financial instruments	252
Balance at September 30, 2016	$  3,726

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, 2016 and December 31, 2015, for which a nonrecurring change in fair value has been recorded during the nine months ended September 30, 2016 and year ended December 31, 2015.

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Carrying Value at September 30, 2016:

(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	$ 741	$   -	$   -	$ 741	$   -
Other real estate owned (“OREO”)	$ 447	$   -	$    -	$  447	-

Carrying Value at December 31, 2015:

(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	$ 479	$    -	$      -	$   479	$ -
Other real estate owned (“OREO”)	$    480	$       -	$        -	$    480	$   39

The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included in the table above as a Level 3 measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the table above as it is not currently being carried at its fair value. At September 30, 2016 and December 31, 2015, the fair values shown above exclude estimated selling costs of $120,000 and $96,000.

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

Fair Value of Financial Instruments

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

The 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.  

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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, 2016		December 31, 2015
(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	$ 9,600	$ 9,600	$ 10,782	$  10,782
Available for sale securities	(1)	6,284	6,284	7,572	7,572
Loans held for sale	Level 2	6,602	6,602	3,261	3,261
Loans held at fair value	Level 3	3,726	3,726	2,459	2,459
Loans, net of allowance for loan losses	(2)	27,988	28,227	33,101	33,082
Accrued interest receivable	Level 2	141	141	175	175
Servicing asset	Level 3	283	283	200	200
Liabilities:
Demand deposits	Level 2	29,367	29,367	30,022	30,022
Savings deposits	Level 2	11,866	11,866	11,681	11,681
Time deposits	Level 2	11,595	11,579	14,259	14,242
Accrued interest payable	Level 2	10	10	9	9

(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.  

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:

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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.

In an effort to restore the Bank to profitability and increased capital levels, its regulators, FDIC and Department of Banking amended and restated the prior Order on April 25, 2018.  This amended Order serves as a prescriptive Restoration Plan providing benchmarks for capital, earnings and asset quality.  The Board of Directors is optimistic about the Bank’s ability to achieve the requirements as stated.  This Order represents a more tailored approach by

28

regulators to strengthen and preserve minority-owned financial institutions like United Bank of Philadelphia.  The priority for the Board of Directors and management is to promptly comply with the Order.

The Order 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 Order.

As of September 30, 2016 and December 31, 2015, the Bank’s tier one leverage capital ratio was 4.67% and 4.57%, respectively, and its total risk based capital ratio was 8.48% and 8.50%, respectively. The net loss for the nine months ended September 30, 2016 resulted in a slight decrease in the tier one leverage and total risk based capital ratios. Management continues its efforts to increase capital by focusing on the following: 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--In March 2017 and September 2017, the Company received a external investments of $675,000 and $250,000, respectively, from other financial institutions. External capital investments will continue to be sought.   

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.

10.  Subsequent Events

In 2016, correspondence was sent to financial institutions in the region to encourage them to consider an investment for CRA credit. In March 2017, the Bank received a preferred stock investment from Fulton Financial totaling $675,000 and in September 2017, an investment of $250,000 was received from Bryn Mawr Trust.   At June 30, 2018, the Bank’s tier one leverage capital ratio was 4.77% and its total risk based capital ratio was 9.20%, which is considered “adequately capitalized” under the regulatory framework for prompt and corrective action.  The Bank’s growth and other operating factors such as the need for additional provisions to the allowance for loans losses may have an adverse effect on its capital ratios.

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

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").

Special Cautionary Notice Regarding Forward-looking Statements

Certain of the matters discussed in this document and the documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may constitute forward looking statements for the purposes of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended, and may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of United Bancshares, Inc (“UBS”) to be materially different from future results, performance or achievements expressed or implied by such forward looking statements.  The words “expect,” “anticipate,” “intended,” “plan,” “believe,” “seek,” “estimate,” “may,” and similar expressions are intended to identify such forward-looking statements.  These forward looking statements include: (a) statements of goals, intentions and expectations; and (b) statements regarding business prospects, asset quality, credit risk, reserve adequacy and liquidity.  UBS’ actual results may differ materially from the results anticipated by the forward-looking statements due to a variety of factors, including without limitation: (a) the effects of future economic conditions on UBS and its customers, including economic factors which affect consumer confidence in the securities markets, wealth creation, investment and consumer saving patterns; (b) UBS interest rate risk exposure and credit risk; (c) changes in the securities markets with respect to the market values of financial assets and the stability of particular securities markets; (d) governmental monetary and fiscal policies, as well as legislation and regulatory changes; (e) changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral and securities, as well as interest-rate risks; (f) changes in accounting requirements or interpretations; (g) the effects of competition from other commercial banks, thrifts, mortgage companies, consumer finance companies, credit unions securities brokerage firms, insurance companies, money-market and mutual funds and other financial institutions operating in the UBS’ trade market area and elsewhere including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet; (h) any extraordinary events (such as the September 11, 2001 events), the war on terrorism and the U.S. Government’s response to those events or the U.S. Government becoming involved in a conflict in a foreign country including the war in Iraq; (i) the failure of assumptions underlying the establishment of reserves for loan losses and estimates in the value of collateral, and various financial assets and liabilities and technological changes being more difficult or expensive than anticipated; (j) UBS’ success in generating new business in its existing markets, as well as its success in identifying and penetrating targeted markets and generating a profit in those markets in a reasonable time; (k) UBS’ timely development of competitive new products and services in a changing environment and the acceptance of such products and services by its customers; (l) any downgrades, in the credit rating of the United States Government and federal agencies; (m) changes in technology being more expensive or difficult than expected; (n) the ability of key third party providers to perform their obligations to UBS and; (o) the Bank and UBS’ success in managing the risks involved in the foregoing, and (p) failure to comply with the Consent Orders with the FDIC and the Pennsylvania Department of Banking.

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

Overview

The Company reported a net loss of approximately $ 118,000 ($ 0.14 per common share) for the quarter ended September 30, 2016 compared to a net loss of approximately $210,000 ($0.25 per common share) for the same quarter in 2015. The Company reported a net loss of approximately $2,000 ($0.00 per common share) for the nine months ended September 30, 2016 compared to a net loss of approximately 313,000 ($0.32 per common share) for the same period in 2015. The improvement in financial performance is primarily related to the Bank’s SBA loan strategy as well as a reduction in the provision for loan losses.  Management remains committed to further improving the Company’s operating performance by continuing to implement its profit enhancement strategies that are centered on small business lending products and services. The following actions are critical to ensure continued improvement in the Company’s financial performance:

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Increase Capital.  The critical importance of establishing and maintaining capital levels to support the Bank’s risk profile and growth is understood; however, capital continues to decline as a result of operating losses.  A concentrated effort will be made to stabilize and strengthen the Bank’s capital by the following:

Core Profitability from Bank operations—Core profitability is essential to stop the erosion of capital.  Refer to the Earnings Enhancement discussion below. 

External equity investments—Potential investors will continue to be sought. 

Earnings enhancement plan. Management seeks to increase noninterest income and further reduce noninterest expense to achieve core earnings. The primary strategy continues to be to increase SBA loan origination and sell the guaranteed portion in the secondary market for a gain.   During the nine months ended September 30, 2016, noninterest income totaling approximately $752,000 (including fair value adjustments) was recognized utilizing this strategy compared to $431,000 for the same period in 2015.

General improvement has been made in controlling noninterest expense; however, there was an increase in other real estate expense because of foreclosure-related expenses.  Further, the Bank’s noninterest expense remains elevated when compared to its peer group. The Bank continues to incur a higher level of professional service fees (audit and legal) because of its SEC filing requirements as a result of having in excess of 1,200 shareholders. Management will continue to seek further savings and efficiencies, where possible.

Another challenge to increased earnings is the restriction on asset growth because of the Bank’s current capital levels; however, the net interest margin continues to be a significant source of strength. The low cost of funds is the primary contributing factor. Management will continue to balance asset growth with capital adequacy requirements.

Manage asset quality to minimize credit losses and reduce collection costs. Asset quality trends showed some improvement during the quarter with a decline in nonperforming loans and delinquencies. Management will seek to make further progress by adhering to its underwriting standards as well as good customer relationship management practices.  In addition, proactive monitoring of the loan portfolio is essential to the identification of emerging problem credits and is performed during bi-weekly Asset Quality Committee meetings.   Forbearance, foreclosure and/or other appropriate collection methods will be used as necessary and may result in increased loan and collection expense.

Significant Accounting Policies

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the dates of the balance sheets and revenues and expenditures for the periods presented.  Therefore, actual results could differ from these estimates.  

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

The Company’s significant accounting policies are presented in Note 1 to the  Company’s audited consolidated financial statements filed as part of the 2015 Annual Report on Form 10-K and in the footnotes to the Company’s unaudited financial statements filed as part of this Form 10-Q.  

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Selected Financial Data

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

(Thousands of dollars, except per share data)	Quarter ended September 30, 2016	Quarter ended September 30, 2015	Nine Months ended September 30, 2016	Nine Months ended September 30, 2015
Statement of operations information:
Net interest income	$626	$619	$1,925	$1,926
Provision (credit) for loan losses	(45)	83	(50)	(17)
Noninterest income	374	334	1,366	977
Noninterest expense	1,163	1,080	3,343	3,233
Net (loss)income	(117)	(210)	(2)	(313)
Net (loss)income per share-basic and diluted	(0.14)	(0.25)	0.00	(0.32)
Balance Sheet information:	September 30, 2016	December 31, 2015
Total assets	$ 55,951	$  58,984
Loans, net	27,988	33,101
Investment securities	6,284	7,572
Deposits	52,828	55,962
Shareholders' equity	2,764	2,680
Ratios*:	Quarter ended September 30, 2016	Quarter ended September 30, 2015	Nine Months ended September 30, 2016	Nine Months Ended September 30, 2015
Return on assets	(0.21)%	(1.41)%	0.00%	(0.73)%
Return on equity	(16.93)%	(26.84)%	0.00%	(15.57)%

*annualized

Financial Condition

Sources and Uses of Funds

The financial condition of the Bank can be evaluated in terms of trends in its sources and uses of funds.  The comparison of average balances in the following table indicates how the Bank has managed these elements. Average funding uses increased approximately $1,677,000, or 3.23% during the quarter ended September 30, 2016 compared to the quarter ended June 30, 2016. Average funding sources increased approximately $1,646,000, or 3.20%, during the same quarter.

Sources and Uses of Funds Trends

(dollars in 000’s)	September 30, 2016			June 30, 2016
	Average	Increase (Decrease)	Increase (Decrease)	Average
	Balance	Amount	%	Balance
Funding uses:
Loans	$41,494	$ 3,537	9.32%	$37,957
Investment Securities	6,653	(572)	(7.92)%	7,225
Federal funds sold	5,118	(1,288)	(20.11)%	6,406
Balances with other banks	311	-	-	311
Total  uses	$53,576	$ 1,677	3.23%	$51,899
Funding sources:
Demand deposits
Noninterest-bearing	$15,854	$ (200)	(1.25)%	$16,054
Interest-bearing	13,860	1,395	11.19%	12,465
Savings deposits	11,787	476	4.21%	11,311
Time deposits	11,582	(25)	(0.22)%	11,607
Total sources	$53,083	$1,646	3.20%	$51,437

Loans

Average loans increased by approximately $3,537,000, or 9.32%, during the quarter ended September 30, 2016 as a result of SBA loan origination and funding.  The Bank’s commercial loan pipeline continues to grow as a result of its small business banking focus specifically targeting SBA loans. This strategy is designed to generate fee income from sales of the guaranteed portion as well as build loan volume.  There are a significant number of small businesses in the region that may fall below minimum business loan levels of the money center banks in the region which provides an opportunity for the Bank to continue to grow its SBA lending as a niche business. Management will continue to work in alliance with its third party SBA loan origination group, commercial real estate brokers, accountants, lawyers, SBA

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brokers, and other centers of influence to build loan volume.  

The Bank’s consumer and residential mortgage loan portfolios continue to decline as a result of residential mortgages and home equity repayment activity as consumers refinance to take advantage of the continued low interest rate environment.  The Bank does not originate residential mortgage loans and made a strategic shift in its lending program in 2012 to phase out consumer lending, including home equity loans and lines of credit.  

The Bank’s loan portfolio continues to be concentrated in commercial real estate loans that comprise approximately $22 million, or 79%, of total loans at September 30, 2016 of which approximately $13.2 million are owner occupied.  The Bank continues to have a strong niche in lending to religious organizations for which total loans at September 30, 2016 were approximately $9.3 million, or 41%, of the commercial real estate portfolio. Management closely monitors this concentration to proactively identify and manage credit risk for any conditions might negatively impact the level of tithes and offerings that provide cash flow for repayment.  The composition of the net loans is as follows:

	September 30,	December 31,
(In 000's)	2016	2015
Commercial and industrial:
Commercial	$ 959	$  1,535
SBA loans	39	40
Asset-based	1,294	1,487
Total commercial and industrial	2,292	3,062
Commercial real estate:
Commercial mortgages	11,902	13,774
SBA loans	421	353
Construction	843	2,175
Religious organizations	9,276	10,112
Total commercial real estate	22,442	26,414
Consumer real estate:
Home equity loans	811	897
Home equity lines of credit	19	20
1-4 family residential mortgages	1,687	1,924
Total consumer real estate	2,517	2,841
Total real estate	24,959	29,255
Consumer and other:
Student loans	864	1,081
Other	190	121
Total consumer and other	1,054	1,202
Loans, net	$  28,305	$ 33,519

Allowance for Loan Losses

The allowance for loan losses reflects management’s continuing evaluation of the loan portfolio, the diversification and size of the portfolio, and adequacy of collateral. Provisions are made to the allowance for loan losses in accordance with a detailed periodic analysis.  This analysis includes specific reserves allocated to impaired loans based on underlying recovery values as well as a general reserve based on charge-off history and various qualitative factors including delinquency trends, loan terms, regulatory environment, economic conditions, concentrations of credit risk and other relevant data.  The Bank utilizes an annualized eight rolling quarter historical loss factor as management believes this best represents the current trends and market conditions.  The allowance for loan losses as a percentage of total loans was 1.12% at September 30, 2016 compared to 1.25% at December 31, 2015. The decline is a result of the charge-off activity as well as a shift to SBA loans that are accounted for at fair value and not included in the calculation of the allowance for loan losses.

Loans deemed “impaired” are those for which borrowers are no longer able to pay in accordance with the terms of their loan agreements.  The Bank’s source of repayment is generally the net liquidation value of the underlying collateral.  Impaired loans totaled approximately $2,175,000 at September 30, 2016 compared to $2,515,000 at December 31, 2015. The valuation allowance associated with impaired loans was approximately $71,000 and $91,000, at September 30, 2016

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and December 31, 2015, respectively. The decrease in impaired loans is attributable to collection activity as well as charge-offs totaling approximately $42,000 for which there was a specific reserve allocated. Management continues to work to reduce the level of classified and impaired loans. Forbearance, foreclosure and/or other appropriate collection methods will be used as necessary.

At September 30, 2016 and December 31, 2015, loans to religious organizations represented approximately $199,000 and $471,000, respectively, of total impaired loans. Management continues to work closely with its attorneys and the leadership of these organizations in an attempt to develop suitable repayment plans to avoid foreclosure.  In general, loans to religious organizations are being monitored closely to proactively identify potential weaknesses in this area of high concentration.  

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

The percentage of allowance to nonperforming loans was 12.04% at September 30, 2016, down from 13.92% at December 31, 2015.  The level of nonperforming loans to total loans decreased from 8.96% at December 31, 2015 to 8.57% at September 30, 2016 as a result of collection and foreclosure activity. Approximately 83% of nonperforming loans are secured by real estate which serves to mitigate the risk of loss.

Loans more than 90 days past due that are still in the process of collection for which the full payment of principal and interest can reasonably be expected are not considered nonperforming.  The following table sets forth information concerning nonperforming loans and nonperforming assets.

(In 000's)	September 30, 2016	December 31, 2015
Commercial and industrial:
Commercial	$    109	$   110
SBA loans     Asset-based	39 289	40 289
Total commercial and industrial	437	439
Commercial real estate:
Commercial mortgages	1,280	1,335
SBA loans	259	271
Religious organizations	199	471
Total commercial real estate	1,738	2,077
Consumer real estate:
Home equity loans	323	358
1-4 family residential mortgages	136	129
Total consumer real estate	459	487
Total real estate	2,197	2,564
Total nonperforming loans	2,634	3,003
OREO	447	480
Total nonperforming assets	$  3,081	$  3,483
Nonperforming loans to total loans	9.31%	8.96%
Nonperforming assets to total loans and OREO	10.89%	10.24%
Nonperforming assets to total assets	5.50%	5.90%
Allowance for loan losses as a percentage of:
Total loans	1.12%	1.25%
Total nonperforming loans	12.04%	13.92%

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The following table sets forth information related to loans past due 90 days or more and still accruing interest.

(In 000's)	September 30, 2016	December 31, 2015
Commercial real estate:
Commercial mortgages	$  14	$  39
Total commercial real estate	14	39
Consumer real estate:
Home equity loans	147	125
Total consumer real estate	147	125
Consumer and other:
Student loans     Other	38 1	129 -
Total consumer and other	39	129
Total	$  200	$  293

Investment Securities and Other Short-term Investments

Average investment securities decreased by approximately $572,000, or 7.92%, during the quarter ended September 30, 2016. The decrease was primarily related to the call of two $250,000 agency security and mortgage-backed security paydowns during the quarter ended September 30, 2016. During the nine months ended September 30, 2016, there was a reduction of approximately $1.3 million related to investment maturities, calls and mortgage-backed security paydowns.

The average yield on the investment portfolio declined to 2.12% for the nine months ended September 30, 2016 compared to 2.31% for the nine months ended September 30, 2015.  The decline is a result of calls of higher yielding bonds during the period. Amortizing GSE mortgage-backed securities approximate 54% of the portfolio. The payments of principal and interest on these pools of GSE loans serve to provide monthly cashflow and are guaranteed by these entities that bear the risk of default.  The Bank’s risk is prepayment risk when defaults accelerate the repayment activity.  These loans have longer-term contractual maturities but are sometimes paid off/down before maturity or have repricing characteristics that occur before final maturity. Management’s goal is to maintain a portfolio with a relatively short duration to allow for adequate cash flow to fund loan origination activity and to manage interest rate risk.  

Deposits

During the quarter ended September 30, 2016, average deposits increased approximately $1,646,000, or 3.20%. The increase was concentrated in interest bearing demand deposit accounts that increased by $1,395,000, or 11.19%. The increase was primarily related to one customer that receives grant funds that are generally utilized within a 6 month period.  During the nine months ended September 30, 2016, deposits declined approximately $3.1 million primarily because of the requested January 2016 $2.5 million reduction in the City of Philadelphia certificate of deposit to improve the Bank’s leverage capital position.  

Noninterest bearing checking account balances decreased on average by $200,000, or 1.25%, during the quarter ended September 30, 2016.   As small business loans are originated, primary operating accounts are required to be maintained at the Bank which serves to grow core deposits; however, balances fluctuate with normal business activity.  

Average savings deposits increased by approximately $476,000, or 4.21%, as a result of several new customer deposit accounts with balances in excess of $100,000.

Time deposit accounts decreased on average by approximately $25,000, or 0.22%, during the quarter from the non-renewal of several certificates of deposit less than $100,000.

Commitments and Lines of Credit

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

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Many of the commitments are expected to expire without being drawn upon. The total commitment amounts do not necessarily represent future cash requirements.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Management believes the Bank has adequate liquidity to support the funding of unused commitments. The Bank's financial instrument commitments are summarized below:  

	September 30, 2016	December 31, 2015
Commitments to extend credit	$6,965,000	$5,903,000
Standby letters of credit	378,996	333,000

The level of commitments increased during the nine months ended September 30, 2016 as a result of SBA loan activity.   The Bank’s outstanding commitments also include unused lines of credit with Fortune 500 corporations for which the Bank leads and/or participates in syndications that are not expected to be drawn upon.

Liquidity

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

By policy, the Bank’s minimum level of liquidity is 6.00% of total assets.  At September 30, 2016, the Bank had total short-term liquidity, including cash and federal funds sold, of approximately $9.6 million, or 17.2% of total assets, compared to $10.8 million, or 18.28%, at December 31, 2015.

The Bank's principal sources of asset liquidity include investment securities consisting principally of U.S. Government and agency issues, particularly those of shorter maturities, and mortgage-backed securities with monthly repayments of principal and interest. In addition, the Bank’s investment portfolio is classified as available-for-sale; however, majority of these securities are pledged as collateral for deposits of governmental/quasi-governmental agencies as well as the Discount Window at the Federal Reserve Bank.  Therefore, they are restricted from use to fund loans or to meet other liquidity requirements.

Other types of assets such as federal funds sold, as well as maturing loans, are also sources of liquidity.  Approximately $10.1 million in loans are scheduled to mature within one year.  To ensure the ongoing adequacy of liquidity, the following contingency strategies will be utilized in order of priority, if necessary:

Seek non-public deposits from existing private sector customers; specifically, additional deposits from members of the National Bankers Association will be considered a potential source.  

Sell participations of existing commercial credits to other financial institutions in the region and/or NBA member banks based on participation agreements. 

The Bank’s contingent funding sources  include the Discount Window at the Federal Reserve Bank for which it currently has $750,000 in securities pledged that result in borrowing capacity of approximately $740,000. In light of the Bank’s regulatory Orders and “Troubled Bank” designation, liquidity will continue to be closely monitored and managed to minimize risk and ensure that adequate funds are available to meet daily customer requirements and loan demand.

Interest rate sensitivity

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

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interest income within the limits imposed by regulatory authorities, liquidity determinations and capital considerations.  At September 30, 2016, a positive gap position is maintained on a cumulative basis through 1 year of 14.89% that is within the Bank’s policy guidelines of +/- 15% on a cumulative 1-year basis and decreased from the December 31, 2015 positive gap position of 17.28%. This position is caused by an increasing level of loans maturing and/or repricing in one to three months due to the Banks’ growing variable rate SBA loan portfolio. This position makes the Bank’s net interest income more favorable in a rising interest rate environment. The most recent economic forecast suggests no further decline in rates but rather increases beginning in early 2016.  Therefore, management does not believe the interest rate risk associated with the Bank’s current position to be significant. Management will continue review and monitor the structure and rates on investment purchases, new loan originations and renewals to manage the interest rate risk profile within acceptable limits.

While using the interest sensitivity gap analysis is a useful management tool as it considers the quantity of assets and liabilities subject to repricing in a given time period, it does not consider the relative sensitivity to market interest rate changes that are characteristic of various interest rate-sensitive assets and liabilities.  A simulation model is used to estimate the impact of various changes, both upward and downward, in market interest rates and volumes of assets and liabilities on the net income of the Bank.  This model produces an interest rate exposure report that forecasts changes in the market value of portfolio equity under alternative interest rate environments.  The market value of portfolio equity is defined as the present value of the Company’s existing assets, liabilities and off-balance-sheet instruments.  At September 30, 2016, the change in the market value of equity in a +200 basis point interest rate change is 18.9%, in line with the policy limit of 25%; and 37.1% in a +400 basis point interest rate change, in line with the policy limit of -50%.   These levels represent an improvement from 2015 when the +400 basis point change was 63.5%.  The improvement during the quarter is related to the sale/payoff of loans that resulted in an increase in Federal Funds Sold that reprice immediately.  Management continues to strategically work to maintain compliance with policy limits by originating more variable rate loans or structure short maturity balloon mortgages.  Although the economic value of equity is in excess of policy, interest-rate exposure is considered reasonable and manageable at September 30, 2016.

Capital Resources

Total shareholders’ equity increased approximately $84,000, or 3.13%, during the nine months ended September 30, 2016. The increase is attributable to other comprehensive income related to an unrealized gain on the securities classified as available-for-sale totaling approximately $86,000.   

The critical importance of establishing and maintaining capital levels to support the Bank’s risk profile and growth is understood.  A concentrated effort will be made to stabilize and strengthen the Bank’s capital through the generation of core profitability from Bank operations and external investment. In 2013, an investment banker was engaged to assist with raising a minimum investment of $2 million.  Although the Bank has approximately $750,000 in commitments from several financial institutions in the region, the timing of these investments is uncertain.

On January 1, 2015, new regulatory risk-based capital rules became effective. These new capital requirements, commonly referred to as “Basel III” regulatory reforms increased the minimum Tier I capital ratio in order to be considered well-capitalized from 6.0% to 8.0%. In addition, a new capital ratio, the Common Equity Tier I ratio was introduced, with a minimum, well-capitalized level of 6.5%. The new rules provided for smaller banking institutions (less than $250 billion in consolidated assets) an opportunity to make a one-time election to opt out of including most elements of accumulated other comprehensive income in regulatory capital. Importantly, the opt-out excludes from regulatory capital not only unrealized gains and losses on available-for-sale debt securities, but also accumulated net gains and losses on cash-flow hedges and amounts attributable to defined benefit postretirement plans. On April 30, 2015, in connection with the filing of its March 31, 2015 Call Report, the Bank elected to opt-out of including these items in regulatory capital. For more information regarding Basel III, refer to Part I, Item 1 of the Company’s 2015 Annual Report on Form 10-K, under the heading “Capital Adequacy.” There is no official regulatory guideline for the tangible common equity to tangible asset ratio.

On January 31, 2012, the Bank entered into a Consent Order with its primary regulators that requires the development of a written capital plan ("Capital Plan") that details the manner in which the Bank will meet and maintain a Leverage Ratio of at least 8.50% and a Total Risk-Based Capital Ratio of at least 12.50%.  At a minimum, the Capital Plan must include specific benchmark Leverage Ratios and Total Risk-Based Capital Ratios to be met at each calendar quarter-end, until the required capital levels are achieved. At September 30, 2016, capital benchmarks have not been met; however, management will continue to execute its capital strategies. The Company and the Bank do not anticipate paying dividends in the near future.

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At September 30, 2016, capital benchmarks had not been met and total capital to risk weighted assets and Tier I Leverage ratios are below the minimum capital levels to be considered “well capitalized”. Management will continue to execute its capital strategies. The following table presents the capital ratios of the Company and the Bank as of September 30, 2016 and December 31, 2015:

(In 000’s)	Actual September 30, 2016		Actual December 31, 2015		Minimum to be “Well Capitalized”
	Amount	Ratio	Amount	Ratio	Amount	Ratio
Total (Tier II) capital to risk weighted assets:
Company	$ 2,901	8.48%	$3,081	8.50%	N/A
Bank	2,901	8.48	3,081	8.50	$3,623	10.00%
Tier I capital to risk weighted assets
Company	2,584	7.56	2,663	7.35	N/A
Bank	2,584	7.56	2,663	7.35	$2,899	8.00%
Common equity Tier I capital to risk weighted assets
Company	2,584	7.56	2,663	7.35	N/A
Bank	2,584	7.56	2,663	7.35	$2,355	6.50%
Tier I Leverage ratio (Tier I capital to total quarterly average assets)
Company	2,584	4.67	2,663	4.57	N/A
Bank	2,584	4.67	2,663	4.57	$2,915	5.00%

Results of Operations

Summary

The Company reported a net loss of approximately $117,000 ($0.14 per common share) for the quarter ended September 30, 2016 compared to a net loss of approximately $210,000 ($0.25 per common share) for the same quarter in 2015. The Company reported a net loss of approximately $2,000 ($0.00 per common share) for the nine months ended September 30, 2016 compared to a net loss of approximately $313,000 ($0.32 per common share) for the same period in 2015. The improvement in financial performance during the nine months is primarily related to the Bank’s SBA loan strategy as well as a reduction in the provision for loan losses. A detailed explanation of each component of operations is included in the sections below.

Net Interest Income

Net interest income is an effective measure of how well management has balanced the Bank’s interest rate-sensitive assets and liabilities.  Net interest income, the difference between (a) interest and fees on interest-earning assets and (b) interest paid on interest-bearing liabilities, is a significant component of the Bank’s earnings.  Changes in net interest income result primarily from increases or decreases in the average balances of interest-earning assets, the availability of particular sources of funds and changes in prevailing interest rates.

Average Balances, Rates, and Interest Income and Expense Summary

		Three  months ended   September 30, 2016			Three  months ended   September 30, 2015
(in 000’s)	Average Balance	Interest	Yield/Rate	Average Balance	Interest	Yield/Rate
Assets:
Interest-earning assets:
Loans	$41,494	$601	5.79%	$40,960	$589	5.75%
Investment securities	6,653	35	2.12	7,460	43	2.31
Federal funds sold	5,118	6	0.47	8,897	5	0.22
Interest bearing balances with other banks	311	-	-	310	-	-
Total interest-earning assets	53,576	642	4.80	57,627	637	4.42
Interest-bearing liabilities
Demand deposits	13,860	6	0.18	14,687	$7	0.17
Savings deposits	11,787	1	0.03	11,997	2	0.03
Time deposits	11,582	9	0.32	14,313	9	0.25
Total interest-bearing liabilities	37,229	16	0.17	40,997	18	0.16
Net interest income		$626			$ 619
Net yield on interest-earning assets			4.67%			4.31%

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		Nine months ended   September 30, 2016			Nine months ended   September 30, 2015
(in 000’s)	Average Balance	Interest	Yield/Rate	Average Balance	Interest	Yield/Rate
Assets:
Interest-earning assets:
Loans	$39,159	$1,830	6.23%	$43,454	$1,834	5.63%
Investment securities	7,136	120	2.25	7,833	135	2.30
Federal funds sold	6,556	23	0.47	5,703	9	0.21
Interest bearing balances with other banks	311	1	0.43	310	1	0.43
Total interest-earning assets	53,162	1,974	4.95	57,300	1,979	4.61
Interest-bearing liabilities
Demand deposits	13,102	18	0.19	15,122	19	0.19
Savings deposits	11,545	4	0.05	12,056	4	0.04
Time deposits	11,872	27	0.30	13,617	29	0.26
Total interest-bearing liabilities	36,519	49	0.18	40,795	52	0.17
Net interest income		$1,925			1,927
Net yield on interest-earning assets			4.83%			4.48%

For purposes of computing the average balance, loans include all loans including loans held for sale and held at fair value.  Loan balances are not reduced for nonperforming loans.  Loan fee income is included in interest income on loans but is not considered material.

Net interest income increased approximately $7,000, or 1.06%, for the quarter ended September 30, 2016 compared to 2015. Net interest income declined approximately $2,000, or 0.06%, for the nine months ended September 30, 2016 compared to 2015.  The increase for the quarter is primarily related to an increase in the yield on loans compared to 2015.  The decrease for the nine months is due to the decline in yield on investments due to the call of higher yielding bonds.  

Rate-Volume Analysis of Changes in Net Interest Income

	Three months ended September 30, 2016 compared to 2015			Three months ended September 30, 2015 compared to 2014
	Increase (decrease) due to			Increase (decrease) due to
(Dollars in thousands)	Volume	Rate	Net	Volume	Rate	Net
Interest earned on:
Loans	$  8	$  4	$  12	$  (46)	$ (43)	$ (89)
Investment securities	(5)	(3)	(8)	(14)	(1)	(15)
Federal funds sold	(2)	3	1	3	-	3
Interest bearing balances with other banks	-	-	-	-	-	-
Total Interest-earning assets	1	4	5	(57)	(44)	(101)
Interest paid on:
Demand deposits	-	-	-	-	(1)	(1)
Savings deposits	-	2	2	-	-	-
Time deposits	(1)	1	-	-	-	-
Total interest-bearing liabilities	(1)	3	2	-	(1)	(1)
Net interest income	$  -	$  7	$ 7	$(57)	$ (43)	$(100)

	Nine months ended September 30, 2016 compared to 2015			Nine months ended September 30, 2015 compared to 2014
	Increase (decrease) due to			Increase (decrease) due to
(Dollars in thousands)	Volume	Rate	Net	Volume	Rate	Net
Interest earned on:
Loans	$ (191)	$  187	$  (4)	$ (7)	$ (123)	$(130)
Investment securities	(12)	(3)	(15)	(38)	(5)	(43)
Federal funds sold	1	13	14	3	-	3
Interest bearing balances with other banks	-	-	-	-	(3)	(3)
Total Interest-earning assets	(202)	197	(5)	(42)	(131)	(173)
Interest paid on:
Demand deposits	(1)	-	(1)	(1)	-	(1)
Savings deposits	-	-	-	-	-	-
Time deposits	(2)	-	(2)	-	(1)	(1)
Total interest-bearing liabilities	(3)	-	(3)	(1)	(1)	(2)
Net interest income	$  (199)	$  197	$ (2)	$ (41)	$ (130)	$ (171)

For the quarter ended September 30, 2016 compared to the same period in 2015, there was an increase of approximately $7,000 due to changes in rate. For the nine months ended September 30, 2016 compared to the same period in 2015,

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there was a decrease in net interest income of approximately $199,000 due to changes in volume offset by an increase of approximately $197,000 due to changes in rate. The rate increase was primarily related to an increased yield on loans and the payoff of principal and interest on nonaccrual loans.

Provision for Loan Losses

There was a negative provision for loan losses of $45,000 for the quarter ended September 30, 2016 compared to a provision of $83,000 for the same quarter in 2015. There was a negative provision for loan losses of $50,000 for the nine months ended September 30, 2016 compared to a negative provision of $17,000 for the same period in 2015. The decrease in provisions is primarily related to a lower level of non-SBA loan originations, loan payoff activity as well as a reduction in net charge-offs and related historical loss factors. In addition, the Bank reduced several of its qualitative factors in the commercial real estate segment of the loan portfolio for which it has never experienced losses or charge-offs and for general improvement in credit quality during the year. In general, provision requirements are based on credit losses inherent in the loan portfolio and the review and analysis of the loan portfolio in accordance with the Bank’s Allowance for Loan Loss policies and procedures. In addition, loans held for sale and held at fair value are excluded from the allowance calculation as credit risk is a component of the fair value calculation and related discount on the unguaranteed portion that is retained in the Bank’s loan portfolio. (Refer to Allowance for Loan Losses above for discussion and analysis of credit quality.)  

Noninterest Income

The amount of the Bank's noninterest income generally reflects the volume of the transactional and other accounts handled by the Bank and includes such fees and charges as low balance account fees, overdrafts, account analysis, ATM fees, SBA loan related income and other customer service fees.  Noninterest income increased approximately $40,000, or 12.06%, for the quarter ended September 30, 2016 compared to the same quarter in 2015. Noninterest income increased approximately $389,000, or 39.81%, for the nine months ended September 30, 2016 compared to the same period in 2015. The increase in 2015 is primarily related to SBA loan related income including gains on sales as well as fair value adjustments.

Customer service fees decreased approximately $3,000, or 3.55% for the quarter ended September 30, 2016 compared to 2015.   ATM activity fees increased by approximately $480 or 1.74%, for the quarter ended September 30, 2016 compared to the same period in 2015. Customer service fees decreased approximately $62,000, or 19.17% for the nine months ended September 30, 2016 compared to 2015.  ATM activity fees decreased by approximately $7,000, or 7.33%, for the nine months ended September 30, 2016 compared to the same period in 2015.  The decrease in customer service fees is the result of lower level of overdraft fees related to several business customers.  The decline in ATM fees is related to lower volume which is consistent with trends in the industry; ATM usage has declined as consumers continue to move to electronic payment methods utilizing debit and credit cards versus cash.  

In conjunction with its SBA loan origination strategy, the Bank recognized income of approximately $752,000 and $431,000, respectively, for the nine months ended September 30, 2016 and 2015, on the sale of the guaranteed portion of SBA loans and on SBA loans that were held-for-sale and accounted for at fair value under ASC 825, Financial Instruments. The increase is related to higher loan origination volume during the year.  Management plans to continue to increase its SBA loan volume and related gains on sales as its primary strategy to enhance and stabilize earnings.

Other income increased approximately $141,000 for the nine months ended September 30, 2016 compared to the same period in 2015.  The increase is primarily related to a loan pay-off that included loan and collection expenses incurred in prior years as well as the shortening in the period to escheat dormant accounts resulting in a significant number of accounts closed and escheated to the Commonwealth of Pennsylvania for which the Bank charged a per account administrative fee for this service.

Noninterest Expense

Salaries and benefits increased approximately $13,000, or 3.58%, for the quarter ended September 30, 2016 compared to 2015 as a result of the increased healthcare cost and use of summer interns.  Salaries and benefits decreased approximately $25,000, or 2.14%, for the nine months ended September 30, 2016 compared to 2015 as a result of several unfilled positions within the Bank’s branch network as well as the elimination of the business development and lending positions in 2015.

Occupancy and equipment expense increased approximately $1,000, or 0.60%, for the quarter ended September 30, 2016 compared to 2015. Occupancy and equipment expense decreased approximately $22,000, or 2.99%, for the nine months

40

ended September 30, 2016 compared to 2015.  The decrease is primarily related to a reduction in depreciation expense for fully depreciated equipment as well as a reduction in equipment rental expense because of copier lease expiration.

Office operations and supplies expense increased by approximately $10,000, or 13.7%, for the quarter ended September 30, 2016 compared to 2015.  Office operations and supplies expense increased by approximately $26,000, or 11.68%, for the nine months ended September 30, 2016 compared to 2015.  The increase is primarily related to increased branch security expense because the branches are operating with fewer full time staff people that may increase the potential risk of crime; therefore, the Bank increased the presence of security guards to compensate.

Professional services expense decreased approximately $2,000, or 2.93%, for the quarter ended September 30, 2016 compared to 2015. Professional services expense decreased approximately $19,000, or 7.65%, for the nine months ended September 30, 2016 compared to 2015 as a result of a reduction in audit cost.

Data processing expenses decreased approximately $1,000, or 1.27%, for the quarter ended September 30, 2016 compared to 2015.  Data processing expenses increased approximately $21,000, or 7.47%, for the nine months ended September 30, 2016 compared to 2015. The increase is primarily related to annual contract escalation and the implementation of new technology.

Federal deposit insurance assessments decreased approximately $4,000, or 12.28%, for the quarters ended September 30, 2016 and 2015. Federal deposit insurance assessments decreased approximately $14,000, or 13.52%, for the nine months ended September 30, 2016 compared to 2015.  Assessments are based on many factors including the Bank’s deposit size and composition and its current regulatory ratings.  The Bank’s deposit levels declined in 2016 compared to 2015, resulting in lower assessments.  

Net other real estate expenses increased approximately $56,000 for the quarter ended September 30, 2016 compared to 2015. Net other real estate expenses increased approximately $206,000 for the nine months ended September 30, 2016 compared to 2015. In 2015, there was approximately $88,000 in non-recurring transfer-in write-ups related to several properties where the net liquidation value exceeded the Bank’s loan balance.  In addition, in 2016, the Bank had to satisfy delinquent property taxes and utility expense on several acquired properties.

Loan and collection expenses decreased approximately $3,000, or 5.97%, for the quarter ended September 30, 2016 compared to 2015. Loan and collection expenses decreased approximately $48,000, or 32.66%, for the nine months ended September 30, 2016 compared to 2015. The decline is related to a reduction in loan-related legal fees as the Bank successfully recouped legal fees on an impaired nonaccrual loan.

Other operating expenses increased approximately $11,000, or 9.02%, for the quarter ended September 30, 2016 compared to 2015 and increased approximately $30,000, or 9.10%, for the nine months ended September 30, 2016 compared to 2015. The increase is primarily related to increased amortization of SBA loan servicing asset as the Bank’s SBA loan origination activity continues to grow.

Dividend Restrictions

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

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

41

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4.  Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

The management of the Company, including the Chief Executive Officer and the Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 as of the end of the period covered by this Report (the “Evaluation Date”). A control system, no matter how well designed and operated, can provide only reasonable, not absolute insurance, that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic and annual reports.  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were not effective as of the end of the period covered by this report due to the material weakness described below.

(b) Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) under the Securities Exchange Act of 1934. Under the supervision and with the participation of principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation under the framework, management has concluded that our internal control over financial reporting was not effective as of September 30, 2016 due to the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of interim or annual financial statements will not be prevented or detected on a timely basis by the company’s internal controls.  Based on our evaluation under the framework, management has concluded that material weaknesses existed in the internal controls as of September 30, 2016 in connection with credit administration matters and the timeliness of financial reporting related to the identification and support for asset quality matters that could have a material effect on the consolidated financial statements.

To address the material weaknesses, we have established the following procedures: (1) Implement a new credit administration monitoring system for items requiring follow-up/annual reviews; (2) Implement an appraisal monitoring procedure for all impaired loans; and (3) Together with credit administration in conjunction with monthly Asset Quality Committee Meetings, identify and provide appropriate supporting documentation for material asset quality-related matters that could affect the consolidated financial statements of the Company.  Management believes that this change will address material weaknesses in the financial controls that were in existence as of September 30, 2016. Additional changes will be implemented as determined necessary.

Although our remediation efforts have been implemented, our material weaknesses will not be considered remediated until new internal controls are operational for a period of time and are tested, and management concludes that these controls are operating effectively.  

(c) Changes in Internal Control Over Financial Reporting.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the final fiscal quarter of the year to which this Report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

42

Management’s report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Act which permits small reporting companies, such as the Company, to provide only management’s report in this annual report.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Bank is a defendant in certain claims and legal actions arising in the ordinary course of business.  In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material adverse effect on the consolidated financial condition of the Company.

Item 1A. Risk Factors.

There have not been any material changes to the risk factors disclosed in the Company’s 2015 Annual Report on Form 10-K except as disclosed below.  The risk factors disclosed in the Company’s 2015 Annual Report on Form 10-K are not the only risks that we face.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Failure to Comply with the FDIC and Pennsylvania Department of Banking Consent Orders

The Bank has entered into Consent Orders with the FDIC and the Department which, among other provisions, require the Bank to increase its tier one leverage capital ratio to 8.5% and its total risk based capital ratio to 12.5%.  As of September 30, 2016, the Bank’s tier one leverage capital ratio was 4.67% and its total risk based capital ratio was 8.48%.  Refer to the Regulatory Orders section.  The Bank’s failure to comply with the terms of the Consent Orders could result in additional regulatory supervision and/or actions.  The ability of the Bank to continue as a going concern is dependent on many factors, including achieving required capital levels, earnings and fully complying with the Consent Orders.  The Consent Orders raise substantial doubt about the Bank’s ability to continue as a going concern.  

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

None

Item 3.  Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

None

Item 5.  Other Information.

None

Item 6.  Exhibits.  

a)Exhibits.   

Exhibit 31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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

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

43

Signatures

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

UNITED BANCSHARES, INC.

Date: November 30, 2018	/s/ Evelyn F. Smalls
	Evelyn F. Smalls
	President & Chief Executive Officer
Date: November 30, 2018	/s/ Brenda M. Hudson-Nelson
	Brenda Hudson-Nelson
	Executive Vice President/Chief Financial Officer

44

Index to Exhibits-FORM 10-Q

Exhibit 31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

45

EX-31.1

Exhibit 31.1

CERTIFICATIONS  

I, Evelyn F. Smalls, certify that:

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

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

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4. The registrant’s other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) for the registrant and have: 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

                   b)         designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter, (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

/s/ Evelyn F. Smalls

Evelyn F. Smalls

Chief Executive Officer

November 30, 2018

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Brenda M. Hudson-Nelson, certify that:

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

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

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) for the registrant and have: 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

                   b)         designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter, (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

/s/ Brenda M. Hudson-Nelson

Brenda M. Hudson-Nelson

Chief Financial Officer

November 30, 2018

EX-32.1

Exhibit 32.1

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

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

In connection with the Quarterly Report of United Bancshares, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Evelyn F. Smalls, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to '906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. 

/s/ Evelyn F. Smalls

Evelyn F. Smalls

Chief Executive Officer

November 30, 2018

EX-32.2

Exhibit 32.2

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

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

In connection with the Quarterly Report of United Bancshares, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brenda M. Hudson-Nelson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to '906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. 

/s/ Brenda M. Hudson-Nelson

Brenda M. Hudson-Nelson

Chief Financial Officer

November 30, 2018

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 30, 2018
Document and Entity Information:
Entity Registrant Name	UNITED BANCSHARES INC /PA
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Entity Central Index Key	0000944792
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		826,921
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Ex Transition Period	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	uboh

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 1,875,628	$ 2,107,359
Interest-bearing deposits with banks	311,176	310,739
Federal funds sold	7,413,000	8,364,000
Cash and cash equivalents	9,599,804	10,782,098
Investment securities available-for-sale, at fair value	6,283,682	7,572,029
Loans held for sale	6,602,035	3,260,761
Loans held at fair value	3,726,003	2,458,930
Loans, net of unearned discounts and deferred fees	28,305,134	33,519,042
Less allowance for loan losses	(316,979)	(418,013)
Net loans	27,988,155	33,101,029
Bank premises and equipment, net	427,543	492,730
Accrued interest receivable	140,756	175,416
Other real estate owned	447,371	479,627
Servicing asset	283,069	199,781
Prepaid expenses and other assets	452,464	461,837
Total assets	55,950,882	58,984,238
Liabilities:
Demand deposits, noninterest-bearing	15,078,236	16,417,150
Demand deposits, interest-bearing	14,288,590	13,605,888
Savings deposits	11,865,814	11,680,878
Time deposits, under $250,000	5,303,819	7,505,729
Time deposits, $250,000 and over	6,291,146	6,752,759
Total deposits	52,827,605	55,962,404
Accrued interest payable	10,488	9,157
Accrued expenses and other liabilities	349,027	332,915
Total liabilities	53,187,120	56,304,476
Shareholders' equity:
Series A preferred stock, noncumulative, 6%, $0.01 par value, 500,000 shares authorized; 99,442 issued and outstanding at September 30, 2016 and December 31, 2015	993	993
Common stock, $0.01 par value; 2,000,000 shares authorized; 826,921 issued and outstanding at September 30, 2016 and December 31, 2015	8,269	8,269
Additional paid-in-capital	14,752,644	14,752,644
Accumulated deficit	(12,064,660)	(12,062,818)
Accumulated other comprehensive income (loss)	66,516	(19,326)
Total shareholders' equity	2,763,762	2,679,762
Total liabilities and shareholders' equity	$ 55,950,882	$ 58,984,238

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	2,000,000	2,000,000
Common stock, shares issued	826,921	826,921
Common stock, shares outstanding	826,921	826,921
Series A Preferred Stock
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	99,442	99,442
Preferred stock, shares outstanding	99,442	99,442
Preferred stock, Dividend Rate	6.00%	6.00%

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income:
Interest and fees on loans	$ 601,002	$ 588,991	$ 1,829,942	$ 1,833,681
Interest on investment securities	35,236	42,561	120,188	135,152
Interest on federal funds sold	6,059	4,739	23,286	8,998
Interest on time deposits with other banks	173	166	463	492
Total interest income	642,470	636,457	1,973,879	1,978,323
Interest expense:
Interest on time deposits	9,173	9,472	26,529	29,264
Interest on demand deposits	6,175	6,426	18,274	18,705
Interest on savings deposits	1,475	1,493	4,291	4,430
Total interest expense	16,823	17,391	49,094	52,399
Net interest income	625,647	619,066	1,924,785	1,925,924
Provision (Credit) for loan losses	(45,000)	83,000	(50,000)	(17,000)
Net interest income after provision (credit) for loan losses	670,647	536,066	1,974,785	1,942,924
Noninterest income:
Customer service fees	86,376	89,368	262,643	324,920
ATM fee income	28,141	27,661	84,155	90,810
Gain on sale of loans	188,385	176,229	500,358	380,625
Gain (loss) on sale of other real estate	0	4,048	(3,239)	1,759
Net change in fair value of financial instruments	(36,194)	19,225	252,086	50,104
Loan syndication fees	85,000	0	85,000	85,000
Other income	22,325	17,245	185,075	43,854
Total noninterest income	374,033	333,776	1,366,078	977,072
Noninterest expense:
Salaries, wages and employee benefits	391,000	377,504	1,155,616	1,180,883
Occupancy and equipment	241,950	240,517	720,587	742,761
Office operations and supplies	86,700	76,253	253,114	226,635
Marketing and public relations	9,016	7,935	36,736	34,124
Professional services	74,723	76,977	223,854	242,392
Data processing	93,025	94,218	302,320	281,305
Other real estate expense (income)	65,955	9,999	103,516	(53,215)
Loan and collection costs	39,816	42,345	98,392	146,116
Deposit insurance assessments	30,000	34,200	87,000	100,600
Other operating	130,372	119,803	361,570	331,401
Total noninterest expense	1,162,557	1,079,751	3,342,705	3,233,002
Net loss before income taxes	(117,877)	(209,909)	(1,842)	(313,006)
Provision for income taxes	0	0	0	0
Net loss	$ (117,877)	$ (209,909)	$ (1,842)	$ (313,006)
Net loss per common share - basic and diluted	$ (0.14)	$ (0.25)	$ 0.00	$ (0.32)
Weighted average number of common shares outstanding	826,921	826,921	826,921	986,487
Comprehensive loss:
Net loss	$ (117,877)	$ (209,909)	$ (1,842)	$ (313,006)
Unrealized gains on available for sale securities	59,202	64,491	85,841	43,258
Total comprehensive loss	$ (58,675)	$ (145,418)	$ 83,999	$ (269,748)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net loss	$ (1,842)	$ (313,006)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Credit to provision for loan losses	(50,000)	(17,000)
Amortization of premiums on investments,net	10,689	13,397
Depreciation on fixed assets	141,771	132,713
Net change in fair value of financial instruments	(252,086)	(50,104)
Gain on sale of loans	(500,358)	(380,625)
Write-up of other real estate owned	0	(88,460)
Loss (gain) on sale of other real estate owned	3,239	(1,759)
Proceeds from the sale of loans held-for-sale	5,070,979	6,433,243
Amortization of servicing asset	25,892	0
Loans originated for sale	(8,926,882)	(377,675)
Increase in accrued interest receivable and other assets	(65,147)	(157,850)
Increase in accrued interest payable and other liabilities	17,447	37,831
Net cash (used in) provided by operating activities	(4,526,301)	5,230,705
Cash flows from investing activities:
Proceeds from maturity and principal reductions of available-for-sale investment securities	5,213,099	1,405,542
Purchase of securities available-for-sale	(3,849,600)	(79)
Net decrease in loans	5,162,874	4,065,976
Purchase of bank premises and equipment	(76,584)	(99,465)
Proceeds from sale of other real estate	29,017	83,209
Net cash provided by investing activities	6,478,806	5,455,183
Cash flows from financing activities:
Net decrease in deposits	(3,134,799)	(1,087,258)
Net cash used in financing activities	(3,134,799)	(1,087,258)
Net (decrease) increase in cash and cash equivalents	(1,182,294)	9,598,630
Cash and cash equivalents at beginning of period	10,782,098	3,236,582
Cash and cash equivalents at end of period	9,599,804	12,835,212
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	47,763	55,424
Noncash transfer of loans to other real estate	0	148,241
Transfer of loans from held-for-sale to held as fair value	$ 1,285,309	$ 1,844,725

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1. Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

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, 2015 when reviewing this Form 10-Q. Because this report is based on an interim period, certain information and footnote disclosures normally included in the Annual Report on Form 10-K have been condensed or omitted. Quarterly results reported herein are not necessarily indicative of results to be expected for other quarters.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the Company's consolidated financial position as of September 30, 2016 and December 31, 2015 and the consolidated results of its operations and its cash flows for the three and nine months ended September 30, 2016 and 2015.

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, the fair value of loans held at fair value, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities.

Commitments

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

Contingencies

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

Loans Held for Sale

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

Loans Held at Fair Value

The Bank originates SBA loans for which the un-guaranteed portion is retained after the guaranteed portion is sold in the secondary market.  Management has elected to carry these loans at fair value in accordance with the irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments.  Fair value of these loans is estimated based on the present value of future 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

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

Allowance for Loan Losses

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

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

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

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

•   During regularly scheduled meetings of the Asset Quality Committee 

•   During regular reviews of the delinquency report 

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

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

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

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

Non-accrual and Past Due Loans.

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

Income Taxes

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

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more-likely-than not recognition threshold 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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2. Net Loss Per Share

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

2. Net Loss Per Share

2. Net (Loss) Income Per Share

The calculation of net loss per share follows:

	Three Months Ended  September 30, 2016	Three Months Ended September 30, 2015	Nine Months Ended   September 30, 2016	Nine Months Ended   September 30, 2015
Basic:
Net loss available to common shareholders	$     (117,877)	$     (209,909)	$     (1,842)	$     (313,006)
Average common shares outstanding-basic	826,921	826,921	826,921	986,487
Net loss per share-basic	$   (0.14)	$   (0.25)	$   0.00	$   (0.32)
Diluted:
Average common shares-diluted	826,921	826,921	826,921	986,487
Net loss per share-diluted	$   (0.14)	$   (0.25)	$   0.00	$   (0.32)

Wells Fargo (formerly Wachovia Corporation) owned 241,666 shares of UBS Common Stock (50,000 voting shares); however, on February 18, 2015, Wells Fargo returned all shares (voting and non voting) for cancellation.

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

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3. Changes in Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

3. Changes in Accumulated Other Comprehensive Income

3.Changes in Accumulated Other Comprehensive Income

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

	Three Months Ended September 30, 2016
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$  106	$  (35)	$  71
Unrealized gain on securities:
Unrealized holding gain arising during period	(5)	1	(4)
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	(5)	1	(4)
Ending balance	$  101	$  (34)	$  67
	Three Months Ended September 30, 2015
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$  (39)	$     5	$  (34)
Unrealized gain on securities:
Unrealized holding gain arising during period	97	(33)	64
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	97	(33)	64
Ending balance	$      58	$      (28)	$     30
	Nine Months Ended September 30, 2016
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$   (29)	$     10	$   (19)
Unrealized gain on securities:
Unrealized holding gain arising during period	$  130	(44)	86
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	130	(44)	86
Ending balance	$  101	$  (34)	$    67
	Nine Months Ended September 30, 2015
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (21)	$        8	$  (13)
Unrealized gain on securities:
Unrealized holding gain arising during period	$      66	$       (23)	$      43
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	$      66	$      (23)	$      43
Ending balance	$      45	$      (15)	$     30

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4. New Authoritative Accounting Guidance

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

4. New Authoritative Accounting Guidance

4. New Authoritative Accounting Guidance

ASU 2014-9 (Topic 606), “Revenue from Contracts with Customers”.  The Company adopted ASU 2014-9 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as OREO. The majority of the Company’s revenues come from interest income and other sources, including loans, leases, investment securities and derivatives, that are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Corporation satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposits, loan syndication fees, ne gains on SBA loan sales and the net gain on sale of OREO. The adoption of this ASU did not have an impact to our Consolidated Financial Statements.

ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments” Issued in June 2016, ASU 2016-13 significantly changes how companies measure and recognize credit impairment for many financial assets. The new current expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. The ASU also makes targeted amendments to the current impairment model for available-for-sale debt securities. ASU 2016-13 is effective for the annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures.

ASU 2016-02 (Topic 842), “Leases” Issued in February 2016, ASU 2016-02 revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. ASU 2016-02 is effective for the first interim period within annual periods beginning after December 15, 2018, with early adoption permitted. The standard is required to be adopted using the modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

ASU 2016-01 (Subtopic 825-10), “Financial Instruments – Overall, Recognition and Measurement of Financial Assets and Financial Liabilities” Issued in January 2016, ASU 2016-01 provides that equity investments will be measured at fair value with changes in fair value recognized in net income. When fair value is not readily determinable an entity may elect to measure the equity investment at cost, minus impairment, plus or minus any change in the investment’s observable price. For financial liabilities that are measured at fair value, the amendment requires an entity to present separately, in other comprehensive income, any change in fair value resulting from a change in instrument-specific credit risk. ASU 2016-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. Entities may apply this guidance on a prospective or retrospective basis. The Company is evaluating the effect that ASU 2016-01 will have on its consolidated financial statements and related disclosures.

ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” Issued on August 15, 2014, ASU 2014-15 describes how an entity should assess its ability to meet obligations and sets disclosure requirements for how this information should be disclosed in the financial statements. The standard provides accounting guidance that will be used with existing auditing standards. The new standard applies to all entities for the first annual period ending after December 15, 2016, and interim periods thereafter. The Company is evaluating the effect that ASU 2014-15 will have on its consolidated financial statements and related disclosures as adoption of the new accounting standard could result in a different conclusion.

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5. Investment Securities

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

5. Investment Securities

5.  Investment Securities

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

(In 000’s)	September 30, 2016
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,699	$      2	$    ( 2)	$   2,699
Government Sponsored Enterprises residential mortgage-backed securities	3,355	100	-	3,455
Investments in money market funds	130	-	-	130
	$ 6,184	$  102	$     (2)	$   6,284
	December 31, 2015
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$  3,697	$      3	$   (38)	$   3,662
Government Sponsored Enterprises residential mortgage-backed securities	3,774	36	(30)	3,780
Investments in money market funds	130	-	-	130
	$  7,601	$   39	$   (68)	$  7,572

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2016, are as follows:

(In 000’s)	Amortized Cost				Fair Value
Due in one year	$	-	$	-
Due after one year through five years		-		-
Due after five years through ten years		2,699		2,699
Government Sponsored Enterprises residential mortgage-backed securities		3,355		3,455
Total debt securities		6,054		6,154
Investments in money market funds		130		130
	$	6,184	$	6,284

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

There were no sales of securities during the three months ended September 30, 2016 and 2015.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2016:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	Of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	losses	value	Losses
U.S. Government
agency securities	2	$997	$  (2)	$-	$ -	$997	$ (2)
Total temporarily
impaired investment
Securities	2	$ 997	$   (2)	$-	$-	$ 997	$ (2)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2015:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	securities	Value	Losses	Value	Losses	value	Losses
U.S. Government
agency securities	9	$ 2,416	$   (32)	$ 243	$  (6)	$ 2,659	$ (38)
Government Sponsored Enterprises residential
mortgage-backed securities	8	1,486	(19)	227	(11)	1,713	(30)
Total temporarily
impaired investment
Securities	17	$ 3,902	$   (51)	$ 470	$ (17)	$ 4,372	$ (68)

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

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

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

As of September 30, 2016 and December 31, 2015, investment securities with a carrying value of $4,577,000 and $7,076,000, respectively, were pledged as collateral to secure public deposits and contingent borrowing at the Discount Window.

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6. Loans and Allowance For Loan Losses

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

6. Loans and Allowance For Loan Losses

6. Loans and Allowance for Loan Losses

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

(in 000’s)	September 30, 2016	December 31, 2015
Commercial and industrial	$ 2,292	$  3,062
Commercial real estate	22,442	26,414
Consumer real estate	2,517	2,841
Consumer loans other	1,054	1,202
Total loans	$28,305	$ 33,519

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 annualized eight-quarter rolling historical charge-off rate to all portfolio segments of non-classified loans.  

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

All of these factors may be susceptible to significant change.  During the nine months ended September 30, 2016, the Bank reduced several of its qualitative factors in the commercial real estate segment of the loan portfolio for which it has never experienced losses or charge-offs and for improvement in credit quality during the year resulting in a credit to the provision 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, 2016
	Commercial and industrial			Commercial real estate		Consumer real estate	Consumer loans Other	Total
Beginning balance	$ 87			$ 245		$  13	$    10	$   355
Provision (credit) for loan losses	41			(75)		(11)	-	(45)
Charge-offs	-			(1)		-	-	(1)
Recoveries	1			-		6	1	8
Net (charge-offs) recoveries	1			(1)		6	1	7
Ending balance	$ 129			$ 169		$   8	$    11	$    317
(in 000's)		For the Three months ended September 30, 2015
	Commercial and industrial		Commercial real estate		Consumer real estate		Consumer loans Other	Total
Beginning balance	$     320		$     236		$      23		$         17	$   596
Provision (credit) for loan losses	100		(9)		(4)		(4)	83
Charge-offs	(212)		-		-		(2)	$ (214)
Recoveries	2		-		1		1	4
Net (charge-off) recoveries	(210)		-		1		(1)	(210)
Ending balance	$     210		$ 227		$  20		$  12	$  469
(in 000's)		For the Nine months ended September 30, 2016
	Commercial and industrial		Commercial real estate		Consumer real estate		Consumer loans Other	Total
Beginning balance	$ 151		$ 250		$ 8		$    9	$   418
Provision (credit) for loan losses	(25)		(39)		14		-	(50)
Charge-offs	-		(42)		(22)		(3)	(67)
Recoveries	3		-		8		5	16
Net (charge-offs) recoveries	3		(42)		(14)		2	(51)
Ending balance	$ 129		$ 169		$   8		$    11	$    317

(in 000's)		For the Nine months ended September 30, 2015
	Commercial and industrial		Commercial real estate	Consumer real estate	Consumer loans Other	Total
Beginning balance	$      403		$      300	$      20	$      12	$    735
Provision (credit) for loan losses	63		(73)	(4)	(3)	(17)
Charge-offs	(259)		-	-	(15)	(274)
Recoveries	3		-	4	18	25
Net (charge-offs)recoveries	(256)		-	4	3	(249)
Ending balance	$210		$     227	$     20	$      12	$    469

(in 000's)		September 30, 2016
	Commercial and industrial		Commercial real estate	Consumer real estate	Consumer loans Other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$           -		$    71	$    -	$   -	$       71
Loans collectively  evaluated for impairment	129		98	8	11	246
	$       129		$  169	$   8	$ 11	$     317
Loans, ending balance:
Loans individually evaluated for impairment	$     437		$   1,738	$         -	$          -	$    2,175
Loans collectively  evaluated for impairment	1,855		20,704	2,517	1,054	26,130
Total	$   2,292		$  22,442	$   2,517	$   1,054	$  28,305

(in 000's)			December 31, 2015
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$    -	$    91	$       -	$      -	$      91
Loans collectively  evaluated for impairment	151	159	8	9	327
	$    151	$   250	$      8	$     9	$     418
Loans, ending balance:
Loans individually evaluated for impairment	$     439	$   2,076	$         -	$         -	$   2,515
Loans collectively  evaluated for impairment	2,623	24,338	2,841	1,202	31,004
Total	$  3,062	$ 26,414	$ 2,841	$ 1,202	$ 33,519

Nonperforming and Nonaccrual and Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2016 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
(In 000's)	30-89 Days	More Days	More Days	Total Past	Current
	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$        30	$     -	$     109	$    139	$   820	$    959
SBA loans	-	-	39	39	-	39
Asset-based	-	-	289	289	1,005	1,294
Total Commercial and industrial	30	-	437	467	1,825	2,292
Commercial real estate:
Commercial mortgages	-	14	1,280	1,294	10,608	11,902
SBA loans	-	-	259	259	162	421
Construction	-	-	-	-	843	843
Religious organizations	-	-	199	199	9,077	9,276
Total Commercial real estate	-	14	1,738	1,752	20,690	22,442
Consumer real estate:
Home equity loans	30	147	323	500	311	811
Home equity lines of credit	-	-	-	-	19	19
1-4 family residential mortgages	34	-	136	170	1,517	1,687
Total consumer real estate	64	147	459	670	1,847	2,517
Total real estate	64	161	2,197	2,422	22,537	24,959
Consumer and other:
Student loans	85	38	-	123	741	864
Other	1	1	-	2	188	190
Total consumer and other	86	39	-	125	929	1,054
Total loans	$    180	$  200	$  2,634	$  3,014	$  25,291	$    28,305

An age analysis of past due loans, segregated by class of loans, as of December 31, 2015 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
	30-89 Days	More Days	More Days	Total Past	Current
(In 000's)	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$     -	$       -	$   110	$   110	$   1,425	$   1,535
SBA loans	-	-	40	40	-	40
Asset-based	11	-	289	300	1,187	1,487
Total Commercial and industrial	11	-	439	450	2,612	3,062
Commercial real estate:
Commercial mortgages	169	39	1,335	1,543	12,231	13,774
SBA loans	-	-	271	271	82	353
Construction	-	-	-	-	2,175	2,175
Religious organizations	-	-	471	471	9,641	10,112
Total Commercial real estate	169	39	2,077	2,285	24,129	26,414
Consumer real estate:
Home equity loans	56	125	358	539	358	897
Home equity lines of credit	-	-	-	-	20	20
1-4 family residential mortgages	35	-	129	164	1,760	1,924
Total consumer real estate	91	125	487	703	2,138	2,841
Total real estate	260	164	2,564	2,988	26,267	29,255
Consumer and other:
Student loans	66	129	-	195	886	1,081
Other	2	-	-	2	119	121
Total consumer and other	68	129	-	197	1,005	1,202
Total loans	$    339	$    293	$    3,003	$    3,635	$    29,884	$  33,519

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. 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.  

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, 2016
	Good/ Excellent	Satisfactory		Pass	Special Mention	Substandard		Doubtful	Total
Commercial and industrial:
Commercial	$   250	$   344		$    70	$      43	$    252		$  -	$  959
SBA loans	-				-	39			39
Asset-based	-	727		202	-	289		76	1,294
	250	1,071		272	43	580		76	2,292
Commercial real estate:
Commercial mortgages	-	8,664		1,389	554	1,074		221	11,902
SBA Loans	-	162		-	-	259		-	421
Construction	-	843		-	-	-		-	843
Religious organizations	53	8,098		61	865	199		-	9,276
	53	17,767		1,450	1,419	1,532		221	22,442
Total commercial loans	$  303	$  18,838		$  1,722	$  1,462	$  2,112		$  297	$ 24,734
(In 000's)			Residential Mortgage and Consumer Loans September 30, 2016
	Performing			Nonperforming			Total
Consumer Real Estate:
Home equity	$   488			$   323			$   811
Home equity line of credit	19			-			19
1-4 family residential mortgages	1,551			136			1,687
	2,058			459			2,517
Consumer Other:
Consumer Installment	-			-			-
Student loans	864			-			864
Other	190			-			190
	1,054			-			1,054
Total  consumer loans	$  3,112			$   459			$  3,571

(In 000's)			Commercial Loans, December 31, 2015
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$    285	$    922	$    16	$    58	$    254	$    -	$    1,535
SBA loans	-	-	-	-	40	-	40
Asset-based	-	900	222	-	289	76	1,487
	285	1,822	238	58	583	76	3,062
Commercial real estate:
Commercial mortgages	-	10,689	1,098	613	1,151	223	13,774
SBA Loans	-	82	-	-	271	-	353
Construction	-	2,175	-	-	-	-	2,175
Religious organizations	-	7,624	1,131	886	471	-	10,112
	-	20,570	2,229	1,499	1,893	223	26,414
Total commercial loans	$    285	$    22,393	$    2,467	$    1,557	$    2,476	$    299	$  29,476
			Residential Mortgage and Consumer Loans December 31, 2015
	Performing		Nonperforming		Total
Consumer Real Estate:
Home equity	$    539		$    358		$    897
Home equity line of credit	20		-		20
1-4 family residential mortgages	1,795		129		1,924
	2,354		487		2,841
Consumer Other:
Consumer Installment	-		-		-
Student loans	1,081		-		1,081
Other	121		-		121
	1,202		-		1,202
Total  consumer loans	$  3,556		$    487		$    4,043

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

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

The Company makes partial charge-offs of impaired loans when the impairment is deemed permanent and is considered a loss.  Specific reserves are allocated to cover “other-than-permanent” impairment for which the underlying collateral value may fluctuate with market conditions. There were no 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, 2016 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	$   109	$   109	$      -	$  109	$    -
SBA Loans	39	39	-	39	-
Asset-based	289	289	-	289	-
Total commercial and industrial	437	437	-	437	-
Commercial real estate:
Commercial mortgages	1,280	806	474	1,280	67
SBA Loans	259	162	97	259	4
Religious organizations	199	199	-	199	-
Total commercial real estate	1,738	1,167	571	1,738	71
Total loans	$  2,175	$ 1,604	$  571	$  2,175	$  71

Impaired loans as of December 31, 2015 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	$  818	$    353	$    -	$    353	$   -
SBA loans	46	46	-	46	-
Asset-based	40	40	-	40	-
Total commercial and industrial	904	439	-	439	-
Commercial real estate:
Commercial mortgages	1,334	810	524	1,334	91
SBA Loans	271	271	-	271	-
Religious organizations	471	471	-	471	-
Total commercial real estate	2,076	1,552	524	2,076	91
Total loans	$2,980	$ 1,991	$   524	$  2,515	$ 91

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

(In 000's)	Three Months Ended September 30, 2016		Three Months Ended September 30, 2015
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$   109	$      -	$  160	$      -
SBA  loans	39	-	40	1
Asset-based	289	-	46	1
Total commercial and industrial	437	-	246	2
Commercial real estate:
Commercial mortgages	1,280	1	976	-
SBA loans	162	-	110	-
Religious organizations	200	-	488	-
Total commercial real estate	1,642	1	1,574	-
Total loans	$   2,079	$    1	$ 1,820	$    2

(In 000's)	Nine Months Ended September 30, 2016		Nine Months Ended September 30, 2015
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$     109	$    -	$    188	$      -
SBA  loans	39	-	58	2
Asset-based	289	-	36	2
Total commercial and industrial	437	-	282	4
Commercial real estate:
Commercial mortgages	1,422	5	971	-
SBA loans	304	3	112	-
Religious organizations	299	-	496	2
Total commercial real estate	2,025	8	1,579	2
Total loans	$   2,462	$  8	$   1,861	$    6

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, 2016 and December 31, 2015.

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7. Other Real Estate Owned

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

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, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Beginning balance	$  447	$  757	$  480	$    564
Additions, transfers from loans	-	-	-	149
Sales	-	(38)	(33)	(83)
	447	719	447	630
Write-ups	-	-	-	89
Ending Balance	$   447	$  719	$ 447	$   719

There were no loans in the process of foreclosure at September 30, 2016 and December 31, 2015.

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

(in 000's)	September 30, 2016	December 31, 2015
Commercial real estate	$  316	$ 297
Residential real estate	131	183
Total	$  447	$ 480

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

	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Insurance	$3	$4	$9	$13
Legal fees	-	-	16	-
Foreclosure expense	56	-	56	-
Professional fees	-	-	4	-
Real estate taxes	6	4	16	10
Utilities	1	1	2	2
Transfer-in write-up	-	-	-	(89)
Other	-	1	1	11
Total	$66	$10	$104	$(53)

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8. Fair Value

9 Months Ended

Sep. 30, 2016

Disclosure Text Block [Abstract]

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.  

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

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

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

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

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at   September 30, 2016	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$2,699	$      -	$2,699	$    -
Government Sponsored Enterprises residential mortgage-backed securities	3,455	-	3,455	-
Money market funds	130	130	-	-
Total	$6,284	$130	$6,154	$    -
Loans held for sale	$6,602	$   -	$6,602	$   -
Loans held at fair value	$3,726	$   -	$         -	$ 3,726
Servicing asset	$  283	$   -	$         -	$     283

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at   December 31, 2015	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	$ 3,662	$  -	$3,662	$      -
Government Sponsored Enterprises residential mortgage-backed securities	3,780	-	3,780	-
Money market funds	130	130	-	-
Total	$7,572	$130	$ 7,442	$    -
Loans held for sale	$3,261	$   -	$3,261	$   -
Loans held at fair value	$2,459	$   -	$     -	$ 2,459
Servicing asset	$   200	$   -	$     -	$    200

The fair value of the Bank’s AFS securities portfolio was approximately $6,284,000 and $7,572,000 at September 30, 2016 and December 31, 2015, respectively. All the residential mortgage-backed securities were issued or guaranteed by the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).  The underlying loans for these securities are residential mortgages that are geographically dispersed throughout the United States.  The valuation of AFS securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar instruments and all relevant information.  There were no transfers between Level 1 and Level 2 assets during the periods ended September 30, 2016 and 2015.

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,     2016 Fair value	December 31, 2015 Fair Value	Principal valuation techniques	Significant observable inputs	September 30,      2016 Range of inputs	December 31, 2015 Range of inputs
Loans held at fair value:	$  3,726	$ 2,459	Discounted cash flow	Constant prepayment rate	7.50% to 9.71  %	7.10% to 9.88%
				Weighted average discount rate	7.72% to 9.38%	7.76% to 9.94%
				Weighted average life	3.12 yrs to 9.97yrs	3.40 yrs to 8.78 yrs

(in 000’s)

Assets measured at fair value	September 30,   2016 Fair value	December 31, 2015 Fair Value	Principal valuation techniques	Significant observable inputs	September 30,  2016 Range of inputs	December 31, 2015 Range of inputs
Servicing asset	$283	$ 200	Discounted cash flow	Constant prepayment rate	4.76% to 10.10%	6.57% to 10.27%
				Weighted average discount rate	9.54% to 16.04%	11.94 % to 16.23%
				Weighted average life	3.12 yrs to 9.72 yrs	3.40 yrs to 8.78 yrs

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

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

(in 000’s)	Loans held at fair value
Balance at December 31, 2015	$   2,459
Origination of loans	1,339
Principal repayments	(324)
Change in fair value of financial instruments	252
Balance at September 30, 2016	$  3,726

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, 2016 and December 31, 2015, for which a nonrecurring change in fair value has been recorded during the nine months ended September 30, 2016 and year ended December 31, 2015.

Carrying Value at September 30, 2016:

(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	$ 741	$   -	$   -	$ 741	$   -
Other real estate owned (“OREO”)	$ 447	$   -	$    -	$  447	-

Carrying Value at December 31, 2015:

(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	$ 479	$    -	$      -	$   479	$ -
Other real estate owned (“OREO”)	$    480	$       -	$        -	$    480	$   39

The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and the loan is included in the table above as a Level 3 measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the table above as it is not currently being carried at its fair value. At September 30, 2016 and December 31, 2015, the fair values shown above exclude estimated selling costs of $120,000 and $96,000.

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

Fair Value of Financial Instruments

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

The 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, 2016		December 31, 2015
(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	$ 9,600	$ 9,600	$ 10,782	$  10,782
Available for sale securities	(1)	6,284	6,284	7,572	7,572
Loans held for sale	Level 2	6,602	6,602	3,261	3,261
Loans held at fair value	Level 3	3,726	3,726	2,459	2,459
Loans, net of allowance for loan losses	(2)	27,988	28,227	33,101	33,082
Accrued interest receivable	Level 2	141	141	175	175
Servicing asset	Level 3	283	283	200	200
Liabilities:
Demand deposits	Level 2	29,367	29,367	30,022	30,022
Savings deposits	Level 2	11,866	11,866	11,681	11,681
Time deposits	Level 2	11,595	11,579	14,259	14,242
Accrued interest payable	Level 2	10	10	9	9

(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, 2016

Disclosure Text Block [Abstract]

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.

In an effort to restore the Bank to profitability and increased capital levels, its regulators, FDIC and Department of Banking amended and restated the prior Order on April 25, 2018.  This amended Order serves as a prescriptive Restoration Plan providing benchmarks for capital, earnings and asset quality.  The Board of Directors is optimistic about the Bank’s ability to achieve the requirements as stated.  This Order represents a more tailored approach by regulators to strengthen and preserve minority-owned financial institutions like United Bank of Philadelphia.  The priority for the Board of Directors and management is to promptly comply with the Order.

The Order 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 Order.

As of September 30, 2016 and December 31, 2015, the Bank’s tier one leverage capital ratio was 4.67% and 4.57%, respectively, and its total risk based capital ratio was 8.48% and 8.50%, respectively. The net loss for the nine months ended September 30, 2016 resulted in a slight decrease in the tier one leverage and total risk based capital ratios. Management continues its efforts to increase capital by focusing on the following: 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--In March 2017 and September 2017, the Company received a external investments of $675,000 and $250,000, respectively, from other financial institutions. External capital investments will continue to be sought.  

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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10. Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

10. Subsequent Events

10.  Subsequent Events

In 2016, correspondence was sent to financial institutions in the region to encourage them to consider an investment for CRA credit. In March 2017, the Bank received a preferred stock investment from Fulton Financial totaling $675,000 and in September 2017, an investment of $250,000 was received from Bryn Mawr Trust.   At June 30, 2018, the Bank’s tier one leverage capital ratio was 4.77% and its total risk based capital ratio was 9.20%, which is considered “adequately capitalized” under the regulatory framework for prompt and corrective action.  The Bank’s growth and other operating factors such as the need for additional provisions to the allowance for loans losses may have an adverse effect on its capital ratios.

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1. Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Policy Text Block [Abstract]

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, the fair value of loans held at fair value, valuation allowance for deferred tax assets, the carrying value of other real estate owned, the determination of other than temporary impairment for securities.

Commitments

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

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

Loans Held At Fair Value

Loans Held at Fair Value

The Bank originates SBA loans for which the un-guaranteed portion is retained after the guaranteed portion is sold in the secondary market.  Management has elected to carry these loans at fair value in accordance with the irrevocable option permitted under Accounting Standards Codification (“ASC”) 825-10-25 Financial Instruments.  Fair value of these loans is estimated based on the present value of future 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

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 within 30 days as of the date such payments were due.  The Bank generally places a loan on non-accrual status when interest or principal is past due 90 days or more.  If it otherwise appears doubtful that the loan will be repaid, management may place the loan on nonaccrual status before the lapse of 90 days. Interest on loans past due 90 days or more ceases to accrue except for loans that are well collateralized and in the process of collection.  When a loan is placed on nonaccrual status, previously accrued and unpaid interest is reversed out of income.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Income Taxes

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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2. Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

Schedule of Net Loss per Common Share

The calculation of net loss per share follows:

	Three Months Ended  September 30, 2016	Three Months Ended September 30, 2015	Nine Months Ended   September 30, 2016	Nine Months Ended   September 30, 2015
Basic:
Net loss available to common shareholders	$     (117,877)	$     (209,909)	$     (1,842)	$     (313,006)
Average common shares outstanding-basic	826,921	826,921	826,921	986,487
Net loss per share-basic	$   (0.14)	$   (0.25)	$   0.00	$   (0.32)
Diluted:
Average common shares-diluted	826,921	826,921	826,921	986,487
Net loss per share-diluted	$   (0.14)	$   (0.25)	$   0.00	$   (0.32)

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3. Changes in Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

Schedule of Components of Other Comprehensive Income

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

	Three Months Ended September 30, 2016
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$  106	$  (35)	$  71
Unrealized gain on securities:
Unrealized holding gain arising during period	(5)	1	(4)
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	(5)	1	(4)
Ending balance	$  101	$  (34)	$  67
	Three Months Ended September 30, 2015
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$  (39)	$     5	$  (34)
Unrealized gain on securities:
Unrealized holding gain arising during period	97	(33)	64
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	97	(33)	64
Ending balance	$      58	$      (28)	$     30
	Nine Months Ended September 30, 2016
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$   (29)	$     10	$   (19)
Unrealized gain on securities:
Unrealized holding gain arising during period	$  130	(44)	86
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	130	(44)	86
Ending balance	$  101	$  (34)	$    67
	Nine Months Ended September 30, 2015
	Before tax		Net of tax
(in (000’s)	Amount	Taxes	Amount
Beginning balance	$ (21)	$        8	$  (13)
Unrealized gain on securities:
Unrealized holding gain arising during period	$      66	$       (23)	$      43
Less: reclassification adjustment for gains (losses)
realized in net income	-	-	-
Other comprehensive income, net	$      66	$      (23)	$      43
Ending balance	$      45	$      (15)	$     30

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5. Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

Schedule of Available-for-sale Securities Reconciliation

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

(In 000’s)	September 30, 2016
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$ 2,699	$      2	$    ( 2)	$   2,699
Government Sponsored Enterprises residential mortgage-backed securities	3,355	100	-	3,455
Investments in money market funds	130	-	-	130
	$ 6,184	$  102	$     (2)	$   6,284
	December 31, 2015
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Available-for-sale:
U.S. Government agency securities	$  3,697	$      3	$   (38)	$   3,662
Government Sponsored Enterprises residential mortgage-backed securities	3,774	36	(30)	3,780
Investments in money market funds	130	-	-	130
	$  7,601	$   39	$   (68)	$  7,572

Schedule of Investments Classified by Contractual Maturity Date

The amortized cost and fair value of debt securities classified as available-for-sale by contractual maturity as of September 30, 2016, are as follows:

(In 000’s)	Amortized Cost				Fair Value
Due in one year	$	-	$	-
Due after one year through five years		-		-
Due after five years through ten years		2,699		2,699
Government Sponsored Enterprises residential mortgage-backed securities		3,355		3,455
Total debt securities		6,054		6,154
Investments in money market funds		130		130
	$	6,184	$	6,284

Schedule of Unrealized Loss on Investments

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2016:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	Of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	losses	value	Losses
U.S. Government
agency securities	2	$997	$  (2)	$-	$ -	$997	$ (2)
Total temporarily
impaired investment
Securities	2	$ 997	$   (2)	$-	$-	$ 997	$ (2)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2015:

(in 000’s)	Number	Less than 12 months		12 months or longer		Total
Description of	of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	securities	Value	Losses	Value	Losses	value	Losses
U.S. Government
agency securities	9	$ 2,416	$   (32)	$ 243	$  (6)	$ 2,659	$ (38)
Government Sponsored Enterprises residential
mortgage-backed securities	8	1,486	(19)	227	(11)	1,713	(30)
Total temporarily
impaired investment
Securities	17	$ 3,902	$   (51)	$ 470	$ (17)	$ 4,372	$ (68)

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6. Loans and Allowance For Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

Schedule of the Composition of Net Loans

(in 000’s)	September 30, 2016	December 31, 2015
Commercial and industrial	$ 2,292	$  3,062
Commercial real estate	22,442	26,414
Consumer real estate	2,517	2,841
Consumer loans other	1,054	1,202
Total loans	$28,305	$ 33,519

Schedule of Age Analysis of Allowance for Loan Losses

The following table presents an analysis of the allowance for loan losses.

(in 000's)		For the Three months ended September 30, 2016
	Commercial and industrial			Commercial real estate		Consumer real estate	Consumer loans Other	Total
Beginning balance	$ 87			$ 245		$  13	$    10	$   355
Provision (credit) for loan losses	41			(75)		(11)	-	(45)
Charge-offs	-			(1)		-	-	(1)
Recoveries	1			-		6	1	8
Net (charge-offs) recoveries	1			(1)		6	1	7
Ending balance	$ 129			$ 169		$   8	$    11	$    317
(in 000's)		For the Three months ended September 30, 2015
	Commercial and industrial		Commercial real estate		Consumer real estate		Consumer loans Other	Total
Beginning balance	$     320		$     236		$      23		$         17	$   596
Provision (credit) for loan losses	100		(9)		(4)		(4)	83
Charge-offs	(212)		-		-		(2)	$ (214)
Recoveries	2		-		1		1	4
Net (charge-off) recoveries	(210)		-		1		(1)	(210)
Ending balance	$     210		$ 227		$  20		$  12	$  469
(in 000's)		For the Nine months ended September 30, 2016
	Commercial and industrial		Commercial real estate		Consumer real estate		Consumer loans Other	Total
Beginning balance	$ 151		$ 250		$ 8		$    9	$   418
Provision (credit) for loan losses	(25)		(39)		14		-	(50)
Charge-offs	-		(42)		(22)		(3)	(67)
Recoveries	3		-		8		5	16
Net (charge-offs) recoveries	3		(42)		(14)		2	(51)
Ending balance	$ 129		$ 169		$   8		$    11	$    317

(in 000's)		For the Nine months ended September 30, 2015
	Commercial and industrial		Commercial real estate	Consumer real estate	Consumer loans Other	Total
Beginning balance	$      403		$      300	$      20	$      12	$    735
Provision (credit) for loan losses	63		(73)	(4)	(3)	(17)
Charge-offs	(259)		-	-	(15)	(274)
Recoveries	3		-	4	18	25
Net (charge-offs)recoveries	(256)		-	4	3	(249)
Ending balance	$210		$     227	$     20	$      12	$    469

(in 000's)		September 30, 2016
	Commercial and industrial		Commercial real estate	Consumer real estate	Consumer loans Other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$           -		$    71	$    -	$   -	$       71
Loans collectively  evaluated for impairment	129		98	8	11	246
	$       129		$  169	$   8	$ 11	$     317
Loans, ending balance:
Loans individually evaluated for impairment	$     437		$   1,738	$         -	$          -	$    2,175
Loans collectively  evaluated for impairment	1,855		20,704	2,517	1,054	26,130
Total	$   2,292		$  22,442	$   2,517	$   1,054	$  28,305

(in 000's)			December 31, 2015
	Commercial and industrial	Commercial real estate	Consumer real estate	Consumer loans Other	Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$    -	$    91	$       -	$      -	$      91
Loans collectively  evaluated for impairment	151	159	8	9	327
	$    151	$   250	$      8	$     9	$     418
Loans, ending balance:
Loans individually evaluated for impairment	$     439	$   2,076	$         -	$         -	$   2,515
Loans collectively  evaluated for impairment	2,623	24,338	2,841	1,202	31,004
Total	$  3,062	$ 26,414	$ 2,841	$ 1,202	$ 33,519

Schedule of Age Analysis of Past Due Loans

An age analysis of past due loans, segregated by class of loans, as of September 30, 2016 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
(In 000's)	30-89 Days	More Days	More Days	Total Past	Current
	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$        30	$     -	$     109	$    139	$   820	$    959
SBA loans	-	-	39	39	-	39
Asset-based	-	-	289	289	1,005	1,294
Total Commercial and industrial	30	-	437	467	1,825	2,292
Commercial real estate:
Commercial mortgages	-	14	1,280	1,294	10,608	11,902
SBA loans	-	-	259	259	162	421
Construction	-	-	-	-	843	843
Religious organizations	-	-	199	199	9,077	9,276
Total Commercial real estate	-	14	1,738	1,752	20,690	22,442
Consumer real estate:
Home equity loans	30	147	323	500	311	811
Home equity lines of credit	-	-	-	-	19	19
1-4 family residential mortgages	34	-	136	170	1,517	1,687
Total consumer real estate	64	147	459	670	1,847	2,517
Total real estate	64	161	2,197	2,422	22,537	24,959
Consumer and other:
Student loans	85	38	-	123	741	864
Other	1	1	-	2	188	190
Total consumer and other	86	39	-	125	929	1,054
Total loans	$    180	$  200	$  2,634	$  3,014	$  25,291	$    28,305

An age analysis of past due loans, segregated by class of loans, as of December 31, 2015 is as follows:

		Accruing	Nonaccrual
	Loans	Loans 90 or	Loans 90 or
	30-89 Days	More Days	More Days	Total Past	Current
(In 000's)	Past Due	Past Due	Past Due	Due Loans	Loans	Total Loans
Commercial and industrial:
Commercial	$     -	$       -	$   110	$   110	$   1,425	$   1,535
SBA loans	-	-	40	40	-	40
Asset-based	11	-	289	300	1,187	1,487
Total Commercial and industrial	11	-	439	450	2,612	3,062
Commercial real estate:
Commercial mortgages	169	39	1,335	1,543	12,231	13,774
SBA loans	-	-	271	271	82	353
Construction	-	-	-	-	2,175	2,175
Religious organizations	-	-	471	471	9,641	10,112
Total Commercial real estate	169	39	2,077	2,285	24,129	26,414
Consumer real estate:
Home equity loans	56	125	358	539	358	897
Home equity lines of credit	-	-	-	-	20	20
1-4 family residential mortgages	35	-	129	164	1,760	1,924
Total consumer real estate	91	125	487	703	2,138	2,841
Total real estate	260	164	2,564	2,988	26,267	29,255
Consumer and other:
Student loans	66	129	-	195	886	1,081
Other	2	-	-	2	119	121
Total consumer and other	68	129	-	197	1,005	1,202
Total loans	$    339	$    293	$    3,003	$    3,635	$    29,884	$  33,519

Schedule of Bank Loans by Class According to Credit Quality

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

(In 000's)			Commercial Loans September 30, 2016
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$   250	$   344	$    70	$      43	$    252	$  -	$  959
SBA loans	-			-	39		39
Asset-based	-	727	202	-	289	76	1,294
	250	1,071	272	43	580	76	2,292
Commercial real estate:
Commercial mortgages	-	8,664	1,389	554	1,074	221	11,902
SBA Loans	-	162	-	-	259	-	421
Construction	-	843	-	-	-	-	843
Religious organizations	53	8,098	61	865	199	-	9,276
	53	17,767	1,450	1,419	1,532	221	22,442
Total commercial loans	$  303	$  18,838	$  1,722	$  1,462	$  2,112	$  297	$ 24,734

(In 000's)		Residential Mortgage and Consumer Loans September 30, 2016
	Performing		Nonperforming	Total
Consumer Real Estate:
Home equity	$   488		$   323	$   811
Home equity line of credit	19		-	19
1-4 family residential mortgages	1,551		136	1,687
	2,058		459	2,517
Consumer Other:
Consumer Installment	-		-	-
Student loans	864		-	864
Other	190		-	190
	1,054		-	1,054
Total  consumer loans	$  3,112		$   459	$  3,571

(In 000's)			Commercial Loans, December 31, 2015
	Good/ Excellent	Satisfactory	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial:
Commercial	$    285	$    922	$    16	$    58	$    254	$    -	$    1,535
SBA loans	-	-	-	-	40	-	40
Asset-based	-	900	222	-	289	76	1,487
	285	1,822	238	58	583	76	3,062
Commercial real estate:
Commercial mortgages	-	10,689	1,098	613	1,151	223	13,774
SBA Loans	-	82	-	-	271	-	353
Construction	-	2,175	-	-	-	-	2,175
Religious organizations	-	7,624	1,131	886	471	-	10,112
	-	20,570	2,229	1,499	1,893	223	26,414
Total commercial loans	$    285	$    22,393	$    2,467	$    1,557	$    2,476	$    299	$  29,476
			Residential Mortgage and Consumer Loans December 31, 2015
	Performing		Nonperforming		Total
Consumer Real Estate:
Home equity	$    539		$    358		$    897
Home equity line of credit	20		-		20
1-4 family residential mortgages	1,795		129		1,924
	2,354		487		2,841
Consumer Other:
Consumer Installment	-		-		-
Student loans	1,081		-		1,081
Other	121		-		121
	1,202		-		1,202
Total  consumer loans	$  3,556		$    487		$    4,043

Schedule of Impaired Loans

Impaired loans as of September 30, 2016 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	$   109	$   109	$      -	$  109	$    -
SBA Loans	39	39	-	39	-
Asset-based	289	289	-	289	-
Total commercial and industrial	437	437	-	437	-
Commercial real estate:
Commercial mortgages	1,280	806	474	1,280	67
SBA Loans	259	162	97	259	4
Religious organizations	199	199	-	199	-
Total commercial real estate	1,738	1,167	571	1,738	71
Total loans	$  2,175	$ 1,604	$  571	$  2,175	$  71

Impaired loans as of December 31, 2015 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	$  818	$    353	$    -	$    353	$   -
SBA loans	46	46	-	46	-
Asset-based	40	40	-	40	-
Total commercial and industrial	904	439	-	439	-
Commercial real estate:
Commercial mortgages	1,334	810	524	1,334	91
SBA Loans	271	271	-	271	-
Religious organizations	471	471	-	471	-
Total commercial real estate	2,076	1,552	524	2,076	91
Total loans	$2,980	$ 1,991	$   524	$  2,515	$ 91

Schedule of Interest Income on Impaired Loans

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

(In 000's)	Three Months Ended September 30, 2016		Three Months Ended September 30, 2015
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$   109	$      -	$  160	$      -
SBA  loans	39	-	40	1
Asset-based	289	-	46	1
Total commercial and industrial	437	-	246	2
Commercial real estate:
Commercial mortgages	1,280	1	976	-
SBA loans	162	-	110	-
Religious organizations	200	-	488	-
Total commercial real estate	1,642	1	1,574	-
Total loans	$   2,079	$    1	$ 1,820	$    2

(In 000's)	Nine Months Ended September 30, 2016		Nine Months Ended September 30, 2015
	Average	Interest recognized	Average	Interest recognized
	Recorded	on impaired	Recorded	on impaired
	Investment	Loans	Investment	Loans
Commercial and industrial:
Commercial	$     109	$    -	$    188	$      -
SBA  loans	39	-	58	2
Asset-based	289	-	36	2
Total commercial and industrial	437	-	282	4
Commercial real estate:
Commercial mortgages	1,422	5	971	-
SBA loans	304	3	112	-
Religious organizations	299	-	496	2
Total commercial real estate	2,025	8	1,579	2
Total loans	$   2,462	$  8	$   1,861	$    6

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7. Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

Schedule of Change in Other Real Estate Owned

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, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Beginning balance	$  447	$  757	$  480	$    564
Additions, transfers from loans	-	-	-	149
Sales	-	(38)	(33)	(83)
	447	719	447	630
Write-ups	-	-	-	89
Ending Balance	$   447	$  719	$ 447	$   719

Schedule of Components of Other Real Estate Owned

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

(in 000's)	September 30, 2016	December 31, 2015
Commercial real estate	$  316	$ 297
Residential real estate	131	183
Total	$  447	$ 480

Schedule of Components of Net Expense (income) of Other Real Estate Owned

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

	Three  Months Ended	Three  Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Insurance	$3	$4	$9	$13
Legal fees	-	-	16	-
Foreclosure expense	56	-	56	-
Professional fees	-	-	4	-
Real estate taxes	6	4	16	10
Utilities	1	1	2	2
Transfer-in write-up	-	-	-	(89)
Other	-	1	1	11
Total	$66	$10	$104	$(53)

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8. Fair Value (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

Schedule of Fair Value of Assets on a Recurring Basis

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, 2016	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
U.S. Government agency securities	$2,699	$      -	$2,699	$    -
Government Sponsored Enterprises residential mortgage-backed securities	3,455	-	3,455	-
Money market funds	130	130	-	-
Total	$6,284	$130	$6,154	$    -
Loans held for sale	$6,602	$   -	$6,602	$   -
Loans held at fair value	$3,726	$   -	$         -	$ 3,726
Servicing asset	$  283	$   -	$         -	$     283

(in 000’s)		Fair Value Measurements at Reporting Date Using:
	Assets Measured at Fair Value at   December 31, 2015	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	$ 3,662	$  -	$3,662	$      -
Government Sponsored Enterprises residential mortgage-backed securities	3,780	-	3,780	-
Money market funds	130	130	-	-
Total	$7,572	$130	$ 7,442	$    -
Loans held for sale	$3,261	$   -	$3,261	$   -
Loans held at fair value	$2,459	$   -	$     -	$ 2,459
Servicing asset	$   200	$   -	$     -	$    200

Schedule of Inputs in Estimation of Fair Value of Level 3 Financial Instruments

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,     2016 Fair value	December 31, 2015 Fair Value	Principal valuation techniques	Significant observable inputs	September 30,      2016 Range of inputs	December 31, 2015 Range of inputs
Loans held at fair value:	$  3,726	$ 2,459	Discounted cash flow	Constant prepayment rate	7.50% to 9.71  %	7.10% to 9.88%
				Weighted average discount rate	7.72% to 9.38%	7.76% to 9.94%
				Weighted average life	3.12 yrs to 9.97yrs	3.40 yrs to 8.78 yrs

(in 000’s)

Assets measured at fair value	September 30,   2016 Fair value	December 31, 2015 Fair Value	Principal valuation techniques	Significant observable inputs	September 30,  2016 Range of inputs	December 31, 2015 Range of inputs
Servicing asset	$283	$ 200	Discounted cash flow	Constant prepayment rate	4.76% to 10.10%	6.57% to 10.27%
				Weighted average discount rate	9.54% to 16.04%	11.94 % to 16.23%
				Weighted average life	3.12 yrs to 9.72 yrs	3.40 yrs to 8.78 yrs

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

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

(in 000’s)	Loans held at fair value
Balance at December 31, 2015	$   2,459
Origination of loans	1,339
Principal repayments	(324)
Change in fair value of financial instruments	270
Balance at September 30, 2016	$  3,744

Schedule of Fair Value of Assets Measured on a Nonrecurring Basis

The following table presents the assets carried on the consolidated balance sheet by level within the hierarchy as of September 30, 2016 and December 31, 2015, for which a nonrecurring change in fair value has been recorded during the nine months ended September 30, 2016 and year ended December 31, 2015.

Carrying Value at September 30, 2016:

(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	$ 741	$   -	$   -	$ 741	$   -
Other real estate owned (“OREO”)	$ 447	$   -	$    -	$  447	-

Carrying Value at December 31, 2015:

(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	$ 479	$    -	$      -	$   479	$ -
Other real estate owned (“OREO”)	$    480	$       -	$        -	$    480	$   39

Schedule of Fair Value of Financial Instruments at Year-End

		September 30, 2016		December 31, 2015
(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	$ 9,600	$ 9,600	$ 10,782	$  10,782
Available for sale securities	(1)	6,284	6,284	7,572	7,572
Loans held for sale	Level 2	6,602	6,602	3,261	3,261
Loans held at fair value	Level 3	3,726	3,726	2,459	2,459
Loans, net of allowance for loan losses	(2)	27,988	28,227	33,101	33,082
Accrued interest receivable	Level 2	141	141	175	175
Servicing asset	Level 3	283	283	200	200
Liabilities:
Demand deposits	Level 2	29,367	29,367	30,022	30,022
Savings deposits	Level 2	11,866	11,866	11,681	11,681
Time deposits	Level 2	11,595	11,579	14,259	14,242
Accrued interest payable	Level 2	10	10	9	9

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9. Regulatory (Tables)

9 Months Ended

Sep. 30, 2016

Table Text Block Supplement [Abstract]

The requirements and status of items included in the Consent Orders

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.

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2. Net Loss Per Share: Schedule of Net Loss per Common Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Text Block [Abstract]
Net loss available to common shareholders	$ (117,877)	$ (209,909)	$ (1,842)	$ (313,006)
Average common shares outstanding-basic	826,921	826,921	826,921	986,487
Net loss per share-basic	$ (0.14)	$ (0.25)	$ 0.00	$ (0.32)
Average common shares-diluted	826,921	826,921	826,921	986,487
Net loss income per share-diluted	$ (0.14)	$ (0.25)	$ 0.00	$ (0.32)

XML

2. Net Loss Per Share (Details)	9 Months Ended
	Sep. 30, 2015 shares
Common Stock
Shares cancelled	50,000

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3. Changes in Accumulated Other Comprehensive Income: Schedule of Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Text Block [Abstract]
Other comprehensive income, before tax amount, beginning	$ 106	$ (39)	$ (29)	$ 21
Other comprehensive income, Taxes, beginning	(35)	5	10	8
Other comprehensive income, Net of tax Amount, beginning	71	(34)	(19)	(13)
Unrealized holding gain arising during period, before tax amount	5	97	130	66
Unrealized holding gain arising during period, taxes	1	33	(44)	(23)
Unrealized holding gain arising during period, net of tax amount	4	64	86	43
Less: reclassification adjustment for gains(losses) realized in net loss, before tax amount	0	0	0	0
Less: reclassification adjustment for gains(losses) realized in net loss, taxes	0	0	0	0
Less: reclassification adjustment for gains(losses) realized in net loss, net of tax amount	0	0	0	0
Other comprehensive loss, net, before tax amount	5	97	130	66
Other comprehensive loss, net, taxes	1	33	(44)	(23)
Other comprehensive loss, net, net after tax amount	4	64	86	43
Other comprehensive income, before tax amount, ending	101	58	101	45
Other comprehensive income, Taxes, ending	(34)	(28)	(34)	(15)
Other comprehensive income, Net of tax Amount, ending	$ 67	$ 30	$ 67	$ 30

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5. Investment Securities: Schedule of Available-for-sale Securities Reconciliation (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Available-for-sale Securities, Amortized Cost Basis	$ 6,184,000	$ 7,601,000
Available-for-sale Securities, Gross Unrealized Gain	102,000	39,000
Available-for-sale Securities, Gross Unrealized Loss	(2,000)	(68,000)
Investment securities available-for-sale, at fair value	6,283,682	7,572,029
US Government Agency Securities
Available-for-sale Securities, Amortized Cost Basis	2,699,000	3,697,000
Available-for-sale Securities, Gross Unrealized Gain	2,000	3,000
Available-for-sale Securities, Gross Unrealized Loss	(2,000)	(38,000)
Investment securities available-for-sale, at fair value	2,699,000	3,662,000
Government Sponsored Enterprises residential mortgage-backed securities
Available-for-sale Securities, Amortized Cost Basis	3,355,000	3,774,000
Available-for-sale Securities, Gross Unrealized Gain	100,000	36,000
Available-for-sale Securities, Gross Unrealized Loss	0	(30,000)
Investment securities available-for-sale, at fair value	3,455,000	3,780,000
Investments in money market funds
Available-for-sale Securities, Amortized Cost Basis	130,000	130,000
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	$ 130,000	$ 130,000

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5. Investment Securities: Schedule of Investments Classified by Contractual Maturity Date (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Amortized Cost, due in one year	$ 0
Fair Value, due in one year	0
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	2,699,000
Fair Value, due after five years through ten years	2,699,000
Available-for-sale Securities, Amortized Cost Basis	6,184,000	$ 7,601,000
Investment securities available-for-sale, at fair value	6,283,682	7,572,029
Total debt securities, Amortized Cost Basis	6,054,000
Total debt securities, Fair Value	6,154,000
Investments in money market funds
Available-for-sale Securities, Amortized Cost Basis	130,000	130,000
Investment securities available-for-sale, at fair value	130,000	130,000
Government Sponsored Enterprises residential mortgage-backed securities
Available-for-sale Securities, Amortized Cost Basis	3,355,000	3,774,000
Investment securities available-for-sale, at fair value	$ 3,455,000	$ 3,780,000

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5. Investment Securities: Schedule of Unrealized Loss on Investments (Details) $ in Thousands	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Number of Securities	2	17
Less than Twelve Months, Fair Value	$ 997	$ 3,902
Less than 12 Months, Unrealized Losses	(2)	(51)
Twelve Months or Longer, Fair Value	0	470
12 Months or Longer, Unrealized Losses	0	(17)
Total Fair Value	997	4,372
Total Unrealized Losses	$ (2)	$ (68)
US Government Agency Securities
Number of Securities	2	9
Less than Twelve Months, Fair Value	$ 997	$ 2,416
Less than 12 Months, Unrealized Losses	(2)	(32)
Twelve Months or Longer, Fair Value	0	243
12 Months or Longer, Unrealized Losses	0	(6)
Total Fair Value	997	2,659
Total Unrealized Losses	$ (2)	$ (38)
Government Sponsored Enterprises residential mortgage-backed securities
Number of Securities		8
Less than Twelve Months, Fair Value		$ 1,486
Less than 12 Months, Unrealized Losses		(19)
Twelve Months or Longer, Fair Value		227
12 Months or Longer, Unrealized Losses		(11)
Total Fair Value		1,713
Total Unrealized Losses		$ (30)

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6. Loans and Allowance For Loan Losses: Schedule of the Composition of Net Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Text Block [Abstract]
Commercial and industrial	$ 2,292	$ 3,062
Commercial real estate	22,442	26,414
Consumer real estate	2,517	2,841
Consumer loans other	1,054	1,202
Loans, net	$ 28,305	$ 33,519

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6. Loans and Allowance For Loan Losses: Schedule of Age Analysis of Allowance for Loan Losses (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Beginning balance	$ 355,000	$ 469,000	$ 596,000	$ 418,000	$ 735,000
Provision (credit) for loan losses	45,000		83,000	50,000	17,000
Charge-offs	(1,000)		(214,000)	(67,000)	(274,000)
Recoveries	8,000		4,000	16,000	25,000
Net (charge-offs) recoveries	7,000		210,000	51,000	249,000
Ending balance	317,000	469,000	469,000	317,000	469,000
Period-end amount allocated to: Loans individually evaluated for impairment	71,000			71,000		$ 91,000
Period-end amount allocated to: Loans collectively evaluated for impairment	246,000			246,000		327,000
Period-end amount allocated to: Total	(316,979)			(316,979)		(418,013)
Loans, ending balance: Loans individually evaluated for impairment	2,175,000			2,175,000		2,515,000
Loans, ending balance: Loans collectively evaluated for impairment	26,130,000			26,130,000		31,004,000
Loans, ending balance: Total	28,305,134			28,305,134		33,519,042
Commercial And Industrial
Beginning balance	87,000	320,000		151,000	403,000
Provision (credit) for loan losses	41,000	100,000		25,000	63,000
Charge-offs	0	(212,000)		0	(259,000)
Recoveries	1,000	2,000		3,000	3,000
Net (charge-offs) recoveries	1,000	210,000		3,000	256,000
Ending balance	129,000	210,000	320,000	129,000	210,000
Period-end amount allocated to: Loans individually evaluated for impairment	0			0		0
Period-end amount allocated to: Loans collectively evaluated for impairment	129,000			129,000		151,000
Period-end amount allocated to: Total	(129,000)			(129,000)		(151,000)
Loans, ending balance: Loans individually evaluated for impairment	437,000			437,000		439,000
Loans, ending balance: Loans collectively evaluated for impairment	1,855,000			1,855,000		2,623,000
Loans, ending balance: Total	2,292,000			2,292,000		3,062,000
Commercial Real Estate Portfolio Segment
Beginning balance	245,000	236,000		250,000	300,000
Provision (credit) for loan losses	75,000	9,000		39,000	73,000
Charge-offs	(1,000)	0		(42,000)	0
Recoveries	0	0		0	0
Net (charge-offs) recoveries	1,000	0		42,000	0
Ending balance	169,000	227,000	236,000	169,000	227,000
Period-end amount allocated to: Loans individually evaluated for impairment	71,000			71,000		91,000
Period-end amount allocated to: Loans collectively evaluated for impairment	98,000			98,000		159,000
Period-end amount allocated to: Total	(169,000)			(169,000)		(250,000)
Loans, ending balance: Loans individually evaluated for impairment	1,738,000			1,738,000		2,076,000
Loans, ending balance: Loans collectively evaluated for impairment	20,704,000			20,704,000		24,338,000
Loans, ending balance: Total	22,442,000			22,442,000		26,414,000
Consumer Real Estate
Beginning balance	13,000	23,000		8,000	20,000
Provision (credit) for loan losses	11,000	4,000		14,000	4,000
Charge-offs	0	0		(22,000)	0
Recoveries	6,000	1,000		8,000	4,000
Net (charge-offs) recoveries	6,000	1,000		14,000	4,000
Ending balance	8,000	20,000	23,000	8,000	20,000
Period-end amount allocated to: Loans individually evaluated for impairment	0			0		0
Period-end amount allocated to: Loans collectively evaluated for impairment	8,000			8,000		8,000
Period-end amount allocated to: Total	(8,000)			(8,000)		(8,000)
Loans, ending balance: Loans individually evaluated for impairment	0			0		0
Loans, ending balance: Loans collectively evaluated for impairment	2,517,000			2,517,000		2,841,000
Loans, ending balance: Total	2,517,000			2,517,000		2,841,000
Consumer And Other Loans
Beginning balance	10,000	17,000		9,000	12,000
Provision (credit) for loan losses	0	4,000		0	3,000
Charge-offs	0	(2,000)		(3,000)	(15,000)
Recoveries	1,000	1,000		5,000	18,000
Net (charge-offs) recoveries	1,000	1,000		2,000	3,000
Ending balance	11,000	$ 12,000	$ 17,000	11,000	$ 12,000
Period-end amount allocated to: Loans individually evaluated for impairment	0			0		0
Period-end amount allocated to: Loans collectively evaluated for impairment	11,000			11,000		9,000
Period-end amount allocated to: Total	(11,000)			(11,000)		(9,000)
Loans, ending balance: Loans individually evaluated for impairment	0			0		0
Loans, ending balance: Loans collectively evaluated for impairment	1,054,000			1,054,000		1,202,000
Loans, ending balance: Total	$ 1,054,000			$ 1,054,000		$ 1,202,000

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6. Loans and Allowance For Loan Losses: Schedule of Age Analysis of Past Due Loans (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Past Due Loans	$ 3,014,000	$ 3,635,000
Nonaccrual	2,634,000	3,003,000
Current Loans	25,291,000	29,884,000
Total Loans	28,305,134	33,519,042
Loans 30-89 Days Past Due
Past Due Loans	180,000	339,000
Accruing Loans 90 or More Days Past Due
Past Due Loans	200,000	293,000
Commercial And Industrial
Past Due Loans	467,000	450,000
Nonaccrual	437,000	439,000
Current Loans	1,825,000	2,612,000
Total Loans	2,292,000	3,062,000
Commercial And Industrial | Loans 30-89 Days Past Due
Past Due Loans	30,000	11,000
Commercial And Industrial | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Commercial Real Estate Portfolio Segment
Past Due Loans	1,752,000	2,285,000
Nonaccrual	1,738,000	2,077,000
Current Loans	20,690,000	24,129,000
Total Loans	22,442,000	26,414,000
Commercial Real Estate Portfolio Segment | Loans 30-89 Days Past Due
Past Due Loans	0	169,000
Commercial Real Estate Portfolio Segment | Accruing Loans 90 or More Days Past Due
Past Due Loans	14,000	39,000
Consumer Real Estate
Past Due Loans	670,000	703,000
Nonaccrual	459,000	487,000
Current Loans	1,847,000	2,138,000
Total Loans	2,517,000	2,841,000
Consumer Real Estate | Loans 30-89 Days Past Due
Past Due Loans	64,000	91,000
Consumer Real Estate | Accruing Loans 90 or More Days Past Due
Past Due Loans	147,000	125,000
Total Real Estate
Past Due Loans	2,422,000	2,988,000
Nonaccrual	2,197,000	2,564,000
Current Loans	22,537,000	26,267,000
Total Loans	24,959,000	29,255,000
Total Real Estate | Loans 30-89 Days Past Due
Past Due Loans	64,000	260,000
Total Real Estate | Accruing Loans 90 or More Days Past Due
Past Due Loans	161,000	164,000
Consumer And Other Loans
Past Due Loans	125,000	197,000
Nonaccrual	0	0
Current Loans	929,000	1,005,000
Total Loans	1,054,000	1,202,000
Consumer And Other Loans | Loans 30-89 Days Past Due
Past Due Loans	86,000	68,000
Consumer And Other Loans | Accruing Loans 90 or More Days Past Due
Past Due Loans	39,000	129,000
Home Equity Line of Credit | Consumer Real Estate
Past Due Loans	0	0
Nonaccrual	0	0
Current Loans	19,000	20,000
Total Loans	19,000	20,000
Home Equity Line of Credit | Consumer Real Estate | Loans 30-89 Days Past Due
Past Due Loans	0	0
Home Equity Line of Credit | Consumer Real Estate | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Commercial | Commercial And Industrial
Past Due Loans	139,000	110,000
Nonaccrual	109,000	110,000
Current Loans	820,000	1,425,000
Total Loans	959,000	1,535,000
Commercial | Commercial And Industrial | Loans 30-89 Days Past Due
Past Due Loans	30,000	0
Commercial | Commercial And Industrial | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
SBA Loans | Commercial And Industrial
Past Due Loans	39,000	40,000
Nonaccrual	39,000	40,000
Current Loans	0	0
Total Loans	39,000	40,000
SBA Loans | Commercial And Industrial | Loans 30-89 Days Past Due
Past Due Loans	0	0
SBA Loans | Commercial And Industrial | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
SBA Loans | Commercial Real Estate Portfolio Segment
Past Due Loans	259,000	271,000
Nonaccrual	259,000	271,000
Current Loans	162,000	82,000
Total Loans	421,000	353,000
SBA Loans | Commercial Real Estate Portfolio Segment | Loans 30-89 Days Past Due
Past Due Loans	0	0
SBA Loans | Commercial Real Estate Portfolio Segment | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Asset Based Loans | Commercial And Industrial
Past Due Loans	289,000	300,000
Nonaccrual	289,000	289,000
Current Loans	1,005,000	1,187,000
Total Loans	1,294,000	1,487,000
Asset Based Loans | Commercial And Industrial | Loans 30-89 Days Past Due
Past Due Loans	0	11,000
Asset Based Loans | Commercial And Industrial | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Commercial Mortgages | Commercial Real Estate Portfolio Segment
Past Due Loans	1,294,000	1,543,000
Nonaccrual	1,280,000	1,335,000
Current Loans	11,538,000	12,231,000
Total Loans	12,836,000	13,774,000
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Loans 30-89 Days Past Due
Past Due Loans	0	169,000
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Accruing Loans 90 or More Days Past Due
Past Due Loans	14,000	39,000
Construction | Commercial Real Estate Portfolio Segment
Past Due Loans	0	0
Nonaccrual	0	0
Current Loans	843,000	2,175,000
Total Loans	843,000	2,175,000
Construction | Commercial Real Estate Portfolio Segment | Loans 30-89 Days Past Due
Past Due Loans	0	0
Construction | Commercial Real Estate Portfolio Segment | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Religious Organizations | Commercial Real Estate Portfolio Segment
Past Due Loans	199,000	471,000
Nonaccrual	199,000	471,000
Current Loans	9,077,000	9,641,000
Total Loans	9,276,000	10,112,000
Religious Organizations | Commercial Real Estate Portfolio Segment | Loans 30-89 Days Past Due
Past Due Loans	0	0
Religious Organizations | Commercial Real Estate Portfolio Segment | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Home Equity Loans | Consumer Real Estate
Past Due Loans	500,000	539,000
Nonaccrual	323,000	358,000
Current Loans	311,000	358,000
Total Loans	811,000	897,000
Home Equity Loans | Consumer Real Estate | Loans 30-89 Days Past Due
Past Due Loans	30,000	56,000
Home Equity Loans | Consumer Real Estate | Accruing Loans 90 or More Days Past Due
Past Due Loans	147,000	125,000
1-4 family residential mortgages | Consumer Real Estate
Past Due Loans	170,000	164,000
Nonaccrual	136,000	129,000
Current Loans	1,517,000	1,760,000
Total Loans	1,687,000	1,924,000
1-4 family residential mortgages | Consumer Real Estate | Loans 30-89 Days Past Due
Past Due Loans	34,000	35,000
1-4 family residential mortgages | Consumer Real Estate | Accruing Loans 90 or More Days Past Due
Past Due Loans	0	0
Student Loans | Consumer And Other Loans
Past Due Loans	123,000	195,000
Nonaccrual	0	0
Current Loans	741,000	886,000
Total Loans	864,000	1,081,000
Student Loans | Consumer And Other Loans | Loans 30-89 Days Past Due
Past Due Loans	85,000	66,000
Student Loans | Consumer And Other Loans | Accruing Loans 90 or More Days Past Due
Past Due Loans	38,000	129,000
Other | Consumer And Other Loans
Past Due Loans	2,000	2,000
Nonaccrual	0	0
Current Loans	188,000	119,000
Total Loans	190,000	121,000
Other | Consumer And Other Loans | Loans 30-89 Days Past Due
Past Due Loans	1,000	2,000
Other | Consumer And Other Loans | Accruing Loans 90 or More Days Past Due
Past Due Loans	$ 1,000	0
Consumer Installment | Consumer And Other Loans
Past Due Loans		0
Nonaccrual		0
Current Loans		0
Total Loans		0
Consumer Installment | Consumer And Other Loans | Loans 30-89 Days Past Due
Past Due Loans		0
Consumer Installment | Consumer And Other Loans | Accruing Loans 90 or More Days Past Due
Past Due Loans		$ 0

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6. Loans and Allowance For Loan Losses: Schedule of Bank Loans by Class According to Credit Quality (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Commercial real estate	$ 22,442	$ 26,414
Consumer real estate	2,517	2,841
Consumer loans other	1,054	1,202
Total consumer loans	3,571	4,043
Good/Excellent
Total commercial loans	303	285
Satisfactory
Total commercial loans	18,838	22,392
Pass
Total commercial loans	1,722	2,467
Special Mention
Total commercial loans	1,462	1,557
Substandard
Total commercial loans	2,112	2,476
Doubtful
Total commercial loans	297	299
Total
Total commercial loans	24,734	29,476
Performing
Consumer real estate	2,058	2,354
Consumer loans other	1,054	1,202
Total consumer loans	3,112	3,556
Nonperforming
Consumer real estate	459	487
Consumer loans other	0	0
Total consumer loans	459	487
Commercial And Industrial | Good/Excellent
Total commercial loans	250	285
Commercial And Industrial | Satisfactory
Total commercial loans	1,071	1,822
Commercial And Industrial | Pass
Total commercial loans	272	238
Commercial And Industrial | Special Mention
Total commercial loans	43	58
Commercial And Industrial | Substandard
Total commercial loans	580	583
Commercial And Industrial | Doubtful
Total commercial loans	76	76
Commercial And Industrial | Total
Total commercial loans	2,292	3,062
Consumer And Other Loans | Total | Consumer Installment
Consumer loans other	0	0
Consumer And Other Loans | Total | Student Loans
Consumer loans other	921	1,081
Consumer And Other Loans | Total | Other
Consumer loans other	121	121
Consumer And Other Loans | Performing | Consumer Installment
Consumer loans other	0	0
Consumer And Other Loans | Performing | Student Loans
Consumer loans other	921	1,081
Consumer And Other Loans | Performing | Other
Consumer loans other	121	121
Consumer And Other Loans | Nonperforming | Consumer Installment
Consumer loans other	0	0
Consumer And Other Loans | Nonperforming | Student Loans
Consumer loans other	0	0
Consumer And Other Loans | Nonperforming | Other
Consumer loans other	0	0
Consumer Real Estate | Total | Home Equity
Consumer real estate	811	897
Consumer Real Estate | Total | Home Equity Line Of Credit
Consumer real estate	19	20
Consumer Real Estate | Total | 1-4 Family Residential Mortgages
Consumer real estate	1,687	1,924
Consumer Real Estate | Performing | Home Equity
Consumer real estate	488	539
Consumer Real Estate | Performing | Home Equity Line Of Credit
Consumer real estate	19	20
Consumer Real Estate | Performing | 1-4 Family Residential Mortgages
Consumer real estate	1,551	1,795
Consumer Real Estate | Nonperforming | Home Equity
Consumer real estate	323	358
Consumer Real Estate | Nonperforming | Home Equity Line Of Credit
Consumer real estate	0	0
Consumer Real Estate | Nonperforming | 1-4 Family Residential Mortgages
Consumer real estate	136	129
Commercial Real Estate Portfolio Segment | Good/Excellent
Commercial real estate	53	0
Commercial Real Estate Portfolio Segment | Satisfactory
Commercial real estate	17,767	20,570
Commercial Real Estate Portfolio Segment | Pass
Commercial real estate	1,450	2,229
Commercial Real Estate Portfolio Segment | Special Mention
Commercial real estate	1,419	1,499
Commercial Real Estate Portfolio Segment | Substandard
Commercial real estate	1,532	1,893
Commercial Real Estate Portfolio Segment | Doubtful
Commercial real estate	221	223
Commercial Real Estate Portfolio Segment | Total
Commercial real estate	22,442	26,414
Commercial | Commercial And Industrial | Good/Excellent
Total commercial loans	250	285
Commercial | Commercial And Industrial | Satisfactory
Total commercial loans	344	922
Commercial | Commercial And Industrial | Pass
Total commercial loans	70	16
Commercial | Commercial And Industrial | Special Mention
Total commercial loans	43	58
Commercial | Commercial And Industrial | Substandard
Total commercial loans	252	254
Commercial | Commercial And Industrial | Doubtful
Total commercial loans	0	0
Commercial | Commercial And Industrial | Total
Total commercial loans	959	1,535
SBA Loans | Commercial And Industrial | Good/Excellent
Total commercial loans	0	0
SBA Loans | Commercial And Industrial | Satisfactory
Total commercial loans		0
SBA Loans | Commercial And Industrial | Pass
Total commercial loans		0
SBA Loans | Commercial And Industrial | Special Mention
Total commercial loans	0	0
SBA Loans | Commercial And Industrial | Substandard
Total commercial loans	39	40
SBA Loans | Commercial And Industrial | Doubtful
Total commercial loans		0
SBA Loans | Commercial And Industrial | Total
Total commercial loans	39	40
SBA Loans | Commercial Real Estate Portfolio Segment | Good/Excellent
Commercial real estate	0	0
SBA Loans | Commercial Real Estate Portfolio Segment | Satisfactory
Commercial real estate	162	82
SBA Loans | Commercial Real Estate Portfolio Segment | Pass
Commercial real estate	0	0
SBA Loans | Commercial Real Estate Portfolio Segment | Special Mention
Commercial real estate	0	0
SBA Loans | Commercial Real Estate Portfolio Segment | Substandard
Commercial real estate	259	271
SBA Loans | Commercial Real Estate Portfolio Segment | Doubtful
Commercial real estate	0	0
SBA Loans | Commercial Real Estate Portfolio Segment | Total
Commercial real estate	421	353
Asset Based | Commercial And Industrial | Good/Excellent
Total commercial loans	0	0
Asset Based | Commercial And Industrial | Satisfactory
Total commercial loans	727	900
Asset Based | Commercial And Industrial | Pass
Total commercial loans	202	222
Asset Based | Commercial And Industrial | Special Mention
Total commercial loans	0	0
Asset Based | Commercial And Industrial | Substandard
Total commercial loans	289	289
Asset Based | Commercial And Industrial | Doubtful
Total commercial loans	76	76
Asset Based | Commercial And Industrial | Total
Total commercial loans	1,294	1,487
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Good/Excellent
Commercial real estate	0	0
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Satisfactory
Commercial real estate	8,664	10,689
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Pass
Commercial real estate	1,389	1,098
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Special Mention
Commercial real estate	554	613
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Substandard
Commercial real estate	1,074	1,151
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Doubtful
Commercial real estate	221	223
Commercial Mortgages | Commercial Real Estate Portfolio Segment | Total
Commercial real estate	11,902	13,774
Construction | Commercial Real Estate Portfolio Segment | Good/Excellent
Commercial real estate	0	0
Construction | Commercial Real Estate Portfolio Segment | Satisfactory
Commercial real estate	843	2,175
Construction | Commercial Real Estate Portfolio Segment | Pass
Commercial real estate	0	0
Construction | Commercial Real Estate Portfolio Segment | Special Mention
Commercial real estate	0	0
Construction | Commercial Real Estate Portfolio Segment | Substandard
Commercial real estate	0	0
Construction | Commercial Real Estate Portfolio Segment | Doubtful
Commercial real estate	0	0
Construction | Commercial Real Estate Portfolio Segment | Total
Commercial real estate	843	2,175
Religious Organizations | Commercial Real Estate Portfolio Segment | Good/Excellent
Commercial real estate	53	0
Religious Organizations | Commercial Real Estate Portfolio Segment | Satisfactory
Commercial real estate	8,098	7,624
Religious Organizations | Commercial Real Estate Portfolio Segment | Pass
Commercial real estate	61	1,131
Religious Organizations | Commercial Real Estate Portfolio Segment | Special Mention
Commercial real estate	865	886
Religious Organizations | Commercial Real Estate Portfolio Segment | Substandard
Commercial real estate	199	471
Religious Organizations | Commercial Real Estate Portfolio Segment | Doubtful
Commercial real estate	0	0
Religious Organizations | Commercial Real Estate Portfolio Segment | Total
Commercial real estate	$ 9,276	$ 10,112

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6. Loans and Allowance For Loan Losses: Schedule of Impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Unpaid Contractual Principal Balance	$ 2,175	$ 2,980
Recorded Investment With No Allowance	1,604	1,991
Recorded Investment With Allowance	571	524
Total Recorded Investment	2,175	2,515
Related Allowance	71	91
Commercial And Industrial
Unpaid Contractual Principal Balance	437	904
Recorded Investment With No Allowance	437	439
Recorded Investment With Allowance	0	0
Total Recorded Investment	437	439
Related Allowance	0	0
Commercial Real Estate Portfolio Segment
Unpaid Contractual Principal Balance	1,738	2,076
Recorded Investment With No Allowance	1,167	1,552
Recorded Investment With Allowance	571	524
Total Recorded Investment	1,738	2,076
Related Allowance	71	91
Commercial | Commercial And Industrial
Unpaid Contractual Principal Balance	109	818
Recorded Investment With No Allowance	109	353
Recorded Investment With Allowance	0	0
Total Recorded Investment	109	353
Related Allowance	0	0
SBA Loans | Commercial And Industrial
Unpaid Contractual Principal Balance	39	46
Recorded Investment With No Allowance	39	46
Recorded Investment With Allowance	0	0
Total Recorded Investment	39	46
Related Allowance	0	0
SBA Loans | Commercial Real Estate Portfolio Segment
Unpaid Contractual Principal Balance	259	271
Recorded Investment With No Allowance	162	271
Recorded Investment With Allowance	97	0
Total Recorded Investment	259	271
Related Allowance	4	0
Asset Based Loans | Commercial And Industrial
Unpaid Contractual Principal Balance	289	40
Recorded Investment With No Allowance	289	40
Recorded Investment With Allowance	0	0
Total Recorded Investment	289	40
Related Allowance	0	0
Commercial Mortgages | Commercial Real Estate Portfolio Segment
Unpaid Contractual Principal Balance	1,280	1,334
Recorded Investment With No Allowance	806	810
Recorded Investment With Allowance	474	524
Total Recorded Investment	1,280	1,334
Related Allowance	67	91
Religious Organizations | Commercial Real Estate Portfolio Segment
Unpaid Contractual Principal Balance	199	471
Recorded Investment With No Allowance	199	471
Recorded Investment With Allowance	0	0
Total Recorded Investment	199	471
Related Allowance	$ 0	$ 0

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6. Loans and Allowance For Loan Losses: Schedule of Interest Income on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Average Recorded Investment	$ 2,079		$ 1,820	$ 2,462	$ 1,861
Interest recognized on impaired loans	1		$ 2	8	6
Commercial And Industrial
Average Recorded Investment	437	$ 246		437	282
Interest recognized on impaired loans	0	2		0	4
Commercial Real Estate Portfolio Segment
Average Recorded Investment	1,642	1,574		2,025	1,579
Interest recognized on impaired loans	1	0		8	2
Commercial | Commercial And Industrial
Average Recorded Investment	109	160		109	188
Interest recognized on impaired loans	0	0		0	0
SBA Loans | Commercial And Industrial
Average Recorded Investment	39	40		39	58
Interest recognized on impaired loans	0	1		0	2
SBA Loans | Commercial Real Estate Portfolio Segment
Average Recorded Investment	162	110		304	112
Interest recognized on impaired loans	0	0		3	0
Asset Based Loans | Commercial And Industrial
Average Recorded Investment	289	46		289	36
Interest recognized on impaired loans	0	1		0	2
Commercial Mortgages | Commercial Real Estate Portfolio Segment
Average Recorded Investment	1,280	976		1,422	971
Interest recognized on impaired loans	1	0		5	0
Religious Organizations | Commercial Real Estate Portfolio Segment
Average Recorded Investment	200	488		299	496
Interest recognized on impaired loans	$ 0	$ 0		$ 0	$ 2

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7. Other Real Estate Owned: Schedule of Change in Other Real Estate Owned (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Text Block [Abstract]
Other Real Estate, Beginning Balance	$ 447,000	$ 757,000	$ 479,627	$ 564,000
Additions, transfers from loans	0	0	0	149,000
Sales	0	(38,000)	(33,000)	(83,000)
Other Real Estate Owned	447,000	719,000	447,000	630,000
Write-ups	0	0	0	89,000
Other Real Estate, Ending Balance	$ 447,371	$ 719,000	$ 447,371	$ 719,000

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7. Other Real Estate Owned: Schedule of Components of Other Real Estate Owned (Details) - USD ($)	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Other real estate owned	$ 447,371	$ 447,000	$ 479,627	$ 719,000	$ 719,000	$ 757,000	$ 564,000
Commercial Real Estate
Other real estate owned	316,000		297,000
Residential Real Estate
Other real estate owned	$ 131,000		$ 183,000

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7. Other Real Estate Owned: Schedule of Components of Net Expense (income) of Other Real Estate Owned (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Professional fees	$ 74,723		$ 76,977	$ 223,854	$ 242,392
Other Real Estate {1}
Insurance	3	$ 4		9	13
Legal fees	0	0		16	0
Foreclosure expense	56	0		56	0
Professional fees	0	0		4	0
Real estate taxes	6	4		16	10
Utilities	1	1		2	2
Transfer-in write up	0	0		0	(89)
Other	0	1		1	11
Total	$ 66	$ 10		$ 104	$ (53)

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8. Fair Value: Schedule of Fair Value of Assets on a Recurring Basis (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Assets Measured at Fair Value	$ 6,284,000	$ 7,572,000
Loans held for sale, at fair value	6,602,035	3,260,761
Loans held at fair value	3,726,003	2,458,930
Servicing asset	283,069	199,781
Fair Value, Inputs, Level 1
Assets Measured at Fair Value	130,000	130,000
Loans held for sale, at fair value	0	0
Loans held at fair value	0	0
Servicing asset	0	0
Fair Value, Inputs, Level 2
Assets Measured at Fair Value	6,154,000	7,442,000
Loans held for sale, at fair value	6,602,000	3,261,000
Loans held at fair value	0	0
Servicing asset	0	0
Fair Value, Inputs, Level 3
Assets Measured at Fair Value	0	0
Loans held for sale, at fair value		0
Loans held at fair value	3,726,000	2,459,000
Servicing asset	283,000	200,000
US Government Agency Securities
Assets Measured at Fair Value	2,699,000	3,662,000
US Government Agency Securities | Fair Value, Inputs, Level 1
Assets Measured at Fair Value	0	0
US Government Agency Securities | Fair Value, Inputs, Level 2
Assets Measured at Fair Value	2,699,000	3,662,000
US Government Agency Securities | Fair Value, Inputs, Level 3
Assets Measured at Fair Value	0	0
Government Sponsored Enterprises residential mortgage-backed securities
Assets Measured at Fair Value	3,455,000	3,780,000
Government Sponsored Enterprises residential mortgage-backed securities | Fair Value, Inputs, Level 1
Assets Measured at Fair Value	0	0
Government Sponsored Enterprises residential mortgage-backed securities | Fair Value, Inputs, Level 2
Assets Measured at Fair Value	3,455,000	3,780,000
Government Sponsored Enterprises residential mortgage-backed securities | Fair Value, Inputs, Level 3
Assets Measured at Fair Value	0	0
Investments in money market funds
Assets Measured at Fair Value	130,000	130,000
Investments in money market funds | Fair Value, Inputs, Level 1
Assets Measured at Fair Value	130,000	130,000
Investments in money market funds | Fair Value, Inputs, Level 2
Assets Measured at Fair Value	0	0
Investments in money market funds | Fair Value, Inputs, Level 3
Assets Measured at Fair Value	$ 0	$ 0

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8. Fair Value: Schedule of Inputs in Estimation of Fair Value of Level 3 Financial Instruments (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Loans held at fair value	$ 3,726,003	$ 2,458,930
Servicing asset	283,069	199,781
Fair Value, Inputs, Level 3
Loans held at fair value	3,726,000	2,459,000
Servicing asset	$ 283,000	$ 200,000
Fair Value, Inputs, Level 3 | Loans Held at Fair Value
Principal valuation technique	Discounted cash flow	Discounted cash flow
Fair Value, Inputs, Level 3 | Loans Held at Fair Value | Fair Value, Measurements, Recurring | Minimum
Constant prepayment rate	7.50%	7.10%
Weighted average discount rate	7.72%	7.76%
Weighted average life	3 years 1 month 13 days	3 years 4 months 24 days
Fair Value, Inputs, Level 3 | Loans Held at Fair Value | Fair Value, Measurements, Recurring | Maximum
Constant prepayment rate	971.00%	9.88%
Weighted average discount rate	9.38%	9.94%
Weighted average life	9 years 11 months 19 days	8 years 9 months 11 days
Fair Value, Inputs, Level 3 | Servicing asset [Member]
Principal valuation technique	Discounted cash flow	Discounted cash flow
Fair Value, Inputs, Level 3 | Servicing asset [Member] | Fair Value, Measurements, Recurring | Minimum
Constant prepayment rate	4.76%	6.57%
Weighted average discount rate	9.54%	11.94%
Weighted average life	3 years 1 month 13 days	3 years 4 months 24 days
Fair Value, Inputs, Level 3 | Servicing asset [Member] | Fair Value, Measurements, Recurring | Maximum
Constant prepayment rate	10.10%	10.27%
Weighted average discount rate	16.04%	16.23%
Weighted average life	9 years 8 months 19 days	8 years 9 months 11 days

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8. Fair Value (Details) - Loans Held at Fair Value $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Balance, Starting	$ 2,459
Origination of loans	1,339
Principal repayments	(324)
Change in fair value of financial instruments	252
Balance, Ending	$ 3,726

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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, 2016	Dec. 31, 2015
Assets, Fair Value, Nonrecurring	$ 6,284	$ 7,572
Fair Value, Inputs, Level 1
Assets, Fair Value, Nonrecurring	130	130
Fair Value, Inputs, Level 2
Assets, Fair Value, Nonrecurring	6,154	7,442
Fair Value, Inputs, Level 3
Assets, Fair Value, Nonrecurring	0	0
Impaired Loans, Carrying Value
Assets, Fair Value, Nonrecurring	741	479
Total fair value loss during the year	0	0
Impaired Loans, Carrying Value | Fair Value, Inputs, Level 1
Assets, Fair Value, Nonrecurring	0	0
Impaired Loans, Carrying Value | Fair Value, Inputs, Level 2
Assets, Fair Value, Nonrecurring	0	0
Impaired Loans, Carrying Value | Fair Value, Inputs, Level 3
Assets, Fair Value, Nonrecurring	741	479
Other Real Estate Owned
Assets, Fair Value, Nonrecurring	447	480
Total fair value loss during the year	0	39
Other Real Estate Owned | Fair Value, Inputs, Level 1
Assets, Fair Value, Nonrecurring	0	0
Other Real Estate Owned | Fair Value, Inputs, Level 2
Assets, Fair Value, Nonrecurring	0	0
Other Real Estate Owned | Fair Value, Inputs, Level 3
Assets, Fair Value, Nonrecurring	$ 447	$ 480

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8. Fair Value: Schedule of Fair Value of Financial Instruments at Year-End (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Assets:
Available for sale securities		$ 6,283,682	$ 7,572,029
Loans held for sale		6,602,035	3,260,761
Loans held at fair value		3,726,003	2,458,930
Loans, net of allowance for loan losses		27,988,155	33,101,029
Servicing asset		283,069	199,781
Savings deposits		11,865,814	11,680,878
Accrued interest payable		10,488	9,157
Fair Value, Inputs, Level 1
Assets:
Loans held for sale		0	0
Loans held at fair value		0	0
Servicing asset		0	0
Fair Value, Inputs, Level 2
Assets:
Loans held for sale		6,602,000	3,261,000
Loans held at fair value		0	0
Servicing asset		0	0
Fair Value, Inputs, Level 3
Assets:
Loans held for sale			0
Loans held at fair value		3,726,000	2,459,000
Servicing asset		283,000	200,000
Carrying Amount
Assets:
Available for sale securities	[1]	6,284,000	7,572,000
Loans, net of allowance for loan losses	[2]	27,988,000	33,101,000
Carrying Amount | Fair Value, Inputs, Level 1
Assets:
Cash and cash equivalents		9,600,000	10,782,000
Carrying Amount | Fair Value, Inputs, Level 2
Assets:
Loans held for sale		6,602,000	3,261,000
Accrued interest receivable		141,000	175,000
Demand Deposits		29,367,000	30,022,000
Savings deposits		11,866,000	11,681,000
Time deposits		11,595,000	14,259,000
Accrued interest payable		10,000	9,000
Carrying Amount | Fair Value, Inputs, Level 3
Assets:
Loans held at fair value		3,726,000	2,459,000
Servicing asset		283,000	200,000
Fair Value
Assets:
Available for sale securities	[1]	6,284,000	7,572,000
Loans, net of allowance for loan losses	[2]	28,227,000	33,082,000
Fair Value | Fair Value, Inputs, Level 1
Assets:
Cash and cash equivalents		9,600,000	10,782,000
Fair Value | Fair Value, Inputs, Level 2
Assets:
Loans held for sale		6,602,000	3,261,000
Accrued interest receivable		141,000	175,000
Demand Deposits		29,367,000	30,022,000
Savings deposits		11,866,000	11,681,000
Time deposits		11,579,000	14,242,000
Accrued interest payable		10,000	9,000
Fair Value | Fair Value, Inputs, Level 3
Assets:
Loans held at fair value		3,726,000	2,459,000
Servicing asset		$ 283,000	$ 200,000

[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: The requirements and status of items included in the Consent Orders (Details)	9 Months Ended
	Sep. 30, 2016
Text Block [Abstract]
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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9. Regulatory (Details) - BankMember	Sep. 30, 2016	Dec. 31, 2015
Tier One Leverage Capital Ratio	4.67%	4.57%
Risk Based Capital Ratio	8.48%	8.50%

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10. Subsequent Events (Details) - Subsequent Event [Member] - USD ($)	1 Months Ended
	Sep. 30, 2017	Mar. 31, 2017	Jun. 30, 2018
Tier One Leverage Capital Ratio			4.77%
Risk Based Capital Ratio			9.20%
Fulton Financial
Proceeds From Issuance Of Preferred Stock And Preference Stock		$ 675,000
Bryn Mawr Trust
Proceeds From Issuance Of Preferred Stock And Preference Stock	$ 250,000